Federal Trade Commission v. Bunte Bros.

312 U.S. 349, 61 S. Ct. 580, 85 L. Ed. 881, 1941 U.S. LEXIS 1315

• Court: Supreme Court of the United States
• Decided: February 17, 1941
• Docket: 85
• Status: Published

Opinions

Mr. Justice Frankfurter

delivered the opinion of the Court.

The Federal Trade Commission found that IBunte Brothers, candy manufacturers in Illinois, sold products there in what the trade calls “break and take” packages, which makes the amount the purchaser receives dependent upon chance; and that thereby it was enabled in the Illinois market to compete unfairly with manufacturers outside of Illinois who could not indulge in this device because the Trade Commission has barred “break and take” packages as an “unfair method of competition.” Federal Trade Commission Act, § 5 (a), 38 Stat. 719, as amended, 15 U. S. C. § 45, Federal Trade Comm’n v. Keppel & Bro., 291 U. S. 304. Deeming the “break and take” sales unfair methods of competition under § 5, even though the sales took place wholly within Illinois, the Commission forbade Bunte Brothers further use of the device. The circuit court of appeals set aside the order, 110 F. 2d 412, and we brought the case here because the issue at stake presents an important aspect of the interplay of state and federal authority. 311 U. S. 624.

The scope of § 5 is in controversy.¹ That section, the court below held, authorizes the Commission to proceed only against business practices employed in interstate commerce. The Commission urges that its powers are not so restricted, that it may also proscribe unfair methods used in intrastate sales when these result in a handicap to interstate competitors.

While one may not end with the words of a disputed statute, one certainly begins there. “Unfair methods of competition in commerce” are the concern of § 5, and the Commission, is “directed to prevent persons . . . from using unfair methods of competition in commerce . . .” The “commerce” in which these methods are barred is interstate commerce.² Neither ordinary English speech nor the considered language of legislation would aptly describe the sales by Bunte Brothers of its “break and take” assortments in Illinois as “using-unfair methods of competition in [interstate] commerce.” When in order to protect interstate commerce Congress has regulated activities which in isolation are merely local, it has normally conveyed its purpose explicitly. See for example, National Labor Relations Act, §§ 2 (7), 9 (c), 10 (a), 49 Stat. 450, 453, 29 U. S. C. §§ 152 (7), 159 (c), 160 (a); Bituminous Coal Act, § 4-A, 50 Stat. 83, 15 U. S. C. § 834; Federal Employers’ Liability Act, § 1, 35 Stat. 65, as amended, 53 Stat. 1404, 45 U. S. C. § 51. To be sure, the construction of every such statute presents a unique problem in which words derive vitality from the aim and nature of the specific legislation. But bearing in mind that in ascertaining the scope of congressional legislation a due regard for a proper adjustment of the local and national interests in our federal scheme must always be in the background, we ought not to find in § 5 radiations beyond the obvious meaning of language unless otherwise the purpose of the Act would be defeated. Minnesota Rate Cases, 230 U. S. 352, 398-412.

That for a quarter century the Commission has made no such claim is a powerful indication that effective enforcement of the Trade Commission Act is not dependent on control over intrastate transactions.³ Authority actually granted by Congress of course cannot evaporate through lack of administrative exercise. But just as established practice may shed light on the extent of power conveyed by general statutory language, so the want of assertion of power by those who presumably would be alert to exercise it, is equally significant in determining whether such power was actually conferred. See Norwegian Nitrogen Co. v. United States, 288 U. S. 294, 315. This practical construction of the Act by those entrusted with its administration is reinforced by the Commission’s unsuccessful attempt in 1935 to secure from Congress an express grant of authority over transactions “affecting” commerce in addition to its control of practices in commerce. S. Rep. No. 46, 74th Cong., 1st Sess. These circumstances are all the more significant in that during the whole of the Commission’s life the so-called Shreveport doctrine operated in the regulatory field committed to the Interstate Commerce Commission. And it is that doctrine which gives the contention of the Trade Commission its strongest support.

Translation of an implication drawn from the special aspects of one statute to a totally different statute is treacherous business. The Interstate Commerce Act and the Federal Trade Commission Act are widely disparate in their historic settings, in the enterprises which they affect, in the range of control they exercise, and in the relation of these controls to the functioning of the federal system. We need not at this late day rehearse the considerations that led to the Shreveport decision. Houston, E. & W. T. Ry. Co. v. United States, 234 U. S. 342. The nub of it, in the language of Chief Justice Taft, lay in the relation between intrastate and interstate railroad traffic: “Effective control of the one must embrace some control over the other in view of the blending of both in actual operation. The same rails and the same cars carry both. The same men conduct them.” Wisconsin Railroad Comm’n v. Chicago, B. & Q. R. Co., 257 U. S. 563, 588. And so when the Interstate Commerce Commission found that the intrastate rates of a carrier subject to the Act in effect operated as a discrimination against its interstate traffic, this Court sustained the power of the Commission to bring the two rates into harmonious relation and thereby to terminate the unlawful discrimination. Congress in 1920 revised the Interstate Commerce Act and explicitly confirmed this power of the Commerce Commission. 41 Stat. 484, 49 U. S. C. § 13 (4).

