Food Fair Stores, Inc., et al.

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IN THE MATTER OF FOOD FAIR STORES, INC., ET AL. D. 8786"

H. C. BOHACK CO., INC., ET AL. D. 8787 JEWEL COMPANIES, INC., ET AL. D. 8788 BORMAN FOOD STORES, INC. D. 8789* FIRST NATIONAL STORES, INC., ET AL. D. 8790 ORDER OF DISMISSAL, ETC., IN REGARD TO THE ALLEGED VIOLATIONS OF SEC. 2(C) OF THE CLAYTON ACT Complaints, July 10, 1969—Decisions, Jan. 22, 1974 Orders dismissing the complaints issued against 10 corporations and certain individual officers thereof, engaged in various aspects of the food industry for alleged violations of Sec. 2(c) of the Clayton Act on the basis that the evidence relied upon by complaint counsel would not support the charges that respondent had violated Sec. 2(c) of the Clayton Act, amended.

Appearances For the Commission: Francis C. Mayer, James C. Donoghue, Martin A. Rosen, Lewis F. Parker, Louis R. Sernoff and Eliot G. Disner. For respondents: Shipley, Akerman, Stein & Kaps, Wash., D.C. and Stein & Rosen, New York, N.Y. for Food Fair Stores, Inc. and World-Wide Produce Co., Inc. Subin, Shams & Rosenbluth, Orlando, Fla. for Hallee-Boy Sales, Inc. and Ivin Arost. Collier, Shannon, Rill & Edwards, Wash., D.C. for John P. Storm, a corporation. COMPLAINT IN DOCKET NO. 8786 The Federal Trade Commission, having reason to believe that th . *For.complaint in D. 8789 see 81 F.T.C. 201. By Commission decision dated Aug. 3, 1972, the complaint was dismis as to respondents P & R Brokerage Co. and Frank V. Condello. Complaint 83 F.T.C.

aot AE parties respondent named in the caption hereof, and hereinafter more particularly described, have been and are violating the provisions of Subsection (c) of Section 2 of the Clayton Act, as amended, (15 U.S.C. Section 13) hereby issues its complaint, stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent Food Fair Stores, Inc., hereinafter referred to as “Food Fair,” is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with its office and principal place of business located at 3175 John F. Kennedy Boulevard, Philadelphia, Pa. PAR. 2. Respondent World-Wide Produce Co., Inc., hereinafter referred to as “World-Wide,” is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with its office and principal place of business located at 10 - Oregon Avenue, Philadelphia, Pa. Respondent World-Wide is a wholly-owned corporate subsidiary of respondent Food Fair. PAR. 3. Respondent Food Fair has been and is now engaged primarily in the retailing of food products and other articles for personal and household use and operates a large number of retail stores, including supermarkets, discount supermarkets and department stores. Food Fair also manufactures and processes a variety of food products. In the operation of its retail food business, respondent Food Fair purchases directly and through respondent World-Wide large quantities of food products from numerous sellers located throughout the United States for resale to its customers. As of Apr. 27, 1968, Food Fair operated approximately 560 food units and 60 department stores in 16 States of the United States. Food Fair’s volume of business is substantial, totalling in excess of $1.3 billion annually, as of Apr. 27, 1968. PAR. 4. Respondent World-Wide has been and is now engaged as a purchaser of food products solely on behalf of respondent Food Fair. Food products obtained for Food Fair by World-Wide are resold to consumers through Food Fair’s retail outlets. Some of the officers and directors of respondent Food Fair have been and are now officers and lirectors of respondent World-Wide. _ PAR. 5. In the course and conduct of its business for the past several ears, respondent Food Fair has purchased, distributed and resold, and now purchasing, (both directly and through respondent World-Wide) stributing and reselling food products and other articles for personal d household use, including fresh fruits and vegetables, in commerce, _ “ecommerce” is defined-in the Clayton Act, which it purchased from lers located in several States of the United States other than the nmonwealth of Pennsylvania in which respondent Food Fair is lo- 1d. Food Fair purchases these food products, including fresh fruits a FOOD. FAIR STORES, INC., ET AL. 1215 1218 ae Complaint and vegetables, and causes them to be transported from the growing ~ areas or packing plants of sellers located in various States of the United States to. Food Fair’s warehouses. and retail stores in the Common- - wealth of Pennsylvania and various other States i in the United. States. _ Thus, there has been and is now a continuous course of trade in com: merce in the purchase and resale of said food products by respondent Food Fair.

PAR..6. In the course and conduct of its business for the past several ~ years, respondent World- Wide has purchased and distributed and re- sold through respondent Food Fair, and:is now. purchasing and dis- _tributing and reselling through respondent Food Fair, food products and other articles for personal and household use, including fresh fruits. . - and vegetables, in commerce, as “commerce” is defined in the Clayton: Act, which it purchased from sellers located in several States of the United States other than the Commonwealth of. Pennsylvania i in which oe respondent World-Wide is located. World-Wide purchases these food — products, including fresh fruits and vegetables, and causes them to betransported from.the growing areas or packing plants of sellers located in various States of the United States to Food Fair's warehouses and retail stores in the Commonwealth of Pennsylvania and various: other. States in the United States. Thus, there has been and is now a continu- ~ ous course of trade in commerce in the purchase of said food products by respondent World-Wide.

© PAR. 7. *Respondent Hallee-Boy ‘Sales, hereinafter. referred to as “Hallee-Boy,” is a partnership, composed of respondents Ivin Arost and Harold Arost, doing business under and by virtue of the laws of the | - State of Florida, with their office and principal place of business located at P.O. Box 7741, Orlando, Fla. These individual respondents formu- . late, direct and control the acts, practices and policies of the partnership, Hallee-Boy, including the acts and practices hereinafter described. - PAR. 8. Respondent. Hallee-Boy:. has been and is now engaged in business primarily as a “ground” or “field” broker effecting sales. of fresh fruits and vegetables by sellers located in the State of Florida and purchases by buyers located in various States of the United States other than the State of Florida. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. ~The annual volume of business of Hallee-Boy in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables i is substantial. — *OnJune 5, 1978, the administrative law judge amended the complaint as follows: substituting Hallee-Boy Sales, Inc., the successor corporation for Hallee-Boy Sales, a dissolved partriership, as respondent; retaining Ivin Arost individually as a respondent; dismissing Harold Arost.

FOOD FAIR STORES, INC., ET AL. 1Z14 1213 Complaint PAR. 13. In the course and conduct of their business, respondents Food Fair and World-Wide have been and are now utilizing the services of respondent Hallee-Boy as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Hallee-Boy performs valuable services for respondents Food Fair and World-Wide and other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, by negotiating purchases of said products at the most favorable prices and by arranging pool car shipments from various sellers. Respondent Hallee-Boy, in performing the services enumerated above, has been and is now acting as an agent or representative of respondents Food Fair and World-Wide and other buyers. In such capacity, Hallee-Boy is subject to and under the direct or indirect control of Food Fair, World-Wide and other buyers of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, respondent Hallee-Boy has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables.

PAR. 14. In the course and conduct of their business, respondents Food Fair and World-Wide have been and are now utilizing the services of respondent John Storm as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent John Storm performs valuable services for respondents Food Fair and World-Wide and other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, by negotiating purchases of said products at the most favorable prices and by arranging pool car shipments from various sellers. Respondent John Storm, in performing the services enumerated — above, has been and is now acting as an agent or representative of respondents Food Fair and World-Wide and other buyers. ‘In such capacity, John Storm is subject to and under the direct or indirect control of Food Fair, World-Wide and other buyers of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, said respondent John Storm has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables.

PAR. 15. In addition, respondents Food Fair and World-Wide have been and are now utilizing the services of Jack Stires, Inc., a Calif. corporation located at 795 Desert Gardens Drive, El Centro, Calif. as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. In such capacity, Jack Stires, Inc. performs the Complaint 83 F.T.C.

same or substantially the same services for respondents Food Fair and World-Wide, as those performed by Hallee-Boy and John Storm for respondents Food Fair and World-Wide, described above in Paragraphs Thirteen and Fourteen, while acting as an agent or representative, and subject to the direct or indirect control, of respondents Food Fair and World-Wide in transactions with sellers. In connection with such tranactions, Jack Stires, Inc. has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables.

PAR. 16. Respondents Food Fair and World-Wide and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent John Storm without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent John Storm has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compenstation from sellers, when, in fact, it has been and is now acting for or in behalf of respondents Food Fair and World-Wide and other buyers, or has been and is now subject to the direct or indirect control of respondents Food Fair and World-Wide and other buyers. Respondents Food Fair and World-Wide and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Hallee-Boy without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent Hallee-Boy has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondents Food Fair and World-Wide and other buyers, or has been and is now subject to the direct or indirect control of respondents Food Fair and World-Wide and other buyers. Moreover, respondents Food Fair and World-Wide have received and are now receiving valuable “ground” or “field” broker services from Jack Stires, Inc. without paying, either directly or indirectly, any brokerage, commissions or other compenstaion to said broker. At the same time, Jack Stires, Inc. has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondents Food Fair and World-Wide or has been and is now subject to the direct or indirect control of respondents Food Fair and World-Wide. .

. PAR. 17. The aforesaid acts and practices of respondents and each of hem in receiving and accepting, directly or indirectly, anything of value s a commission, brokerage or other compensation or any allowance or discount in lieu thereof from sellers, are in violation of Subsection (c) of -. FOOD FAIR STORES, INC., ET AL. 1219.

oC “Initial Decision noes Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. Commissioners Elman. and Nicholson dissented and fled dissenting ~-statements.* Shes :

Commissioners Dixon and MacIntyre filed separate statements. * INITIAL DECISION ON DOCKET 8786) ON. RESPONDENTS’ MOTION, . : FOR SUMMARY DECISION | - UNDER SECTION 3.24 OF THE COMMISSION’S RULES OF PRACTICE BY RAYMOND J. LYNCH; ADMINISTRATIVE LAW JUDGE J ULY. 3 0, 19 73° : PRELI MIN ARY STATEMENT.

On July 10, 1969, ‘the Federal Trade. Commission issued a com- ‘plaint 128 in the above- entitled proceeding, charging the respondents with. violations of Subsection (c) of Section 2 of the Clayton ‘Act, as amended by the Robinson-Patman Act.* Answers were filed by all the ~ respondents. named herein, denying the allegations contained in the complaint. Pretrial conferences and discovery proceedings were held both on and off the record from May 22, 1972 to May 14, 1973. On June 4; 1973, respondents filed a motion for summary decision pursuant to Section 3.24 of the Commission’s Rules of Practice. Counsel supporting complaint, on June. 18, 1973, filed a reply thereto. In addition, respon- ‘dents’ requests for admissions were answered by counsel supporting the complaint, briefs were filed and a stipulation entered into between the Be parties. = :

The Complaint The complaint, as amended in the above-entitled proceeding, alleges that the respondent Food Fair Stores, Inc. engaged in a course of commerce, as commerce is defined in the Clayton Act, by purchasing from Hallee-Boy Sales, Inc., a corporation, Ivin Arost, an individual, and John P. Storm, a corporation, specified qualities and quantities of _ fresh fruits and vegetables, and that as a result of the. transactions | between Food Fair Stores, Inc., a buyer, and the other remaining “respondent brokers, acted in such a manner as to violate Subsection (c) * For reasons of economy, the text of the dissenting statements of Commissioners Elman and Nicholson, and the text of the separate statements of Commissioners Dixon and MacIntyre are not published herein. However, they appear at 81 F.T.C, 203-216, Docket 8789...

By order of the administrative law judge, Hallee-Boy Sales, a partnership, was dismissed as a respondent and in lieu thereof, Hallee-Boy Sales, Inc., a corporation, was substituted. 2 Harold Arost was dismissed as a respondent by order of the adminstrative law judge, based upon an agreement of the parties.

% John P. Storm, individually, was dismissed as a respondent on motion of respondent’s.counsel because of his death in Dec. 1972. .

4 This matter was pending i in United States District Court for the Northern District of Illinois and the Seventh Circuit Court of Appeals from Aug. 11, 1969 to Mar. 29, 1972. o

FOOD FAIR STORES, INC., ET AL. Syayann 1213 : Initial Decision (b) That the respondent brokers perform services which are valuable to respondent buyer and other buyers by (i) furnishing information concerning market conditions; (ii) maintaining contact with various sellers; (iii) inspecting and selecting specified qualities and quantities of fresh fruits and vegetables; and (iv) negotiating purchases of specified qualities and quantities of fresh fruits and vegetables. 8. Respondent buyer and other buyers have not paid brokerage or other compensation to the broker respondents and such brokerage has been paid by sellers.

9. Complaint counsel do not contend that the buyer respondent has received or accepted any monetary payments or anything of value other than benefits complaint counsel contend arise from broker respondents’ performance of the functions referred to in Paragraph 7, supra. 10. Complaint counsel expect to offer no evidence that the acts and practices of respondents alleged in the complaint in this matter have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition. Complaint counsel do contend that the acts and practices alleged are unfair.

Stipulation of the Parties In addition to the agreement of the parties with respect to the respondents’ request for admissions and counsel supporting the complaint’s reply thereto, for the purpose of presenting the legal issue, it was agreed that a stipulation would. be entered into, which follows: A. If, as a matter of law, complaint counsel must prove any one or more of the matters set forth in Paragraphs 1 through 6, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. B. If, as a matter of law, complaint counsel must prove that buyer respondent has received or accepted any monetary payments or anything of value other than the services described in Paragraph 7(b) then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. C. Tf, as a matter of law, complaint counsel must prove that the acts and practices of respondents have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition, then the proposed evidence of referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise.a material issue of fact.

D. If, as a matter of law, the proposed evidence of complaint counsel set forth in Paragraph 7 of the admissions of complaint counsel does not establish that the broker respondents acted as agent, representative or 1222 FEDERAL TRADE COMMISSION DECISIONS — Initial Decision 83 F.T.C.

other intermediary for, or in behalf of, or subject to the direct or indirect control of buyers, then there is no genuine issue as to material facts in this matter.

Contention of the Parties Counsel supporting the complaint contend that Section 2(c) should be extended to apply to any situation in which it can be concluded, after analysis of the details of a broker’s business and of the businesses of the sellers and buyers with whom he has done business, that the buyer realized greater benefits from the broker’s services than did the seller. Complaint counsel contend that, on the basis of such a conclusion, it can be further implied that the broker was “acting in fact for or in behalf” of the buyer within the meaning of the statute and that, therefore, unless the buyer has paid any fee charged by the broker, the statute was violated.

Respondents’ counsel contend that to establish a Section 2(c) violation, complaint counsel must show that one aspect of the transactions at issue was for the respondent buyer “to receive or accept” something of value “as a commission, brokerage or other compensation, or any allowance or discount in lieu thereof.” Complaint counsel, however, do _ not assert that the buyer has received or accepted any allowance or discount in lieu of brokerage commission or other compensation. Rather, they simply contend that the buyer receives benefits from various brokerage functions performed by the respondent brokers. As a matter of statutory construction, the benefits inherent in the performance of brokerage functions cannot constitute something of value as “a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof.” The “thing of value” referred to in Section 2(c) means something paid as compensation for brokerage services, not the benefits of the performance of the brokerage function or the brokerage services themselves. If the brokerage services themselves can constitute the “thing of value,” then the whole clause is a meaningless redundancy because that “thing of value” is inherent in every transaction. To adopt complaint counsel’s view would be to hold that Congress wrote a meaningless clause into Section 2(c). The Issue There is no dispute as to the material facts that prevent a determination of the legal issue to wit: based upon counsel supporting the complaint’s admissions with respect to respondents’ actions, would respondents’ conduct be in violation of the Clayton Act? . - FOOD. FAIR ‘STORES, INC., ET AL. 1223 : “1218 ne Pag “Initial: Decision a FINDINGS. OF FACT Respondent Food Fair Stores, Inc., “hereinafter referred to as “Food oe Fair,” is a corporation organized, existing and doing business under and ae by virtue of the laws of the Commonwealth:of Pennsylvania with its office and principal place of business located at 3175 J ohn F. Kennedy -- Boulevard, Philadelphia,..Pa.

~.. Respondent World-Wide Produce Co.; Ine. hereinafter referred toas” » “World-Wide,” is:a corporation organized, ‘existing and doing. business under and by virtue of the laws of the Commonwealth of Pennsylvania - with its, office and principal place of business located. at 10. Oregon _s Avenue, Philadelphia, Pa. Respondent. World-Wide is a wholly-owned 5 corporate subsidiary of respondent Food Fair. Respondent Food Fair has been and is now engaged primarily in the retailing of food products and other articles for: personal and household ~ use and operates a large number of retail stores, including supermarkets, discount supermarkets | and department stores. Food Fair also manufactures and processes a variety of food products. In the operation of its retail food business, respondent Food Fair purchases directly and through respondent World-Wide large quantities of food products from numerous sellers located throughout the United States for resale to its customers: As of Apr. 27, 1968, Food Fair operated approximately 560 food units and 60 department stores in 16 States of the United States. Food Fair’s volume of business is substantial, totalling i in excess of $1. 3 - billion annually, as of Apr. 27, 1968.

Respondent World-Wide has been and is now engaged as a purchaser of food products solely on behalf of respondent Food Fair. Food... products obtained for Food Fair by World-Wide are resold to consumers through Food Fair’s retail outlets. Some of the officers and directors of — respondent Food Fair have been and are now officers and directors of respondent World-Wide. _ In the course and conduct of its business for the past several years, respondent Food Fair has purchased, distributed and resold, and is now purchasing (both directly and through respondent World: Wide), dis- _ tributing and reselling food products and other articles for personal and household use, including fresh fruits and vegetables, in commerce, as “commerce” is defined in the Clayton Act, which it purchased from sellers located in several States of the United States other than the Commonwealth of Pennsylvania in. which respondent Food Fair is located. Food Fair purchases these food products, including fresh fruits and vegetables, and causes them to be transported from the growing _ areas or packing plants of sellers located i in various States of the United States to Food Fair’s warehouses and retail stores in the Commonwealth of Pennsylvania and various other States in the United States. ae 1224 _FEDERAL TRADE. COMMISSION DECISIONS | pee Initial Decision 6 _ oe - 88 PRTG io: Thus, there has been and is now a y contiiusas course of tradeincom- =». merce in the purchase and resale of said food products by respondent eS 2 Food Fair; Ls Bs :

In the course and conduct: of its business for the past several years, oe ‘yespondent World-Wide has purchased and: distributed and: resold =~ through respondent Food Fair, and is now purchasing and distributing a and reselling through respondent Food Fair, food products and other _ articles for personal and household use, including fresh fruits ‘and veg-.. -etables, in commmerce, as “commerce” is defined in the Clayton Act, se which it purchased from sellers located in several States of the United States. other than the Commonwealth of Pennsylvania in. which. ~ respondent World-Wide is located. World-Wide purchases these food products, including fresh fruits and vegetables, and causes them tobe transported from the growing areas or packing plants of sellers located . in various States of the United States to Food Fair’s. warehouses and : - retail stores in the Commonwealth of Pennsylvania. and various other: States in the United States. Thus, there has been and is now a continu-.. ous course of trade in commerce in the purchase of said food products by respondent. World-Wide.

Respondents Hallee-Boy Sales, Inc., a corporation, ‘and Ivin Arost, individually, have been doing business tinder and by virtue of the laws ar of the State of Florida, with their office and principal place of business located at P.O. Box 7741, Orlando, Fla. — Respondent Hallee-Boy Sales, Inc., has been. and is now engaged i in business’ primarily as a “ground” or “field” broker effecting sales of fresh fruits and vegetables by sellers located in the State of Florida and purchases by buyers located in various States of the United States other than the State of Florida. In such capacity, respondent has demanded ~and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Hallee-Boy Sales, Inc. in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables is substantial.

Respondent Hallee-Boy Sales, Inc., in the course and conduct of its business as a “ground” or “field” broker, has been and is now effecting sales of fresh fruits and vegetables by sellers located in the State of Florida and purchases by buyers located in various States of the United States other than the State of Florida in commerce, as “commerce” is defined in the Clayton-Act. Said respondent has transported or caused such products to be transported from the sellers’ places of business to the buyers’ places of business located in other states. Thus, there has been, at all times mentioned herein, a continuous course of trade in a RNOU, PAL me Ve.

“1218 nese ee Bee “Initial Decision :

commerce in. effecting purchases: and sales of such products by said respondent Hallee-Boy Sales, Inc.

- Respondent John P. Storm, a corporation, isa corporation oneaniied, Be existing and doing business ‘under and by virtue of the laws of the State ~ of California with its office and Principal place of business located at 314 me ~. East John Street, Salinas, Calif...

