Tom C. Clark

“ In allowing a 'cost justification' for price discriminations and not for others, Congress could very well have felt that sellers would be forced to confine their discriminatory practices to price differentials, where they could be more readily detected and where it would be much easier to make accurate comparisons with any alleged cost savings. ”

“ Simplicity argues that 'motivation' controls and that since the variety store sells for a profit and the fabric store for accommodation that the competition is minuscule. But the existence of competition does not depend on such motives. Regardless of the necessity the fabric stores find in the handling of patterns it does not remove their incentive to sell those on hand, especially when cash is tied up in keeping patterns on the shelves. ”

“ Furthermore, Simplicity not only takes advantage of the captive nature of the fabric stores in not granting them these advantages but compounds the damage by creating a sales outlet in the variety stores through the granting of these substantial incentives to engage in the pattern business. ”

“ The variety stores devote the minimum amount of display space consistent with adequate merchandising-consisting usually of nothing more than a place on the counter for the catalogues, with the patterns themselves stored underneath the counter in the steel cabinets furnished by Simplicity. In contrast, the fabric stores usually provide tables and chairs where the customers may peruse the catalogues in comfort and at their leisure. ”

“ Simplicity's arguments to the contrary are based essentially on the ground that it would be 'bad law and bad economics' to make discriminations unlawful even where they may be accounted for by cost differentials or where there is no competitive injury. ”

“ The catalogues and storage cabinets are both furnished by Simplicity.
The variety stores handle and sell a multitude of relatively low-priced articles. Each article, including dress patterns, is sold for the purpose of returning a profit and would be dropped if it failed to do so. The fabric stores, on the other hand, are primarily interested in selling yard goods; they handle patterns at no profit or even at a loss as an accommodation to their fabric customers and for the purpose of stimulating fabric sales. ”

“ The retail prices of Simplicity patterns are uniform at 25$, 35$, or 50$. Similarly, Simplicity charges a uniform price, to all its customers, of 60% Of the retail price. However, inthe furnishing of certain services and facilities Simplicity does not follow this uniformity. It furnishes patterns to the variety stores on a consignment basis, requiring payment only as and when patterns are sold-thus affording them an investment-free inventory. The fabric stores are required to pay cash for their patterns in regular course. ”

“ Consequently, the seller was forced to raise prices even further on smaller quantity lots in order to cover the concessions made to the large purchasers. Comparable competitive advantages were obtained by the large purchasers in several ways other than direct price concessions. Rebates were induced for 'brokerage fees,' even though no brokerage services had been performed. 'Advertising allowances' were paid by the sellers to the large buyers in return for certain promotional services undertaken by the latter. Some sellers furnished special services or facilities to the chain buyers. ”

“ It expressed disagreement with the desirability of this result, in view of what it deemed the 'broader antitrust objectives,' and recommended that § 2 (c) be changed by legislation and § 2 (d) and (e) by 'interpretive reform.' P. 93.↑ During congressional debates on the bill, there were continual references to the subsections (c) , (d) and (e) practices as 'secret' discriminations. ”