FTC v. Anheuser-Busch, Inc.

PETITIONER: FTC
RESPONDENT: Anheuser-Busch, Inc.
LOCATION: Dry Docks at Reed, WV

DOCKET NO.: 389
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 363 US 536 (1960)
ARGUED: Mar 02, 1960
DECIDED: Jun 20, 1960

Facts of the case

Question

Media for FTC v. Anheuser-Busch, Inc.

Audio Transcription for Oral Argument - March 02, 1960 (Part 1) in FTC v. Anheuser-Busch, Inc.

Audio Transcription for Oral Argument - March 02, 1960 (Part 2) in FTC v. Anheuser-Busch, Inc.

Earl Warren:

-- you may proceed.

Edgar E. Barton:

Thank you Your Honor.

During the course of the price reductions that AB made in St. Louis, it overhauled its sales methods and intensified them.

The amount spent for advertising both in St. Louis and outside St. Louis was increased to the level of its competitors in St. Louis and increased outside and all these things were done for the purpose of obtaining more business.

With reference to the question Your Honor asked as to why Budweiser price was raised in March of 1955.

The reason which appears in the record is that in that -- at that time Anheuser-Busch put out a new product, which was called Busch Lager and was retailed as (Inaudible) of the regional beers in St. Louis.

It was also put out over a wider area.

That one didn't go over and a new product Busch (Inaudible) was put out and that's was presently on the market, but in connection with putting out the new product it was inconsistent to have Budweiser in the new product selling at the same price, so Budweiser was raised, the amount which was specified.

Thereafter, several months after the price raise in March of 1955 the Federal Trade Commission charged that our price reduction in St Louis violated the Clayton Act as amended by Robinson-Patman.

Now, in essence the facts found by the Commission here, and I think the facts are important is that AB is not a -- one of the delights of industry such as might be true in the Standard Oil case back in the days when before this Clayton was passed.

Anheuser-Busch has 70% of national sales of beers.

As a matter of fact all of the competitors in St Louis were among the largest 35 brewers in United States and Falstaff was number 4 among the brewers in the United States.

Now its true Budweiser sold at many markets in the country at various prices depending upon that differing freight rates from St Louis to those markets, depending upon the different tax rate that exist.

There's a great variety of taxes for beer which is up in Washington DC and in Missouri.

Missouri has the lowest tax on beer than any State in the Union.

And --

Potter Stewart:

Is all the beer actually brewed in St Louis, or do you have breweries around country?

Edgar E. Barton:

We have two other breweries Your Honors.

There's a brewery in North New Jersey and there's a brewer -- brewery in Los Angeles, California.

Falstaff on the other hand have seven breweries located conveniently around the 1/3 of the country in which they do business.

And therefore they have lower freight rates from their breweries to markets than we have from St Louis to those markets.

Now the Commission expressly recognized therefore, that it would be contrary to market reality to require a uniform pricing by AB or by any other brewery.

At the time of our temporary price reductions in St Louis our competitors there accounted for 83% of the market.

We had 12% and 5% was represented by other national shipping breweries and some others.

All the competitors in St Louis they stated were substantial companies doing business as counsel said over a wide area and they have between 75% and 90% of their sales outside St Louis where there was no price reduction.

Petitioner concedes that there was no proof of any sales below cost during either price reductions and indeed there was a concession of the trial that we operated profitably in St Louis during the period.

The only claimed result of the price reduction was that AB, the last place seller in St Louis temporarily gained some sales in the St Louis market while its competitors accounted for somewhat less of the market during that period than they previously had, 2/3 of the market rather than 4/5 of the market.

Now on these bare facts, the Commission found that we violated the Robinson-Patman Act stating that we've discriminated in price because we reduced the prices in St Louis and didn't reduce them elsewhere and that we injured competition because the difference in our prices in St Louis and markets elsewhere caused the diversion of sale to us from our competitors in St Louis.

That's what they held and the meeting competition event was inapplicable they said for two reasons.

First, they said its -- they claim that our reduced prices which at their lowest exactly equal to our competitor's prices did not meet an equally low price but rather under kept them and they held further in denying the meeting competition defense that since we were not losing sales in St Louis but losing them elsewhere, we couldn't reduce our prices in St Louis in order to recoup some of those loses, even though the competitors inside St Louis and outside St Louis to whom we are losing the business were by and large the same and it was feasible for us to reduce the prices in St Louis to recapture part of that business and it wasn't feasible for us to do it outside St Louis.