Atlantic Refining v. Federal Trade Commission

PETITIONER: Atlantic Refining
RESPONDENT: Federal Trade Commission
LOCATION: United States Post Office and Courthouse

DOCKET NO.: 292
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 381 US 357 (1965)
ARGUED: Mar 30, 1965
DECIDED: Jun 01, 1965

Facts of the case

Question

Media for Atlantic Refining v. Federal Trade Commission

Audio Transcription for Oral Argument - March 30, 1965 in Atlantic Refining v. Federal Trade Commission

Earl Warren:

Number 292, the Atlantic Refining Company, Petitioner versus Federal Trade Commission and number 296, the Goodyear Tire & Rubber Company versus Federal Trade Commission.

Mr. Ballard, you may proceed with your argument.

Frederic L. Ballard, Jr.:

May it please the Court.

This is a proceeding under Section 5 of the Federal Trade Commission Act.

The principle issue for the Court at this stage in the proceeding is the legality of a contract between the Atlantic Refining Company, an oil company, and the Goodyear Tire & Rubber Company, which is a maker of tires, tubes, and other rubber products.

Under this contract, Atlantic promotes the sale of Goodyear tires and batteries, and accessories, automotive accessories, which are called TBA.

They referred to in the proceedings and in the industry as TBA standing for tires, batteries, and accessories.

Atlantic promotes the sale of these articles through the service stations which handle Atlantic gasoline and this is Atlantic's part of the bargain.

Goodyear's part of the bargain is to pay Atlantic a commission for these services.

The Trade Commission issued a complaint charging that this sales and commission contract is an unfair method of competition within the meaning of Section 5 of the Act.

The examiner for the Federal Trade Commission after extensive hearings, upheld the legality of the contract, but he found that Atlantic had coerced its dealers to buy TBA, and he entered an order to prohibit that coercion.

This order in substance was affirmed by the Commission and it was also affirmed by the Court of Appeals from the Seventh Circuit.

Now Atlantic has not sought a further review of this portion of the order and this is the first point Your Honors that I would like to stress because it's a very important point.

As this case was presented to the Trade Commission, and as it was presented to the Court of Appeals for the Seventh Circuit, the issue of coercion was not only in the case, but it dominated the case.

This was as the Trade Commission saw it, and that the Seventh Circuit saw it, a coercion case.

Now if Your Honors please, we took vigorous exception to this.

We felt that the evidence did not support these findings, but having lost that issue before the Commission and having lost it again before the Seventh Circuit, we do not press it here and we accept the sections of the Commission's order which are designed broadly, sweepingly to prohibit and eliminate coercion and to guarantee to our dealers their freedom of choice.

Now Your Honors, we believe that that should have been the answer to this case.

We believe that once you are given -- once the fact of coercion is approved or accepted, that the hearing examiner was right.

The correct disposition of the case was an order against coercion.

This would have taken care of the competitive evil which was uppermost in the mind of the Commission and we know it was uppermost in the mind of the Commission Your Honors, because the great bulk of the testimony in this case was from dealer witnesses and actually ex-dealer witnesses who complained that that they had been forced by various methods of coercion, some sophisticated, some more open to buy Goodyear TBA.

And the remainder of the bulk of the testimony was from independents so-called independent wholesalers of TBA, people who called on these dealers from time to time and who complained that they found it extremely difficult if not to impossible to sell to the dealers and that they felt that the dealers were required to buy the TBA that Atlantic was promoting, that the dealers themselves felt this and that therefore they were foreclosed in the station.

Now Your Honors, we believe that this was the heart of the Commission's case, this notion of foreclosure, this notion of coercion, and it would be completely cured by the two paragraphs of the order which are not before this Court because we have accepted it.

Justice Bernnan:

[Inaudible] of pages B68 and 69 -- Section 7, 8 and 9?

Frederic L. Ballard, Jr.:

Your Honor, I don't have this.

I don't -- perhaps, it's in one of your papers.

It is not in our papers as such.

Frederic L. Ballard, Jr.:

I had the appendix --

The Goodyear Appendix.

Frederic L. Ballard, Jr.:

The -- in the Goodyear Appendix, the order of the hearing examiner, sir, is found on A 18 and 19.