United States v. Borden Company (1961)
- Docket
- 439
- Decided
- 1961-01-01
- Category
- General
Summary
Question: Under the Clayton Act, is it lawful to engage in price discrimination in favor of chain groceries and against independent groceries with a showing that sales to chains are less costly on average than sales to independents, but without showing why chains and independents should be treated as separate classes of purchasers? Conclusion: No, Justice Tom C. Clark, wrote the opinion of the Court reversing and remanding the lower court's decision. Writing for himself and five other justices, Clark maintained that the cost studies submitted by the two dairy companies did not satisfy their burden of showing that their respective discriminatory pricing plans reflected only a due allowance for cost differences. Clark recognized that eliminating class pricing would be impractical, but emphasized that customer classifications could not be arbitrary and that members of a class must have such similarity as to make the averaging of the cost of dealing with the class a valid and reasonable indication of the cost of dealing with any specific member of the class. Since Borden and Bowman did not show sufficient homogeneity within the class of chain groceries or within the class of independent groceries, the price discrimination between the two classes was illegal under the Clayton Act. Justice William O. Douglas voted with the majority and wrote a concurring opinion, which emphasized the purpose of the anti-trust acts. Douglas stated that the Clayton Act should be read in a way that preserves as much of traditional free enterprise as possible, by controlling practices such as unfair discounting, which could lead to unfair competitive advantage and monopoly. Justice Marshall Harlan dissented. Harlan stated that the cost studies submitted to the district court were adequate under the accepted principles of the law in this field. He agreed with the District Court's conclusion that the studies were conscientiously prepared and appeared to justify the price discrimination arising from the discount practices. As such, Harlan would have affirmed the lower court's opinion. Justice Felix Frankfurter took no part in this decision.