FTC v. Anjeuser-Busch, Inc.
363 U.S. 536 (1960)

Annotate this Case

U.S. Supreme Court

FTC v. Anjeuser-Busch, Inc., 363 U.S. 536 (1960)

FTC v. Anjeuser-Busch, Inc.

No. 389

Argued March 2, 1960

Decided June 20, 1960

363 U.S. 536

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

The Federal Trade Commission found that respondent, a leading national brewer which sells a so-called premium beer at higher prices than the beers of regional and local breweries in the great majority of markets, had reduced its prices only to those customers in the St. Louis area, while maintaining higher prices to all purchasers outside the St. Louis area, and thereby had "discriminated in price" as between purchasers differently located, and that this had diverted substantial business from respondent's St. Louis competitors, had substantially lessened competition and tended to create a monopoly, in violation of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, and it ordered respondent to cease and desist. The Court of Appeals concluded that the statutory element of price discrimination had not been established, and it set aside the Commission's order on this ground alone.

Held: the Court of Appeals erred in its construction of § 2(a); the evidence warranted the Commission's finding of price discrimination, and the judgment is reversed and the case is remanded for further proceedings. Pp. 363 U. S. 537-554.

(a) Section 2(a) is violated when there is a price discrimination which deals the requisite injury to sellers' or "primary line" competition, even though buyers' or "secondary line" and "tertiary line" competition are unaffected. Pp. 363 U. S. 542-545.

(b) The Court of Appeals erred in concluding that, since all competing purchasers paid respondent the same price, so far as the record disclosed, respondent's price cuts were not discriminatory. Pp. 363 U. S. 545-546.

(c) A price discrimination within the meaning of the portion of § 2(a) here involved is merely a price difference; and, in order to establish such a price discrimination, it is not necessary to show that the lower price is below cost or unreasonably low for the purpose or design to eliminate competition, and thereby obtain a monopoly. Pp. 363 U. S. 546-553.

265 F.2d 677 reversed.

Page 363 U. S. 537

MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.

The question presented is whether certain pricing activities of respondent, Anheuser-Busch, Inc., constituted price discrimination within the meaning of § 2(a) of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13(a).

Section 2(a) provides in pertinent part:

"That it shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them. . . . "

Page 363 U. S. 538

This controversy had its genesis in a complaint issued by the Federal Trade Commission in 1955 which charged respondent, a beer producer, with a violation of § 2(a). The complaint alleged that respondent had

"discriminated in price between different purchasers of its beer of like grade and quality by selling it to some of its customers at higher prices than to other[s];"

that, more specifically, respondent had lowered prices in the St. Louis, Missouri, market, without making similar price reductions in other markets; that this discrimination had already diverted substantial business from respondent's St. Louis competitors; that it was "sufficient" to have the same impact in the future; that there was a "reasonable probability" it would substantially lessen competition in respondent's line of commerce; and that it might also tend to create a monopoly or to injure, destroy, or prevent competition with respondent. Thus, the complaint described a pricing pattern which had adverse effects only upon sellers' competition, commonly termed primary line competition, and not upon buyers' competition, commonly termed secondary line competition.

Both the hearing examiner and, on appeal, the Commission held that the evidence introduced at the hearing established a violation of § 2(a). The Commission found the facts to be as follows:

Respondent, a leading national brewer, [Footnote 1] sells a so-called premium beer, which is priced higher than the beers of regional and local breweries in the great majority of markets, although both the price of respondent's beer and the premium differential vary from market to market and from time to time. During the period relevant to this case, respondent had three principal competitors in the St. Louis area, all regional breweries: Falstaff Brewing

Page 363 U. S. 539

Corporation, Griesedieck Western Brewing Company, and Griesedieck Brothers Brewery Company. [Footnote 2] In accord with the generally prevailing price structure, these breweries normally sold their products at a price substantially lower than respondent's.

In 1953, most of the national breweries, including respondent, granted their employees a wage increase, and, on October 1,1953, they put into effect a general price increase. [Footnote 3] Although many regional and local breweries throughout the country followed suit by raising their prices, Falstaff, Griesedieck Western, and Griesedieck Brothers maintained their pre-October price of $2.35 per standard case. Although respondent's sales in the St. Louis area did not decline, its national sales fell, along with industry sales in general.

On January 4, 1954, respondent lowered its price in the St. Louis market from $2.93 to $2.68 per case, thereby reducing the previous 58$ differential to 33$. A second price cut occurred on June 21, 1954, this time to $2.35, the same price charged by respondent's three competitors. On January 3, 1954, the day before the first price cut, respondent's price in the St. Louis market had been lower

Page 363 U. S. 540

than its price in other markets, [Footnote 4] and, during the period of the price reductions in the St. Louis area, respondent made no similar price reductions in any other market. In March, 1955, respondent increased its St. Louis price 45

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