The Miller-Tydings Act exempts from the operation of the Sherman
Act "contracts or agreements prescribing minimum prices for the
resale" of specified commodities when "contracts or agreements of
that description are lawful as applied to intrastate transactions"
under local law. Respondents, distributors of gin and whiskey in
interstate commerce, have contracts or agreements with Louisiana
retailers fixing minimum retail prices for respondents' products.
Louisiana law authorizes enforcement of price-fixing not only
against parties to a "contract," but also against nonsigners.
Petitioner, a retailer in New Orleans, refused to sign a
price-fixing contract with respondents and sold respondents'
products at cut-rate prices.
Held: Respondents were not entitled by reason of the
Miller-Tydings Act to enjoin petitioner from selling their products
at less than the minimum prices fixed by their schedules. Pp.
341 U. S.
385-395.
(a) Price-fixing is unlawful
per se under the Sherman
Act. P.
341 U. S.
386.
(b) The Miller-Tydings Act exempts "contracts or agreements
prescribing minimum prices for the resale" of the articles
purchased, not "contracts or agreements" respecting the practices
of noncontracting competitors of the contracting retailers. Pp.
341 U. S.
387-390.
(c) The history of the Miller-Tydings Act supports the
construction here given it. Pp.
341 U. S.
390-395.
184 F.2d 11, reversed.
The District Court enjoined petitioner from alleged unlawful
price-cutting. The Court of Appeals affirmed. 184 F.2d 11. This
Court granted certiorari. 340 U.S. 928.
Reversed, p.
341 U. S.
395.
Page 341 U. S. 385
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
Respondents, Maryland and Delaware corporations, are
distributors of gin and whiskey. They sell their products to
wholesalers in Louisiana, who, in turn, sell to retailers.
Respondents have a price-fixing scheme whereby they try to maintain
uniform retail prices for their products. They endeavor to make
retailers sign price-fixing contracts under which the buyers
promise to sell at not less than the prices stated in respondents'
schedules. They have indeed succeeded in getting over one hundred
Louisiana retailers to sign these agreements. Petitioner, a
retailer in New Orleans, refused to agree to the price-fixing
scheme, and sold respondents' products at a cut-rate price.
Respondents thereupon brought this suit in the District Court by
reason of diversity of citizenship
Page 341 U. S. 386
to enjoin petitioner from selling the products at less than the
minimum prices fixed by their schedules.
It is clear from our decisions under the Sherman Act (26 Stat.
209) that this interstate marketing arrangement would be illegal,
that it would be enjoined, that it would draw civil and criminal
penalties, and that no court would enforce it. Fixing minimum
prices, like other types of price fixing, is illegal
per
se. United States v. Socony-Vacuum Oil Co.,
310 U. S. 150;
Kiefer-Stewart Co. v. Seagram & Sons, 340 U.
S. 211. Resale price maintenance was indeed struck down
in
Dr. Miles Medical Co. v. John D. Park & Sons Co.,
220 U. S. 373. The
fact that a state authorizes the price-fixing does not, of course,
give immunity to the scheme, absent approval by Congress.
Respondents, however, seek to find legality for this marketing
arrangement in the Miller-Tydings Act enacted in 1937 as an
amendment to § 1 of the Sherman Act. 50 Stat. 693, 15 U.S.C. § 1.
That amendment provides, in material part, that "nothing herein
contained shall render illegal,
contracts or agreements
prescribing minimum prices for the resale" of specified commodities
when "
contracts or agreements of that description are
lawful as applied to intrastate transactions" under local law.
[
Footnote 1] (Italics
added.)
Louisiana has such a law. La.Gen.Stat. §§ 9809.1
et
seq. It permits a "contract" for the sale or resale of a
commodity to provide that the buyer will not resell "except at the
price stipulated by the vendor." The
Page 341 U. S. 387
Louisiana statute goes further. It not only allows a distributor
and retailer to make a "contract" fixing the resale price, but,
once there is a price-fixing "contract," known to a seller, with
any retailer in the state, it also condemns as unfair competition a
sale at less than the price stipulated even though the seller is
not a party to the "contract." [
Footnote 2] In other words, the Louisiana statute enforces
price-fixing not only against parties to a "contract," but also
against nonsigners. So far as Louisiana law is concerned,
price-fixing can be enforced against all retailers once any single
retailer agrees with a distributor on the resale price. And the
argument is that the Miller-Tydings Act permits the same range of
price-fixing.
The argument is phrased as follows: the present action is
outlawed by the Sherman Act -- the Miller-Tydings Act apart -- only
if it is a contract, combination, or conspiracy in restraint of
trade. But if a contract or agreement is the vice, then, by the
terms of the Miller-Tydings Act, that contract or agreement is
immunized, provided it is immunized by state law. The same is true
if the vice is a conspiracy, since a conspiracy presupposes an
agreement. That was in essence the view of the Court of Appeals,
which affirmed by a divided vote a judgment of a district court
enjoining petitioner from price-cutting. 184 F.2d 11.
The argument, at first blush, has appeal. But we think it
offends the statutory scheme.
We note, to begin with, that there are critical differences
between Louisiana's law and the Miller-Tydings Act.
Page 341 U. S. 388
The latter exempts only "contracts or agreements prescribing
minimum prices for the resale." On the other hand, the Louisiana
law sanctions the fixing of maximum, as well as minimum, prices,
for it exempts any provision that the buyer will not resell "except
at the price stipulated by the vendor." We start, then, with a
federal act which does not, as respondents suggest, turn over to
the states the handling of the whole problem of resale price
maintenance on this type of commodity. What is granted is a limited
immunity -- a limitation that is further emphasized by the
inclusion in the state law and the exclusion from the federal law
of the nonsigner provision. The omission of the nonsigner provision
from the federal law is fatal to respondents' position unless we
are to perform a distinct legislative function by reading into the
Act a provision that was meticulously omitted from it.