Respondent John: P. Storm, a. corporation, ‘has been: and is now — engaged in business primarily asa “ground” or “field” broker effecting. a sales of fresh fruits and. vegetables. by. sellers located in the State of California and purchases by ‘buyers located in various States. of the: United States other than the State of California. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of © ~ fresh fruits and vegetables. The annual volume of business of John P. : a tial.

~ Storm, a corporation, in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables i is substan- “ Respondent J ohn P. Storm, a corporation: i in ‘the course: and conduct of its business as a “ground” or “field” broker, has been and is. now — effecting sales. of fresh fruits and vegetables. by sellers. located in: the - State of California and purchases by buyers located in various States of the United States other than the State of. California in commerce, as.» . “ecommerce” is defined in. the Clayton Act. Said respondent has transported: or caused: such: products. to. be transported from the’ sellers’ - places of business to the buyers’ places of business located in other states. Thus, there has been, at all times mentioned herein, a continuous course of trade in commerce in effecting purchases and sales of such products by said respondent John P. Storm, a corporation. Tahes Performance of Normal Brokerage Services From the very adoption of the section, it has been recognized that both buyers and sellers benefit from performance of normal brokerage services by independent brokers and that the existence of such benefits is no legal or factual basis for inferring the existence of a relationship of agency between the broker and a buyer receiving such benefits. As the Commission said in Great Atlantic and Pacific Tea Co., 26 F. T. C. 486, - 506-507 (1930): :

In the course of conducting his business a broker must and does also vender services to _buyers—but those services, unlike the services rendered to the respondent by its field buying agents, are not buying services: A’broker is not employed by: buyers. He is © employed and paid by sellers as their selling agent and he represents his seller- principals © only. His activities in. connection. with his representation of his seller-principals are controlled by them, but, paradoxically, because of the broker’s:anomalous position: as.an independent sales agent in'’business for himself, he does act for buyers in a sense and he is : subject to a degree of control.on their ‘Part. Initial Decision 83 F.T.C.

This results from requests by buyers that brokers report complaints to their sellerprincipals, that brokers communicate cancellations of orders to their seller-principals, that brokers submit to their seller-principlas offers of buyers to purchase commodities at prices stipulated by buyers, that brokers endeavor to make up “pool” cars of merchandise among several buyers so that the buyers may obtain the advantage of quantity prices and carload rates of freight, that brokers obtain quotations of prices from their seller-principals for the consideration ob buyers, and, perahps, in other ways. Naturally it is to the mutual interest and advantage of brokers and sellers to maintain the good will of their common customers, and brokers generally endeavor to comply with the reasonable requests of buyers along the lines indicated. In the course of negotiating sales from seller to buyer and brining them into agreement brokers are necessarily guided somewhat by instructions from each, but in the essential particular of selling commodities and consummating sales they act for and are controlled by the latter alone, who in the absence of a contract may discharge them and substitute new brokers in their places at any time. Complaint counsel contend that respondent buyer usually uses the services of the respondent brokers rather than the services of other brokers in the purchase of fresh fruits and vegetables. This fact, if true, hardly establishes agency. It is certainly not unusual for a buyer to do business more frequently with one supplier than another and the fact that he does so does not establish that the supplier he selects is his agent. It certainly was not the intention of the statute to require a buyer to spread his business among several brokers. In fact, in Tillie Lewis Foods, Inc., et al., 65 F.T.C. 1099, 1136 (1964), the Commission expressly approved the seller’s payment of brokerage to a broker, Bushey & Wright, on sales to a large buyer with whom the broker had had a “personal relationship” for many years dating back to the time when the buyer and broker were the same entity. The “field broker” aspect of Tillie Lewis Foods, supra, is particularly enlightening as to the lack of probity, for the purpose of establishing agency, of the facts relied on by complaint counsel. The Commission, in holding that seller payment of brokerage did not violate Section 2(c), described the broker’s activity in a discussion which shows that brokerage services which benefit both buyers and sellers do not establish a violation of Section 2(c):

* * * the local broker and the purchaser are generally located at considerable distances from the canners. A small canner, with a limited or no sales force, is thus unable to make known to these potential purchasers information concerning his production capabilities and the stock which he has available. On the other hand, the field broker, by reason of his location and constant contact with all canners in his area, maintains this information on a current basis. Through bulletins, letters and principally by telephone, he relays this information regularly to numerous local brokers. The field broker, upon receipt of an order from a local broker or direct purchaser, may split the order up among several small canners and coordinate the pooling of each canner’s share in shipment to the purchaser. The seller compensates the field broker for these services by a commission which is usually indicated as a deduction on the invoice. {65 F.T.C at 1132] These findings as to the legitimate brokerage functions of shipping point FOOD FAIR STORES, INC., ET AL. 1z21 1213 Initial Decision brokers which are not violative of Section 2(c) are sufficiently close to a number of the admitted contentions of Paragraph 7 of the admissions as to demonstrate that the contentions themselves, even if established, would not, under Commission precedents, carry the burden necessary to sustain a violation here.

In short, the facts by which complaint counsel seek to establish agency of the broker respondents for buyers are nothing more than a description of the functions necessarily and historically performed by brokers acting as independent intermediaries bringing buyer and seller together. It is the essence of the business operations of independent brokers that they negotiate sales transactions and, in the course of such negotiations, perform acts beneficial to both buyer and seller. But, in the absence of circumstances evidencing the kind of control by the buyer over the-broker contemplated by Section 2(c), the factual contentions of - complaint counsel set forth in Paragraph 7 of the request for admissions are totally inadequate to establish that a broker is either an agent of a buyer or in violation of Section 2(c).

Complaint counsel’s approach to proof of an agency relationship which violates Section 2(c) is highly unrealistic and ignores the economic realities of the brokerage business. Because it is unrealistic, it would be impossible to apply the approach fairly and predictably. As a result, the threat of a 2(c) proceeding against any buyer or seller who deals with an independent broker would cause buyers and sellers to cease to do business with independent brokers.

Complaint counsel’s approach to proof of a 2(c) violation ignores the essentials 1 2 6 1 2 709 1557 168 44 95.998825 economics 1 2 6 1 3 892 1557 174 31 96.499229 characters 1 2 6 1 4 1080 1558 35 31 96.967903 of5 1 2 6 1 5 1127 1557 141 31 96.550491 brokers5 1 2 6 1 6 1283 1567 36 21 96.528862 as5 1 2 6 1 7 1334 1557 270 32 96.391708 intermediaries5 1 2 6 1 8 1619 1557 75 31 96.720657 who5 1 2 6 1 9 1708 1558 153 38 96.740685 promote4 1 2 6 2 0 533 1606 1329 41 -1 5 1 2 6 2 1 533 1607 99 31 96.616867 trades 1 2 6 2 2 645 1607 44 40 96.877861 by5 1 2 6 2 3 703 1607 157 40 96.497086 bringing5 1 2 6 2 4 871 1607 125 40 96.455376 buyers5 1 2 6 2 5 1009 1608 65 31 96.866219 ands 1 2 6 2 6 1087 1608 118 31 96.528038 sellers5 1 2 6 2 7 1217 1608 160 39 96.768646 together5 1 2 6 2 8 1390 1608 64 32 96.579254 ands 1 2 6 2 9 1467 1608 74 31 96.413261 who5 1 2 6 2 10 1555 1610 55 28 96.798050 acts 1 2 6 2 11 1622 1608 52 30 96.569351 for5 1 2 6 2 12 1685 1606 90 32 95.845276 theirs 1 2 6 2 13 1789 1617 73 21 96.850777 own4 1 2 6 3 0 533 1656 1329 41 -1 5 1 2 6 3 1 533 1656 146 32 96.478050 interests 1 2 6 3 2 690 1656 34 32 96.962425 in5 1 2 6 3 3 739 1657 140 40 95.684967 earnings 1 2 6 3 4 890 1667 21 22 95.684967 a5 1 2 6 3 5 921 1658 54 31 96.734634 fees 1 2 6 3 6 988 1658 66 31 96.997864 ands 1 2 6 3 7 1067 1660 58 29 96.414230 not5 1 2 6 3 8 1138 1668 37 21 96.558952 as5 1 2 6 3 9 1188 1658 59 31 95.538345 thes 1 2 6 3 10 1260 1658 272 39 96.518227 representatives 1 2 6 3 11 1545 1657 36 32 96.859200 of5 1 2 6 3 12 1591 1657 111 32 96.254082 either5 1 2 6 3 13 1713 1659 101 37 96.254082 party5 1 2 6 3 14 1827 1659 35 29 96.714661 to4 1 2 6 4 0 533 1704 1329 41 -1 5 1 2 6 4 1 533 1704 59 31 96.790962 thes 1 2 6 4 2 616 1705 218 32 96.677963 transaction.5 1 2 6 4 3 863 1705 38 31 95.221413 In5 1 2 6 4 4 925 1715 94 22 96.294411 some5 1 2 6 4 5 1043 1706 236 38 96.158813 transactions,5 1 2 6 4 6 1306 1706 58 31 96.511963 thes 1 2 6 4 7 1388 1706 125 31 96.448723 brokers 1 2 6 4 8 1537 1715 77 30 96.464294 may5 1 2 6 4 9 1638 1704 79 32 96.060890 firsts 1 2 6 4 10 1740 1704 42 32 92.794586 be5 1 2 6 4 11 1807 1713 55 30 92.794586 ap-4 1 2 6 5 0 533 1754 1329 42 -1 5 1 2 6 5 1 533 1754 167 40 95.725616 proached5 1 2 6 5 2 714 1755 44 39 96.092903 by5 1 2 6 5 3 762 1750 17 50 95.707306 a5 1 2 6 5 4 801 1755 101 32 95.707306 sellers 1 2 6 5 5 913 1758 34 29 96.948349 to5 1 2 6 5 6 958 1755 70 33 96.535805 finds 1 2 6 5 7 1041 1765 43 23 97.010147 an5 1 2 6 5 8 1096 1756 106 32 95.647995 outlets 1 2 6 5 9 1213 1756 54 32 96.283516 for5 1 2 6 5 10 1276 1756 60 32 93.193153 thes 1 2 6 5 11 1347 1756 128 32 92.142632 seller’s5 1 2 6 5 12 1487 1756 116 40 96.673058 goods;5 1 2 6 5 13 1616 1755 33 31 96.854057 in5 1 2 6 5 14 1662 1755 128 37 96.555832 others,5 1 2 6 5 15 1804 1754 58 31 96.783875 thea 1 2 6 6 0 533 1804 1326 42 -1 5 1 2 6 6 1 533 1804 125 32 96.291092 brokers 1 2 6 6 2 673 1815 76 30 96.568962 may5 1 2 6 6 3 766 1806 40 31 96.568962 be5 1 2 6 6 4 821 1806 78 31 96.312988 firsts 1 2 6 6 5 914 1806 211 39 96.588684 approached5 1 2 6 6 6 1140 1806 45 40 96.112984 by5 1 2 6 6 7 1199 1816 20 21 96.465439 a5 1 2 6 6 8 1234 1806 109 40 96.133286 buyers 1 2 6 6 9 1356 1806 142 39 96.133286 seeking5 1 2 6 6 10 1510 1816 19 25 96.601585 a5 1 2 6 6 11 1546 1815 118 23 96.337044 sources 1 2 6 6 12 1679 1806 36 30 96.611977 of5 1 2 6 6 13 1727 1805 132 40 96.162781 supply.4 1 2 6 7 0 534 1854 1328 41 -1 5 1 2 6 7 1 534 1854 38 31 96.644096 In5 1 2 6 7 2 590 1854 42 32 95.987137 all5 1 2 6 7 3 649 1854 181 39 96.423180 instances,5 1 2 6 7 4 850 1856 80 31 96.219025 both5 1 2 6 7 5 948 1856 124 39 95.619461 buyers5 1 2 6 7 6 1089 1857 65 32 95.619461 ands 1 2 6 7 7 1172 1857 117 31 96.513786 sellers5 1 2 6 7 8 1307 1857 66 32 96.513786 will5 1 2 6 7 9 1388 1857 130 31 96.425552 benefits 1 2 6 7 10 1534 1857 87 31 96.806183 from5 1 2 6 7 11 1637 1855 59 32 91.815575 thes 1 2 6 7 12 1713 1858 149 29 91.815575 transac-4 1 2 6 8 0 532 1903 1332 43 -1 5 1 2 6 8 1 532 1903 81 31 96.511765 tion.5 1 2 6 8 2 633 1904 87 31 96.471840 Both5 1 2 6 8 3 736 1905 65 31 96.992805 will5 1 2 6 8 4 816 1905 131 31 96.898445 receives 1 2 6 8 5 962 1905 215 32 96.541702 information5 1 2 6 8 6 1192 1905 201 41 96.439529 concerning5 1 2 6 8 7 1407 1905 186 32 96.743233 conditions5 1 2 6 8 8 1608 1904 34 31 96.747665 in5 1 2 6 8 9 1656 1905 59 30 96.882576 thes 1 2 6 8 10 1729 1903 135 32 96.782356 market4 1 2 6 9 0 532 1953 1331 43 -1 5 1 2 6 9 1 532 1954 65 32 96.637810 ands 1 2 6 9 2 614 1954 58 31 96.078461 thes 1 2 6 9 3 688 1955 206 39 96.078461 availability5 1 2 6 9 4 910 1955 34 32 96.531837 of5 1 2 6 9 5 957 1956 116 40 96.476059 goods.5 1 2 6 9 6 1093 1955 87 32 96.905876 Both5 1 2 6 9 7 1196 1956 77 37 95.441544 will,5 1 2 6 9 8 1290 1956 46 40 96.587914 by5 1 2 6 9 9 1351 1956 151 40 96.248436 utilizing5 1 2 6 9 10 1516 1956 58 31 96.678009 thes 1 2 6 9 11 1592 1955 147 32 96.851982 services5 1 2 6 9 12 1756 1953 37 33 96.781769 of5 1 2 6 9 13 1804 1953 59 32 96.678017 thea 1 2 6 10 0 532 2004 1332 41 -1 5 1 2 6 10 1 532 2004 136 38 96.492874 broker,5 1 2 6 10 2 694 2014 82 22 96.877365 saves 1 2 6 10 3 799 2015 148 30 96.613922 expenses 1 2 6 10 4 970 2005 106 32 96.628838 which5 1 2 6 10 5 1099 2006 82 39 96.241112 they5 1 2 6 10 6 1203 2006 110 32 96.468201 would5 1 2 6 10 7 1337 2006 182 32 95.861710 otherwise5 1 2 6 10 8 1540 2006 88 31 96.916847 have5 1 2 6 10 9 1651 2005 116 31 96.087402 borne.5 1 2 6 10 10 1794 2004 70 31 96.298393 Thea 1 2 6 11 0 532 2053 1330 43 -1 5 1 2 6 11 1 532 2053 112 39 96.601532 seller,5 1 2 6 11 2 658 2054 55 32 96.619606 for5 1 2 6 11 3 724 2055 165 39 96.829964 example,5 1 2 6 11 4 904 2055 65 31 96.399109 will5 1 2 6 11 5 982 2055 86 32 96.918724 have5 1 2 6 11 6 1080 2055 104 32 96.358360 saved5 1 2 6 11 7 1198 2055 57 31 96.234398 thes 1 2 6 11 8 1268 2065 148 31 96.522812 expenses 1 2 6 11 9 1430 2056 36 31 96.662514 of5 1 2 6 11 10 1474 2055 138 40 96.644829 making5 1 2 6 11 11 1621 2054 53 32 96.401001 his5 1 2 6 11 12 1688 2064 74 22 96.452065 owns 1 2 6 11 13 1775 2053 87 33 96.704613 sales4 1 2 6 12 0 532 2102 1331 42 -1 5 1 2 6 12 1 532 2102 79 32 67.409546 calls5 1 2 6 12 2 634 2103 64 31 96.267296 ands 1 2 6 12 3 721 2103 58 31 96.523285 thes 1 2 6 12 4 802 2103 108 40 96.799149 buyers 1 2 6 12 5 931 2103 65 32 96.310913 will5 1 2 6 12 6 1018 2104 85 31 96.798172 have5 1 2 6 12 7 1126 2104 103 31 96.669708 saved5 1 2 6 12 8 1252 2103 58 32 96.836205 thes 1 2 6 12 9 1332 2114 149 30 96.290451 expenses 1 2 6 12 10 1503 2103 36 33 96.717712 of5 1 2 6 12 11 1558 2103 137 40 96.522408 making5 1 2 6 12 12 1714 2102 52 32 96.317513 his5 1 2 6 12 13 1789 2112 74 22 96.552734 own4 1 2 6 13 0 532 2151 1332 42 -1 5 1 2 6 13 1 532 2151 128 41 96.503952 buying5 1 2 6 13 2 673 2153 79 31 96.639648 calls5 1 2 6 13 3 766 2153 107 32 96.935143 directs 1 2 6 13 4 886 2156 36 29 97.002480 to5 1 2 6 13 5 934 2154 60 31 96.987305 thes 1 2 6 13 6 1008 2153 128 32 96.635338 sellers.5 1 2 6 13 7 1154 2154 87 31 96.761902 Both5 1 2 6 13 8 1255 2154 65 32 96.795593 will5 1 2 6 13 9 1334 2154 129 32 96.240570 benefits 1 2 6 13 10 1475 2154 86 31 96.240570 from5 1 2 6 13 11 1577 2163 65 30 96.382660 any5 1 2 6 13 12 1655 2152 209 41 96.363304 negotiation4 1 2 6 14 0 531 2201 1332 43 -1 5 1 2 6 14 1 531 2201 59 32 96.964241 thes 1 2 6 14 2 604 2201 124 32 96.390022 brokers 1 2 6 14 3 742 2212 77 30 96.445625 may5 1 2 6 14 4 832 2202 86 32 95.555832 have5 1 2 6 14 5 934 2203 129 32 96.737854 carried5 1 2 6 14 6 1077 2214 41 21 96.737854 on5 1 2 6 14 7 1132 2205 35 30 96.627090 to5 1 2 6 14 8 1181 2202 99 41 96.874725 brings 1 2 6 14 9 1293 2203 102 33 96.455505 about5 1 2 6 14 10 1408 2214 20 21 95.420952 a5 1 2 6 14 11 1441 2203 90 41 95.420952 prices 1 2 6 14 12 1545 2202 174 32 96.557213 favorable5 1 2 6 14 13 1732 2205 37 29 96.990768 to5 1 2 6 14 14 1781 2202 82 32 96.371635 both4 1 2 6 15 0 530 2248 1334 48 -1 5 1 2 6 15 1 530 2251 141 40 96.427216 parties.5 1 2 6 15 2 686 2248 308 48 96.485703 Thereafter,5 1 2 6 15 3 918 2244 70 56 96.429649 both5 1 2 6 15 4 1006 2253 65 32 96.429649 will5 1 2 6 15 5 1083 2253 128 32 96.777954 benefits 1 2 6 15 6 1222 2253 34 32 95.647812 in5 1 2 6 15 7 1267 2254 58 32 95.647812 thes 1 2 6 15 8 1338 2256 104 30 96.814377 events 1 2 6 15 9 1453 2254 35 32 95.792107 of5 1 2 6 15 10 1498 2253 113 33 95.792107 claims5 1 2 6 15 11 1623 2253 45 40 96.735001 by5 1 2 6 15 12 1681 2262 62 22 96.778877 ones 1 2 6 15 13 1756 2262 38 22 96.932137 or5 1 2 6 15 14 1805 2252 59 32 96.625916 thea 1 2 6 16 0 532 2302 1330 42 -1 5 1 2 6 16 1 532 2302 107 39 96.058670 other;5 1 2 6 16 2 661 2302 60 33 96.669151 thes 1 2 6 16 3 742 2303 134 38 96.526115 broker,5 1 2 6 16 4 898 2304 33 31 96.925087 in5 1 2 6 16 5 951 2304 59 31 96.983620 thes 1 2 6 16 6 1029 2304 146 32 96.311737 interests 1 2 6 16 7 1195 2304 36 31 96.816933 of5 1 2 6 16 8 1246 2304 194 40 96.448990 protecting5 1 2 6 16 9 1459 2304 58 31 96.915817 thes 1 2 6 16 10 1537 2304 54 31 96.335983 fees 1 2 6 16 11 1612 2303 107 32 96.756210 which5 1 2 6 16 12 1739 2303 43 32 96.457634 he5 1 2 6 16 13 1803 2303 59 32 96.803589 has4 1 2 6 17 0 531 2352 1334 43 -1 5 1 2 6 17 1 531 2352 126 32 96.653580 earned5 1 2 6 17 2 680 2353 66 32 96.937576 ands 1 2 6 17 3 769 2354 37 31 96.689178 of5 1 2 6 17 4 823 2354 194 39 95.190727 protecting5 1 2 6 17 5 1036 2354 52 32 96.615616 his5 1 2 6 17 6 1111 2355 238 40 96.757889 relationships5 1 2 6 17 7 1371 2355 83 31 96.752487 with5 1 2 6 17 8 1475 2355 81 31 96.513855 both5 1 2 6 17 9 1579 2353 129 42 96.513855 parties5 1 2 6 17 10 1731 2353 53 32 96.851990 for5 1 2 6 17 11 1805 2352 60 32 96.954521 thea 1 2 6 18 0 530 2401 1334 42 -1 5 1 2 6 18 1 530 2401 126 39 96.206825 future,5 1 2 6 18 2 674 2402 66 32 96.684586 will5 1 2 6 18 3 754 2402 145 32 96.552856 mediate5 1 2 6 18 4 913 2403 65 32 96.682289 ands 1 2 6 18 5 993 2403 81 31 96.428871 seeks 1 2 6 18 6 1087 2406 37 29 96.428871 to5 1 2 6 18 7 1136 2404 133 31 96.700638 resolves 1 2 6 18 8 1283 2404 59 32 96.890427 thes 1 2 6 18 9 1355 2406 223 37 96.369942 controversy5 1 2 6 18 10 1591 2406 35 28 96.838379 to5 1 2 6 18 11 1639 2403 59 31 93.300400 thes 1 2 6 18 12 1712 2402 152 32 92.036224 satisfac- Initial Decision 83 F.T.C.

tion of both parties. In every aspect of the brokerage function, the point is the same; both parties benefit from the services of an independent broker, but the broker performs the services for his own purpose, which is to consummate the transaction and obtain his commission. It is no answer to suggest that independent brokers drop the contested services. The services are intrinsic to the brokerage function. Other types of middlemen engaged in distribution provide a variety of services to benefit both buyers and sellers and thereby encourage them to do business with them. These include all of the same types of benefit complaint counsel allege in this case to be the basis for implying agency. If, because of the rule of law being proposed by complaint counsel, these broker respondents and other independent brokers could not provide such benefits, they, of course, would not be competitive with other forms of distribution such as commission merchants, wholesalers, the seller’s own sales force and the like, and would, in time, disappear from the competitive arena.

