The Supreme Court/The Supreme Court.iso/pc/ascii/misc/7_2048c1

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Subject: 87-2048--CONCUR, TEXACO INC. v. HASBROUCK




        SUPREME COURT OF THE UNITED STATES


No. 87-2048



TEXACO INC., PETITIONER v. RICKY HASBROUCK, dba RICK'S TEXACO, et al.

on writ of certiorari to the united states court of appeals for the ninth
circuit

[June 14, 1990]



    Justice White, concurring in the result.
    Texaco's first submission urging a blanket exemption for all functional
discounts is rejected by the Court on the ground stated in FTC v. Annheuser
Busch, Inc., 363 U. S. 536, 550 (1960), that the "statute itself spells out
the conditions which make a price difference illegal or legal, and we would
derange this integrated statutory scheme" by providing a defense not
contained in the statute.  In the next section of its opinion, however, the
Court not only declares that a price differential that merely accords due
recognition and reimbursement for actual marketing functions not only does
not trigger the presumption of an injury to competition, see FTC v. Morton
Salt Co., 334 U. S. 37, 46-47 (1948), but also announces that "[s]uch a
discount is not illegal."  Ante, at 16.  There is nothing in the Act to
suggest such a defense to a charge of price discrimination that "may . . .
substantially . . . lessen competition . . . 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."  15 U. S. C. 13(a).  Nor is there any indication in
prior cases that the Act should be so construed.  The Court relies heavily
on the Report of the Attorney General's National Committee to Study the
Antitrust Laws (1955) and also suggests that the Federal Trade Commission
permits "legitimate functional discounts" but will not countenance
subterfuges.  Ante, at 17.
    Thus, a Texaco retailer charged a higher price than a distributor who
is given what the Court would call a legitimate discount is entirely
foreclosed, even though he offers to prove, and could prove, that the
distributor sells to his customers at a price lower than the plaintiff
retailer pays Texaco and that those customers of the distributor undersell
the plaintiff and have caused plaintiff's business to fail.  This kind of
injury to the Texaco retailer's ability to compete is squarely covered by
the language of 13(a), which reaches not only injury to competition but
injury to Texaco retail customers' ability to compete with the
distributor's customers.  The Court neither explains why this is not the
case nor justifies its departure from the provisions of the Act other than
by suggesting that when there is a legitimate discount, it is the
distributor's decision, not the discount given by Texaco, that causes the
injury, even though the latter makes possible the distributor's discount.
Perhaps this is the case if the concept of a legitimate price
discrimination other than those legitimated by the Act's provisions is to
be implied.  But that poses the question whether the Act is open to such a
construction.
    The Attorney General's Committee noted the difficulty.  Under the
construction of the Act that the FTC was then espousing and applying, see
Standard Oil Co. v. FTC, 173 F. 2d 210 (CA7 1949), rev'd on other grounds,
340 U. S. 231 (1951), the Committee said, "[a] supplier according
functional discounts to a wholesaler and other middleman while at the same
time marketing directly to retailers encounters serious legal risks."
Report of Attorney General's National Committee, at 206.  The Committee
clearly differed with the FTC and called for an authoritative construction
of the Act that would accommodate "functional discounts to the broader
purposes of the Act and of antitrust policy."  Id., at 208.  At a later
stage in the Standard Oil case, the FTC disavowed any purpose to eliminate
legitimate functional pricing or to make sellers responsible for the
pricing practices of its wholesalers.  The reversal of its position, which
the Court of Appeals for the Seventh Circuit had affirmed, was explained on
the ground of "broader antitrust policies."  Reply Brief for Petitioner in
FTC v. Standard Oil Co., O. T. 1957, No. 24, p. 32.  The FTC has also
appeared as an amicus in this case urging us to recognize and define
legitimate functional discounts.  Its brief, however, does not spell out
the types of functional discounts that the Commission considers defensible.
Nor does the FTC cite any case since the filing of its reply brief in 1957
in which it has purported to describe the contours of legitimate functional
pricing.  Furthermore, the FTC's argument apparently does not persuade the
Court, for the Commission recommends reversal and remand, while the Court
affirms the judgment.
    In the absence of Congressional attention to this long- standing issue
involving antitrust policy, I doubt that at this late date we should
attempt to set the matter right, at least not in a case that does not
require us to define what a legitimate functional discount is.  If the FTC
now recognizes that functional discounts given by a producer who sells both
to distributors and retailers are legitimate if they reflect only proper
factors and are not subterfuges, I would await a case challenging such a
ruling by the FTC.  We would then be reviewing a construction of the Act by
the FTC and its explanation of legitimate functional discount pricing.
    This is obviously not such a case.  This is a private action for treble
damages, and the Court rules against the seller- discounter since under no
definition of a legitimate functional discount do the discounts extended
here qualify as a defense to a charge of price discrimination.  We need do
no more than the Court did in Perkins v. Standard Oil Co. of California,
395 U. S. 642 (1969).  This the Court plainly recognizes, and it should
stop there. Hence, I concur in the result.

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