A refusal to read the nonsigner provision into the
Miller-Tydings Act makes sense if we are to take the words of the
statute in their normal and customary meaning. The Act sanctions
only "contracts or agreements." If a distributor and one or more
retailers want to agree, combine, or conspire to fix a minimum
price, they can do so if state law permits. Their contract,
combination, or conspiracy -- hitherto illegal -- is made lawful.
They can fix minimum prices pursuant to their contract or agreement
with impunity. When they seek, however, to impose price-fixing on
persons who have not contracted or agreed to the scheme, the
situation is vastly different. That is not price-fixing by contract
or agreement; that is price-fixing by compulsion. That is not
following the path of consensual agreement; that is resort to
coercion.
Much argument is made to import into the contracts which
respondents make with retailers a provision that the parties may
force nonsigners into line. It is said that state law attaches that
condition to every such contract,
Page 341 U. S. 389
and that therefore the Miller-Tydings Act exempts it from the
Sherman Act. Such a condition, if implied, creates an agreement
respecting not sales made under the contract, but other sales. Yet
all that are exempted by the Miller-Tydings Act are "contracts or
agreements prescribing minimum prices for the resale" of the
articles purchased, not "contracts or agreements" respecting the
practices of noncontracting competitors of the contracting
retailers.
It should be noted in this connection that the Miller-Tydings
Act expressly continues the prohibitions of the Sherman Act against
"horizontal" price-fixing by those in competition with each other
at the same functional level. [
Footnote 3] Therefore, when a state compels retailers to
follow a parallel price policy, it demands private conduct which
the Sherman Act forbids.
See Parker v. Brown, 317 U.
S. 341,
317 U. S. 350.
Elimination of price competition at the retail level may, of
course, lawfully result if a distributor successfully negotiates
individual "vertical" agreements with all his retailers. But when
retailers are forced to abandon price competition, they are driven
into a compact in violation of the spirit of the proviso which
forbids "horizontal" price-fixing. A real sanction can be given the
prohibitions of the proviso only if the price maintenance power
granted a distributor is limited to voluntary engagements.
Otherwise, the exception swallows the proviso and destroys its
practical effectiveness.
The contrary conclusion would have a vast and devastating effect
on Sherman Act policies. If it were adopted, once a distributor
executed a contract with a
Page 341 U. S. 390
single retailer setting the minimum resale price for a commodity
in the state, all other retailers could be forced into line. Had
Congress desired to eliminate the consensual element from the
arrangement and to permit blanketing a state with resale
price-fixing if only one retailer wanted it, we feel that different
measures would have been adopted -- either a nonsigner provision
would have been included or resale price-fixing would have been
authorized without more. Certainly the words used connote a
voluntary scheme. Contracts or agreements convey the idea of a
cooperative arrangement, not a program whereby recalcitrants are
dragged in by the heels and compelled to submit to
price-fixing.
The history of the Act supports this construction. The efforts
to override the rule of
Dr. Miles Medical Co. v. John D. Park
& Sons Co., supra, were long and persistent. Many bills
had been introduced on this subject before Senator Tydings
introduced his. Thus, in 1929, in the Seventy-First Congress, the
Capper-Kelly fair trade bill was offered. [
Footnote 4] It had no nonsigner provision. It merely
permitted resale price maintenance as respects specified classes of
commodities by declaring that no such "contract relating to the
sale or resale" shall be unlawful. As stated in the House Report,
that bill merely legalized an agreement "that the vendee will not
resell the commodity specified in the contract except as a
stipulated price." [
Footnote 5]
That bill became the model for the California act passed in 1931 --
the first state act permitting resale price maintenance. [
Footnote 6] The California act
contained no nonsigner clause. Neither did the Capper-Kelly bill
that
Page 341 U. S. 391
was introduced in the Seventy-Second Congress. [
Footnote 7] So far as material here, it was
identical with its predecessor.
The Capper-Kelly bill did not pass. And, by the time the next
bill was introduced -- three years later -- the California act had
been changed by the addition of the nonsigner provision. [
Footnote 8] That was in 1933. Yet,
when, in 1936, Senator Tydings introduced his first bill in the
Seventy-Fourth Congress, [
Footnote
9] he followed substantially the Capper-Kelly bills and wrote
no nonsigner provision into it. His bill merely legalized
"contracts or agreements prescribing minimum prices or other
conditions for the resale" of a commodity. By this date, several
additional states had resale price maintenance laws with nonsigner
provisions. [
Footnote 10]
Even though the state laws were the models for the federal bills,
the nonsigner provision was never added. That was true of the bill
introduced in the Seventy-Fifth Congress, as well as the subsequent
one. They all followed in this respect the pattern of the
Capper-Kelly bill as it appeared before the first nonsigner
provision was written into state law. The "contract" concept
utilized by Capper-Kelly before there was a nonsigner provision in
state law was thus continued even after the nonsigner provision
appeared. The inference, therefore, is strong that there was
continuity between the first Tydings bill and the preceding
Capper-Kelly bills. The Tydings bills built on the same foundation;
they were no more concerned with nonsigner provisions than were
their predecessors. In view of this history, we can only conclude
that, if the
Page 341 U. S. 392
draftsman intended that the nonsigning retailer was to be
coerced, it was strange indeed that he omitted the one clear
provision that would have accomplished that result.
