Sugar Institute v. United States
| Decision Date | 30 March 1936 |
| Docket Number | No. 268,268 |
| Citation | 56 S.Ct. 629,80 L.Ed. 859,297 U.S. 553 |
| Parties | SUGAR INSTITUTE, Inc., et al. v. UNITED STATES |
| Court | U.S. Supreme Court |
Appeal from the District Court of the United States for the Southern District of New York.
[Argument of Counsel from pages 553-555 intentionally omitted] Mr. John C. Higgins, of New York, City, for appellants.
[Argument of Counsel from pages 555-563 intentionally omitted]
Messrs. Homer S. Cummings, Atty. Gen., Angus D. MacLean, of Raleigh, N.C., and Walter L. Rice, of New York City, for appellee.
[Argument of Counsel from pages 563-570 intentionally omitted]
This suit was brought to dissolve the Sugar Institute, Inc., a trade association, and to restrain the sugar refining companies which composed it, and the individual defendants, from engaging in an alleged conspiracy in re-
straint of interstate and foreign commerce in violation of the Sherman Anti-Trust Act, 15 U.S.C. § 1 (15 U.S.C.A. § 1). Final decree was entered which, while it did not dissolve the Institute, permanently enjoined the defendants from engaging directly or indirectly in forty-five stated activities. Defendants bring a direct appeal to this court under the Act of February 11, 1903, 15 U.S.C. § 29 (15 U.S.C.A. § 29).
The record is unusually voluminous.1 The court rendered an exhaustive opinion and made detailed findings of fact (218 in number) with conclusions of law, describing and characterizing the transactions involved. Numerous assignments of error broadly challenge its rulings and the case has been presented here in extended oral arguments and elaborate briefs. We shall attempt to deal only with the salient and controlling points of the controversy. These involve (1) the special characteristics of the sugar industry and the practices which obtained before the organization of the Sugar Institute, (2) the purposes for which the Institute was founded, (3) the agreement and practices of the members of the Institute, and (4) the application of the Anti-Trust And and the provisions of the decree.
First. The sugar industry and practices prior to the formation of the Sugar Institute.—Domestic refined sugar, best sugar, and foreign and insular refined sugar, known in the trade as 'off-shore' refined, constitute about 99 per cent. of the nation's supply. The remainder, consisting of domestic cane sugar, refined particularly in Louisiana, does not appear to be an important factor in the national markets. The fifteen defendant companies, members of the Institute, refine practically all the im-
ported raw sugar processed in this country. Their product is known as 'domestic refined.' Prior to the organization of the Institute in 1927, they provided more than 80 per cent. of the sugar consumed in the United States, and they have since supplied from 70 to 80 per cent. Their proportion of the supply is even greater in the New England and Middle Atlantic States, being more than 90 per cent., while in all but a few states their share is more than 55 per cent. Each of the refiners is engaged extensively in interstate commerce. Their refineries are in the vicinity of Boston, New York, Philadelphia, Baltimore, Savannah, New Orleans, Galveston, and San Francisco. The raw cane sugar which they use is imported principally from Cuba and to some extent from the insular possessions.
Beet sugar for many years has been an important factor in the domestic market. It is produced and sold chiefly in the middle and far West, providing in some states over 75 per cent. of the supply, and it competes with other sugars in a number of Southern and Middle Atlantic States. Off-shore sugar is refined principally in Cuba and to some extent in the insular possessions. Its important trade areas have been the Middle, Atlantic, and Southern States; in some states it constitutes from 25 to 40 per cent. of the total supply. Both beet sugar and off-shore sugar are sold at a small differential below defendants' sugar. The trial court found that there was no agreement between defendants and the beet sugar manufacturers, or with the off-shore interests, to maintain any differential.
The court found that the defendants' refined can sugar 'is a thoroughly standardized commodity in physical and chemical properties.' In exceptional cases and localities, certain of the defendants had built up a preference for brand names 'sufficient before and after the Institute was organized to enable such brands to command a higher
price than the sugar of the other defendants in sales from sugar dealers to their trade.' In sales by refiners to manufacturers of products containing sugar—about one-third of the sugar consumed 'price, not brand, was always the vital consideration.' And in the other sales, 'one refiner could not ordinarily, by virtue of preference for his brand, obtain a higher price except insofar as another refiner might be giving a lower price by secret concessions.'
The court further found that the 'basis prices,'2 quoted by the several refiners in any particular trade area, 'were generally uniform both before and after the Institute, because economically the defendants' sugar, save for exceptional instances was and is a thoroughly standardized product.'
It is a fundamental and earnest contention of defendants that the occasion for the formation of the Institute was the existence of grossly unfair and uneconomical practices in the trade, and that a proper appraisal of the motives and transactions of defendants cannot be made without full appreciation of the sorry condition into which the industry had fallen.
