# Appendix — M. C. Manufacturing Co. v. Texas Foundries, Inc.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1935%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1976
- **Citation:** 424 U.S. 968

## Text

Appendix — i

M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC. 7415

M. C. MANUFACTURING COMPANY,
INC.., et al., Plaintiffs-Appeliees,

v.

TEXAS FOUNDRIES, INC., et ai.,
Defendants- Appellants.

No. 74-2246.

United States Court of Appeals,
Fifth Circuit.

Aug. 21, 1975.

A private antitrust action was
brought wherein plaintiffs claimed that
defendants had conspired to restrain
trade in violation of section 1 of Sher-
man Act through the utilization of an
illegal price discrimination scheme The
United States District Court for the
Eastern District of Texas, at Marshall,
William M. Steger, J., entered judgment
for piaintiffs, and defendants appeaied.
The Court of Appeals, Clark, Circuit
Judge, heid that plaintiff which failed to
prove that in the absence of defendants’
discriminatory pricing scheme it would
have received government supplier con-
tract in question failed to present jury
issue on Sherman Act ciaim; and that
purchases were not made “in compet:
tion,” as required in order to establish
Robinson-Patman Act discriminatory
pricing claim

Reversed.

1. Monopolies—28(7.1, 7.2)

Proof of existence of an actionabie
conspiracy is mot enough to establish a
section 1 Sherman Act claim; in addition
to proof that antitrust laws were violat
ed. a plaintiff must also establish that
such violation proximately caused injury
to his business and adduce evidence that
at least gives an indication of the
amount of damage which resuited
Sherman Anti-Trust Act, s 1, 15 US.
CA 451

2. Monopolies—28(8)

Plaintiff which failed to prove that
in the absence of defendants’ discrimina-
tory pricing scheme it would have re
ceived government supplier contract in
question failed to present jury issue on
Sherman Act claim, where evidence dis-
closed that even if defendant supoiier's

7416

bia had been disregarded plaintiff would
not have been the low bidder, despite
plaintiff's hypothetical recalculation o!
its bid based upon orices the conspiracy
fetched for detendant supplier. Sher
man Anti-Trust Act, 6 1,15 US.C.A
s1

3. Monopolies—10

Purpose of Snerman Act is preserva
tion of open, competitive marker. Sher
man Anti-Trust Act, s 1, 18 USCA.
s 1.

4. Monopolies—28(7.6)

Damages are recoverabie in private
suit on Sherman Act claim only upon
showing that in the absence of anticom-
petitive practice complained of plaintiff
would not have suffered the loss asserted
Clayton Act, 6 4, 15 USCA. 6 15

5. Trade Regulaticn—911

tn order for there to be discrimina-
tion between purchasers violative of sec-
tion 2(a) of Clayton Act, there must be
actual sales at two different prices to
two different actual buyers. Clayton
Act, 6 2(a, {) as amended by Robinson
Patmsan Price Discrimination Act. 15
USCA. 6 13ta, ft)

6. Trade Regulation—914

Robinson-Patman legality of price
discrimination between contracts to pur-
chase that contempiate contemporaneous
delivery must be evaluated as of dates
the respective contracts were made.
Clayton Act, s 2(a, f) as amended by
Robinson-Patman Price Discrimination
Act. 15US.C.A. 8 13iha, f).

? Trade Reguiation—913

Discriminatory pricing is violative of
Robinson-Patman only when it lessens or
tends to prevent competition between
customers or between sellers. Ciayton
Act, 6 2la, f) as amended by Robinson.
Patman Price Discrimination Act, 15
US.C.A. § 13la, f)

8. Trade Reguiation—913

To constitute a Robinson-Patman
wrong, price discrimination must occur
between competitors in comoparabie
transactions, that is, where persons re-
ceiving different prices sare in actual,
functional competition with one another,
and must have requisite effect upon ac-
tual or potential competition. Clayton
Act, 6 2(a, f) as amended by Robinson
Patman Price Discrimination Act, 15
USCA. 6 13la f)

Synopees, Syliatb: and Key Number Ciassa:fication
COPYRIGHT © 1975, by WEST PUBLISHING CO

The Synopees, Syilebi and Key Number Classifi-

cation constitute so part of the opinion of the court

INDEXED

Appendix 2

7416
7417

9. Trade Regulation—913

Even if sales at different prices are
contemporaneous, involve goods of like
grade and quality, price distinction is not
justified by good business cause and it
causes injury to the disadvantaged pur-
chaser, recovery under Robinson-Patman
Act is preciuded absent proof that price
variance detrimentally affected competi-
tion. Clayton Act, s 2(a, f) as amended
by Robinson-Patman Price Discrimina-
tion Act, 15 U.S.C.A. § 13(a, f).

