# Appendix — Federal Trade Commission v. Texaco Inc.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0015%3A06

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1968
- **Citation:** 393 U.S. 223

## Text

| Sage Got of We aes

Ocrosze Das, 1007

No. 1049

e TRADE Comnatssron, PEITTIONER
v.

55 Tuxaco, Inc., An Tn B. F. ene e 0 .

oy WRIT OF OBRTIORARI TO THB UNITED STATES COURT OF.
"| APPEALS FOR THH DISTRIOT OF COLUMBIA.OIROOIT ——

G

INDEX: :
Page
Dediiion of 1 court of appeals (July 30, 1964) 8 af

‘ Order of Federal Trade. Commission vacating prior de-

'. , Gision and order and setting mine en remind 33
n on. A VRE TEETIS B 21
Oral argument before Federal Trade “Commision

+ (Jalp BE 4065) i eee. cee ies 3
Opinion of the Commission (January 14, 1966) eo ae *
Final order of the Commission (January 14, 1966). 94

_ Prehearing otipulasion in lieu of prehearing conference, ca

| (April 26; 1006). . . b chide: gl kee vere’ HF

| Order of court of appeals (May 2, 1966). Ams AF: 104

| Decision of the court of appeals (September 25, 1067) 106

| Judgment of the court of —_ (September 25, 1967 ). 121

Order granting oertiorari tha Eis, — —* dees | 122

a ** 0

a ra) ates Ober wh
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. 4 — * — 42
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theory Bit inc en i thie Om.

1c the Sherman Act (which generally ae

=

Ona vagen Ton 0

ral
1" i.

Solis a bann

eee e a eared ng 2401. 0

° j
miei . bere) oy

nde il Rs nd Dix Di 2 i ai ha Jest "3 Ue SER ES eRe Ee RIO O12 -
£4 te” fix (4 83413
Oe

ee ö .
John R. Reill7
Mary Gardiner: Jones

— 640

In dhe Matter ay :
* i B. F. GoobRICR Company
ml iy

—

THE TEXAS ComPany, CORPORATIONS

5 5

3 ay bad wel 4 9 2. jue done tot om
fii oa ei e aa alt N. ped ae

a4.
97711 ern
ope tte ‘3+ 4

7

05

} be ifs EGS ETE

| the Matter of 5
TN B. F. . a obéporation
‘Texaco, Inc, Gunmen the Tense een n corporation

—

ier od Be al ce Re
1 raat et Uns gamer ti pote

July „1965. sc
_ Met, pursuant to notice, at 3:00 p.m.

Héfore:' ' 139 3 Weipa 3 . |
E Mi he 44 ’

Jon R. Runax, Member e : 0 tel, 5

e eee bee Member; is
Ap Aen * a | . Ft tf FD

Miro am Attorney. for Respondent Texaco,

EZ Banton, ‘Attorney for hem F. Good-

Pa Jag e ‘itorney bith He Trade en

mission,

194771 The
Federal Trade See 8278 Commision is now in session.

pen ot yemand

pany,

| to each side, 3 ö h

Mr. Peter Dias is appesiriiig
ents. " SA TS EE x ae
Have you agreed on the division of time, Mr. Handler?
Ar. Handle Yoo You Had taney

Oral Argument. of Milton Handler on Behalf of Respondent
3 Taxaco, Inc.

Mr. Handler: May it please the Commission; in focusing on
the question posed by Vour Honor's order, I propose, first, to
analyze the Supreme Court’s ruling in Atlantic, with emphasis

on its precise ratio decidendi, and then to review the pertinent
facts of record in the present ease, to show that they do not
fall within the condemnatory rules laid down by the Supreme

I wish to emphasize at the outset that not a single [9478]
operative fact which resulted in the invalidation of the At-

_lantie-Goodyear sales commission plan has been proved against

Texaco and Goodrich, from which it follows that these proceed-
1 missed ; qWartittsif Lae Pes SC j

> 2 ings should be i

What is it that was held et es me 1
The Supreme Court took pains to make clear tliat it did not
regard the sales commission plan as per se unlawful. Indeed, the
Solicitor General expressly disclaimed on all [sic] argument

„It is the oi] company’s power atid ‘overt acts towards

89 555 e eng ari

in 3 fi ex cet BE 0G ye 795 * ae hse ovis

to buy the sponsored TBA with den titi
a effects. 202! 0 411. .
F220 deiled Use vate
| completely removed hy pat of the onion dealing wit
the matter of relief. : i e SEO |

Dee eben mr
be no question of the propriety of forbidding stich plans;'and , -
pret nh td 3
er 2 * Cr
But the whole Point of part 5 was to justify the breadth
of the order precisely because it was not limited to the ane
held unlawful, to wit, the coercive use of the plan.
Atlantic had strenuously urged that the gtder should enjoin
only the use of overt: coercive tacties. This argument was re-
jeoted- not because noncoertive use of the plan was itself a
violation of law—it was rejected. because of a settled principle
of administrative law that permits an agéncy to forbid lawful
oonduet which it-deems necessary for effective relief. i
” Justice Clark makes this point abundantly cleat on page 14

opionion that to enjoin the. use of overt coercive ‘guation was
_ insufficient: We think it was justified in this conclusion, The
long existence of the plan itself; coupled with the eoereive acts
practiced by the Atlantic Company pursuant to it, warranted
[9480] a decision to i more.” And I underscore ‘the words
to require more..

When all you do is ‘forbid the unlawful conduet, you .
ously are not requiring more. at 0

It is quite sign d 1 do not know whether Your
Honors are,familiar with, transcript of the oral argument before

- . thie United States Supreme Court—it is quite significant that on

oral argument, when closely questioned by various members of

the Supreme Court, Government counsel. was explicit that the

Government was not claiming the sales commission arrange-
ment 8 was mst ge: unlawful, that it was not nee the

al — noted alee einen 525110 = 82, 56
Serben 65 of ‘the transcript of the aral ergument, before the
i ae as.agked to, find the Atlantio-Goodye

7 W. ear
ale commission, agreement, unlawful, because of the coareian, -

aie — 98 Two the posses-
sion and exercise. of economic Per, over dealers to force them
do purchase the sponsored TB TBA. Three —antieompetitive effect.

„ is noteworthy chat on each of these three three aategpries of

here.. rity
Limite Your Honors io eg with me'the Supreme Court’
deseriptian of, Atlantic s coercive. tactic at page 8 of the slip
opinion, the second full paragraph, just/-sbeve the Raman
Numeral II. Ye IB eer igs
ae 5 “The Comission stressed the opidense hom that
Atlantib dealers have been orilly’ advised by sales offi-
cials of the oil compan, that their ‘continued status us
1105 „ e ho of ompany th be in jeo they
a bee eee ais ae f e fe, titer,

*
0 ber inte nd ni oti ne

to ** ie pt ry 115 199 1 =
Nee „na cotarbiuas't

Mr. Handler: 80, per dens ol the dealers hy namber
one dollar or more of the sponsored TBA. 20 per cent, ber
ber, 1 nenen mes bo
Your Honors— . 1 on

.; Commissioner Reilly: Nr. ‘Handler, what about tha oondlu-
sion, of dhe Hearing Bxnminer-ntheeonclusion of the Hearing
Examinerota the effect ‘Texaod dealers did induee 104831
the parehage of Den Ahrouth eperdion? ?)?)
Mr. Handler: That Siding was never affirmed by: the prior
_ Commissions that satten this matter, and as I will demonstrate
in 2. minute, the Court: of Appeals, after serutinizintz this reo-
ord, caane to the eanelusion that i a RR
on sabetantiveevidenes supporting.that conclusion:
AI can say is that the Examiner was completely Wrong.
Now, Vour eee bites — —

had bean ed, acd that he rood aa whe dean he
A

4
aids eis of serve tintin vm ven proved in an,
base p. 708. ct eels 25 Sutayba Woe tet 810
the independence of the dealers,’
whelmingly Leaps ioe )
9 inet

(9484) “iin other words, the bet Odtirt of nppienle was tit 7

relying merely upon a paper declarstion of poliey—it was red |

ing upon the proofs in this record ‘that the the practice of Tees

pees ye e sve Jeet
exacn’s to bir re

the recommendation and to haddle & different line if they think

it would be tare sesoptable to thir ace Page c

I could stop here on thé issue oféoercion,:but thervare'addi- -

tional facta which I believe you wald want me to cf do your

attention. 99 290 AAP

— Ehmnan: Mr. Handler; b are not arguing
that we are precluded from finding that dull coercive tactics

were used.

Mr. Handler: No. This record is béford'jou, and you ate free
to makb those findings comaporting with the requirementa of

the —B Prodsduss Act; lind the devisions'of ti

courte—namely; the findings must be by reliable,
substantiakevidence, taking the reoord ss a w. ole
‘Commissioner Eman: But you recognise that the Supreme
Court ‘and:the Commission itself have in effect wiped the slate
clean, 60 far as the prior rulings are eoneerned—s majority of
. forthe ‘first time this’ record, de

Mr. Handler: It Your Heng will péemtt tnd; m5 1 10485)
restate what I said with! slight: amendment. Tou are free,

under the mandate of thé Supreme Court, to the Grouit Court

of Appeals ‘and the mandate of the. Court of Appeals

to you to m ππνπj,jũ this record in light of the Atlantio ese

$s VVV
— Yer aud if the facts do not support md e

woul? support finditg of cobreiem t 1) bab Paau ed Dal
Now, let me bring to your atten 5 ‘hein oni

“a

coercion: matier in addition t0 the referenses that T md io.
the opinions of the Court of Appeals. Ma PUES
Firet—and I do not believe that you knew about this; and a
‘hence I am taking the time to call it to your attention. Counsél ;
for the Commission at the trial, at Joint Appendix 23538-that
is the printed record specifically diselaimed that he was
charging respondents with ooercion. This was towards the end
of the trial. He solemnly asserted this to the Hearing Examiner.
_ Second—the Commission, on the first appeal, unlike what it
did in Atlantic and Shell, did not make an explicit: finding of
coercion in this case. The findings, when you ‘examine these
ere eee soto a gs res pie pce e
BO.
19486] Thitd, dene io one additional fant: whidy'P dais 60
advert to. Texaco has 38,000 dealers. If any of them had been
required against his will to handle the sponsored TBA, there
should have been no difficulty in obtaining such evidende. Not
a single dealer was called to the stand to give sueli evidence.
- Buti respondents put plenty of dealers on who gave the con-
trary evidence—that they were not coerced and they were not
required to handle the sponsored’ TBA, es ey
free to handle any products they sew St: a tgs 2
. — —
cont out questionnaires to determine whether the dealers were
forced to handle Goodrich and Firestone TBA. How do we
know this? We know this because a Texaco distributor received
one such questionnaire. The questionnaire plus the distribu-
te- s answer wag introduted into evidence by Texaco.
e moved for a disclosure of alf tlie answers to the ques-
r stastd sso-ntnke: thie tatenaia .
, e eee ee 31 of HHH ,
“ . iwhty, Ocmarniesiéy'cowtsel) being
possessed of the facts negating epercion; ‘expressly disclaimed —
before the Examiner: ang claim of. coercion’ against Teraoo.
Anti I refer to that doit. Appendix, JAX: 429; where Your
Hondrs will find the tert of ‘the letter written by Cotnmission
pounsel to various Texaco distributors and dealers —Specifcally
asking them whether they were foreed to handle TBA. And

Wau Honors) 9487] know that if He had received favorable |

responses, he would put nnn
give wach testimony. This he did neon rofbash «ll

7

«1 Now, the, mecond factual ares, stteseed ‘in: the Supreme

Court 's opinion is the posiessign and exercise. of ¢oomomic

— — dealers to 1 — deere wee

Rol e Mi on 1.2 in .

