William O. Douglas

“ Since film advertising space in theaters is limited to four, five, or six advertisements, it is not unreasonable for respondent to contract for all space available in such theaters, particularly in territories canvassed by its salesmen at regular and frequent intervals.↑ A suggestion is made that respondent needs a period longer than one year in view of the fact that the contracts with advertisers are often not co-terminous with the exclusive screening agreements, due in large part to the delays in obtaining advertising contracts after the exclusive screening agreements have been executed. ”

“ Indeed, the degree of exclusion of competitors in some instances is represented simply by the inadequacy of a 15% commission paid the 'excluded' competitor when he is permitted to show his films in theaters nominally exclusive. The Commission found the 15% unprofitable in local advertising, but it did not find how much of the affected competitors' total business, which may also have included manufacturer-dealer or cooperative advertising and national advertising, was in effect excluded because of the unprofitability of the commission in local advertising. ”

“ It is said that the expenses of securing these screening contracts do not warrant one-year agreements, that investment of capital in the business would not be justified without assurance of a market for more than one year, that theatres frequently demand guarantees for more than a year or otherwise refuse to exhibit advertising films. These and other business requirements are the basis of the argument that exclusive contracts of a duration in excess of a year are necessary for the conduct of the business of the distributors. ”

“ The Commission considered this argument and concluded that, although the exclusive contracts were beneficial to the distributor and preferred by the theatre owners, their use should be restricted in the public interest. The Commission found that the term of one year had become a standard practice and that the continuance of exclusive contracts so limited would not be an undue restraint upon competition, in view of the compelling business reasons for some exclusive arrangement. [2] The precise impact of a particular practice on the trade is for the Commission, not the courts, to determine. ”

“ We do have an indication from the record that more than half of respondent's exclusive contracts run for only one year; if that is so, that part of respondent's hold on the market found unreasonable by the Commission boils down to exclusion of other competitors from something like 1,250 theaters, or about 6%, of the some 20,000 theaters in the country. The hold is on about 10% of the theaters that accept advertising. ”

“ My doubts that the Commission has adequately shown that it has been guided by relevant criteria in dealing with its findings under § 5 of the Federal Trade Commission Act are dispelled neither by those findings nor by the opinion of the Court. The Commission has not explained its conclusion with the 'simplicity and clearness' necessary to tell us 'what a decision means before the duty becomes ours to say whether it is right or wrong.' United States v. ”

“ See Findings as to the Facts No. 12, In re Motion Picture Advertising Service Co., supra, at 388.
Further, the findings of the Commission indicate that there are some factual differences in the 'exclusive' provisions here, for in this industry, as may not have been feasible in gasoline retailing, distributors of films often do have access to the theaters having nominally exclusive contracts with competing distributors. At times the exclusive provision may do little more than give the distributor a priority over other distributors in the use of screen space. ”

“ The range within which the broadly stated concepts of reasonableness moved was confined as well as defined by experience, and application of the concepts was necessarily limited to easily comparable economic activity. ”

“ If all contracts are not to be bad on such reasoning, it seems there must be more, particularly in view of indications here not adverted to by the Commission in its formal findings that what little business failure there has been among competitors may to some extent have resulted from the inferior quality of those competitors' films. ”

“ We have concluded that the order which the Commission entered in this case is consistent with that construction. It does not prevent the completion of any particular advertising contract after the expiration of the exclusive screening agreement. The order merely prevents respondent from requiring the theatre owner to show only its films after that date. It does not prevent the theatre owner from making an otherwise exclusive agreement with another distributor at that time. No theatre owner is a party to this proceeding. ”

“ While the existence of the other exclusive contracts is, of course, not irrelevant in a market analysis, see Standard Oil Co. v. United States, 337 U.S. 293, 309, 69 S.Ct. 1051, 1059, 93 L.Ed. 1371, this Court has never decided that they may, in the absence of conspiracy, be aggregated to support a charge of Sherman Law violation. Cf. id., at page 314, 69 S.Ct. at page 1062. If other factors pertinent to a Sherman Law violation were present here, the Commission could not leave such factors unmentioned and simply ask us to review a broad unexplained finding that there is such a violation. ”