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Morton Salt Co. v. Federal Trade Commission.

May 27, 1947

MORTON SALT CO.
v.
FEDERAL TRADE COMMISSION.



Author: Briggle

Before SPARKS and MINTON, Circuit Judges and BRIGGLE, District Judge.

BRIGGLE, District Judge: The petitioner beeks to set aside a modified order of the respondent Commission to cease and desist from discriminating in the price of its salt products of like grade and quality as among wholesale or retail dealers when the differences in price are not justified in

"* * * differences in the cost of manufacture, sale, or delivery resulting from differing methods or quantities in which such products are sold or delivered (a) by selling such products to some wholesalers thereof at prices different from the prices charged other wholesalers who in fact compete in the sale and distribution of such products; provided, however, that this shall not prevent price differences of less than five cents per case which do not tend to lessen, injure, or destroy competition among such wholesalers; (b) by selling such products to some retailers thereof at prices different from the prices charged other retailers who in fact compete in the sale and distribution of such products; provided, however, that this shall not prevent price differences of less than five cents per case which do not tend to lessen, injure, or destroy competition among such retailers; (c) by selling such products to any retailer at prices lower than prices charged wholesalers whose customers compete with such retailer. For the purposes of comparison, the term "price" as used in this order takes into account discounts, rebates, allowances, and other terms and conditions of sale."

The order complained of issued in a proceeding initiated by the respondent Commission in which it charged petitioner with discriminating in price between different purchasers of its product through quantity discounts in effect since June 19, 1936, in violation of Section 2(a) of the Clayton Anti-Trust Act, as amended by the Act, commonly referred to as the Robinson-Patman Price Discrimination Act (Act of June 19, 1936, U.S.C.A. Title 15, Sec. 13). The respondent Commission has filed a cross-petition praying affirmance and enforcement of its modified order.

The complaint issued on September 18, 1940. After extensive hearings the original findings and order issued on July 28, 1944. In October of that year a petition for review was filed in this Court and in February of 1945, pursuant to stipulation, it was ordered that the cause be remanded to the Federal Trade Commission for modification of findings of fact and the cease and desist order. The modified order now before the Court issued by the respondent Commission on April 14, 1945.

Petitioner is an Illinois corporation producing manufacturing and selling salt in interstate commerce in all parts of the United States to wholesalers, retailers and consumers, and is one of the largest producers and distributors of this product in the country. Table salt is the only product involved in this proceeding. Table salts produced and distributed by petitioner are variously known as Morton's free running, plain and iodized, Morton's Blue Label, Morton's Blue Package, and Morton's round can. Blue Label or Blue Package salt is packed and sold 24 packages to the carton or case, and this variety appears to also be identified as round can, iodized, etc.This grade or variety will be referred to as Blue Label.

In selling Blue Label salt petitioner allows three separate discounts, all based on purchases of very large quantities. A fourth discount applies to other varieties of table salt.These price differentials and the basis thereof are substantially, as follows:

(1) Blue Label salt sells for $1.50 per case when purchased in carload lots and at $1.60 when purchased in less than carload lots. The ten cent differential approximates the extra cost of handling a less than carload shipment moving from a warehouse or other car destination point to some outside point, entailing a double handling. In such cases the freight would be paid by petitioner and the amount thereof might exceed or be less than the ten cent differential.

(2) A rebate of ten cents from the $1.50 a case price applicable to carload shipments is also granted to customers purchasing 5000 or more cases in any consecutive 12 month period.

(3) In lieu of the ten cent rebate to purchasers of 5000 or more cases of this salt, a rebate of fifteen cents a case from the $1.50 price is allowed to purchasers of 50,000 or more cases during any consecutive 12 month period.

(4) To purchasers of $50,000 or more of table salt other than the Blue Package variety, in any 12 consecutive month period, there is granted a one unit (about 5%) discount. Although this discount is not allowed on the Blue Package purchases, these purchases are included in the computation of total purchases of a customer which determine whether or not that customer has qualified as a $50,000 discount buyer. In computing the $50,000 bracket, f.o.b. plant prices are used for all items except the Blue Package, regardless of other discounts, and the delivered price of the Blue Package is used regardless of other discounts.

The ten cent per case, fifteen cent per case and $50,000 discounts are based upon quantity sales but are not related by evidence in the record to any specified economies resulting to petitioner from cumulative purchases of the size covered by these respective discounts. In this respect these discounts differ from the carload discount of ten cents a case.

The carload discount (No. 1) has been in effect since the organization of the Morton Salt Company in 1922. The 5000 case (No. 2) and 50,000 case (No. 3) discounts were introduced by the Company in 1927 or 1928 and have not since then been changed. The $50,000 discount (No. 4) was started in 1933 or 1934 and since then has been unchanged.

In addition to these standard regular quantity discounts, it appears from the record that petitioner in a few instances has made special allowances or discounts of a competitive nature applicable to particular customers and limited areas. The findings and order of the Commission are in part predicated upon the so-called competitive adjustments and same should be distinguished from the general price discounts above described and the findings in respect thereto. The findings and order of the Commission in respect to the general price discounts raises the basic questions now in controversy. We will hereinafter refer to these discounts as "quantity" discounts.

The quantity discounts applicable to the table salt sales of petitioner are open and available on equal terms to all customers, and it is not contended that any of said discounts or the price system which embraces them all was formulated to give any particular customer or customers or a selected class of customers a cost advantage over others who qualify therefor by quantity purchases.It is not claimed that there has been anything secret, local, special or personal about any such quantity discount as offered by petitioner to any of its customers. Each quantity discount and the quantity discount system of petitioner were and are national in scope, published, known and equally available to all. At all times pertinent to the present controversy these quantity discounts conformed with trade practices generally in the distribution and sale of staple merchandise by other producers and manufacturers of such merchandise. If the quantity price system of petitioner in inherently discriminatory, within the meaning of this Act, as contended by the respondent Commission, then such discrimination is inherent in, and inseparable from the quantity discount price structures of many other commodities similarly manufactured, sold and distributed. This conclusion is implicit in the findings, as based upon the evidence, and in the other of the Commission, and gives a scope to the determination of the instant question beyond its immediate effect upon the business practices of petitioner.

Section 2(a) of the Clayton Act, as amended, omitting all priviso clauses, is, as follows:

"It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them."

The italicized language was inserted in the original section by the 1936 amendment ...


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