Arthur Goldberg

“ We see no reason to permit Sun discriminatorily to pit its greater strength at the supplier level against Super Test, which, so far as appears from the record, is able to sell its gasoline at a lower price simply because it is a more efficient merchandiser, particularly when Super Test's challenge as an 'independent' may be the only meaningful source of price competition offered the 'major' oil companies, of which Sun is one. ”

“ The mere existence of a competitive continuum, however, does not require that market limits be indefinitely extended with absurd results in the form of unwarranted nationwide or otherwise overly broad measures of competitive impact. In appraising the effects of any price cut or the corresponding response to it, both the Federal Trade Commission and the courts must make realistic appraisals of relevant competitive facts. ”

“ The Court recognizes, ante, p. 512, note 7, that a different case would be presented 'if it appeared either that Super Test were an integrated supplier-retailer, or that it had received a price cut from its own supplier-presumably a competitor of Sun.' It is true that the burden of proof in establishing a § 2 (b) defense rests on Sun, and that it must therefore bear the responsibility for any gaps in the record. But it is equally true that we are here dealing with an extremely difficult question arising under a singularly opaque and elusive statute. ”

“ It is contended that the individual station is but a 'conduit' for the supplier and that Sun is thus in competition with Super Test, considered even only as a retailer. [14]
In a very real sense, however, every retailer is but a 'conduit' for the goods which it sells and every supplier could, in the same sense, be considered a competitor of retailers selling competing goods. We are sure Congress had no such broad conception of competition in mind when it established the § 2 (b) defense and, certainly, it intended no special exception for the petroleum industry. ”

“ All competition, Sun says, is directed to sales of the final product-gasoline-to the motoring consumer, and anything that threatens to reduce the sales of a branded gasoline at the retailer's pump is a threat to the supplier whose business is a direct function of its stations' marketing success or failure. ”

“ The reduced retail price of the purchaser's competitor will almost invariably be higher than the supplier's wholesale price; even in those instances in which this is not so, it cannot seriously be suggested that under § 2 (b) the wholesaler is entitled to reduce discriminatorily his wholesale price to the lower retail level. ”

“ In 1955, Gilbert McLean was the lessee and operator of a Sunoco gas station located on the corner of 19th and Pearl Streets in Jacksonville, Florida. He was one of Sun's 38 retail dealers in the Jacksonville area, which Sun divided into three sales territories; McLean operated in a sales territory composed of eight Sun stations, one of which was only about 11 blocks away from McLean. Like almost all retail sellers of branded gasoline, McLean bought and sold only the petroleum products of a single supplier, here Sun. ”

“ In essence, Sun argues that, practically viewed, Super Test was not merely a competitor of McLean, but also a competitor of Sun. Oil companies, whether major or minor, integrated or nonintegrated, it is asserted, compete not at the wholesale or jobber level, but almost exclusively at the retail level. ”

“ No corresponding price reduction was given by Sun to any of its other dealers in the area.
Within a few days, Super Test further lowered its price to 23.9 cents per gallon. No further price cuts were made by either McLean or Super Test until mid-February 1956, when Super Test cut its price for 'regular' gasoline to 22.9 cents per gallon. At about the same time, a general price war developed in the Jacksonville area and several other suppliers made price reductions. Sun then dropped its price equally to all of its dealers in the area. ”

“ Such price warfare appears to be caused by a number of basic factors, not the least of which are industry overcapacity and the propensity of some major refiners to engage in so-called 'dual marketing' under which, in order to increase their overall sales and utilize idle facilities, they not only sell branded gasoline to their own dealers but also sell unbranded gasoline to independent retailers or jobbers, often at a lower price. ”

“ It appears that this was Super Test's first and only station in Jacksonville. The record does not disclose that Super Test was anything more than a retail dealer; nor does it indicate the source from which Super Test obtained its gasoline.
The two-cent-per-gallon difference in price between McLean and Super Test represented the 'normal' price differential then prevailing in the area between 'major' and 'non-major' brands of gasoline. This 'normal' differential represents the price spread which can obtain between the two types of gasoline without major competitive repercussions. ”

“ Similarly, the mere fact that McLean was a small retailer does not make the good faith defense applicable. While, as noted, the immediate and generating cause of the Robinson-Patman amendments may have been a congressional reaction to what were believed to be predatory uses of mass purchasing power by chain stores, neither the scope nor the intent of the statute was limited to that precise situation or set of circumstances. Congress sought generally to obviate price discrimination practices threatening independent merchants and businessmen, presumably from whatever source. ”

“ The law does not, and under the free enterprise system it cannot, guarantee businessmen against loss. That businessmen lose money or even go bankrupt does not necessarily mean that competition has been injured.' H.R.Rep.No.1422, 81st Cong., 1st Sess. 5-6.
But the mere recognition that harm sometimes may be a by-product of competition is the beginning, not the end, of analysis. Whatever the result here, someone may be hurt-to allow Sun to pursue its discriminatory pricing policy will, as has been indicated, harm other Sun dealers who compete with McLean ”

“ No more can be said than that there appears to be nothing in the legislative history to directly contradict what we deem to be the ordinary meaning of the statutory language or to indicate that a different reading was specifically intended ”

“ The Court of Appeals concluded that Sun was entitled, under the circumstances, to 'assert the (§ 2 (b) ) defense of meeting competition in good faith.' 294 F.2d, at 481. The Court of Appeals did not overturn the Commission's finding that Sun's discriminatory price concession to McLean had resulted in competitive injury to the other Sun dealers in McLean's area. ”

“ However, it may be noted that a properly designed and limited price reduction system fashioned in such a manner might, under appropriate circumstances, be found to have obviated substantial competitive harm to the other Sun dealers and thereby negated a violation of § 2 (a) such as is here charged. ”