Federal Trade Commission v. Consolidated Foods Corporation

PETITIONER: Federal Trade Commission
RESPONDENT: Consolidated Foods Corporation
LOCATION: Longshore and Warehouse Union

DOCKET NO.: 422
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 380 US 592 (1965)
ARGUED: Mar 10, 1965 / Mar 11, 1965
DECIDED: Apr 28, 1965

Facts of the case

Question

Media for Federal Trade Commission v. Consolidated Foods Corporation

Audio Transcription for Oral Argument - March 10, 1965 in Federal Trade Commission v. Consolidated Foods Corporation

Audio Transcription for Oral Argument - March 11, 1965 in Federal Trade Commission v. Consolidated Foods Corporation

Earl Warren:

Number 422, Federal Trade Commission, petitioner versus Consolidated Foods Corporation.

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, may it please the Court.

I think, first, I should create a correct an inadvertent the statement that I made yesterday, although it's not a point, it's not very essential.

There is testimony in the record at page is 1664 and 1665, to the effect that in 1950 the wholesale grocery business was declining, and that Consolidated, then began to move into the retail field.

It bought some chains which are identified in briefs.

It also attempted to organize some retailers, and the Cardinal Stores on a somewhat loser basis without buying into them, but making them a chain that it would help to manage.

As far as I can ascertain, the record does not show, how far Consolidated had become engaged in purchasing for resale at retail, and how far it was still purchasing for resale at wholesale, by the time this record was closed.

But, I don't think the point is of the essence, because in any event it was a large buyer, and I suppose also we don't lay any stress on it, that it's power as a buyer for immediate sale at retail was perhaps more important than it's power as a buyer, as a wholesaler where it would have to buy what it could sell instead of choosing what went on shelves itself, but I don't make anything at that point.

I just want to correct any misapprehension I might have left with the Court.

Now, yesterday, I was directing myself throughout the argument to the question whether the commission was warranted, leaving the evidence of post-acquisition market behavior aside for the moment, was warranted in finding that this merger created a probable injury to competition, within the meaning of Section 7 of the Clayton Act.

In a nutshell, the case, I think comes down to this.

The record shows, that Consolidated was a customer of concerns buying from 25% to 50% of the onion and garlic.

Indeed, that it was a customer of firms buying 25% from the Gentry division, that became part of Consolidated.

It was also a very large purchaser.

In addition, the record shows that the merger gave Consolidated at the absolute dominant position in the onion and garlic market and as I said before, 25% of all sales were made to its customers.

We also know as a matter of fact, that Consolidated was ready, able and willing, and it was ready and willing and at least in some cases able to use its purchasing power to acquire sales, to break into the new markets of garlic and onion.

I think, we know as a matter of commonsense and of commercial experience, that buying power in other markets can be used and has been used in a number of instances with devastating affect in foreclosing the market you are concerned with, two independent competitors who lack that leverage.

Now, we would say taking this together, and still for the moment, leaving aside the post-acquisition evidence, that it's indeed a necessary inference, that the combination of the two powers creates or may substantially lessen competition within the meaning of the statute.

That it creates sufficient probability of injury to independent competitor to cause Section 7 to apply.

That was the conclusion that the District Court and the Third Circuit reached in a comparable situation, in the Ingersoll Rand case cited in our briefs, but we don't need to go quite that far here.

All we need to argue is that the Federal Trade Commission could draw this conclusion, because after all, the very purpose of creating the Federal Trade Commission, as this court pointed out in the Cement Institute case, I wish I'd quoted it in my brief, the whole purpose of setting up the commission was to have a body that was capable of appraising the affects.

In that case, various competitive practices with Basing Point System, under Section 7 of the Clayton Act as amended of appraising the effects of various structural changes in the market, and what they were likely to do to competition.

The commission, remember, was according to legislative history made the principal instrument for enforcing Section 7, so that it's expertise could be brought to bare.

I think in the sense, the answer to the argument that the respondents make here, about there being no evidence concerning the degree of probability is that, the answer that was made in the Republic Aviation case in dealing with the Labor Board.

There, the proof showed only that there was a company rule, barring the solicitation of union members of the plant and wearing of union buttons.

And the company argued well there was no testimony concerning the extent to which this will interfere with union organization.

And the company replies that, that's something -- the court replied that is something for an expert body like the Labor Board to infer from the facts, one of the purposes it said which lead to the creation of such boards is to have decisions based upon evidential facts under the particular statue, made by experienced officials with an adequate appreciation of the subject interested their administration.

To move to still another area in the Market Street Railway case, it was held at a Public Utilities Commission could infer that a lowering of the rates, and being a fares on a Street Railway could infer without direct testimony that that would resolved in an increase of passenger traffic.

And the same thing has been applied during the Cement Institute case, and in the Morton Salt case to the Federal Trade Commission.