10. Trade Regulation- 913,932

Competition between buyers at dis-
Parate prices is essential to a violation of
Robinson-Patman Act and existence of
this requisite is normally a fact question
to be determined by making a realistic
appraisal of all relevant facts. Clayton
Act, § 2(a, f) as amended by Robinson-
Patman Price Discrimination Act, 15
U.S.C.A. § 13 f(a, f).

11. Trade Regulation—913

Purchases were not made “in com-
petition” as required in order to establish
Robinson-Patman Act Discriminatory
pricing claim, where plaintiff contrac-
tor’s purchases of lifting plugs could
only be accepted by government in ful-
fillment of 1970 contract while defend-
ant contractor's purchases similarly could
be used only on 1971 contract and, re-
gardiess of subsequent discrepancy in
price to these suppliers, by defendant
seller, government had to purchase from
each, and only from each, the specified
number of plugs at agreed price under
respective contracts. Clayton Act, s 2(a,
f) as amended by Robinson-Patman Price
Discrimination Act,15 US.C.A. § 13a,
f)

12. Trade Regulation—913

Injury to a competitior is not test
for Robinson-Patman violation; test is
injury to competition. Clayton Act,
s 2a, f) as amended by Robinson-Pat-
man Price Discrimination Act, 15 U-S.
C.A. 8 13{a, f).

1. The Type “G” lifting plug is a mai-
leable iron device which the military ser-
vices use to lift 155 mm. artillery pro-
jectiles. The lifting plug has a loop at
one end, known as the “bail,”” and is
threaded on the other end for insertion
into the nose of an unfused artillery
projectile, thereby facilitating the move-
ment of such projectiles. When a pro-
jectile is to be fired, the lifting plug is
removed and replaced by an appropriate

M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC.

Appeal from the United States Dis-
trict Court for the Eastern District of
Texas.

Before GOLDBERG, CLARK and
GEE, Circuit Judges.

CLARK, Circuit Judge:

Plaintiffs, M.C. Manufacturing Com-
pany, Inc. (M.C.), and its wholly-owned
subsidiary, Universal Automatic Machine
Company, Inc. (Universal), initiated this
Private antitrust action against defend-
ants, Texas Foundries, Inc. (Texas
Foundries) and WH/R Products, Inc.
(H/R), alleging that the defendants con-
spired to restrain trade in violation of
Section 1 of the Sherman Act, 15 U.S.C.
s 1, through the utilization of a price
discrimination scheme which also was vi-
olative of Section 2 of the Clayton Act
as amended by the Robinson-Patman
Act, 15 U.S.C. s 13(a & f). Trial to a
jury resulted in a general verdict for
plaintiffs of $73,000.00 which was then
trebled by the trial court to $219,000.00.
Texas Foundries and H/R petition this
court for relief from the judgment en-
tered pursuant to that award. We re-
verse.

Universal alleges that this contro-
versy arose while it and H/R were
actively competing for a December, 1971
government contract to supply a finished
military hardware item known as a Type
“G" lifting plug,’ because Texas Found-
ries quoted H/R a lower price than it
quoted Universal to supply the required
unfinished plug castings.* According to
plaintiffs, H/R and Texas Foundries
clandestinely agreed by telephone on the
29th of November, 1971, to a price of 31
cents per unfinished plug casting deliv-
ered to H/R’s plant (South Bend, Indi-
ana). Texas Foundries had quoted Uni-
versal a price of 32.5 cents f.o.b. Texas
Foundries’ plant (Lufkin, Texas) only 11
days earlier, on the 18th of November.
Plaintiffs assert that the price discrepan-
cy between the two offers was the result

fuse. Because their purpose is use with
large caliber munitions, the only end-
user market for lifting plugs is the
military arm of the United States
government.

2. The term “unfinished plug casting”
refers to a basic casting made by a
foundry which has not been machined
and threaded into its final form as a
lifting plug which will meet contract
specifications.

BLURRED COPY

M.C.MF-.CO. INC

of 2 conspiracy between Texas Founane
and H/R in vroiation of Section 1 of the
Sherman Act aimed at the cestructon ©
Universal as a competitor. They furtne:
assert that the ultimate saie to H/R oo é
portion of the castings requirec to per-
form the contract at the lower orice con
stituted a violation of the Robinson-Par-
man Act's proscription of price distinc-
tions between purchasers since on No-
vember 12, 1971, Texas Foundries and
Universal had entered into a subcontract
at 32.5 cents per casting to fulfill a prsor
government contract award to Universal.’

For their part, the defendants con-
tend that Texas Foundries’ agreement to
sell to H/R at a lower price was reached
after the December, 1971 contract had
been awarded and then only after H/R's
intended suppliers communicatec to
H/R that they could not satisfy H/R's re-
Quirements. They further contend the
price reduction by Texas Foundries was
intended to meet the price offered by
H/R’‘s other suppliers and to find a mar-
ket for a substantial overage of castings
which had been produced under Texas
Foundries’ preexisting contract with
Universal.