CONCLUSIONS The legislative history of Section 2(c) demonstrates conclusively that the only purpose of the statute is to prevent price discrimination among customers of the same seller which arises when the seller pays brokerage direct to a buyer or indirectly to the buyer through a dummy or nominee broker of the buyer. The effect of this legislative history upon the proper construction of the statute has, furthermore, been confirmed by the United States Supreme Court in Federal Trade Commission v. Henry Broch & Co., 363 U.S. 166 (1960). That case involved a preferentia] allowance granted by a seller direct to a buyer in lieu of brokerage. The allowance was found to have resulted in a price discrimination in favor of the buyer and to be, therefore, within the prohibitive scope of Section 2(c). With respect to the proper construction of Section 2(c), the Court affirmed that:

The Robinson-Patman Act was enacted in 1986 to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power. [363 U.S. at 168] It further affirmed with respect to Section 2(c) that: One of the favorite means of obtaining an indirect concession was by setting up “dummy” brokers who were employed by the buyer and who, in many cases, rendered no services. The large buyers demanded that the seller pay “brokerage” to these fictitious brokers who then turned it over to their employer. This practice was one of the chief targets of § 2(c) of the Act. But it was not the only means by which the brokerage function was abused and Congress in its wisdom phrased § 2(c) broadly, * * * to cover * * * all other means by which brokerage could be used to effect price discrimination. [363 U.S. at 169] A summary decision for respondents is appropriate even though FOOD FAIR STORES INC., ET AL. 1229 1213 Initial Decision complaint counsel state in response to the request for admissions that they intend to claim that payment of brokerage by sellers in the circumstances of this case is unfair. The basis for this claim is unlcear, although apparently complaint counsel believe buyers receive greater benefits from the services of these brokers than do sellers. This belief is, in the opinion of the administrative law judge, unfounded. In any event, it is.quite immaterial to this proceeding because this proceeding is brought under Section 2(c) of the Robinson-Patman Act, not under Section 5 of the Federal Trade Commission Act.: Section 2(c) is not and was never intended to be a vehicle through which the Federal Trade Commission would substitute its judgments for those of the market place to determine when independent brokers should be paid and by whom. The Commission’s only function under Section 2(c) is to determine whether an abuse of brokerage exists which results or is likely to result in price discrimination; there is no such result or likelihood of such a result involved in this proceeding.

To establish a Section 2(c) violation, complaint counsel must show that one aspect of the transactions at issue was for the respondent buyer “to receive or accept” something of value “as a commission, brokerage or other compensation, or any allowance or discount in lieu thereof.” Complaint counsel, however, do not assert that the buyer has received or accepted any allowance or discount in lieu of brokerage commission or other compensation. Rather, they simply contend that the buyer receives benefits from various brokerage functions performed by the respondent brokers. The “thing of value” referred to in Section 2(c) means something paid as compensation for brokerage services, not the benefits of the performance of the brokerage function or the brokerage services themselves. If the brokerage services themselves can constitute the “thing of value,” then the whole clause is a meaningless redundancy because that “thing of value” is inherent in every transaction. Review of the full range of cases decided under Section 2(c) reveals no support for complaint counsel’s theory. For example, in Webb-Crawford Co., etal. v. FTC, 109 F.2d 268 (5th Cir. 1940), the brokerage services provided by Daniel Brokerage Company to Webb-Crawford were not the consideration as to which a violation was found; brokerage partnership distributions were the illegal considerations. In Independent Grocers Alliance Distributing Co. v. FTC, 203 F.2d 941 (7th Cir. 1953), dividends and advertising allowances were found illegal. In Broch, supra, of course, the illegal consideration was a cash discount. But in none of the adjudicated 2(c) cases is the brokerage service itself the illegal consideration. In the more than 87 years since the enactment of Section 2(c), the Commission has litigated hundreds of cases charging violations of that section. In none of those cases has a buyer or seller Complaint 83 F.T.C.

been held to violate the section on the theory that the brokerage services themselves could be the “thing of value” received “as a commission, brokerage, or other compensation, or * * * allowance or discount in lieu thereof.”

In prior Section 2(c) litigation, the Commission consistently has regarded the “thing of value” as the payment received or entitled to be received by the broker as compensation for his services and has found a violation only where that thing of value was passed on to the buyer. As complaint counsel can point to no such passing on from respondent brokers to respondent buyer of anything of value outside the legitimate brokerage function, another essential element of proof of a 2(c) violation is absent. .

The Federal Trade Commission has jurisdication of and over respondents and the subject matter of this proceeding. ORDER It is ordered, That respondents’ motion for summary decision be, and the same hereby is, granted.

It is further ordered, That the complaint herein be, and the same hereby is, dismissed in its entirety.

Appearances For the Commission: Lewis F. Parker, Francis C. Mayer, James C. Donoghue, Martin A. Rosen, Louis R. Sernoff and Eliot G. Disner. For the respondents: Simpson Thacher & Bartlett, New York, N.Y. for H. C. Bohack Co., Inc. Beverly & Frates, West Palm Beach, Fla. for Henderson Distributing Co., Inc. and Vinson Henderson. COMPLAINT IN DOCKET NO. 8787 The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof, and hereinafter more particularly described, have been and are violating the provisions of Subsection (c) of Section 2 of the Clayton Act, as amended, (15 U.S.C. Section 18) hereby issues its complaint, stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent H. C. Bohack Co., Inc., hereinafter referred to as “Bohack,” is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its office and principal place of business located at 4825 Metropolitan Avenue, Brooklyn, N.Y.

PAR. 2. Respondent Bohack has been and is now engaged primarily in the retailing of food products and articles for personal and household use and operates a large number of retail supermarkets. As of Jan. 27, 1968, H.O. BUHMAUCK LU., LNU., WY AL. . 1a01 1218 Complaint Bohack operated approximately 166 supermarkets. Bohack’s volume of business is substantial, totalling in excess of $207 million annually. PAR. 8. Respondent Henderson Distributing Co., Inc., hereinafter referred to as “Henderson Dist.,” is a corporation organized, existing and doing business under and by virtue of the laws of the State of Florida with its office and principal place of business located at State Farmers Market, Pahokee, Fla.

Respondent Vinson Henderson, an individual, is president of corporate respondent Henderson Dist., and is located at the same address as said corporate respondent and owns all or substantially all of its stock. He formulates, directs and controls the acts, practices and policies of said corporate respondent, including the acts and practices hereinafter described.

PAR. 4. Respondent Henderson Dist. has been and is now engaged in business primarily as a “ground” or “field” broker effecting sales of fresh fruits and vegetables by sellers located in the State of Florida, and purchases by buyers located in various States of the United States other than the State of Florida. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Henderson Dist., in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables, is substantial.

PAR. 5. Respondent Henderson Dist., in the course and conduct of its business as a “ground” or “field” broker, has been and is now effecting sales of fresh fruits and vegetables by sellers located in the State of Florida and purchases by buyers located in various States of the United States other than the State of Florida in commerce, as “commerce” is defined in the Clayton Act. Said respondent has transported or caused such products to be transported from the sellers’ places of business to the buyers’ places of business located in other states. Thus, there has been, at all times mentioned herein, a continuous course of trade in commerce in effecting purchases and sales of such products by said respondent Henderson Dist.

PAR. 6. In the course and conduct of its business for the past several years, respondent Bohack has purchased, distributed and resold, and is now purchasing, distributing and reselling, food products and other articles for personal and household use, including fresh fruits and vegetables, in commerce, as “commerce” is defined in the Clayton Act, which it purchased from sellers located in several States of the United States other than the State of New York in which respondent Bohack is located. Bohack purchases these food products, including fresh fruits and vegetables, and causes them to be transported from the growing Complaint 83 F.T.C.

areas or packing plants of sellers located in various States of the United States to Bohack’s warehouses and retail stores in the State of New York. Thus, there has been and is now a continuous course of trade in commerce in the purchase and resale of said food products by respondent Bohack.

PAR. 7. In the course and conduct of its business, respondent Bohack has been and is now utilizing the services of respondent Henderson Dist. as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Henderson Dist. performs valuable services for respondent Bohack and. other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, by negotiating purchases of said products at the most favorable prices and by arranging pool car shipments from various sellers. Respondent Henderson Dist., in performing the services enumerated above, has been and is now acting as an agent or representative of respondent Bohack and other buyers. In such capacity, Henderson Dist. is subject to and under the direct or indirect control of Bohack and other buyers of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, respondent Henderson Dist. has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables.

PAR. 8. Respondent Bohack and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Henderson Dist. without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent Henderson Dist. has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent Bohack and other buyers, or has been and is now subject to the direct or indirect control of respondent Bohack and other buyers.

PAR. 9. The aforesaid acts and practices of respondents and each of them in receiving and accepting, directly or indirectly, anything of value as a commission, brokerage or other compensation or any allowance or discount in lieu thereof from sellers, are in violation of subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. Commissioners Elman and Nicholson dissented and filed dissenting statements.* Commissioners Dixon and MacIntyre filed separate statements.* *For reasons of economy, the text of the dissenting statements of Commissioners Elman and Nicholson and the text of . the separate statements of Commissioners Dixon and MacIntyre are not published herein. However, they appear at 81 F.T.C. 203-216, Docket 8789.

H.C. BOHACK CO., INC., ET AL. 1233 1218 Initial Decision INITIAL DECISION [IN DOCKET 8787] ON RESPONDENTS’ MOTION FOR SUMMARY DECISION UNDER SECTION 3.24 OF THE COMMIS- SION’S RULES OF PRACTICE BY RAYMOND J. LYNCH, AD- MINISTRATIVE LAW JUDGE JULY 30, 1973 PRELIMINARY STATEMENT On July 10, 1969, the Commission issued a complaint in the aboveentitled proceeding, charging the respondents with violations of Subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act.! On June 26, 1972, respondents filed their answer to the complaint and denied the allegations contained therein. Pretrial conferences and discovery proceedings were held both on and off the record from May 22, 1972 to May 14, 1973. On June’4, 1973, respondents filed a motion for summary decision pursuant to Section 3.24 of the Commission’s Rules of Practice. Counsel supporting the complaint, on June 18, 1973, filed a reply thereto. In addition, respondents’ requests for admissions were answered by counsel supporting the complaint, briefs were filed and stipulation entered into between the parties.

The Complaint The-complaint alleges that:

In the course and conduct of its business, respondent Bohack has been and is now utilizing the services of respondent Henderson Dist. as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Henderson Dist. performs valuable services for respondent Bohack and other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, by negotiating purchases of said products at the most favorable prices and by arranging pool car shipments from various sellers. Respondent Henderson Dist., in performing the services enumerated above, has been and is now acting as an agent or representative of respondent Bohack and other buyers. In such capacity, Henderson Dist. is subject to and under the direct or indirect control of Bohack and other buyers of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, respondent Henderson Dist. has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables. Respondent Bohack and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Henderson Dist. without paying, either directly, or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent Henderson Dist. has been and is now collecting ' This matter was pending in United States District Court for the Northern District of Illinois and the Seventh Circuit Court of Appeals from Aug. 11, 1969 to Mar. 29, 1972. Initial Decision 83 F.T.C.

and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent Bohack and other buyers, or has been and is now subject to the direct or indirect control of respondent Bohack and other buyers, and that as a result of these business practices, respondents have violated Subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. Admissions by Counsel Supporting the Complaint Pursuant to respondents’ request for admissions of complaint counsel’s contentions of law and fact, counsel supporting the complaint admit that:

1. Buyer respondent does not own or have any financial or other interest in the business of either of the broker respondents, and does not in any way share in the profits or losses of either of the broker respondents.

2. No director, officer or employee of buyer respondent owns all or any part of either of the broker respondents, or has any financial or other interest in the business of either of the broker respondents or shares in any way in the profits or losses of either of the broker | respondents.

3. No broker respondent is a director, officer, manager or shareholder of buyer respondent or other buyers; and no director, officer or employee of buyer respondent is a director, officer, manager or shareholder of either of the broker respondents. 4, There are no common officers, directors, shareholders, employees or other personnel between respondent brokers and respondent sellers. 5. Broker respondents have not entered into any express contract or agreement to act as an agent, representative or other intermediary of buyer respondent or other buyers or for or in behalf of, or subject to the direct or indirect control of buyer respondent or other buyers. 6. The broker respondents were independently owned and managed business entities which performed bona fide brokerage functions of benefit to both buyers and sellers; and were not so-called “dummy brokers.” Except as to words “bona fide” and “and is not a so-called ‘dummy broker’ .” Neither admit or deny “bona fide” because term is not defined with specificity with respect to the words “brokerage functions” which it modifies. Admit “is not a so-called ‘dummy broker’ ” as that term is defined in FTC v. Henry Broch & Co., 363 U.S. 166, 168-169 (1960).

7. Complaint counsel expect to prove that the broker respondents acted as agent or representative for, or in behalf of or subject to the Bho Ve APRA VY 0g 2410) 24d Ae Aad 1213 Initial Decision direct or indirect control of respondent buyer and other buyers by — inference from the following:

(a) That respondent buyer and other buyers have “utilized” the services of the respondent brokers as “ground” or “field” brokers in the purchase of fresh fruits and vegetables and usually not the services of other “ground” or “field” brokers.

(b) That the respondent brokers perform services which are valuable to respondent buyer and other buyers by (i) furnishing information concerning market conditions; (ii) maintaining contact with variuos sellers; (iii) inspecting and selecting specified qualities and quantities of fresh fruits and vegetables; and (iv) negotiating purchases of specified qualities and quantities of fresh fruits and vegetables. 8. Respondent buyer and other buyers have not paid brokerage or other compensation to the broker respondents and such brokerage has been paid by sellers.

9. Complaint counsel do not contend that the buyer respondent has received or accepted any monetary payments or anything of value other than benefits complaint counsel contend arise from broker respondents’ performance of the functions referred to in Paragraph 7, supra. 10. Complaint counsel expect to offer no evidence that the acts and practices of respondents alleged in the complaint in this matter have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition. Complaint counsel do contend that the acts and practices alleged are unfair.

Stipulation of the Parties In addition to the agreement of the parties with respect to the respondents’ request for admissions and counsel supporting the complaint’s reply thereto, for the purpose of presenting the legal issue, it was agreed that a stipulation would be entered into, which follows: A. If, as a matter of law, complaint counsel must prove any one or more of the matters set forth in Paragraphs 1 through 6, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. B. If, as a matter of law, complaint counsel must prove that buyer respondent has received or accepted any monetary payments or anything of value other than the services described in Paragraph 7(b) then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. C. If, as a matter: of law, complaint counsel must prove that the acts and practices of respondents have-resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly Initial Decision 83 F.T.C.

or injure, destroy or prevent competition, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact.

D. If, as a matter of law, the proposed evidence of complaint counsel set forth in Paragraph 7 of the admissions of complaint counsel does not establish that the broker respondents acted as agent, representative or other intermediary for, or in behalf of, or subject to the direct or indirect control of buyers, then there is no genuine issue as to material facts in this matter.

Contention of the Parties Counsel supporting the complaint contend that Section 2(c) should be extended to apply to any situation in which it can be concluded, ‘after analysis of the details of a broker’s business and of the businesses of the sellers and buyers with whom he has done business, that the buyer realized greater benefits from the broker’s services than did the seller. _Complaint counsel contend that, on the basis of such a conclusion, it can ‘be further implied that the broker was “acting in fact for or in behalf” of the buyer within the meaning of the statute and that, therefore, unless the buyer has paid any fee charged by the broker, the statute was violated.

Respondents’ counsel contend that to establish a Section 2(c) violation, complaint counsel must show that one aspect of the transactions at issue was for the respondent buyer “to receive or accept” something of value “as a commission, brokerage or other compensation, or any allowance or discount in lieu thereof.” Complaint counsel, however, do not assert that the buyer has received or accepted any allowance or discount in lieu of brokerage commission or other compensation. Rather, they simply contend that the buyer receives benefits from various brokerage functions performed by the respondent brokers. As a matter of statutory construction, the benefits inherent in the performance of brokerage functions cannot constitute something of value as “a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof.” The “thing of value” referred to in Section 2(c) means something paid as compensation for brokerage services, not the benefits of the performance of the brokerage function or the brokerage services themselves. If the brokerage services themselves can constitute the “thing of value,” then the whole clause is a meaningless redundancy because that “thing of value” is inherent in every transaction. To adopt complaint counsel’s view would be to hold that Congress wrote a meaningless clause into Section 2(c). The Issue There is no dispute as to the material facts that prevent a determina- H. C. BOHACK CO., INC., ET AL. 125'/ 1218 Initial Decision tion of the legal issue to wit: based upon counsel supporting the complaint’s admissions with respect to respondents’ actions, would respondents’ conduct be in violation of the Clayton Act? FINDINGS OF FACT Respondent H. C. Bohack Co., Inc., hereinafter referred to as “Bohack,” is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its office and principal place of business located at 4825 Metropolitan Avenue, Brooklyn, N.Y.

Respondent Bohack has been and is now engaged primarily in the retailing of food products and articles for personal and household use and operates a large number of retail supermarkets. As of Jan. 27, 1968, Bohack operated approximately 166 supermarkets. Bohack’s volume of _ business is substantial, totalling in excess of $207 million annually. Respondent Henderson Distributing Co., Inc., hereinafter referred to as “Henderson Dist.,” is a corporation organized, existing and doing business under and by virtue of the laws of the State of Florida with its office and principal place of business located at State Farmers Market, Pahokee, Fla.

Respondent Vinson Henderson, an individual, is president of corporate respondent Henderson Dist. and is located at the same address as said corporate respondent and owns all or substantially all of its stock. He formulates, directs and controls the acts, practices and policies of said corporate respondent, including the acts and practices hereinafter described. , Respondent Henderson Dist. has been and is now engaged in business primarily as a “ground” or, “field” broker effecting sales of fresh fruits and vegetables by sellers located in the State of Florida, and purchases by buyers located in various States of the United States other than the State of Florida. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Henderson Dist., in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables, is substantial.

Respondent Henderson Dist., in the course and conduct of its business as a “ground” or “field” broker, has been and is now effecting sales of fresh fruits and vegetables by sellers located in the State of Florida and purchases by buyers located in various States of the United States other than the State’of Florida in commerce, as “commerce” is defined in the Clayton Act. Said respondent has transported or caused such products to be transported from the sellers’ places of business to the Initial Decision 83 F.T.C.

buyers’ places of business located in other states. Thus, there has been, at all times mentioned herein, a continuous course of trade in commerce in effecting purchases and sales of such products by said respondent Henderson Dist.

