After hearings on a complaint charging respondent with violations of the price discrimination provisions of the Clayton Act, 2 (a) as amended, the Federal Trade Commission (FTC) found that the 10% truckload discounts offered by respondent on its line of plumbing fixtures had a proscribed anticompetitive effect since some customers who were unable to purchase in truckload quantities were in competition with customers able to take advantage of the discount. Accordingly, the Commission issued a cease-and-desist order prohibiting respondent from discriminating in price between competing customers. Thereafter, respondent petitioned the Commission for a stay of the order pending investigation of alleged industry-wide discount practices, claiming that enforcement against it alone would cause it substantial financial injury. The FTC denied the petition. On petition for review, the Court of Appeals set aside the denial and remanded the cause for the industry investigation sought by respondent. Held: Since the Commission's refusal to withhold enforcement of the cease-and-desist order did not constitute a patent abuse of discretion, the Court of Appeals exceeded its authority by setting aside the Commission's denial of the petition for a stay. Moog Industries v. Federal Trade Commission, 355 U.S. 411 (1958), followed. Pp. 249-252.
352 F.2d 831, reversed and remanded.
Robert S. Rifkind argued the cause for petitioner. With him on the briefs were Solicitor General Marshall, Assistant Attorney General Turner, Howard E. Shapiro, Milton J. Grossman, James McI. Henderson and W. Risque Harper.
Frank C. McAleer argued the cause for respondent. With him on the brief was James R. Fruchterman. [387 U.S. 244, 245]
MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.
The question presented by this case is whether the Court of Appeals exceeded its authority as a reviewing court by postponing the operation of a Federal Trade Commission cease-and-desist order against respondent until an investigation should be made of alleged industry-wide violations of the price discrimination provisions of the Clayton Act, 2, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. 13.
Respondent Universal-Rundle produces a full line of china and cast-iron plumbing fixtures which it sells to customers located throughout the United States. In 1960, the Federal Trade Commission issued a complaint charging that for more than three years Universal-Rundle's sales to some of these customers had been made "at substantially higher prices than the prices at which respondent sells such products of like grade and quality to other purchasers, some of whom are engaged in competition with the less favored purchasers in the resale of such products." The effect of the discriminations, the complaint alleged, "may be substantially to lessen competition" in violation of 2 (a) of the Clayton Act, as amended. In its answer, Universal-Rundle denied the essential allegations of the complaint, and, in addition, asserted as affirmative defenses that such price differentials as may have existed were cost justified or were made "in good faith to meet competition."
After evidentiary hearings, in which Universal-Rundle made no effort to sustain its affirmative defenses, the Commission found that during 1957 Universal-Rundle had offered "truckload discounts" averaging approximately 10% to all of its customers. Because some of these customers could not afford to purchase in truckload quantities, and thus were unable to avail themselves [387 U.S. 244, 246] of the discounts, the Commission held that the offering of the truckload discounts constituted price discrimination within the meaning of 2 (a) of the Clayton Act, as amended. Since some Universal-Rundle customers who were able to purchase in truckload quantities were found to be in competition with customers unable to take advantage of the discounts, the Commission concluded that Universal-Rundle's price discrimination had the anticompetitive effect proscribed by 2 (a). 1 Accordingly, it ordered Universal-Rundle to refrain from:
In Moog Industries v. Federal Trade Commission, supra, we set forth the principles which must govern our review of the action taken by the court below: The decision as to whether to postpone enforcement of a cease-and-desist order "depends on a variety of factors peculiarly within the expert understanding of the Commission." 355 U.S., at 413 . Thus, "although an allegedly [387 U.S. 244, 250] illegal practice may appear to be operative throughout an industry, whether such appearances reflect fact" is a question "that call[s] for discretionary determination by the administrative agency." Ibid. Because these determinations require the specialized experienced judgment of the Commission, they cannot be overturned by the courts "in the absence of a patent abuse of discretion." 355 U.S., at 414 . Consequently, the reviewing court's inquiry is not whether the evidence adduced in support of a petition for a stay tends to establish certain facts, such as that the industry is engaged in allegedly illegal price discrimination practices; rather, the court's review must be limited to determining whether the Commission's evaluation of the merit of the petition for a stay was patently arbitrary and capricious.
Viewed in the light of these principles, the decision below must be reversed. The evidence which Universal-Rundle offered in its petition for a stay is so inconclusive that it cannot be said that the Commission's evaluation of the evidence, and its consequent refusal to grant the stay, constituted a patent abuse of discretion. Indeed, Universal-Rundle's evidence does not even support the improper de novo findings which formed the basis for the Court of Appeals' decision. Universal-Rundle's truckload discounts were held to be illegal only because the corporation sold fixtures to one group of customers who were unable to purchase in truckload quantities while simultaneously selling fixtures at a discount to another group of customers who were in competition with the nonfavored group. Since the evidence presented in the petition for a stay did not tend to show that the discounts offered by Universal-Rundle's competitors had such an anticompetitive effect, there was no basis for a conclusion that the practice held illegal by the Commission was prevalent throughout the plumbing [387 U.S. 244, 251] industry. Similarly, the unsupported speculation of Universal-Rundle's vice president as to the pecuniary effect of enforcement of the cease-and-desist order does not provide a sufficient basis for a finding that Universal-Rundle would be "sacrificed" or even that it would suffer substantial financial injury. It follows that Universal-Rundle has failed to demonstrate that enforcement would be contrary to the purposes of the Clayton Act.
We note that even if a petitioner succeeded in demonstrating to the Commission that all of its competitors were engaged in illegal price-discrimination practices identical to its own, and that enforcement of a cease-and-desist order might cause it substantial financial injury, the Commission would not necessarily be obliged to withhold enforcement of the order. As we stated in Moog Industries, 355 U.S., at 413 :
[ Footnote 2 ] According to respondent's petition for a stay, the shares enjoyed by its principal competitors were: Percent American Radiator & Standard Sanitary Corp. ..... 32 Kohler Co. ...................................... 15 Eljer Division of the Murray Corp. of America ... 10 Crane Co. ....................................... 9 Briggs Manufacturing Co. ........................ 6 Rheem Manufacturing Co. ......................... 5
[ Footnote 3 ] The Commission further noted that "even if a prima facie violation of Section 2 (a) is established, the seller may in each case interpose the statutory defenses to justify the discrimination." Trade Reg. Rep., 1963-1965 Transfer Binder, § 16,998, at 22,070.
[ Footnote 4 ] Ibid.
[ Footnote 5 ] We are informed by the parties that after the Commission's refusal to grant the stay, the respondent presented some evidence to the Commission staff which was relevant to the anticompetitive effects of the discounts offered by two of its competitors. Apparently relying on this evidence, the court below ruled that the Commission was obliged to conduct its own industry investigation and that the pendency of a Department of Justice antitrust investigation of the industry did not relieve the Commission of this responsibility. Since the post-proceeding evidence was not properly before the court below on a petition for review and is not in the record here, we do not reach, and the court below should not have reached, the questions of whether an industry investigation was necessitated by the additional evidence or whether such an investigation would be unnecessary in light of the Department of Justice investigation. [387 U.S. 244, 253]