Because the particular facts underiy-
ing this case are crucial to Our resoiution
of the controversy, a detailed review. of
the events leading to selection of 4 con-
tractor on government contract INo.
DAAA—09--72—C—0208 is warranted

On October 27, 1971, tne Ammu-
nition Procurement Supply Aagency
(APSA) distributed a solicitation inviting
bids on a contract to supply 1,984 006
Type 'G” lifting plugs. A total of 159
prospective bidders were solicitec of
which 16, inctuding Universal ang H/F

3 Universe! had been successful o1
June 16, 1970 in bidding on a similar
government contract. This award i
Universal was for 2,033, 950 plugs wit:
an “add-on” award of 450,000, olus -
negotiated addition of 750,000 plug:

4. Universal purchased approximate,
1,500,000 unfinished plugs trom Texas
Foundries while fulfilling :ts 1979 com
tract with add-ons and edc:tions

5 The opre-awarc survey invoive.
government assessment o} such factors a:
@ bidder's financia! Sates. procucrnior
capability, technica!’ ccpability, olar

facihiiies and a ance capa

15 whilt on take

yan

EXAS FOUNDRIES. INO 41?
4ict

ultimately submitted DiCcs
Upon receiving @ soicita rom
tne APSA Universa aske exas
Foundnes to bid ON @ suoconisact to
suppiy unfinishec piug casting. On
November 18, 1971, Texas Founaries re
spondec with a 32.5-cent pe casting
price, fo.b. Texas Foundcrie oc.ant

Based upon Texas Foundries Guotation
for the unfinished plug, Universa sub-
mitted a final bid to APSA 39.28
cents per finished piug. Ouring tne time
prior to opening of bids Texas
Foundnes was also called upor by
several other potentiai bidders tc give
similar casting price quotations As a
result, Texas Foundries sent written
quotations to both Deco Granc, inc., an
uninvolved third party. and +i/F con-
taining the identical price quoteo Uni-
versal, /. @., 32.5 cents per casting, t.0.b.
Texas Foundries’ plant.

The sixteen bids ultimately received
on the APSA contract were opened on
December 3, 1971, revealing that H/R
was the low bidder at 47.6 cents per
casting, Land-Air, Inc. was second at
48 8 cents per casting, and plaint:t*, Uni-
versal, was the third lowest bidder at
49.28 cents per casting. Pre-award sur-
veys and cost evaluations’ were then
conducted on the lowest group of bid-
ders ~ These studies resulted im evaluat
ed vids (lowest cost to government) of
47.362 cents per piug for H/F 48.678
cents per plug for Land-Ai, inc and
39.107 cents per plug for Universal.
Having thus enterec the lowes. €vaiuat-
ed nid and having received a satisiactory
Pre-aweard survey analysis, H/F was
awarded the contract on December 30,

197%.

costs. @ bidder's us2 of government-
owned equipment or facies anc
discounts. That bidder who is sy own to
nave the bid which evaivate: iowest
atong with 2 teasibie pre-awarc survey Is
then considered eligibie Tor a award
Tne award must be made ic that
responsible bidder who subm ‘ted the
iowest responsibie bid. “unless there is 3

compeliing reason to reject af. ors and

cance! the emnvitation 22 CiFA. 8

24m

co Land-Air was not surveye: mecause

Of an original Getermination tr > bic

was not responsive After amenc ent
nywever

Land-Air s DIG we 2teo

So ‘ at

Appendix 4

7418 M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC.
7419
7420
SHERMAN ACT CLAIM premise. and that it was supported by

At trial plaintiffs’ evidence tended to
show a discriminatory pricing conspiracy
between Texas Foundries and H/R
aimed at the destruction of Universal as
a producer of Type “G” lifting plugs
From the outset, plaintiffs have contend-
ed that on the 29th of November, 1971,
Texas Foundries and H/R consummated
a secret telephonic agreement whereby
Texas Foundries committed itself to sup-
ply unfinished plugs to H/R at 31 cents
per casting, at H/R’‘s plant, after only
eleven. days earlier having assured Uni-
versal that a 32.5 cent per casting price,
fob. Texas Foundries pliant, was the
lowest price it could possibly offer. The
reason for this discrepancy in price quo-
tations is found, according to plaintiffs
in H/R’‘s precarious financial situation in
November of 1971. Until 1970, the year
of Universal's entry into the lifting plug
market, H/R had been the leading pro-
ducer of military lifting plugs. In 1970,
however, Universal received the only
government contract let that year,
causing H/R a concomitant 60,000
dollar loss At this point, plaintiffs’
theory continues, realizing that failure to
obtain the 1971 contract would neces.
sitate abandonment of its plug business
and fully aware that Universal's failure
to get at least a portion of the 1971 con-
tract would portend the latter's business
demise,” H/R resolved to take whatever
steps were necessary (including partici-
pation in a discriminatory = pricing
scheme) to insure that it would not again
be underbid by Universal *

