FTC v. Cement Institute
333 U.S. 683 (1948)

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U.S. Supreme Court

FTC v. Cement Institute, 333 U.S. 683 (1948)

Federal Trade Commission v. Cement Institute

No. 23

Argued October 20-21, 1947

Decided April 26, 1948*

333 U.S. 683

Syllabus

The Federal Trade Commission instituted a proceeding before itself against an unincorporated trade association composed of corporations which manufacture, sell, and distribute cement; corporate members of the association, and officers and agents of the association. The complaint charged: (1) that respondents had engaged in an unfair method of competition in violation of § 5 of the Federal Trade Commission Act by acting in concert to restrain competition in the sale and distribution of cement through use of a multiple basing point delivered-price system, which resulted in their quoting and maintaining identical prices and terms of sale for cement at any given destination, and (2) that this system of sales resulted in price discriminations violative of § 2 of the Clayton Act, as amended by the Robinson-Patman Act. Upon a hearing and findings, the Commission ordered respondents to cease and desist from any concerted action to do specified things, including use of the multiple basing point delivered-price system to maintain identical prices for cement.

Held:

1. The Commission has jurisdiction to conclude that conduct tending to restrain trade is an unfair method of competition violative of § 5 of the Federal Trade Commission Act, even though the self-same conduct may also violate the Sherman Act. Pp. 333 U. S. 689-693.

Page 333 U. S. 684

2. The legislative history of the Federal Trade Commission Act shows that the purpose of Congress was not only to continue enforcement of the Sherman Act by the Department of Justice and the federal courts, but also to supplement that enforcement through the administrative process of the Federal Trade Commission. Pp. 333 U. S. 692-693.

3. The filing by the United States of a civil action in a federal district court to restrain the respondents and others from violating § 1 of the Sherman Act, though based largely on the same alleged misconduct as in the Commission proceeding, does not require that the Commission proceeding be dismissed. Pp. 333 U. S. 693-695.

4. Since all of the respondents were charged with combining to maintain a delivered-price system in order to eliminate price competition in interstate commerce, some who sold cement in intrastate commerce exclusively were nevertheless subject to the jurisdiction and order of the Commission. Pp. 333 U. S. 695-696.

5. The Commission was not disqualified to pass upon the issues involved in this proceeding, even assuming that the members of the Commission, as a result of its prior ex parte investigations, had previously formed the opinion that the multiple basing point system operated as a price-fixing restraint of trade violative of the Sherman Act. Pp. 333 U. S. 700-703.

6. It was not a denial of due process for the Commission to act in these proceedings after having expressed the view that industrywide use of the basing point system was illegal. Tumey v. Ohio,273 U. S. 510, distinguished. Pp. 333 U. S. 702-703.

7. Although the alleged combination be treated as having had its beginning in 1929, evidence of respondents' activities during years long prior thereto and during the NRA period was admissible for the purpose of showing the existence of a continuing combination among respondents to utilize the basing point pricing system. Pp. 333 U. S. 703-706.

(a) The Commission's consideration of respondents' pre-1929 and NRA code activities was within the rule that testimony as to prior or subsequent transactions, which for some reason are barred from forming the basis for a suit, may nevertheless be introduced if it tends reasonably to show the purpose and character of the particular transactions under scrutiny. Pp. 333 U. S. 704-705.

(b) Administrative agencies such as the Commission are not restricted by rigid rules of evidence. Pp. 333 U. S. 705-706.

(c) A letter written prior to the filing of the complaint by one, since deceased, who was president of a respondent company

Page 333 U. S. 685

and an active trustee of the association, in which he stated that free competition would be ruinous to the cement industry, was admissible in evidence even though the statement may have been only the writer's conclusion. P. 333 U. S. 706.

8. Cement Mfrs. Protective Assn. v. United States,268 U. S. 588, is not decisive of the issues in the present case. Pp. 333 U. S. 706-709.

9. Individual conduct or concerted action may fall short of violating the Sherman Act and yet constitute an "unfair method of competition" prohibited by the Federal Trade Commission Act. P. 333 U. S. 708.

10. The Commission made adequate findings that respondents collectively maintained a multiple basing point delivered-price system for the purpose of suppressing competition. Pp. 333 U. S. 709-712.

11. There was substantial evidence to support these findings. Pp. 333 U. S. 712-720.

12. Maintenance by concerted action of the basing point delivered-price system employed by respondents is an unfair trade practice prohibited by the Federal Trade Commission Act. Pp. 333 U. S. 720-721.

13. Respondents' multiple basing point delivered-price system resulted in price discriminations between purchasers, in violation of § 2 of the Clayton Act as amended by the Robinson-Patman Act. Corn Products Co. v. Federal Trade Comm'n,324 U. S. 726; Federal Trade Comm'n v. Staley Co.,324 U. S. 746. Pp. 333 U. S. 721-726.

14. The differences in respondents' net returns from different sales in different localities, resulting from use of the multiple basing point delivered-price system, were not justifiable under § 2(b) of the amended Clayton Act as price discriminations "made in good faith to meet an equally low price of a competitor." Pp. 333 U. S. 721-726.

15. The objections to the form and substance of the Commission's order are without merit. Pp. 333 U. S. 726-730.

157 F.2d 533 reversed.

A cease and desist order issued by the Federal Trade Commission in proceedings against respondents under the Federal Trade Commission Act and the amended Clayton Act was set aside by the Circuit Court of Appeals. 157 F.2d 533. This Court granted certiorari. 330 U.S. 815816. Reversed, p. 333 U. S. 730.

Page 333 U. S. 687

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