In view of the interpretation placed upon the antitrust statutes by the Supreme Court of the United States in several cases, it is arguable that the Capper-Volstead Act was not, strictly speaking, required for the purpose of giving authority to farmers to form associations, but that the organization of cooperative associations was permissible under the antitrust statutes.

In a case involving the right of independent producers of coal to act together in the marketing of coal, the Supreme Court said:

We agree that there is no ground for holding defend-
ants' plan illegal merely because they have not inte-
grated their properties and have chosen to maintain
their independent plants, seeking not to limit but rather
to facilitate production. We know of no public policy,
and none is suggested by the terms of the Sherman Act,
that, in order to comply with the law, those engaged in
industry should be driven to unify their properties and
businesses, in order to correct abuses which may be cor-
rected by less drastic measures. Public policy might
indeed be deemed to point in a different direction. If
mere size of a single, embracing entity is not enough to
bring a combination in corporate form within the
statutory inhibition, the mere number and extent of the
production of those engaged in a cooperative endeavor
to remedy evils which may exist in an industry, and to
improve competitive conditions, should not be regarded
as producing illegality. The argument that integration
may be considered a normal expansion of business,
while a combination of independent producers in a
common selling agency should be treated as
abnormal-that one is a legitimate enterprise and the
other is not-makes but an artificial distinction. The
Anti-Trust Act aims at substance. Nothing in theory or
experience indicates that the selection of a common
selling agency to represent a number of producers
should be deemed to be more abnormal than the
formation of a huge corporation bringing various
independent units into one ownership.147

147 Appalachian Coals, Inc. v. United States, 288 U.S. 344, 376, 53 S. Ct. 471, 77 L. Ed. 825. See also Filene's Sons Co. v. Fashion Originators' Guild of America, Inc., 14 F. Supp. 353; Spielman Motor Sales Co., Inc. v. Dodge, 8 F.

Many articles have been written about section 6 of the Clayton Act and the Capper-Volstead Act. Some of them are listed on page 320.

Robinson-Patman Act

The Robinson-Patman Act (15 U.S.C. 13 et seq.) was enacted in 1936. It applies to cooperatives just as it does to other business concerns.

The Act prohibits the sale of commodities of the same grade and quality at prices that are discriminatory. 148 The Act provides "that nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered."

Thus the Act permits a seller, if he desires to do so, to give a buyer every saving attributable to quantity purchases of the merchandise in question. Someone has said that one object of the Act was to enable a small dealer to buy merchandise on a basis of substantial equality with the prices paid by a large dealer.

The Federal Trade Commission has held on several occasions that quantity discounts, based upon deliveries to a chain store system, should be determined by the quantities delivered to each individual warehouse. 149

Sellers under the Act may classify their customers according to function as wholesalers or jobbers and retailers and may within reasonable limits accord to each class a special price or series of prices.

Supp. 437; Indiana Farmer's Guide Publishing Co. v. Prairie Farmer Publishing Co., 70 F. 2d 3, reversed in 293 U.S. 268, 55 S. Ct. 182, 79 L. Ed. 356.

As to the "rule of reason" mentioned in Appalachian Coals, Inc., see Standard Oil of New Jersey v. United States, 221 U.S. 1, 31 S. Ct. 502, 55 L. Ed. 619, 34 L.R.A. (N.S.) 834, Ann. Cas. 1912D 734; United States v. American Tobacco Co., 221 U.S. 106, 31 S. Ct. 632, 55 L. Ed. 663; United States v. United States Steel Corporation, 251 U.S. 417, 40 S. Ct. 293, 64 L. Ed. 343, 8 A.L.R. 1121; Board of Trade of the City of Chicago v. United States, 246 U.S. 231, 38 S. Ct. 242, 62 L. Ed. 683; National Association of Window Glass Manufacturers v. United States, 263 U.S. 403, 44 S: Ct. 148, 68 L. Ed. 358. See also The Rule of Reason in Loose-knit Combination, 32 Colum. L. Rev. 291 (1932).

148 Tri-Valley Packing Association v. F.T.C., 329 F. 2d 694, 60 F.T.C. 2073 (9th Cir. 1964).

149 Docket No. 3299, H.C. Brill Company, Inc.

A case which dealt with functional classification involved county farm bureaus. County farm bureaus purchased seed inoculants at jobbers' prices less 20 per cent. They then sold to jobbers, to retailers, and to consumers on a functional price basis. In holding the sales to the county farm bureaus in violation of the Robinson-Patman Act, the Federal Trade Commission said:

These county farm bureaus are direct competitors of
independent retail merchants buying at higher prices.
When, in fact, jobbing services are rendered by State or
county farm bureaus, nothing herein contained shall
preclude jobber prices on that portion which is
jobbed, 150

In determining whether a given sale is discriminatory, the net amount received by the seller for the goods is all important. This means that all terms, discounts, and allowances for services and concessions of every character and description must be taken into consideration.

Although the statute does not require that the terms of sale be identical in each case, yet if by means of the terms given, a price advantage is obtained, this would appear to violate the law.

While a seller who grants a discriminatory price thereby violates the law under section 2 (f) of the Act, the buyer is guilty of violating the statute only in case he knows that the price allowed him is discriminatory.