An argument is made from the reports and debates to the effect
that "contracts or agreements" nevertheless includes the nonsigner
provisions of state law. The Senate Report on the first Tydings
bill, after stating that the California law authorized a
distributor "to make a contract that the purchaser will not resell"
except at the stipulated price, said that the proposed federal law
"does no more than to remove Federal obstacles to the enforcement
of contracts which the States themselves have declared lawful."
[
Footnote 11] The Senate
Report on the second Tydings bill, which was introduced in the
Seventy-fifth Congress, did little more than reprint the earlier
report. [
Footnote 12] The
House Report, heavily relied on here, gave a more extended
analysis. [
Footnote 13]
The House Report referred to the state fair trade acts as
authorizing the maintenance of resale prices by contract and as
providing that "third parties with notice are bound by the terms of
such a contract regardless of whether they are parties to it"; and
the Report also stated that the objective of the Act was to permit
the public policy of the states having such acts to operate with
respect to interstate contracts for the sale of goods. [
Footnote 14] This Report is the
strongest statement for respondents' position which is found in the
legislative history. The bill which that Report endorsed, however,
did not pass. The bill which became the law was attached by the
Senate Committee on the District of Columbia as a rider to the
District of Columbia revenue bill. In that form, it was debated and
passed.
Page 341 U. S. 393
It is true that the House Report quoted above [
Footnote 15] was referred to when the
Senate amendment to the revenue measure was before the House.
[
Footnote 16] And one
Congressman in the debate said that the nonsigner provision of
state laws was validated by the federal law.
But we do not take these remarks at face value. In the first
place, the House Report, while referring to the nonsigner provision
when describing a typical state fair trade act, is so drafted that
the voluntary contract is the core of the argument for the bill.
Hence, the General Statement in the Report states that the sole
objective of the Act was "to permit the public policy of States
having
fair trade acts' to operate with respect to interstate
contracts for the resale of goods"; and the fair trade
acts are referred to as legalizing "the maintenance, by
contract, of resale prices of branded or trade-marked goods."
[Footnote 17] (Italics
added.)
In the second place, the remarks relied on were not only about a
bill on which no vote was taken; they were about a bill which
sanctioned "contracts or agreements" prescribing not only "minimum
prices," but "other conditions" as well. The words "other
conditions" were dropped from the amendment that was made to the
revenue bill. Why they were deleted does not appear. It is said
that they have no relevance to the present problem, since we are
dealing here with "minimum prices," not with "other conditions."
But that answer does not quite hold. The question is the amount of
state law embraced in the words "contracts or agreements." It might
well be argued that one of the "conditions" attaching to a contract
fixing a minimum price would be the liability of a nonsigner.
Page 341 U. S. 394
We do no more than stir the doubt, for the doubt alone is enough
to make us skeptical of the full implications of the old report as
applied to a new and different bill.
We look for more definite clues; and we find the following
statement made on the floor by Senator Tydings:
"What does the amendment do? It permits a man who manufactures
an article to state the minimum resale price of the article in a
contract with the man who buys it for ultimate resale to the
public. . . . [
Footnote
18]"
Not once did Senator Tydings refer to the nonsigner provisions
of state law. Not once did he suggest that the amendment would
affect anyone but the retailer who signs the contract. We search
the words of the sponsors for a clear indication that coercive as
well as voluntary schemes or arrangements are permissible. We find
none. [
Footnote 19] What we
do find is the expression of fear in the minority report of the
Senate Committee that the nonsigner provisions of the state laws
would be made effective if the law passed. [
Footnote 20] These fears were presented in the
Senate debate by Senator King in opposition to the amendment.
[
Footnote 21] But the Senate
Report emphasizes the "permissive" nature of the state laws,
[
Footnote 22] not once
pointing to their coercive features.
The fears and doubts of the opposition are no authoritative
guide to the construction of legislation. It is the sponsors that
we look to when the meaning of the statutory
Page 341 U. S. 395
words is in doubt. And when we read what the sponsors wrote and
said about the amendment, we cannot find that the distributors were
to have the right to use not only a contract to fix retail prices,
but a club, as well. The words they used -- "contracts or
agreements" -- suggest just the contrary.
It should be remembered that it was the state laws that the
federal law was designed to accommodate. Federal regulation was to
give way to state regulation. When state regulation provided for
resale price maintenance by both those who contracted and those who
did not, and the federal regulation was relaxed only as respects
"contracts or agreements," the inference is strong that Congress
left the noncontracting group to be governed by preexisting law. In
other words, since Congress was writing a law to meet the
specifications of state law, it would seem that, if the nonsigner
provision as well as the "contract" provision of state law were to
be written into federal law, the pattern of the legislation would
have been different.
We could conclude that Congress carved out the vast exception
from the Sherman Act now claimed only if we were willing to assume
that it took a devious route and yet failed to make its purpose
plain.
Reversed.
* Together with No. 443,
Schwegmann Brothers et al. v.
Seagram Distillers Corp., also on certiorari to the same
court.
[
Footnote 1]
Resale price maintenance is allowed only as respects commodities
which bear, or the label or container of which bear, the trademark,
brand, or name of the producer or distributor and which are in free
and open competition with commodities of the same general class
produced or distributed by others. Excluded are agreements between
manufacturers, between producers, between wholesalers, between
brokers, between factors, between retailers or between persons,
firms or corporations in competition with each other.
[
Footnote 2]
The nonsigner clause in the Louisiana Act reads as follows:
"Wilfully and knowingly advertising, offering for sale or
selling any commodity at less than the price stipulated in any
contract entered into pursuant to the provision of section 1 of
this Act (§ 9809.1)
whether the person so advertising, offering
for sale or selling is or is not a party to such contract, is
unfair competition and is actionable at the suit of any person
damaged thereby."
