Federal Trade Commission v. Bunte Bros.

Background

The Federal Trade Commission, a federal agency, found that Bunte Brothers, a candy maker in Illinois, sold candies in “break and take” or chance-assortment packages that made what a buyer received depend on luck. The Commission had previously banned such packages as an unfair method of competition and ordered Bunte Brothers to stop using them. A federal appeals court set that order aside, and the dispute reached the Supreme Court about how far the Commission’s authority reaches.

Reasoning

The Court asked whether the law that bans “unfair methods of competition in commerce” lets the FTC forbid business practices that happen only inside one State but that hurt out-of-state competitors. The majority said the phrase “in commerce” refers to interstate commerce and that Congress usually says clearly when it wants federal agencies to reach purely local activity. The Court contrasted this case with different situations—like railroad rate disputes—where local and interstate activities are physically intertwined. Relying on the words of the statute, past practice, and caution about broad federal control of local business, the Court upheld the appeals court and rejected the Commission’s broader reading.

Real world impact

The decision prevents the FTC from using Section 5 to stop purely intrastate business practices simply because they disadvantage out-of-state sellers unless Congress clearly gives that power. Bunte Brothers effectively won; the Commission lost authority in this context. The Court noted it was interpreting what Congress actually did, not deciding how far Congress could constitutionally reach.

Dissents or concurrances

Justice Douglas, joined by two colleagues, dissented. He argued the Commission’s finding that the sales directly harmed interstate commerce was enough to support federal action and would have reversed the lower court.