Federal Trade Commission v. Fred Meyer, Inc.

United States Supreme Court

390 U.S. 341

Federal Trade Commission  v.  Fred Meyer, Inc., et al.

Certiorari to the United States Court of Appeals for the Ninth Circuit

No. 27.  Argued: November 6, 1967 --- Decided: March 18, 1968

The Federal Trade Commission (FTC) ruled that respondents, the corporate owner of a chain of supermarkets (Meyer) and two of its officers, had unlawfully induced suppliers to engage in discriminatory pricing and sales promotion activities prohibited by §§ 2 (a) and 2 (d) of the Clayton Act, as amended by the Robinson-Patman Act. The FTC held that § 2 (d) prohibits a supplier from granting promotional allowances to a direct-buying retailer like Meyer, unless the allowances are also made available to wholesalers who purchase from the supplier and resell to the direct-buying retailer's competitors. The Court of Appeals adopted respondents' views that the statutory requirement of proportional equality among "customers competing in the distribution" of products concerned competition at the same functional level of distribution, which did not include competition between direct-buying retailers and wholesalers, and that retailers competing with Meyer were not customers of the suppliers but were customers of the wholesalers. The court set aside that portion of the FTC order which barred respondents from inducing suppliers to grant them promotional allowances not available to "customers who resell to purchasers who compete with respondents in the resale of such supplier's products."

Held: On the facts of this case, § 2 (d) reaches only discrimination between customers competing for resales at the same functional level. Pp. 348-358.

(a) The Act does not mandate proportional equality between the direct-buying retailer, Meyer, and the wholesalers. Pp. 348-349, 355-357.

(b) "Customer" in § 2 (d) includes a retailer who buys through wholesalers and competes with a direct-buying retailer in the resale of the supplier's products. Pp. 348-352.

(c) The FTC found that Meyer competed in the resale of certain suppliers' products with other retailers in the area who purchased the products through wholesalers, and the Court of Appeals did not disturb this finding. P. 354.

(d) Since in this case the direct impact of the discriminatory promotional allowances is felt by the disfavored retailers, the most reasonable construction of § 2 (d) is one which places on the supplier the responsibility for making promotional allowances available to those resellers who compete directly with the favored buyer. P. 357.

(e) A supplier may, consistently with the other provisions of the antitrust laws, utilize his wholesalers to distribute payments or administer promotional programs, as long as the supplier assumes the responsibility, under the FTC's rules, for seeing that the allowances are made available to all who compete in the resale of his products. P. 358.

359 F. 2d 351, reversed in part and remanded.

Daniel M. Friedman argued the cause for petitioner. On the brief were Solicitor General Marshall, Assistant Attorney General Turner, Francis X. Beytagh, Jr., James McI. Henderson and E. K. Elkins.

Edward F. Howrey argued the cause for respondents. With him on the brief were Terrence C. Sheehy and George W. Mead.

Morris B. Abram filed a brief for the Atlantic Coast Independent Distributors Association, Inc., as amicus curiae, urging reversal.

Gilbert H. Weil filed a brief for Clairol Incorporated, as amicus curiae, urging affirmance.

Notes