1. The amendment, June 16, 1936, of § 2 of the Clayton Act, with
respect to permissibility of price discriminations based on
quantities sold, was not intended to affect orders of the Federal
Trade Commission issued before the effective date of the amendment.
P. 304 U. S.
2. Abandonment of a price arrangement found illegal and ordered
discontinued by the Federal Trade Commission does not deprive
respondent of the right to have the legality of the practice and
the validity of the order determined on review by the Circuit Court
of Appeals. The controversy does not become moot. P. 304 U. S.
92 F.2d 677, 679, reversed.
Certiorari, 303 U.S. 631, to review a judgment setting aside an
order of the Federal Trade Commission.
In September, 1933, the Federal Trade Commission charged
respondent, the Goodyear Tire & Rubber Company, with the
violation of § 2 of the Clayton Act, 15 U.S.C. § 13, in selling
tires, tubes, etc., to Sears, Roebuck & Company at
discriminatory prices. Respondent, invoking
Page 304 U. S. 258
the first proviso in § 2, *
its contracts with Sears, Roebuck & Company for sales involving
lower net prices than those charged to independent dealers were
made because of the great difference in the quantities sold. After
hearing, the Commission ruled that it did not consider a difference
in price to be on account of quantity unless it was based on a
difference in cost and was reasonably related to and approximately
no more than that difference. In March, 1936, the Commission issued
an order requiring respondent to desist from discriminations in
prices as described.
Pending the hearing in the Circuit Court of Appeals of
respondent's petition for review, the Congress amended § 2 of the
Clayton Act. Act of June 19, 1936, c. 592, 49 Stat. 1526. The first
proviso was amended to read as follows:
That nothing herein contained shall prevent
differentials which make only due allowance for differences in the
cost of manufacture, sale, or delivery resulting from the differing
methods or quantities in which such commodities are to such
purchasers sold or delivered."
Thereupon, respondent informed the Circuit Court of Appeals
that, in view of this provision, respondent had ceased to
manufacture tires for Sears, Roebuck & Company under the terms
of its existing contract; that, to dispose of the stock on hand,
the parties had made a new price arrangement designed to conform to
the new law, and that, within the year, all transactions between
Page 304 U. S. 259
and Sears, Roebuck & Company ceased and obligations were
terminated by mutual releases. 92 F.2d 677, 679.
Considering that there was no controversy between the parties as
to the illegal character of respondent's practices under the
amended Act, the Circuit Court of Appeals concluded that the case
had become moot. In that view, the court set aside the order of the
Commission and remanded the case,
"but without direction to the Commission to dismiss the
complaint and without prejudice to its filing a supplemental
complaint in the original proceeding if under § 2 of the amendatory
act this may now be done,"
as to which the court expressed no opinion. 92 F.2d 677 at
Both the Commission and the respondent contended below, and
contend here, that the case has not become moot. While they
disagree in their reasoning, they come to the same conclusion upon
this point, and both ask that the case be remanded to the Circuit
Court of Appeals with directions to determine it upon the merits.
We think that their conclusion is correct, and that the remand
should be made.
Section 11 of the Clayton Act, 15 U.S.C. § 21, provides that,
whenever the Commission has reason to believe that any person is
violating or has violated the provisions of the Act, and upon
hearing so finds, the Commission shall issue an order requiring
such person to cease and desist from such violations. In case of
failure to obey its order, the Commission may apply to the Circuit
Court of Appeals for enforcement. And anyone required to cease and
desist from a violation charged may seek review in the Circuit
Court of Appeals, praying that the order be set aside. The
provisions of the Act of June 19, 1936, show clearly that the
orders of the Commission entered before its passage are to remain
in effect. Section 2 of that Act, provides that nothing therein
Page 304 U. S. 260
rights of action arising, or litigation pending, or orders of
the Federal Trade Commission issued and in effect or pending on
review, based on section 2 of said Act of October 15, 1914, prior
to the effective date of this amendatory Act."
Discontinuance of the practice which the Commission found to
constitute a violation of the Act did not render the controversy
moot. United States v. Trans-Missouri Freight Assn.,
166 U. S. 290
166 U. S.
-310; Southern Pacific Co. v. Interstate Commerce
Commission, 219 U. S. 433
219 U. S. 452
Southern Pacific Terminal Co. v. Interstate Commerce
Commission, 219 U. S. 498
219 U. S.
-516; Labor Board v. Pennsylvania Greyhound
Lines, 303 U. S. 261
Guarantee Veterinary Co. v. Federal Trade Commission,
F. 853, 859, 860; Chamber of Commerce v. Federal Trade
13 F.2d 673, 686, 687. The Commission, reciting
its findings and the conclusion that respondent had violated the
act, required respondent to cease and desist from the particular
discriminations which the order described. That is a continuing
order. Its efficacy, if valid, was not affected by the subsequent
passage or the provisions of the amendatory Act. As a continuing
order, the Commission may take proceedings for its enforcement if
it is disobeyed. But, under the statute, respondent was entitled to
seek review of the order and to have it set aside if found to be
invalid. The question which both parties sought to have the Circuit
Court of Appeals decide was whether respondent's conduct was a
violation of the original statute. Upon the conclusion that it was
such a violation, the Commission based its order. Neither the
transactions subsequent to that order nor the passage of the
amendatory Act deprived the respondent of its right to challenge
the order and to have its validity determined or the Commission of
its right to have its order maintained if validly made.
Page 304 U. S. 261
The decree of the Circuit Court of Appeals is reversed, and the
cause is remanded to that court for a determination of the
MR. JUSTICE STONE, MR. JUSTICE CARDOZO, and MR. JUSTICE REED
took no part in the consideration and decision of this case.
* That proviso, in the original Act, was as follows:
That nothing herein contained shall prevent
discrimination in price between purchasers of commodities on
account of differences in the grade, quality, or quantity of the
commodities sold, or that makes only due allowance for difference
in the cost of selling or transportation, or discrimination in
price in the same or different communities made in good faith to