Petitioner, an independent wholesale and retail distributor of
gasoline and oil, brought this treble damage action against his
supplier, Standard Oil Co., alleging injuries resulting from
respondent's price discriminations in violation of § 2(a) of the
Clayton Act, as amended by the Robinson-Patman Act. The evidence
showed that, for over two years, Standard's charges to petitioner
were higher than those to (1) its Branded Dealers who competed with
petitioner, and (2) Signal, a wholesaler, whose gas was sold to a
subsidiary (Western Hyway), which, in turn, sold to Western's
subsidiary (Regal), a major competitor of petitioner, the lower
price being passed on at each stage, so that Regal was able to
undersell petitioner. The jury returned a verdict for petitioner.
The Court of Appeals, while finding Standard's liability clear for
favoring the Branded Dealers, held the "fourth level" injuries
petitioner sustained from the impaired competition with Regal too
far removed from respondent to come within the Act. Since the
jury's verdict did not disclose what amount of the damages awarded
was attributable to Regal's conduct, the court ordered a new trial.
That court, for the trial judge's guidance on retrial, also noted
that any financial losses to petitioner from the inability of two
of his corporations to pay him agreed brokerage fees for securing
gasoline, for rental on leases of service stations, and for other
indebtedness were too incidental to support recovery under the
antitrust laws.
Held:
1. Section 2(a) of the Clayton Act, as amended by the
Robinson-Patman Act, applies to respondent's price discriminations,
which are not immunized from coverage under the statute simply
because the product involved passed through additional formal
exchanges before reaching petitioner's actual competitor.
Cf.
FTC v. Fred Meyer, Inc., 390 U. S. 341. Pp.
395 U. S.
646-648.
2. The evidence was sufficient to show a causal connection
between Standard's price discrimination and the damage to
petitioner's business. Pp.
395 U. S. 648-649.
Page 395 U. S. 643
3. Since petitioner was the principal victim of Standard's price
discrimination, and not just an innocent bystander, he was entitled
to present evidence of all his losses to the jury. Pp.
395 U. S.
649-650.
396 F.2d 809, reversed and case remanded to District Court for
reinstatement of verdict and judgment.
MR. JUSTICE BLACK delivered the opinion of the Court.
In 1959 petitioner, Clyde A. Perkins, brought this civil
antitrust action against the Standard Oil Company of California
seeking treble damages under § 2 of the Clayton Act, as amended by
the Robinson-Patman Act, [
Footnote
1] for injuries alleged to have resulted from Standard's price
discriminations in the sale of gasoline and oil during a period of
over two years from 1955 to 1957. In 1963, after
Page 395 U. S. 644
a lengthy and complicated trial, the jury returned a verdict for
Perkins and assessed damages against Standard of $333,404.57,
which, after trebling by the court and after the addition of
attorney's fees, resulted in a total judgment against Standard of
$1,298,213.71. On review, the Court of Appeals for the Ninth
Circuit held that the assessment of damages included injuries to
Perkins that were not recoverable under the Act, and therefore
ordered a new trial.
Standard Oil Co. of California v.
Perkins, 396 F.2d 809. We granted certiorari to determine
whether the Court of Appeals, in reversing the judgment, had
correctly construed the Robinson-Patman Act.
Petitioner Perkins entered the oil and gasoline business in 1928
as the operator of a single service station in the State of
Washington. By the mid-1950's, he had become one of the largest
independent distributors of gasoline and oil in both Washington and
Oregon. He was both a wholesaler, operating storage plants and
trucking equipment, and a retailer through his own Perkins
stations. From 1945 until 1957, Perkins purchased substantially all
of his gasoline requirements from Standard. From 1955 to 1957,
Standard charged Perkins a higher price for its gasoline and oil
than Standard charged to its own Branded Dealers, [
Footnote 2] who competed with Perkins, and to
Signal Oil & Gas Co., a wholesaler whose gas eventually reached
the pumps of a major competitor of Perkins. Perkins contends that
Standard's price and price-related discriminations against him
seriously harmed his competitive position and forced him, in 1957,
to sacrifice by sale what remained of his once independent business
to
Page 395 U. S. 645
one of the major companies in the gasoline business, Union
Oil.
