admitted that they paid Central for the savings that accrued to them because Central solicited orders from their member wholesalers, and it cannot be disputed that the solicitation of orders from wholesalers was the principal function performed by the sellers' brokers on sales to other customers.

In addition, Olds Products Co. and Tharinger Macaroni Co. (see testimony of the representatives of these suppliers, supra) issued dual price lists, one a price list for Central, the other for the general trade, An examination of the price lists used by Olds Products Co. (CX 298; CX 194 A-B) reveals 38 common items. In 34 instances the price to Central was the equivalent of, to the nearest 1⁄2 cent, the net amount realized by the supplier on sales through brokers. An examination of the price lists used by Tharinger Macaroni Co. (CX 317 A−B) reveals 17 common items. In 15 instances the price to Central was the equivalent of, to the nearest 2 cent, the net amount realized by that supplier on sales through brokers. Tables showing this are attached hereto as Tables A and B. On the face of tihs record we believe the court of appeals erred when it stated (Slip Opinion pp. 8-9):

"There were no savings in brokerage expenses involved in this case and hence the following principle announced in Federal Trade Commission v. Broch & Co., 363 U.S. 166, 176, does not apply here:

** A price reduction based upon alleged savings in brokerage expenses is an "allowance in lieu of brokerage" when given only to favored customers. ****"

4. In setting aside the Commission's order to cease and desist the Court of Appeals said that reason did not permit it under the facts of this case "to declare illegal a worthy effort by a number of wholesale grocers, owned by retailers, to reduce ultimate prices to consumers and make the retailers stronger in their competition with large chain stores" (Slip Opinion p. 7). This statement by the Court appears to suggest that the Commission has held cooperative buying ventures illegal per se. under Section 2(c). This clearly is not the case. The Commission found on this record that Central, as a buyer for its wholesalermembers, exacted concessions in price which constituted allowances in lieu of brokerage. The Commission's discussion of Central's method of doing business related to Central's argument that it was entitled to such concessions due to savings which accrued to its suppliers from its "unique" method of doing business; the Commission showed that this method of doing business was, in large part, merely the activity normally pursued by a buyer's broker, and that compensation for such services was prohibited by Section 2(c). Certainly any group buying organization, or in fact any buyer, is permitted under the statute to effect those economies permitted under Section 2(a). But there is nothing in the circumstances of this case that would permit Central to stand in a preferred position by benefiting from economies outside the ambit of that Section.

The court of appeals stated that "in the case at bar the Commission would drive such groups out of existence" (Slip Opinion p. 8). But, as recently indicated by the Supreme Court in Federal Trade Commission v. Sun Oil Co., 371 U.S. 505, 519 (1963), the courts are not free on the basis of their “economic predilections" to make a choice foreclosed by the determination in the statute itself in favor of equality of treatment. We believe the Supreme Court's statement to be appropriate in the circumstances of this case.

5. This case involves, as did the Broch case, the situation where sellers yield to economic pressures of buyers by granting unfair preferences in connection with the sale of goods, a practice which the Robinson-Patman Act was enacted to prevent. As stated by the Supreme Court (363 U.S. at 174) :

"The form in which the buyer pressure is exerted is immaterial and proof of its existence is not required. It is rare that the motive in yielding to a buyer's demands is not the 'necessity' for making the sale." Such "pressure" was exerted here, and the seller's "motive in yielding to a buyer's demands" is apparent. The court, in effect, has presented all large buyers with a built-in defense in instances where they pursuade sellers to replace brokers on direct sales. If the court has correctly stated the law, this exemption probably will not be limited to buying groups such as Central; it may apply also to chain stores, which without doubt perform the same services for which Central has been compensated in this case. This was exactly the "sort of thing that it was the purpose of the act to prevent.” Oliver Bros. v. Federal Trade Commission, 102 F.2d 763, 770 (4th Cir. 1939). See The Great Atlantic & Pacific Tea Co. v. Federal Trade Commission, 106 F.2d 667 (3d Cir. 1939).

