by the Supreme Court, there will be no compulsion on Callaway or Cabin Crafts to discontinue their price discriminations. Moreover, quantity discounts are employed extensively in many industries. The decision of the Fifth Circuit may seriously hinder future administration of Section 2(a), especially in view of the fact that respondents against whom cease-and-desist orders are issued have the choice of circuits in which to file their petitions for review and probably. if the decision stands, will take their appeals to the Fifth Circuit. Enclosed are copies of the opinion and judgments of the court of appeals, the printed records, the briefs filed in the court of appeals, and the letters from counsel for Callaway and Cabin Crafts dated July 25 and August 2, 1966. By the Commission, Commissioner Elman not participating. PAUL RAND DIXON, Chairman. DAYCO CORP. 26. Dayco Corp. v. F.T.C.. 362 F.2d 180 (6th Cir. 1966) (a) Court Action: 2(a) aspect of order vacated and cause remanded to Commission. (b) Commission Action: 1. On September 7, 1966 directed that certiorari not be sought. Vote: 5-0. 2. On October 12, 1966 price discrimination charge against Dayco was dismissed. Vote: 4-1, Commissioner MacIntyre not concurring for the minute record only. 3. On October 26, 1966 Commission entered its modified order to cease and desist. Vote: 5-0. SEPTEMBER 7, 1966. (92) Dayco Corporation v. Federal Trade Commission, 6th Cir. No. 16,215 (Docket 7604—Dayco Corporation) Circulated by Mr. Dixon August 18, 1966-The Commission (a) directed that certiorari not be sought herein, and (b) agreed that the matter would be returned to Mr. Dixon for further consideration of, and recommendation to the Commission as to, the future course of the proceeding in light of (i) the opinion and judgment of June 17, 1966, of the United States Court of Appeals affirming the Section 5 part of the order in Docket 7604 and vacating the Section 2(a) part, and (ii) the "amended judgment" entered on July 5, 1966, by the Court, adding a provision requested by Commission counsel that provided for remand to the Commission "for further proceedings consistent" with the Court's opinion. OCTOBER 12, 1966 (1) Dayco Corporation v. Federal Trade Commission, 6th Cir., No. 16,215 (Docket 7604-Dayco Corporation) Agenda-matter circulation of September 30, 1966, by Mr. Dixon with which he submitted, pursuant to the agreement at the meeting of August 18, 1966, a memorandum dated September 30, 1966. Mr. Dixon recommended, for the reasons given, that the price discrimination charge against Dayco be dismissed: and stated that the Division of Appeals, Office of the General Counsel, should be requested to prepare a modified order consistent with the court's opinion and dismissing the price discrimination charges in the complaint in Docket 7604. After consideration, on motion of Mr. Dixon, the price discrimination charge against Dayco was dismissed. The Division of Appeals, Office of the General Counsel, was instructed to prepare and submit to the Commission for approval a draft of modified order consistent with the court's opinion and dismissing the price discrimination charges in the complaint in Docket 7604. Mr. Elman was recorded as in favor of the foregoing action, and Mr. MacIntyre, for the minute record only, did not concur. (479) OCTOBER 26, 1966. Adjudicative matters: (1) Dayco Corporation v. Federal Trade Commission, 6th Cir., No. 16,215 (Docket 7604-Dayco Corporation) Draft of modified order to cease and desist in Docket 7604, as submitted by the General Counsel with memorandum of October 14, 1966, pursuant to the action of October 12, 1966. With his adjudicative-matter circulation of October 21, 1966, Mr. Dixon submitted memorandum of the same date in which he advised that he had altered the order submitted by the General Counsel in several minor respects. and recommended that the revised order be adopted in lieu of the draft submitted by the staff. After consideration, the Commission entered its modified order to cease and desist in Docket 7604, and referred its modified order, as submitted by Mr. Dixon, to the Secretary for issuance and service upon the parties. STANDARD MOTOR PRODUCTS, INC. 27. F.T.C. v. Standard Motor Products, Inc., 371 F.2d 613 (2nd Cir. 1967) (a) Court Action: Petition for enforcement of order denied. (b) Commission Action: 1. On March 22, 1967 directed that Solicitor General be requested to file a petition for certiorari. Vote: 3-2, Commissioners Reilly and Elman not concurring. 2. On June 28, 1967 ordered that no further enforcement action be taken at this time and that the investigational hearing be terminated. Vote: 3-1, Commissioner Dixon voting in the negative, Mr. MacIntyre not participating. MARCH 22, 1967. (6) Federal Trade Commission v. Standard Motor Products, Inc., 2d Cir., No. 30,325 (Docket 5721-Standard Motor Products, Inc.) Memorandum of March 7, 1967, from the Assistant General Counsel for Appeals. Mr. James B. Truly, approved by the General Counsel, advising that the Court of Appeals for the Second Circuit, in its opinion of January 9, 1967, held that it had jurisdiction to enforce the Commission's pre-1959 Section 2(a) order in Docket 5721, and denied the Commission's petition for enforcement because it did not accept the grounds on which the Commission rejected Standard's costjustification defense. For the reasons recited, Assistant General Counsel Truly expressed the opinion that the Commission should make an effort