In the course and conduct of its business for the past several years, respondent Bohack has purchased, distributed and resold, and is now purchasing, distributing and reselling, food products and other articles for personal and household use, including fresh fruits and vegetables, in commerce, as “commerce” is defined in the Clayton Act, which it purchased from sellers located in several States of the United States other than the State of New York in which respondent Bohack is located. Bohack purchases these food products, including fresh fruits and vegetables, and causes them to be transported from the growing areas or packing plants of sellers located in various States of the United States to Bohack’s warehouses and retail stores in the State of New York. Thus, there has been and is now a continuous course of trade in commerce in the purchase and resale of said food products by respondent Bohack. Performance of Normal Brokerage Services From the very adoption of the section, it has been recognized that both buyers and sellers benefit from performance of normal brokerage services by independent brokers and that the existence of such benefits is no legal or factual basis for inferring the existence of a relationship of agency between the broker and a buyer receiving such benefits. As the Commission said in Great Atlantic and Pacific Tea Co., 26 F.T.C. 486, 506-507 (1930):

In the course of conducting his business a broker must and does also render services to buyers—but those services, unlike the services rendered to the respondent by its field buying agents, are not buying services. A broker is not employed by buyers. He is employed and paid by sellers as their selling agent and he represents his seller-principals only. His activities in connection with his representation of his seller-principals are controlled by them, but, paradoxically, because of the broker's anomalous position as an independent sales agent in business for himself, he does act for buyers in a sense and heis subject to a degree of control on their part. This results from requests by buyers that brokers report complaints to their sellerprincipals, that brokers communicate cancellations of orders to their seller-principals, that brokers submit to their seller-principals offers of buyers to purchase commodities at prices stipulated by buyers, that brokers.endeavor to make up “poo!” cars of merchandise among several buyers so that the buyers may obtain the advantage of quantity prices and earload rates of freight, that brokers obtain quotations of prices from their sellerprincipals for the consideration of buyers, and, perhaps, in other ways. Naturally it is to the mutural interest and advantage of brokers and sellers to maintain the good will of their common customers, and brokers generally endeavor to comply with the reasonable requests of buyers along the lines indicated. In the course of negotiating sales from seller to buyer and bringing them into agreement brokers are necessarily guided somewhat by instructions from each, but in the essential particular of selling commodities and consumi. Ce BOHACK Co., , INC., INC., ET AL. 1239 : 1218. - : oo Initial Decision .

“ mating sales they ‘act for and are > controlled by. the latter alone; who i in the absence of ao contract may discharge them and-substitute new brokers in their places at any time. Complaint counsel contend that respondent buyer usually uses the servicés of the respondent. brokers rather than: the services of other brokers in the purchase of fresh fruits and vegetables. This fact, if true, hardly establishes agency. It is certainly not unusual for a buyer to do. -: business ‘more frequently ‘with one supplier than another and the fact _ that he does.so does not establish that the supplier he selects is his agent. It certainly was: not: the intention of the statute: to require. a buyer to spread his business among several brokers. In fact, in Tillie’ Lewis Foods, Inc., et al, .65 F.-T.C, 1099, 1136 (1964), the Commission . expressly approved the seller’s payment of brokerage to a. broker, - Bushey & Wright, on sales to a large buyer with whom the broker had .. had a “personal: relationship” for many years dating back to. the time : ~:- when the buyer and broker were the same entity. : The “field broker” aspect of Tillie Lewis Foods, supra, is particularly enlightening as to the lack of probity, for the purpose of establishing agency, of the facts relied on by complaint counsel. The Commission, in - holding that seller payment of brokerage did not violate Section 2(c), - described the broker's activity ina discussion which shows that broker- _ age services which benefit both buyers and sellers do not. establish, a: violation of Section 2(¢): :

* * * the local broker. and the purchaser are generally located at considerable distances from'the canners. A’small canner, with a limited or no sales force, is thus unable to make known ‘to these potential purchasers information concerning his production capabilities and the stock which he has available. On. the other hand, the field broker; by reason of his “location and constant contact with all canners in his area, maintains this information on a. current basis. Through bulletins, letters and principally by telephone, he relays this information regularly to numerous local brokers. The field. broker, upon receipt of an order froma local broker or direct purchaser, may split the order up among several small . canners and coordinate the pooling of each canner’s share in shipment to the purchaser. _ ‘The seller compensates the field broker for these services by a commission which is usually : indicated as a deduction on the invoice. [65 F.T.C. at 1132] These findings as to the legitimate brokerage functions of shipping point: brokers which are not violative of Section 2(c) are sufficiently close to a: number of the admitted contentions of Paragraph 7 of the admissions as to demonstrate that the contentions themselves, even if established, would not, under Commission precedents, carry the burden necessary to.sustain a violation here.

In short, the facts. by which complaint counsel ‘seek: to establish agency of thé broker respondents for buyers are nothing more than a description of the functions necessarily and historically performed by - brokers acting as independent intermediaries bringing buyer and seller together. It is the essence of the. business operations of independent brokers that they negotiate sales transactions and, in the course of such

H. C. BOHACK CO., INC., INC., ET AL. 1241 1213 cos Initial Decision broker respondents and other independent brokers could not provide such benefits, they, of course, would not be competitive with other forms of distribution such as commission merchants, wholesalers; the seller’s own sales force and the like, and would, in time, disappear from : the competitive arena.

CONCLUSIONS The legislative history of Section 2(c) demonstrates conclusively that . the only purpose of the statute is to prevent price discrimination among customers of the same seller which arises when the seller pays brokerage direct to a buyer or indirectly to the buyer through a dummy or ~ nominee broker of the buyer. The effect of this legislative history upon the proper construction of the statute has, furthermore, been confirmed by the United States Supreme Court in Federal Trade Commission v. Henry Broch & Co., 363 U.S. 166 (1960). That case involved a preferen- ° tial allowance granted by a seller direct to a buyer in lieu of brokerage. The allowance was found to have resulted in. a price discrimination in favor of the buyer and to be, therefore, within the prohibitive scope of Section 2(c). With respect to the proper construction of Section 2(c), the Court affirmed that:

The Robinson-Patman Act was enacted in 1986 to curb and prohibit all devices by which large buyers gained discriminatory preferences. over smaller ones by virtue of their greater purchasing power. [363 U.S. at 168] It further affirmed with respect to Section 2(¢) that: One of the favorite means of obtaining an indirect concession was by setting up “dummy” brokers who were employed by the buyer and who, in many cases, rendered no services. The large buyers demanded that the seller pay “brokerage” to these fictitious brokers who then turned it over to their employer. This practice was one of the chief targets of § 2(c) of the Act. But it was not the only means by which the brokerage function was abused and Congress in its wisdom phrased § 2(c) broadly, * * * to cover * * * all other means by which brokerage could be used to effect price discrimination. [363 U.S. at 169] A summary decision for respondents is appropriate even though complaint counsel state in response to the request for admissions that they intend to claim that payment of brokerage by sellers in the circumstances of this case is unfair. The basis for this claim is unclear, although apparently complaint counsel believe buyers receive greater benefits from the services of these brokers than do sellers. This belief is, in the opinion of the administrative law judge, unfounded. In any event, it is quite immaterial to this proceeding because this proceeding is brought under Section 2(c) of the Robinson-Patman Act, not under Section 5 of the Federal Trade Commission Act. Section 2(c) is not and was never intended to be a vehicle through which the Federal Trade Commission would substitute its judgments for those of the market place to determine when independent brokers should be paid and by whom. The Commission’s only function under Section 2(c) is to deter- 1242, FEDERAL TRADE. COMMISSION | DECISIONS. Initial: Decision: 88 F. T. C:

mine whether an abuse of brokerage exists which results or is likely to ~ result in price discrimination; there is no such result or likelihood of such noe a result involved in this proceeding.

To establish a Section 2(c). violation, complaint counsel must show that one aspect of the transactions at issue was for the respondent buyer “to receive or accept” something of value “as a commission, brokerage . or other. compensation, or any allowance or discount in lieu thereof.” : Complaint counsel, however, do not assert that the buyer-has received or accepted any allowance or discount in lieu of brokerage commission or other compensation. Rather, they simply contend that the buyer: receives benefits from various brokerage functions performed by the respondent: brokers. The “thing of value” referred to in Section 2(c) means something paid as compensation for brokerage services, not the benefits of the performance of the brokerage function or the brokerage services themselves. If the brokerage services themselves can consti-. tute the “thing of value,” then the whole clause is a meaningless redundancy because that “thing of value” is inherent in every transaction. - Review of the full range of cases decided under Section 2(c) reveals no support for complaint counsel’s theory. For example, in Webb-Crawford - Co., et al. v. F.T.C., 109 F.2d 268 (5th Cir. 1940); the brokerage services provided by Daniel Brokerage Company to Webb-Crawford were not the consideration as to which a violation was found; brokerage partnership distributions were the illegal considerations. In Independent Grocers Alliance Distributing Co., 203 F.2d 941 (7th Cir. 1953), dividends and advertising allowances were found illegal. In Broch, supra, of course, the illegal consideration was a cash discount. But in none of the adjudicated 2(c) cases is the brokerage service itself the illegal consideration. In the more than 37 years since the enactment of Section 2(c), the Commission has litigated hundreds of cases charging violations of that section. In none of those cases has a buyer or seller been held to violate the section on the theory that the brokerage services themselves could be the “thing of value” received “as a commission, brokerage, or other compensation, or* * *allowance or discount in lieu thereof.”

In prior Section 2(c) litigation, the Commission consistently has regarded the “thing of value” as the payment received or entitled to be received by the broker as compensation for his services and has found a violation only where that thing of value was passed on to the buyer. As complaint counsel can point to no such passing on from respondent brokers.to respondent-buyer of anything of value outside the legitimate brokerage function, another essential element of proof of a 2(c) violation is absent.

The Federal Trade Commission has jurisdiction of and over respondents and the subject matter of this proceeding. JEWEL COMPANIES, INC., ET AL. 1243 1213 Complaint ORDER It is ordered, That respondents’ motion for summary decision be, and the same hereby is, granted.

It is further ordered, That the complaint herein be, and the same hereby is, dismissed in its entirety.

Appearances For the Commission: Louis R. Sernoff, Lewis F. Parker, Francis C. Mayer, Martin A. Rosen, James C. Donoghue and Eliot G. Disner. For the respondents: McDermott, Will & Emery, Chicago, Ill. for Jewel Companies, Inc. Collier, Shannon, Rill & Edwards, Wash., D.C. for Jack Stires, Inc. and John C. Stires II. COMPLAINT IN DOCKET No. 8788 The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof, and hereinafter more particularly described, have been and are violating the provisions of Subsection (c) of Section 2 of the Clayton Act, as amended, (15 U.S.C. Section 13) hereby issues its complaint, stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent Jewel Companies, Inc., hereinafter referred to as “Jewel” is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its office and principal place of business located at 135 South Lasalle Street, Chicago, III.

PAR. 2. Respondent Jewel has been and is now engaged primarily in the retailing of food products and other articles for personal and household-use and operates a large number of retail stores, including supermarkets, grocery stores, drugstores, department stores, retail pantries and home service routes. As of January 29, 1968, Jewel operated approximately 364 grocery stores in various States of the United States. Respondent Jewel is also engaged in the wholesale food business. Jewel’s volume of business is substantial, totalling in excess of $1.2 billion annually.

PAR. 3. Respondent Jewel, in the operation of its retail and wholesale food business, purchases large quantities of fresh fruits and vegetables from numerous sellers located throughout the United States for resale to its customers. Most of these fresh fruits and vegetables are purchased by J.E. Perishables, a division of respondent Jewel, with offices located at 1955 West North Avenue, Melrose Park, II. PAR. 4. Respondent Jack Stires, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State Complaint 83 F.T.C.

of California with its office and principal place of business located at 795 Desert Gardens Drive, El] Centro, Calif.

Respondent John C. Stires II, an individual, is president of corporate respondent Jack Stires, Inc., and is located at the same address as said corporate respondent and owns all or substantially all of its stock. He formulates, directs and controls the acts, practices and policies of said corporate respondent, including the acts and practices hereinafter described.

PAR. 5. Respondent Jack Stires, Inc. has been and is now engaged in business primarily as a “ground” or “field” broker effecting sales of fresh fruits and vegetables by sellers located in the States of California and Arizona, and purchases by buyers located in various States of the United States other than the States of California and Arizona. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Jack Stires, Inc. in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables is substantial.

PAR. 6. Respondent Jack Stires, Inc., in the course and conduct of its business as a “ground” or “field” broker, has been and is now effecting sales of fresh fruits and vegetables by sellers located in the States of California and Arizona and purchases by buyers located in various States of the United States other than the States of California and Arizona in commerce, as “commerce” is defined in the Clayton Act. Said respondent has transported or caused such products to be transported from the sellers’ places of business to the buyers’ places of business located in other states. Thus, there has. been, at all times mentioned herein, a continuous course of trade in commerce in effecting purchases and sales of such products by said respondent Jack Stires, Inc. PAR. 7. In the course and conduct of its business for the past several years, respondent Jewel has purchased, distributed and resold, and is now purchasing, distributing and reselling, food products and other articles for personal and household use, including fresh fruits and vegetables, in commerce, as “commerce” is defined in the Clayton Act, which it purchased from sellers located in several States of the United States other than the State of Illinois in which respondent Jewel is located. Jewel purchases fresh fruits and vegetables and causes them to be transported from the growing areas or packing plants of sellers located in various States of the United States to Jewel’s warehouses and retail stores in the State of Illinois and various other States in the United States. Thus, there has been and is now a continuous course of JEWEL COMPANIES, INC., ET AL. 1245 1213 Complaint trade in commerce in the purchase and resale of said food products by respondent Jewel.

PAR. 8. In the course and conduct of its business, respondent Jewel has been and is now utilizing the services of respondent Jack Stires, Inc. as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Jack Stires, Inc. performs valuable services for respondent Jewel and other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables and by negotiating purchases of said products at the most favorable prices. Respondent Jack Stires, Inc., in performing the services enumerated above, has been and is now acting as an agent or representative of respondent Jewel and other buyers. In such capacity, Jack Stires, Inc. is subject to and under the direct or indirect control of Jewel and other buyers of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, respondent Jack Stires, Inc. has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables. In addition, respondent Jewel has been and is now utilizing the services of John P. Storm, a California corporation, located at 314 E. John Street, Salinas, Calif., as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. In such capacity, John P. Storm performs the same or substantially the same services for respondent Jewel as those performed by Jack Stires, Inc. for respondent Jewel, described above, while acting as an agent or representative of respondent Jewel and subject to and under the direct or indirect control of respondent Jewel in transactions with sellers. In connection with such transactions, John P. Storm has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables. PAR. 9. Respondent Jewel and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Jack Stires, Inc. without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent Jack Stires, Inc. has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent Jewel and other buyers, or has been and is now subject to the direct or indirect control of respondent Jewel and other buyers.

Moreover, respondent Jewel has received and is now receiving valuable “ground” or “field” broker services from John P. Storm without Initial Decision 83 F.T.C.

paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, John P. Storm has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent Jewel or has been and is now subject to the direct or indirect control of respondent Jewel.

PAR. 10. The aforesaid acts and practices of respondents and each of them in receiving and accepting, directly or indirectly, anything of value as a commission, brokerage or other compensation or any allowance or discount in lieu thereof from sellers, are in violation of Subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. Commissioners Elman and Nicholson dissented and filed dissenting statements.* Commissioners Dixon and MacIntyre filed separate statements.* INITIAL DECISION [IN DOCKET 8788] BY ANDREW C. GOODHOPE, ADMINISTRATIVE LAW JUDGE AUGUST 1, 1973 PRELIMINARY STATEMENT The complaint in this matter was issued by the Commission on July 10, 1969. Thereafter extended litigation took place both in the courts and before the Commission itself. On June 2, 1972, respondents filed answers to the complaint in which they admitted certain allegations in the complaint but denied that they had violated Section 2(c) of the Robinson-Patman Act as alleged in the complaint. The matter was assigned to the undersigned administrative law judge on Apr. 18, 1973. Extensive pretrial preparations have been made and on June 4, 1978, the respondents filed a motion for summary decision pursuant to Section 3.24 of the Rules of Practice of the Commission. This motion was predicated upon respondents’ request for admissions of complaint counsel’s contentions of law and fact, the response of complaint counsel to such request and a stipulation entered into between complaint counsel and counsel for the respondents, all of which are a part of the record herein. The respondents’ motion for summary decision and opposition thereto havé been fully briefed. Based upon the complaint, respondents’ answers thereto, the request for admissions and the response thereto and the stipulation entered into between the parties, the administrative law judge makes the following findings of fact. *For reasons of economy, the text of the dissenting statements of Commissioners Elman and Nicholson and the text of the separate statements of Commissioners Dixon and MacIntyre are not published herein. However, they appear at 81 F.T.C, 203-216, Docket 8789.

JEWEL COMPANIES, INC., ET AL. 1247 1213 Initial Decision FINDINGS OF FACT 1. Respondent Jewel Companies, Inc. (Jewel) is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its office and principal place of business located at 1385 S. Lasalle Street, Chicago, Ill. 2. Respondent Jewel is primarily engaged in the retailing of food products and other articles for personal and household use which it sells through a large number of retail stores, including supermarkets, grocery stores, drug stores, department stores, retail pantries and home service routes. As of Jan. 29, 1968, Jewel operated approximately 364 grocery stores in the United States. It is also engaged in the wholesale food business. Its volume of business is substantial, totaling in excess of one billion dollars annually.

3. Respondent Jewel purchases large quantities of fresh fruits and vegetables from numerous sellers throughout the United States for resale through its retail stores and to other retailers. Most of these purchases are made by J.E. Perishables, a division of Jewel, located in Melrose Park, Ill.

4. Respondent Jack Stires, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of California with its principal place of business located at 795 Desert Gardens Drive, El] Centro, Calif.

5. Respondent John C. Stires II is an individual and president of corporate respondent Jack Stires, Inc., owns substantially all of its stock and formulates, directs and controls the acts, practices and policies of Jack Stires, Inc., including the acts and practices hereinafter described.

6. Respondent Jack Stires, Inc. has been and is now engaged in business primarily as a “ground” or “field” broker effecting sales of fresh fruits and vegetables by sellers located in the States of California and Arizona, and purchases by buyers located in various States of the United States other than the States of California and Arizona. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Jack Stires, Inc. in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables is substantial.

7. Respondent Jewel and respondent Jack Stires, Inc. are both engaged in commerceé as “commerce” is defined in the Clayton Act. Initial Decision 83 F.T.C.

Admissions As a result of respondents’ request for admissions and complaint counsel’s response thereto:

1. Buyer respondent does not own or have any financial or other interest in the business of either of the broker respondents, and does not in any way share in the profits or losses of either of the broker respondents.

2. No director, officer or employee of buyer respondent owns all or any part of either of the broker respondents, or has any financial or other interest in the business of either of the broker respondents or shares in any way in the profits or losses of either of the broker respondents.

3. No broker respondent is a director, officer, manager or shareholder of buyer respondent or other buyers; and no director, officer or employee of buyer respondent is a director, officer, manager or shareholder of either of the broker respondents. 4. There are no common officers, directors, shareholders, employees or other personnel between respondent brokers and respondent buyers. 5. Broker respondents have not entered into any express contract or agreement to act as an agent, representative or other intermediary of buyer respondent or other buyers or for or in behalf of, or subject to the direct or indirect control of buyer respondent or other buyers. 6. The broker respondents were independently owned and managed business entities which performed bona fide brokerage functions of benefit to both buyers and sellers; and were not so-called “dummy brokers.”

7. Complaint counsel expect to prove that the broker respondents acted -as agent or representative for, or in behalf of or subject to the direct or indirect control of respondent buyer and other buyers by inference from the following:

(a) That respondent buyer and other buyers have “utilized” the services of the respondent brokers as “ground” or “field” brokers in the purchase of fresh fruits and vegetables and usually not the services of other “ground” or “field” brokers.

(b) That respondent brokers perform services which are valuable to respondent buyer and other buyers by (i) furnishing information concerning market conditions, (ii) maintaining contact with various sellers, (iii) inspecting and selecting specified qualities and quantities of fresh fruits and vegetables and (iv) negotiating purchases of specified qualities and quantities of fresh fruits and vegetables. 8. Respondent buyers and other buyers have not paid brokerage or other compensation to the broker respondents and such brokerage has been paid by sellers.

JEWEL COMPANIES, INC., ET AL.. 1249 1213 = Tnitial Decision 9. Complaint counsel does not contend that the buyer respondents have received or accepted any monetary payments or anything of value other than benefits complaint counsel contend arise from broker respondents’ performance of the functions referred to in Paragraph 7, supra.

