Federal Trade Commission v. Universal-Rundle Corporation

PETITIONER: Federal Trade Commission
RESPONDENT: Universal-Rundle Corporation
LOCATION: Superior Court of Orange County North Carolina

DOCKET NO.: 101
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 387 US 244 (1967)
ARGUED: Mar 13, 1967
DECIDED: May 29, 1967

Facts of the case

Question

Media for Federal Trade Commission v. Universal-Rundle Corporation

Audio Transcription for Oral Argument - March 13, 1967 in Federal Trade Commission v. Universal-Rundle Corporation

Earl Warren:

Number 101, Federal Trade Commission, petitioner versus Universal-Rundle Corporation.

Mr. Rifkind.

Robert S. Rifkind:

Mr. Chief Justice, may it please the Court.

This case is here on writ of certiorari to the Seventh Circuit upon the petition of the Federal Trade Commission.

It presents for decision the question of whether the enforcement policy of the Federal Trade Commission is to be determined by the Commission or by the several Courts of Appeals.

More particularly, the question presented is whether the court below exceeded the proper bounds of its authority, in staying the Commission's order that Universal-Rundle cease-and-desist from violations of the Robinson-Patman Act until the Commission makes an industry-wide investigation of the pricing practices of Universal-Rundle's competitors.

It is recognized on all sides I believe, that the issue here is governed by this Courts decision in Moog Industries which held that the Commission's determination whether or not to withhold the cease-and-desist order until competitors are proceeded against, is not to be overturned by the Court of Appeals in the absence of a patent abuse of discretion.

Universal-Rundle is a manufacturer of plumbing fixtures.

In 1957, it enjoyed net sales of approximately $24 million.

It sells it wares to some 8000 dealers under its UR brand name.

In addition, it sells plumbing fixtures to Sears, Roebuck and Company, which are retailed under Sears' private brand Homart.

Sears is of course a very large retailer.

Its annual sales volume exceeds $3 billion and Sears, Roebuck owned some 60% of Universal-Rundle's capital stock and I should say it was this intimate relationship between Sears and Rundle that led initially to the focusing of attention on Rundle.

Abe Fortas:

Does the Trade Commission order cover the Homart products or just the U.R. Products?

Robert S. Rifkind:

It does not because it was eventually determined after very lengthy hearings, most of which had been deleted from this record that the Homart and the UR lines were not of like grade and quality.

On August 4, 1960, the Trade Commission issued two complaints charging Sears and Rundle respectively with violations of the Robinson-Patman Act.

The complaint against Rundle alleged that Rundle was violating Section 2 (a), in two ways; first, by selling fixtures to Sears under the Homart brand at lower prices than it sold its UR line of fixtures to competitors of Sears and second, by selling its own UR line at different prices to purchasers competing in the resale of the UR line.

A motion by Commission's counsel to consolidate the two cases was denied by the hearing examiner and hearings were then commences the Rundle case in October 1962.

Following the close of those hearings, the examiner found as I've just indicated to Mr. Justice Fortas that the Homart and UR lines were not of like grade and quality, and he therefore dismissed so much of the complaint as charged -- as charged Rundle with discriminating in favor of Sears.

With respect to the remainder of the complaint, the hearing examiner found that Rundle sold UR brand plumbing fixtures to some purchasers in the Philadelphia-Camden area at prices substantially below those charged by respondent for products of like grade and quality to other competing purchasers in the same market area.

He also found that in the competitive circumstances prevailing, the disfavored dealers were likely to suffer competitive injury if Rundle's discriminatory practices were to continue and he therefore ordered Rundle to cease-and-desist from discriminating in price between customers who compete in fact with each other in the resale of Rundle's fixtures other than the Homart line.

On cross-appeals to the Commission, the hearing examiner's initial decision was affirmed in all respects that are relevant here.

The Commission rejected Rundle's contention that the requisite injury to competition had not been shown.

In particular, the Commission held that the fact that price differential was -- were attributable to truckload discounts which were offered to all customers did not negate competitive injury because it has been shown that truckload discounts were beyond -- the truckload quantities were beyond the buying capabilities of some of the customers.

The Commission's final order was issued on June 12, 1964 and on July 20, 1964 Rundle petitioned the Commission to withdraw that order.

The petition also prayed that reentry of the order be stayed for 18 months that it be reentered only on 30 days notice to Rundle, and that an immediate temporary stay issue pending a decision on the petition.

The petition alleged that the stay was sought to afford the Commission sufficient time to investigate and institute whatever proceedings are deemed appropriate by the Commission to correct the industry-wide practice of granting discounts on truckload shippings.

The petition further alleged that if the cease-and-desist order was not stayed pending corrective action of industry-wide practices, Rundle would suffer competitive disadvantage and extreme hardship.

In support of these contentions, Rundle attached exhibits indicating that its six principal competitors, all offered truckload discounts.

It also urged that Rundle's market share exclusive of its sales to Sears was 5.75% ranking sixth in the industry and that Rundle suffered losses in the proceeding three and a half years whereas its six major competitors had enjoyed profits.