Respondents, a parent company and its sales subsidiary, are engaged in the manufacture and sale of glucose or corn syrup in competition with others, including the Corn Products Refining Company, whose methods of marketing and pricing its products are described in our opinion in Corn Products Refining Company v. Federal Trade Commission, 324 U.S. 726, 65 S.Ct. 961. Respondents, in selling their glucose, have adopted a basing point delivered price system comparable to that of the Corn Products Refining Company. Respondents sell their product, manufactured at Decatur, Illinois, at delivered prices based on Chicago, Illinois, the price in each case being the Chicago price plus freight from Chicago to point of delivery.
In this proceeding, brought under § 11 of the Clayton Act, c. 323, 38 Stat. 730, 15 U.S.C. § 21, 15 U.S.C.A. § 21, the Federal Trade Commission charged that respondents' pricing system resulted in price discriminations between different purchasers of glucose in violation of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, c. 592, 49 Stat. 1526, 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a). The case was heard by the Commission on stipulations of facts and exhibits, upon the basis of which the Commission ultimately made its findings. Applying the same principles as in the Corn Products Refining Company case, it concluded that respondents had made discriminations between different purchasers in the price of their product; and that respondents were unable to justify the discriminations, as permitted by § 2(b) of the Clayton Act, by showing that they were made 'in good faith' to meet a competitor's equally low price. The Commission accordingly made its order directing respondents to cease and desist from the price discriminations.
On review of the Commission's order, the Court of Appeals for the Seventh Circuit set the Commission's order aside, one judge dissenting. 144 F.2d 221. One of the majority judges did not consider whether t e price discriminations violated § 2(a), but held that in any event they were made in good faith to meet their competitors' price within the meaning of § 2(b). Another concurred in the result on the ground that the Commission had failed to make out a case of unlawful price discrimination, and for that reason he found no occasion to pass upon the merits of respondents' defense. The third judge dissented on the ground that respondents' discriminations were unlawful and not justified by competition. We granted certiorari. 323 U.S. 702, 65 S.Ct. 189.
The principal question for decision is whether respondents, who adopted the discriminatory price system of their competitors, including the Corn Products Refining Company, have sustained the burden of justifying their price system under § 2(b) of the Clayton Act, as amended, by showing that their prices were made 'in good faith' to meet the equally low prices of competitors. A further question is whether there was evidence to support the Federal Trade Commission's findings that respondents, in granting to certain favored buyers, discriminatory prices for their product, did not act 'in good faith' to meet a competitor's equally low price within the meaning of § 2(b) of the Clayton Act.
The Commission found that at all relevant times respondents have sold glucose, shipped to purchasers from their plant at Decatur, Illinois, on a delivered price basis, the lowest price quoted being for delivery to Chicago purchasers. Respondents' Chicago price is not only a delivered price at that place. It is also a basing point price upon which all other delivered prices, including the price at Decatur, are computed by adding to the base price, freight from Chicago to the point of delivery. The Decatur price, as well as the delivered price at all points at which the freight from Decatur is less than the freight from Chicago, includes an item of unearned or 'phantom' freight, ranging in amount in instances mentioned by the Commission, from 1 cent per hundred pounds at St. Joseph, Missouri, to 18 cents at Decatur. The Chicago price, as well as that at points at which the freight from Decatur exceeds freight from Chicago, required respondents to 'absorb' freight, varying in instances cited by the Commission from 4 cents per one hundred pounds at St. Louis, Missouri, to 15 1/2 cents per hundred pounds at Chicago.