Exxon Corp. v. Governor of Maryland
437 U.S. 117 (1978)

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U.S. Supreme Court

Exxon Corp. v. Governor of Maryland, 437 U.S. 117 (1978)

Exxon Corp. v. Governor of Maryland

No. 77-10

Argued February 28, 1978

Decided June 14, 1978*

437 U.S. 117

Syllabus

Responding to evidence that, during the 1973 petroleum shortage, oil producers or refiners were favoring company-operated gasoline stations, Maryland enacted a statute prohibiting producers or refiners from operating retail service stations within the State, and requiring them to extend all "voluntary allowances" (temporary price reductions granted to independent dealers injured by local competitive price reductions) uniformly to all stations they supply. In actions by several oil companies challenging the validity of the statute on various grounds, the Maryland trial court held the statute invalid primarily on substantive due process grounds, but the Maryland Court of Appeals reversed, upholding the validity of the statute against contentions, inter alia, that it violated the Commerce and Due Process Clauses and conflicted with § 2(b) of the Clayton Act, as amended by the Robinson-Patman Act, which prohibits price discrimination, with the proviso that a seller can price in good faith to meet a competitor's equally low price.

Held:

1. The Maryland statute does not violate the Due Process Clause, since, regardless of the ultimate efficacy of the statute, it bears a reasonable relation to the State's legitimate purpose in controlling the gasoline retail market. Pp. 124-125.

2. The divestiture provisions of the statute do not violate the Commerce Clause. Pp. 437 U. S. 125-129.

(a) That the burden of such provisions falls solely on interstate companies does not, by itself, establish a claim of discrimination against interstate commerce. The statute creates no barrier against interstate independent dealers, nor does it prohibit the flow of interstate goods, place added costs upon them, or distinguish between in-state and out-of-state companies in the retail market. Hunt v. Washington Apple

Page 437 U. S. 118

Advertising Comm'n,432 U. S. 333; and Dean Milk Co. v. Madison,340 U. S. 349, distinguished. Pp. 437 U. S. 125-126.

(b) Nor does the fact that the burden of state regulation falls on interstate companies show that the statute impermissibly burdens interstate commerce, even if some refiners were to stop selling in the State because of the divestiture requirement and even if the elimination of company-operated stations were to deprive consumers of certain special services. Interstate commerce is not subjected to an impermissible burden simply because an otherwise valid regulation causes some business to shift from one interstate supplier to another. The Commerce Clause protects the interstate market, not particular interstate firms, from prohibitive or burdensome regulations. Pp. 437 U. S. 127-128.

(c) The Commerce Clause does not, by its own force, preempt the field of retail gasoline marketing, but, absent a relevant congressional declaration of policy, or a showing of a specific discrimination against, or burdening of, interstate commerce, the States have the power to regulate in this area. Pp. 437 U. S. 128-129.

3. The "voluntary allowances" requirement of the Maryland statute is not preempted by § 2(b) of the Clayton Act, as amended by the Robinson-Patman Act, or the Sherman Act. Pp. 437 U. S. 129-134.

(a) Any hypothetical "conflict" arising from the possibility that the Maryland statute may require uniformity in some situations in which the Robinson-Patman Act would permit localized price discrimination is not sufficient to warrant preemption. Pp. 437 U. S. 130-131.

(b) Neither § 2(b) nor the federal policy favoring competition establishes a federal right to engage in discriminatory pricing in certain situations. Section 2(b)'s proviso is merely an exception to that statute's broad prohibition against discriminatory pricing, and does not create any new federal right, but rather defines a specific, limited defense. Pp. 437 U. S. 131-133.

(c) While, in the sense that the Maryland statute might have an anticompetitive effect, there is a conflict between that statute and the Sherman Act's central policy of "economic liberty," nevertheless this sort of conflict cannot, by itself, constitute a sufficient reason for invalidating the Maryland statute, for if an adverse effect on competition were, in and of itself, enough to invalidate a state statute, the States' power to engage in economic regulation would be effectively destroyed. Pp. 437 U. S. 133-134.

279 Md. 410, 370 A.2d 1102 and 372 A.2d 237, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, WHITE, MARSHALL, and REHNQUIST, JJ.,

Page 437 U. S. 119

joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, post, p. 437 U. S. 134. POWELL, J., took no part in the consideration or decision of the cases.

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