FTC v. Beech-Nut Packing Co.

FTC v. Beech-Nut Packing Co.

Opinion

 [*443]   [**151]   [***309]  MR. JUSTICE DAY delivered the opinion of the court.

This case is here upon a writ of certiorari to the United States Circuit Court of Appeals for the Second Circuit, which court set aside an order of the Federal Trade Commission requiring the Beech-Nut Packing Company, a corporation engaged [****5]  in the manufacture and sale of food and other products throughout the United States, to  [*444]  cease and desist from carrying out a plan of resale of its products. ¹ 264 Fed. 885.

The [****6]  Commission condemned the plan as an unfair method of competition within the meaning of § 5 of the Federal Trade Commission Act. (38 Stat. 719).

In the original complaint it was charged that, in order to accomplish the illegal purpose intended, the Beech-Nut Company required its purchasers to agree to maintain or resell such products at standard selling prices, and that, for the purpose of maintaining such standard resale prices and for the purpose of inducing and compelling its customers to maintain and keep such standard prices, the company refused to sell its products to customers and dealers who whould not agree to maintain such specified standard resale prices, and who did resell such products at the specified standard selling prices fixed and determined by the company. By stipulation before trial the complaint was amended so as to charge: That the Beech-Nut Company has adopted and enforced a system of fixing and maintaining certain specified standard prices at which its chewing gum and food  [***310]  products shall be  [*445]  resold by purchasers thereof, including jobbers, wholesalers and retailers, with the purpose and effect of securing the trade of such jobbers,  [****7]  wholesalers and retailers, and of enlisting their active support and cooperation in enlarging the sale of respondent's products, to the prejudice of its competitors who do not require and enforce the maintenance of resale prices for their products; and with the purpose and effect of eliminating competition in prices among all jobbers, wholesalers and retailers, respectively, engaged in handling the products manufactured by the company; thereby depriving such distributors of their right to sell, and preventing them from selling, its products at such prices as they may deem to be, and as are, adequate and warranted by their respective selling costs and efficiency, and with various other effects; and that the company, as a means of making effective its system of resale prices and of inducing and compelling its customers and the dealer customers of its customers to maintain such resale prices, has for more than two years last past: Made it generally known to jobbers, wholesalers and retailers, respectively, that it required and insisted that they should sell its products at the resale prices so fixed by it, and refused to sell to jobbers, wholesalers or retailers not maintaining such prices;  [****8]  that the company threatened to and did refuse to sell to all jobbers, wholesalers and retailers who failed to maintain the resale prices so fixed by it, or who sold to other distributors who failed to maintain such prices; induced or compelled the jobbers, wholesalers and retailers, by divers other means, not only to maintain its resale prices so fixed, but also to discontinue selling its products to other jobbers, wholesalers and retailers who did not maintain such resale prices; that the company caused the diversion of retailers' orders away from jobbers and wholesalers who did not maintain such resale prices so fixed by it, or who  [*446]  had resold its products to other jobbers, wholesalers or retailers who had failed to maintain such resale prices, and caused such orders to be given to other jobbers and wholesalers who had  [**152]  maintained such resale prices and/or had refused to supply other jobbers, wholesalers and retailers failing to maintain such prices; that the company solicited and secured the cooperation of wholesalers, jobbers and retailers in reporting price cutters, all in pursuance of its efforts to ascertain the names of all distributors of its products [****9]  who had failed to maintain the resale prices fixed by it and/or who had resold to other jobbers, wholesalers and retailers failing to maintain such prices; that it entered in card records kept by it the names of all dealers reported to it, either in this or other ways, as not maintaining its resale prices or as selling to other distributors not maintaining such prices, and has taken various measures to prevent all such dealers from obtaining further shipments of its products from any source until it has received from them declarations, promises, assurances, statements, or other similar expressions, to the effect that in the future such dealers intend to and will sell such products at the resale prices fixed by the company and will refrain from selling the same to other jobbers, wholesalers and retailers failing to maintain such prices; that respondent employed various other means and methods for the enforcement of its system of maintaining resale prices.

The case was heard before the Commission upon an agreed statement of facts, from which, among other things, it found:

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