Black v. Magnolia Liquor Company
| Decision Date | 12 November 1957 |
| Docket Number | No. 14,14 |
| Citation | 2 L.Ed.2d 5,78 S.Ct. 106,355 U.S. 24 |
| Parties | Joseph F. BLACK, Assistant Regional Commissioner, Alcohol and Tobacco Tax Division (Dallas Region), Internal Revenue Service, Petitioner, v. MAGNOLIA LIQUOR COMPANY, Inc., |
| Court | U.S. Supreme Court |
Mr. Daniel M. Friedman, Washington, D.C., for petitioner.
Mr. Moise S. Steeg, Jr., New Orleans, La., for respondent.
Petitioner seeks to suspend respondent's wholesale liquor permit issued under the Federal Alcohol Administration Act (49 Stat. 977, 27 U.S.C. § 201, 27 U.S.C.A. § 201 et seq.) for having made 'quota' sales of alcoholic beverages in violation of § 5(a) and (b) of the Act. The agency ordered suspension of the permit for 15 days for that violation. The Court of Appeals set the order aside, 5 Cir., 231 F.2d 941. The case is here on a petition for a writ of certiorari, which we granted (352 U.S. 877, 77 S.Ct. 103, 1 L.Ed.2d 79) because of a conflict between the decision below and Distilled Brands, Inc., v. Dunigan, 222 F.2d 867, from the Second Circuit.
Section 5 makes it unlawful for a wholesaler to induce a retailer to purchase distilled spirits 'to the exclusion in whole or in part of distilled spirits' offered by other persons 'by requiring the retailer to take and dispose of a certain quota of any of such products,' where, inter alia, the effect is 'substantially to restrain or prevent transactions in interstate or foreign commerce in any such products.'
The facts are that during the period in question Johnny Walker Scotch and Seagram's V. O. Whiskey were in short supply, while Seagram's Ancient Bottle Gin and Seagram's 7-Crown Whiskey were plentiful, Ancient Bottle being a poor seller. Respondent, in order to increase its sales of Ancient Bottle Gin and 7-Crown Whiskey, compelled retailers to buy them, which they did not desire, in order to obtain the other two whiskeys which they did desire. The agency found that respondent's sales were 'quota' sales within the meaning of the Act, that they affected adversely the sales of competing brands, and 'excluded, in whole or in part, distilled spirits * * * offered for sale by other persons in interstate commerce'—all to the end of substantially restraining and preventing commerce. The Court of Appeals concluded that the transactions complained of, although tie-in sales, did not violate § 5 of the Act.
Tying agreements by which the sale of one commodity is conditioned on the purchase of another have been repeatedly condemned under the antitrust laws, since they serve no purpose beyond the suppression of competition. Standard Oil Co. of California and Standard Stations v. United States, 337 U.S. 293, 305—306, 69 S.Ct. 1051, 1058, 93 L.Ed. 1371; United States v. Paramount Pictures, 334 U.S. 131, 156—159, 68 S.Ct. 915, 928—929, 92 L.Ed. 1260; International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20; Mercoid Corp. v. Minneapolis Honeywell Regulator Co., 320 U.S. 680, 64 S.Ct. 278, 88 L.Ed. 396. One aim of Congress by the present legislation was to prohibit practices that were 'analogous to those prohibited by the antitrust laws,' (see H.R.Rep No. 1542, 74th Cong., 1st Sess., p. 12). The tie-in sales involved here seem to us to run afoul of that policy, since the retailer is coerced into buying distilled spirits he would otherwise not have purchased at that time, and other sellers of the products are to that extent excluded from the market that would exist when the demand arose. A wholesaler who compels a retailer to buy an unwanted inventory as a condition to acquisition of needed articles exacts a 'quota' from the retailer and excludes...
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