A. E. Staley Mfg. Co. v. Federal Trade Commission

EVANS, Circuit Judge

(dissenting).

I agree with the majority opinion when it states that the evidence supports the Commission’s finding that the basing-point system as practiced by the A. E. Staley Manufacturing Company was discriminatory and worked to substantially lessen competition and tended to create a monopoly. Such a finding, supported by substantial evidence, necessitates our accepting it as a verity.

I can not follow the majority opinion, however, when it holds that the case made out by the Commission was rebutted by the petitioners. We part over the effect of petitioners’ effort to bring themselves within the exception found in Subsection (a) of Section 2 of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C.A. § 13(a). That section condemns and makes unlawful discriminations in prices which “may be substantially to lessen competition or tend to create a monopoly in any line of commerce.”

The Commission having made a finding supported by substantial evidence and approved by this court that such practice was indulged in, there would be nothing left to this case, were it not for subsection (b) of the same section 13, which places upon the party practicing discrimination the burden of affirmatively showing justification.

The language of the statute, as amended, is, — “Nothing contained in sections 12, 13, 14 — 21, 22-27 of this title shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price * * * was made in good faith to meet an equally low price of a competitor He * * ”

In an effort to determine whether petitioners have established the justification permitted by the statute, it is worthy of note,

First, that such justification is limited to cases where the seller is attempting to justify “his lower price.” In the instant case there is no attempt to show Staley was trying to justify a lower price. The most that the evidence shows is that Staley attempted to enter the field by complying with the existing basing-point practice. In short, Staley did not want “to stir up the animals” by starting a price war. He accepted the status quo, — a status quo which followed a practice which “substantially lessened competition and tended to create a monopoly,” and which was, no doubt, satisfactory to one about to enter the field. But the satisfaction was not over the fact that it was to be permitted to “lower prices,” but over the fact that said practice tended to lessen competition.

I can find nothing that would justify the conclusion that Staley indulged in its practice to justify a lower price.

Second. Likewise, worthy of note is the requirement of the statutory justification that the seller’s “lower price” was to meet an “equally low price” of a competitor. There is nothing to show that the practice was adopted to meet “an equally low price” of a competitor.

If Staley’s practice were limited to sales in Chicago, there could be a conceivable case of competition and a price fixing by Staley to meet the competition of Corn Products Company. But there is no showing that Com Products Company was maintaining a low price. Nor could it be.said that the adoption of the basing-point system resulted in either a lower price for the seller or “a low price” of the competitor.

There might be, in my opinion, some justification for saying that Staley adopted the price fixed by the competitors and the competitors’ basing-point system in order to prevent a competitive war in the industry which it was about to enter. It continued to maintain that price, not because it was a “lower price” but because the system was profitable and therefore satisfactory to those engaged therein.

Third. Nor can I believe that good faith, as that term is used in the statute, would ever apply to, or justify, a practice by a seller which- produced a discrimination of such character as to substantially lessen competition and tend to create a monopoly as here found.

Good faith can not be ascribed to a seller who adds a freight charge to the selling price when there was no freight charge. It is utterly inconceivable that Staley could charge a customer a price which included a freight item from Chicago to Decatur, when no shipment was ever made by Staley, and delivery was to a customer in Decatur, where Staley’s plant is located, and then assert that said practice was to justify a lower price and to meet the equally low price of a (Chicago) competitor.

We are here dealing with an attempted legal justification of a practice which substantially lessened competition and tended to create a monopoly. The only justification which the law permits is limited to the instance where the seller lowered its price to meet an equally low price of a competitor. Staley failed to bring itself within the protection of the statute in three respects : (a) Its action was not to justify its “lower price.” (b) Its acceptance of the practice was not “to meet an equally low price of a competitor.” (c) It was not, and could not be, made “in good faith” when the result of it was to “substantially lessen competition and tended to create a monopoly.”

In the concurring-dissenting opinion of Judge MAJOR, it is said, “I agree that the strict literal language of Section 2(a) makes it appear that the system has been proscribed, but at the same time I am even more certain that it was not the intention or purpose of Congress so to do.” In other words, Congress did not mean what it said. The court does not like the language of the statute as written so rewrites it.

