JW Kobi Co. v. Federal Trade Commission
| Decision Date | 12 December 1927 |
| Docket Number | No. 40.,40. |
| Parties | J. W. KOBI CO. v. FEDERAL TRADE COMMISSION. |
| Court | U.S. Court of Appeals — Second Circuit |
Joseph A. Burdeau, of New York City (Daniel N. Dougherty, of San Francisco, Cal., George F. Scull, of New York City, and Chadwick, McMicken, Ramsey & Rupp, of Seattle, Wash., of counsel), for petitioner.
Bayard T. Hainer, Chief Counsel, Adrien F. Busick, Asst. Chief Counsel, and James T. Clark, all of Washington, D. C., for respondent.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.
The order entered by the Federal Trade Commission directs the petitioner to cease and desist from carrying into effect or attempting to carry into effect its policy of securing the maintenance of resale prices for its products by cooperative methods, in which it and its distributors, customers, and agents undertook to prevent sales of its products for less than such prices by (a) seeking or securing or entering into contracts, agreements, or understandings with customers or prospective customers that they will maintain the resale prices designated by it; (b) by soliciting customers to report the names of other customers who failed to observe such resale prices; and (c) by utilizing any equivalent co-operative means of accomplishing the maintenance of such resale prices. The order rests on agreements or understandings and co-operative methods of price fixing. The agreement, or understanding, or co-operative methods might be implied from the course of dealing or other circumstances. Federal Trade Commission v. Beech-Nut Packing Co., 257 U. S. 441, 42 S. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882; Frey & Son v. Cudahy Packing Co., 256 U. S. 208, 41 S. Ct. 451, 65 L. Ed. 892.
This record consists of correspondence of the petitioner with its customers relating to resale price fixing. No customers were called as witnesses, but the petitioner's officers were called, and admitted that in some instances they had inquired from the trade as to price cutting by competitors, and stated that it was their policy not to sell to price cutters when so informed. They also admitted that in some specific instances they had entered into agreements with customers to observe resale prices, and that, when price cutting had been called to their attention, they asked customers to call further instances of price cutting of the kind to their attention. The correspondence between the petitioner and its customers and others brings this case well within the rule that the essential agreement or combination or conspiracy which is a violation of the Clayton Act (38 Stat. 730) might be implied from a course of dealing or other circumstances. United States v. Schrader's Sons, Inc., 252 U. S. 85, 40 S. Ct. 251, 64 L. Ed. 471; Federal Trade Com. v. Beech-Nut Packing Co., supra. The petitioner undoubtedly was endeavoring to control its resale prices, so as to prevent reduced prices. That was its definite purpose. It represented that it did not sell to price cutters, and before it accepted customers it made it plain that its resale prices would have to be observed. In some instances it obtained a tacit agreement to maintain resale prices, and in others it received a promise so to do, and thereupon served the customer his requirements. There are many instances in which it wrote to price-cutting customers a letter of which the one to George Kay is a sample, wherein it said:
And another to the Royal Drug Company:
"We will greatly appreciate your immediate assurance that you agree with our contentions and that you will comply with our request not to list Golden Glint or Golden Glint shampoo at a lower quotation than $2 net."
And, receiving no reply, they again wrote:
Thereafter, when they received an order with assurances that the prices would be maintained, they replied:
"We have your letter of April 7 and thank you for the assurance that you will not cut the resale price of Golden Glint shampoo below $2."
This character of correspondence was repeated to a number of their customers, and warnings were delivered that, if the prices were not maintained, future sales would be withheld. Its insistence that its terms and conditions be met before it accepted customers, and its reference to other customers who were following its policy or requirements, was sufficient to justify the finding of the commission that there were agreements to maintain resale prices. There was sufficient to require the action of the Trade Commission which would forbid the continuance and extension of these practices, which constituted a method to make the petitioner's policy of fixing resale prices that of its customers.
Another objectionable practice consisted of obtaining reports of price cutters from competitors. A letter written by petitioner's sales manager to its president makes reference to a complaint (a) from wholesalers against retail druggists' associations; (b) from hair goods jobbers against each other; and (c) from Brown against anybody and everybody who trespassed on his territory. And in a letter dated January 11, 1923, addressed to one of its customers, it wrote:
And to another customer they wrote on May 15,...
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