Whitaker Cable Corporation v. Federal Trade Com'n
| Decision Date | 08 January 1957 |
| Docket Number | No. 11494.,11494. |
| Citation | 239 F.2d 253 |
| Parties | WHITAKER CABLE CORPORATION, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Edwin S. D. Butterfield, Chicago, Ill., for petitioner.
Robert B. Dawkins, Asst. Gen. Counsel, James E. Corkey, Atty., Federal Trade Commission, Washington, D. C., Earl W. Kintner, Gen. Counsel, Washington, D. C., for respondent.
Before FINNEGAN, SWAIM and SCHNACKENBERG, Circuit Judges.
Petitioner seeks to set aside a cease and desist order entered by the Federal Trade Commission at the conclusion of proceedings on a complaint charging it with violation of Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C.A. § 13. The complaint, issued on December 20, 1949, charged that petitioner, Whitaker Cable Corporation, had violated and was violating Section 2(a), as amended, by "* * directly or indirectly discriminating in price between * * * different purchasers of its * * * automotive products and supplies of like grade and quality * * * by selling said products and supplies at higher and less favorable prices to numerous small businessmen purchasers than said products and supplies were sold to various larger purchasers generally competitively engaged * * * with said less favored purchasers."
Petitioner is engaged in the manufacture of automotive cable and related parts for the replacement parts market. It sells its products on a nationwide basis to automotive jobbers and to oil and tire companies under the Whitaker brand name and under various private brand names. It is undisputed that petitioner sold its products to such jobbers and oil and tire companies at substantially different net prices. These variations in net price resulted primarily from the application of a rebate schedule based on the total annual volume of purchases made, although certain of petitioner's accounts were charged on the basis of a price schedule reached through private negotiations. Petitioner made no effort to demonstrate any cost justification for its pricing practices, nor did it show that the price discriminations were made in good faith to meet equally low prices of competitors.
Petitioner attacks the order on the grounds that there was insufficient evidence to justify the Commission's finding of probable injury to competition and that it was not accorded a fair hearing.
Petitioner urges that the finding of probable injury to competition cannot be sustained because: (1) the Commission failed to prove injury in fact; (2) direct testimony by some of petitioner's purchasers that they had not lost sales because of petitioner's pricing policies negated a finding of probable injury; (3) petitioner's pricing policies followed custom and trade practice; and (4) petitioner's sales did not exceed one per cent of the products directly competitive with its own sold in the national market.
The Act, in part, prohibits a seller from discriminating "* * * in price between different purchasers of commodities of like grade and quality * * where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly * * or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *." 15 U.S.C.A. § 13(a). In Corn Products Refining Co. v. Federal Trade Commission, 324 U.S. 726, at page 738, 65 S.Ct. 961, at page 967, 89 L.Ed. 1320, the court stated:
See also Federal Trade Commission v. Morton Salt Co., 334 U.S. 37, 46, 68 S. Ct. 822, 92 L.Ed. 1196; National Lead Co. v. Federal Trade Commission, 7 Cir., 227 F.2d 825, 835.
This is not to say, however, that the Commission may never lose its case by failing to introduce evidence of injury in fact. In view of the statutory language of Section 2(a) and the well settled construction thereof that Section 2 (a) does not require a finding that the discriminations in price have in fact had an adverse effect on competition, we take petitioner's contention in this regard as one that, on the facts of this case and particularly in light of the direct testimony by some of petitioner's purchasers that they had not lost sales because of petitioner's pricing policies, the Commission was not justified in disregarding this direct evidence and basing its finding of probable injury on inference. Petitioner finds support for this argument in Commissioner Mason's dissent in this case — the rationale of which is set forth in his dissenting opinion in Matter of Moog Industries, Inc., Docket 5723, affirmed Moog Industries, Inc., v. Federal Trade Commission, 8 Cir., 238 F.2d 43. The rationale of his disagreement with the majority opinion in the Moog case is that if there is no direct evidence on the question of injury, inference may fill the "empty spaces." But the spaces had best be empty of direct facts before inference is permissible.
Without questioning the soundness of this observation, see United States v. United States Gypsum Co., D.C., 67 F. Supp. 397, 450, reversed on other grounds 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746, we shall pass to a consideration of the evidence before the Commission.
The record shows price discriminations of considerable magnitude — ranging as high as 30 per cent in net buying price; that petitioner's purchasers sold in a market where competition was keen; that these purchasers operated on small profit margins; that many of the purchasers found it expedient to enter into group buying arrangements for the purpose of aggregating their purchases and thus obtaining higher volume discounts than they would otherwise receive on their individual volume of purchases.
On the basis of these facts the Commission found what would appear to be obvious — that the competitive opportunities of certain purchasers were injured when they had to pay petitioner substantially more for petitioner's products than their competitors had to pay. Further, the inferences drawn by the Commission from these facts are not inconsistent with the evidence adduced by petitioner. The sum and substance of the testimony by petitioner's purchasers was that they had not lost sales as a result of price cutting by their competitors in petitioner's products. Whatever the inherent force of this testimony might otherwise be, it was dissipated by the fact that petitioner's suggested resale prices were...
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