— Elman: Mr, Handler; am Lime in thinks

ing that 38 to your. first point, about_coercion, when you use :

the word fevencion’’ -you sxe thinking of what the Supreme
Court on page.J0 of the slip opinion, characterised as tates
and aver threate.of peprienbr-that, kind of orion? 91100

M. Handler] mean eoersion in the legal sense, yes...

— ‘Commissioner Riman: Ia a strict laghl ih ol

Mx. Handler: That is corrnet. ip wus αννονôñp̊ g or:
Commissioner Elman: Not the kind of utilization of coercive

| superior, ohm power dial een ‘thel’ton¢urring

opinie 0649 Yo 7128-41 e495!) O00.28 val o

"Met, Kisodlen:, aril qi fsitthee. J: dink cemognipe an die

tinetion: between that which is oer and that which’ is not
evercive. But I do recognize that cbertive tactics dan be ex-
mee beet You age Spey eerie Seat

a eourse of oonduet ! 91909 tort 9% Hubi Yes

here is no evidence f „

or however you define it. n nus vrenιπ¹bονe u ofhaad oi oort °

: 25255———
Danis ods ind’ Ani

Mr. Handler: However you do it. Tou metimis can he
doy somebody ho has iriferinr bowen But: the mere

et shah yon hawe supetie nowet: doce meren vu are

re D Ain

—
: Mott rend the Guptents Court dpinion

＋ szorlr. Mich binow od .so2nnges?

Mr. Handle: — Bitty st ae whe reridaes dois e ovine

*

4 a

.

wir

2 e, terer.

tk 7. 45191 45
ra 4 115
Done |

What bat of th en 11
115 ehen

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r

gue

2 1 ; F 2 , — > j 9 0. 19 > 1 1
ot Hoi 36 “gas ody 2: $f ti eg dann, stato 10 0 le ab

1

e

7

ain jicbset tag of . ceogel. ta 4 tanta
ae a ene nns f yw the ee bund

Of POX rev!

ve MS ete | OP
dtu N 122 . 2 0 A 91 the
177. Puy (Ti 2112

ANC ey aan? oF

Oru tour
Bb sHonsorec
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, 7717

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Coad a 1281 2 2715 * po

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ele 12 2 9

N 55
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nat * .
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ee e e
IK dee TG OT 175 1113

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b ie 11 of 6 PaO 7 . f

a 8 1 : efit” Spat BEY, 7759 He ing
eM gu ö e ene Ac sal el gabe
1121 2 2 oa » 1 AY * 1 0 — 1 40

2 ta gte de

- they. etc | ABE TERY MADE nk
without any interf ace Whats gad

10 which Le amg ee
, a .

cae ohe

progr: eie nein ee Slash ae vets,
gral te — — ef illegality u tee .
rtrd pou of adver competi facts in Atte

*

i 2 — 1 Ne
dade 3 any 72A.
4
2

10 ges

i remanded |

5 Sate rod egit Wha teh. ene
ee thé Supreme’ Coutt' found a casi aivaton

a . Fe

DNN A ; sahil ie, N *

ee e

2 u

| : TAPERS eee ECURE me vas 5 Fadler dp un-

att 9 e ae,
: 5 7 r
90 * 8 : 3 iC IP bergan data level
a 2 r 3 n N
— —— 1 a. 2 8 a 2 baw > E 4 * =
, ; ts ; ae: "s tee 1
= 2 = 2 1 * it * 7 Pi K * * = a4
tS RAS 3s ee S ee 2 * cae ea * N
2 mat tee . 2
* * * * *

Full. ime fo cing Porn 2 OWES RE fal ation in

5 Bat i 1 5 ae salon tues) 1 2100 “ait . i

lein

setts ba 1

8 ‘ef iw 20 “alt, *
a an toad e ontavbs to 3

wee.

8 | 38

Commissioner Ant Phat micht wow e
would not have an to do with ti and bat
e

HI An; Wik. Hise

Commissioner Jones: Suppose mes _
coercive inthe ie i TONGS —

Mr. Handler: Where there was full ia feng var elii-
nated Atlantic outlets om purctiksers 6f the Various
accéssories. You do not at bere that, here. Deen the Com-

1 mission found in the, first decision we had beer og
closure of the small e 8 E

the time is Past n
Na stitute

_ lf Your Honors p cove

4 con ten!

2 1 1 Jo TA * 3 79 7 — N f
° “peti woegband of est S mont iadine 0} 2 — adi soo! of 2

6
—

36
no coercion, an avin evapo and.no anticom 1

Jn Wel bee fluro of prof. bla long pending tities

of the cam-
rin ogi Tena ned Goodrich
According to the clock ¥ Honors tia
eker ee 1 i
Thank you very : * a
Commissioner Mr Barton. ' |

N Oral Arguinent of Edgar ' BZ. Sie es
a ae Behalf of Respondent B. F. Goodrich Company

"42 724;

e againgt At é 1

ee eee cord.
its 0 sion Jemen
meta ir. Ke e wet

ka iy the broad remedy, oes Wa a

wrong.
5 He his sleo demonstrated, Tsu submit e ls aw
fails to prove any such coercion by Texaco

eee ee. bee ee

2 If 2 a 2 2 te 2 15 15 55 e
w See tof gocrion, again, e Court relies fairly

heavily, on its Simpeon. opini inion, Union Oil. And there, as I un-
eee ee

aie same kind ‘ot coercion that
en it talked about e b

88 3

in th if e ö a yt t

simply sit back and passively .

accrue to it from the Ae 7

ances with the aid of 5
ion that is a natural
2 ee e e e i

1506. 7 .

a Again, at 1507 The eee e dn RC a
2 8 bee b ee HU ita full

‘3 13 7 7 and uti 7
rit > ie ft 232% 5 Sar
\ oan
— BA 2907
te
7 775 2

. TS e cA

“oh ab ord

adage eh fogs hel
wi e act that ars
‘establishes the

: the
omic jus on fe B. F. Géodrich sales
n nts with Texao a, other [9500] oil
* 2 Let me e
Ts it your ele this i ai a a pone pou fon tho ‘the
use, your words, flowed. from the bc pre

"exaco with the service station—that. the

of the contract, you | would still not be, involved in

"Me. Barton: I don’t think, Your Honor, that there is vine
from w. hich the Commission can find that what legally consti-
. tie cern flows from the Telationsbip between Texaco and

ts, dealers.
he N - ei want to get to that specifically —
here in absolute absence of sny kind of coereion flowing from |

* 5 i 0 ler Jones: ‘Boy you 70 would eat your ‘contract and
coi nd coercior n by Texaco .
cts Of costcion 7 7 sa 40, ni Ra Yaa. 7

E
* Auntze,
op es
„Ceed e u What
—— ———

eerdianasbieh used hy. 1 G 1 a
MIt. Barton: No Lam neteaying ee ee ARIE am net Saving that
you have ta find; the same thing; But you Erne the renord
and find nonedithe thigiggrn) ii, i 9% it de 1491 U.

.

e —— st 70 810
„Hit had been the rule that ‘they, were holding that.a sales
commission plan wae illegal per b. none: of thatparh of Juakion:

a Clarkis-opinitua abouts operaidn would “hatve; liens in AD¥ HAY, -

relevant to his conclusion. . FP

.

Ly 8 7

| 40

eridens:

| berger ett ‘of bun- ou at:

Court — at 1500, "The 0
in cope eee

dh de eagle e.
errec dd Hey Have eee rs une
ding oF aniog at boisitmtat od O ved qid-
bn 5 easier ean have cap U ‘whl not

teili 12711

ene: ke hice li ry zuch Pi 97 enirisiss (mB 1 tach w seh. :
0 , ahr ana adaptive who is pot
| . “IES

* * rot bisg ado} ital.

3

eee e eee, iam Le
rather B. F. Goodrich: and- im #t he eee e,
‘ Gapdaich franchds „inn z Hod acids 1 20% HOH 41 .
- dealecasigmed up in a r mon th, P ied before.thedateah ths —
hesritiy oft siott 2a0i7182 be tines yasyenos writ edd, HW [eRMee

and Derag fortnrdestthe nameto D „ee of avosssiaaybs.
e tat of the tte is that dente Texaco hon hott

legitimate services which it renders. ° Fao yederent-o!
„Commissioner Jones: You said some ofthese small s«théns
did not want TBA. This 30 per cent figure-—is that 30-perudént
of all the ¢tationsor'all thd landing mo) A180

Mr. Barton: 1 did not say the smaller id not wan ee

TBA. said that when there is not Tiere = corde ante :

corpatty;\the Healers donot have the nin to how

some 8,000 of titel genere wie Dee from: emma Bud che
br veh : therevord, and:THonetithiak there

ersehen tu) af {evi %%% UO d Feat ddgiiod
thé record h tiecneaise O igacel wsdotesimare)
OH a 3s f OTE, tS 57

e

4 Lihoo.): SA bn
e if do tire company recived ‘services from the oreo:
any of M Bere mee eee hie iv pakdto ay the
" idee cen "got nien 211g was juodtiv.qu bowie 4 —
ce elbe; Rey: S8 ff a baskress see, Ib has been
„ ad 0 Goodeiel t be under hie. type d 1
arrange ers caunged Jedt zi toiisut adj lo gent a
Mr. Barton ein Orvise they wu riot
per cent. f 27 heey AO nditada 9 Ks

on GiduaruieniainbesBeily nde thererainythinigde the satord to in-
— ——— with:-Texebo prict
to the consignment? . bn, asoietos atomitive!
es zan Baittome: Nesthiereia nobis. 1105 7 fe Win nie
to Mowe Ae ceili ais-sitind tis coq ? er „% dar heh.
[9514] ComihisdiéneriElmadn::To what EAtent was. this att er-
ehrensenf, sof! ncaa t v. ‘You hib I. HOẽ“wlf A
Hh Brune 2 ei sed? asde tedidire TART
~ ommmiasioner dima n ti Torwhatvextént-didothe See ten
teen Tenne Goodticl provide: for-exelaswit¥? f°. | |
Mr: Berton: No provitiok for exelusivity-wheledevar: 2 ocic>
rr Tera r en have made the iaꝗ f
; year the next day hf «oiteossp rr ot hh