10. Complaint counsel expect to offer no evidence that the acts and practices of respondent alleged in the complaint in this matter have resulted in price discrimination or may be substantially to lessen competition or tend to create a-monopoly or injure, destroy or prevent competition. Complaint counsel do contend that the acts and practices alleged are unfair. =.

At the same time as making the admissions set forth above, complaint counsel entered into a stipulation with counsel for the respondents as follows: 4 A. If, as a matter of law, complaint counsel must prove any one or more of the matters set forth in Paragraphs 1 through 6, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. B. If, as a matter of law, complaint counsel must prove that buyer respondent has received or accepted any monetary payments or anything of value other than the services described in Paragraph 7(b) then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. C. If, as a matter of law, complaint counsel must prove that the acts and practices of respondents have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact.

D. If, as a matter of law, the proposed evidence of complaint counsel set forth in Paragraph 7 of the admissions of complaint counsel does not establish that the broker respondents acted as agent, representative or other intermediary for, or in behalf of, or subject to the direct or indirect control of sellers, then there is no genuine issue as to material facts in this matter.

Paragraphs 8 and 9 of the complaint charge the two corporate respondents and the individual respondent with violations of Section 2(c) of the Claytion Act as follows:

PARAGRAPH EIGHT: In the course and conduct of its business, respondent Jewel has been and is now utilizing the services of respondent Jack Stires, Inc. as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Jack Stires, Inc. performs valuable services for respondent Jewel and other buyers by (1) furnishing information concerning market conditions, by (2) maintaining contact with various sellers, (3) by inspecting and selecting specified qualities and quan- 1250 FEDERAL TRADE COMMISSION DECISIONS: :

Initial Decision . gg F. T. Ce tities of fresh fruits. and vegetables and by (4) negotiating purchases of said products at the most favorable prices. Respondent Jack Stires, Inc., in’ performing the services enumerated above, has been andis now acting as an agent or representative of respondent». Jewel and other. buyers.’ In such capacity, Jack Stires, Inc. is subject to and under the direct or indirect control of Jewel: and. other. buyers ‘of fresh fruits and vegetables in. transactions with sellers. In connection with such transactions, respondent Jack Stires, Inc. has been and. is now collecting. and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables. In-addition, respondent Jewel has been and is now utilizing the services of John P. Storm, a California corporation, located at 314.E. John Street, Salinas, California, as a “ground” or “field” broker in the purchase.of fresh fruits and. vegetables from numerous. sellers. In such capacity, John P.-Storm performs the same or substantially the same services for respondent Jewel as those performed by Jack: Stires, Inc. for respondent Jewel, described above, while acting as an agent or representative of respondent Jewel and subject to and under the direct or indirect control of respondent Jewel in transactions with sellers. In: connection with such transactions, John P. Storm has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and, vegetables.

“PARAGRAPH NINE: Respondent Jewel and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Jack Stires, Inc: without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time; respondent Jack Stires, Inc. has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent Jewel and other buyers, or has been and is now subject to the direct or indirect control of respondent Jewel and other buyers. : Moreover, respondent Jewel has received and is now receiving valuable “ground” or “field” broker services from John P. Storm without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, John P. Storm has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent Jewel or has been and is now subject to the diréct or indirect control of respondent Jewel.

Discussion Complaint counsel assert that a violation of Section 2(c) occurs whenever a broker paid by a seller performs brokerage functions of benefit to buyer as well as seller. They assert that the brokerage functions themselves as described in Paragraph 7 of the request for admissions can supply each of the necessary elements to prove a violation.

Complaint. counsel have admitted that they have no proof of price discrimination or competitive injury and that there are no contractual, financial or employment ties between respondent Jewel and respondent Jack Stires, Inc.

With this as a starting point, complaint counsel apparently argue that there is some sort of a fiduciary or agency relationship between Jewel and Jack Stires, Inc. which is violated in some fashion by Jack Stires, Inc. performing certain brokerage functions which have some value to JEWEL COMPANIES, INC., ET AL. 1251 1213 — Initial Decision the respondent Jewel. Complaint counsel cite no cases to support such a theory and there is nothing in the legislative history or in the actual language of Section 2(c) itself to support such a theory. In short, complaint counsel have asserted that the performance of normal brokerage functions can itself establish that brokers are acting on behalf of buyers and that therefore the respondent Jewel should pay any fees, brokerage or salary that such brokers earn rather than the sellers of the products in question. If they do not, it is urged that Jewel and Jack Stires, Inc. both have violated Section 2(c) of the Clayton Act, as amended.

Complaint counsel rely heavily on Rangen, Inc. et al. v. Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 1965), and Fitch v. Kentucky-Tennessee Light and Power Co., 136 F.2d 12 (6th Cir. 1943). Neither of these cases is in point since each involves commercial bribery and is decided in terms of breach of fiduciary obligation. Indeed both of these cases were decided on the basis of a particular breach of obligation which was the very form of. misconduct Section 2(c) was enacted to prevent. .

All of the remaining cases involving Section 2(c) are cases where it was proven or admitted that the broker was the actual agent of the buyer or was owned by the buyer or under contract to the buyer and consequently under the buyer’s control. InFTC v. Herzog, 150 F.2d 450 (2d Cir. 1945), the broker there involved admitted that he was acting as an agent of buyers while receiving brokerage from sellers. Likewise, in Biddle Purchasing Co. v. FTC, 96 F.2d 687 (2d Cir. 1938), the broker there involved had entered into a written contract with the buyers to act for them as purchasing agent and to represent their best interests in all dealings with sellers.

In these proceedings, there is no allegation that the brokers are agents or employees of the buyer; rather they are admittedly independent. Furthermore, there is no intention on the part of complaint counsel to prove that brokerage was passed on to the buyer as brokerage or by any subterfuge designed to deliver brokerage to the buyer. Complaint counsel propose to offer no evidence whatsoever that the brokers acted for or in behalf of or under the control of the buyer pursuant to any prearrangement of any kind or any contract, ownership, employment or other contractual relationship between the brokers and the buyer. Instead, it is admitted by complaint counsel that the brokers are independent intermediaries, that they render services of benefit to both buyer and sellers and that the only basis for inferring either that they acted for or under the control of buyer or that brokerage was passed on to the buyer is the fact that the buyer realized certain benefits from doing business with them. Such benefits always occur Initial Decision 83 F.T.C.

when one businessman does business with another and does not raise any factual inference either of agency or of a passing on of brokerage directly or indirectly as a subterfuge. The lack of probative value and the total legality of such benefits was recognized by the Commission as early as the A&P decision and as recently as Tillie Lewis Foods. ' These two cases are dispositive of the issue presented by respondents’ motion for summary decision. The factual situations in both cases were virtually identical to the situation in this proceeding. In 1930, the Commission said in the A&P case:

In the course of conducting his business a broker must and does also render services to buyers—but those services, unlike the services rendered to the respondent by its field buying agents, are not buying services. A broker is not employed by buyers. He is employed and paid by sellers as their selling agent and he represents his seller-principals only. His activities in connection with his representation of his seller-principals are controlled by them, but, paradoxically, because of the broker’s anomalous position as an independent sales agent in business for himself, he does act for buyers in a sense and he is subject to a degree of control on their part. This results from requests by buyers that brokers report complaints to their sellerprincipals, that brokers communicate cancellations of orders to their seller principals, that brokers submit to their seller-principals offers of buyers to purchase commodities at prices stipulated by buyers, that brokers endeavor to make up “pool” cars of merchandise among several buyers so that the buyers may obtain the advantage of quantity prices and carload rates of freight, that brokers obtain quotations of prices from their sellerprincipals for the consideration of buyers, and, perhaps, in other ways. Naturally it is to the mutual interest and advantage of brokers and sellers to maintain the good will of their common customers, and brokers generally endeavor to comply with the reasonable requests of buyers along the lines indicated. In the course of negotiating sales from seller to buyer and bringing them into agreement brokers are necessarily guided somewhat by instructions from each, but in the essential particular of selling commodities and consummating sales they act for and are controlled by the latter alone, who in the absence of a contract may discharge them and substitute new brokers in their places at any time. Again in 1964, the Commission affirmed the propriety of the activities of field brokers in the Tillie Lewis Foods case as follows: * * * the local broker and the purchaser are generally located at considerable distances from the canners. A small canner, with a limited or no sales force, is thus unable to make known to these potential purchasers information concerning his production capabilities and the stock which he has available. On the other hand, the field broker, by reason of his location and constant contact with all canners in his area, maintains this information on a current basis. Through bulletins, letters and principally by telephone, he relays this information regularly to numerous local brokers. The field broker, upon receipt of an order from a local broker or direct purchaser; may split the order up among several small canners and coordinate the pooling of each canner’s share in shipment to the purchaser. The seller compensates the field broker for these services by a commission which is usually indicated as a deduction on the invoice. Complaint counsel’s approach to proof of a Section 2(e) violation ignores the character of brokers as intermediaries who promote trade ‘In the Matter of Great Atlantic and Pacific Tea Co., FTC Docket 3031, 26 F.T.C. 486 (1930); Jn the Matter of Tillie Lewis Foods, Inc., FTC Docket 7226, 65 F.T.C. 1099, 1131 (1964). -JEWEL COMPANIES, IN., ET AL. 1253 1218 Initial Decision by bringing buyers and sellers together and who act for their own interest in earning a fee and not as the representative of either party to. the transaction. In. some transactions, the broker may first be approached by a seller to find an outlet for the seller’s goods; in others, the broker may be first approached by a buyer seeking a source of supply. In all instances, both buyers and sellers will benefit from the transaction. Both will receive information concerning conditions in the market and the availability of goods. Both will, by utilizing the services of the broker, save expense which they would otherwise have borne. The seller, for example, will have saved the expense of making his own buying calls direct on the buyers. Both will benefit from any negotiation the broker may have carried on to bring about a price favorable to both parties. Thereafter, both will benefit in the event of claims by one or the other. The broker, in the interest of protecting the fee which he has ‘earned and of protecting his relationships with both parties for the ~ future, will mediate and seek to resolve the controversy to the satisfaction of both parties. In every aspect of the brokerage function, the point is the same; both parties benefit from the services of an independent broker, but the broker performs the services for his own purpose, which is to consummate the transaction and obtain his commission. It is no answer to suggest that independent brokers drop the contested services. The services are intrinsic to the brokerage function. Other types of middlemen engaged in distribution provide a variety of services to benefit both buyers and sellers and thereby encourage them to do business with them. These include all of the same types of benefit complaint counsel allege in this case to be the basis for implying agency. If, because of the rule of law being proposed by complaint counsel, Jack Stires, Inc. and other independent brokers could not provide such benefits, they, of course, would not be competitive with other forms of distribution such as commission merchants, wholesalers, the seller’s own sales force and the like and would, in time, disappear from the competitive arena.

The contention of complaint counsel that the “thing of value” referred to in Section 2(c) includes the brokerage services which the brokers -performed constitutes something as compensation which was given to the respondent must be rejected. A review of the cases decided under Section 2(c) supplies no support for this theory. In every case, the “thing of value” paid as compensation was actual cash which could be computed from the transactions there involved. In no case has the “thing of value” been equated in terms of activities inherently incidental to the performance of the brokerage function. Furthermore, the legislative history of Section 2(¢) as pointed out by the Supreme Court in FTC v. Broch & Co., 363 U.S. 166 (1960), makes 1254 3 FEDERAL TRADE COMMISSION. DECISIONS ; Initial Decision 4 “83 F.T.C.

it clear that the thrust of the section was to prevent price discrimination among customers of the same seller which arises when the seller pays. brokerage direct to a buyer or indirectly to a buyer through a dummy ~ broker or other representative of the buyer. In Broch, the. Court stated ; (p: 168) that:

The. Robinson-Patman Act was enacted in 1936 to carb and prohibit all devices by which large buyers gained discriminatory. preferences over. smaller ones by virtue of their. =. greater purchasing power. .. a And further, the Court affirmed with respect to Section 2(c) (p. 169) that:

One of the favorite means of obtaining an indirect price concession was by setting up “dummy” brokers who were employed by the buyer and who, in many cases, rendered no services. The large buyers demanded that the seller pay “brokerage” to these fictitious brokers who then turned it over to their employer. This practice was one, of the chief targets of § 2(c).of the Act. But.it was not the only means by which the brokerage function was abused and Congress in its wisdom phrased § 2(e). broadly, * * * to cover *.* * all other means by which brokerage could be used to effect price discrimination. , As recently as 1967, the Commission has pointed out in an opinion, Jn the Matter of Modern Marketing Services, Inc., FTC Docket 3783, 71 F.T.C. 1676 (1685):

As we pointed out in our brief filed as amicus curiae in Empire Rayon Co., Inc., supra: “The crucial question in every case brought under Section 2(c) is whether the’ buyer is receiving preferential treatment effected through the payment of brokerage, or other compensation, or any allowance or discount in lieu thereof.’ Complaint counsel have admitted that in this case there is neither price discrimination nor competitive injury.

CONCLUSIONS 1. The Federal Trade Commission has jurisdiction over the respondents and over the subject matter involved in this proceeding. 2. From the above discussion, it is concluded that respondents’ motion for summary decision must be granted and the complaint dismissed. ORDER It is ordered, That respondents’ motion for summary decision be, and the same hereby is, granted.

It is further ordered, That the complaint herein be, and the same thereby is, dismissed.

It is further ordered, That request for oral argument upon this motion for summary decision be denied.

DOCKET NO, 8789—BORMAN Foop STORES, INC.

Appearances For the Commission: Louis R. Sernoff, Lewis F. Parker, Francis C. Mayer, Martin A. Rosen, James C. Donoghue and Eloit G. Disner. | BORMAN FOOD STORES, INC. ——s«1255 1218 oh . Initial Decision For. the respondent: Arent, Fox, Kintner, Plotkin & Kahn, Wash., D.C. and Friedman, Meyers & Keyes, Detroit Mich. INITIAL DECISION BY ANDREW C. GOODHOPE, ADMINISTRATIVE . LAW J UDGE JULY 30, 1973 PRELIMINARY STATEMENT The complaint in this matter was issued by the Commission on July 10, 1969. Thereafter extended litigation took place both in the courts and before the Commission itself. On June 2, 1972, respondent filed an answer to the complaint in which it admitted certain allegations in the complaint but denied that it had violated Section 2(c) of the Robinson- Patman Act as alleged in the complaint. The matter was assigned to the undersigned administrative law judge on Apr. 18, 1978. Extensive pretrial preparations have been made and on June 4, 1973, the respon- - dent filed a motion for summary decision pursuant to Section 3.24 of the Rules of Practice of the Commission. This motion was predicated upon respondent’s request for admissions of complaint counsel’s contentions of law and fact, the response of complaint counsel to such request and a stipulation entered into between complaint counsel and counsel for the respondent, all of which are a part of the record herein. The respondent’s motion for summary decision and opposition thereto have. been fully briefed. Based upon the complaint, respondent’s answer thereto, the request for admissions and the response thereto and the stipulation entered into between the parties, the administrative law judge makes the following findings.of fact.

FINDINGS OF FACT 1. Respondent Borman Food Stores, Inc. (Bormans) is a corporation organized, existing and doing business under and by virtue of the laws of the State of Michigan with its office and principal place of business located at 12300 Mark Twain, Detroit, Mich. 2. Bormans is primarily a food retailer and sells other articles for personal and household use through a substantial number of retail stores, including supermarkets, drugstores and department stores: Its total volume of business was in excess of 300 million dollars ‘as of Jan. 1968.

3. Bormans is engaged in commerce, as “commerce” is defined i in the Clayton Act.

4. The P & R Brokerage Co. (P & R) is a California partnership located in Salinas, Calif.

~ 1256 -FEDERAL TRADE. COMMISSION DECISIONS ~ Initial Decision Pe # : 83. F.T.C.

5. P & R was and is now engaged in. | business primarily as a a ground . and field broker effecting sales of fresh fruits and vegetables by sellers i located in California and purchased by buyers in various States of the . ~ United States. In such capacity, P & R has been paid commissions, brokerage or other compensation in-connection with the.effecting of © purchases and sales of fresh fruits and vegetables by the sellers of such products. .~ :

Admissions As a result of respondent’s request for admissions and complaint counsel’s response thereto:

1. The respondent Bormans does not own or have any financial interest in the business of P & R and does not in any way share in the profits or losses of P & R..

2. No director, officer or employee of Bormans owns all or any part of P & R, or has any financial or other interest in the business of P & R or shares i in any way in the profits or losses of P & R. 3. Neither P & R nor any person associated with P & R isa director, officer, manager or shareholder of Bormans or any other buyer and no director, officer or employee of Bormans i is a director, officer, manager or shareholder of P & R.

4. There are no.common officers, directors, shareholders, employees or other personnel between Bormans and P & R. 5. P & R has not entered into any express contract or agreement to act as an agent, representative or other intermediary for or in behalf of, or subject to the direct or indirect control of, Bormans or any other buyer.

6. P & R is an independently owned and managed business entity which performed brokerage functions of benefit to both buyers and sellers and is not a so-called “dummy broker.” 7. Complaint counsel expect to prove that P & R acted as an agent or representative for or in behalf of or subject to the direct or indirect control of Bormans and other buyers by interference from the following: (a) That Bormans and other buyers have “utilized” the services of P & R as “ground” or “field” brokers in the purchase of fresh fruits and vegetables and usually not the services of other “ground” or “field” brokers.

(b) That P & R has performed services which are valuable to Bormans and other buyers by (i) furnishing information concerning market conditions, (ii) maintaining ‘contact with various sellers, (iii) inspecting and selecting specified qualities and quantities of fresh fruits and vegetables and (iv) negotiating purchases of specified qualities and quantities of fresh fruits and vegetables.

BORMAN FOOD STORES, INC. 1Z9% 1213 Initial Decision 8. Bormans and other buyers have not paid brokerage or other compensation of P & R and such brokerage has been paid by sellers. 9. Complaint counsel do not contend that Bormans has received or accepted any monetary payments or anything of value other than benefits complaint counsel contend arise from P & R’s performance of the functions referred to in Paragraph 7(b), supra. 10. Complaint counsel expect to offer no evidence that the acts and practices of either Bormans or P & R alleged in the complaint in this matter have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition. Complaint counsel do contend that the acts and practices alleged are unfair.

At the same time as making the admissions set forth above, complaint counsel entered into a stipulation with counsel for the respondent as follows:

A. If, as a matter of law, complaint counsel must prove any one or more of the matters set forth in Paragraphs 1 through 6, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. B. If, as a matter of law, complaint counsel must prove that buyer respondent has received or accepted any monetary payments or anything of value other than the services described in Paragraph 7(b) then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. C. If, as a matter of law, complaint counsel must prove that the acts and practices of respondent have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact.

D. If, as a matter of law, the proposed evidence of complaint counsel set forth in Paragraph 7 of the admissions of complaint counsel does not establish that the broker respondent acted as agent, representative or other intermediary for, or in behalf of, or subject to the direct or indirect control of buyers, then there is no genuine issue as to material facts in this matter. ! Paragraph 7 of the complaint in this matter charges Bormans with violation of Section 2(c) of the Clayton Act as follows: In the course and conduct of its business, respondent Borman has been and is now utilizing the services of P & R as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. P & R performs valuable services for On5 1 5 1 1 2 628 2379 50 23 89.782181 Aug.5 1 5 1 1 3 690 2380 18 21 86.233932 3,5 1 5 1 1 4 723 2381 46 18 86.233932 19725 1 5 1 1 5 781 2382 33 18 96.206619 thes 1 5 1 1 6 817 2382 141 24 96.206619 Commissions 1 5 1 1 7 970 2382 105 19 96.480934 dismissed5 1 5 1 1 8 1088 2383 32 19 96.480934 thes 1 5 1 1 9 1131 2384 106 23 96.767021 complaints 1 5 1 1 10 1249 2385 18 18 96.602516 in5 1 5 1 1 11 1279 2385 40 19 96.148804 this5 1 5 1 1 12 1331 2389 74 15 93.628273 matters 1 5 1 1 13 1415 2392 22 13 93.323029 as5 1 5 1 1 14 1450 2390 19 15 92.227928 to5 1 5 1 1 15 1489 2386 6 18 74.265823 P5 1 5 1 1 16 1505 2387 15 18 78.610611 &5 1 5 1 1 17 1536 2387 14 18 92.149353 R5 1 5 1 1 18 1564 2387 115 23 95.755653 Brokerages 1 5 1 1 19 1691 2386 35 19 84.339600 Co.5 1 5 1 1 20 1738 2387 38 18 96.171837 ands 1 5 1 1 21 1791 2386 65 19 93.233482 Frank5 1 5 1 1 22 1869 2386 23 18 65.596054 V.4 1 5 1 2 0 558 2411 287 26 -1 5 1 5 1 2 1 558 2411 103 23 90.941650 Condello,5 1 5 1 2 2 673 2413 28 21 87.042610 [815 1 5 1 2 3 715 2413 73 20 89.157883 F.T.C.5 1 5 1 2 4 801 2415 44 22 85.550880 201] Initial Decision 83 F.T.C.

respondent Borman by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, and by negotiating purchases of said porducts at the most favorable prices. P & R, in performing the services enumerated above, has been and is now acting as an agent or representative of respondent Borman. In such capacity, P & R is subject to and under the direct or indirect control of Borman of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, P & R has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables. DISCUSSION Complaint counsel assert that a violation of Section 2(¢) occurs whenever a broker paid by a seller performs brokerage functions of benefit to bayer as well as seller. They assert that the brokerage functions themselves as described in Paragraph 7 of the request for admissions can supply each.of the necessary elements to prove a violation.

