Borden Co. v. Federal Trade Commission

381 F.2d 175 (1967)

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Borden Co. v. Federal Trade Commission

United States Court of Appeals for the Fifth Circuit
381 F.2d 175 (1967)

Facts

Borden Co. (defendant) sold evaporated milk in two separate contexts: (1) under the Borden brand name for a particular price; and (2) under a non-Borden private label for a significantly lower price. The recipe and composition of the evaporated milk was identical in the two contexts, with the only difference being in whether it bore a Borden label or a private label. A significantly higher demand existed among retailers for the Borden-label evaporated milk than it did for the non-Borden, private-label evaporated milk. Nothing in the record indicated that this preference was the result of anything nefarious on the part of Borden; rather, the preference resulted from genuine consumer choice. This resulted in the Borden-label evaporated milk being sold for a significantly higher price than the non-Borden, private-label evaporated milk. The Federal Trade Commission (FTC) (plaintiff) brought administrative proceedings against Borden under § 2(a) of the Robinson-Patman Act. The FTC issued a cease-and-desist order against Borden demanding that it stop discriminating in its price between the Borden-label and the non-Borden, private-label evaporated milk. The FTC concluded that competitive injury existed due to some merchants paying more for the Borden-label evaporated milk than their competitors paid for the same evaporated milk sold under the non-Borden, private label. Borden petitioned the United States Court of Appeals for the Fifth Circuit to set aside the cease-and-desist order. The Fifth Circuit initially set aside the cease-and-desist order on the ground that the clear consumer preference for the Borden-label evaporated milk meant the issue did not even fall within the jurisdiction of the Robinson-Patman Act in the first place. The United States Supreme Court reversed this holding on the ground that the consumer-preference issue should be considered in the context of injury under the Robinson-Patman Act, not the act’s jurisdiction. The Supreme Court remanded the matter back to the Fifth Circuit for further proceedings.

Rule of Law

Issue

Holding and Reasoning (Hutcheson, J.)

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