. Audit fnet ditt Indeet-they:mede-the-ssme-
agreement. with Hirestoha and 0 1950 made the same gere- |
. —— ei! ru Lei 99. 198 or. us a! att? al

—

. er dc

tate r ey

1 0 5 * * 92 2
* — —
re b en omi Hb met ae
: Commissioner Jones: Temp ‘salesmen reeeived imm,
a: sions? 255 55 5

Mn. Berton:Terago —
company if they ‘bought feomenyvons-a these putten ᷑
one of those tire companien , e cA ee

nn

Taxseo sponsored? rod ET ng u
[9515] Mr: Barton: 8⁰ . a that is
trube dt 1: 4 K. of 2 ane Ait — ott I: 20 f. root

_ three? 8 ite Oe! OWA ii wok *

Mr. Barton: De you. mesh Aang e
Commissioner Elman : Goodrigh Ente nid a
Mr. Barton: No, no. 7 id not. 2, 90 per gent

is all ‘sponsored lines, , bil 485 eld eee £5 (tae) é

Jones: Witz
salesmen ? Do they get a commission? ©

N. dia, en conan

in connection with vine tonite hy the Tea 7 0 2

Cee Janey: a a -ogrenastoed. fo tothe enlesman in.
some way? dew giatt nen bs 214 d 11 egii ty. bat 11 71 N
NM. Barton; No, ir i not. I em eure it ee piu.

ns 46 1 „ in Atlantis it man tonic;
nA eigne)

my: iy: Mr N e ee e ie

85 21 ip ve 2 5 * ie Sushila 80 . 2 ait.

pone youn gio

851 10 cb 8 ff
V ou anid t
ow the ang er, te shat. Me will

ö 8 * ‘i ee il Bid wn 10 bn eget.
eed ald gtsgun oe add 100 gan bo A 10 fl AN...
295-464—08-——_4 ;

0 BL TAW208 a ofl ‘bout stoosib. need
; é : . . 6 ;

120 8 ps zeit.

* .

7

9 7 : 48
— Ray ih Doyo tn wins erat

iod -yorus ti Ted
‘Mr. “ere ‘What pe oLAAQIN9 TY: Mods } ie S110 |
«38 Oobticikioner! : What perddntage-desntring thet the
that-was

— — o holst. ULE |
Mir. Barton: Well, the record has some figures in h tht et
thin majurity 0g. the TBA’ snd by Texned seryite ‘stations,
much less, is sponsored. 22 71¹1
i Commissioner Elman: Is there & finding oblan of this big the |

Poor j Lei Bite of 90 i- itt.
Jon bi 3 ils 911 5004 ) O11 OF. HOTTE ud: 117

eur Commissioner Elman: ‘Hedid napadl bon acorn, l „
Barter? Phis in inthe Feeoitt that the Beaminer dd lot
make findings on it. dizi s.ipgy todtoCk $f irsaeataz
— . N
missipöh when urztint ‘your berets If you
— the: ee I h eL . 913 tot Virago |
Mr. Barton: We will be very specifie ba it. dia notes ai:
Now? tite Supreme Court pbin tet to the fact that Govdydar
8 4 Atlantic with detailed reports from which“ Atlatitie
could determine the! eraot umount bf ‘sponsored “prodicts
purchased by dich Atlan tie retail outet. se olasituio)
Commissioner Elman: Nou haus ubdut ‘dhe ‘tmiritite lett,
Mr. Bartéay! doe i en UL : Illis Hh õο, ij
Mr. Barton: All right. Al. le 1 toa {5 da 1 OAL 11 8 Jit 4)
——— tts“ to 0 100 055 ö loe if Diba)

3 womie ten ‘both! rand
Goodrich. e 19 In a ui Tal lob s i ö HO.

co alen -t9l d

Mr. Barton: Fre mean that the sales commission plan has
__ been dissontinued, the answer's no. 5

8.

> 4 @ « : ith agin 3 ‘ — 5 } 97 = 72 1. 2 2 i : 5
ee OF e ee; ft a ty s
A 7 el j * N on 5 bs Oe A 3 Sf
Lun ee ee e dee eee yank st tats

1 ane fois 5
a Rae ae ar 10 Tap ,

Boyes 7280 2 wey

War
ee ths Ute wa — — 2 118801
md overt certib. 1 thought tha
there’ i! nue vl,
paren mr Hoe Zi bh -
toercich er overt er-
Miresis of reprisal’

. ——— Aid tt page 100 uf the blip op.
inne bodo Maidiat it sanevbhs

$48 Guck 2 I ey, be the opinie ef!

bo. mre —— to, tor
anak: ndissich,Al;

5 tio 947.

„ = 2 ne 25 paige gt —
72 e bi Oo ‘
apie bel pid na

4
* ‘

2 94 H. a 11 “ai iste tt

8 ee Se i N gt STE record,

; 5 ; N * 1903 24

ota’ 118088 . A
77 * 4 Se Seventh Cr dit ünding ‘that’
Thin i 2 1 ID Pp

32 err Nee

Woung mmoamg

1495 bea Ni Dae

5 215 by the Süprette
. the” have ait? te
1 le EI Ji a pve Aale
* cee 6 a *
4 peace

faye 7 . 20 eien
; 39735 Jen „ nigra

5 r Jones: 3 he a tt 8 ;
1 225

Lire
ste #

4

“not ane all through this thing. But I think I can
you thut th

sible plodanig type of cor ubtivity. 05 tiloasd oT

not trie and not present in this ¢ase.

ists ai

Hen haa beet: e 10 doithoon) Ano zi Ge 5111.
Nef, Dias 1 ain Satiefred OF Matz e, sir As Testy, We ne
ti Ge is vert Wöreien in äs. %%% tT
Let's take the very rst Ttelif which thé’ Oourtw:conbidered
40 be che Catnpoflents of THE Bales’ obi misblolt system, and that
is Me Sdchner hotite. ction OF FOU matt $0 to anmeyvivs le
Now, this may not be the erade; dverd type, but; it is ‘the

8 into it, the Texan people advise him that

uwe have an instance of the mu b Been
veel Deford’ he ‘edt’ his ‘wiatiowLithe runder

a rief. ο.
fn th ta factually

ra - Is bs 1 ‘

Hees sun I hun 451:
Will. — 711
el ort

1

4
=

1
ee

&

2
int
f
uy
111

f
. Teg PERSE

5
1

5 7 n * * 223 — , ‘4 7
product, 12, 1 An 1 3944 nit phy 17 U. DR 5275
Ihe Texaco instrustzon, : incidentally, on the opening of
. J 22 " — 4 2 r : $
[952410 new, statign ie ne felt... #4)
f *

: account, and that
herbe requested to conta t the One Veit BLT ne.
dude benefit of thie--Go ‘geod

eee fe git 5-H ase eid asi

ROGER, 5
MBG! is1 odd 01. ,h
anch bo did not have

*

nh ai 1 νν. 501 bas sit jon

*

is significanto: «)) bw 9 10 fH ports. lud paceman 0

will bivef it and there has aw bebe are 0

T
Bui there e da of
| 60 las about figurel

eee

2 0801 to Nag 193201 odd mi boẽmͥ n yoilt And)

That js not to. e tied bare ee, stations. .
2 . une

OL Yo Wand!.

= sr no BA feral nd — —
Also, Nate dhe are net beommended or not dedepted
b Nrestone are :

chrrying' Goodrich or Firestone TRA But altinantety ithere
a 1 nd was developed there was tno ther Goodrich büp-
ply point either a stores or ffanchise operator ond ting or un-
- ether swithin's block of tiiis station, or it wag a tiny town:that
oerteintyväbldinot support mote than two distributors of an

38571 B 170 bins ~DbODEHE TROY * Sew.

Nowy that, too an unknown figurel;butitdeinifent ob life

thes Goodrich in ether worde n 1 hoteccept

Wo doindt knbwisrhat- thao: — ist: Wechawe Sith 40 get ;
‘some_breakdown, ‘but those figures are hard to get. isis +:
Along that ine I am not. implying: thint-réspondents/‘e-
; fosedtb. give tile figures The:case was: brougl o in 1950) And I
tt it is significant to note that the override comihissiin plan
5 eee eee
5 or not they had changed dver from purchase and resale, and
the record only shows that prior to 1940 Goodrieh had been—
Fam sorry. Dernveo had been expeiithefiting' with different

forms of TA supply, and in 1940 fiitally? devised and entered

into theagreenientwith Goodfich providing for the sale of com-

mission contracts. Anck I think, if you will keep that in mind

you will understand why the evidenes in the Atlantie Gobdye

f eren ende ie Comes te the Grade crest type
of edervion:>:*: ih wi demise else LEP ao) anti dp

* Gerdes. Atlantis donitnenced their operation m- (0828)

think they negotiated in the latter part of 1950, es

- the ituin dotuaity-commencedin Match of 1061. Pho f A

: . think I bave mentioned béfere, aud in

f January of 1086, but obviously dur investigation started earlier.
2 n

ache ee +) Sidigaegrati Ser
adw eg Ris sig} OLE! Lig?

