Federal Trade Commission v. Motion Picture Advertising Service

344 U.S. 392 (1953)

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Federal Trade Commission v. Motion Picture Advertising Service

United States Supreme Court
344 U.S. 392 (1953)

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Facts

Motion Picture Advertising Service (MPAS) (defendant) produced and distributed advertisements that aired in movie theaters. MPAS entered into exclusive-dealing arrangements with theaters around the United States through contracts in which the theaters agreed not to display ads created by other ad companies. Three of MPAS’s competitors signed similar exclusive-dealing arrangements with theaters. Altogether, these agreements covered 75 percent of all movie theaters in the United States that paid for and displayed ads. MPAS alone had exclusive contracts with nearly 40 percent of the theaters in its area. The Federal Trade Commission (FTC) (plaintiff) commenced an administrative proceeding against MPAS and the other three companies, finding that the exclusive agreements were unfair methods of competition in violation of § 5 of the Federal Trade Commission Act (FTC Act). The FTC based its conclusion on the fact that the agreements, taken together, foreclosed competition by limiting business opportunities for other competitors, forcing some of them out of business because they could not sell their ad services. The FTC concluded that any such agreements over one year in length violated the FTC Act. The appellate court reversed, and the FTC appealed.

Rule of Law

Issue

Holding and Reasoning (Douglas, J.)

Dissent (Frankfurter, J.)

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