Many of the elements of liability on the part of Standard are
not in dispute. Standard has admitted that it sold gasoline and oil
to its Branded Dealers and to Signal Oil at discriminatorily lower
prices than those at which it sold to Perkins. The Court of Appeals
found that Standard's liability for the harm done Perkins by the
favorable treatment of the Branded Dealers was beyond dispute. Of
this aspect of the damages, the Court of Appeals said:
"The Branded Dealers purchased gasoline and oil from Standard
which they, in turn, sold at retail. With respect to them, Perkins'
story is quickly told. Because of Standard's favoritism and
discrimination, they were able to and did offer lower prices and
better services and facilities than Perkins in marketing at
retail."
396 F.2d at 812. With regard to Perkins' damage resulting from
Standard's discrimination in favor of Signal Oil, however, the
Court of Appeals took a different view because of the following
circumstances under which the discriminatory sales were made.
Standard admittedly sold gasoline to Signal at a lower price than
it sold to Perkins. Signal sold this Standard gasoline to Western
Hyway, which, in turn, sold the Standard gasoline to Regal Stations
Co., Perkins' competitor. Perkins alleged that the lower price
charged Signal by Standard was passed on to Signal's subsidiary
Western Hyway, and then to Western's subsidiary, Regal. Regal's
stations were thus able to undersell Perkins' stations and,
according to Perkins, the resulting competitive harm, along with
that he suffered at the hands of Standard's favored Branded
Dealers, destroyed his ability to compete and eventually forced him
to sell what was left of his business. The Court of
Page 395 U. S. 646
Appeals held, however, that any harm suffered by Perkins from
impaired competition with Regal stations was beyond the scope of
the Robinson-Patman Act because Regal was too far removed from
Standard in the chain of distribution. A substantial part of the
damages the jury assessed against Standard, as the Court of Appeals
viewed it, might have been based upon a finding that Perkins
suffered competitive harm from the price advantage held by Regal
stations. That court, concluding that "the whole verdict is
tainted, since the amount reflected in it by Regal's conduct cannot
be ascertained, . . ." reversed the judgment and ordered a new
trial. 396 F.2d at 813.
We disagree with the Court of Appeals' conclusion that § 2 of
the Clayton Act, as amended by the Robinson-Patman Act, does not
apply to the damages suffered by Perkins as a result of the price
advantage granted by Standard to Signal, then by Signal to Western,
then by Western to Regal. The Act, in pertinent part, provides:
"(a) It shall be unlawful for any person engaged in commerce, .
. . either directly or indirectly, to discriminate in price between
different purchasers of commodities of like grade and quality, . .
. 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. . . ."
The Court of Appeals read this language as limiting "the
distributing levels on which a supplier's price discrimination will
be recognized as potentially injurious to competition." 396 F.2d at
812. According to that court, the coverage of the Act is restricted
to injuries caused by an impairment of competition with (1) the
seller
Page 395 U. S. 647
("any person who . . . grants . . . such discrimination"), (2)
the favored purchaser ("any person who . . . knowingly receives the
benefit of such discrimination"), and (3) customers of the
discriminating seller or favored purchaser ("customers of either of
them"). Here, Perkins' injuries resulted in part from impaired
competition with a customer (Regal) of a customer (Western Hyway)
of the favored purchaser (Signal). The Court of Appeals termed
these injuries "fourth level," and held that they were not
protected by the Robinson-Patman Act. We conclude that this
limitation is wholly an artificial one, and is completely
unwarranted by the language or purpose of the Act.
In
FTC v. Fred Meyer, Inc., 390 U.
S. 341 (1968), we held that a retailer who buys through
a wholesaler could be considered a "customer" of the original
supplier within the meaning of § 2(d) of the Clayton Act, as
amended by the Robinson-Patman Act, a section dealing with
discrimination in promotional allowances which is closely analogous
to § 2(a) involved in this case. In
Meyer, the Court
stated that to read "customer" narrowly would be wholly untenable
when viewed in light of the purposes of the Robinson-Patman Act.
