*2
MAJOR,
Before
FINNEGAN and
Judges.
SCHNACKENBERG, Circuit
Judge.
SCHNACKENBERG, Circuit
Petitioner,
sometimes referred
here-
Niehoff,
in
asks us to review order
respond-
to cease and
desist issued
ent, sometimes referred to herein as the
commission, upon
charging
complaint
2(a)
of section
violation
amended
Clayton Act.1
charges
complaint
Niehoff,
ig-
in its nationwide
sale
automotive
hydraulic
parts
nition and
brake
to auto-
jobbers
engaged
competitively
motive
in
any person
stroy,
prevent
any
en
or
unlawful for
shall be
1. “It
commerce,
grants
person
knowingly
gaged
of such
course
who either
or
indirectly,
directly
commerce,
the benefit
such discrimina-
either
or
received
tion,
or with
either of
between
customers of
them:
discriminate
grade
nothing
Provided,
purchasers
That
contained
of commodities of like
sec-
any
14-21,
quality,
either or
22-27 of this title
where
tions
discrimination
differentials which make
involved in such
commerce,
commodi
due
where such
allowance
differences in the
are in
delivery
consumption,
manufacture,
sale,
use,
or re
cost
re-
are sold
ties
differing
*,
sulting
from the
the United States
methods
sale within
quantities
commodities
the effect of such discrimina
where
be
to lessen com
to such
sold
delivered:
monopoly
petition
or tend
create
commerce,
injure,
any
de-
line of
products,
cost
discriminates
cost
resale of such
pur-
2(a)”
(except
quantity
particular
a minor
small
between
large
purchas- which
set
quantity
the commission on review
and its
chasers
*3
“ * * *
aside);
be
dis-
ers,
and
the effect thereof
that
and that
competition
substantially
criminations
under
to lessen
were
‘good
2(b)
monopoly
lines
faith’
in the
of section
a
tend to create
Accordingly
fav-
its
Act.”
and
the examiner entered
in which Niehoff
commerce
engaged,
provisional
in-
or to
a
purchasers
order to
desist.
are
cease and
ored
Upon
appeals
with
jure, destroy
cross
to
parties,
May
or with
Niehoff,
purchasers
commission,
both
said favored
on
findings
them.
affirmed
of either of
and
customers
slight
the examiner with
that
admits
Niehoff’s amended answer
and entered
now
review.
the order
Illinois,
Chicago,
in the
engaged
it is
Summarized,
facts,
which are
basic
manufacture,
distribution
sale and
dispute,
not in real
are
stated.
now
prod-
automotive
commerce of
interstate
com-
and distributes
sells
purchasers
supplies to different
ucts and
products
merce
and
certain automotive
substantial
and
and
is in
active
that
many
supplies.
items
There are
different
companies simi-
competition with other
ignition
classified into
lines:
an
three
manufacturing
larly engaged
and sell-
line, hydraulic
testing
line,
equip-
and a
supplies;
ing
products and
automotive
line.
ment
products to
its
admits that
sells
price
purchasers
different
different
Niehoff’s total
sales
in the
volume
alleges
differentials,
such dif-
sample year
that
$2,068,499,
1949 was
and
openly
to all
ferentials are
available
approximately
rep-
of this amount
90%
discrimina-
ignition
its
and are not
line,
resented
sales
tory,
thereof
and denies that
the effect
hydraulic line,
in the
6%
2%
competi-
testing
lessen
be
equipment line, and
in rebuilt
2%
monopoly in its line
create a
and
items.
alleges
commerce;
dif-
such
that
Its domestic sales were made to some
allowance
make
due
ferentials
jobber
prices paid
accounts. The
delivery
in the cost of
differences
sale
these customers were
first
based in the
differing
resulting
methods
from the
jobber price
instance on
list
products
quantities
and
in which such
which
Nie
base
schedule.
pur-
supplies
are sold or delivered
grants
hoff
discounts from
schedule
alleges
;
also
chasers
paid
vary
prices actually
the net
granted by Niehoff
as were
differentials
jobber
its several
accounts. For dis
equal-
granted in
faith to meet
were
purposes
job
count
Niehoff classified its
ly
prices of its
beginning
ber customers at the
of each
hearings
year
purchases
Following
on the basis of
made
before
extensive
during
preceding year.
examiner,
dis
of fact.
A
he entered
prompt payment
petitioner
count
“that
sold
accorded
He concluded
regardless
grade
quality
to all accounts
products
classifica
of like
cus-
grants
freight
prices,
tion. Niehoff
uniform
the cus-
at different
tomers
jobber
competed
allowances to all
another in the
customers and
tomers
one
uniformly
products,
treats all accounts
han
and that
of these
resale
dling
discriminatory
returned for credit.
were
merchandise
2(a)
examiner,
As found
the various
in violation
“
placed
one
differentials
accounts are
of four classifications
justified by
differences in
:1
are
inn
referred to
some
view the case
1a. The classifications
cumstance
material,
confusing,
appearing
there
what
overlapping
be
classes. This cir-
purchases
found,
Jobbers whose
shows,
annual
It also
record
$1,200
are less
than
classified
Niehoff sold to
more
one account
“jobbers
agreement”
single city
trading
who
without
in a
area and that
pay
regular jobber
price.
paid
the net
list
accounts within
given trading areas varied.
