ARKANSAS WHOLESALE GROCERS'ASS'N v. FEDERAL TRADE COM'N

• Decision Date: 05 April 1927
• Docket Number: No. 301.,301.
• Citation: 18 F.2d 866
• Parties: ARKANSAS WHOLESALE GROCERS' ASS'N et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Eighth Circuit

18 F.2d 866 (1927)

ARKANSAS WHOLESALE GROCERS' ASS'N et al. v. FEDERAL TRADE COMMISSION.

No. 301.

Circuit Court of Appeals, Eighth Circuit.

April 5, 1927.

Edgar Watkins, of Atlanta, Ga. (Watkins, Asbill & Watkins, of Atlanta, Ga., on the brief), for petitioners.

Eugene W. Burr, of Washington, D. C. (Bayard T. Hainer and Adrien F. Busick, both of Washington, D. C., on the brief), for respondent.

Before STONE and VAN VALKENBURGH, Circuit Judges, and TRIEBER, District Judge.

VAN VALKENBURGH, Circuit Judge.

On or about September 13, 1924, a proceeding was instituted before the Federal Trade Commission against the Arkansas Wholesale Grocers' Association, its officers and members. The complaint charged that the Wholesale Grocers' Association therein named as respondent is a voluntary unincorporated association of individuals, partnerships and corporations with their principal places of business in the state of Arkansas, and engaged in selling, at wholesale, groceries and allied products to retail dealers located at points in Arkansas and in neighboring states, said members being banded together with said association for the purpose of promoting and protecting their common interest; that the members of the association are many in number, and in the aggregate constitute about one-half the number of all the wholesale dealers in the state of Arkansas; that said members and corporations, named as respondent, purchase the products in which they deal directly and immediately from manufacturers and producers located for the most part in states other than the state of Arkansas, and said manufacturers and producers ship the goods so purchased from their respective places of business in such other states to the members and corporation respondents in the state of Arkansas; that upon reselling said products in the course of their aforesaid business the members and corporation respondents cause said products to be transported from their respective places of business in the state of Arkansas to their vendees at their respective points of location in the state of Arkansas and in neighboring states; that said members and corporation respondents are normally in competition with each other in price and otherwise, and with other individuals, partnerships, and corporations also engaged in the purchase of like products from manufacturers and producers as aforesaid, and in the resale thereof in the territory served by said respondent association; that the respondents in said proceedings designate the channel of distribution commencing with the manufacturer or producer, flowing thence to the wholesaler, from the wholesaler to the retailer, and from the retailer to the consuming public, as the only regular and legitimate channel of distribution. Channels of distribution originating with the manufacturer or producer which do not flow through the wholesale dealer, but go direct to the consumer, or to a dealer doing both a wholesale and retail business, or direct to retail dealers, and especially to co-operative purchasing enterprises of retail dealers, are by said respondents designated as irregular and illegitimate channels of trade, and such dealers acquiring goods through so-called illegitimate channels are by respondents designated as irregular or illegitimate dealers. The complaint further charges that for more than three years, then last past, the respondents named therein have united in a common course of action and have co-operated and confederated together and with others to confine the distribution of groceries and allied products to the aforesaid so-called regular and legitimate channels of trade, to prevent so-called irregular and illegitimate dealers from obtaining groceries and allied products from manufacturers and producers thereof, and thereby to suppress competition and especially competition in price therein, in the territory which they serve.