Similarly, to read "customer" more narrowly in this section than we
did in the section involved in
Meyer would allow price
discriminators to avoid the sanctions of the Act by the simple
expedient of adding an additional link to the distribution chain.
Here, for example, Standard supplied gasoline and oil to Signal.
Signal, allegedly because it furnished Standard with part of its
vital supply of crude petroleum, was able to insist upon a
discriminatorily lower price. Had Signal then sold its gas directly
to the Regal stations, giving Regal stations a competitive
advantage, there would be no question, even under the decision of
the Court of Appeals in this case, that a clear violation of the
Robinson-Patman Act had been committed. Instead of selling directly
to the retailer
Page 395 U. S. 648
Regal, however, Signal transferred the gasoline first to its
subsidiary, Western Hyway, which, in turn, supplied the Regal
stations. Signal owned 60% of the stock of Western Hyway; Western,
in turn, owned 55% of the stock of the Regal stations. We find no
basis in the language or purpose of the Act for immunizing
Standard's price discriminations simply because the product in
question passed through an additional formal exchange before
reaching the level of Perkins' actual competitor. From Perkins'
point of view, the competitive harm done him by Standard is
certainly no less because of the presence of an additional link in
this particular distribution chain from the producer to the
retailer. Here, Standard discriminated in price between Perkins and
Signal, and there was evidence from which the jury could conclude
that Perkins was harmed competitively when Signal's price advantage
was passed on to Perkins' retail competitor Regal. These facts are
sufficient to give rise to recoverable damages under the
Robinson-Patman Act.
Before an injured party can recover damages under the Act, he
must, of course, be able to show a causal connection between the
price discrimination in violation of the Act and the injury
suffered. This is true regardless of the "level" in the chain of
distribution on which the injury occurs. The court below held that,
as a matter of law,
"Section 2(a) of the Act does not recognize a causal connection,
essential to liability, between a supplier's price discrimination
and the trade practices of a customer as far removed on the
distributive ladder as Regal was from Standard."
396 F.2d at 816. As we have noted above, we do not accept such
an artificial limitation. If there is sufficient evidence in the
record to support an inference of causation, the ultimate
conclusion as to what that evidence proves is for the jury.
Continental Co. v. Union Carbide, 370 U.
S. 690,
370 U. S.
700-701 (1962). Here, the trial judge properly charged
the jury that Perkins had the burden of showing that any damage to
his business
Page 395 U. S. 649
was proximately caused by Standard's price discriminations, and
there was substantial evidence from which the jury could infer
causation. There was evidence that Signal received a lower price
from Standard than did Perkins, that this price advantage was
passed on, at least in part, to Regal, and that Regal was thereby
able to undercut Perkins' price on gasoline. Furthermore, there was
evidence that Perkins repeatedly complained to Standard officials
that the discriminatory price advantage given Signal was being
passed down to Regal, and evidence that Standard officials were
aware that Perkins' business was in danger of being destroyed by
Standard's discriminatory practices. This evidence is sufficient to
sustain the jury's award of damages under the Robinson-Patman
Act.
One other minor group of damages was found to be improper by the
Court of Appeals, and we conclude that this ruling was also
erroneous. Perkins submitted some evidence tending to show that he
as an individual had suffered financial losses because the two
failing Perkins corporations (Perkins of Washington and Perkins of
Oregon) were unable to pay him agreed brokerage fees for securing
gasoline, rental on leases of service stations, and other
indebtedness. The Court of Appeals, in order to give guidance to
the trial judge at the proposed new trial, noted that, in its
opinion, these damages were not proximately caused by Standard's
violations, and that Perkins should not recover for these damages
in a second trial. For this proposition, the Court of Appeals cited
Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358, 363,
which held that
"the rule is that one who is only incidentally injured by a
violation of the antitrust laws -- the bystander who was hit but
not aimed at -- cannot recover against the violator."