In all cases, for differences in prices of goods to constitute a violation of the statute, there must be a tendency to create a monopoly or to injure competition. 151

If a seller follows the practice of making allowances for advertising and for promotional expenses, such allowances must be made available to all competing buyers on proportionally equal

terms.

Under the statute, the only persons entitled to be paid brokerage are those who function independently as brokers. A buyer may not receive, either directly or through a subsidiary, brokerage fees or allowances in lieu thereof from the seller on pur

150 American Co-op Serum Ass'n v. Anchor Serum Co., 153 F. 2d 907, certiorari denied, 329 U.S. 721,67 S. Ct. 57, 91 L. Ed. 625, rehearing denied, 329 U.S. 826.

151 Docket No. 2935, Kraft-Phoenix Cheese Corporation.

chases of goods, even though some services may be rendered by the buyer in connection with their sale. 152

The payment of commissions to a federated cooperative on sales made by a manufacturer to its member cooperatives was held to be a violation of law. 153

In a case involving a cooperative, it was held that it could refuse to sell in carload lots to a potential buyer and that this did not violate the statute. 154

Under certain conditions promotional allowances may be made to a buyer without the seller violating 15 U.S.C. 13(d). 155 A contract that violates the Robinson-Patman Act is not enforceable. 156

The fact that the Act permits a cooperative to pay patronage dividends does not authorize a cooperative to violate other provisions of that Act or to engage in practices forbidden by that Act.157

In a treble damage action under section 2 of the Clayton Act, as amended by the Robinson-Patman Act, it appeared that the Standard Oil Company of California had sold gasoline and oil to its brand dealers at lower prices than it charged plaintiff who was in competition with them, and this was held to be a violation of law. In addition, the company sold gasoline to Signal Oil at a price lower than it charged plaintiff; and Signal Oil then sold this gasoline to its subsidiary Western Hyway, which in turn sold this gasoline to its subsidiary Regal Stations Company, which was a competitor of the plaintiff.

The plaintiff contended and the jury found that the lower prices charged Signal Oil were passed on to its subsidiary Western Hyway and then on to Western's subsidiary, Regal Stations Company. The trial of this case resulted in a judgment, after trebling the damages found by the jury and after adding attorney fees, of $1,298,213.71, which was approved by the Supreme Court.158

152 Western Fruit Growers Sales Co. v. F.T.C., 322 F. 2d 67.

153 Kentucky Rural Elec. Co-op Corp. v. Moloney Elec. Co., 282 F. 2d 481, certiorari denied, 365 U.S. 812, rehearing denied, 365 U.S. 855; Quality Bakers of America v. F. T. C.. 114 F. 2d 393.

154 Ben B. Schwartz & Sons, Inc. v. Sunkist Growers, Inc., 203 F. Supp. 92. 155 Atalanta Trading Corp. v. Federal Trade Commission, 258 F. 2d 365. 156 Rathe v. Yakima Valley Grape Growers, 30 Wash. 2d 436, 192 P. 2d 349. 157 Quality Bakers of America v. Federal Trade Commission, 114 F. 2d 393. Special Position, If Any. Of Cooperative Under Robinson-Patman Act, G.N. Shameyo, M.H. Van Sustern, 1950 Wis. L. Rev. 119-129.

158 Perkins v. Standard Oil Co., 395 U.S. 642 (1969).

Published Material Pertaining To Antitrust Laws

1. Anonymous

2.

3.

4.

5.

1953. Agricultural Cooperatives and Antitrust Laws. Dicta 30: 245-52, July.

1963. Agricultural Cooperatives and the Antitrust Laws. Nebraska Law Review 43: 73D63.

1961. Agricultural Cooperatives and The Antitrust Laws: A New Departure. Indiana Law Journal 36: 497, Summer.

1959. Restraint Of Trade. University of Pennsylvania Law Review 107: 1222, June.

1958. Agricultural Cooperatives and The Antitrust Laws. Clayton, Capper-Volstead and Common Sense. Virginia Law Review 44: 63, January.

6. Barnes, S. N.

1953. Agricultural Cooperatives and The Antitrust Laws. American Cooperation, p. 26. Washington, D.C., American Institute of Cooperation.

7. Berry, D. L.

1959. Regulation

Of Business-Antitrust Laws. Michigan Law Review 57: 921, April.

8. Broden, T. F.

1947. Cooperatives-A Privileged Restraint of Trade. Notre Dame Law Review 23: 110-19.

9. Bunn, C.

1941. Consumer's Cooperatives and Price Fixing Laws. Michigan Law Review 40: 165-73 D.

10. Kaminsky, L.J.

1943. Business Regulation-Federal Antitrust Laws-Recent Applications To Cooperative Organizations. Cornell Law Quarterly

29: 251-8.

11. Lemmon, L.G.

1968. Antitrust and Agricultural Cooperatives-Collective Bargaining In The Sale Of Agricultural Products. North Dakota Law Review 44: 505, Summer.

12. MacIntyre, E.

1965. Agricultural Cooperatives and The Antitrust Laws. American Cooperation, p. 179. Washington, D.C., American Institute of Cooperation.

13. Mischler, R.J.

1958. Agricultural Cooperative Law. 30 Rocky Mountain Law Review 381, June.

14. Nelson, H.E.

1947. Cooperatives Can Be In Restraint Of Trade. Bar Briefs 23: 37-44.