{1} If plaintiffs’ theory of the case
and version of the evidence were accept-
ed by the jury, as they may have been,
then a Sherman Act violation has been
established. We assume arguendo that
the jury verdict was based on this

7. In fact, after losing the 1971
contract to H/R Universal was unable to
acquire other work in the commercial
field sufficient to hold its shop intact,
and finaliy had to liquidate its equip-
ment

8 Other evidence supportive of plain-
tiffs’ conspiracy theory included: proof
that H/R would not consider itself able
to bid unless it had positive commit-
ments for all the plug castings it would
need: H/R’s knowledge prior to sub-
mission of its bid that its registered
supplier, Marion Malleables, could not
Produce the rough castings in sufficient
quaniity to. satisfy government re-

the evidence Under Section 1,15 US.C
s 1. “Every contract, combination
Or conspiracy, in restraint of trade or
commerce ts declared to be illegal.”
However proof of the existence of an
actionable conspiracy is not
enough. In addition to proof that the
antitrust laws were violated, a plaintiff
must also establish that such violation
proximately caused injury to his business
and adduce evidence that at least gives
an indication of the amount of damage
which resulted. Terrell v. Household
Goods Carriers’ Bureau, 494 F.2d 16, 20
(Sth Cir.), rehearing en banc denied, 496
F.2d 878, cert. dismissed, 419 US
987, 95 SCt. 246, 42 L.Ed.2d 260
(1974); Kestenbaum v. Falstaff Brewing
Corp., 514 F.2d 690 (5th Cir 1975)
{2] Under the facts of this case,
plaintiffs faiied the second of this three-
pronged test, /. e., they failed to prove
that an injury to Universal resulted from
defendants’ discriminatory pricing
scheme. While the fact of injury most
often involves evidentiary questions
which are properly for the jury [e. g.,
Story Parchment Co. v. Paterson Parch-
ment Paper Co., 282 U.S. 555, 562, 51
S.Ct. 248, 250, 75 L.Ed. 544, 548
(1931)] no such jury issue exists where,
as here, plaintiffs failed to establish that
in the absence of defendants’ discrim-
inatory pricing scheme Universal wou!d
have received this contract. Thus, the
trial Court erred in refusing to direct a
verdict for defendants on the Sherman
Act claim at the close of plaintiffs’ case.
Plaintiffs’ premise is that, absent
the illegal bid to H/R, Universal would
have received the contract. However, the
facts as adduced at trial reveal that even
if H/R’'s bid is disregarded, Universal
would not be the low bidder. Rather,

quirements; H/R’s assertion that still
another supplier, F.M.C. Corporation,
would supply the additional piugs neces-
sary to meet the government's require-
ments, while during trial H/R’s President
admitted that no firm commitment was
received from F.M.C. until after the con-
tract was awarded; H/R’s failure to
notify the government of its “change” in
suppliers until specifically asked to do
so despite the requirements of pre-award
disclosure and contract-in-process certifi-
cations; and Texas Foundries’ realization
that it would have a substantial overrun
on its contract with Universal unless it
found an alternate market for this
material

Appendix &

M.C.MFG CO., INC. v. TEXAS FOUNDRIES. INC. 7420

Land-Air, inc., a party wholly uncon
nected with either defendant, stands
second behind H/R. Thus. without
H/R’‘s bid, Universal stil! would not have
received the contract. To show that the
asserted conspiracy did in fact injure
them, plaintiffs contend that Land-Air
was not a viable intermediary. They
point out that its bid was classified by
the APSA as unresponsive and therefore
its position should not be considered
While it is true that Land-Air’s bid was
initially classified as non-responsive and
consequently Land-Air did not receive a
pre-award survey, a memo from the
APSA contract specialist in charge of
contract DAAA—09—72—C—0208 nego-
tiations introduced at triai reveals that
an amendment was received from Land-
Air on December 1, which negated the
previous non-responsive action consid-
ered, and led to reinstatement of Land-
Air's bid prior to award. It is crystal clear
that Land-Air was a viable bidder and
that, even after disregarding H/R's low
bid because of the special, conspira-
torially low price it received from Texas
Foundries, Land-Air's bid stood between
Universal and the opportunity to acquire
this contract.

Plaintiffs attempted to circumvent
the intervening position of Land-Air, inc
through a hypothetical recalculation of
the bid submitted by Universal. This
recaiculation was based upon the as-
sumption that Universal should be enti
tled to utilize a price per casting equ:va-
lent to the 31-cent f.o.b. South Bend
price which the conspiracy fetched for
H/R. By utilizing this price and apply-
ing the same profit and other cost fac-
tors it had employed in submitting its
bid based upon the 32.5-cent price, Uni-
versal calculated it would have bid an
amount below those entered by both
H/R and Land-Air, Inc., thus seeking to
show the conspiracy did cost it the con-
tract award. The fallacy in this theory,
however, is Universal's utilization of the
31-cent delivered price given to H/F.

