Federal Trade Commission v. Ruberoid Co.

Background

A major roofing-materials manufacturer (Ruberoid) was charged by the Federal Trade Commission with selling the same grade products at different prices to customers who competed with each other. The FTC found those price differences could lessen competition and issued a broad cease-and-desist order forbidding price discrimination among purchasers who actually compete in resale or distribution. Ruberoid sought court review; the Court of Appeals affirmed the order but, on rehearing, refused to enforce it.

Reasoning

The Supreme Court reviewed two main issues: whether the FTC’s broad remedy was too sweeping, and whether a court may enforce an FTC order without a showing that the order has been disobeyed or is about to be. The Court said the FTC has wide discretion to frame remedies and that the order was reasonably related to the price-discrimination findings. It also held that statutory exceptions for cost differences and good-faith price matching are implicitly available to sellers. However, the Court agreed that a federal court may not enter a decree enforcing an FTC order unless there is evidence the order has been violated or a violation is imminent.

Real world impact

The decision lets the FTC issue broad orders to prevent future price discrimination but limits immediate court enforcement until disobedience or imminent violation is shown. Businesses selling roofing materials (and similar sellers) remain able to assert cost or good-faith meeting-the-price defenses when enforcement is sought. The ruling also highlights that tougher enforcement mechanics would require congressional change.

Dissents or concurrances

Justice Black agreed generally but wanted the statutory exceptions spelled out in the order. Justice Jackson dissented, arguing the order was too vague and should be remanded for a clearer, narrower directive from the FTC. Justice Douglas dissented from denying enforcement.