Federal Trade Commission v. Fred Meyer, Inc./Dissent Stewart

by Potter Stewart

United States Supreme Court

390 U.S. 341

Federal Trade Commission  v.  Fred Meyer, Inc.

 Argued: Nov. 6, 1967. ---

Mr. Justice STEWART, dissenting.

Section 2(d) of the Clayton Act, as amended by the Robinson-Patman Act, makes it unlawful for a supplier to grant to a customer a promotional allowance which is not available to 'all other customers competing in the distribution of such products or commodities.' The Federal Trade Commission held that the respondent retailer had violated § 2(d) by inducing certain of its direct suppliers to grant it promotional allowances which were not available to wholesalers who sold the suppliers' products to retailers competing with the respondent. ^[1] The Court of Appeals refused to enforce this part of the Commission's order on the ground that the wholesalers were not customers 'competing' with the respondent. We granted certiorari limited to a single question:

'Whether a supplier's granting to a retailer who buys directly from it promotional allowances that are not made available to a wholesaler who resells to retailers competing with the directbuying retailer violates Section 2(d) of the Robinson-Patman Act.' 386 U.S. 907, 87 S.Ct. 853, 17 L.Ed.2d 781.

The Court today agrees with the Court of Appeals' answer to this question and holds that wholesalers are not customers 'competing' with the respondent. But the Court nevertheless goes on to hold that § 2(d) was violated upon a theory not argued here by either party. The theory is that retailers who are in fact customers of independent wholesalers are somehow also 'customers' of the suppliers of those wholesalers. The Commission has never suggested that this case should turn on any such construction of the term 'customer.' ^[2] Cf. SEC v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626.

Because the Court of Appeals was correct in rejecting the Commission's construction of § 2(d), I would affirm its judgment. But, at the very least, the case should be remanded in order to give the respondent notice and an opportunity to defend against the novel construction of § 2(d) under which the Court today finds the respondent to be a violator of the law. Due process requires no less. Cf. Cole v. State of Arkansas, 333 U.S. 196, 68 S.Ct. 514, 92 L.Ed. 644.

Notes

1. In this opinion the term 'respondent' refers to Fred Meyer, Inc.
2. One Commissioner attempted in vain to persuade the Commission to accept the theory which the Court today adopts: 'What made this practice illegal, as I see it, is that the allowances were not also made available on proportionally equal terms to Meyer's retail competitors. But that is not the Commission's view of the law.' 63 F.T.C., at — (Commissioner Elman, concurring in part and dissenting in part).