[3, 4) The avowed purpose of the
Sherman Act is the preservation of the
open, competitive market. See. ¢« g.
Northern Pac. Ry. v. United States, 356

9. Texas Foundries charged Unrversal
the 32.5-ceni price in their Novemper
1971 purchase-order contract for 740,000
plugs to compiete Universal's 1970 con-
tract addition. tn nether of ther pre
vious purchase-order contacts did 1exas
Foundries’ price drop be! ow 32 certs per

7421

U.S. 1, 4, 78 S.Ct. 514, 517, 2 .Ed.2d
545 (1958): Apex Hosiery Co. v. Leader,
310 US. 469, 492-93, 60 SCt. 982,
992, 84 L.Ed. 1311 (1940). Damages are
recoverabie thereunder if a piaintiff can
show that the anticompetitive practice
whicn inhibits that protected freedom of
competition has proximately caused the
damages he asserts 15 U.S.C. s 15. For
the case at bar, this rule means that dam-
ages are recoverabie only upon a show-
ing that absent the anticompetitive prac-
tice plaintiff would not have suffered
the loss. The anticompetitive conduct
which the evidence tended to establish in
the case at bar was Texas Foundries’
special 31-cent price to H/R, not its re-
tusal to offer a comparable price to
H/R's competitors. The price of 32.5
cents f.o.b. Texas Foundries plant was
shown to be the standard or usual mar-
ket price quoted in connection with this
bidding. It was the price initially quot-
ed to H/R. It was the only price quoted
to Universal and it was also the price
quoted to an univolved third party,
Deco Grand, Inc. Evidence of Texas
Foundries’ other dealings during this pe-
riod further confirms that the 31-cent
price was the conspiratorial price.”

Restoration of the competitive free-
dom which the Sherman Act 1s oesigned
to protect thrcugh elimination of the
anticompetitive practice 's accomptl:shed
here by disregarding the special consptr-
atonal price to H/F, not be nypotheti-
cal broadening of the conspiracy ‘0 give
H/R’s abnormally iow price to Universal
as well. The problem tor Universal is
that tt is not 2anough to merely restore
the open competitive market status by
knocking out the conspiracy, fo. then
Lana-Air, not Universal, would ‘ave be-
come the lowest bidder. But more can-
not be done. The result is that t5e con-
spiracy did not cause the damages upon
which recovery was based, ana there-
fore the verdict cannot be sustained un-
der the Sherman Act

ROBINSON-PATMAN ACT CLAIM
Pia:ntiffs also assert tnat defendants‘
buy-sei! agreement at 31 cents per cast-
ino wes wolative cf Section 2le & f) of
the Clayton Act as amended by the Rob-

untinished plug casting. Whiie the issue
of which party was to pay the freight ts
in Cispute under two of these contracts,
under no circumstance would the
ultrmete cost to Universal per unf:cished
pluo casting ever fall below the 31 cents

2 South Benc price grantec H/R

Appendix 6

7421 M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC.

7422

inson-Patman Act, 15 U.S.C. 5s 13(a& f).
Under Section 2({a), it is unlawful for
any person engaged in commerce to dis-
criminate in price (1) between different
purchasers (2) of commodities of like
grade and quality (3) where the effect of
such discrimination is to substantially
lessen competition or tend to create a
monopoly, or to injure, destroy, or pre-
vent competition with any person who
either grants or knowingly receives the
benefit of such discrimination and (4)
where such differential is not in response
to changing market conditions,"° — while
under Section 2(f), it is unlawful to
knowingly induce or receive discrimina-
tron in price prohibited by this section

{5, 6] Recognizing that in order
for there to be discrimination between
purchasers violative of s 2(a) ‘‘there
must be actual sales at two different
prices to two different actual! buyers,"
plaintiffs pursue the Robinson-Patman
claim on the basis of the price discrepancy
between Universal's purchase-order con-
tract with Texas Foundries dated No-
vember 12, 1971 and H/R’s clandestine
November 29th agreement with Texas
Foundries which related to the Decem
ber 30, 1971 contract.’” These separate
contracts contemplated contemporane-
ous delivery of Type ‘’G” lifting plugs
during 1972 but H/R was given a price

10. In addition to the defense of
changing market conditions, a defendant
may rebut a primafacie case of discrimi-
nation by showing that his lower price
was made “in good faith to meet an
equally low price of a competitor.”
15 USC. s 13(b). Since, as discussed
infra, plaintiffs have failed to prove a
prima-facie case we do not decide the
applicability ve/ non of these defenses
under the facts of this case