Complaint counsel have admitted that they have no proof of price discrimination or competitive injury and that there are no contractual, financial or employment ties between respondent Bormans and the P & R Brokerage Co.

With this as a starting point, complaint counsel apparently argue that there is some sort of a fiduciary or agency relationship between the sellers and the P & R Brokerage Co. which is violated in some fashion by the P & R Brokerage Co. performing certain brokerage functions which have some value to the respondent Bormans. Complaint counsel cite no cases to support such a theory and there is nothing in the legislative history or in the actual language of Section 2(c) itself to support such a theory.

In short, complaint counsel have asserted that the performance of normal brokerage functions can itself establish that brokers are acting on behalf of buyers and that therefore the respondent Bormans should pay any fees, brokerage or salary that such brokers earn rather than the sellers of the products in question. If they do not, it is urged that Bormans has violated Section 2(c) of the Clayton Act, as amended. Complaint counsel rely heavily on Rangen, Inc. et al. v. Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 1965), and Fitch v. Kentucky-Tennessee Light and Power Co., 136 F.2d 12 (6th Cir. 1948). Neither of these cases is in point since each involves commercial bribery and is decided in terms of breach of fiduciary obligation. Indeed both of these cases were decided on the basis of a particular breach of obligation which was the very form of misconduct Section 2(c) was enacted to prevent.

All of the remaining cases involving Section 2(c) are cases where it sy mete ame 1213 Initial Decision was proven or admitted that the broker was the actual agent of the buyer or was owned by the buyer or under contract to the buyer and consequently under the buyer’s control. InF'TC v. Herzog, 150 F.2d 450 (2d Cir. 1945), the broker there involved admitted that he was acting as an agent of buyers while receiving brokerage from sellers. Likewise, in Biddle Purchasing Co. v. FTC, 96 F.2d 687 (2d-Cir. 1938), the broker there involved had entered into a written contract with the buyers to act for them as purchasing agent and to represent their best interests in all dealings with sellers.

In these proceedings, there is no allegation that the brokers are agents or employees of the buyers; rather they are admittedly independent. Furthermore, there is no intention on the part of complaint counsel to prove that brokerage was passed on to the buyers as brokerage or by any subterfuge designed to deliver brokerage to the buyers. Complaint counsel propose to offer no evidence whatsoever that the brokers acted for or in behalf of or under the control of the: buyers pursuant to any prearrangement of any kind or any contract, ownership, employment or other contractual relationship between the brokers and the buyers. Instead, it is admitted by complaint counsel that the brokers are independent intermediaries, that they render services of benefit to both buyers and sellers and that the only basis for inferring either that they acted for or under the control of buyers or that brokerage was passed on to the buyers is the fact that the buyers realized certain benefits from doing business with them. Such benefits always occur when one businessman does business with another and does not raise any factual inference either of agency or of a passing on of brokerage directly or indirectly as a subterfuge. The lack of probative value and the total legality of such benefits was recognized by the Commission as early as the A&P decision and as recently as Tillie Lewis Foods.” These two cases are dispositive of the issue presented by respondent’s motion for summary decision. The factual situations in both cases were virtually identical to the situation in this proceeding. In 1930, the Commission said in the A&P case:

In the course of conducting his business a broker must and does also render services to buyers—but those services, unlike the services rendered to the respondent by its field buying agents, are not buying services. A broker is not employed by buyers. He is employed and paid by sellers as their selling agent and he represents his seller-principals only. His activities in connection with his representation of his seller-principals are controlled by them, but, paradoxically, because of the broker’s anomalous position as an independent sales agent in business for himself, he does act for buyers in a sense and he is subject to a degree of control on their part. * In the Matter of Great Atlantic and Pacific Tea Co., FTC Docket 3031, 26 F.T.C. 486 (1980); Ji the Matter of Tillie Lewis Foods, lne., FTC Docket 7226, 65 F.T.C. 1099, 1131 (1964). Initial Decision 83 F.T.C.

This results from requests by buyers that brokers report complaints to their sellerprincipals, that brokers communicate cancellations of orders to their seller-principals, that brokers submit to their seller-principals offers of buyers to purchase commodities at prices stipulated by buyers, that brokers endeavor to make up “pool” cars of merchandise among several buyers so that the buyers may obtain the advantage of quantity prices and carload rates of freight, that brokers obtain quotations of prices from their sellerprincipals for the consideration of buyers, and, perhaps, in other ways. Naturally it is to the mutual interest and advantage of brokers and sellers to maintain the good will of their common customers, and brokers generally endeavor to comply with the reasonable requests of buyers along the lines indicated. In the course of negotiating sales from seller to buyer and bringing them into agreement brokers are necessarily guided somewhat by instructions from each, but in the essential particular of selling commodities and consummating sales they act for and are controlled by the latter alone, who in the absence of a contract may discharge them and substitute new brokers in their places at any time. Again in 1964, the Commission affirmed the propriety of the activities of field brokers in the Tillie Lewis Foods case as follows: * * * the local broker and the purchaser are generally located at considerable distances from the canners. A small canner, with a limited or no sales force, is thus unable to make known to these potential purchasers information concerning his production capabilities and the stock which he has available. On the other hand, the field broker, by reason of his location and constant contact with all canners in his area, maintains this information on a current basis. Through bulletins, letters and principally by telephone, he relays this information regularly to numerous local brokers. The field broker, upon receipt of an order from a local broker or direct purchaser, may split the order up among several small canners and coordinate the pooling of each canner’s share in shipment to the purchaser. The seller compensates the field broker for these services by a commission which is usually indicated as a deduction on the invoice. Complaint counsel’s approach to proof of a Section 2(c) violation ignores the character of brokers as intermediaries who promote trade by bringing buyers and sellers together and who act for their own interest in earning a fee and not as the representative of either party to the transaction. In some transactions, the broker may first be approached by a seller to find an outlet for the sellers’ goods; in others, the broker may be first approached by a buyer seeking a source of supply. In all instances, both buyers and sellers will benefit from the transaction. Both will receive information concerning conditions in the market and the availability of goods. Both will, by utilizing the services of the broker, save expense which they would otherwise have borne. The seller, for example, will have saved the expense of making his own buying calls direct on the buyers. Both will benefit from any negotiation the broker may have carried on to bring about a price favorable to both parties. Thereafter, both will benefit in the event of claims by one or the other. The broker, in the interest of protecting the fee which he has earned and of protecting his relationships with both parties for the future, will mediate and seek to resolve the controversy to the satisfaction of both parties. In every aspect of the brokerage function, the point BORMAN FOOD STORES, INC. 1261 1213 Initial Decision is the same; both parties benefit from the services of an independent broker, but the broker performs the services for his own purpose, which is to consummate the transaction and obtain his commission. It is no answer to suggest that independent brokers drop the contested services. The services are intrinsic to the brokerage function. Other types of middlemen engaged in distribution provide a variety of services to benefit both buyers and sellers and thereby encourage them to do business with them. These include all of the same types of benefit complaint counsel allege in this case to be the basis for implying agency. If, because of the rule of law being proposed by complaint counsel, P & R Brokerage Co. and other independnt brokers could not provide such benefits, they, of course, would not be competitive with other forms of distribution such as commission merchants, wholesalers, the seller’s own sales force and the like and would, in time, disappear from the competitive arena.

The contention of complaint counsel that the “thing of value” referred to in Section 2(c) includes the brokerage services which the broker P & R performed constitutes something as compensation which was given to the respondent must be rejected. A review of the cases decided under Section 2(c) supplies no support for this theory. In every case, the “thing of value” paid as compensation was actual cash which could be computed from the transactions there involved. In no case has the “thing of value” been equated in terms of activities inherently incidental to the performance of the brokerage function. Furthermore, the legislative history of Section 2(c) as pointed out by the Supreme Court inF'TC v. Broch & Co., 363 U.S. 166 (1960), makes it clear that the thrust of the section was to prevent price discrimination among customers of the same seller which arises when the seller pays brokerage direct to a buyer or indirectly to a buyer through a dummy broker or other representative of the buyer. In Broch, the Court stated (p. 168) that:

The Robinson-Patman Act was enacted in 1936 to curb and prohibit all devices by which Jarge buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power.

And further, the Court affirmed with respect to Section 2(c) (p. 169) that:

One of the favorite means of obtaining an indirect price concession was by setting up “dummy” brokers who were employed by the buyer and who, in many cases, rendered no services. The large buyers demanded that the seller pay “brokerage” to these fictitious brokers who then turned it over to their employer. This practice was one of the chief targets of §2(c) of the Act. But it was not the only means by which the brokerage function was abused and Congress in its wisdom phrased §2(c) broadly, * * * to cover * * * all other means by which brokerage could be used to effect price discrimination. As recently as 1967, the Commission has pointed out in an opinion, In Complaint 83 F.T.C.

the Matter of Modern Marketing Services, Inc., FTC Docket 3783, 71 F.T.C. 1676 (1685): , As we pointed out in our brief filed as amicus curiae in Empire Rayon Co., Inc., supra: “The crucial question in every case brought under Section 2(c) is whether the buyer is receiving preferential treatment effected through the payment of brokerage, or other compensation, or any allowance or discount in lieu thereof.” Complaint counsel have admitted that in this case there is neither price discrimination nor competitive injury.

CONCLUSIONS 1. The Federal Trade Commission has jurisdiction over the respondent and over the subject matter involved in this proceeding. 2. From the above discussion, it is concluded that respondent’s motion for summary decision must be granted and the complaint dismissed. ORDER It is ordered, That respondent’s motion for summary decision be, and the same hereby is, granted.

It is further ordered, That the complaint herein be, and the same hereby is, dismissed.

It is further ordered, That request for oral argument upon this motion for summary decision be denied.

Appearances For the Commission: Lowis R. Sernoff, Lewis F. Parker, Francis C. Mayer, Martin A. Rosen, James C. Donoghue and Eliot G. Disner. For the respondents: Lyne, Woodworth & Evarts, Boston, Mass. for First National Stores, Inc. Counihan, Casey & Loomis, Wash., D.C. for Ruby Produce Company, Inc. and Samuel Harry Rubenstein. COMPLAINT IN DOCKET NO. 8790 The Federal Trade Commission, having reason to belive that the parties respondent named in the caption hereof, and hereinafter more particularly described, have been and are violating the provisions of Subsection (c) of Section 2 of the Clayton Act, as amended, (15 U.S.C. Section 13) hereby issues its complaint, stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent First National Stores, Inc., hereinafter referred to as “First National,” is a corporation organized, existing, and doing business under and by virtue of the laws of the Commonwealth of Massachusetts with its office and principal place of business located at 5 Middlesex Avenue, Somerville, Mass.

PAR. 2. Respondent First National has been and is now engaged primarily in the retailing of food products and other articles for personal Awa ER ANCE AALAND AS WAU ALE, LINU., Muh ALL LaVUYN 1213 Complaint and household use and operates a large number of retail stores, including supermarkets. As of March 30, 1968, First National operated approximately 481 grocery stores in 8 States of the United States. First National’s volume of business is substantial, totalling in excess of $640 million annually as of March 30, 1968.

PAR. 3. Respondent Ruby Produce Company, Inc., hereinafter referred to as “Ruby,” is a corporation organized, existing and doing business under and by virtue of the laws of the State of New Jersey with its office and principal place of business located at Cherry Street, Pedriecktown, N.J.

Respondent Samuel Harry Rubenstein, an individual, is president of corporate respondent Ruby and is located at the same address as said corporate respondent and owns all or substantially all of its stock. He formulates, directs, and controls the acts, practices and policies of Ruby, including the acts and practices hereinafter described. . PAR. 4. Respondent Ruby has been and is now engaged in business as a “ground” or “field” broker effecting sales of fresh fruits and vegetables by sellers located in the State of Florida, and purchases by buyers located in various States of the United States other than the State of Florida. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Ruby, in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables is substantial.

PAR. 5. Respondent Ruby, in the course and conduct of its business as a “ground” or “field” broker, has been and is now effecting sales of fresh fruits and vegetables by sellers located in the State of Florida, and purchases by buyers located in various States of the United States other than the State of Florida in commerce, as “commerce” is defined in the Clayton Act. Said respondent has transported or caused such products to be transported from the sellers’ places of business to the buyers’ _ places of business located in other states. Thus, there has been, at all times mentioned herein, a continuous course of trade in commerce in effecting purchases and sales of such products by said respondent Ruby. Par. 6. In the course and conduct of its business for the past several years, respondent First National has purchased, distributed and resold, and is now purchasing, distributing and reselling, food products and other articles for personal and household use, including fresh fruits and vegetables, in commerce, as “commerce” is defined in the Clayton Act, which it purchased from sellers located in several States of the United States other than the Commonwealth of Massachusetts in which respondent First National is located. First National purchases these food Complaint 83 F.T.C.

products, including fresh fruits and vegetables, and causes them to be . transported from the growing areas or packing plants of sellers located in various States of the United States to First National’s warehouses and retail stores in the Commonwealth of Massachusetts and various other States in the United States. Thus, there has been and is now a continuous course of trade in commerce in the purchase and resale of said food products by respondent First National. PAR. 7. In the course and conduct of its business, respondent First National has been and is now utilizing the services of respondent Ruby as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Ruby performs valuable services for respondent First National and other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, by negotiating purchases of said products at the most favorable prices and by arranging pool car shipments from various sellers. Respondent Ruby, in performing the services enumerated above, has been and is now acting as an agent or representative of respondent First National and other buyers. In such capacity, Ruby is subject to and under the direct or indirect control of First National and other buyers of fresh fruits and vegetables in transactions with sellers. In connection with such transactions, respondent Ruby has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables. PAR. 8. Respondent First National and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Ruby without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent Ruby has been and is now collecting and receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent First National and other buyers, or has been and is now subject to the direct or indirect control of respondent First National and other buyers.

PAR. 9. The aforesaid acts and practices of respondents and each of them in receiving and accepting, directly or indirectly, anything of value as a commission, brokerage or other compensation or any allowance or discount in lieu thereof from sellers, are in violation of Subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. Commissioners Elman and Nicholson dissented and filed dissenting statements.* *For reasons of economy, the text of the dissenting statements of Commissioners Elman and Nicholson are not published herein. However, they appear at 81 F.T.C. 203-214, Docket 8789. FIRST NATIONAL STORES, INC., ET AL. 1265 1213 Initial Decision Commissioners Dixon and MacIntyre filed separate statements.* INITIAL DECISION [IN DOCKET 8790] BY ANDREW C. GOODHOPE, ADMINISTRATIVE LAW JUDGE AUGUST 38, 1973 PRELIMINARY STATEMENT The complaint in this matter was issued by the Commission on July 10, 1969. Thereafter extended litigation took place both in the courts and before the Commission itself. On June 5, 1972, respondents filed answers to the complaint in which they admitted certain allegations in the complaint but denied that they had violated Section 2(c) of the Robinson-Patman Act as alleged in the complaint. The matter was assigned to the undersigned administrative law judge on Apr. 13, 1973. Extensive pretrial preparations have been made and on June 4, 1973, the respondents filed a motion for summary decision pursuant to Section 3.24 of the rules of practice of the Commission. This motion was predicated upon respondents’ request for admissions of complaint counsel’s contentions of law and fact, the response of complaint counsel to such request and a stipulation entered into between complaint counsel and counsel for the respondents, all of which are a part of the record herein. _The respondents’ motion for summary decision and opposition thereto have been fully briefed. Based upon the complaint, respondents’ answers thereto, the request for admissions and the response thereto and the stipulation entered into between the parties, the administrative law judge makes the following findings of fact. FINDINGS OF FACT 1. Respondent First National Stores, Inc. (First National) is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Massachusetts with its office and principal place of business located at 5 Middlesex Avenue, Somerville, Mass. 2. Respondent First National has been and is now engaged primarily in the retailing of food products and other articles for personal and household use and operates a large number of retail stores, including supermarkets. As of Mar. 30, 1968, First National operated approximately 481 grocery stores in eight States of the United States. First National’s volume of business is substantial, totaling in excess of 640 million dollars annually as of Mar. 30, 1968. 3. Respondent Ruby Produce Company, Inc. (Ruby) is a corporation =Por reasons of economy, the text of the separate statements of Commissioners Dixon and MacIntyre are not published herein. However, they appear at 81 F.T.C, 214-215, Docket 8789. Initial Decision 83 F.T.C.

organized, existing and doing business under and by virtue of the laws of the State of New Jersey with its office and principal place of business located at Cherry Street, Pedricktown, N.J. 4. Respondent Samuel Harry Rubenstein, an individual, is president of corporate respondent Ruby and is located at the same address as said corporate respondent and owns all or substantially all of its stock. He formulates, directs and controls the acts, practices and policies of Ruby, including the acts and practices hereinafter described. 5. Respondent Ruby has been and is now engaged in business as a “ground” and “field” broker effecting sales of fresh fruits and vegetables by sellers located in the State of Florida and purchases by buyers located in various States of the United States other than the State of Florida. In such capacity, respondent has demanded and received commissions, brokerage or other compensation in connection with effecting purchases and sales of fresh fruits and vegetables. The annual volume of business of Ruby, in its capacity as a “ground” or “field” broker in effecting purchases and sales of fresh fruits and vegetables, is substantial.

6. Respondent First National and respondent Ruby are both engaged in commerce as “commerce” is defined in the Clayton Act. Admissions As a result of respondents’ request for admissions and complaint counsel’s response thereto:

1. Buyer respondent does not own or have any financial or other interest in the business of the broker respondent, and does not in any way share in the profits or losses of the broker respondent. 2. No director, officer or employee of buyer respondent owns all or any part of the broker respondent, or has any financial or other interest in the business of the broker respondent or shares in any way in the profits or losses of the broker respondent. 3. The broker respondent is not a director, officer, manager or shareholder of buyer respondent or other buyers; and no director, officer or employee of buyer respondent is a director, officer, manager or shareholder of the broker respondent.

4. There are no common officers, directors, shareholders, employees or other personnel between respondent broker and buyers with whom respondent broker deals.

5. Broker respondent has not entered into any express contract or agreement to act as an agent, representative or other intermediary of buyer respondent or other buyers or for or in behalf of, or subject to the direct or indirect control of buyer respondent or other buyers. 6. The broker respondent was an independently owned and managed FLKS'T NATIONAL STORES, INC., ET AL. 1267 1213 Initial Decision business entity which performed bona fide brokerage functions of benefit to both buyers and sellers; and was not a so-called “dummy broker.”

7. Complaint counsel expect to prove that the broker respondent acted as agent or representative for, or in behalf of or subject to the direct or indirect control of respondent buyer and other buyers by inference from the following:

(a) That respondent buyer and other buyers have “utilized” the services of the respondent broker as a “ground” or “field” broker in the purchase of fresh fruits and vegetables and usually not the services of other “ground” or “field” brokers.

(b) That the respondent broker performs services which are valuable to respondent buyer and other buyers by (i) furnishing information concerning market conditions, (ii) maintaining contact with various sellers, (ili) inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, and (iv) negotiating purchases of specified qualities and quantities of fresh fruits and vegetables. 8. Respondent buyer and other buyers have not paid brokerage or other compensation to the broker respondent and such brokerage has been paid by sellers.

9. Complaint counsel does not contend that the buyer respondent has received or accepted any monetary payments or anything of value other than benefits complaint counsel contend arise from broker respondent’s performance of the functions referred to in Paragraph 7, supra. 10. Complaint counsel expect to offer no evidence that the acts and practices of respondents alleged in the complaint in this matter have resulted in price discrimination or may be substantially to lessen competition or tend to create a monopoly or injure, destroy or prevent competition. Complaint counsel do contend that the acts and practices alleged are unfair.