In furtherance of this program it is charged that said respondents frequently hold general and special meetings for the interchange of information concerning and the discussion and adoption of plans and measures for the carrying out of their said undertaking; also by distributing and disseminating among respondents, the members of said respondent association, and others, bulletins published by respondent association containing names and lists of names of manufacturers and producers selling to so-called irregular dealers, and by correspondence and reports between the association and the members and between the members amongst themselves, all the members are informed of instances of the sale by manufacturers and producers of aforesaid products to so-called irregular dealers, and thereupon respondents bring pressure to bear upon such manufacturers and producers to cease dealing with such vendees, and by persuasion, intimidation, threats of boycott, and by boycott, attempt to and do coerce such manufacturers and producers to refrain from supplying such dealers with goods; that said respondents use other co-operative and individual means to carry out and make effective their aforesaid undertaking. It is further charged that said acts and things substantially lessen, hinder, and suppress competition in the sale and distribution of groceries and allied products in the territory served by respondents, obstruct the natural flow of commerce in the channels of interstate trade, and deny the dealers in and consumers of said commodities in the aforesaid territories advantages in price and otherwise which they would obtain from the natural flow of commerce in said commodities under conditions of free and unobstructed competition, all resulting in restraint of trade and to the prejudice of the public, of respondents' competitors and of manufacturers, producers, and dealers not complying with and adhering to the aforesaid plan and limitation of trade, and constituting unfair methods of competition in commerce within the meaning of the Federal Trade Commission Act (Comp. St. §§ 8836a-8836k).

The record is long and tends to support the charges made in the complaint. As alleged therein the secretary of the respondent association sent out frequent bulletins to the membership, strongly urging them to refrain from trading with manufacturers and producers who sold directly to retailers, brokers, or consumers. A few quotations from these bulletins will serve to illustrate their character and objective. That of January 9, 1922, contains the following:

"We hope that all wholesale grocers will look over their list of manufacturers from whom they buy and see the ones that are selling the chain stores at the same price that they are selling the wholesale grocers. When you buy from them, you give them the club that they are pounding you with and the club that they pound the retailers with."

One of December 27, 1921, reads:

"Resolved, that as far as possible, we will give our orders for merchandise to those manufacturers who sell to the wholesale trade exclusively."

And, again:

"Be loyal to those who are loyal to you. You can reduce to a minimum the articles carried for those manufacturers who are giving the `double cross' to the wholesale grocers. You know who those manufacturers are. We don't have to make a list of them. Just go through your stock, make a list for your own information, then see if you can't cut those lines out that are featured by the manufacturer who is not dealing on the level with the wholesale grocers.

"Now is the time and now the opportunity to clean all such articles out of stock and now is the time to favor the goods which `pay their fare' and to favor those manufacturers who favor you. * * * The trade is united; it is on the defensive; courageous action is the need of the hour."

A certain trade journal, known as "Duncan's Trade Register," on the cover of its issue of November, 1921, announced its purpose to publish a list of "undesirables," and in the course of its notice said:

"What the retailer needs is a list of concerns placing chain stores on the jobbers' list. * * * Compel them to distribute through the chain stores."

The cover then gave as a sample of the list later to be published a number of prominent manufacturers and producers. The secretary of the respondent association, on November 3, 1921, issued a bulletin containing the following:

"The List of Undesirables.

"The above is the title of an article on the front page of Duncan's Trade Register, November, 1921. If you do not take this splendid magazine, it will pay you to subscribe. In his January edition he will give you a complete list of `undesirables.' That is what he terms the manufacturers who are selling the chain stores at the prices they sell the wholesaler. In this article he gives a few of them. He says that the list given is just a sample, and that the complete list will be ready for distribution January 1st. The price is $3, including yearly subscription to Duncan's Trade Register. `Don't you think the list worth the money, and then you get this fine magazine for a year? Address, Portland, Oregon.'"

In the February issue of Duncan's Trade Register, under the heading "List of Undesirables and Malefactors of Great Wealth" appeared a list of corporations, manufacturers, and producers concerning which that magazine gave the following advice:

"Boycott them? Why certainly. Trade Register makes no reservation in advising the boycott and ostracism. They are criminals without the law, a menace to commerce, society, and the peace of the world. Boycott them by all means, fair or foul. * * * Don't buy their goods, use their goods, or miss a chance to advise your friends to give like treatment."

In the bulletin of February 8, 1922, the secretary of the respondent association makes the following comment:

"Duncan's Trade Register for February. Have you received your copy? Well, ours has arrived. It is a real `hot one.' Mr. Duncan is one of those fearless writers, who call an ace an ace and a spade a...