to obtain certiorari of the above decision. In his special-matter "Walk-Around" circulation of March 9, 1967, Mr. Dixon concurred in the staff's recommendation. On March 13, 1967, Messrs. Dixon and MacIntyre, and Miss Jones directed that the Solicitor General be requested to file a petition for certiorari of the above decision in the Supreme Court; and approved and ordered hand-carried after signature by the Chairman a letter to Hon. Thurgood Marshall, The Solicitor General, Department of Justice, as submitted by Mr. Truly, making such request. Messrs. Elman and Reilly did not concur in the foregoing action, and it was directed that they be so shown on the letter. JUNE 28, 1967. (10) Federal Trade Commission v. Standard Motor Products, Inc., 2d Cir., No. 30,325 (Docket 5721-Standard Motor Products, Inc.) Memorandum of June 21, 1967, from the Bureau of Restraint of Trade reporting pursuant to the action of March 13, 1967, and recommending, since the Solicitor General has advised the Commission of his decision not to file a petition for a writ of certiorari of the January 9, 1967 decision of the Court of Appeals for the Second Circuit in the above matter, that Docket 5721 be remanded to the hearing examiner for reopening of the investigational compliance hearing therein, for reception of evidence and for further proceedings consistent with the opinion and judgment of the above court. In his agenda-matter circulation of June 23, 1967, Mr. Dixon recommended, for the reasons recited, that this matter be remanded to the hearing examiner for such further proceedings as may be appropriate consistent with the Court's opinion and judgment. Messrs. Joseph E. Sheehy, Joseph J. Gercke, Bartley T. Garvey, Richard B. Mathias, Francis C. Mayer and John M. Siemien of the Bureau of Restraint of Trade were called in, consulted with regard to this matter, and thereafter excused. After discussion, Mr. Dixon moved that Docket 5721 be remanded to the hearing examiner for such further proceedings as may be appropriate consistent with the Court's opinion and judgment. As a substitute motion, Mr. Reilly moved that no further enforcement action be taken in this matter at this time and that the investigational hearing be ter minated. As to Mr. Reilly's motion, Messrs, Elman and Reilly and Miss Jones voted in the affirmative, and Mr. Dixon voted in the negative. The motion was carried, and it was so ordered. Mr. MacIntyre did not participate in the foregoing action. MARCH 13, 1967. Re Federal Trade Commission v. Standard Motor Products, Inc., 2d Cir. No. 30,325-FTC Docket 5721 Hon. THURMOND MARSHALL, DEAR MR. SOLICITOR GENERAL: On January 9, 1967, the United States Court of Appeals for the Second Circuit issued its opinion and judgment denying the Commission's petition to enforce a pre-1959 Clayton Act order directing Standard Motor Products, Inc., to cease and desist from charging different net prices to purchasers who compete in the resale of its products. The court refused to accept the Commission's rejection of Standard's cost justification defense; it did not, however, resolve the vital question presented, i.e., whether Standard has made out such a defense. We believe that the court's decision is erroneous in several respects and presents substantial obstacles to the Commission's enforcement of Section 2(a) of the Robinson-Patman Act. For the reasons stated below the Commission requests that a petition for certiorari be filed in the Supreme Court. In 1957, having found that Standard's practice of pricing pursuant to a retroactive volume rebate schedule resulted in discriminations in price between competing customers and that, in the circumstances of the automotive replacement parts industry where "competition is keen" and "margins of profit are small." such discriminations may be to substantially lessen competition between such favored and nonfavored customers, the Commission issued its cease and desist order prohibiting Standard from discriminating in price— *** by selling to any one purchaser at net prices higher than the net prices charged to any other purchaser who, in fact, competes with the purchaser paying the higher price in the resale and distribution of (Standard's) products." 1 This order is substantially similar to those issued in other "second-line" or customer competition cases. The order was affirmed by the Second Circuit on Standard's petition for review (265 F.2d 674 (1959)). In 1963 the Commission initiated compliance proceedings to ascertain whether Standard had violated the order to cease and desist (Pet. Apdx. 3a-5a). In its report on the compliance investigation (Pet. Apdx. 9a-41a), the Commission found that the cumulative volume discount schedules used by Standard in 1962 created discriminations in price between competing customers substantially similar to those considered in the original proceeding, that the "competitive elimate among resellers in the automotive after-market industry has not changed and that [Standard's] price discriminations continue to have substantial competitive effects" (Pet. Apdx. 16a-1a. 27a). Standard had defended its pricing practices in the compliance proceeding on the ground that such discriminations made only due allowance for differences in the cost of selling such products to the different purchasers. "Direct selling," "catalog." "branch warehouse" and “administrative" expenses were chosen by Standard to reflect these cost differences (Pet. Apdx. 16a-17a). 154 F.T.C. 614. |