11. Jones v. Metzger Dairies, Inc., 334

F.2d 919, 924 (Sth Cir. 1964), cert. ©

denied, 379 US. 965, 85 S.Ct 659, 13
L.Ed.2d 559 (1965): accord, Stough v.
May and Co., Inc., 484 F.2d 22, 23
(Sth Cir. 1973); Hiram Walker, Inc. v.A
& S Tropical, Inc., 407 F.2d 4, 7 (5th
Cir.), cert. denied, 396 US. 901, 90
S.Ct. 212, 24 L.Ea.2d 177 (1969). The
term ‘‘purchaser’’ means a buyer or
vender, not one who merely seeks to
purchase F. g, Chicago Seating Co v.S

of 31 cents delivered at its plant while
Universal was given the substantially
higher price of 32.5 cents at Texas
Foundries’ plant."*

Alternatively, plaintiffs argued at
trial that a Robinson-Patman violation
had occurred even if the jury believed
that no agreement was reached by Texas
Foundries and H/R on the 29th of No-
vember, but rather was made later —aft-
er the contract was awarded—and as a
result of the failure of H/R’s expected
supplier to produce. They contend that
even a January, 1972 agreement would
still be reasonably contemporaneous
with the November, 1971 agreement be-
tween Texas Foundries and Universal,
since delivery was contemplated during
the same periods under both contracts
and no justification based upon a change
in| market conditions or good faith
meeting of competition was shown

Defendants contest the sufficiency
of proof on every element essential to a
Robinson-Patman Act violation We
need not weigh each element, however,
as our conclusion that plaintiffs have
failed to prove that the purchases were
made ‘in competition’ forestalis the ne-
cessity of further consideration of plain-
tiffs’ claim under the Act.

[7-9] Discriminatory pricing is
violative of Robinson-Patman only when
it lessens or tends to prevent competition

Karpen & Bros., 177 F.2d 863 (7th Cir.
1949): Shaw's Inc. v. Wilson-Jones Co.,
105 F.2d 331, 333 (3rd Cir. 1939)

12. Universal contracted with Texas
Foundries on November 12 for the pur-
chase of 740,000 unfinished piug castings
(with delivery to continue through Feb-
ruary, 1972) to fulfill the government's
addition to Universal's 1970 contract
H/R's agreement with Texas Foundries
was of course ‘1 contemplation of H/R’s
attainment o: the December, 1971
contract and required delivery beginning
in January, 1972.

13. The Robinson-Patman legality of
price discrimination between contracts
to purchase that contemplate contem-
poraneous delivery, must be evaluated as
of the dates the respective contracts
were made. See, Texas Sulphur Co. v
J. R. Simplot Co., 418 F.2d 793, 806
(9th Cir. 1969).

M.C.MFG.CO., INC.

“

between customers or Detween sellers
To constitute a Robinson-Patman wrong
the price discrimination must occur be
tween competitors in comperabie trans
actions—/. @., where persons receiving
the different prices are in actual, func-
tional competition with one another-—
and it must have the requisite effect
upon actual! or potential competition."
Even if the sales at different prices are
contemporaneous, involve goods of like
grade and quality, the price distinction
is not justified by good business cause,
and it causes injury to the disadvantage
purchaser, recovery under the Act is pre-
cluded absent proof that the price
variance detrimentally affected com.
petition.

{10-12] Competition between the
buyers at disparate prices is essential to
a violation of the Robinson-Patman Act,
see Ag-Chem Equipment Co., Inc. v
Hahn, Inc., 480 F.2d 482, 490-91 (8th
Cir. 1973), and the existence of this re-
quisite is normally a fact question to be
determined by making a realistic ap-
praisal of all the relevant facts F.T.C v
Sun Oi! Co., 371 U.S. 505, 527, 83 S.Ct.
358, 9 L.Ed.2d 466 (1963). However, in
the case at bar the relevant facts are
without dispute. The government's selec
tion under both the 1970 contract ac-
dition and the December, 1971 contract

78. 16 USC. a 13le). €. g¢., F.TC. v
Sun Oil Co., 371 US. 505, 527, 83. § Ci
358, 9 LEd2d 466 (1963) Ailas
Building Products Co. v Diamond Block
& Gravel Co., 269 F 2d 950, 354 (10th
Cir. 1959), cert. denied, 363 US. 843,
80 S.Ct 1608, 4 L Ed 2d 1727 (1960)
Hartley & Parker, Inc. v. Flonda Bever
age Corp., 307 F.2d 916, 921 (Stn Cur
1962): Chicage Sugar Co vo American
Sugar Refining Co., 176 F 2d *, 7 {7th
Cir. 1949): Great Atiantic & Pacific Tea
Co. v. F.T.C., 106 F 2d 667. 676 (3rd
Cir. 1939), cert. denied, 308 US. 625
60 S.Ct. 380, 84 L Ed. 521 (1940) & &
W. Gas, !nc. v. Generali Gas Corp, 247
F Supp. 339, 343 (ND. © 1965)