It should be pointed out that mathematical correlation between brokerage and price concession was specifically noted by the Supreme Court in the Broch case. 363 U.S. at 168.

We believe, for the reasons stated, that the decision of the court of appeals is erroneous as a matter of law, and is contrary to the decision cited herein. It is therefore requested that a petition for a writ of certiorari be filed.

As we have stated, this case was decided by the court of appeals on July 2, 1963. We regret the delay in making this request. We believe, however, that the importance of the case warrants a request by you for additional time for filing a petition for certiorari if the remaining time is insufficient for that purpose.

Transmitted herewith are copies of the briefs, the printed record, books of exhibits, and the opinion and judgment of the court of appeals.

1 Commissioner Elman, while he agrees with the decision of the Court of Appeals for the Seventh Circuit, agrees that the questions raised by the decision are important and should be resolved by the Supreme Court. He therefore joins in the Commission's request that the Solicitor General seek certiorari.

R. H. MACY & CO., INC.

14. R. H. Macy & Co., Inc., v. F.T.C. 326 F. 2d 445 (2nd Cir. 1964)

(a) Court Action: Order enforced as modified.

(b) Commission Action:

1. On March 3, 1964 directed that certiorari not be sought. Vote: 40, Commissioner Reilly not participating.

MARCH 3, 1964.

R. H. Macy & Co., Inc. v. Federal Trade Commission, 2d Cir. No. 27.687 (Docket 7869-R. H. Macy & Co., Inc.)

Mr. MacIntyre reported his consideration of memorandum of February 24, 1964, from Assistant General Counsel Truly, approved by the General Counsel. concerning (1) the opinion and judgment, filed January 16, 1964, by the United States Court of Appeals for the Second Circuit, affirming the decision in Docket 7869, but directing modification of the Commission's order therein in accordance with the cases indicated, and (2) the Court's decree of February 14, 1964, modifying the terms of the Commission's order to make it conform substantially to the modified orders in the cases cited. For the reasons recited, Mr. Truly expressed the opinion that a request for a writ of certiorari is not warranted, and recommended against it.

After consideration, on motion of Mr. Dixon, it was directed that certiorari not be sought in this matter.

Mr. Reilly did not participate in the foregoing action.

(436)

TRI-VALLEY PACKING ASSOCIATION

15. Tri-Valley Packing Association v. F.T.C., 329 F. 2d 694 (9th Cir. 1964) (a) Court Action: Order reversed and case remanded.

(b) Commission Action:

1. On July 1, 1964, directed that cause be remanded to hearing examiner for further proceedings. Vote: 4-1, Commissioner Elman dissenting.

JULY 1, 1964.

(1) Tri-Valley Packing Association v. Federal Trade Commission, 9th Cir., No. 18125 (Docket 7225-Tri-Valley Packing Association, Docket 7496-Tri-Valley Packing Association)

Mr. Dixon presented memorandum of June 30, 1964 in which he reported his consideration of memorandum of May 26, 1964, from the General Counsel recommending that Dockets 7225 and 7496 be reopened and remanded to the hearing examiner for initial compliance with the opinion and judgment of the United States Court of Appeals for the Ninth Circuit. The General Counsel transmitted draft of order to effect that result.

Mr. Dixon concurred in the recommendation of the General Counsel. After consideration, the order to cease and desist in the consolidated proceedings in Dockets 7225 and 7496 having been reversed and set aside by the United States Court of Appeals for the Ninth Circuit by its judgment entered on March 18, 1964, and the Court having by said judgment remanded the cause for the further proceedings directed in its opinion of the same date, the Commission reopened this matter and remanded the same to Hearing Examiner Edgar A. Buttle for such further proceedings, including hearings, as are necessary to comply fully with the directions contained in the opinion and judgment of the Court, with the direction that the hearing examiner shall, upon completion of the further proceedings, file a revised initial decision based upon the record made prior to the remand and any additional evidence that may be received.

Order to the above effect was approved and referred to the Secretary for issuance and service upon the parties.

Mr. Elman dissented from the foregoing action.

(437)