[
Footnote 3]
"
Provided further, That the preceding proviso shall not
make lawful any contract or agreement, providing for the
establishment or maintenance of minimum resale prices on any
commodity herein involved, between manufacturers, or between
producers, or between wholesalers, . . . or between retailers, or
between persons, firms, or corporations in competition with each
other."
15 U.S.C. § 1.
[
Footnote 4]
S. 240, 71st Cong., 1st Sess.; H.R.11, 71st Cong., 1st Sess. See
H.R.Rep.No. 536, 71st Cong., 2d Sess.
[
Footnote 5]
H.R.Rep.No.536, 71st Cong., 2d Sess., p. 2.
[
Footnote 6]
Cal.Stat.1931, c. 278. The California Act was sometimes known as
"the Junior Capper-Kelly."
See Grether, Price Control
Under Fair Trade Legislation (1939) p. 54.
[
Footnote 7]
S. 97, 72d Cong., 1st Sess.; H.R.11, 72d Cong., 1st Sess.
[
Footnote 8]
Cal.Stat.1933, c. 260. The California law is now found in
Business & Professions Code, Pt. 2, c. 3, § 16904.
[
Footnote 9]
S. 3822, 74th Cong., 2d Sess., 80th Cong.Rec. 1007.
[
Footnote 10]
See Ill.Laws 1935, p. 1436, Ill.Rev.Stat.1949, c. 121
1/2, § 188
et seq.; Iowa Laws 1935, c. 106, I.C.A. § 550.1
et seq.; Md.Laws 1935, c. 212, § 2; N.J.Laws 1935, c. 58;
N.Y.Laws 1935, c. 976, § 2; Or.Laws 1935, c. 295, § 2; Pa.Laws
1935, No. 115, § 2; Wash.Laws 1935. c. 177, § 4; Wis.Laws 1935, c.
52.
[
Footnote 11]
S.Rep.No.2053, 74th Cong., 2d Sess. 2.
[
Footnote 12]
S.Rep.No.257, 75th Cong., 1st Sess.
[
Footnote 13]
H.R.Rep.No.382, 75th Cong., 1st Sess.
[
Footnote 14]
Id., p. 2.
[
Footnote 15]
Id.
[
Footnote 16]
See, e.g., the statement of Rep. Dirksen, a House
conferee, in 81 Cong.Rec. 8138.
[
Footnote 17]
H.R.Rep.No.382, 75th Cong., 1st Sess. 2.
[
Footnote 18]
81 Cong.Rec. 7495.
[
Footnote 19]
H.R.Rep.No.1413, 75th Cong., 1st Sess. 10 (the Conference Report
of the House) merely stated:
"This amendment provides for an amendment to the antitrust laws
under which contracts and agreements stipulating minimum resale
prices of certain commodities, and which are similar to contracts
and agreements which are lawful as applied to intrastate commerce,
are not to be regarded as being illegal under the antitrust
laws."
[
Footnote 20]
S.Rep.No.879, 75th Cong., 1st Sess.
[
Footnote 21]
81 Cong.Rec. 7491.
And see S.Rep.No.879, Part 2, 75th
Cong., 1st Sess.
[
Footnote 22]
S.Rep.No.879, 75th Cong., 1st Sess. 6.
MR. JUSTICE JACKSON, whom MR. JUSTICE MINTON joins,
concurring.
I agree with the Court's judgment and with its opinion insofar
as it rests upon the language of the Miller-Tydings Act. But it
does not appear that there is either necessity or propriety in
going back of it into legislative history.
Resort to legislative history is only justified where the face
of the Act is inescapably ambiguous, and then I think we should not
go beyond Committee reports, which presumably are well considered
and carefully prepared.
Page 341 U. S. 396
I cannot deny that I have sometimes offended against that rule.
But to select casual statements from floor debates, not always
distinguished for candor or accuracy, as a basis for making up our
minds what law Congress intended to enact is to substitute
ourselves for the Congress in one of its important functions. The
Rules of the House and Senate, with the sanction of the
Constitution, require three readings of an Act in each House before
final enactment. That is intended, I take it, to make sure that
each House knows what it is passing and passes what it wants, and
that what is enacted was formally reduced to writing. It is the
business of Congress to sum up its own debates in its legislation.
Moreover, it is only the words of the bill that have presidential
approval, where that approval is given. It is not to be supposed
that, in signing a bill, the President endorses the whole
Congressional Record. For us to undertake to reconstruct an
enactment from legislative history is merely to involve the Court
in political controversies which are quite proper in the enactment
of a bill but should have no place in its interpretation.
Moreover, there are practical reasons why we should accept
whenever possible the meaning which an enactment reveals on its
face. Laws are intended for all of our people to live by, and the
people go to law offices to learn what their rights under those
laws are. Here is a controversy which affects every little merchant
in many States. Aside from a few offices in the larger cities, the
materials of legislative history are not available to the lawyer
who can afford neither the cost of acquisition, the cost of
housing, or the cost of repeatedly examining the whole
congressional history. Moreover, if he could, he would not know any
way of anticipating what would impress enough members of the Court
to be controlling. To accept legislative debates to modify
statutory provisions
Page 341 U. S. 397
is to make the law inaccessible to a large part of the
country.
By and large, I think our function was well stated by Mr.
Justice Holmes: "We do not inquire what the legislature meant; we
ask only what the statute means." Holmes, Collected Legal Papers,
207.
See also Soon Hing v. Crowley, 113 U.
S. 703,
113 U. S.
710-711. And I can think of no better example of
legislative history that is unedifying and unilluminating that that
of the Act before us.
MR. JUSTICE FRANKFURTER, whom MR. JUSTICE BLACK and MR. JUSTICE
BURTON join, dissenting.