15. F.TC.v. Borden Co., 382 US 637
643, 86 S.Cr. 1092. 1097, 16 L.Ed 2
153 (1966) See Texas Guif Sulpnur Ce
v. J R. Simpiot Co., 418 F 2c 793, 806
(9th Cir 1969), Tri-Valiey Packing As

F TC , 329 F.2d 694 (9th Cir. 1964
Refrigeration Engineering Corp. vv Frict
Co., 370 & Supp 702, 712-13 (WD Tex
1974} we have in the pe

ticular situetion an aoatoaee to stand

"Essertially,

TEXAS FOUNDRIES iNC 7822
42°

of a singie producer for eac preciuded
the possibilty of competition betwee

these suppliers as 3 matter o’ aw Univer
sal's purchases proven here could only be
accepted by the governmen: in fulfril
ment of the 1970 contract addition, while
H/R's purchases similarly could be used
only on the 1971 contract Segardiess of
@ subsequent discrepancy ‘9 price to
these suppliers, the government had to
purchase from each, and oniy from each
the specified number of plugs at the
agreed price under the respective con-
tracts. This being established, the trial
court erred in not granting defendants’
motion for directed verdict on this aspect
of plaintiffs’ case.

It cannot be gainsaid that Universal
and H/R were competitive bidders on
the 1971 contract. They could not be,
however, competitive purchasers as re-
quired by the Act either under their re-
spective separate contracts or under
both.'’ It is the government's unavaila-
bility to Universal as a customer of any
of the government's needs under the De-
cember, 1971 contract, and ‘ts similar un-
availability to H/R on the 19270 contrect
addition which prevents purchases made
in performance on one from being in
competition with those made under the
other. Each contract represented a sep
arate, distinct market ope only to 4 sin-
gle producer. Once it we. awarded the

The customer has standing only to raise
and compare those sales woich are injur.
ous to his competition.” Mayer Paving &
Asphalt Co. v. General Dy nemics Corp.,
486 F 2d 763, 770 (7tt 1973) .cert.
denied, 414 US 1146 oF S.Ct. 899
39 L_ Ea 2d 102 |1974)

16. See, ec. g. Texas Gu!! Sulphur Co,
supra; S S Kresge Co. » Champion
Spark Plug Co., 3 F.2c 415, 420 (6th
Cir 1925)

1? We emphesize :t was the bids on the
December, 1971 contract which were in
competition—not the oic and new sales
assailed here These bids gone cannot
form the basis for a Rob:nson-Patman
Act claim since they do ot satisfy the
two-purchaser requiremer A. J
Goodman & Son. Inc. v United Lacquer

Menuf. Corp., 81 F Supp 890, 892
(0 Mass.1949). See tex. at note 11
supra. \WWe note this circ. jecision in
American Can Co. v. Bruc ulces, inc

187 F.2d 919 924 {Sth Cir.), cert
dismissed, 342 US. 875 72 $Cr. 165,
96 L Ec 657 (1951! + appears tc

Appendix 8

7423 M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC.

7424

bid, which was a prerequisite to becom
ing a purchaser from Texas Foundries,
Universal's 1970 contract addition was
assured to it to the exciusion of all other
suppliers regardless of any discrepancy
in prices paid on underlying subcon-
tracts. In the same fashion, the govern-
ment pledged itself unconditionally un-
der the 1971 contract to purchase the
specified quantity of finished plugs
exclusively from H/R. The very nature
of these mutually exclusive commitments
in the respective contracts meant that
Universal and H/R could not have been
“in competition” with respect to their
separate purchases from Texas Foundries
pursuant to the government contracts
Therefore, while the price discrepancy
between the two actual purchases (as
distinguished from the bids related to
the 1971 contract) could have affected
Universal's profits under the addition to
its 1970 contract, this discrimination in
no way diminished Universal's competi-
tive ability in that plug market. “Injury
to a competitor is not the test; the test
is injury to competition.” Lloyd A. Fry
Roofing Co. v. F.TC., 371 F.2d 277,
281 (7th Cir. 1966). Accord, GAF Corp
v. Circle Floor Co., Inc., 463 F.2d 752
(2nd Cir. 1972), cert. dismissed, 413
US. 901, 93 SCt 3058, 37 L Ed 2d
1045 (1973)

create a special exception to the two-
purchaser requirement where compet:-
tors in the same market are engaged in
competitive purchasing and selling at the
time of the price discrimination and
where the failure of the plaintiff to con-
summate a second purchase of the item
discriminatorily priced ts directly attrib-
utable to defendant's own discriminatory
practice. We conclude, however, that this
exception is inapplicable on the facts
now before us