Be,"
the | 8

from . e ie
of that. ee
2 5 Le been * as fer as seer ets Hi

resale, or at least, aa far as, we ve know they were
nae 4 5 0 80 you have a ‘brand-new fresh pre ras 2 insofar 3s
Atlantic-Good was concerned that merely y by the pas ae
time we could n hope to match i in the. Texaco-Goodri
situation. 2 27
But again, iin ino i ik a

nga 22 nn
i it ant 1. Seawe ¢

ol the street, Firestone on the other. Not quite thet bed.
But von don b have that here. **. 8
been eee Fe ere

no matter where. the sales are made, who is makin t them, or

how many are selling to them. var Stas 3

The record does show thant Gi mies rubber Wr . 3

, They: are sponsored. And 1 think eyen that in itself b

suspect. N

Certaiply if an operator has any. ‘sense at all, he, 1 auppose,

would buy the popular brands of any: products. In Texaco, if a

Teasee chooses Firestone or Goodri Goodrich or U.S. Bore ee we fo

not, know. where that, is going, to ee are, collect

217 4 eed Segre bree: $57
Bo = .

at ‘with any hale?
would love to do, 5
geration

vas,

nmis
* es *

‘was 2 en
"ere le

* * 4
red ; tart

5 . : os
* 5 a 4“ >
Pe oo a : 7
eer ee : > . —
i

— —
r

geta the 10 percent.
market if you have nonexclusive sales commission &

}
/

I 53 N x 80 . : . 8
a eki ge inhi
8 5 N tae , Pex sree ahr |
er "ft. des for ay brand bf PBA: wae
ant te their service stations, that a

0 e abet be ba Pe And 60 on the one

a er
hand they would have you believe that everything. they do, all
the encot

puragéement they give their dealers, and all the jdeas
thend for Meer stocking and selling TBA applies

if that is the ease, it seems ds though Firestone and
Goodrich’ are & couple of philanthropists. They do not have to
do that tly, But J do not believe that for a minute.
think the e chit ae thie 188 for Firestone’ and
Gre js mee thin bunting license, hie 18 f e se

e Geir Le Eee ak ae a
“all inthe world that they are being paid for. Because—Mr.

does most of the selling. A least
be sid that one minute I think the next he faid something
else. 9 fit: io

But the fact is and. the record shows that Mr. Hoban, their

a presid t, general f merchandising said, We,
vice ent, general manager o

„ actually do the selling. We rely on Texaco. for

ossi) soniething else—they keep thé people stirréd up during
the year- or some other such thing, “But we, Goodrich, actually

do the selling.” And then when you read the testimony of Mr.
— , who was questioned along these lines, he is a Good-
＋T¹

Le it i hard tell who ie doing what fo whom and who *

dner Elman: wat happens to the idea of a pt

a e en e ba pliers? The dealers of a par-
ef 0 115 econ = eae, radon i |

MBA

3 i 8 H
aot. * *
e 31 . fo Set “te = Fore ieee OURS 4 a
tances I do not basta ve Wo.
1 find (
tothe deen And if shat: wee.poliey---in other. words, I don’t
know. whet. it hed 70 be repented: sighifcantiy, after wariove
court actions—significant court actions.
Nagpber two, I den’t.know why, and the mem dose. not
show why they were not shown to dealers. . oe eae
Commissioner Reilly : Did you present eny evidenoe aa 10
the relative. positions in g gaa.station or in a dealer s station 1
the relative. positions of. sponsored and nenaponsared TBA |

8. Jr. De: 3 ‘We had testimony along this line—and. this may
dot be eampletely in answer to your question—for eum le.
227 tegen A lr ale 5
deslerz in his area, 89 Texace in his area, he only knew —
al ene Mat did not qr or Firestone. Now, that
does not go to the quantity of the various. products. in the

[954$} statien.
Reilly: Abat i is * infosmasion. But

. the thing thet I was interested in was this: For instanee, is the
c

ttery or apeensary: in the back room/
„Mr. Dias: Well, we bave one instanoe in Chicago that I can
recall offhand. Again, thia wee one of respondent's witnesses, .
a Mr. Who was a Goodrich distributor. He testified
ren figures, teo, are significant hs estimated that,
I believe; 75 pe ent of the dealers in his anes carried Tena 0
„ ‘dealers partied either Goodrich ot Firestone, and in the stations :
to whom ho sd, Goodrich products, some of them also bought
. Firestone but kept those in the back room. That's the testi-
mony of one of tespondents’ witnesses...

— Mr, Barton referred to the testimony of 59 dealers that were
used. in the defense by Goodrich, and he has urged you to read
their testimony.J, ean do nothing more than urge yeu to read

| their testimony: mand. These 50 dealers came from various

_ scattered locations. throughout the eountry. We joked about it
many a time I eould see thein arm in arm going from the West
Coast to the East Coast losking for, these. dealere, and they
cane up wick 5d. I think you will find when you auabe the
evidence: thet what they. produced. was not much. ig ap

have from small towns, there were
- other Texace stations or thay had d were: im —
ö undes fo 1 9 323 ghd e Fi. Aud nne vie gl: oh mat ten nik

ba» 1 ae * ms ee + 84 RN
pipearha eee he *—9ν 9e ad! 1b BOS af, oe 15 TOK * yd

0

*

. er :
— — Ot thein own Dale WU
veloped evidence of the obervive power; . ae 1

‘Down in hot Dallas in the summer
they wanted to interview these p ple he deal.
ers up and said, “We would ike 0 int u eme dow?
to the office, so they went do mm. r eee Ati rg

- Now, 5. de comment on he denne Arte
to'rély, on the Seventh Circuit, where they clsimed at be |
dealer ‘testimony introduced. in the Atlantic’ ase where 13
dealers were intraduced—aAtlantic claimed that that. was not
sufficient. . ² be Ramen: roy K

- Commissioner Elman: What page is that?

Mr. Dias: That is at 401. That in 381 Fed, Da 64 401: ‘The
Seventh Circuit said, We disagree. The evidehoe relating to

overt coercion tactics, although not extenarve must be d= ee

ered with the testimony of the witnesses representing compet-
ing suppliers to the effect that the dealers felt thatiif they did
not carry spo TBA they risked reprisals. Aloe to be con-
sidered are the ‘tactics of Atlantic: stleamet: und the
gurveillanee of the so-called phantom custonter inspectors”.
Now, and let me continue, Moreover, it should bei noted
that the Examiner in considering the testimotty.of the dealers
who testified for Atlantic recognized that these witnesses were
under considerable pressure because they were naturally [9550}

interested in not jeopardizing the renewal of their leages.””

The Examiner made the same finding in this case. The phan- :

| om customer inspector is one element miseing the only ele-

ment missing. We did not have anybody in Texaco—they did

not employ. a “phantom; inspector,” But they did. in- =

apect, And they did keep them surveillance.
rr rr
men to n but and look around; the station and see whether or

not they were carrying TBA.’ |
Now, that is a sort of a form of a lish, They did not go
in to see if they were carrying n They went in to

de if they were carrying sponsored. 1 amount othe mse
L Qptaghissioner Reil: There nothing i ur i tho
Atlantis ene. af a list of nonoompli 5 505
Mr. Dias: I don't quite go slong wi Waa Fo Nerf, where :
incidentally the inoidenos of to the pr wos very:

sored: TRAA one point Wee a there is in the re-
— eee man to the effect
A, aod L thick We See
like 51 whe did not carry TBA at alk, But the list. of; not

carrying sponsored TBA was sent to the home; af 5:7) 5 «45
[0551] |- When: tespondents put in tlieir defense ae bea

in about five:df those dealers One is this Mr. Bailey. Aud the .
names f the-other four eschpe mb. otα⁰, ⁰⁰õο,ÿ¾.—iñe e tats
But thé s, atid!wubstance of ite töstimony of 3

dealers some of tllem mdst of them was chat ‘they! were iy 7"
small, isolated areas; dt hey were the: only denler in town, r
that Goddtich br Firestone supply Poin its Wers Hear Heim!

. OT Aa TB ghey, 1 ve teoee Hot Abie! to develop the:
fale number of Texaco dealers dhe were in fart nominated to

and aevepted by th rubber companies. Those figures were not
88 pointed out, gursuant to the sales vom
do not approve'stas
ona oonfliet with éxisting distribution oft 918° batsbr

1 —— wé put in bur case we in fület dic
uss only abbut 8 or Hie. dealers. But as I mentioned before we
used something like 20 independent distributors; or distributor
of inidependent-«nonspdnasored: HA, and used just abput all

tlg sales fore, 80 we / had totabof ene old ain Top
; resentiig seine 20 distritsutors: A} nisi, tore b

| During ‘the eroed-examiniation: end “OF these witnesses de-
spondénts made a great point of developing the fact that there
were other Sellerb of nomsponsored TBA the area Hnd yet
would yuu believe it. wheni they pat in their defense) they did
not produce one siligle distributor] ,n ful br othe,ide. The
onh:-auedéssful ‘distributor ' thet they put on owerestwoe who

19552 Uhu ppendd to: e er e EBAS ‘They
were very successful, AAT hooanoge HINTEN l?

0 On the UueHon f- Mins Jones) you abked: about pSiniilis-
sions one ME f TRA Ig is a fact in this cast) unlike thie
Atlantze Oobd ear ease; the salesmen; ‘Texaco salesmen} do not
e ee a perten of en e
; cs Uf! ty

on their sales, and incre&aing sales; not dalyüf gasoline prodavts
bat‘o? TBA prodicts épdnsored TBA products: In other words,
it te part of the wei tofla for deterthixtingowhether oF nit they ure
RFV ii

7 art A0 1
6 > ali have a note on e Beate
ait a enue) polyp dea ot Sad Vf feel. Heis IHG
[9553] „*
0 Don gan HD- 117,61 14496917 : 7 62
‘ N 7 7 { , Jai aten at bicep
gf! f Ws e SOT = J 1977. 117141 14 bi;
“bewine a a3 brio
,: i 1 ‘ ‘ 7 . 1 *
„106 11 yf recat yd +32 yf. 4% wits oc 1417 417, 8 Eeel Tere is f 1

＋ 2 ¢ ‘rr 7 * , * N *
95 oT ITH ‘yt 1. 7 Ti „ f t gte 1 57 012i Fu

D amciqn] engt nn tet tolyto ods dott eye in

Beas mtodt awit no, big, .outy of HI 1707 F „ e i a
P enen meters Porm 11 wise

wo balg ung F ioe ob of Ho od blaow f ¹ttẽ¾ i
“adj WT si 71. fat 0% de 7 570 779 12229 f 522 Beer .

Aol e in if on n ashio oft , lech eee
eig DH att to 1 701 En TO e n vt
* f a- odd to viz Ala ret id) Lge,
ax viqett ton 2 t2aupot itt fis I ne de Hον.
atria addy no cio eo fc Ne e
©sirly ao amid BI vid on (iE ett .

fA).

Ker :
a ieiII. > — oncaeid unh ee M

1e ene — 2.0 Sl 2 Salt sch
H du ‘ertsifettoD Art HN

id UNITED pray neger .
10 Quiyvine sot aaayhoo) Bas Ae ie te — BA Bs don pi
notte PAF 0

71 och sotesisuao). adT 2susersyrys - iOipahintos “eal ee
100 has , anα,ẽ&ͤꝑ̃att ) 10 noitstiotriag

* g Pit ci N22 K. BRO) enn hovfaiva bed arrdal
. i ibe ye ads 40 ii ots ti
eto2zcet 4113 103 .bohuisnos asad
se Viva snomeenge HDðLrii˖ẽỹ

nT eib. Assis bite no.

DE STO Sth Sito ae tad bag sitet ai fy?
LS Tree 9 blub wann a5 .

By Commissioner Elman: —

b cat « 0 tale *
0 e ul Aon ne
of 2 7 7 7 +
fs 17 as 17
‘ 5
. 18 11789

9457 92 7 *
N ne des .

aA; ti 504 1
FOM. pe we 7

; a
ate” Acid tir

‘eeu
Nen 7 tg
antic pan Lo.