It is clear in this case, however, that Perkins was no mere
innocent bystander; he was the principal victim of the price
discrimination practiced by Standard. Since he was directly
injured
Page 395 U. S. 650
and was clearly entitled to bring this suit, he was entitled to
present evidence of all of his losses to the jury. Moreover, it is
obvious from the opinion of the Court of Appeals that this question
was being decided not because there was any reversible error at the
first trial, but in order to give guidance for the conduct of any
new trial. The record in this case does not show that the jury
included an award for any of these minor items in its judgment. It
is impossible to say that they were included, because they were not
covered in the trial judge's charge to the jury. While the trial
judge treated many items of damage specifically, there was no
charge -- either specific or general -- upon which the jury could
have felt free to include such items in its award. For this reason,
the Court of Appeals could not have reversed the jury's verdict in
this case on this ground.
Respondent has argued in its brief several minor trial rulings
which it contends were in error. Most of these additional arguments
were rejected by the Court of Appeals. We have examined the others,
and find them without merit. We therefore see no need to prolong
this litigation, which began nearly 10 years ago. The jury's
verdict and judgment should be reinstated.
It is so ordered.
MR. JUSTICE HARLAN took no part in the consideration or decision
of this case.
[
Footnote 1]
Section 2 of the Clayton Act, 3 Stat. 730, as amended, 49 Stat.
1526, 15 U.S.C. § 13, provides in pertinent part as follows:
"(a) 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 or any Territory thereof or the District of Columbia
or any insular possession or other place under the jurisdiction of
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. . . ."
[
Footnote 2]
Branded Dealers were independent operators of Standard's Signal
and Chevron stations who marketed gasoline and oil under Standard's
brand names. During the claim period, the Signal Branded Dealers
had no connection with Signal Oil & Gas Co., which is involved
in this litigation as a wholesaler.
MR. JUSTICE MARSHALL, with whom MR. JUSTICE STEWART joins,
concurring in part and dissenting in part.
I agree with the Court that the judgment of the Court of Appeals
cannot be affirmed. But I cannot agree either with the broad, and
somewhat vague, ground of decision chosen by the Court or with the
conclusion that the jury verdict in this case must be
reinstated.
As I view it, this case poses only a very narrow question.
Respondent discriminated in price in favor of
Page 395 U. S. 651
Signal Oil & Gas Co. Through a chain of majority-owned
subsidiaries, Signal marketed this gasoline at stations which
competed with petitioner's outlets. Since we are dealing with a
chain of majority-owned subsidiaries, it seems quite likely that
the discriminatory price given Signal would have a vital effect on
the pricing decisions of the stations which eventually marketed
Signal's gasoline. Even if the lower price were not passed on to
the company marketing the gasoline, that company would be more
willing to accept losses in a protracted price war if it knew that
its "grandfather" corporation were making some extra, and partially
offsetting, profits. For this reason, and since, in interpreting
the antitrust laws, "[w]e must look at the economic reality of the
relevant transactions,"
United States v. Concentrated Phosphate
Export Assn., Inc., 393 U. S. 199,
393 U. S. 208
(1968), I would treat Signal, the beneficiary of the discriminatory
price, as if it were directly competing with petitioner's stations.
Respondent's price discrimination, on this view, in effect injured
competition with a company which "knowingly receive[d] the benefit
of such discrimination," Clayton Act § 2(a), 38 Stat. 730, as
amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. §
13(a), and the case could properly go to the jury for determination
of "causation" and damages. Accordingly, I see no reason to
intimate, even by indirection, what the result would be if wholly
independent firms had intervened in the distribution chain. I would
therefore explicitly limit the holding to the facts of the case
before us.
Moreover, I see no reason for the Court to undertake the
difficult task of sorting out all the other issues in this case.
The Court of Appeals based its reversal solely on its view of the
"fourth line injury" problem. Other issues were treated on the
assumption that the case would have to go back for trial. The
record in this case is long and complicated, and we have no idea
what
Page 395 U. S. 652
view the Court of Appeals would have taken about respondent's
other allegations of error had the major prop for its decision been
removed. The law under the Robinson-Patman Act is convoluted enough
without the addition of numerous explicit and implicit holdings
which may come back to bedevil us in future years. I would leave
these other problems unresolved, so that the Court of Appeals can
look at them anew in the context of this Court's holding on the
major issue of general importance presented by the petition for
certiorari.