Specifically, in Bruce’s Juices, the
court held that plaintiff could bring a
Robinson-Patman Act claim against de-
fendant can manufacturer for defendant's
refusal to offer plaintiff the same price
on a particular type of can offered
plaintiff's competitors, in spite of plain-
tiff's failure to purchase that particular
type of can, where plaintiff was
purchasing other types of cans not so
discriminatorily priced and competing
for the sale of its product packaged in
such cans in the same market as its
favored competitor. In our case, however,
Universal and H/R never purchased in
the same market. As mentioned pre-
viously, they were producing at ail

“Antitrust legislation 1s concerned
primarily with the health of the compet:-
tive process, not with the individual
competitor who must sink or swim itn
competitive enterprise. But as anecessary
incident thereto, it is concerned with
predatory price cutting which has the
effect of eliminating or crippling a com-
petitor. For, surely there is no more
effective means of lessening competition
or creating monopolies than the debilita-
tion of a competitor.” Atlas Buriding
Products Co. v. Diamond Block & Gravel
Co., supra, 269 F.2d at 954. Accord, Bor
den Co. v. F.T.C., 381 F.2d 175, 178
(4th Cir. 1967) Universal cannot avail it-
self of this approach because it failed to
show an injury to competition generally
or that the revenue lost under the con-
tract addition impaired its individual
competitive status

Piaintiffs Robinson-Patman claim
is presented in a setting analogous to the
situation where, aithough a seller sells
his product at different discriminatory
prices, he is not liable under Robinson-
Patman because his buyers are not in
competition for the same ultimate
users.’ In our case, although the
government is the ultimate user under
both contracts, those individual contracts
constitute separate, distinct markets,
each unaffected by prices available in

times pursuant to mandatory, single-pro-
ducer contracts, /. e., when they pur-
chased unfinished plug castings it was
always Pursuant to a preexisting govern-
ment commitment that could not be
altered upon the government's ability to
find a lower price after entry into the
contract. For this reason, the Bruce's
Juices exception is not applicable here

18 On the contrary, Universal must
have felt that its profitability on ail
phases of the 1970 contract was satisfac
tory since it quoted its finished plug
“addition” price to the government
based upon a 32.5-cent casting price
from Texas Foundries. Thus, though
Universal could have realized an increased
profit if it had received a lower casting
price from Texas Foundries and not
passed the savings on, even this hypo-
thetical profit was not shown to have
had the necessary deleterious competitive
effect. While Universal did establish its
business demise (See note 7), its proof of
causation related to the deleterious
effect of the failure to acquire the 1971
contract rather than the loss of profit on
the 1970 contract addition

Appendix 9

M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC.

the other. Universal and H/R were not
competing for the same consumer dollar
in their activities under the 1970 and the
1971 contracts.”°

20. “The whole thrust of the Rob:inson-
Patman Act concerns protection
of competition for resale.
petition is determined by careful anai-
ysis of each party’s customers. Only if
they are each directly after the same

. . Com-

7424
7425

There being no theory which will
support plaintiffs’ Sherman or Robinson-
Patman Act claims, the judgment below
is

Reversed.

dollar are they competing.’’ Ag-Chem
Equipment Co., Inc. v. Hahn, Inc.,
350 F.Supp. 1044, 1051 (D.Minn.1972),
modified on other grounds, 480 F.2d
482 (8th Cir. 1973).

Adm. Office, U.S. Courts—West Publishing Company, Saint Paul, Minn.

APPENDIX - 10

United States Court of Appeals

FOR THE FIFTH CIRCUIT

October Term, 1974

No. 74-2246

D.C. Docket No. CA 1614

M.C. MANUFACTURING COMPANY, INC., ET AL..,
Plaintiffs-Appellees,

versus

TEXAS FOUNDRIES, INC., ET AL.,
Defendants-Appellants.

Appeal! from the United States District Court for the
Eastern District of Texas

Before GOLDBERG, CLARK and GEE, Circuit Judges.
JUDGMENT

This cause came on to be heard on the transcript of the
record from the United States District Court for the Eastern
District of Texas, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here ordered
and adjudged by this Court that the judgment of the said District
Court in this cause be, and the same is hereby, reversed;

It is further ordered that plaintiffs-appellees pay to
defendants-appellants, the costs on appeal to be taxed by the
Clerk of this Court.

August 21, 1975

Issued as Mandate:

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

NO. 74-2246

M. C. MANUFACTURING COMPANY, INC., ET AL.,
Plaintiffs-Appellees,

versus

TEXAS FOUNDRIES, INC., ET AL.,
Defendants Appellants.

Appeal from the United States District Court for the
Eastern District of Texas

ON PETITION FOR REHEARING
(November 12, 1975)

Before GOLDBERG, CLARK and GEE, Circuit Judges.

PER CURIAM:

IT 1S ORDERED that the petition for rehearing filed in the
above entitled and numbered cause be and the same is hereby
denied.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1935%3A2. Public record. Not legal advice.