Ba Pit toh eb yl estate ee Rey Oe
en Sisttif os 10 noi 10 vutibeif *

Nil 1 Mett Ji bestenT 2.198) erin 190%
Dr De bt o eric tr ¢

—— tafe oedechytiirw wets
. ‘qpuilinnta semeiak onan

6

—— of Chitwan Dixon aid Commie ‘Mac
Intyre, has reviewed afre A the : peding
in the licht of the l
'_have concluded, for the reasons set ff
{, Commission agreement involved here. iis ‘ita Kune
, operation and effect, rom the dhe nend unlaw
ful in Atlantic, and that an order rm i bythe
_ Supreme Gouin dt der enter ee, va

eis ey
22
Dr A
TEC 9
SOMIBIESION. DL
17 Hom

.*
ths U LY
acy bres eed 1 2

7, irpetone and

=
.

770 i 1 wen. 126 17 ‘the wag dt bape RL. 410
56 , WET. . 9 one ee Wolle eie :
nig 905 Meint N 505 2 p

ars 5 4 U 7 ö ‘ 2 — ii ; . :

U 3 2 aA ns USC bets SiN eS 4 ro: ru

*

* N J 1 .
ubstantial quantities of sponanred, — abe ide.
of ovirt Obertibe tacties. 5 +) (GBBT CNG 40
e MR RO IE — ie
‘dn eal — J
itedl fit:(68 Fr SA Sein
the actual operation of the sales ona isi0 pin in theeontett eee
ofthe economic telationship: between-the-ail Sdinpeny and its

. by :
‘ 2 — 8 ;
rn
overt, 5
Der. Hs Fs ie! De
1

455 5 i erde
E jf least, , 0 hh Boe
*

tat benden

by. Allan . 2 ase, pn
Having made 1 ‘ihe: Copamieniott mac —
— aaah Uf chm

| 25.6666

—

-

80 4

Merceallectedd wust hot insubstantial“ nde Atlantie nad end
about $50 million in sponsored TBA products during the period
12501960 (88 F. P.O; at 350-66). In Gbourich the Commammon

outlets; which „e eintilar' to ä — in
Goodyear. The: amount of commerce’ affected in Goodrich was
considerably more substantial than that in Goodyear in the
five-year period: 1952. 1056 Texaeo sold more than $245 million
in sponsored TBA, almost five times as much as was invalved
ene 4
data“ eee tolq „ln

man : evidence ahi Berit
ae relent e e
e oi
. Bense ‘ta’ thowd' pfevigushy entered 5 Gear ka Pre
stone. "Ai apie es gait ae Wo th Cee .
time, the composition of the Commission Hack ch
ö nf Of thle mene rh; r AndktsoH) N oho
0 atec earlier decision Tétisined

hin. second appeal thé Cothiniition,
* ene 2 a the Sonata chiail-

ire equal ily spite 7 7 hic
Ath | po ty 7.6 Gch
or 1 Keil 1863). be to
An 7 a vt ot
ordéted' that ther ebtnblaint be 'disrnineed.

en 712 tte 4! Wy

5 75 — soit |

8 Ibn, f are
Saat Bera ES 5%, nich

a 1 » roses

25 =

of ha iit Mone ew

of Goodrich —— — a —
Texaco dealers are quite frve t ancept aq

pany's recommandatien“ —— — 1

note (da 763). „nag fio odt g eta

[ease The fondanieh tal premise: ther ying die tonclusion
the Curt of . in
— for the S demctusle that Derhoo has
controlling economic power ee its dealers” and Wat Tex-
ands * ‘with {tts P dealers do tict give tied? 48 an infer-
enge tint 1¢ dd (Ido at-762.) Tn the cburt'eview, the F promo-
tidnal Scr Viel perforined by Terade Gale indistinguishable
trot, nu no N lawful than, ‘eotiventional’ sstesmantship to
1 “purchasers. ort i sa0criig eagrtiand
50 THe apiprosch: conflicted with that of thé Deurt-of Appeals
for the Seventy Orrcuit; lich affirmed the Coministin’:'s order
m Goodyear.’ Bor the Seventh ‘Cireuit che starting point for
any tealisti¢ a ed of the nature and competitive effect of
an oil bompany’s “resommen dations” under che made commis-
ston plait wae the eboribmic power whirh the pil company pos-
sessed over its dealers and which derived from the vontractual
relationship between them. In, ite Nam he — megs
the eeonamio power Atlantic

dealers” (331 F. 2d.at, 400), fs png 5 e coher
eit! upon poercive tactics Rather, Sade Ne ily ie
ae 1. 4 Rubber bo. “py daa v 40% Hen ote Hoes’

* The Seventh. Circuit — —

2 r
f ’ P ae er F ps4 = a ene ; 4 . be , 82 * N t 8

e
he pee die er ot Bali
* =: 5
8 snp 8

et eh

685

—
*
:
a

82
that. power. could be. fund in the, “lease and equipm Joan
Lontract with their ahert term and, —

Abia.) Viewed in the eontaxt n the Service
station dealer is mom of an economig serf than ——
free te putehasp the TBA of hie ehoiee.” (lind.) Reaching an,
opposite conshusion fram. thes of the District, of ee
perp nit — Seventh, Circvit- held (id. 46. 401): N
SARL RARPY Poet te chüse it dealers! bo — Ane
00d r Frestene TBA dods not depend upon vert

dete Methods: The totality of fünts surroanding the
_ relationship between the oil company bd the dealers
poimta do one pomelusion.; the pil company is able toexert

dbufßcient osonnmin power oven ite « alers s that for al
preurtival purposes: they ane ‘to. rr neee .
TBA “avale: hy aa! N TNC Att. 2.1 HG

a a fe fal aht cays. eh ie ma Buenoe over ita dealers to pur.
: 6 A shart. of forge; threat, or intimida-
— that itanay:reqommend high. quality TBA
0 ida-dealbeny and thet such action: serves 4 legitimate
business purpose in the promotion of the sale ef gasoline.
„Nis wald ele pennen, mu ent except forthe
debe nei dependent upon the oi] company. In
that zetting, reepmmendation is tantamount, to com ·
mand. Cowert: practices are as efficient, as overt action.
. Sopbistachted: methods ci preesuring the dealers into
rnit ep red TBA a Paes Sennen cove-
2 naateandepérs threats.”

mite Lug zan efi 1% le
Atlantic bee pd fl he diene

e two es ad upoh nhrrow fabthal distine-

77 7
a

ae es naif ‘frdmed Ue asus presented: by
_ Both, sapen in identigal, Pron een ani the Seer ne

„ % ysifiell-="suimetgnre’) oft
is unfair method of dompetition, in violation af
5 r r

eee eee

2 ty decks og. aris * g
ial yp lesiege 87 93 275
ok tina ets 81 Wang

ech ee l .

fe 9 Hi ‘a es, 4 ome or 46 Ai
: ’ Ne pile 7 57 17 ith
our dectston upon it.

| Goodyear; (1). pepe

4

blier 1155 oi] company.

be 55

n major runder bomb. et arid g mater oll Segen to sitet

to an nt under which the'dil domi puny, in rev
6 Sponser the gels of me fudder

el Sen poche in oft conapaniytsretail dexlers.”*

E 0s lt to gang
15 boch oases the. ö

reflected by 125 Sen i i Seve

N his
pendence upon, and subservience:

purchase substantial quanti es i he ont ove
(2) the promotional services: whic e 1 80 compan

ligated’ to, and dick, perform under .

ment constituted the exercise of that Power fol tlie benefit of of
the spondorec 0 ‘supplier and (8) ad a restilt, the effect of
i on’ Plan igfike that of a/tylig abreemenit, fore-
non-spo — ö
ma ech werfen bil cdthbahny” y stealer ign tenn

i): $3

19461]. The Supreme Save ari the “Atlantic: Goodyear |
case for the purpose of rago ‘apparent, conflict” with
Texaco (381 U.S. at 363), The Courts d the Seventh Cir-
cuit’s.decision, and a week later, vacated the judgment of the
District of Columbia Circuit. in cane. and ordęred that the
case be remanded to the Commission for r reconsideration i in light
of the decision i in Atlantic (V. Tr. 05 *. Texaco, Ine. 881 P. 8. 27

ot! fA 4j, i

„We turn 8 to the threshold question in this ne pro-
eceding: What light is cast by the Supreme Nee in
Atlantit upon the appropriate disposition, of this case

Reading its opinion againet the background, set forth ghore,
we can draw only one conclusion: In upholding the Seventh
Circuit, and Commission decisiong, the Suppemp Court approved
their broad rationale, rejected the approach taken by the Dis
tzict of Columbia Circuit in this ng, and enunciated,» rule
which transcends the confines of the partiouler. facts involved

—— TT
e Inc, supra, ‘Petition ter a Wait of Gertiogari to the
ted, States Court of Abpeals' for the District of Columbia: Circuit, p. 2:
. Refning Oo. Y N. T. Oi, spre; Brie? ‘for the Dea ‘Trade Com-
— ot one og ee 7017 gtr YW Si eae dary ee
; fring Co. v. „rn. Federal Trade Commis
sion, pp. rr “ier supra, ‘Petition for a Writ of Cer
tiotari, pp 16-10. ‘

ae,

‘ : — —
Be 4.

gest the Perle ie oversive Practieeg agers
vate the, restraint imposed by the sales. commission plan, it is
the nil Nee over its begat Be andy of shat

45 a ana pe dealers), ‘tang 10 not. 150 as
| eee e
en an contracts wi

“su
Inion, 55.57 88. 13 (1064),
and we need not oad repeat that discussion here. -
It must also — remembered that Atlantic controlled the

H gasolin fhe id en c fe wholeaalére and dealers

23 1 a an de | al 80 ’
> roy 4 * Ine, 37 VS. 38, 45

' text, “threats: aad coercive 11 W Hol-
stered agra which resulted from this economic power
(id. at 369). The Court viewed the oil company’s aggressive and
vigorous salesmanship, in carrying out the sales commission
plan, ‘wholly apart from any boereive tactics; as an exertion
l the p persulidion that is a natural incident’ of its economic
pb Fae i at 308) rather than ‘as the “recommendations” of
© ale to a ‘independent purchaser “free to accept of re
jectꝰ tem
edith, the Court accepted the Commission's anid the
obntradt, it; which obligated — to st: power over
ale al he ond — Po, a

t was im yim mie Under the sales
ihc ‘the'r 2 antl Tetuco
ow), the i company, without 5 80 any investment in de

S

tribiation’d facilities or ‘TBA inventory, and ae *
the TRA supplier oi the burden of sales, distribwtion, and serv-
ieev is nevertheless paid large commissions for its promotional
eflorta. Aocordingly,. the Court found that- it, is difficult to
escape the conclusion that there would: have been little point
in paying substantial commissions to oil companies were it not
for their ability: to exert. power over their: wholesplers,.and . |
dealers (id. at 376). 3 lait totuo ®
A in upholding the Gomantimion’s |
onder prohibiting outright the use of the sales commission plan

by Atlantie and Goodyear, was also affirming the rationale

Eren the Commission's decision; which ‘Wea: Count de
Ameo. (id. at 361): 5 b..

