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April 29, 1966


The opinion of the court was delivered by: Marovitz, District Judge.


Motion of Defendant for Judgment on the Pleadings.

This action arises under Sections 2(d) and 2(e) of the Clayton Act, as amended by the Robinson-Patman Act, (Secs. 13(d), (e), Title 15, U.S.C.). In essence, plaintiff, a manufacturer of coil springs and coil spring assemblies, used for innerspring mattresses, charges that defendant, its supplier of steel wire, granted discriminatory "freight allowances or rebates" during the years 1962, 1963, and 1964, to other steel wire purchasers, when those purchasers took delivery f. o. b. defendant's mill, by means other than common carrier, without making such payments available to plaintiff on proportionally equal terms.

Defendant has moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure on the ground that freight allowances and rebates are not actionable under Sections 2(d) and 2(e) of the Robinson-Patman Act. We must agree.

In American Can Co. v. Russelville Canning Co., (8th Cir., 1951) 191 F.2d 38, the Court of Appeals for the Eighth Circuit held directly in point that the payment of a freight allowance did not constitute the furnishing of "services or facilities" connected with the processing, handling or sale of commodities within the meaning of Section 2(e) and that such abuses are actionable only as "price discrimination" under Section 2(a), being subject to the cost justification defense outlined therein. See also New England Confectionery, 46 F.T.C. 1041 (1949), wherein the Federal Trade Commission held that freight rebates did not fall under the terms of Sections 2(d) and 2(e), and that the "proportionally equal terms" standard of those sections did not apply; Rowe, Price Discrimination Under the Robinson-Patman Act, pp. 363-420 (1962).

The correctness of these decisions is made manifestly clear by an analysis of the legislative history and language of the Robinson-Patman Act.

Initially, it is clear that Section 2(a) of the Act, upon which this action was originally based before amendment, expressly covers such rebates, providing that differentials which make "due allowance for differences in the cost of * * * delivery resulting from the differing methods * * * in which such commodities are * * * delivered," are lawful. In contrast, not a single mention of "delivery" can be found in Sections 2(d) and 2(e). When this factor is combined with the uncontroverted case law holding that the cost justification defense is applicable only to actions under Section 2(a), F. T. C. v. Simplicity Pattern Co., 360 U.S. 55, 79 S.Ct. 1005, 3 L.Ed.2d 1079 (1959), it would seem apparent that Congress did not intend freight allowance differentials to be sued upon under the instant sections which are not subject to the defenses made available in Section 2(a). For to hold that they could be so based, would be to make nugatory the defenses specifically outlined for this offense.

Further, where statutory provisions are inconsistent, as here, it is well-settled that specific terms covering the subject matter, as Section 2(a) with regard to "delivery" will prevail over more general language in other sections. Kepner v. United States, 195 U.S. 100, 125, 24 S.Ct. 797, 49 L.Ed. 114 (1904). While there is overlap in the coverage of the three sections, such overlap cannot be said to control when "delivery" is specifically provided for in one section and not in the remaining two.

Moreover, if this Court were to apply Sections 2(d) and 2(e) to freight allowances, we would be acting in contradiction to the apparent goal of all anti-trust legislation, by stifling price competition. See Automatic Canteen Co. v. F. T. C., 346 U.S. 61, 73-74, 73 S.Ct. 1017, 97 L.Ed. 1454 (1953). That is, while Section 2(a) provides that price differentials are lawful absent proof of competitive injury, Sections 2(d) and 2(e) declare certain acts to be per se illegal. Therefore, if we were to decide that freight rebates were subject to the latter sections, we would in effect be concluding that buyers and sellers were no longer free to haggle over basic price elements, and that proof of competitive injury would no longer be a prerequisite to recovery.

  "* * * the existing evil at which this part of
  the bill [2(d) and 2(e)] is aimed is, of course,
  the grant of discriminations under the guise of
  payments for advertising and promotional
  services * * *." 80 Cong.Rec. 9418 (1936).
  "[the] Committee discussed the bill and the
  provisions in paragraph (d) with relation to
  advertising allowances, and any member of that
  committee will tell you that that section refers
  to advertising allowances." 80 Cong.Rec. 8123

See also Nuarc Co. v. F. T. C., (7th Cir., 1963) 316 F.2d 576, 580; Rowe, Price Discrimination Under the Robinson-Patman Act, supra, at p. 377 (1962).

When plaintiff herein dropped its charges of Section 2(a) violations by filing its Second Amended Complaint, it did so to avoid the necessity of proving competitive injury, and to escape from meeting a cost justification defense. In the opinion of this Court, plaintiff did not have the opportunity to make such a choice. Its remedy, if any, for freight allowance ...

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