Chain Institute, Inc. v. Federal Trade Commission

246 F.2d 231
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 3, 1957
DocketNo. 14821
StatusPublished
Cited by1 cases

This text of 246 F.2d 231 (Chain Institute, Inc. v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chain Institute, Inc. v. Federal Trade Commission, 246 F.2d 231 (8th Cir. 1957).

Opinion

SANBORN, Circuit Judge.

This case comes to this Court upon petitions to review a cease and desist order of the Federal Trade Commission1 which is based upon its determination that the petitioners had conspired to bring about uniformity in prices for chain and chain products, in violation of Section 5 of the Federal Trade Commission Act.2

The petitioners are: the principal manufacturers of chain and chain products in the United States; the trade association of which they are members; and certain of the officers of the association. The Commission on December 22, 1942, issued a complaint charging them with having conspired to fix and maintain identical delivered prices for such products. Delivered prices are those charged by a seller for his goods when and where delivered. On October 9, 1945, the Commission issued an amended complaint which contained two counts. The first count charged the petitioners with conspiring, in violation of § 5 of the Federal Trade Commission Act, to fix identical delivered prices for their respective products by the use of the same delivered pricing methods, which are referred to as (1) a basing point system, (2) a freight equalization system, and (3) a zone system; and thereby preventing the forces of competition from making and determining price quotations. The second count of the amended complaint charged the petitioners with price discrimination, in violation of § 2(a) of the Clayton Act, as amended.3 That count was ultimately dismissed by the Commission. The petitioners denied all of the material allegations of the amended complaint. Evidence was heard by a Trial Examiner designated by the Commission. The hearings commenced in April of 1946 and continued through 1947 and into 1948. The record evidence was closed July 7, 1948. The Trial Examiner filed his recommended decision on September 23, 1948. It was later amended in some particulars. The case was argued before the Commission, on exceptions to the Trial Examiner’s report, on April 7, 1949; was reargued September 22,1950; and was finally decided by the Commission adversely to petitioners on the first count February 16, 1953, by a vote of 3 to 1, Commissioner Mason dissenting and Commissioner Carretta not participating. The cease and desist order under review was entered on the same date. In addition to the dismissal of the second count, the amended complaint was also dismissed as to several individuals who had been joined as parties. The record evidence necessarily reflects conditions in the chain industry as they existed prior to July 1948.

The petitioners on April 20, 1953, filed their “Joint and Several Petition to Review” the order of the Commission, The John M. Russell Manufacturing Company, Inc., and Turner & Seymour Manufacturing Company, who were par[234]*234ties to the joint petition, filed a supplemental petition to review the order, asserting, in effect, that there was no adequate evidentiary basis for a finding that they had participated in a conspiracy to fix prices. They asked that the relief prayed for in the joint petition be granted. The petitioners originally all sought a complete review and reversal of the Commission’s findings and order. On June 17, 1954, they (with the exception of the two petitioners who had filed the supplemental petition and the Columbus McKinnon Chain Corporation) moved this Court for leave to withdraw their challenge to the Commission’s findings and order with respect to the price fixing conspiracy charge, except as such findings and order bore upon the use of the delivered pricing methods.

The cease and desist order of the Commission prohibited broadly a continuation of the price fixing conspiracy which the Commission had found to exist. Included in this part of the order was a subparagraph numbered (6) requiring the petitioners who make or deal in chain to cease and desist from entering into or continuing any common course! of action, agreement or conspiracy to

“Quote or sell chain or chain products at prices calculated or determined pursuant to or in accordance with the single basing point delivered-price system, the freight equalization delivered-price system, or the zone delivered-price system; or quote or sell chain or chain products at prices calculated or determined pursuant to or in accordance with any other plan or system which results in identical price quotations or prices for chain or chain products at points of quotation or sale or to particular purchasers by any two or more sellers of chain or chain products using such plan or system or which prevents purchasers from finding any advantage in price in (Sealing with one or more as against another seller.”

In addition, the Commission included in the order a third ordering paragraph. That paragraph required each of the corporate petitioners to

“cease and desist from quoting or selling chain or chain products at prices calculated or determined pursuant to or in accordance with a single basing point delivered-price system, a freight equalization delivered-price system, or a zone delivered-price system, for the purpose or with the effect of systematically matching the delivered-price quotations or the delivered prices of other sellers of chain or chain products and thereby preventing purchasers from finding any advantage in price in dealing with one or more sellers as against another.”

The validity of both of these paragraphs of the order is challenged as being without adequate evidentiary support and exceeding the powers of the Commission.

The case was argued and submitted to this Court at its March Session 1956. The Court of Appeals for the Seventh Circuit had just decided the case of National Lead Co. v. Federal Trade Commission, 227 F.2d 825, which also involved an alleged conspiracy to fix prices. The Commission in its cease and desist order in that case had included a paragraph similar to the third ordering paragraph in this case, forbidding the respondents there involved “from quoting or selling lead pigments at prices calculated or determined in whole or in part pursuant to or in accordance with a zone delivered price system for the purpose or with the effect of systematically matching the delivered price quotations or the delivered prices of other sellers of lead pigments and thereby preventing purchasers from- finding any advantage in price in dealing with one or more sellers as against another.” 227 F.2d at page 840. The Seventh Circuit ruled that that paragraph of the order was invalid. See pages 840-844 of 227 F.2d. In his argument, in the instant case, counsel for the Commission conceded that if that ruling was correct, the corresponding paragraph in the order under [235]*235review here could not be sustained. Moreover, Commissioner Mason, who had dissented in both the National Lead Co. case and this case, had said in his dissenting opinion, with respect to the order now under review: “The order in this case, like the order in Docket 5253, National Lead Company, et al., goes further than to suppress practices found to be unlawful.” We therefore deferred decision pending final disposition of the National Lead Co. case, in which the Supreme Court granted certiorari. That Court on February 25, 1957, in Federal Trade Commission v. National Lead Co., 352 U.S. 419, 77 S.Ct.

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Chain Institute, Inc. v. Federal Trade Commission
246 F.2d 231 (Eighth Circuit, 1957)

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Bluebook (online)
246 F.2d 231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chain-institute-inc-v-federal-trade-commission-ca8-1957.