Opinion · Supreme Court of the United States
Federal Trade Commission v. Motion Picture Advertising Service Co.
Fed. Trade Comm’n v. Motion Picture Advert. Serv. Co., 344 U.S. 392 (1953)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1953-03-09
- Topic
- general
How later courts describe this case
- holding that conduct prohibited by Sherman Act automatically violates section 5 of the FTC Act
- upholding contracts of one year or less, but condemning contract terms ranging from two to five years
- “when the Sherman Act is involved the crucial fact is the impact of the particular practice on competition”
- issue of unfair competition not controlled by prior administrative determination as to conspiracy to restrain trade
- “It is also clear that the [FTC Act] was designed to supplement and bolster the Sherman Act and the Clayton Act . . . to stop in their incipiency acts and practices which, when full blown, would violate those Acts[.]”
- § 5 to supplement Clayton Act
Citator
UpLaw has not yet analyzed Federal Trade Commission v. Motion Picture Advertising Service Co.. The absence of a flag is not a finding that it is good law.
- Cited by
- 147 opinions
Headnotes
- Antitrust & Competition Law — Federal Trade Commission Act — Unfair Methods of Competition The "unfair methods of competition" condemned by § 5(a) of the Federal Trade Commission Act are not confined to practices that were illegal at common law or condemned by the Sherman Act; Congress deliberately left the concept flexible to be defined with particularity by the myriad cases arising from the field of business.
- Antitrust & Competition Law — Relationship of FTC Act to Sherman and Clayton Acts The Federal Trade Commission Act was designed to supplement and bolster the Sherman Act and the Clayton Act — to stop in their incipiency acts and practices which, when full blown, would violate those Acts, as well as to condemn as unfair methods of competition existing violations of them.
- Antitrust & Competition Law — Exclusive Dealing A practice that has sewed up a market so tightly for the benefit of a few falls within the prohibitions of the Sherman Act and is therefore an unfair method of competition within the meaning of § 5(a) of the Federal Trade Commission Act.
- Antitrust & Competition Law — Scope of Judicial Review of Commission Findings The precise impact of a particular practice on the trade is for the Commission, not the courts, to determine; the point at which a method of competition becomes unfair within the meaning of the Act will often turn on the exigencies of a particular situation, trade practices, or the practical requirements of the business in question.
- Antitrust & Competition Law — Remedies — Reasonableness of Cease and Desist Order Where the Commission finds that exclusive contracts are beneficial and preferred by theatre owners but should be restricted in the public interest, and finds a one-year term to be standard practice such that exclusive contracts so limited would not unduly restrain competition, a reviewing court cannot say that the Commission exceeded the limits of its allowable judgment in limiting the contract term to one year.
- Antitrust & Competition Law — Sherman Act — Label of the Practice Where the Sherman Act is involved, the crucial fact is the impact of the particular practice on competition, not the label the parties attach to their arrangement; the relevance of Federal Trade Commission v. Curtis Publishing Co. is confined to cases involving § 3 of the Clayton Act.
- Civil Procedure — Res Judicata A prior cease and desist proceeding that sought to end a conspiracy among the respondent and other distributors does not bar a subsequent proceeding directed against the respondent's individual acts, because the issues litigated and determined are not the same and the plea of res judicata is therefore unavailable.
delivered the opinion of the Court.
Respondent is a producer and distributor of advertising motion pictures which depict and describe commodities offered for sale by commercial establishments. Respondent contracts with theatre owners for the display of these advertising films and ships the films from its place of business in Louisiana to theatres in twenty-seven states and the District of Columbia. These contracts run for terms up to five years, the majority being for one or two years. A substantial number of them contain a provision that the theatre owner will display only advertising films furnished by respondent, with the exception of films for charities or for governmental organizations, or announcements of coming attractions. Respondent and three other companies in the same business (against which proceedings were also brought) together had exclusive arrangements for advertising films with approximately three-fourths of the total number of theatres in the United States which display advertising films for compensation. Respondent had exclusive contracts with almost 40 percent of the theatres in the area where it operates.
The Federal Trade Commission, the petitioner, filed a complaint charging respondent with the use of “unfair methods of competition” in violation of § 5 of the Federal Trade Commission Act, 38 Stat. 717, 719, 52 Stat.
The “unfair methods of competition,” which are condemned by § 5 (a) of the Act, are not confined to those that were illegal at common law or that were condemned by the Sherman Act. Federal Trade Commission v. Keppel & Bro., 291 U. S. 304. Congress advisedly left the concept flexible to be defined with particularity by the myriad of cases from the field of business. Id., pp. 310-312. It is also clear that the Federal Trade Commission Act was designed to supplement and bolster the Sherman Act and the Clayton Act (see Federal Trade Commission v. Beech-Nut Co., 257 U. S. 441, 453) — to stop in their incipiency acts and practices which, when full blown,
The Commission found in the present case that respondent’s exclusive contracts unreasonably restrain competition and tend to monopoly. Those findings are supported by substantial evidence. This is not a situation where by the nature of the market there is room for newcomers, irrespective of the existing restrictive practices. The number of outlets for the films is quite limited. And due to the exclusive contracts, respondent and the three other major companies have foreclosed to competitors 75 percent of all available outlets for this business throughout the United States. It is, we think, plain from the Commission’s findings that a device which has sewed up a market so tightly for the benefit of a few falls within the prohibitions of the Sherman Act and is therefore an “unfair method of competition” within the meaning of § 5 (a) of the Federal Trade Commission Act.
An attack is made on that part of the order which restricts the exclusive contracts to one-year terms. It is argued that one-year contracts will not be practicable. It is said that the expenses of securing these screening contracts do not warrant one-year agreements, that investment of capital in the business would not be justified without assurance of a market for more than one year, that theatres frequently demand guarantees for more than a year or otherwise refuse to exhibit advertising films. These and other business requirements are the basis of the argument that exclusive contracts of a duration in excess of a year are necessary for the conduct of the business of the distributors. The Commission considered this argument and concluded that, although the exclusive contracts were beneficial to the distributor and preferred
Finally, respondent urges that the sole issue raised in the Commission’s complaint had been adjudicated in a former proceeding instituted by the Commission which resulted in a cease and desist order. 36 F. T. C. 957.
Reversed.
Comparable findings and like orders were entered in each of the three companion cases. In the Matter of Reid H. Ray Film, Industries, 47 F. T. C. 326; In the Matter of Alexander Film Co., 47 F. T. C. 345; In the Matter of United Film Ad Service, Inc., 47 F. T. C. 362.
The Commission said: “Under the general practice the representative of the respondent first contacts the theater to determine if space is available for screen advertising and makes such arrangements as conditions warrant with respect to such space. In this way respondent’s representative is able to show prospective advertisers where space is available. In contacting the theater it is necessary for the respondent to estimate the amount of space it will be able to sell to advertisers. Since film advertising space in theaters is limited to four, five, or six advertisements, it is not unreasonable for respondent to contract for all space available in such theaters, particularly in territories canvassed by its salesmen at regular and frequent intervals.
“It is therefore the conclusion of the Commission in the circumstances here that an exclusive screening agreement for a period of 1 year is not an undue restraint upon competition.” 47 F. T. C., at 389.
A suggestion is made that respondent needs a period longer than one year in view of the fact that the contracts with advertisers are often not coterminous with the exclusive screening agreements, due
This section makes unlawful a lease, sale, or contract for sale which substantially lessens competition or tends to create a monopoly. 15 U. S. C. § 14.