It was fur-
Jobbers whose annual
trading
ther found that accounts within
range
$1,200
$3,600
from
Nie-
receive
competed
areas
with one another in sell-
agreement”
“jobbers
hoff’s
as such
products.
following
receive the
and al-
discount
price:
jobber
lowances
the base
commission found that Niehoff’s
*4
price differentials constituted discrimi-
Annualvolume
price.
nations in
It was further
found
purchases
of
Discount
that
the effect of these discriminations
allow
ance,
percent may
substantially lessen,
injure,
be to
destroy
prevent competition
re-
in the
$l,200-$2,400
5
...................
finding
products.
of
sale Niehoff’s
$2,400-$3,600
7
...................
took into account the
of the differen-
size
$3,600 and over..................10
tials, amounting to as much as
16%
the rec-
purchase price;
net
the fact
that
purchases
Jobbers whose annual
parts
ord shows that
the automotive
range
$3,600
$6,000
from
are classified
highly competitive;
job-
business is
that
agreement”
as
and
“distributors without
ranging
many
stock
bers
15
lines
receive a
discount off Niehoff’s base
operator
or 20 for the small
more
jobber price
purchases.
on all
large operator
100 for the
and
lines
these
purchases
4. Jobbers whose annual
generally
items;
consist
thousands of
of
$6,000
are in
excess
are classified as
profit depends
net
that
on the accumula-
agreement”
“distributors with
as
and
margins
small
on the numerous
discount off Niehoff’s
receive 10%
handled;
items
and that
the record also
purchases
base
on all
fol-
and the
margin
generally
profit
that the
shows
lowing additional
discount allowances
runs
of sales.
about 4%
the form of
:3
credits
merchandise
The commission also found that Nie-
hoff’s discounts to favored distributors
Annualvolume
powerful
contribute a direct and
advan-
purchasesDiscoun
allow
tage
recipient
to the
and concluded that
ance,
percent
probability
there was a reasonable
that
$6,000-$8,400 ...................
5
pricing
practices
$8,400-$12,000
6
..................
competition
secondary
lessened
4
$12,000 and
over................
level
the effect
discrimina-
destroy
injure,
tions
be to
found,
The commission
not
between
receiv-
system
disputed,
pricing
this
the benefit
the discriminations and
purchase
they
provided
prices.
to whom
net
were
accorded.
those
plan
designations
Niehoff
sold to one
In 1950 the
used to describe
buying group
States,
in each
known
Cotton
the accounts
classification were
composed
Inc.,
changed
1949 was
the basis of
nine
classification
jobbers.
group
buying prices
Niehoff
treats
as a
remained the same for
single
selling
purchaser,
on its class 4
each class.
jobber
pays
member
basis.
the in-
3. The additional discount
allowances
do
group headquarters
voice
and it
purchases
apply
stocks,
of service
monthly
purchases by
remits
all
turn
equipment
brake fluid.
during
Except
its members
that month.
monthly billing
accounts were in
In
class 1 and
one
instead of
jobber
purchased
operation
nothing.
list
less cash dis-
saves Niehoff
In 1949
2;
were
in class
accounts
annual
count
one member
individually
in class
and 98
were
accounts
class
would
the dis-
given.
awas
deviation from
4. There
the stated
count
expressed
for the
adhere
introduced evidence
to the views
those
purpose
justifying its
difieren-
cases.
in costs of sale
tials
differences
baye
tborougIl
n We
made a
o
ivery.
per
e
ence
ame
is evi
searcb 0f the record
and considered
advertising
expenses,
expense, and
sales
parties
evidence introduced
both
on,
processing
Upon
costs oí
orders.
consid-
,.
involving
justification
issues
cost
.
,
, «
(cid:127)
commis-
eration of all this evidence the
n
-u
alleged good
j. =,
±
faith of Niehoff m meet-
.
(cid:127)
-i
xt. i
Niehoff s claim that
i
x -l
rejected
»
sion
...
,
mg equally
competitors,
n
.
low
of its
™
cost-justified
differentials were
within
While there
be some
conflict
.,
,
meaning
proviso
^
,,
.
issues,
evidence
.
these
find that
we
^ ' n
support
there
substantial evidence to
introduced
also
evidence
tbe
of the commission.8 Sub
prove
differentials
gtantial evidence means such relevant
equally
made in
faith to meet the
might
evidence as a reasonable mind
ac
competitor
ag
conclusion',
cept
adeqliate
support
*5
meaning
good
pro
within the
faith
the
Consolidated Edison
v.