There is the widest difference in practical operation between the control over local traffic intimately connected with interstate traffic and the regulatory authority-here asserted. Unlike the relatively precise situation presented by rate discrimination, “unfair competition” was designed by Congress as a flexible concept with evolving content. Federal Trade Comm’n v. Keppel & Bro., supra, at 311-312. It touches the greatest variety of unrelated activities. The Trade Commission in its Report for 1939 lists as “unfair competition” thirty-one diverse types of business practices which run the gamut from bribing employees of prospective customers to selling below cost for hindering competition.⁴ The construction of § 5 urged by the Commission would thus give a federal agency pervasive control over myriads of local businesses in matters heretofore traditionally left to local custom or local law. Such control bears no resemblance to the strictly confined authority growing out of railroad rate discrimination. An inroad upon local conditions and local standards of such far-reaching import as is involved here, ought to await a clearer mandate from Congress. The problem now before us is very different from that which was recently presented by United States v. Darby, ante, p. 100. We had there to consider the full scope of the constitutional power of Congress under the Commerce Clause in relation to the subject matter of the Fair Labor Standards Act. This case presents the narrow question of what Congress did, not what it could do. And we merely hold that to read “unfair methods of competition in [interstate] commerce” as though it meant “unfair methods of competition in any way affecting interstate commerce,” requires, in view of all the relevant considerations, much clearer manifestation of intention than Congress has furnished.

Affirmed.

1 “Sec. 5. (a) Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful. '

“The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations . . . from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce.”

2 “Sec. 4. The words defined in this section shall have the following meaning when found in this Act, to wit:

“ ‘Commerce’ means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any state or foreign nation, or between the District of Columbia and any State or Territory or foreign nation.”

3 The Commission makes no claim of a contrary administrative practice. The cases which it cites in no way mitigate what is stated in the text of the opinion. (1) Counsel for the Commission apparently argued for recognition of the power claimed here in Canfield Oil Co. v. Federal Trade Comm’n, 274 F. 571, but the Commission had made no findings of discrimination against commerce and had only found that the Oil Company was engaged in commerce. (2) The jurisdiction sustained in Chamber of Commerce of Minneapolis v. Federal Trade Comm’n, 13 F. 2d 673, was very different from that claimed here. It rested on the fact that the Chamber conducted a market for grain in the current of interstate commerce. See Chicago Board of Trade v. Olsen, 262 U. S. 1, and cases cited. (3) The order of the Commission reviewed in California Rice Industry v. Federal Trade Comm’n, 102 F. 2d 716, resulted from proceedings instituted more than a year after this proceeding against Bunte Brothers had begun.

4 Report, pp. 83, 88. And see these additional examples (pp. 83, 85, 89) :

“6. Making false and disparaging statements respecting competitors’ products and business, in some cases under the guise of ostensibly disinterested and specially informed sources or through purported scientific, but in fact misleading, demonstrations or tests; and making false and misleading representations with respect to competitors’ products, such as that seller’s product is competitor’s, and through use of such practices as deceptive simulation of competitor’s counter-display catalogs or trade names; and that competitor’s business has been discontinued, and that seller is successor thereto or purchaser and owner thereof.”

“10. Selling rebuilt, second-hand, renovated, or old products or articles made from used or second-hand materials as and for new.”

“19. Using containers ostensibly of the capacity customarily associated in the mind of the general purchasing public -with standard weights or quantities of the product therein contained, or using such standard containers only partially filled to capacity, so as to make it appear to the purchaser that he is receiving the standard weight or quantity.”

“30. Failing and refusing to deal justly and fairly with customers in consummating transactions undertaken, through such practices as refusing to correct mistakes in filling orders, or to make promised adjustments or refunds, and retaining, without refund, goods returned for exchange or adjustment, and enforcing, notwithstanding agents’ alterations, printed terms of purchase contracts, and exacting payments in excess of customers’ commitments.”

“31. Shipping products at market prices to its customers or prospective customers or to the customers or prospective customers of competitors without an, order and then inducing or attempting by various means to induce the consignees to accept and purchase such consignments.”