In 1890, Congress passed the Sherman Law, which declared
illegal
"[e]very contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations."
Act of July 2, 1890, § 1, 26 Stat. 209, 15 U.S.C. § 1. In 1937,
Congress passed the Miller-Tydings Amendment. This excepted from
the Sherman Law "contracts or agreements" prescribing minimum
prices for the resale of trademarked commodities where such
contracts or agreements were valid under State statute or policy.
Act of Aug. 17, 1937, Title VIII, 50 Stat. 673, 693, 15 U.S.C. § 1.
It would appear that, insofar as the Sherman Law made maintenance
of minimum resale prices illegal, the Miller-Tydings Amendment made
it legal to the extent that State law legalized it. "Contracts or
agreements" immunized by the Miller-Tydings Amendment surely cannot
have a narrower scope than "contract, combination . . . or
conspiracy" in the Sherman Law. The Miller-Tydings Amendment is an
amendment to § 1 of the Sherman Law. The category of contract
cannot be given different content in the very same section of the
same act, and every combination or conspiracy implies an
agreement.
Page 341 U. S. 398
The setting of the Miller-Tydings Amendment and its legislative
history remove any lingering doubts. The depression following 1929
gave impetus to the movement for legislation which would allow the
fixing of minimum resale prices. In 1931, California passed a
statute allowing a manufacturer to establish resale prices binding
only upon retailers who voluntarily entered into a contract with
him. This proved completely ineffective, and, in 1933, California
amended her statute to provide that such a contract established a
minimum price binding upon any person who had notice of the
contract. Grether, Experience in California with Fair Trade
Legislation Restricting Price Cutting, 24 Calif.L.Rev. 640, 644
(1936). This amendment was the so-called "nonsigner" clause which,
in effect, allowed a manufacturer or wholesaler to fix a minimum
resale price for his product. Every "fair trade" law thereafter
passed by any State contained this "nonsigner" clause. By the close
of 1936, 14 States had passed such laws. In 1937, 28 more States
passed them. Today, 45 out of 48 States have "fair trade" laws.
See Report of the Federal Trade Commission on Resale Price
Maintenance XXVII (Dec. 13, 1945).
A substantial obstacle remained in the path of the "fair trade"
movement. In 1911, we had decided
Dr. Miles Medical Co. v. John
D. Park & Sons Co., 220 U. S. 373.
There, in a suit brought against a "nonsigner," we held that an
agreement to maintain resale prices was a "contract . . . in
restraint of trade" which was contrary to the Sherman Law. To
remove this block, the Miller-Tydings Amendment was enacted. It is
said, however, that thereby Congress meant only to remove the bar
of the Sherman Law from agreements between the manufacturer and
retailer, that Congress did not mean to make valid the "nonsigner"
clause which formed an integral part of each of the 42 State
statutes in effect when the Amendment was passed.
Page 341 U. S. 399
The Miller-Tydings Amendment was passed as a rider to a Revenue
Bill for the District of Columbia. The Senate Committee which
attached the rider referred the Senate to S.Rep.No.2053, 74th
Cong., 2d Sess. [
Footnote 2/1] The
House Conference Report (H.R.Rep.No.1413, 75th Cong., 1st Sess.),
contains only five lines concerning the rider. But the rider was
not a new measure. It came as no surprise to the House, which
already had before it practically the same language in the Miller
Bill, reported favorably by the Committee on the Judiciary.
H.R.Rep.No.382, 75th Cong., 1st Sess. Both the House and Senate,
therefore, had before them reports dealing with the substance of
the Miller-Tydings Amendment. These reports speak for themselves,
and I attach them as
341
U.S. 384app|>appendices to this opinion.
341 U. S. 341
U.S. 402. Every State act referred to in these reports contained a
"nonsigner" provision I cannot see how, in view of these reports,
we can conclude that Congress meant the "nonsigner" provisions to
be invalid under the Sherman Law -- unless, that is, we are to
depart from the respect we have accorded authoritative legislative
history in scores of cases during the last decade.
See
cases collected in
Commissioner v. Estate of Church,
335 U. S. 632,
335 U. S. 687,
Appendix A. In many of these cases, the purpose of Congress was far
less clearly revealed than here. [
Footnote 2/2] It has never been questioned
Page 341 U. S. 400
in this Court that committee reports, as well as statements by
those in charge of a bill or of a report, are authoritative
elucidations of the scope of a measure.
It is suggested that we go to the words of the sponsors of the
Miller-Tydings Amendment. We have done so. Their words confirm the
plain meaning of the words of the statute and of the congressional
reports. Senator Tydings made the following statement:
"What we have attempted to do is what 42 States have already
written on their statute books. It is simply to back up those acts,
that is all; to have a code of fair trade practices written not by
a national board such as the N.R.A. but by each State, so that the
people may go to the State
Page 341 U. S. 401
legislature and correct immediately any abuses that may
develop."
81 Cong.Rec. 7496.
Representative Dirksen made a statement to the House as a member
of its Conference Committee. He referred to the case of
Old
Dearborn Distributing Co. v. Seagram Distillers Corp.,
299 U. S. 183, in
which this Court had held that the "nonsigner" provision of the
Illinois "fair trade" statute did not violate the Due Process
Clause. Mr. Dirksen continued:
"A question then arose as to whether or not the maintenance of
such resale prices under a State fair trade act might not be in
violation of the Sherman Anti-Trust Law of 1890 insofar as these
transactions sprang from a contract in interstate commerce. This
question was presented to the House Judiciary Committee and there
determined by the reporting of the Miller bill. It was essentially
nothing more than an enabling act which placed the stamp of
approval upon price maintenance transactions under State acts,
notwithstanding the Sherman Act of 1890."
