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Anheuser-Busch, Inc. v. Federal Trade Commission

289 F.2d 835 (1961)

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Anheuser-Busch, Inc. v. Federal Trade Commission

United States Court of Appeals for the Seventh Circuit

289 F.2d 835 (1961)

Facts

Anheuser-Busch, Inc. (AB) (defendant) was a national brewing company that competed with local and regional breweries in geographic submarkets. The St. Louis area was one geographic submarket. AB’s beer was generally more expensive than its regional competitors’ beer. In 1953, most United States breweries raised prices to cover national increases in employee wages. In most markets, AB did the same. However, in the St. Louis area, AB and its competitors did not raise prices. AB’s national and St. Louis area sales both declined severely. In response to the St. Louis area decline, AB engaged in vigorous competition with the other St. Louis breweries on price and other factors. AB lowered its price, initiated new advertising campaigns, and updated its operations. AB also attempted product changes and innovations. After these efforts, in March 1955, AB’s St. Louis market share reached a high of 39.3 percent. Soon after, AB and the local breweries raised prices, with AB’s prices ending up higher than the local breweries’ prices again. But the following year, AB’s market share fell back down to 17.5 percent. The Federal Trade Commission (FTC) (plaintiff) sued AB. During the alleged period, AB’s prices were lower in the St. Louis area than anywhere else. The FTC found that AB’s primary-line price-cutting violated the Robinson-Patman Act. The FTC relied heavily on a finding that, although AB had not used profits from its national business to stabilize its price-cutting losses in the St. Louis market, AB had the ability to do so. The case went up to the United States Supreme Court and was then remanded to the court of appeals.

Rule of Law

Issue

Holding and Reasoning (Schnakenberg, J.)

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