Petitioner sued respondent for treble damages for violations of
§ 2 of the Clayton Act and § 3 of the Robinson-Patman Act.
Petitioner was engaged in a purely intrastate bakery business.
Respondent sold bread both locally and interstate, and, in the
course of such business, maintained prices in interstate
transactions but cut prices in intrastate transactions in
petitioner's locality, thus driving petitioner out of business.
There was ample evidence to support a finding of a purpose to
eliminate a competitor.
such practices are included in the scope of § 2
of the Clayton Act and § 3 of the Robinson-Patman Act, and a
judgment for petitioner is sustained. Pp. 348 U. S.
(a) Congress has power under the Commerce Clause to prevent the
opportunities afforded by interstate commerce from being employed
to injure local trade. Pp.
348 U. S. 119
(b) By the Clayton Act and the Robinson-Patman Act, Congress
barred the use of interstate business to destroy local business and
outlawed the price cutting employed by respondent. P. 348 U. S.
208 F.2d 777 reversed, and judgment of District Court
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This is a suit for treble damages, 38 Stat. 731, 15 U.S.C. § 15,
brought for violations of § 2(a) of the Clayton Act, as amended by
the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13(a), and of §
3 of the Robinson-Patman Act, 15 U.S.C. § 13a. The jury found for
petitioner; the Court of Appeals reversed, 208 F.2d 777; and we
Page 348 U. S. 116
granted certiorari, 347 U.S. 1012, because of the importance of
the question of law presented. [Footnote 1
Petitioner was engaged in the bakery business at Santa Rosa, New
Mexico, none of his activities being interstate in character.
Respondent is a corporation in the baking business at Clovis, New
Mexico. It is one of several corporations having interlocking
ownership and management, all in the Mead family and associates.
These corporations maintain plants at Lubbock and Big Spring,
Texas, and at Hobbs, Roswell, and Clovis, New Mexico. They all
market their bread under the name "Mead's Fine Bread," and promote
the product through a common advertising program. These
corporations purchase their flour and bread wrappers as a unit.
Respondent sells bread in Farwell, Texas, a town which it serves
with a bread truck operating out of Clovis, New Mexico.
For some months, petitioner and respondent were in competition
in Santa Rosa. There is evidence that, on the threat of petitioner
to move his bakery to another town, the local Santa Rosa merchants
agreed to purchase petitioner's products exclusively. Respondent,
labeling that action a boycott, cut the wholesale price of bread in
Santa Rosa from 14 cents to 7 cents for a pound loaf and from 21
cents to 11 cents for a pound-and-a-half loaf. The Mead companies
did not cut the prices of bread in
Page 348 U. S. 117
any other town, and respondent did not cut its prices of bread
in Farwell, Texas.
The price war continued from September, 1948 to April, 1949,
and, as a result, petitioner was forced to close his business.
The Court of Appeals reversed the judgment for petitioner on the
ground that the injury resulting from the price cutting was to a
purely local competitor whose business was in no way related to
interstate commerce. "If competition was lessened or a monopoly
created," said the Court of Appeals, "it was purely local in its
scope and effect, and in no way related to or affected interstate
commerce." 208 F.2d 777, 780.
Section 2(a) of the Clayton Act, as amended, 15 U.S.C. § 13(a),
provides in part:
"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 . . . 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. . . ."
Section 3 of the Robinson-Patman Act, 15 U.S.C. § 13a, provides
"It shall be unlawful for any person engaged in commerce, in the
course of such commerce, . . . to sell . . . goods in any part of
the United States at prices lower than those exacted by said person
Page 348 U. S. 118
in the United States for the purpose of destroying competition,
or eliminating a competitor in such part of the United States; or,
to sell . . . goods at unreasonably low prices for the purpose of
destroying competition or eliminating a competitor."
Those sections, on their face, seem to cover the instant case.
Respondent is engaged in commerce, selling bread both locally and
interstate. In the course of such business, it made price
discriminations, maintaining the price in the interstate
transactions and cutting the price in the intrastate sales. The
destruction of a competitor was plainly established, as required by
the amended § 2(a) of the Clayton Act, and the evidence to support
a finding of purpose to eliminate a competitor, as required by § 3
of the Robinson-Patman Act, was ample. [Footnote 2
The Court of Appeals read the antitrust laws as reaching local
transactions only where: (1) the local restraint has an effect on
the free flow of interstate trade or commerce, e.g., Wickard v.
