Maryland and Virginia Milk Producers Association, Inc v. United States United States v. Maryland and Virginia Milk Producers Association, Inc, s. 62

• Decision Date: 02 May 1960
• Docket Number: 73,Nos. 62,s. 62
• Citation: 80 S.Ct. 847,4 L.Ed.2d 880,362 U.S. 458
• Parties: MARYLAND AND VIRGINIA MILK PRODUCERS ASSOCIATION, INC., Appellant, v. UNITED STATES of America. UNITED STATES of America, Appellant, v. MARYLAND AND VIRGINIA MILK PRODUCERS ASSOCIATION, INC
• Court: U.S. Supreme Court

362 U.S. 458

80 S.Ct. 847

4 L.Ed.2d 880

MARYLAND AND VIRGINIA MILK PRODUCERS ASSOCIATION, INC., Appellant,

v UNITED STATES of America.

UNITED STATES of America, Appellant,

v. MARYLAND AND VIRGINIA MILK PRODUCERS ASSOCIATION, INC.

Nos. 62, 73.

Argued Jan. 19, 20, 1960.

Decided May 2, 1960.

Messrs.

[Syllabus from pages 458-459 intentionally omitted]

Herbert A. Bergson and William J. Hughes, Jr., Washington, D.C., for appellant in No. 62 and for appellee in No. 73.

Mr. Philip Elman, Washington, D.C., for appellee in No. 62 and for appellant in No. 73.

Mr. Justice BLACK delivered the opinion of the Court.

This is a civil antitrust action brought by the United States in a Federal District Court against an agricultural co-operative, the Maryland and Virginia Milk Producers Association, Inc. The Association supplies about 86% of the milk purchased by all milk dealers in the Washington, D.C., metropolitan area, and has as members about 2,000 Maryland and Virginia dairy farmers. The complaint charged that the Association had: (1) attempted to monopolize and had monopolized interstate trade and commerce in fluid milk in Maryland, Virginia and the District of Columbia in violation of § 2 of the Sherman Act;¹ (2) through contracts and agreements combined and conspired with Embassy Dairy and others to eliminate and foreclose competition in the same milk market area in violation of § 3 of that Act;² and (3) bought all the assets of Embassy Dairy, the largest milk dealer in the area which competed with the Association's dealers, the effect of which acquisition might be substantially to lessen competition or to tend to create a monopoly in violation of § 7 of the Clayton Act.³ The chief defense set up by the Association was that, because of its being a cooperative composed exclusively of dairy farmers, § 6 of the Clayton Act⁴ and §§ 1 and 2 of the Capper-Volstead Act⁵ completely exempted and immunized it from the antitrust laws with respect to the charges made in the Government's complaint. The District Court concluded after arguments that

'an agricultural cooperative is entirely exempt from the provisions of the antitrust laws, both as to its very existence as well as to all of its activities, provided it does not enter into conspiracies or combinations with persons who are not producers of agricultural commodities.' 167 F.Supp. 45, 52.

Accordingly the court dismissed the Sherman Act § 2 monopolization charge, where the Association was not alleged to have acted in combination with others, but upheld the right of the Government to go to trial on the Sherman Act § 3 and Clayton Act § 7 charges because they involved alleged activities with the owners of Embassy and other persons who were not agricultural producers. After trial the court found for the United States on the latter two charges and entered a decree ordering the Association to divest itself within a reasonable time of all assets acquired from Embassy and to cancel all contracts ancillary to the acquisition. 167 F.Supp. 799; 168 F.Supp. 880. The court refused to grant additional relief the United States asked for. It is from this refusal and the dismissal of its Sherman Act § 2 monopolization charge that the Government appealed directly to this Court under the Expediting Act.⁶ The Association similarly appealed to review the judgments against it on the Sherman Act § 3 charge and the Clayton Act § 7 charge. We noted probable jurisdiction, 360 U.S. 927, 79 S.Ct. 1447, 1450, 3 L.Ed.2d 1541, and treat both appeals in this opinion.

The Association's chief argument for antitrust exemption is based on § 2 of the Capper-Volstead Act, which authorizes the Secretary of Agriculture to issue a cease-and-desist order upon a finding that a cooperative has monopolized or restrained trade to such an extent that the price of an agricultural commodity has been 'unduly enhanced.'⁷ The contention is that this provision was intended to give the Secretary of Agriculture primary jurisdiction, and thereby exclude any prosecutions at all under the Sherman Act. This Court unequivocally rejected the same contention in United States v. Borden Co., 308 U.S. 188, 206, 60 S.Ct. 182, 191, 84 L.Ed. 181, after full consideration of the same legislative history that we are now asked to review again. We adhere to the reasoning and holding of the Borden opinion on this point.

