Federal Trade Commission v. Eastman Kodak Co.

274 U.S. 619, 47 S. Ct. 688, 71 L. Ed. 1238, 1927 U.S. LEXIS 56
CourtSupreme Court of the United States
DecidedMay 31, 1927
Docket215
StatusPublished
Cited by40 cases

This text of 274 U.S. 619 (Federal Trade Commission v. Eastman Kodak Co.) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Trade Commission v. Eastman Kodak Co., 274 U.S. 619, 47 S. Ct. 688, 71 L. Ed. 1238, 1927 U.S. LEXIS 56 (1927).

Opinions

Mr. Justice Sanford

delivered the opinion of the Court.

This writ brings up for review a decree of the. Circuit Court of Appeals setting aside in part an order of the Federal Trade Commission, entered after a due hearing in a proceeding instituted by it under § 5 of the Federal Trade Commission Act,1 by which the Eastman Kodak Company, the Allied Laboratories Association, Inc., and others were required to desist from acts held by the Commission to constitute unfair methods of competition in the manufacture and sale of positive cinematograph films in interstate and foreign commerce.

These positive films are raw materials used by film laboratories in making positive prints of motion pictures that are thrown upon the screen. The Eastman Company originated the commercial manufacture of such films many years ago. In 1920 it manufactured and sold 94 per cent, of those used in the United States; but in 1921, owing to competition by importers of films manufactured in foreign countries, its sales decreased to 81 per cent. Upon an agreed statement of facts, and the inferences which it drew therefrom, the-Commission found, in effect, that thereafter the Eastman Company, with the purpose and intent of maintaining its. monopoly and lessening competition in the sale of such films, acquired three laboratories used in making motion picture prints, whose combined capacity exceeded that of all the other laboratories [621]*621east of Chicago, and announced its intention of entering upon the manufacture of such prints; that this constituted an effective threat of overpowering competitive force which compelled the members of the Allied Laboratories — an association of manufacturers of such prints— to- enter into an agreement or understanding with the Eastman Company that the members of the Allied Laboratories would use American-made films only, to the exclusion of foreign-made films, so long as the Company did not compete with them in manufacturing, prints, and that the company — which continued to maintain its laboratories in readiness for operation — would not manufacture prints in competition with them so long as they used American-made films exclusively; that this agreement or understanding had the effect of lessening competition in the sale of the films in interstate and foreign commerce and sustaining the monopoly of the Company therein; and that its ownership of the three laboratories and their maintenance in condition for operation, continued to have the effect of inducing and compelling the manufacturers of prints to use only the films made by the Company.

On these and subsidiary findings, the Commission entered an order requiring the defendants to cease and desist from combining and cooperating in restraining competition in the manufacture and sale of positive films and maintaining the monopoly of the Eastman Company in their sale in interstate and foreign commerce, by the agreement and understanding that the members of the Allied Laboratories would use American-made films exclusively, provided the Company would not operate its laboratories in competition with them, and that the Company would not operate its laboratories for the manufacture of prints in competition with them, provided they used and. continued to use American-made films exclusively; and by other incidental means. And the Com[622]*622mission further ordered that for the purpose" of preventing the maintenance of the monopoly of the Eastman Company in the manufacture and sale of positive film^ and restoring competitive freedom in their distribution! and sale, the Company should with due diligence sell and convey its three laboratories to parties not directly connected, or indirectly interested, with it.

On a petition by the Eastman Company and the Allied Laboratories for a review of this order, the Circuit Court óf Appeals — without referring specifically to the purpose for which the Eastman Company acquired and maintáined the three laboratories — held, in substance, that the reciprocal agreement or understanding between the Eastman Company and the Allied Laboratories that their members would use only American-made films in the manufacture of prints, and the Company would not operate its laboratories for the manufacture, of prints, was an Unfair method of competition which the Commission had authority to prevent; but that — one judge dissenting— it was not unlawful for the Eastman Company to equip itself to enter upon the business of manufacturing prints, there being nothing unfair in its going into this business, and the Commission had no authority to order the Company to divest itself of the laboratories which it had lawfully acquired. 7 Fed. (2d) 994. A decree was accordingly entered affirming the order of the Commission in so far as it required the Eastman Company and the Allied Laboratories to desist from their agreement or understanding in reference to the use of American-made films and the operation .of the Eastman Company’s laboratories, but setting aside the order in so far as it required the Eastman Company to sell its laboratories, and in other incidental respeets.

This writ of certiorari was then granted on a petition by the Commission which challenged the correctness of the decree of the Court of Appeals only in respect to the [623]*623setting aside of so much of thé order as required the Eastman Company to dispose of its laboratories.

For present purposes we do not find it necessary to determine the questions whether the finding of the Commission as to the purpose for which the Eastman Company acquired the three laboratories — based in part at least upon inferences from the. agreed statement of facts — was correct, and whether, in any event, it was conclusive upon the Court of Appeals; but, in the absence of any specific reference to this matter by the Court' of Appeals, we shall assume the correctness of the Commission’s finding, and proceed, on that assumption, to the consideration of the only other question presented in the petition for the writ of certiorari and pressed in this Court, namely, whether the Commission had authority to order the Eastman Company to sell and convey its laboratories to other parties.

The proceeding before the Commission was instituted under § 5 of the Federal Trade Commission Act, and its authority did not go beyond the provisions of that section. By these the Commission is empowered to prevent the using of “ unfair methods of competition ” in interstate and foreign commerce, and, if it finds that “ any unfair method of competition ” is being used, to issúe an order requiring the offender “to cease and desist from using such method of competition.” The Commission exercises only the administrative functions delegated to it by the Act, not judicial powers. National Harness, etc. Association v. Federal Trade Commission (C. C. A.), 268 Fed. 705, 707; Chamber of Commerce v. Federad Trade Commission (C. C. A.), 280 Fed. 45, 48. It has not been delegated the authority of a court of equity. And a Circuit Court of Appeals on a petition to review its order is limited to the question whether or riot it has properly exercised the administrative authority given it by the Act, and may not sustain or award relief beyond [624]*624the authority of the Commission; such review being appellate and revisory merely, and not an exercise of original jurisdiction by the court itself.

The question here presented is in effect ruled by Federal Trade Commission v. Western Meat Co.,

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Bluebook (online)
274 U.S. 619, 47 S. Ct. 688, 71 L. Ed. 1238, 1927 U.S. LEXIS 56, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-trade-commission-v-eastman-kodak-co-scotus-1927.