With one part of the above-quoted sentence, to-wit, “the strict literal language of Section 2 (a) makes it appear that the system has been proscribed,” I agree. We are, in other words, in accord on the proposition that the plus freight charge system is included in that which is proscribed.

What I can not agree to is that while Congress said so, it did not mean or intend what it said. Nor could I agree that if I were convinced that Congress did not intend what it said, courts could justifiably rewrite a statute to say what the courts believed Congress intended to say. If we were to so construe statutes, the courts, rather than the Congress would become the law making body.

Courts can and do go far in seeking intent, when the language used is ambiguous or uncertain and there is doubt as to the meaning of words. Courts then study the purpose of the legislation. In the case before us, there is no ambiguity nor uncertainty. And, instead of construing the language to carry out the intent of Congress to prevent unfair trade practices the proposed construction would tie the hands of the F. T. C. and prevent it from performing its duty to keep open all the lanes of commerce to all who wish to use them. It would defeat, or at least handicap, the F. T. C.’s effort to protect the public against practices which the Commission has found (and we approve the finding) “substantially lessened competition” and tended “to create a monopoly.”

The purpose of the legislation embodied in the Clayton Act, as amended by the Robinson-Patman Act, is now so clear and obvious that debate or discussion is idle. We are dealing with unfair trade practices. Such condemned practices include those which result in “substantially lessening competition” or which “tend to create a monopoly.” Unfair trade methods also include other bad practices, like misrepresentation of quality of goods, false and misleading advertisement, and fraudulent practices in general. In a word, the Act was passed to protect the public against the practices which the avaricious might inflict on an innocent or gullible public. The legislation did not define all the specific kinds of commerce which were subject to its provision. It used all inclusive language. The only limitation is that the commerce must be interstate.

As in the recently decided case of United States v. South-Eastern Underwriters Ass’n, 64 S.Ct. 1162, the question is one where Congress has spoken and courts are asked to make an exception to the inclusion of its broad language where no such exception appears in the statute.

In United States v. South-Eastern Underwriters Ass’n, 64 S.Ct. 1162, the Justices agreed that insurance business was commerce. Division in the Court occurred over whether that phase of commerce represented by insurance was excepted from the inclusive language of the Sherman AntiTrust Act, 15 U.S.C.A. §§ 1-7, 15 note. The Court held that the Act covered all commerce and therefore commerce represented by insurance could not be exempted.

In the case before us, we have even stronger reason for concluding that the Congressional Act did not except the practice here under consideration. In the instant case, petitioners must bring themselves within the language of the exception. The fact that one exception is stated in the Act excludes all other exceptions. We are not justified in adding other instances as exceptions. To come within this single exception, petitioners must show that their practices, which tended to lessen competition and to create a monopoly, were justified because they met an unusual situation, — in other words, that it was necessary to lower prices — in good faith, — to meet equally low prices of a competitor. There is no other exception. Either petitioners come within this exception, or they fail in their defense.

To even contend that such was the justification of the practice in question, strikes me as bordering on the absurd. No lower price by either party was contemplated. Good faith, a term often stretched to the breaking point, has never before been held to sustain a practice which lessened competition and tended to create a monopoly. “Good faith” — a term for the hard-pressed wrongdoer to conjure with, a term which protects the innocent from the consequences of his mistake, also a term behind which the insincere attempt to hide— would be given a false application if it covered the act of those seeking to monopolize an industry. Faced by many a decision, one of which was recently announced by this court (Eugene Dietzgen Co. v. Federal Trade Commission, 7 Cir., 142 F.2d 321), we must hold that action which lessens competition or tends to create a monopoly is unfair within the meaning of the Federal Trade Commission Act, 15 U.S.C. A. § 41 et seq., and good faith, as that term is used in the above-quoted exception found in the Robinson-Patman Act, cannot be ascribed to those who indulge in such practice. Such a construction would run counter to the Sherman Anti-Trust Act, the Clayton Act, and the Federal Trade Commission Act. We cannot justifiably hold that by implication the Robinson-Patman Act repealed or changed this Congressional policy so long established. If the change is to be ’ made, Congress, not the courts, must do it.

The order of the Commission should be .affirmed and enforced.