Co. of New York
2(b)
The
viso of section
of the Act.5
B.,
197, 229,
N. L. R.
305 U.S.
59 S.Ct.
not
commission found
Niehoff did
prices
206
n at least business,9 delay power that this Niehoff's court has no to competitors, postpone compliance has 19 group and included with the commis- competitors presently are 3 sion’s im- who order. If this be true we are complaints potent postpone orders to cease date of the effective pending against and, desist furthermore, them before under sec- commission, ing required be- other tion 11 of the act we can be pric- free to continue enforce the their order in the manner therein ing practices words, provided delay. unless until cease without In other according against desist commission, are them in orders entered wit- we proceedings yet participate in, commenced. ness not interfere with, death of Niehoff economic against appears It thus the order machinery while the commission contin- entered at when was a time operate ues desist toward cease and against only had a few commission acted against competitors. orders per- this firm’s argument that, suaded ju However, we do not admit lapse is in- view the of time which impotency dicial in this situation. Sec evitably proceedings before involved Clayton gives Act11 commission, will Niehoff’s business power, alia, modify inter an or suffer economic extinction before der commission. includes prac- adjudicates upon trade power change part of an order competitors, which in tices of Niehoff’s stating when it shall take effect. We are.essentially purpose *6 'their and.effect power have held12 court the Nie- condemned the similar to' those modify appeals enforce, set aside or .of follow if This will hoff order. result of the order is commission’s an exercise by required of its elimination Niehoff is original jurisdiction, appel rather than charge higher selling methods to jurisdiction, late and that the court products the for its protect rights own its orders of the charged against competitors whom any parties any manner in which yet has not ruled. commission general equity jurisdic trial might injunction tion do so in an suit. posi commission takes The order in this case on was issued stay compli power to has no tion that it May 17, 1955 and directed that Niehoff part upon a It relies its order. ance with “forthwith” cease and desist. order Clayton of the amended injunction. of an the nature We contending Act,10 no discre that it has right upon a consider its effect of the law. enforcement as to light equitable princi Niehoff part section 11 cite It fails to grant ples, accordingly. and to relief provides that commission .which * knowing way have no in advance what requir an order “shall issue proceedings, any, if further will be had person and desist from to cease such * * * against by the commission Niehoff’s com within the violations petitors to whom we have (Italics sup heretofore re by said order.” time fixed fixing opinion emphasis.) of the our ferred. The time which It is at plied language against statutory vests order shall become that this postpone power the time is matter over which effective we now effect. jurisdiction, is to order take an the exercise at reserve of which depend upon the will course of event, future any the commission In proceedings against permissive commission’s exercised this has case argues 11, that reason and it For section power n 11. 15 21. § U.S.C.A. Niehoff’s business Another 9. prin- hydraulic it has (cid:127) line where Pipeline 12. Natural Co. of Gas America cipal competitors. Cir., Commission, Federal Power F.2d § 10. 15 hereby reviewing price dis- against them in mod- evidence order now, crimination, not, or, they striking word “forthwith” ified adding have no business order affairs we to said state therefrom and will following: with them. when this Court desist Just “This cease and vitality decide to order, the Niehoff infuse into such time effect order take animation, currently suspended Ap- Court future as the United States escapes direct, entirely. appears me that the It peals for Circuit the Seventh majority’s compels the Com- sponte upon of the Federal motion sua complete modified, investigate, mission to ex- As thus Trade Commission.” competitors of, amination order is affirmed. forfeiting ap- risk of otherwise Order, modified, as proved all order. Whether this entails Affirmed. dozen is un- or baker’s grave My revealed. doubts Judge (dissent- FINNEGAN, Circuit statutory power modify Federal Trade ing). Commission orders can be converted into Affirming Commis- though policing supervising, perhaps directing indeterminate sion then obliquely, length, breadth se- diverge suspension, me to causes investigations quence of Commission majority Section 11 of the view. brings position me to the I now take. amended, Clayton Act, that: mandates as Certainly we would refuse to activate the Commission “The * * petition Commission a bare facts, supported if as to the investigate mandamus to the automotive evidence, shall be conclu- substantial ignition industry. Responsibility of sive,” 15 U.S.C.A. 64 Stat. achieving enforcement of the statutes my find, squares If, this order brothers Congress assigned to the Commission lies statutory yardstick then a vio- with the elsewhere. Clayton has Act been estab- lation of the But, the other hand if the lished. order, on *7 majority, requires approved state, they for the reasons or- the Commission’s then would seem unsupported it is is defective since der concerning petitioner’s
by evidence com- matter
petitors. After all the involves problem within a economic defined an industry. al., Plaintiffs-Appellees, R. J. ADNEY et (T.R. opinion In its 1027- stated, 1028) alia: Commission inter MISSISSIPPI LIME COMPANY OF in effect initial decision held that “The MISSOURI, Defendant-Appellant. respondent’s price of status of the competitors No. 11860. lawful unlawful was controlling decision here *. Appeals United States Court of lawfulness or unlawfulness of The competitors’ Seventh Circuit. not in Feb. respondent’s defense inasmuch as issue legally insufficient on other been has grounds.” too far into reach much the admin- reserving agency’s province istrative contingent jurisdiction upon “the pro- course of the Commission’s
future ceedings against competitors.” are now such matters before us
Either properly we have failed evaluate