The Association also argues that without regard to § 2 of the Capper-Volstead Act, § 1 of that Act and § 6 of the Clayton Act demonstrate a purpose wholly to exempt agricultural associations from the antitrust laws. In the Borden case this Court held that neither § 6 of the Clayton Act nor the Capper-Volstead Act granted immunity from prosecution for the combination of a co-operative and others to restrain trade there charged as a violation of § 1 of the Sherman Act. Although the Court was not confronted with charges under § 2 of the Sherman Act in that case we do not believe that Congress intended to immunize cooperatives engaged in competition-stifling practices from prosecution under the antimonopolization provisions of § 2 of the Sherman Act, while making them responsible for such practices as violations of the antitrade-restraint provisions of §§ 1 and 3 of that Act. These sections closely overlap, and the same kind of predatory practices may show violations of all.⁸ The reasons underlying the Court's holding in the Borden case that the cooperative there was not completely exempt under § 1 apply equally well to §§ 2 and 3. The Clayton and Capper-Volstead Acts, construed in the light of their background, do not lend themselves to such an incongruous immunity-distinction between the sections as that urged here.

In the early 1900's, when agricultural cooperatives were growing in effectiveness, there was widespread concern because the mere organization of farmers for mutual help was often considered to be a violation of the antitrust laws. Some state courts had sustained antitrust charges against agricultural cooperatives,⁹ and as a result eventually all the States passed Acts authorizing their existence.¹⁰ It was to bar such prosecutions by the Federal Government as to interstate transactions that Congress in 1914 inserted § 6 in the Clayton Act exempting agricultural organizations, along with labor unions, from the antitrust laws. This Court has held that the provisions of that section, set out below,¹¹ relating to labor unions do not manifest 'a congressional purpose wholly to exempt' them from the antitrust laws,¹² and neither the language nor the legislative history of the section indicates a congressional purpose to grant any broader immunity to agricultural cooperatives. The language shows no more than a purpose to allow farmers to act together in cooperative associations without the associations as such being 'held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws,' as they otherwise might have been. This interpretation is supported by the House and Senate Committee Reports on the bill.¹³ Thus, the full effect of § 6 is that a group of farmers acting together as a single entity in an association cannot be restrained 'from lawfully carrying out the legitimate objects thereof' (emphasis supplied), but the section cannot support the contention that it gives such an entity full freedom to engage in predatory trade practices at will. See United States v. King, D.C., 229 F. 275; D.C., 250 F. 908, 910. Cf. United States v. Borden Co., 308 U.S. 188, 203—205, 60 S.Ct. 182, 190—191, 84 L.Ed. 181.

The Capper-Volstead Act of 1922 extended § 6 of the Clayton Act exemption to capital stock agricultural cooperatives which had not previously been covered by that section.¹⁴ Section 1 of the Capper-Volstead Act also provided that among 'the legitimate objects' of farmer organizations were 'collectively processing, preparing for market, handling, and marketing' products through common marketing agencies and the making of 'necessary contracts and agreements to effect such purposes.' We believe it is reasonably clear from the very language of the Capper-Volstead Act, as it was in § 6 of the Clayton Act, that the general philosophy of both was simply that individual farmers should be given, through agricultural cooperatives acting as entities, the same unified competitive advantage—and responsibility—available to businessmen acting through corporations as entities. As the House Report on the Capper-Volstead Act said:

'Instead of granting a class privilege, it aims to equalize existing privileges by changing the law applicable to the ordinary business corporations so the farmers can take advantage of it.'¹⁵

This indicates a purpose to make it possible for farmer-producers to organize together, set association policy, fix prices at which their cooperative will sell their produce, and otherwise carry on like a business corporation without thereby violating the antitrust laws. It does not suggest a congressional desire to vest cooperatives with unrestricted power to restrain trade or to achieve monopoly by preying on independent producers, processors or dealers intent on carrying on their own businesses in their own legitimate way. In the Senate hearings on the Capper-Volstead Act the Secretary of Agriculture, who was given a large measure of authority under this Act, and the Solicitor of his Department, testified that the Act would not authorize cooperatives to engage in predatory practices in violation of the Sherman Act.¹⁶ And the House Committee Report assured the Congress that:

'In the event that associations authorized by this bill shall do anything forbidden by the Sherman Antitrust Act, they will be subject to the penalties imposed by that law.'¹⁷

Although contrary inferences could be drawn from some parts of the legislative history, we are satisfied that the part of the House Committee Report just quoted correctly interpreted the Capper-Volstead Act, and that ...