„The Commission Seiter the doused . :

“to be symptomatic of à more fundamental restraint of
trade and found the sales-commission plan Megul in it-
delf as ‘a classic example of the use of economic ‘power in

50 one market to destroy competition in another |

market 8 * 99:9 [Emphasis supplied} 110
At the same ‘time the Supreme Court dispelled )
tin e by the Cennet hres Len it

ceeding. An assessrnent of the competitive 1 Becta of tt I
commission plan does not require an analysis of “marl ot 0 data.”

Since the testimony only al what was ese essentially im- |
plicit, in the relationhip between the oil a Tra deal-

com-

ers—that the oil company’s
mission poten the compa et effe
Spo! suppliers evr

by the gil company’s pays dealer farther rtm nalys
la It is sufficient to ; 2 d eee
portion of commerce is affected

£9464]. To be sure, the Supreme Court took note of the strik

: in Atlantic of both the extreme abuses at-
Atlantis use ef the salea-eommigsion.plan, and the
dramstio effectiveness of the plan in foreclosing nonsponsored '

0 “he Court waid ft this regard {id at 71): 2110 Ani:
n — oe

paid re extensive economic

— — wit

*
n

TBA suppliers from the Atlantic’ servite station market: Atian-
tic’ wala the first case before the Court involving a challenge to
the sales commission plan it presented for review a Commis-
sion decision: whose rationals would render unlawful the sales
commission plans theinselves, whenever used by major oil and
rubber ‘companies. The Court; therefore, made a careful exam-
ination of the entire record to assess the “economic and business
stuff out of which these arrangements emerge”, so ds to deter-
mine whether they are naked restraints of trade with no pur-
pose except stifling of competition” and whether “they may be
too dangerous to sanction” (White Motor Co. v. United States,
372 US: 253; 263): But, like the Commission, the Court
looked upon the dramatic aspects of Atlantic as “symptomatic”
of a broader problem. Having examined, as reflected by the
record in Atlantic, the dangers presented by sales œmmission
plans, them essentially anti-competitive character, and the vivid
demonstration of the abuses which may attend their use, the
Court eonoluded more generally that the sales commigsion plan
itself amount Is] to a device that permits suppliers of tires,
batteries and accessories, through the use of oil company power,
to effectively sew up lange markets” and, as Such, could not. be
defended even though it might be an efficient and economic
method of “dsteibution' (381 U.S. at 371). Consequently, the
Court's ultimate concern was not limited to the sales commis-
sion plan it Miezen Atlantic, but was rather with “the *
fect on commerce that 1 result from the widespread
commiss ie by. faajor. oil com-

entered itd ‘bales ems von plans a6 W Seating
aer eompainies“Goodrich; Firestone and, under an agree-

— eee

effect. We think it enough that the Commissfon found that a not insubetan-
dN e e ef e M f. 1

A 2 7 oF * 7. 7 4 .
F. T. C., ‘eupra, Brief of Petitioner The Atlantic Refining Company, pp. 81-82,
57, n. 48.

e lt Sen ge tot other me BN
The service station dealer outlets dees Wy tls de de.
mission plans conatitꝭ DL eee
‘the same time only the largest rubber cot re.
Senger plane, & fact which’ WO aper e ati Ne”
Commission's finding in Atlantic that siialler TBA sippiiers
are unable to utilize the sales commission arrangement (8
F. T. C. at 307)? Given the Court's yiew of the fundamentally
anticompetitive character of the sles’ commission plan ‘when
be dect pcg sree Aare rato ons ve
proliferation of these plans between major oil companies and
major rubber companies constitutes in itself an acute danger for
competition. It was in this context that the Court, looking
beyond Atlantic, and the sperifi¢’ facts involved there, coneluded
that generally the use of the sales commission plan by major
oil companies and major rubber companies, whatever its eo- -
nomic advantages, is a practice “too dangerous to sanction”, -
_» This conclusion is buttressed as much by what the Court did,
4 by wind it anid: The Courtꝰ's affirmance of the Commission's
order prohibiting outright the use of sales cominission plans hy
Atlantie and Goodyear not only, between. themselves but. with
other companies had broad competitive conaequenoes in both
the TBA and petroleum markets. If the Court’s decision were
to be read as limiting the. Commission in its evnduation of other |
in-

sales commission plans to the specific factual ei
Wed in Atlantic; ons major oil and one major rubber com-
cpartiye action e e aging im
its major pecan fsa Sake mee psa free to u.

„ ao") asi pla?
[9466] .. tax Geneltooeanatien
eS een

*

j

8

commission plans proxiding
sponsorship. to promote their TBA $8 t ca
ers, Net, Goodyear could not ask Tera Lei . 6
exace hes uo propensity tq use. coercive tactics
in petorming its other sales commission, plans)-to perform i

— e af apa edt 1
ment in, distributional A inventory, 1 8 5

stantial commissions for the sale 0 e Sag
stations. Atlantic, a major oil company but s

af

n a e e eee equip;
* Court
in Atlantic also render Texaco deal eee
to, and depen N exaoo; and its commission
require Texaco, to perform, the same kind of vigorous e
tional campaign ny ene T q bax only-Atlantic and
4 ty ml enen n Die: wpuldl Gis

nat only, create a joes, competitive imbalance among; the
leading firms of the two. indystries, it would be ae and

ineq

„The Supremip Court ‘waa informed of the harmafui aed. anom-
slous consequence. of a rule confi „
Atlantic. We fn find nothing wh: would permit us to read
19467 the Court's en read orn rz

ing, as sanctioning such results. 1 1
R
a ede ie r pcg Sue's 10 Tesbs dond ‘the Ocürt:
. A
e conftict unresolved, would - an anomsious situation
which hone, mao — and — Sealed
prohibited ͤ — wü TO) “A681

PPO. vi rue, Inc, 861 U. eo fn Wo Cee» 5

e order in of the two cases ap MIE Si aie

11 22 20 ee times larger 1 10 1
— Hero, one. it eee e Hanth
Beene Comeeny,

dt THEI bigs VR di tig DP elner R. *

cots it dobyboud ue dur?

80

Hr in haworiod AAL. Ehn enoiiste sid} fit:

In our ien thie: Supitese Coltrt david bs d estb butt
pels tlie conel uon that the Texaco Goh plan is un uiviair
method of competition and that Texabo And Goodrich ahbuld
Be prohibited, ax were Atiantiéb and Goodyeaty from erfor-

ing or enteting into any other ‘miles cohunission'plang:‘The
Courts bontern for the datigam whieh ddervwod Trem h wide 8

spread use of ‘the sales cdmmmston plan is espedially relevant
here. As has been pointed out, Texaco is considerably larger.
than Atlantic. Its service station dealers constitute an‘ even
more Significant TBA market Stations operated by Teracb's

lessse dealers and contract dealers 9468 ‘constituted ©

16.5% of the service stations in the United Stations in the year
1955. In that year, Tenade had approximately ain dme 46
many’ contract and lessee dealers in Atlantic

Moreover, as we have noted, im Atlantic en
Atlantie dediets of ‘Goodyear and Firestone: products for'the
six-year period dun 1960-June 1956 amounted’ to about $50
million! Goodrich 4nd Firestone sold: almost: $60 million, in

TBA products to Texaco dealers in the year 1056 dione. In the
five-year period 1952-1956, the sales of the sponsored Godd-
rich and Firestone dun to Texaco amounted to r anal
$245 million: ” MA e

The eco, e of Tera ae is no different
toin thet df Atlantic dealers: Thus Tesco lessee dealers, wha
constitute the most important segment of service station TBA
otitlets,; have the same kind of short term teases, renewable on
a yeir-t0-year besis and terminable at year’s end upon ten days
notice of either party: These leases contain the same kind of
general housekeeping” requirements concerning the stations
use, maintenance and appearance which, if breached, can re-
bull in immediate dancellation by Texaco without notice te the
lessed. The Wandern have 1. Nr 2 Fern, investment

0 Tey

f

{a
ts 177 Mr Hf 4 nn 555 1

e
OS OMe ¢ 80

i

in ‘their stations, at times, on Hunds borrowed from ‘Texaco.
ontract dealers’, bo own their stations or lease them from
third parties, nevertheless lese their pumps and other equip
went Front Texaco, Bech lesser: and contract dealers purchase
their gasoline pursuant to an Agreement of Sale“, preseribing
annual minimum and maximum purchases at eurrent, Texaco

to-yenr basa, bel aging f end upon thirty day’ note,
and .nittomatically cancelled” if a lessee dealer's lee is
terminated. a
In these cent the - cobsietitiparactynntaah:’ given. 8
TRA: supplier whose products are sponsored by. Texaeo. need
[9469} hardly depend upon the use of overtly coercive tacti wef
Here, as in Atlantic, Texaco promotional efforts in
f ing cut ita enleb comminhion sgredenent with-Cloodrioh and Mire-
stone constitute a foreeful exertise of its economic power over
ita dealers: Its consequence is to impress upon ‘Texaco dealers,
through constant repetition ‘and in)a’ variety of ways, that
Texaco, whose favor the dealer must court, bas a strong intereat
g in their pur¢haseof the spored TBA products. baa
Even before he dealer has been accepted, Tennoo begins ite
cantpaign on behalf af the sponsored TBA. products. Texaco
‘personnel, whem interviewing prospective dealers for new or
established service stations, advised them of the importance of
TBA, recommending the TBA products of Goodrich and Fire-
stone. Once the dealer is selected, and before he opens his sta-
tion, rende frequently informs Goodrich and Firestone of ti 5
prospective opening station, affording Goodrich and Tire
stone ‘a headstart over corfipetitors.in the. initiation of their

| own tales campaign on behalf. of their products. Thereafter,

Texno often with the direct assistance and participation of the
rubber ‘companies, maintains a continuous campaign designed
to induos the dealer to: purchase the sponsored: TBA produets:
Dealer meetings and training courses designed to edyeate-the
dealer in thé use of TBA’ products ttilize ‘the products of the
sponsored companies, Texaco participatesin the sponded com-
88 * —— 8
f N 1 3 e A 8 bent 10 lis 4 ie
as the sp Products, And, ‘perhaps most, tee.
tive of all, ek ee ona cr a
ta Sonat le e re pa

9 8 5

ee ten
| most mee involved in _— the orion TBA préduste:

. a

7

slp play arto! rl in he aay deal
thes n of arhether, the dealer’

{9470} device, pointing arg at si
ee dernen.

e en
iio off jure

es Sb. 0 i ~ s% oa : . x 8
2 :
2
eas Dre 5 e
=> Sag

- 49919 ce Wh I torid 15 in i 91 — lan, exguoisis oq H. 8

he ron or tig

Ne Pulitgs | opiniona.and,
place heave reliance . d 2

dence, necessitating the designation of substantial portions of
the record in the joint appendix i e of this
Court.

