Untitled Texas Attorney General Opinion

Honorable Enrigue.H. Pena Opinion No. M-412
County Attorney
Room 201 Re: Does the formation of
city-County Building non-profit food
El Pasol. Texas 79901 cooperatives violate
the Texas antitrust laws?
Dear Mr. Pena:
you have requested our.opinion.on the following question,
to-wit:
"Does the formation of an unincorporated
non-profit f00a purchasing cooperative violate
the: Texasantitrust law?"
The facts,.as set out.in.your recent letter, are as follows:
A group of:ultimate..consumers formed.an association for
the purposes of Ipurchasing foodfrom.wholesale grocery out-
lets and redistributing.,such.food to its membership. Member-
ship in the association requires the..payment of dues and
such.memberships are-opento the..general..public. Members
of the..assocfation~are not~..reguired~.to.:purchase
exclusively
through, the,,association.
For the purposes.of thisopinion, the Texas antitrust
laws may:be diuided..into three..categories, namely, "monopolies,"
as defined in SectfonlS.01; "trusts," in Section 15.02; and
"conspiracies," in Sectionl5.03,,Business and Commerce Code.
Section 15.01 Vernon's Civil Statutes, Business and
Commerce Code; limitsa "monopoly" to a combination or con-
solidation~of.two or more.corporations under circumstances
set out in that~ statute. As set out in your request, the
food cooperatives in question are not incorporated, and
therefore Section 15.01 is inapplicable.
Section 15.02 defines.a."trust",as being a combination
of capital,.skill, oracts by two ormore persons, established
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Hon. ENique H. Pena, page 2 w-412)
for the following purposes:
II . . .
"(b) A.'trust' is a combination of capital,
skill, or acts by two or more persons to
(1) restrict, or tend to.restrict, trade,
commerce, aids to comerce, the pre-
paration of tangible personal property
for market or transportation, or the
free pursuit of a lawful business;
or
(2) fix, maintain, increase, or reduce the
price of tangible personal property,
the cost of insurance, or the cost
of preparing tangible personal pro-
perty for market or transportation
or
(3)~prevent.or lessen competition in
(A) the manufacture, transportation,
sale, or purchase.of tangible.
personal.property;
(B) the business of insurance;
(C) aias:to oommerce; or
(D) preparing.tangible personal.property
for marketortranspoztation; or
(I),~affect; control,~or establish the price
of tangible personal property, or the
cost of.transportatioh, insurance, or
preparing.tangible,personal property
for .market or.transportation; or
(5) agree
(A) not to sell, aispose of, transport,
or prepare tangible personal property
for market or transportation, or
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Eon. Enrique H..Pena, page 3 (~-43.3)
not to make an insurance contract,
at a price below a common standard
or figure;
(B) to rxintain the price of tangible
personal property, the charge for
transportation or insurance, or the
cost of preparing tangible personal
property for market.or transportation
at a fixed or graded figure;
(Cl to affect or maintain the price of
tangible Personal property or the
cost of transportation, insurance,
or Preparing.tangible.personal
property for market or transportation
in order to preclude free competition
between.or among themselves or others
in the sale or transportation of
tangible"~personal~.property, in the
busLuess of transportation or in-
surauce, or in preparing tang+ble
personal property formarket or
tranqortation: or
(D) to pool, combine, or unite an interest
theY have in the sale or purchase of
tangible personal property, or in the
charge for transportation, insurance,
or preparing tangible,personal property
for market or transportation so that
the Price of the tangible personal
PrcG=tYr or charge for transporta-
tion, insurance, or preparing tangible
personal property for market or trans-
portation, might be in any manner
affected; or
(6) regulate, fix, or 1imi.t~the output of
.tangible Personal property, or the
amount of insurance.undertaken, or
the amcurt of work performed in pre-
paring tangible personal property for
market or transportation; or
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Hon. ENique H. Pena, page 4 (M-412)
(7) refrain from engaging in business, or
from buying or selling tangible per-
sonal property for market or trans-
portation; or"
After a careful' examination of the cases interpreting
Section 15.02, and prior Article 7426, Vernon's Civil Sta-
tutes, which also defined a trust, we fail to find any
situation in which this statute has been applied to an
agreement or contract.between.ultimate consumers. Inherent
in a typical antitrust arrangement is its.ultimate.purpose;
to raise or maintain consumer prices at non-competitive
levels. A cooperative formed.by ultimate consumers to gain
the advantage of volume purchasing, has the reverse effect;
that of fostering.price competition.
Texas courts.on'many occasions.have determined that an
unlawful combination exists,.only when there..is a union or
association of parties,.which.might have been otherwise in-
dependent and competing, for the accomplishment of one or
more of the-proscribed purposes set outin Section 15.02
and Article.7426.. Gates v. Hooper, 90 Tex. ~563, 39 S.W. 1079,
1080, (1897); Padgitt v. Lone Star Gas Co., 213 S.W.Zd 133,
(Tex.Civ.App. 1948);..State v. Fairbanks-Morse,~& Co., 246 S.W.2d
647,.(Tex.Civ.App.l951). The facts, as set out m your
opinion.request, do not'ref1ect.a union or association of
competitors; hence,.Section.l5.02 is inapplicable to the
situation at.hand.
Section:15.03.i.s also.inapplicable.to the facts as set
out in your opinion request. There is no exclusive dealing
arrangement between the membership and the association, and
the members of~such associations are free to~purchase food
wherever they choose.
SUMMARY
An association of ultimate consumers,
formed for the purpose of,purchasing food
products from wholesale grocery,outlets
and for the further purpose of redistributing
such food products to its membership, is
not in violation of the,Texas antitrust
statutes, Sections 15.01, 15.02, and 15.03, V.C.S.,
the Business and.Commerce Code. This opinion
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EIon..~ENique 8, Pena; page 5 (M-412)
is limited:to.the.question.of .the forma-
tion of .ultimate consumer cooperatives
and is in no'wsy intended -as an interpre-
tati.on.of the possible future acts of such
cooperatives.
Prepared by Thomas W. Mack
Assistsnt.Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
George Kelton, Vice-Chairman
Charles Parrett
Bill Craig
Louis .Neunann
Houghton .BzownLee
W. V. Geppert
Staff Legal Assistant
Hawthorne Phillips
Executive Assistant
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