Filburn, 317 U. S. 111
(2) the restraint on or the monopoly of local trade is effected
through the utilization of interstate mechanisms, e.g.,
342 U. S. v.
Page 348 U. S. 119
143; or (3) local prices are fixed by the use of interstate
commercial transactions, e.g., United States v. Frankfort
Distilleries, 324 U. S. 293
(4) the discriminatory sales are to purchasers who compete in
interstate commerce, e.g., Corn Products Refining Co. v.
Federal Trade Commission, 324 U. S. 726
(5) interstate commerce is in some other way used to destroy
competition or is injured or impaired as a result of unlawful
We think that the practices in the present case are also
included within the scope of the antitrust laws. We have here an
interstate industry increasing its domain through outlawed
competitive practices. The victim, to be sure, is only a local
merchant, and no interstate transactions are used to destroy him.
But the beneficiary is an interstate business; the treasury used to
finance the warfare is drawn from interstate, as well as local,
sources which include not only respondent, but also a group of
interlocked companies engaged in the same line of business; and the
prices on the interstate sales, both by respondent and by the other
Mead companies, are kept high while the local prices are lowered.
If this method of competition were approved, the pattern for growth
of monopoly would be simple. As long as the price warfare was
strictly intrastate, interstate business could grow and expand with
impunity at the expense of local merchants. The competitive
advantage would then be with the interstate combines not by reason
of their skills or efficiency, but because of their strength and
ability to wage price wars. The profits made in interstate
activities would underwrite the losses of local price-cutting
campaigns. No instrumentality of interstate commerce would be used
to destroy the local merchant and expand the domain of the combine.
But the opportunities afforded by interstate commerce would be
employed to injure local trade. Congress, as guardian of the
Commerce Clause, certainly
Page 348 U. S. 120
has power to say that those advantages shall not attach to the
privilege of doing an interstate business.
This type of price-cutting was held to be "foreign to any
legitimate commercial competition" even prior to the
Robinson-Patman Act. See Porto Rican American Tobacco Co. v.
American Tobacco Co.,
30 F.2d 234, 237. It seems plain to us
that Congress went at least that far in the Robinson-Patman Act. As
we have shown, the facts charged and found read upon the words of
the statute. And the history of the Act shows it was designed to
have the reach now claimed for it by petitioner. Congressman
Utterback, manager of the bill in the House, included this type of
case in the price-cutting that he claimed was outlawed:
"Where, however, a manufacturer sells to customers both within
the State and beyond the State, he may not favor either to the
disadvantage of the other; he may not use the privilege of
interstate commerce to the injury of his local trade, nor may he
favor his local trade to the injury of his interstate trade. The
Federal power to regulate interstate commerce is the power both to
limit its employment to the injury of business within the State and
to protect interstate commerce itself from injury by influences
within the State."
80 Cong.Rec. 9417.
It is, we think, clear that Congress by the Clayton Act and
Robinson-Patman Act barred the use of interstate business to
destroy local business, outlawing the price cutting employed by
Other points are pressed on us by respondent in support of the
judgment of the Court of Appeals. But we have examined them and
found them not substantial. We therefore reverse the judgment of
the Court of Appeals and affirm the judgment of the District
The case first reached the Court of Appeals on appeal from a
dismissal of the action at the close of plaintiff's case. The Court
of Appeals affirmed, holding that the suit was precluded by
petitioner's own illegal acts which initiated the alleged price
discrimination. 184 F.2d 338. We granted a petition for certiorari,
vacated that judgment, and remanded the case to the Court of
Appeals for further consideration in light of Kiefer-Stewart
Co. v. Joseph E. Seagram & Sons, 340 U.
. See Moore v. Mead Service Co.,
944. On reconsideration, the Court of Appeals receded from its
former position, reversed the judgment dismissing the complaint,
and remanded the case for trial. 190 F.2d 540.
Respondent contends that the so-called boycott justified its
price cutting. In Kiefer-Stewart Co. v. Joseph E. Seagram &
Sons, 340 U. S. 211
340 U. S. 214
"If petitioner and others were guilty of infractions of the
antitrust laws, they could be held responsible in appropriate
proceedings brought against them by the Government or by injured
private persons. The alleged illegal conduct of petitioner,
however, could not legalize the unlawful combination by
respondents, nor immunize them against liability to those they
We need not pursue the matter, for respondent obtained a charge
on this phase of the case as to which it cannot complain. The
District Court charged the jury that respondent would not be liable
if the price cutting was "for the purpose of regaining its own
market or of reestablishing competition and not to destroy
competition or to eliminate a competitor."