February 1964, on the. prior.
Ltn ( ee 135 herr)

| t 4 — 1 together with a
supplement ee tein ear of those relevant
aie ae to the af

‘| extend i into thesethher.
Rule ue of 8 —
spectfully des

ing schedule neg it is believ:

a

. 5 * 1 . 2 *
* . * ot
* 2 .
> mk N *
. 3 er Oe.
: nag 2

1

ii Hi. nod dui eure rde

* *
te 0 tor

wine
ä de

Fortunately, a substan iat’ 5. Pee * of the“ record has been
printed in a single joint sapendix an this Court in or about
ore this Court in this
rdingly, all parties stip-

legal papers ter the filing of said 1964

eee me rnd eripendix on
this appeal. mae 0

The parties are undef 4: Weit Dt Agb 0

sion in the un ppenats those papers and ther
materials deer nia : 7
material and héfp 15 sing of the petitions.

It is e e thet ,
printed in 1. Petitlöbers pot brief pursu-
ant to the ee set, forth, for, he consideration

and approval of this
The parties further stipulate and agree that the respondent |
may file a singis Riel.
Inasmuch as td brief sil of the parties will
ies, in accordance with
agree, and hereby re-
Frowah for the following brief-
, will not delay the assignment.

of the appeals for oral argument:
1. The petitioners shall file their appeal briefs not later than

June 30, 1966.

2. The e respondent : shall file ite answering brief, whigh may be

in typewritten or mimeographed form, not later than August
18, 1960, with — brief to be filed eo August 20,
1966.

, may
— écenseript — NOt |
extent that weh portion thay be material to: mone
uuderstood that 4 of thé ecutd thus referred to will
a be printed in a tal joint appendix if ne Court di.
Teota'the name to lista’ ifaw ais! es gd aos!

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Edgar E. Barton
yea! D Menber fm FM
._, Office and P.O. Address
fate) S90 SORE Wall Street
| New York, New. York 10005.

Sram X L,Temxo
Stanley L. Temko
Offios and P. Oo Addtem
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Alvin L. Berman

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sit] OG

, | (May 118800
. ; UNITED STATER cownT ad ‘ABPEALS
Fon = Durner rar Caveat Cracurr,
toa de / September Term, 1965
—
No: 20068 |
A. ee para wennn

1 a Feveilil’ us cist, ‘RESPONDENT

809. 900% hag
111107 3 11 4 1101

~

2 B. F. mne ComMPARY, PETITIONER
rat u. (i 7 g.

Fepititt Th eben, RESPONDENT

Before: Tamm, Circuit Judge in Chambers. ö ae

Counsel for the parties in the above-entitled cases having

———— submitted their stipulation pursuant to Rule 38(k) of the Gen-

_ eral Rules of this fon and the stipulation having been con-

sidered, the stipulation is approved, except as hereinafter
provided, and it is

Further ordered that the stipulation shall control f urther pro-

° ceedings in these cases unless modified by further order of this

ö court, and that the stipulation dnd this order shall be printed

in the joint appendix herein, and it is

_ Further ordered, sua sponte, that the above-entitled cases are

* consolidated for all purposes, ant? that the joint appendix filed

by the in cases numbered /7, 915 and 17,923 shall be

treated part of the _ ee in the above-entitled

- 5 168 0
Faelle, ordered that tie dises for ting ine belets dg Nu

appendit ef the Paitied ts HN as fell:

Petitioners’ briefs.shgl be- filed on or before June 23,

Responden i céneelidated brief shall be filed on or be-

fore August 2, 1966. 8 i

Petitioners’ reply briefs, if any, and the joint appendix

of the parties shall be filed on or before August 22, 1966.

The parties muy de ther briefe ity pewtitten or mimeo-

graphed form, provided that the printed briefs and joint ap-
pendix shall be filed on or bank auer 22, 1966.

Referenoes to. dhe record aH ᷑intz in the brief of the parties
may, if the parties so desire, be to the page numbers in the orig-
inal record certified to this court, provided that in the printing
of the joint appendix there shall be set forth, in addition to the
consecutive fer ing of the Pages of ‘tid joni Gppendix, the
original record page numbers in bold type and indented in #
ittätrner fe Gal e der it dohvenient för the court tö toute

the pages referred tg in the briefs... N

Leg. o

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1 fy 11 Hit 230K 8 i £21 4543 y WN
10 aviyoadi ef fared EMT orl fos 1 41. 1. n e
ive 523 8 7 7 tiie Pa he) ‘ ; 17 4 119 1 2
rl Nel. i inte & Yo > + HES n cyte 21.111011 Liz tim % Lz a
nme A wet a ee eee ee LRT ar eee ssw doide 0
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‘ ; 1 17,

bee bana, RESPONDENT, 101
i i? cu + No, 200% nd nt ae 17
TIB. ia eee eee ere

~ ve’

iy il. T lr 5
Petitions to Review an Order of the. Federal Trade Commission .
7 4 Decided September 25, 1967 * A

Before — Chief Judge, Wnaun K. Mrs, Senior

Circuit Judge, and Bunarn, Circuit Judge.

Bono, Circuit Judge: Eleven years after the issuance of a

complaint and sixteen years after an investigation was initi-

ated,’ this case returns to us from the Federal Trade Commis- .
sion for the second time; in the interim, following our prior re-
view, the 8 Court remanded for further consideration.
See Texaco, Inc. v. F. T. C., 118 US. App. D.C. 366, 336 F. 2d
754 (1964), remanded, 381 US. 739 (1965).

* In 1960 the Federal Trade Commission brought proceedings
against major oil and rubber companies, simultaneously insti-
tuted by substantially identical te, alleging as an un-
ful v seat ited by Section 5; of the
Federal Tra ae t,t thd of & 5 15 prongs Lind (1946) |

Abeebbes bangen ü) dee
sales of — —

—

8375 e ae
5715 5 fa dd rf 1 7 74 2
ce 10 . 5 uae 0

0 Oomph ng.

*

* As :
e tan 2 — chaleur.
em Par erer PEER, paste ee actos.
466 N De 5 Als ott hun, (Aer diy) PME HS
eae 2 ef! SEL ee AL bag ai 61

—
2

| memantine evidence! earlier

i HT ‘po;

bee n nes the san miele decision thin Cour
7 haa lore — * Nur ros!

(ibirendn | 7 one tiv the! bearing
. . * re 0 — 2

re.

i Sa et 7
ue

1
N

+
ne

it ; .
the re ne Sn LG ee
Bo Be (708 Co 1964), and the alleged niet between this

tng the Seventh Crit was aera the pein for

ae Aegis vet f*

V ‘ ite . \ * 40

en 1 Bi ia met DDE 4 nd, 1610 At: ip iA Bids Pie *

1 e 0 1 itp lt. 1! 1 1 . Anf fre i u ot iy: — ams
Ka Tert rt 2 THe — 2 243 or tafe AF 3 slots ts. Or 14

oe

* 25 — —— |
ABRs mat e Lite
Sharan ion, at

A edge edt 0
ben 5 —— teen in Gourd,
— a erktente op .

1 0 0 Or
. Dreteen

d Setting H Search ‘oa her he P. 5.
— Oe ead N 0. 298; mie
: e oft orks ie bt. caseest off diu bai

In Januney, 1066; deen g ented aoe fled
ah’ os on, chick 8 the wert of wid appeal "Phd eee
F. rü an e289 h an Wil. at motes

" — . — —

en aner metdd et
Goodrich, as were Atlantie and Goodye 7
dee ee eee eu de.

S 91h 2

2 ‘The Cammiaion ts hel that

‘products; and. (3). the a, conte stem has
Goodrich enn iser competitive advantage. o abel fine

ad. nian, ORR CAY WRAL BOT te af ORT Aart) bine >

herring ‘been! eee did not qurticipate 1 Ota .

Comin msioners n val pervtietpa fed
in the opinion and order now under review. N of n nn
‘tiajpeting were queinbéravef the 1061 ‘Cétintaton whic diredted the xa m-
mer te take andi enn evidente on the ‘comspetitiv’ - — 8

We have difficult, neil
the fact of 4 leg in 15 ie Ase.
ann g contractui Arrangement.

geen the oil company and f rs in and out 5

. ‘giving rise to controlling ene pone aaf er are te
ane without any coercion ‘constituted ‘nlawful‘exer- -
eise of ‘such power, there would have been nothing to remand.

The Supréme Court could have simply reversed and b —
the Commission 's order,
Ot bourse we realize us did Fudge Wisdont in i Shell, ‘hag th
“Companys tse of its ecpnomia pqwer through the sales Som: |
mission plan to cause its dealers td buy s ed TBA even in
the absence of overt coercion" eam bonstitute an unfair method, 7
of competition and a violation of section 5, Shell: at 482-83
femphasis added J. The Commission also recognizes this. and)
therefore argues that each of the non · Odereive re-
~ ferred to in Atlantic are present in equal degree in this case.
The Commission argues that the references to thes ti
in Atlantic soe 0 conclusion that even the non- 0 er i

Someones odio

N 2.2 ai
*

.

1 former de testified to th e contre.

134;

tain a finding of e res pesetions A sah otis: than. 50 presen

Jn, light of all this we do not read. Atlante 15 onelude, that

slit nan eee 15 Det 7555 *
— lantic’s conduet, » characte 965

Nees ul ee economic power in a eon
god: ~ de. ‘sa at DS, * 5710 75 few, ST will

and wholesalers. to. buy.

. (1) Sales Practices. dee dae,

was to instruot its salesmen to urge dealers to Fer-

‘i tepresent Goodyear, and to “cooperate } ith and:
in its efforts to promote an ‘increase

Er sale by Atlantic dealers of Goodyear produets.

381 US. at 365. The Commission - characterizes the evidence

here as substantially identical. Yet the Examiner was satisfied

that Texaco policy, since at least 1948 | has been to permit each

dealer to choose whatever brand TBA be near =e

The Commission ae argues that; “on each visit, the
ers, to write up sponsored TBA orders,”

but the Commiggion itself in the order presently under review.

struck the Examiner’s finding that Texaco “salesmen were en-
couraged by [Texaco] management to write up orders for spon-

sored TBA without waiting for a forinal request from a dealer.”
(2) Dual Solicitation and Advance N atification. In Atlantic
there was a regtilar practice oft
( Aouble teaming” solicitation of. Atlantic Catlett by rep-
resentatives of both companies to convert them to Good-
year products. They were to call on the dealers together, .

x2 take stock orders, furnish initial price lists and project

future quotas of 1 of ——— products.