81 Cong.Rec. 8138.
Every one of the 42 State acts which the Miller-Tydings
Amendment was to "back up" -- the acts on which the Miller-Tydings
Amendment was to place a "stamp of approval" -- contained a
"nonsigner" provision. As demonstrated by experience in California,
the State acts would have been futile without the "nonsigner"
clause. The Court now holds that the Miller-Tydings Amendment does
not cover these "nonsigner" provisions. Not only is the view of the
Court contrary to the words of the statute and to the legislative
history. It is also in conflict with the interpretation given the
Miller-Tydings Amendment by the Federal Trade Commission, [
Footnote 2/3] by the Department
Page 341 U. S. 402
of Justice, [
Footnote 2/4] and
by practically all persons adversely affected by the "fair trade"
laws. [
Footnote 2/5] The "fair
trade" laws may well be unsound as a matter of economics. Perhaps
Congress should not pass an important measure dealing with an
extraneous subject as a rider to a revenue bill, with the coercive
influence it exerts in avoiding a veto; perhaps it should restrict
legislation to a single relevant subject, as required by the
constitutions of three-fourths of the States. These are matters
beyond the Court's concern. Where both the words of a statute and
its legislative history clearly indicate the purpose of Congress,
it should be respected. We should not substitute our own notion of
what Congress should have done.
[
Footnote 2/1]
The Senate Report on the District of Columbia Revenue Bill,
S.Rep.No.879, 75th Cong., 1st Sess., quoted S.Rep.No.2053, 74th
Cong., 2d Sess.
See S.Rep.No.257, 75th Cong., 1st Sess.,
which also quotes the text of the earlier report.
[
Footnote 2/2]
The intricate verbal arguments used to support the Court's
decision do not affect the clarity of the statute and its
legislative history. (1) It is said that the proviso to the
Miller-Tydings Amendment makes it inapplicable to "nonsigner"
clauses in State acts. But the proviso only made explicit that the
Amendment applied only to vertical agreements and did not make
legal horizontal agreements, for example, those between retailers
or between manufacturers.
See statements of Senator
Tydings, 81 Cong.Rec. 7487, 7496. The wording of the proviso, in
fact, follows closely a statement of what the Senate Committee
thought was implicit in the State acts.
See S.Rep.No.2053,
74th Cong., 2d Sess. 2. (2) The fact that the 1931 California
statute used wording similar to the Miller-Tydings Amendment and
was later amended to refer to nonsigners is beside the mark. The
words of the 1933 amendment to the California statute make clear
that it was not, like the Miller-Tydings Amendment, designed to
remove the bar of an antitrust act. It was enacted to give an
affirmative right to recover from nonsigners, something the
Miller-Tydings Amendment does not purport to do. In such a statute
specific language referring to nonsigners would of course have to
be used. (3) It is said that H.R.Rep.No.382, 75th Cong., 1st Sess.,
refers to a bill containing the phrase "other conditions." The
words "other conditions" when used in conjunction with a phrase
referring to minimum prices, could scarcely mean anything except
"conditions other than minimum prices." We are here concerned with
minimum prices. (4) "Permissive" was used in the Senate Report not
to refer to retailers but to manufacturers.
"[The State acts] merely authorize a manufacturer or producer to
enter into contracts for the maintenance of his price, but they do
not compel him to do so. In other words, they are merely
permissive."
S.Rep.No.2053, 74th Cong., 2d Sess. 2.
[
Footnote 2/3]
See letter addressed to the President by the Chairman
of the Federal Trade Commission, S.Doc.No.58, 75th Cong., 1st
Sess., pp. 2-3.
See also Report of the Federal Trade
Commission on Resale Price Maintenance LXII (Dec. 13, 1945).
[
Footnote 2/4]
The Department of Justice appears to have instituted no
prosecutions because of enforcement of "fair trade" acts against
nonsigners. The Assistant Attorney General who played an important
part in enforcement of the antitrust laws called for repeal of the
Miller-Tydings Amendment because it made legal the nonsigner
provisions of the State "fair trade" acts. Statement of Mr. Thurman
Arnold, T.N.E.C. Hearings, pp. 18162-18165.
[
Footnote 2/5]
The contention that the "nonsigner" provisions are not within
the Miller-Tydings Amendment appears to have been made in only two
reported cases since the Amendment was passed in 1937.
Calamia
v. Goldsmith Bros., Inc., 299 N.Y. 636, 87 N.E.2d 50;
id., 299 N.Y. 795, 87 N.E.2d 687;
Pepsodent Co. v.
Krauss Co., 56 F. Supp.
922. In both, the argument was rejected.
|
341
U.S. 384app|
APPENDIX TO OPINION OF MR. JUSTICE FRANKFURTER
HOUSE REPORT No. 382, 75th Cong., 1st Sess.
The Committee on the Judiciary, to whom was referred the bill
(H.R. 1611) to amend the act entitled "An act to protect trade and
commerce against unlawful restraints and monopolies", approved July
2, 1890, after consideration, report the same favorably to the
House with an amendment with the recommendation that as amended the
bill do pass.
