Federal Trade Commission v. Fred Meyer, Inc./Dissent Harlan

by John Marshall Harlan II

United States Supreme Court

390 U.S. 341

Federal Trade Commission  v.  Fred Meyer, Inc.

 Argued: Nov. 6, 1967. ---

Mr. Justice HARLAN, dissenting.

I dissent because I believe the time has come for a change in approach to Robinson-Patman Act cases that, as here, can only be decided by a judicial tour de force. No doubt, the broad purpose of the Act was to protect small sellers from the advantages their larger competitors can obtain through greater buying power. In implementing this purpose, however, the statute imposes a hodgepodge of confusing, ^[1] inconsistent, ^[2] and frequently misdirected ^[3] restrictions. In such a situation it seems to me the wiser course for this Court to hew as closely as possible to the wandering line that the statute has drawn (with due deference to the expertise of the Commission charged with enforcing the statute) and not to read into the Act its own notions of how best to protect 'little people' from 'big people.'

In this case, certain suppliers made promotional allowances to the company, a direct-buying retailer. The Act provides that if promotional allowances are made to one customer they must also be made, on a basis of proportional equality, to all other 'customers competing in the distribution' of the supplier's product. The suppliers here involved did not make the promotional allowances given to the company available to certain retailers who compete with it but who buy not from the suppliers themselves but from wholesalers who in turn buy from the suppliers. The Court now holds, for the first time, 32 years after the passage of the Act, that although these disfavored retailers are not literally 'customers' of the suppliers, the 'broad goals' of the Act require them to be treated as if they were.

Unfortunately, nothing in the Act and not one word of legislative history the Court has found suggest that Congress meant the word 'customers' to mean 'non-customers who the Court thinks need protection.' The Federal Trade Commission refused to accept the suggestion of one Commissioner that this unexpected nonliteral reading of the word would best effectuate the Act's purposes, so that Commission expertise cannot in this instance be brought to bear in support of the Court's construction.

Furthermore, the failure of the Act to extend explicit protection in the present situation cannot be dismissed as mere legislative oversight. Compelling suppliers to make promotional allowances available to retailers with whom they do not deal is no simple matter. The supplier could deal through his wholesalers, imposing restrictions on them to guarantee that an 'allowance' is actually passed through to retailers, only by running afoul of the Sherman Act. ^[4] Nor would it simplify matters to make the allowances directly available to retailers: by hypothesis, the retailers in question are too small to make direct dealing efficient, and in any event the suppliers and retailers would constantly risk a Sherman Act charge, by the wholesaler in the middle, that they were conspiring in restraint of him. ^[5]

In addition, under the present circumstances the very idea of 'proportional equality' is almost meaningless. The supplier is asked to offer 'equal' promotional allowances to a direct-buying chain and a set of small retailers who buy through wholesalers who presumably carry much of the promotion load; the supplier risks treble damages if his guess as to what is even-handed treatment turns out to be erroneous. Even if it were desirable to force suppliers to submit every promotion to the FTC for advance approval, the Commission's refusal to require equality between customers and noncustomers here does not indicate that the experts are sanguine about the possibility of working out a rational definition of proportional equality under these circumstances.

The supplier can, of course, resolutely refuse to enter into promotional programs, a course of action that would effectively avoid favoring large distributors. In doing so, however, he would be abandoning one significant form of competition with his fellow suppliers, and would risk the disfavor of retailers who might prevail on differently situated and less timorous competitive suppliers for assistance.

Congress, concerned as it was for small retailers, did not explicitly impose the particular restriction on suppliers announced today. Since, for all we know, the omission may have been deliberate in light of practical considerations, I prefer to take the statute as we find it. This course of action here and in similarly opaque cases might at least encourage the Congress to give this notoriously amorphous statute the thorough overhauling that has long been due. ^[6] On this basis I consider that this case should go for the respondents.

Notes

1. See, e.g., F. Rowe, Price Discrimination Under the Robinson-Patman Act 534; Stedman, Twenty-four Years of the Robinson-Patman Act, 1960 Wis.L.Rev. 197, 218.
2. See, e.g., Levi, The Robinson-Patman Act-Is It in the Public Interest?, 1 ABA Antitrust Section 60 (1952-1953). As Professor Levi noted, published criticism of the Act is unsportingly easy to find: 'the literature on the Act has become something of a contest of witticisms to relieve an otherwise dreary picture.' Ibid. An example is Eine Kleine Juristische Schlummergeschichte, 79 Harv.L.Rev. 921.
3. See, e.g., Shniderman, The Impact of the Robinson-Patman Act on Pricing Flexibility, 57 Nw.U.L.Rev. 173; Austern, Presumption and Percipience About Competitive Effect Under Section 2 of the Clayton Act, 81 Harv.L.Rev. 773. The confusion is all the more unfortunate in a field where actual conflicting objectives are many: 'competitive' purposes are often at odds with 'protective' purposes; the defense of traders at one level of distribution may be inconsistent with the liberty of traders at another level, and with the interests of consumers.
4. Under Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998, it would presumably be unlawful per se for a supplier to attempt to prevent his wholesalers from absorbing the allowance by charging higher prices.
5. Under Albrecht, supra, n. 4, it is difficult to see why an agreement between supplier and retailer sufficient to insure that wholesalers in the middle do not absorb promotional allowances would not constitute a combination in restraint of these wholesalers.
6. See Friendly, The Gap in Lawmaking-Judges Who Can't and Legislators Who Won't, 63 Col.L.Rev. 787, 794: 'The tiniest fraction of the time spent by lawyers, legal writers, administrators, and judges in an unsuccessful endeavor to elucidate the obscurities of this statute would have sufficed to put the house in order once the problems were revealed; but that time has not been spent.'