———

6 “Ti nn
ny's selling personnel ‘are expected to become familiar

with ga —ů Inventory Guide Systems and TBA merchan-

—

ad and the merchandising 1 But it should be

y under Soak oe wit conden equal’ assistance to all dealers in
E ‘and u ass Gir e HIN ec ae er

ae K
* n
F — brand and px

sey fa 7

See bas cm mtn tw

i ce sree — rethain unchanged.

115 N

381 U.8 at 368 een lee pee eee e .
ele
tentnintz“ and advunee * nOtids to thé tte Cpu
nies tät a new station ‘wae about to becéme operuble wert
isolated and spOrutie practises! fot à regular or even frequent
practise as was the case with’ Atlantic's operations: They ap-
peared in Atlantic in the context of Axi entire system designed
ty overtly oberoe ite dealers: Wale du not tie dete OF the nerd
before us!:

3) Dedler Policing and Crédit Cards. In Atlantie thes Supreme
Court was confronted with evidenced that Atlantis imposed *
quotas on dealers and effeetively policed the by the use of a
reporting system of Pufehases and sales of TBA. In the original
appeal to this Court, tie Commission donténded that the quota
atid poliing system were als used by ‘Texaco. In the present
appeal the Conimiission has retreated fret Wiis poertief. As to
cretlit card policy the Examiner carefully distinguis ed the
Atlantic record from the instant record and significantly found
that Texaco n dener to ee een, TBA

on its credit cards 1

(4) Geographical Supply Poitee. 15 Atteste Oebdyger fequbed
that Atlantic assign its dealers tö a single point of TBA supply:
This ¢evgraphical division of supply points is not present in out
feeord and, indetd, the’ Examiner found that as to. |
TRA Edles, ‘och ‘dealer did not buy éxelusively from, and ws
not nlite? tö, ‘any ‘partioulée wapply: point ‘but “was free “to
deal with any source he chose!

These few examples ee ee be
tween the Atlantic record and this case. On the basis of the
recotd before us e cannot conclude that Texaco exploited its
service station market illegally for the benefit of itself and
Goodrich. In short, we do not find that Texaco used its con-
economic power to comet its. dealers to fue at eyo

A.

5 Anticompetitive Effects ek .
. .
9 3 eee 5

woe

cnt woes Daa aa — koe eg —

66— a ee Oe

1107

adverse — effects. on: 8 As we hawe
previously noted, the first; Commission remand of the ene to.
the. Examiner. in 1961 was because. of, the need for additional,
evidence on the issue of anticompetitive. effects. We have.

further noted that no such evidence was forthcoming. In our

prior review of this cage we also found eee arſtioam-
petitive effects was lacking.

The Commission urges the ene
the essence of the Atlantic holding on anticompetitive effants;

(i) Extensive ‘economic analysis of the competitive
A effect based on examination of the entire TBA market is
unnecessary:
(2) Evideace. 7 tRialt jestifiention tn benefit to
the parties concerned is immaterial, 11165
(3) It is sufficient when the Commission finds. that
| substantial portion of commerce is affected.

This, of course, explains dhe Conimiasibn poaition chat the nA
system is an “inherently anticompetitive” device from which
“competitive injury must result.” This is simply a renewed inti-
mation of a per se rule in Atlantic and needs little discussion
since we have already rejected that reading. It is true, of course,
that the guidelines suggested by the Commission are referred to
in the Atlantic opinion, ¢.g., 381 US. at 370-37], But it is also
true, as Judge Wisdom pointed out in his discussion of these
guidelines, that the Court in Atlantic looked to the full record
for examples of anticompetitive effects. 360 F. ad 95 53: Seton
the Court was very clear on this point: ut GRP

The anticompetitive elfate of! this program 1 — 8

on thé record and render unnecessary extensive eco-

een ee
Wa is

381 US. at 371. ane

Bearing in mind he Fifth Cireuit’s caveat of an a be-

tween a discussion of anticompetitive effects and the exercise

of dominant economic power, ee e i tho
„
turing, 2 tires

— 0 Kod, of ce ie e e
oxymg that the pe of competition at these levele—interbrand
onan e beer Q ath ITED lob M. = iat —

1 yt?

f

vals

and, Competition. i. os. vilgqua LAT 3
l g the TBA eee eg.

.
service outlets, the manufacturers may suffer injury, To that
extent. producers’: e sep ke ene
| r ane as.
lantic the Court found a cladsi¢ division of territories between
Goodyear ' and Firestone, the ty manufacturers inyolved:
“Firestone and Goodyear were excluded from selling to Atlan-
ties dealers in each other's territories 881 US. at 370. Flow-.

ing direetly from this was the further adverse effeet that Atlan-
tie dealetn could only: buy atith peices designated e
to whom: the territory had: been allocated, ibid. Finally, chere
was little doubt but ‘that. the combination of these and other
practices in the Atlantic, record, including the resort to overt
coercion, had the drastic anticompetitive effect of almost com-
pletely foreclosing the market to Atlantic's .own retailers and
wholesalers: who. desired. to sell brands other than sponsored
products and to. wholésalers and manufacturers of oe
brands with similar desires.

We have earlier noted the fact that the record before us
devoid of evidence disclosing any form of territorial ive
Bethe e tas kat e urfacture

16

competing TBA suppliers to the efféet that ni sponsored TBA
could not be sold’ ib Detach desde bovatae of Wie dae m.

deretanding that! they wers required to purchase sponsored

TBA. The Commisdohttérroborates this testiniony with “rep-
resentative evidenue” tliat in certain’ Texaco districts the per-
céiitagé bf déalers who carried spored TBA: ranges from
70% tor 89% ‘This evidenvé and these figures were rejected by

2 the: Exariiner in his original decision and by the first Com-
chain haa

on. The Examiner's modification of this posi-

don, wbich as we noted was made with no new evidence, was

Affirnied by the sedond Commission decision, and this Court
rejected those findings on the prior appeal as unsupported in

the record. Nothing has developed to change our view; and in-

deed on ‘remand the Commission has stricken the Examinér’s
. eared ea RO
to a statement that “praé-

of competing suppliers
pn orc sieaitG- all OF harstrationetett ren of the soutpetitdes HÄ—2——

dé withesees testified” that they were foreclosed: from the
r Wesimply cannot regard this as
representative; such a conclusion is not supported by sub-
stantial ‘evidénce; except in isolated instances which were gen-
erally contradicted by overwhelming: rebuttal evidente. Nor
cai dre apt the Commission view that the rebuttal testimony
is be discown tad because witnestes are under pfenzure from
Texas, A finding of preasate on witbses before a tribuhal is
Hot one to be lightly inferred and ought not be made without
evidenée of some kind; e e CIC AE
this score.

11 iérabrand Competitu °°
10 mt tin ra

roe

ee: ry iE

. 24 at 206. a ; (IST LIS WW od i ete 7 14

* — 7 - i grt }
2” iy 7 + 2 . 0
5 . Pre 43 1 2 A Atle 0 te 177 °
55 SAA: 1 2 7 1
a ean * ot? 3 5 I. 7 ~ 0
. > OF ane 9611 7
40. 2 * „ ioe) 1 . pe 2 ea 0 wis of
4 Wen 2 e * 5 . 1
commerce is me rat A tian ~ }
* -~ 4

there. is nothing, obecure. or. ambigu

on an absence of cru especially where the remand 7

directs a further inquiry for relevant evidence. And we find no
basis for treating the Atlantic case as carrying the test of quan-
_ titative substantiality to the brink of extremism by a strained
literalism. Indeed, we- are inclined to believe that the Commis-
sion views the situation, as the Commission opinion and brief
candidly concede, as one in which it would be arbitrary and
inequitable to bar Atlantic and Shell, who are very much like

— —
~ 2

Texaco in broad outline, from use of the sales commission plan

while permitting Texaco to continue its operation. We agree
that it would be inequitable, and indeed a dereliction of the

Commissions obligations, provided that all three were guilty |

of substantially equal violations of section 5. But simply be-
cause Texaco is in the same line of business does not mean it
must suffer the pain of the misdeeds of other oil companies; this

would indeed by [sic] guilt by association. We conclude that the

record simply does not support a finding that Texaco violated
the Act. We therefore hold that while the record shows Texaco
indeed has dominant economic power, it is fatally deficient on

the crucial issues of exercise of that power and subsequent

anticompetitive effects. 21
e ; CONCLUSION. ä

One course available to us would be to remand this case
once again to the Commission to permit it to develop addi-
tional evidence for the record ** but the Commission and Exam-
iner have had abundant opportunity—and direct mandate—to
do this in the past and have not done so. We think the time
has now come to terminate these protracted proceedings and
dismiss the complaint. We recognize that the Commission’s
„ren in a remand to the Commission for further proceedings it would
have been imperative to make dear our View that the coercion aspect of the
order las no basis in law, or the record. Since we have twice

Commission ’
determined there is no basis that Texaco overtly coerced any substantial

nummer of dealers or that a pattern of coercion existed, the provistons of _

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0 rA OSS ARBRE 21 21
Txxaco, Ini, PETITIONER |

okt A A oa. ‘i

1 14 2 2
S * cyte N i: 500 2 öl b
In B, 7 ‘Cobos Concedes ee i

v. a a 5
e mes Gee eee, f
8 SC gi n ond io Ali

"United States Court bf Appeals for the Disstibbok Cetisiabla
Circuit; filed September 25, 1967; Nathan J. Paulson, clérk).
On Petitions to Review an Order of the Federal Trade Com-
mission. :

Before: Bazelon, Chief Ju ilbur K. Miller, Senior Cir-
cuit Judge, and Burger, Ci it Judge.

These cases came on to be heard on the record from the
Féderal Trade Commission, and were argued by counsel. —

On consideration whereof, it is ordered and adjudged by this
court that the order of the Federal Trade Commission on re- ‘

view in these cases is set aside, and these cases are hereby
remanded to the Federal Trade Commission with directions to

Per Cireuit Judge Burcer.

Narain J. Pavtson,

: Clerk of the United Stetes Court of Appesls
See Dat A epee CeO.

ichn Lerrarutm cue dy. u bed erte
* No. 010 Hrober, Perm. J 9672

Frorrar Trane, Corgncission, PETITIONER

4

＋ *
7) te — „.
1.1 v. 1 OAL I

; Tuc, Inc., r u.
M Nee Au sansa

Order allowing certigrari—Biled March 11, 1968

The petition herein for a A of Cound United
edie ery roe rh ia Circuit
is granted.

And it is further ordered that, she duly certißied copy of the
transcript of the proceedings below which accompanied the
eee erento eee

af) aki 1131

147 nige!

i n

. IH *
„ sosagk. to Nuo zotnie boa] ot % 410
M9) de 00 lo Nn ! wt

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0015%3A06. Public record. Not legal advice.