During the years 1917 to 1919, when the industry was under governmental control, prices were fixed and all forms of concessions and rebates were forbidden. The court found that, perhaps as early as 1921 and increasingly thereafter, the practice developed on the part of some, but not all, refiners of giving secret concessions. There were five refiners3 who never indulged in that prac-
tice, but the others, called 'unethical' refiners, did so to such an extent that at least 30 per cent. of all the sugar sold by the refiners in 1927 carried secret concessions of some kind. The need of secrecy was urgent, for as soon as it was known that a specific concession was granted it would be generally demanded. That concessions were widely granted was generally known in the trade, and while each refiner was able to find out in a general way the approximate prices and terms of his competitors, it was impossible to know with any degree of accuracy the actual prices and terms granted in the innumerable transactions. The court also found that various causes contributed to the development of these selling methods on the part of the unethical refiners, chief among which was an overcapacity since the war of at least 50 per cent. Other probable causes were the lack of statistical information as to amount of production, deliveries and stocks on hand, leading to overproduction, the uncertainties prevailing in the market for raw sugar which made the refined sugar industry highly speculative, the fact that, since 1922, most sugar has been sold through brokers, and the standardization of defendants' products which made their sales almost entirely dependent upon prices, terms, and conditions. The concessions granted were largely, although not entirely, arbitrary. They were given principally to large buyers, but no system was followed in that respect. Even though there may not have been extensive resort to misrepresentations, 'defendants entertained genuine fears that purchasers were falsely representing prices which they said they could procure from competing sellers.'
Consumption of sugar in the United States decreased in 1927. The public 'slimness c mpaign' of that year had substantial effect in discouraging the use of sugar. Certain distributors refrained from pushing sales because they could not sell profitably, but others were aggressive
and sugar was generally available. While certain smaller distributors suffered because of the advantage enjoyed by some larger ones, that advantage was attributable in the greatest measure to efficiency, and the larger distributors did not obtain monopolies. The court found that there was 'no substantial evidence that the situation caused, or would cause, substantial injury to the 'ethical' refiners as a class,' although they may have been inconvenienced and probably believed that the sales methods of their competitors were harmful. The declining profits for the year 1927 were attributable at least in large part, the court found, to causes other than the secret concession system, such as the 'slimness campaign,' overproduction, and dumping.
But whatever question there may be as to particulars, the evidence and findings leave no doubt that the industry was in a demoralized state which called for remedial measures. The court summed up the facts in the following finding:
Second. The purposes for which the Institute was founded. Defendants emphasize the nature of the proceedings taken in the formation of the Institute. The
court found that the refiners held a series of meetings, beginning in the summer of 1927, for a discussion of conditions 'with particular...
To continue reading
Request your trial
-
In re Mid-Atlantic Toyota Antitrust Litigation
...respect to the published prices, on the other." Catalano, 446 U.S. at 649-50, 100 S.Ct. at 1929. Cf. Sugar Institute v. United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859 (1936) (agreement to adhere to previously announced prices held unlawful). In dicta, the Plymouth Dealers court spe......
-
United States v. Standard Oil Co.
...the problem. Appalachian Coals, Inc. v. United States, 288 U.S. 344, 374, 53 S.Ct. 471, 77 L.Ed. 825; Sugar Institute v. United States, 297 U.S. 553, 598, 56 S.Ct. 629, 80 L.Ed. 859. Certainly it is not true that the lawfulness of every combination depends upon whether it `reasonably' corre......
-
Paris Adult Theatre v. Slaton 8212 1051
...and 'trading stamps,' commanding what they must and must not publish and announce. See Sugar Institute, Inc. v. United States, 297 U.S. 553, 597—602, 56 S.Ct. 629, 641—644, 80 L.Ed. 859 (1936); Merrick v. N. W. Halsey & Co., 242 U.S. 568, 584—589, 37 S.Ct. 227, 230—232, 61 L.Ed. 498 (1917);......
-
Battipaglia v. New York State Liquor Authority, 1381
...as American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S.Ct. 114, 66 L.Ed. 284 (1921); Sugar Institute v. United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859 (1936), and United States v. Container Corp., 393 U.S. 333, 89 S.Ct. 510, 21 L.Ed.2d 526 (1969). An identical argumen......
-
Horizontal Restraints
...controlling 90 percent of the market was sufficient concentration to support information-exchange claim); Sugar Inst. v. United States, 297 U.S. 553, 572 (1936) (information-exchange violation involving 15 companies holding 70-80 percent of the market); Todd , 275 F.3d at 199 (finding 14 co......
-
Analysis of Trade and Professional Association Horizontal Restraints Under Section 1 of the Sherman Act
...683, 720@21 (1948) (agreement to use multiple basing point pricing system violated § 5 of the FTC Act). 45. Sugar Inst. v. United States, 297 U.S. 553, 601 (1936). 46. Premier Elec. Constr. Co. v. Nat’l Elec. Contractors Ass’n, 814 F.2d 358, 370@71 (7th Cir. 1987). 47. Gasoline Retailers As......
-
COVERING PRYING EYES WITH AN INVISIBLE HAND: PRIVACY, ANTITRUST, AND THE NEW BRANDEIS MOVEMENT.
...405 U.S. 596, 610 (1972) (comparing the Sherman Act to "the Magna Carta" and "the Bill of Rights"); Sugar Inst., Inc. v. United States, 297 U.S. 553, 600 (1936) ("We have said that the Sherman Anti-trust Act... has a generality and adaptability comparable to that found to be desirable in co......
-
Settling competition concerns
...In re Electr. Books Antitrust Litig., 14 F. Supp. 3d 525 (S.D.N.Y. 2014) (all claims). 14. See, e.g. , Sugar Inst. v. United States, 297 U.S. 553, 600 (1936) (“[T]he Sherman Anti-Trust Act, as a charter of freedom, has a generality and adaptability comparable to that found to be desirable i......