A wholesale liquor dealer compelled retailers to buy certain
brands of alcoholic beverage which they did not desire in order to
obtain other brands which they did desire.
Held: This exacted a "quota" from the retailers and, to
that extent, excluded sales by competing wholesalers in violation
of § 5 of the Federal Alcohol Administration Act, and it subjected
the offending wholesaler to a suspension of its wholesale liquor
permit issued under the Act. Pp.
355 U. S. 24-27..
Pp. 227.
231 F.2d 941 revered and remanded.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
Petitioner seeks to suspend respondent's wholesale liquor permit
issued under the Federal Alcohol Administration Act (49 Stat. 977,
27 U.S.C. § 201
et seq.) for having made "quota" sales of
alcoholic beverages in violation of § 5(a) and (b) of the Act. The
agency ordered suspension of the permit for 15 days for that
violation. The Court of Appeals set the order aside, 231 F.2d 941.
The case is here on a petition for a writ of certiorari which we
granted (352 U.S. 877) because of a conflict between the decision
below and
Distilled Brands, Inc. v. Dunigan, 222 F.2d 867,
from the Second Circuit.
Page 355 U. S. 25
Section 5 makes it unlawful for a wholesaler to induce a
retailer to purchase distilled spirits "to the exclusion in whole
or in part of distilled spirits" offered by other persons "by
requiring the retailer to take and dispose of a certain quota of
any of such products" where,
inter alia, the effect is
"substantially to restrain or prevent transactions in interstate or
foreign commerce in any such products."
The facts are that, during the period in question, Johnny Walker
Scotch and Seagram's V.O. Whiskey were in short supply, while
Seagram's Ancient Bottle Gin and Seagram's 7-Crown Whiskey were
plentiful, Ancient Bottle being a poor seller. Respondent, in order
to increase its sales of Ancient Bottle Gin and 7-Crown Whiskey,
compelled retailers to buy them, which they did not desire, in
order to obtain the other two whiskeys, which they did desire. The
agency found that respondent's sales were "quota" sales within the
meaning of the Act, that they affected adversely the sales of
competing brands, and "excluded, in whole or in part, distilled
spirits . . . offered for sale by other persons in interstate
commerce" -- all to the end of substantially restraining and
preventing commerce. The Court of Appeals concluded that the
transactions complained of, although tie-in sales, did not violate
§ 5 of the Act.
Tying agreements by which the sale of one commodity is
conditioned on the purchase of another have been repeatedly
condemned under the antitrust laws, since they serve no purpose
beyond the suppression of competition.
Standard Oil Co. v.
United States, 337 U. S. 293,
337 U. S.
305-306;
United States v. Paramount Pictures,
334 U. S. 131,
334 U. S.
156-159;
International Salt Co. v. United
States, 332 U. S. 392;
Mercoid Corp. v. Minneapolis Honeywell Regulator Co.,
320 U. S. 680. One
aim of Congress by the present legislation was to prohibit
practices that were "analogous to those prohibited by the antitrust
laws" (
see H.R.Rep.
Page 355 U. S. 26
No. 1542, 74th Cong., 1st Sess., p. 12). The tie-in sales
involved here seem to us to run afoul of that policy, since the
retailer is coerced into buying distilled spirits he would
otherwise not have purchased at that time, and other sellers of the
products are, to that extent, excluded from the market that would
exist when the demand arose. A wholesaler who compels a retailer to
buy an unwanted inventory as a condition to acquisition of needed
articles exacts a "quota" from the retailer and excludes sales by
competing wholesalers in the statutory sense.
The court below relied on two countervailing considerations. It
noted that § 5(a) is headed "Exclusive outlet," and § 5(b), "Tied
house." These titles were enough, it thought, to raise doubts
concerning the meaning of the statutory clauses, since the retailer
in question was not a "tied house" or "exclusive outlet," but only
the victim of these particular tied-in sales. The court was
constrained to read the Act narrowly, as it conceived it to be
penal in nature when it forfeited a permit to do business. But we
deal here with remedial legislation whose language should be given
hospitable scope.
See Securities and Exchange Commission v. C.
M. Joiner Leasing Corp., 320 U. S. 344,
320 U. S. 353,
320 U. S. 355.
The will of Congress would be thwarted if we gave the language in
question the strictest construction possible. The fair meaning of
the Act is our guide, and it seems too clear for extended argument
that the tied-in sale, though it falls short of creating an
exclusive outlet and a permanently "tied house," violates the
Act.
The other consideration relied upon by the Court of Appeals was
a letter written by the agency to Congress in 1947 asking for an
amendment to § 5 because it had doubt "whether violations of the
statute could be established through the "tie-in" sales." The
administrative practice, we are advised, has quite consistently
reflected the view that such sales are banned by the Act.
See Annual Report, Commissioner of Internal Revenue
1946,
Page 355 U. S. 27
pp. 45-46;
id., 1947, p. 49. The fact that the agency
sought a clarifying amendment is therefore of no significance.
See Wong Yang Sung v. McGrath, 339 U. S.
33,
339 U. S. 47;
United States v. Turley, 352 U. S. 407,
352 U. S. 415,
note 14. The judgment is reversed, and the case is remanded to the
Court of Appeals for proceedings in conformity with this
opinion.
Reversed.