FTC v. Borden Co.,
383 U.S. 637 (1966)

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U.S. Supreme Court

FTC v. Borden Co., 383 U.S. 637 (1966)

FTC v. Borden Co.

No. 106

Argued January 19, 1966

Decided March 23, 1966

383 U.S. 637


Respondent produces and sells evaporated milk under its nationally advertised Borden name, and markets physically and chemically identical milk under various private brands owned by its customers. The FTC found the milk to be of like grade and quality as required for the applicability of § 2(a) of the Robinson-Patman Act, held the price differential to be discriminatory, ascertained the requisite adverse effect on competition, rejected respondent's claim of cost justification, and issued a cease and desist order. The Court of Appeals set aside the FTC order on the ground that, as a matter of law, private label milk was not of the same grade and quality as Borden brand milk.

Held: Labels do not differentiate products for the purpose of determining grade or quality under § 2(a) of the Act, even though one label may have more customer appeal and command a higher price in the marketplace. Pp. 383 U. S. 639-647.

(a) This has been the longstanding view of the FTC, and its construction of the Act is entitled to respect. Federal Trade Commission v. Mardel Brothers, Inc., 359 U. S. 385, 359 U. S. 391. P. 383 U. S. 640.

(b) This construction of the statute is supported by the legislative history, and furthers the purpose and policy of the Act. Pp. 383 U. S. 641-645.

(c) Economic realities are not ignored, but economic factors inherent in brand names and national advertising are not to be considered in the jurisdictional inquiry under the statutory "like grade and quality" test. Pp. 383 U. S. 645-646.

(d) Transactions like those involved here may be examined by the FTC under §2(a) to determine, subject to judicial review, whether the price differential is discriminatory, whether competition may be injured, and whether the differential is cost-justified or is defensible as a good faith effort to meet a competitor's price. P. 383 U. S. 646.

(e) The question of whether the FTC's rulings under §2(b) of the Act are inconsistent with its construction of § 2(a) is not before this Court, and is not passed upon. Pp. 383 U. S. 646-647.

339 F.2d 133 reversed and remanded.

Page 383 U. S. 638

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