United States Supreme Court Cases & Opinions

U.S. Supreme Court

FTC v Brown Shoe Co., Inc., 384 U.S. 316 (1966)

Federal Trade Commission v. Brown Shoe Co., Inc.

No. 11

Argued April 25, 1966

Decided June 6, 1966

384 U.S. 316

Syllabus

The FTC filed a complaint against respondent, the country's second largest shoe manufacturer, under § 5 of the Federal Trade Commission Act, charging unfair trade practices by the use of a "Franchise Stores Program" through which respondent sells its shoes to more than 650 retail stores. In return for special benefits from Brown Shoe Company, the franchise stores agree to buy Brown shoe lines and to refrain from buying competitive lines. After hearings the FTC concluded that the restrictive contract program was an unfair method of competition and ordered respondent to cease and desist from its use. The Court of Appeals set aside the FTC's order, holding that there was "complete failure to prove an exclusive dealing agreement" violative of § 5 of the Act.

Held: the FTC acted well within its authority under the Act in declaring respondent's franchise program an unfair trade practice. Pp. 384 U. S. 319-322.

(a) On this record, the FTC has power to find such anticompetitive practice unfair. Federal Trade Comm'n v. Gratz, 253 U. S. 421, relied on by the Court of Appeals, has been rejected by this Court. Pp. 384 U. S. 320-321.

(b) The franchise program conflicts with the policy of §1 of the Sherman Act and § 3 of the Clayton Act against contracts which remove freedom of purchasers to buy in an open market. P. 384 U. S. 321.

(c) Under § 5 of the Federal Trade Commission Act, the FTC has power to arrest restraints of trade in their incipiency without proof that they are outright violations of § 3 of the Clayton Act or other antitrust provisions. FTC v. Motion Picture Adv. Co., 344 U. S. 392, 344 U. S. 394-395. Pp. 384 U. S. 321-322.

339 F.2d 45, reversed.

Page 384 U. S. 317