At the same time as making the admissions set forth above, complaint counsel entered into a stipulation with counsel for the respondents as follows:

A. If, as a matter of law, complaint counsel must prove the contrary of any one or more of the matters set forth in Paragraphs 1 through 6, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. B. If, as a matter of law, complaint counsel must prove that buyer respondent has received or accepted any monetary payments or anything of value other than the services described in Paragraph 7(b) then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact. C. If, as a matter of law, complaint counsel must prove that the acts Initial Decision 83 F.T.C.

and practices of respondents have resulted in price discrimination or may be substantially to lessen competition, then the proposed evidence referred to in Paragraphs 7 and 8 of the admissions of complaint counsel does not raise a material issue of fact.

D. If, as a matter of law, the proposed evidence of complaint counsel set forth in Paragraph 7 of the admissions of complaint counsel does not establish that the broker respondent acted as agent, representative or other intermediary for, or in behalf of, or subject to the direct or indirect control of buyers, then there is no genuine issue as to material facts in this matter.

Paragraphs 7. and 8. of the complaint charge the two corporate respondents and the individual respondent with violations of Section 2(e) of the Clayton Act as follows:

PAR. 7. In the course and conduct of its business, respondent First National has been and is now utilizing the services of respondent Ruby as a “ground” or “field” broker in the purchase of fresh fruits and vegetables from numerous sellers. Respondent Ruby performs valuable services for respondent First National and other buyers by furnishing information concerning market conditions, by maintaining contact with various sellers, by inspecting and selecting specified qualities and quantities of fresh fruits and vegetables, by negotiating purchases of said products at the most favorable prices and by arranging pool car shipments from various sellers. Respondent Ruby, in performing the services enumerated above, has been and is now acting as an agent or representative of respondent First National and other buyers. In such capacity, Ruby is subject to and under the direct or indirect control of First National and other buyers of fresh fruits and vegetables in tranactions with sellers. In connection with such transactions, respondent Ruby has been and is now collecting and receiving brokerage, commissions or other compensation from sellers of fresh fruits and vegetables.

Par. 8. Respondent First National and other buyers have received and are now receiving valuable “ground” or “field” broker services from respondent Ruby without paying, either directly or indirectly, any brokerage, commissions or other compensation to said broker. At the same time, respondent Ruby has been and is now collecting and _ receiving, directly or indirectly, brokerage, commissions or other compensation from sellers, when, in fact, it has been and is now acting for or in behalf of respondent First National and other buyers, or has been and is now subject to the direct or indirect control of respondent First National and other buyers. Discussion Complaint counsel assert that a violation of Section 2(c) occurs whenever a broker paid by a seller performs brokerage functions of benefit to buyer as well as seller. They assert that the brokerage functions themselves as described in Paragraph 7 of the request for admissions can supply each of the necessary elements to prove a violation.

Complaint counsel have admitted that they have no proof of price discrimination or competitive injury and that there are no contractual, financial or employment ties between respondent First National and respondent Ruby.

FIRST NATIONAL STORES, INC., ET AL. 1269 1213 Initial Decision With this as a starting point, complaint counsel apparently argue that there is some sort of a fiduciary or agency relationship between First National and Ruby which is violated in some fashion by Ruby performing certain brokerage functions which have some value to respondent First National. Complaint counsel cite no cases to support such a theory and there is nothing in the legislative history or in the actual language of Section 2(c) itself to support such a theory. In short, complaint counsel have asserted that the performance of normal brokerage functions can itself establish that brokers are acting on behalf of buyers and that therefore the respondent First National should pay any fees, brokerage or salary that such brokers earn rather than the sellers of the products in question. If they do not, it is urged that First National and Ruby both have violated Section 2(c) of the Clayton Act, as amended.

Complaint counsel rely heavily on Rangen, Inc. et al. v. Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 1965), and Fitch v. Kentucky-Tennessee Light and Power Co., 136 F.2d 12 (6th Cir. 1943). Neither of these cases is in point since each involves commercial bribery and is decided in terms of breach of fiduciary obligation. Indeed both of these cases were decided on the basis of a particular breach of obligation which was the very form of misconduct Section 2(c) was enacted to prevent.

All of the remaining cases involving Section 2(c) are cases where it was proven or admitted that the broker was the actual agent of the buyer or was owned by the buyer or under contract to the buyer and consequently under the buyer’s control. InFTC v. Herzog, 150 F.2d 450 (2d Cir. 1945), the broker there involved admitted that he was acting as an agent of buyers while receiving brokerage from sellers. Likewise, in Biddle Purchasing Co. v. FTC, 96 F.2d 687 (2d Cir. 1938), the broker there involved had entered into a written contract with the buyers to act for them as purchasing agent and to represent their best interests in all dealings with sellers.

In these proceedings, there is no allegation that the brokers are agents or employees of the buyer; rather they are admittedly independent. Furthermore, there is no intention on the part of complaint counsel to prove that brokerage was passed on to the buyer as brokerage or by any subterfuge designed to deliver brokerage to the buyer. Complaint counsel propose to offer no evidence whatsoever that the brokers acted for or in behalf of or under the control of the buyer pursuant to any prearrangement of any kind or any contract, ownership, employment or other contractual relationship between the brokers and the buyer. Instead, it is admitted by complaint counsel that the brokers are independent intermediaries, that they render services of Initial Decision 83 F.T.C.