Page 341 U. S. 403
The committee amendment is as follows: strike out all after the
enacting clause and insert in lieu thereof the following:
"That section 1 of the Act entitled 'An Act to protect trade and
commerce against unlawful restraints and monopolies', approved July
2, 1890 (U.S.Code, title 15, sec. 1), be amended to read as
follows:"
"SECTION 1. Every contract, combination in the form of trust or
otherwise, or conspiracy in restraint of trade or commerce among
the several States, or which foreign nations, is hereby declared to
be illegal. Every person who shall make any such contract or engage
in any such combination or conspiracy, shall be deemed guilty of a
misdemeanor, and, on conviction thereof, shall be punished by fine
not exceeding $5,000, or by imprisonment not exceeding one year, or
by both said punishments, in the discretion of the court. Nothing
herein contained shall render illegal, contracts or agreements
prescribing minimum prices or other conditions for the resale of a
commodity which bears, or the label or container of which bears,
the trademark, brand, or name of the producer or distributor of
such commodity and which is in free and open competition with
commodities of the same general class produced or distributed by
others, when such contracts or agreements are lawful as applied to
intrastate transactions, under any statute, law, or public policy
now or hereafter in effect in any State, Territory, or the District
of Columbia in which such resale is made, or to which the commodity
is to be transported for such resale, and the making of such
contracts or agreements shall not be an unfair method of
competition under section 5, as amended and supplemented, of the
Act entitled 'An Act to create a Federal Trade Commission, to
Page 341 U. S. 404
define its powers and duties, and for other purposes,'"
approved September 26, 1914 (U.S.Code, title 15, sec. 45).
GENERAL STATEMENT
The sole objective of this proposed legislation is to permit the
public policy of States having "fair trade acts" to operate with
respect to interstate contracts for the resale of goods within
those States. The fair trade acts referred to legalize the
maintenance, by contract, of resale prices of branded or
trademarked goods which are in free competition with other goods of
the same general class.
To accomplish this end, the reported bill amends section 1 of
the Sherman Antitrust Act which declares every contract in
restraint of trade illegal. The amendment adds a sentence to the
section, in the nature of a limitation, to the effect, in
substance, that nothing therein contained shall render illegal
contracts prescribing minimum prices or other conditions for resale
of branded or trademarked goods when such contracts are lawful as
to intrastate transactions under the State law of the State in
which the resale is to be made; and that the making of such
contracts shall not be an unfair method of competition under
section 5 of the Federal Trade Commission Act.
In view of the decision of the Supreme Court in
Dr. Miles
Medical Co. v. John D. Park & Sons Co., 220 U.
S. 373, and other cases, it is doubtful, at least, that
such contracts are now valid in interstate commerce.
STATE FAIR TRADE ACTS
State fair trade acts typically provide, first, that contracts
may lawfully be made which provide for maintenance by contract of
resale prices of branded or trademarked competitive goods. Second,
that third parties
Page 341 U. S. 405
with notice are bound by the terms of such a contract regardless
of whether they are parties to it.
The pertinent provisions of the Illinois act, recently held
constitutional by the Supreme Court in the case of
Old Dearborn
Distributing Co. v. Seagram-Distillers Corporation,
299 U. S. 183
(decided Dec. 7, 1936), read as follows:
"SECTION 1. No contract relating to the sale or resale of a
commodity which bears, or the label or content of which bears, the
trademark, brand, or name of the producer or owner of such
commodity and which is in fair and open competition with
commodities of the same general class produced by others shall be
deemed in violation of any law of the State of Illinois by reason
of any of the following provisions which may be contained in such
contract:"
"(1) That the buyer will not resell such commodity except at the
price stipulated by the vendor."
"(2) That the producer or vendee of a commodity require upon the
sale of such commodity to another that such purchaser agree that he
will not, in turn, resell except at the price stipulated by such
producer or vendee."
"Such provisions in any contract shall be deemed to contain or
imply conditions that such commodity may be resold without
reference to such agreement in the following cases:"
"(1) In closing out the owner's stock for the purpose of
discontinuing delivery of any such commodity:
Provided,
however, that such stock is first offered to the manufacturer
of such stock at the original invoice price, at least ten (10) days
before such stock shall be offered for sale to the public."
"(2) When the goods are damaged or deteriorated in quality, and
notice is given to the public thereof."
"(3) By any officer acting under the orders of any court. "
Page 341 U. S. 406
"SEC. 2. Wilfully and knowingly advertising, offering for sale,
or selling any commodity at less than the price stipulated in any
contract entered into pursuant to the provisions of section 1 of
this Act, whether the person so advertising, offering for sale, or
selling is or is not a party to such contract, is unfair
competition, and is actionable at the suit of any person damaged
thereby."
The following States, the committee is advised, have adopted
fair trade acts: California, Washington, Oregon, Montana, Wyoming,
Arizona, New Mexico, Utah, North Dakota, South Dakota, Kansas,
Louisiana, Arkansas, Iowa, Wisconsin, Illinois, Kentucky,
Tennessee, Indiana, Ohio, Georgia, Virginia, West Virginia,
Pennsylvania, Maryland, New York, New Jersey, and Rhode Island.
The committee is advised that, in addition, one house of each of
the following States have passed a fair trade bill: South Carolina,
North Carolina, Idaho, Colorado, and Oklahoma.
The committee is further advised that bills are pending in the
Legislatures of Nevada, Michigan, Minnesota, Texas, Mississippi,
Delaware, Missouri, Connecticut, Massachusetts, New Hampshire, and
Maine; and that only one State, Vermont, has definitely rejected
legislation of this character.
ECONOMIC ASPECTS
The anticipated economic effects of the legislation here
proposed were presented both by proponents and opponents of the
bill in the hearings held by the subcommittee of the Committee on
the Judiciary in charge of the bill. On the one hand, it is urged
that predatory price-cutting is a weapon of monopolistic large
distributors to crush small businessmen. On the other hand, it is
contended that price-maintenance legislation tends unduly to
enhance
Page 341 U. S. 407
the price of goods to the consumer. To this argument, it is
answered that the free play of competition between products of
different manufacturers of the same general class will prevent such
a result.
