# American Motors Corporation, American Motors Sales Corporation v. The Federal Trade Commission > Court of Appeals for the Sixth Circuit · September 29, 1967 · 384 F.2d 247 URL: https://www.frixlaw.com/law-library/cases/9453042 ## Case - **Full name:** AMERICAN MOTORS CORPORATION, American Motors Sales Corporation, Petitioners, v. the FEDERAL TRADE COMMISSION, Respondent - **Court:** Court of Appeals for the Sixth Circuit - **Decided:** September 29, 1967 - **Citations:** 384 F.2d 247; 1967 Trade Cas. (CCH) 72,222; 1967 U.S. App. LEXIS 5002 - **Precedential status:** Published - **Opinion:** Dissent by Battisti - **Judges:** O'Sullivan, Cele-Brezze, Battisti - **Cited by:** 6 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9453042 ## Opinion text BATTISTI, District Judge (dissenting). While I agree that American Motors adequately demonstrated that the average additional cost of dealing with members of its regular dealer group exceeded the price advantage afforded merchandising distributors, 1 I am unable to agree that the Commission clearly erred in finding that American Motors failed to cost justify its price differential. My view is that the record before us not only supports but requires a finding that American Motors failed to establish that members of its regular dealer group possessed “such selfsameness as to make the averaging of the cost of dealing with the group a valid and reasonable indicium of the cost of dealing with any specific group member.” United States v. Borden Company, et al., 370 U.S. 460, 469 , 82 S.Ct. 1309, 1314 , 8 L.Ed.2d 627 (1962). The court’s opinion recognizes that the wide range in sales volume and style of doing business within the regular dealer group precludes a finding of homogeneity or selfsameness based upon such factors. However, it states that “[t]he needed homogeneity is not dependent upon the size or style of doing business, provided American Motors’ method of using them [the regular dealers] to market its products exposed it to the ‘selfsameness’ and uniformity in its burden of costs.” (p. 12) Based upon a view that American Motors adequately demonstrated that as a general practice each of its regular dealers availed themselves of the six additional categories of services, the court seems to conclude that it follows that American Motors has thereby demonstrated that the providing of these services exposed it to a uniform burden of costs or, in other words, that the average cost of providing these additional services to members of the regular dealer group was reasonably equivalent to the actual cost of providing the same to the individual members of the group. For such a conclusion to follow, the nature of the services would of necessity have to be such that the cost of providing the same, when expressed in terms of a percentage of sales, would be reasonably uniform as to all regular dealers regardless of their sales volume or other distinguishing characteristics. Assuming that the record before us demonstrates that as a general practice each of Amercan Motors’ regular dealers availed themselves of the six additional categories of services, it must be noted that the record contains not one scintilla of direct evidence, by way of random sample or otherwise, that the cost of providing these services, when expressed in terms of a percentage of sales, was reasonably uniform as to the individual members within the regular dealer group. A finding of such reasonable uniformity, therefore, would of necessity have to be predicated upon those inferences which might reasonably be drawn from the nature of the services themselves and the surrounding circumstances. Where, as in the instant case, a grouping of customers may not be justified on the basis of similarity in sales volume and style of doing business and an effort is made to justify the same on the basis that additional services were rendered, it seems clear that under. Borden it must be demonstrated not only that the members of the group received the services but also that the cost of providing the same was reasonably uniform as to all members of the group. The latter element might well be established by a sampling of the cost of providing the services to individual dealers having different sales *264 volumes and styles of doing business, 2 and also by testimony on this point from marketing experts. Without such evidence the Commission could only speculate whether the cost of providing the services was reasonably uniform as to all members of the group. In granting a price concession to certain distributors, American Motors acted entirely in secret and apparently without giving any detailed analysis to the matter of cost justification. Because of the secret nature of the concession, regular dealers were obviously foreclosed from electing whether they should take advantage of the price concession or obtain the additional services. 3 When American Motors was ultimately called upon to cost justify its secret price concession it lumped together all of the regular dealers on a zone-by-zone basis and merely figured the average cost of supplying them with the six additional categories of services. It would seem an understatement to say that the six categories of additional services are rather nebulous in nature. With regard to a number of the categories, it seems apparent that the cost of providing the same, when expressed in terms of a percentage of sales, would vary greatly in relation to volume of sales and method of doing business. In presenting its case American Motors offered no evidence to negate this position and, as previously noted, in no manner attempted to affirmatively demonstrate that the cost of providing the services would be reasonably uniform as to the individual members within the regular dealer group. On the evidence submitted I do not think it reasonable to infer from the nature of the six additional services and the surrounding circumstances that the cost of providing such services was reasonably uniform as to the individual regular dealers. Accordingly, I am of the opinion that American Motors has failed to cost, justify the price concession granted its merchandising distributors, and that the judgment of the Commission should be affirmed. . See footnote 7 of majority opinion. . The majority’s concern that the view taken by the Commission would require a cost analysis as to each and every dealer appears to me to be unwarranted. . A similar situation prevailed in the Borden case. With regard to the same, the Supreme Court stated in Footnote 13: “Another suspect feature is that classifications based on services received by independents were apparently frozen— making it impossible for them to obtain larger discounts by electing not to receive the cost-determinative services— with no justifiable business reason offered in support of the practice.” ( 370 U.S. 460, 471 , 82 S.Ct. 1309, 1315 .) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9453042. Public record. Not legal advice.