benefit to both buyer and sellers and that the only basis for interferring either that they acted for or under the control of buyer or that brokerage was passed on to the buyer is the fact that the buyer realized certain benefits from doing business with them. Such benefits always occur when one businessman does business with another and does not raise any factual inference either of agency or of a passing on of brokerage directly or indirectly as a subterfuge. The lack of probative value and the total legality of such benefits was recognized by the Commission as early as the A&P decision and as recently as Tillie Lewis Foods.' These two cases are dispositive of the issue presented by respondents’ motion for summary decision. The factual situations in both cases were virtually identical to the situation in this proceeding. In 1930, the Commission said in the A&P case: “ In the course of conducting his business a broker must and does also render services to buyers—but those services, unlike the services rendered to the respondent by its field buying agents, are not buying services. A broker is not employed by buyers. He is employed and paid by sellers as their selling agent and he represents his seller-principals 4 1 3 1 5 0 698 1270 1333 37 -1 5 1 3 1 5 1 698 1275 69 32 96.927475 only.5 1 3 1 5 2 791 1274 48 26 96.662209 His5 1 3 1 5 3 860 1274 133 25 96.044365 activities5 1 3 1 5 4 1013 1274 26 24 96.044365 in5 1 3 1 5 5 1060 1273 156 26 96.447227 connections 1 3 1 5 6 1237 1272 64 25 96.593475 with5 1 3 1 5 7 1321 1272 42 25 96.949783 his5 1 3 1 5 8 1384 1271 216 33 96.359810 representations 1 3 1 5 9 1621 1271 28 25 96.989510 of5 1 3 1 5 10 1666 1271 42 25 93.177460 his5 1 3 1 5 11 1729 1270 237 32 91.619720 seller-principals5 1 3 1 5 12 1987 1277 44 17 96.637749 area 1 3 1 6 0 698 1311 1332 37 -1 5 1 3 1 6 1 698 1316 145 26 95.677322 controlled5 1 3 1 6 2 857 1316 35 32 96.915459 by5 1 3 1 6 3 906 1316 83 29 96.366409 them,5 1 3 1 6 4 1005 1316 56 29 96.723259 but,5 1 3 1 6 5 1077 1314 207 33 96.764900 paradoxically,5 1 3 1 6 6 1300 1314 115 25 96.911736 because5 1 3 1 6 7 1427 1313 27 26 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1 3 1 7 17 1966 1353 34 25 93.340904 he5 1 3 1 7 18 2011 1353 19 26 93.340904 is4 1 3 1 8 0 699 1398 656 33 -1 5 1 3 1 8 1 699 1401 105 30 96.086357 subjects 1 3 1 8 2 817 1403 28 22 96.620415 to5 1 3 1 8 3 858 1407 15 18 96.620415 a5 1 3 1 8 4 886 1400 100 31 96.029694 degrees 1 3 1 8 5 1000 1399 28 25 96.628746 of5 1 3 1 8 6 1039 1398 101 25 96.551392 controls 1 3 1 8 7 1154 1406 33 16 96.427727 on5 1 3 1 8 8 1201 1398 71 24 96.736000 theirs 1 3 1 8 9 1285 1400 70 29 96.735535 part.3 1 3 2 0 0 699 1436 1337 572 -1 4 1 3 2 1 0 732 1436 1298 35 -1 5 1 3 2 1 1 732 1441 62 25 96.874352 This5 1 3 2 1 2 811 1440 99 26 96.468407 results5 1 3 2 1 3 926 1440 69 25 96.771278 from5 1 3 2 1 4 1011 1442 127 29 96.277420 requests5 1 3 2 1 5 1154 1439 34 31 96.462555 by5 1 3 2 1 6 1205 1439 100 31 96.604698 buyers5 1 3 2 1 7 1322 1438 60 25 96.764603 that5 1 3 2 1 8 1397 1437 112 26 96.345177 brokers5 1 3 2 1 9 1526 1440 93 30 96.329651 reports 1 3 2 1 10 1636 1437 158 32 96.711273 complaints5 1 3 2 1 11 1811 1439 27 22 96.706093 to5 1 3 2 1 12 1855 1436 72 25 93.250626 theirs 1 3 2 1 13 1941 1436 89 25 92.990517 seller-4 1 3 2 2 0 699 1478 1332 37 -1 5 1 3 2 2 1 699 1483 151 32 94.297211 principals,5 1 3 2 2 2 862 1483 60 24 97.012077 that5 1 3 2 2 3 932 1482 113 25 96.121223 brokers5 1 3 2 2 4 1056 1481 192 25 96.363297 communicates 1 3 2 2 5 1260 1480 188 26 96.759254 cancellations5 1 3 2 2 6 1458 1480 27 26 96.968048 of5 1 3 2 2 7 1494 1480 94 25 96.923714 orders5 1 3 2 2 8 1598 1482 28 22 96.775040 to5 1 3 2 2 9 1637 1479 72 25 96.946198 theirs 1 3 2 2 10 1718 1479 81 25 96.006561 sellers 1 3 2 2 11 1807 1478 154 32 96.530457 principals,5 1 3 2 2 12 1973 1478 58 24 97.009544 that4 1 3 2 3 0 701 1520 1335 35 -1 5 1 3 2 3 1 701 1527 112 24 96.806458 brokers5 1 3 2 3 2 832 1526 100 25 96.569443 submits 1 3 2 3 3 950 1527 28 23 96.569443 to5 1 3 2 3 4 997 1524 72 25 93.275826 theirs 1 3 2 3 5 1087 1523 237 32 92.548271 seller-principals5 1 3 2 3 6 1342 1523 84 25 96.636566 offers5 1 3 2 3 7 1445 1522 28 25 96.501915 of5 1 3 2 3 8 1489 1522 100 32 96.720871 buyers5 1 3 2 3 9 1607 1524 28 22 96.393814 to5 1 3 2 3 10 1653 1521 134 32 96.368187 purchases 1 3 2 3 11 1806 1520 185 25 96.609131 commodities5 1 3 2 3 12 2008 1522 28 23 96.908669 at4 1 3 2 4 0 700 1560 1331 38 -1 5 1 3 2 4 1 700 1566 85 32 96.690338 prices5 1 3 2 4 2 797 1566 145 32 96.978470 stipulated5 1 3 2 4 3 955 1566 34 31 97.013458 by5 1 3 2 4 4 1002 1565 108 31 96.854736 buyers,5 1 3 2 4 5 1123 1564 59 25 96.636047 that5 1 3 2 4 6 1194 1563 113 26 97.005180 brokers5 1 3 2 4 7 1318 1563 138 25 96.545135 endeavors 1 3 2 4 8 1464 1566 28 22 96.984375 to5 1 3 2 4 9 1504 1563 77 24 96.905952 makes 1 3 2 4 10 1593 1570 33 24 97.010887 up5 1 3 2 4 11 1638 1562 90 32 95.529549 “pool”5 1 3 2 4 12 1739 1569 59 18 96.317635 cars5 1 3 2 4 13 1810 1562 28 25 96.923859 of5 1 3 2 4 14 1847 1560 184 27 96.428787 merchandise4 1 3 2 5 0 700 1602 1330 38 -1 5 1 3 2 5 1 700 1616 96 24 96.232460 among5 1 3 2 5 2 806 1608 105 25 96.832733 several5 1 3 2 5 3 924 1608 98 30 96.871048 buyers5 1 3 2 5 4 1034 1614 30 17 96.927635 so5 1 3 2 5 5 1075 1606 59 25 96.716888 that5 1 3 2 5 6 1146 1606 46 24 96.967392 thes 1 3 2 5 7 1203 1605 100 32 96.864876 buyers5 1 3 2 5 8 1315 1613 61 24 96.672134 may5 1 3 2 5 9 1388 1605 90 25 96.242165 obtains 1 3 2 5 10 1489 1605 46 24 96.548271 thes 1 3 2 5 11 1546 1605 152 31 96.470894 advantages 1 3 2 5 12 1710 1604 28 25 97.000710 of5 1 3 2 5 13 1747 1603 124 32 96.783073 quantity5 1 3 2 5 14 1883 1602 87 33 96.929832 prices5 1 3 2 5 15 1981 1602 49 25 97.005882 anda 1 3 2 6 0 700 1644 1331 36 -1 5 1 3 2 6 1 700 1650 104 25 87.768822 carloads 1 3 2 6 2 825 1653 74 21 96.456863 rates5 1 3 2 6 3 921 1650 28 24 96.694382 of5 1 3 2 6 4 966 1649 111 31 96.613838 freight,5 1 3 2 6 5 1100 1648 60 25 96.613838 that5 1 3 2 6 6 1182 1647 112 26 96.430977 brokers5 1 3 2 6 7 1316 1647 91 25 96.451958 obtains 1 3 2 6 8 1429 1647 154 32 96.626434 quotations5 1 3 2 6 9 1604 1647 28 24 96.841713 of5 1 3 2 6 10 1650 1646 89 31 96.542992 prices5 1 3 2 6 11 1760 1646 69 25 94.677414 from5 1 3 2 6 12 1850 1645 72 25 92.775497 theirs 1 3 2 6 13 1942 1644 89 25 91.713562 seller-4 1 3 2 7 0 700 1685 1332 37 -1 5 1 3 2 7 1 700 1690 141 32 96.770592 principals5 1 3 2 7 2 854 1690 42 25 96.980904 for5 1 3 2 7 3 908 1690 46 25 96.973053 thes 1 3 2 7 4 967 1689 196 26 96.346077 considerations 1 3 2 7 5 1177 1689 28 24 95.954453 of5 1 3 2 7 6 1214 1689 110 31 96.844368 buyers,5 1 3 2 7 7 1339 1688 61 29 96.952141 and,5 1 3 2 7 8 1414 1688 127 31 96.892494 perhaps,5 1 3 2 7 9 1555 1687 25 25 96.892494 in5 1 3 2 7 10 1594 1687 78 25 96.058075 others 1 3 2 7 11 1684 1695 83 23 96.879341 ways.5 1 3 2 7 12 1783 1686 143 30 96.597816 Naturally5 1 3 2 7 13 1937 1685 22 25 96.857941 it5 1 3 2 7 14 1971 1685 22 25 97.009285 is5 1 3 2 7 15 2005 1688 27 22 96.924889 to4 1 3 2 8 0 700 1726 1333 35 -1 5 1 3 2 8 1 700 1731 46 25 96.780777 thes 1 3 2 8 2 757 1731 100 25 96.684509 mutual5 1 3 2 8 3 868 1731 116 25 96.714279 interests 1 3 2 8 4 994 1731 51 24 95.884377 ands 1 3 2 8 5 1057 1731 152 30 96.837761 advantages 1 3 2 8 6 1221 1730 27 25 97.010834 of5 1 3 2 8 7 1258 1729 112 26 97.000504 brokers5 1 3 2 8 8 1381 1729 51 25 96.985001 ands 1 3 2 8 9 1444 1729 94 26 96.602127 sellers5 1 3 2 8 10 1549 1731 28 23 96.756340 to5 1 3 2 8 11 1588 1728 127 25 96.730301 maintains 1 3 2 8 12 1727 1728 46 24 96.702301 thes 1 3 2 8 13 1783 1727 69 33 96.702301 goods 1 3 2 8 14 1864 1727 51 25 96.719887 will5 1 3 2 8 15 1927 1727 27 25 97.014168 of5 1 3 2 8 16 1962 1726 71 25 96.768471 their4 1 3 2 9 0 702 1761 1334 42 -1 5 1 3 2 9 1 702 1780 120 17 96.734192 common5 1 3 2 9 2 838 1774 160 28 96.257210 customers,5 1 3 2 9 3 1015 1772 52 24 96.716393 ands 1 3 2 9 4 1083 1772 113 25 96.614189 brokers5 1 3 2 9 5 1212 1772 137 31 96.664551 generally5 1 3 2 9 6 1366 1772 136 25 96.559219 endeavors 1 3 2 9 7 1516 1773 28 24 96.686363 to5 1 3 2 9 8 1559 1771 105 32 96.420700 comply5 1 3 2 9 9 1680 1770 65 25 96.484268 with5 1 3 2 9 10 1760 1770 47 25 96.505638 thes 1 3 2 9 11 1822 1770 160 25 95.853676 reasonable5 1 3 2 9 12 1998 1761 38 33 92.522293 re-4 1 3 2 10 0 701 1811 1331 36 -1 5 1 3 2 10 1 701 1818 93 29 52.733185 ‘quests5 1 3 2 10 2 806 1815 27 25 96.267319 of5 1 3 2 10 3 843 1815 99 31 97.003075 buyers5 1 3 2 10 4 953 1815 78 31 96.771530 along5 1 3 2 10 5 1042 1815 46 24 96.771530 thes 1 3 2 10 6 1099 1814 66 25 96.982285 lines5 1 3 2 10 7 1177 1814 142 25 96.750023 indicated.5 1 3 2 10 8 1333 1814 30 24 96.969025 In5 1 3 2 10 9 1375 1813 47 25 97.011154 thes 1 3 2 10 10 1432 1821 94 18 96.752304 courses 1 3 2 10 11 1537 1813 28 25 97.009872 of5 1 3 2 10 12 1574 1812 169 32 96.947884 negotiating5 1 3 2 10 13 1753 1812 70 25 96.745728 sales5 1 3 2 10 14 1835 1812 69 24 96.915344 from5 1 3 2 10 15 1915 1811 81 25 96.615707 sellers 1 3 2 10 16 2005 1813 27 22 96.901329 to4 1 3 2 11 0 702 1850 1330 37 -1 5 1 3 2 11 1 702 1855 83 32 96.259575 buyers 1 3 2 11 2 801 1855 51 24 96.292244 ands 1 3 2 11 3 871 1854 123 32 96.067253 bringing5 1 3 2 11 4 1010 1854 74 25 96.896553 them5 1 3 2 11 5 1101 1854 55 24 95.977859 into5 1 3 2 11 6 1171 1855 159 30 95.928062 agreements 1 3 2 11 7 1348 1853 111 25 95.928062 brokers5 1 3 2 11 8 1474 1860 47 18 96.816803 ares 1 3 2 11 9 1539 1851 162 32 96.079796 necessarily5 1 3 2 11 10 1718 1851 99 33 96.079796 guided5 1 3 2 11 11 1834 1850 148 26 96.676178 somewhat5 1 3 2 11 12 1999 1850 33 31 96.575195 by4 1 3 2 12 0 701 1893 1335 34 -1 5 1 3 2 12 1 701 1897 176 26 96.725182 instructions5 1 3 2 12 2 888 1897 68 24 95.997360 from5 1 3 2 12 3 968 1897 74 30 95.997360 each,5 1 3 2 12 4 1056 1897 50 25 96.396713 but5 1 3 2 12 5 1116 1896 26 25 96.589813 in5 1 3 2 12 6 1155 1896 45 25 96.906067 thes 1 3 2 12 7 1213 1896 128 25 96.885635 essentials 1 3 2 12 8 1354 1895 145 32 96.790894 particulars 1 3 2 12 9 1510 1894 29 27 96.939415 of5 1 3 2 12 10 1548 1894 96 33 96.865791 selling5 1 3 2 12 11 1654 1893 187 26 96.290733 commodities5 1 3 2 12 12 1852 1893 52 25 93.067421 ands 1 3 2 12 13 1916 1899 120 18 92.422966 consum-4 1 3 2 13 0 703 1934 1330 35 -1 5 1 3 2 13 1 703 1938 100 31 96.636749 mating5 1 3 2 13 2 817 1938 69 25 96.379539 sales5 1 3 2 13 3 900 1937 64 32 96.618858 they5 1 3 2 13 4 979 1939 42 23 96.992134 acts 1 3 2 13 5 1035 1937 41 24 97.004768 for5 1 3 2 13 6 1089 1936 50 26 96.975327 ands 1 3 2 13 7 1153 1944 46 17 96.595963 ares 1 3 2 13 8 1214 1936 145 25 96.628777 controlled5 1 3 2 13 9 1375 1936 34 32 96.199173 by5 1 3 2 13 10 1422 1936 47 24 96.199173 thes 1 3 2 13 11 1483 1936 82 25 96.086189 latter5 1 3 2 13 12 1577 1935 85 30 96.086189 alone,5 1 3 2 13 13 1678 1935 61 25 96.111771 who5 1 3 2 13 14 1751 1935 25 25 96.826378 in5 1 3 2 13 15 1791 1935 47 25 96.582893 thes 1 3 2 13 16 1852 1934 114 26 96.503792 absence5 1 3 2 13 17 1980 1934 28 25 95.922340 of5 1 3 2 13 18 2019 1941 14 17 95.922340 a4 1 3 2 14 0 702 1973 1283 35 -1 5 1 3 2 14 1 702 1979 120 23 96.000137 contracts 1 3 2 14 2 836 1985 59 23 96.426506 may5 1 3 2 14 3 910 1977 139 31 96.685051 discharges 1 3 2 14 4 1063 1976 75 25 96.687225 them5 1 3 2 14 5 1152 1976 50 25 96.694374 ands 1 3 2 14 6 1216 1975 149 26 96.730354 substitutes 1 3 2 14 7 1380 1983 59 17 96.529541 news 1 3 2 14 8 1453 1974 112 26 96.350433 brokers5 1 3 2 14 9 1578 1974 26 25 96.996117 in5 1 3 2 14 10 1618 1974 71 25 96.657234 theirs 1 3 2 14 11 1702 1974 89 31 96.866440 places5 1 3 2 14 12 1804 1976 29 23 96.866440 at5 1 3 2 14 13 1847 1981 51 24 96.242378 any5 1 3 2 14 14 1912 1973 73 25 96.242378 time.2 1 4 0 0 0 699 2024 1329 89 -1 3 1 4 1 0 0 699 2024 1329 89 -1 4 1 4 1 1 0 740 2024 1288 46 -1 5 1 4 1 1 1 740 2031 109 39 96.615005 Again5 1 4 1 1 2 861 2030 32 31 96.615005 in5 1 4 1 1 3 910 2031 88 36 96.952911 1964,5 1 4 1 1 4 1013 2029 58 31 96.926628 thes 1 4 1 1 5 1084 2028 224 32 96.432770 Commissions 1 4 1 1 6 1320 2028 155 31 96.486145 affirmed5 1 4 1 1 7 1489 2028 58 31 97.016487 thes 1 4 1 1 8 1559 2026 176 41 96.413971 propriety5 1 4 1 1 9 1747 2026 36 32 96.844826 of5 1 4 1 1 10 1792 2026 58 31 96.794724 thes 1 4 1 1 11 1862 2024 166 32 96.627113 activities4 1 4 1 2 0 699 2077 1078 36 -1 5 1 4 1 2 1 699 2082 35 31 96.985100 of5 1 4 1 2 2 748 2079 78 34 96.628113 fields 1 4 1 2 3 843 2081 140 32 96.232956 brokers5 1 4 1 2 4 1000 2080 33 30 96.893837 in5 1 4 1 2 5 1049 2079 58 31 96.932915 thes 1 4 1 2 6 1123 2079 98 31 96.445381 Tillie5 1 4 1 2 7 1237 2079 108 31 96.603027 Lewis5 1 4 1 2 8 1360 2078 112 31 96.144737 Foods5 1 4 1 2 9 1492 2088 77 21 96.261520 cases 1 4 1 2 10 1585 2087 37 22 96.904350 as5 1 4 1 2 11 1639 2077 138 31 96.707466 follows:2 1 5 0 0 0 698 2147 1332 328 -1 3 1 5 1 0 0 698 2147 1332 328 -1 4 1 5 1 1 0 698 2147 1331 36 -1 5 1 5 1 1 1 698 2154 12 14 90.679756 *5 1 5 1 1 2 727 2154 12 14 51.577206 ©5 1 5 1 1 3 784 2154 46 25 96.220039 thes 1 5 1 1 4 845 2153 65 26 96.220039 local5 1 5 1 1 5 925 2152 97 27 96.010162 brokers 1 5 1 1 6 1036 2151 51 26 96.010162 ands 1 5 1 1 7 1102 2151 46 25 96.098640 thes 1 5 1 1 8 1162 2151 148 32 96.378777 purchasers 1 5 1 1 9 1323 2158 47 18 96.786598 ares 1 5 1 1 10 1385 2150 136 32 96.670082 generally5 1 5 1 1 11 1536 2149 103 26 96.929123 located5 1 5 1 1 12 1654 2151 28 23 97.008987 at5 1 5 1 1 13 1696 2148 185 26 96.383415 considerable5 1 5 1 1 14 1895 2147 134 26 96.990799 distances4 1 5 1 2 0 700 2188 1329 35 -1 5 1 5 1 2 1 700 2196 66 25 96.399910 from5 1 5 1 2 2 779 2196 46 25 93.268440 thes 1 5 1 2 3 836 2202 122 18 93.209229 canners.5 1 5 1 2 4 973 2195 23 24 96.681908 A5 1 5 1 2 5 1008 2194 76 25 90.822937 small5 1 5 1 2 6 1096 2201 106 22 96.305740 canner,5 1 5 1 2 7 1217 2193 63 25 96.963394 with5 1 5 1 2 8 1294 2201 15 17 94.362976 a5 1 5 1 2 9 1320 2193 101 25 94.362976 limited5 1 5 1 2 10 1434 2200 30 18 96.722115 or5 1 5 1 2 11 1474 2200 34 17 96.722115 no5 1 5 1 2 12 1519 2192 70 25 96.608429 sales5 1 5 1 2 13 1601 2192 81 31 96.714256 force,5 1 5 1 2 14 1696 2191 22 25 96.997177 is5 1 5 1 2 15 1731 2191 62 25 96.767014 thus5 1 5 1 2 16 1806 2190 96 25 96.307205 unable5 1 5 1 2 17 1914 2191 27 24 96.307205 to5 1 5 1 2 18 1954 2188 75 25 96.956924 make4 1 5 1 3 0 701 2230 1329 38 -1 5 1 5 1 3 1 701 2238 94 25 95.685814 known5 1 5 1 3 2 811 2239 27 23 95.685814 to5 1 5 1 3 3 855 2237 77 26 96.227066 these5 1 5 1 3 4 949 2235 128 33 96.375656 potential5 1 5 1 3 5 1094 2235 161 32 96.320396 purchasers5 1 5 1 3 6 1271 2234 172 26 96.602982 information5 1 5 1 3 7 1459 2233 160 32 96.775520 concerning5 1 5 1 3 8 1634 2233 41 25 96.731667 his5 1 5 1 3 9 1691 2232 158 33 96.698654 productions 1 5 1 3 10 1866 2230 164 33 96.339470 capabilities4 1 5 1 4 0 700 2271 1330 35 -1 5 1 5 1 4 1 700 2280 50 25 96.484657 ands 1 5 1 4 2 762 2279 46 25 96.484657 thes 1 5 1 4 3 819 2279 75 25 96.269615 stocks 1 5 1 4 4 907 2278 83 25 96.442833 which5 1 5 1 4 5 1002 2278 34 25 96.417328 he5 1 5 1 4 6 1046 2278 48 25 96.717880 has5 1 5 1 4 7 1105 2277 139 25 93.285034 available.5 1 5 1 4 8 1258 2277 97 25 92.813789 On-thes 1 5 1 4 9 1366 2276 79 26 96.999405 others 1 5 1 4 10 1456 2276 79 30 96.792496 hand,5 1 5 1 4 11 1548 2276 47 25 96.962135 thes 1 5 1 4 12 1606 2275 61 25 96.617264 fields 1 5 1 4 13 1680 2274 107 31 96.617264 broker,5 1 5 1 4 14 1801 2274 34 31 97.002434 by5 1 5 1 4 15 1847 2280 96 19 96.647003 reasons 1 5 1 4 16 1954 2272 28 25 96.904655 of5 1 5 1 4 17 1990 2271 40 26 96.918167 his4 1 5 1 5 0 701 2315 1329 33 -1 5 1 5 1 5 1 701 2321 110 26 96.555199 locations 1 5 1 5 2 825 2321 50 25 96.747734 ands 1 5 1 5 3 889 2322 124 24 96.834084 constant5 1 5 1 5 4 1024 2322 106 23 96.482399 contacts 1 5 1 5 5 1143 2319 62 25 96.644386 with5 1 5 1 5 6 1219 2319 31 25 93.150520 all5 1 5 1 5 7 1264 2327 113 17 93.057907 canners5 1 5 1 5 8 1390 2318 25 26 95.873444 in5 1 5 1 5 9 1427 2318 42 26 96.355545 his5 1 5 1 5 10 1480 2326 72 22 96.131577 area,5 1 5 1 5 11 1567 2317 143 26 96.411934 maintains5 1 5 1 5 12 1722 2317 53 25 96.189400 this5 1 5 1 5 13 1788 2315 172 26 96.180916 information5 1 5 1 5 14 1972 2322 31 17 96.366913 on5 1 5 1 5 15 2017 2322 13 17 96.366913 a4 1 5 1 6 0 701 2355 1329 38 -1 5 1 5 1 6 1 701 2365 107 23 94.357292 currents 1 5 1 6 2 829 2362 79 26 94.357292 basis.5 1 5 1 6 3 929 2361 126 32 96.488258 Through5 1 5 1 6 4 1074 2361 135 30 96.645370 bulletins,5 1 5 1 6 5 1229 2361 97 25 96.924110 letters5 1 5 1 6 6 1346 2360 50 26 96.895546 ands 1 5 1 6 7 1417 2359 154 33 96.807182 principally5 1 5 1 6 8 1592 2359 33 31 96.588806 by5 1 5 1 6 9 1644 2358 154 32 96.806862 telephone,5 1 5 1 6 10 1819 2358 33 25 96.994820 he5 1 5 1 6 11 1871 2357 89 31 96.948509 relays5 1 5 1 6 12 1977 2355 53 25 96.948509 this4 1 5 1 7 0 701 2397 1329 39 -1 5 1 5 1 7 1 701 2404 169 26 96.401314 information5 1 5 1 7 2 888 2403 134 33 96.988838 regularly5 1 5 1 7 3 1039 2406 27 22 96.990517 to5 1 5 1 7 4 1084 2411 144 17 96.102203 numerous5 1 5 1 7 5 1246 2403 63 25 96.579796 local5 1 5 1 7 6 1328 2402 121 25 96.648781 brokers.5 1 5 1 7 7 1468 2402 57 25 96.974625 Thes 1 5 1 7 8 1542 2401 62 26 96.933411 fields 1 5 1 7 9 1623 2400 107 31 96.986992 broker,5 1 5 1 7 10 1749 2408 71 24 96.931458 upon5 1 5 1 7 11 1837 2399 103 32 96.720787 receipts 1 5 1 7 12 1957 2397 27 26 96.720787 of5 1 5 1 7 13 1998 2406 32 16 96.961197 an4 1 5 1 8 0 701 2438 1329 37 -1 5 1 5 1 8 1 701 2445 80 25 96.883621 orders 1 5 1 8 2 791 2445 67 25 95.058640 from5 1 5 1 8 3 861 2434 17 46 95.058640 a5 1 5 1 8 4 897 2444 63 25 95.907379 local5 1 5 1 8 5 973 2443 97 27 96.670471 brokers 1 5 1 8 6 1081 2451 31 17 96.698532 or5 1 5 1 8 7 1122 2442 86 26 96.908394 directs 1 5 1 8 8 1219 2442 156 33 96.400864 purchaser,5 1 5 1 8 9 1389 2450 60 23 95.949455 may5 1 5 1 8 10 1462 2442 62 31 96.692619 splits 1 5 1 8 11 1535 2442 47 25 96.920670 thes 1 5 1 8 12 1593 2442 80 25 96.655777 orders 1 5 1 8 13 1684 2448 35 25 96.888428 up5 1 5 1 8 14 1732 2448 97 24 96.412361 among5 1 5 1 8 15 1838 2439 106 26 96.697891 several5 1 5 1 8 16 1956 2438 74 25 96.381706 small2 1 6 0 0 0 706 2517 1345 56 -1 3 1 6 1 0 0 706 2517 1345 56 -1 4 1 6 1 1 0 733 2517 1318 27 -1 5 1 6 1 1 1 733 2520 36 17 61.112312 “In5 1 6 1 1 2 779 2520 33 17 71.490646 thes 1 6 1 1 3 824 2519 72 18 85.684570 Matters 1 6 1 1 4 903 2520 22 22 85.684570 of5 1 6 1 1 5 930 2520 59 17 95.239403 Great5 1 6 1 1 6 1001 2519 90 19 94.880600 Atlantic5 1 6 1 1 7 1099 2519 43 18 94.880600 ands 1 6 1 1 8 1150 2519 77 23 90.804169 Pacific5 1 6 1 1 9 1237 2519 37 19 93.191170 Teas 1 6 1 1 10 1285 2519 43 20 86.825661 Co.,5 1 6 1 1 11 1340 2518 51 20 95.565926 FTC5 1 6 1 1 12 1402 2519 74 19 95.175652 Dockets 1 6 1 1 13 1485 2520 56 21 94.991318 3031,5 1 6 1 1 14 1551 2520 24 18 88.312431 265 1 6 1 1 15 1584 2518 73 20 71.676460 F.T.C.5 1 6 1 1 16 1667 2520 36 17 93.280922 4865 1 6 1 1 17 1712 2519 72 21 93.280922 (1930);5 1 6 1 1 18 1792 2519 23 18 33.908287 Lu5 1 6 1 1 19 1825 2519 32 17 91.981361 thes 1 6 1 1 20 1867 2518 75 18 95.303528 Matters 1 6 1 1 21 1951 2518 21 23 95.513657 of5 1 6 1 1 22 1977 2517 58 19 1.536034 Tillie4 1 6 1 2 0 706 2552 755 21 -1 5 1 6 1 2 1 706 2554 61 17 93.006439 Lewis5 1 6 1 2 2 779 2553 72 19 91.353516 Foods,5 1 6 1 2 3 865 2553 49 20 0.000000 ne,,5 1 6 1 2 4 928 2552 49 19 77.747681 FTC5 1 6 1 2 5 991 2553 74 18 94.289764 Dockets 1 6 1 2 6 1075 2553 56 20 94.289764 7226,5 1 6 1 2 7 1143 2553 23 17 88.510330 655 1 6 1 2 8 1177 2552 73 19 49.214973 F.T.C.5 1 6 1 2 9 1265 2554 53 18 94.846024 1099,5 1 6 1 2 10 1333 2554 43 17 89.268867 11315 1 6 1 2 11 1390 2553 71 20 83.906677 (1964). FIRST NATIONAL STORES, INC., ET AL. 1271 1218 = Initial Decision canners and coordinate the pooling: of each canner’s share in.shipment to the purchaser. The seller compensates the field broker. for these services by a commission which is usually indicated as a deduction on the i invoice. Complaint counsel’s approach to. proof of a Section 2(c) violation ignores the character.of brokers as intermediaries who promote trade by. bringing buyers and ‘sellers. together and who act for their own interest in earning a fee and not as the representative of either party to ~ the transaction. In some transactions, the. broker may first be ap- ~~ proached by a seller to find an outlet for the seller's goods; in others, the _ broker may be first approached by a buyer seeking a source of supply. In all instances, both buyers and sellers will benefit from the transac-. ~ tion. Both will receive information concerning conditions in the market — “= and the availability of goods. Both will, by utilizing the services of the - broker, save expense which they would otherwise have borne. The seller, for example, will have saved the expense of making his own buying calls direct on the buyers. Both will benefit from any negotiation the broker may have carried on to bring about.a price favorable to both parties. Thereafter, both will benefit in the event of claims by one or the ~ other. The broker, in the interest of protecting the fee which he has _ earned and. of protecting his relationships with both parties for the - future, will mediate and seek to resolve the controversy to the satisfaction of both parties. In every aspect of the brokerage function, the point is the same; both parties benefit from the services of an independent ~ broker, but the broker performs the services for his own purpose, which is to consummate the transaction and obtain his commission. It is no answer to suggest that independent brokers drop the contested services. The services are intrinsic to the brokerage function. Other types of middlemen engaged in. distribution provide a variety of services to benefit both buyers and sellers and thereby encourage them to do business with them. These include all of the same types of benefit complaint counsel allege in this case to be the basis for implying agency. If, because of the rule of law being proposed by complaint counsel, Ruby and other independent brokers could not provide such benefits, they, of course, would not be competitive with other forms of distribution such as commission merchants, wholesalers, the seller’s own sales force arid the like and would, in time, disappear from the competitive arena. The contention of complaint counsel that the “thing of value” referred to in Section. 2(e) includes the brokerage services which the brokers performed constitutes something as compensation which was given to the respondent must be rejected. A review of the cases decided under Section 2(c) supplies no support for this theory. In every case, the “thing of value” paid as compensation was actual cash which could be computed from the transactions there involved. In no case has the Initial Decision 83 F.T.C.

“thing of value” been equated in terms of activities inherently incidental to the performance of the brokerage function. Furthermore, the legislative history of Section 2(c) as pointed out by the Supreme Court inFTC v. Broch & Co., 363 U.S. 166 (1960), makes it clear that the thrust of the section was to prevent price discrimination among customers of the same seller which arises when the seller pays brokerage direct to a buyer or indirectly to a buyer through a dummy broker or other representative of the buyer. In Broch, the Court stated (p. 168) that:

The Robinson-Patman Act was enacted in 1936 to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power.

And further, the Court affirmed with respect to Section 2(¢) (p. 169) that:

One of the favorite means of obtaining an indirect price concession was by setting up “dummy” brokers who were employed by the buyer and who, in many cases, rendered no services. The large buyers demanded that the seller pay “brokerage” to these fictitious brokers who then turned it over to their employer. This practice was one of the chief targets of §2(c) of the Act. But it was not the only means by which the brokerage function was abused and Congress in its wisdom phrased §2(¢) broadly, * * * to cover * * * all other means by which brokerage could be used to effect price discrimination. As recently as 1967, the Commission has pointed out in an opinion, Jn the Matter of Modern Marketing Services, Inc., FTC Docket 3783, 71 F.T.C. 1676 (1685):

As we pointed out in our brief filed as amicus curiae in Empire Rayon Co., Inc., supra: “The crucial question in every case brought under Section 2(c) is whether the buyer is receiving preferential treatment effected through the payment of brokerage, or other compensation, or any allowance or discount in lieu thereof.” Complaint counsel have admitted that in this case there is neither price discrimination nor competitive injury.

CONCLUSIONS 1. The Federal Trade Commission has jurisdiction over the -respondents and over the subject matter involved in this proceeding. 2: From the above discussion, it is concluded that respondents’ motion for summary decision must be granted and the complaint dismissed. ORDER It is ordered, That respondents’ motion for summary decision be, and the same hereby is, granted.

It is further ordered, That the complaint herein be, and the same hereby is, dismissed.

- IMPERIAL OF OHIO, INC., ET AL. 1273 1273 Complaint It is further ordered, That request for oral argument upon this motion for summary decision be denied.

DOCKETS 8786, 8787, 8788, 8789 AND 8790 [COMBINED] ORDER DISMISSING COMPLAINTS The administrative law judges filed their initial decisions in these matters on July 30, 1978, August 1, 1978, and August 3, 1978, ordering that respondents’ motions for summary decisions be granted and that the complaints herein be dismissed. No appeals were taken from the initial decisions, and on September 11, 1973, the Commission ordered that the effective dates thereof be stayed until further order of the Commission.

The Commission has now determined that the administrative law judges were correct in finding on the basis of admissions made by complaint counsel that the evidence which complaint counsel intended to offer in support of the complaints would not sustain the essential factual allegations that the brokers were acting for or in behalf of the buyers or subject to the buyers’ direct or indirect control. Consequently, the dismissals of the complaints were proper. The Commission, however, does not consider the initial decisions appropriate in all respects to dispose of these matters and has determined that they should be adopted only to the extent that they hold that the evidence relied upon by complaint counsel would not support the charges that respondents had violated Section 2(c) of the Clayton Act, as amended. It is ordered, That the initial decisions, modified as indicated herein, be, and they hereby are, adopted as the decisions of the Commission. It is further ordered, That the complaints be, and they hereby are, dismissed.