However, in the opinion of the committee, those arguments are
more properly addressed to the State legislatures considering the
enactment of fair trade acts. It is the legislature's
responsibility to fix the public policy of the State. This
legislation merely seeks to help effectuate a public policy so
fixed in a State. It has no application to any State which does not
see fit to enact a fair trade act.
In this connection, the committee invites attention to the
following paragraph of the opinion of the Supreme Court, heretofore
referred to, upholding the constitutionality of the Illinois act,
the Court speaking through Mr. Justice Sutherland:
"There is a great body of fact and opinion tending to show that
price-cutting by retail dealers is not only injurious to the
goodwill and business of the producer and distributor of identified
goods, but injurious to the general public as well. The evidence to
that effect is voluminous, but it would serve no useful purpose to
review the evidence or to enlarge further upon the subject. True,
there is evidence, opinion, and argument to the contrary, but it
does not concern us to determine where the weight lies. We need say
no more than that the question may be regarded as fairly open to
differences of opinion. The legislation here in question proceeds
upon the former, and not the latter, view, and the legislative
determination in that respect, in the circumstances here disclosed,
is conclusive so far as this court is concerned. Where the question
of what the facts establish is a fairly debatable one, we accept
and
Page 341 U. S. 408
carry into effect the opinion of the legislature.
Radice v.
New York, 264 U. S. 292,
264 U. S.
294;
Zahn v. Board of Public Works,
274 U. S.
325,
274 U. S. 328, and cases
cited."
EFFECTUATION OF STATE PUBLIC POLICY
Your committee respectfully submit that sound public policy on
the part of the Federal Government lies in the direction of lending
assistance to the States to effectuate their own public policy with
regard to their internal affairs. It is submitted that this is
especially true where such assistance, as in this instance,
consists of removing a handicap resulting from the surrender of the
power over interstate commerce by the States to the Federal
Government.
* * * *
SENATE REPORT No. 2053, 74th CONG., 2d SESS.
The Committee on the Judiciary, having had under consideration
the bill (S. 3822) to amend the act entitled "An Act to protect
trade and commerce against unlawful restraints and monopolies",
approved July 2, 1890, report the same back with the recommendation
that the bill do pass.
In 1933, a law was enacted by the State of California
authorizing a manufacturer or producer of a commodity which bears
his trademark, brand, or name, and which is sold in free and open
competition with commodities of the same general class produced by
others, to make a contract that the purchaser will not resell such
commodity except at the price stipulated by the manufacturer or
producer.
The purpose of the California act, as expressed in its title,
was to protect trademark owners, distributors, and the general
public against injurious and uneconomic practices
Page 341 U. S. 409
in the distribution of articles of standard quality under a
trademark, brand, or name, and the particular practice against
which it was directed was the so-called "loss-leader selling."
Since the passage of the California act, similar legislation has
been enacted in 12 other States, namely, New York, Illinois,
Pennsylvania, New Jersey, Oregon, Washington, Wisconsin, Iowa,
Maryland, Ohio, Virginia, and Rhode Island (the last three since
the introduction of the proposed bill).
In still other States, contracts stipulating minimum resale
prices are valid at common law.
In the States where such contracts are lawful, it has been found
that loss-leader selling of identified merchandise sold under
competitive conditions operates as a fraud on the consumer,
destroys the producer's goodwill in his trademark, and is used by
the large merchant to eliminate his small independent
competitor.
In recommending the passage of S. 3822, the committee, while
fully recognizing the evils of loss-leader selling, is not required
to determine the effectiveness of the device adopted by the States
to eliminate the same.
It is sufficient that this type of selling unquestionably has
had a disastrous effect upon the small independent retailer,
thereby tending to create monopoly, and that a large number of
States have found that its evil effects can be mitigated, if not
eliminated, by legalizing contracts stipulating minimum resale
prices.
The Congress is not called upon to pass upon the effectiveness
of the remedy, but it should not put obstacles in the way of
efforts of the individual States to make the remedy effective.
Though there is no specific adjudication on the subject, it is
believed that contracts stipulating minimum resale prices, even
when they are made or are to be performed
Page 341 U. S. 410
in a State where such contracts are lawful, may violate the
Sherman Act whenever the goods sold under the contract move in
interstate commerce.
Consequently, many manufacturers not domiciled in the state of
the vendee are unwilling to run the risk of violating the Federal
law, and the effectiveness of the State fair trade laws is thereby
seriously impaired.
S. 3822 removes the doubt as to the applicability of the Sherman
Act by expressly legalizing such contracts where legal under the
laws of the State where made or where they are to be performed.
Moreover, the proposed bill declares such contracts shall not be
an unfair method of competition under the Federal Trade Commission
law.
The language of the bill, in describing the class of commodities
to which it is applicable, follows closely the language of the
State acts, and the scope of the bill is therefore carefully
limited to commodities "in free and open competition with
commodities of the same general class produced by others."
The State acts are in no sense general price-fixing acts. They
merely authorize a manufacturer or producer to enter into contracts
for the maintenance of his price, but they do not compel him to do
so. In other words, they are merely permissive.
They do not authorize horizontal contracts -- that is to say,
contracts or agreements between manufacturers, between producers,
or between wholesalers, or between retailers as to the sale or
resale price of any commodity.
They apply only to commodities which are in free and open
competition with commodities of the same general class produced by
others, and they therefore do not in any sense restrain trade or
competition. In fact, they legalize a device which is intended to
increase competition and prevent monopoly.
Page 341 U. S. 411
But, most important from the standpoint of the Congress, the
proposed bill merely permits the individual States to function,
without Federal restraint, within their proper sphere, and does not
commit the Congress to a national policy on the subject matter of
the State laws.
In other words, the bill does no more than to remove Federal
obstacles to the enforcement of contracts which the States
themselves have declared lawful.