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LEE NATL. CORP. v. ATLANTIC RICHFIELD CO.

February 4, 1970

Lee National Corp.
v.
Atlantic Richfield Co., The Goodyear Tire & Rubber Co., The Goodyear Tire & Rubber Co., Inc., and The Firestone Tire & Rubber Co.


Troutman, D. J.


The opinion of the court was delivered by: TROUTMAN

TROUTMAN, D. J.:

 Nature of Action

 This action is a suit for treble damages brought under Section 4 of the Clayton Act (15 U.S.C. § 15) by the plaintiff, Lee National Corporation, formerly a manufacturer of automobile tires and related products, against Atlantic Richfield Company (Atlantic), a distributor of petroleum and related products, The Goodyear Tire & Rubber Company and The Goodyear Tire & Rubber Company, Inc., (Goodyear) and The Firestone Tire & Rubber Company (Firestone), manufacturers of automobile tires and related products. Violations of Sections 1 and 2 of the Sherman Act are alleged.

 Plaintiff has filed a motion for partial summary judgment on the issue of liability pursuant to F.R. Civ. P. 56 contending that certain so-called sales commission agreements existing between Atlantic and Goodyear and between Atlantic and Firestone, from 1950 to 1966 and pertaining to the purchase and sale of tires, batteries and accessories (TBA) were illegal per se. In the motion filed plaintiff alleges and contends that these very sales commission agreements were challenged and their illegality per se determined in three prior related proceedings originating before the Federal Trade Commission (FTC), namely, Atlantic Refining Company v. Federal Trade Commission, 381 U.S. 357, 14 L. Ed. 2d 443, 85 S. Ct. 1498 (1965) (Atlantic), Shell Oil Company v. Federal Trade Commission, 360 F.2d 470 (5th Cir.) cert. denied 385 U.S. 1002, 17 L. Ed. 2d 541, 87 S. Ct. 703 (1966) (Shell) and FTC v. Texaco, Inc., 393 U.S. 223, 21 L. Ed. 2d 394, 89 S. Ct. 429 (1968) (Texaco). Additionally, plaintiff relies upon International Salt Co. v. United States, 332 U.S. 392, 92 L. Ed. 20, 68 S. Ct. 12 (1947), Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 2 L. Ed. 2d 545, 78 S. Ct. 514 (1958), United States v. Loew's, Inc., 371 U.S. 38, 9 L. Ed. 2d 11, 83 S. Ct. 97 (1962), and Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 22 L. Ed. 2d 495, 89 S. Ct. 1252 (1969) and the dissenting opinion in United States v. Container Corp. of America, 393 U.S. 333, 21 L. Ed. 2d 526, 89 S. Ct. 510 (1969).

 History of Prior FTC Proceedings

 Prior to February, 1964 Lee National was known as Lee Rubber & Tire Corporation (Lee), a manufacturer of automobile tires and other related rubber products with its principal office in Conshohocken, Pennsylvania. Lee National sold its tire plant and other operating assets to Goodyear pursuant to an Option Agreement dated March 1, 1965, and thereafter Lee National went out of the tire business. This action was commenced on May 31, 1966, following the transfer of Lee's plant to Goodyear on January 17, 1966.

 During the period from 1934 to 1951, Atlantic had purchased substantial quantities of Lee tires from Lee for resale by Atlantic to Atlantic gasoline service stations under a marketing plan known as a "Purchase-Resale Plan". *fn1" In 1951, the "Purchase-Resale Plan" was discontinued in favor of a "Sales Commission Plan". *fn2"

 In 1951 Atlantic offered Lee, Goodyear and Firestone each a portion of its business under a sales commission plan. Goodyear and Firestone accepted Atlantic's proposal, but Lee declined. *fn4" Lee concluded that its refusal of Atlantic's offer would free Lee's organization to solicit not only Atlantic's dealers and jobbers, but also other oil companies, dealers and jobbers in Atlantic's marketing area. *fn5"

 In 1956, the Federal Trade Commission brought three separate administrative proceedings under the Federal Trade Commission Act (TBA proceedings) challenging the industry's use of the sales commission plan as an unfair method of competition under Section 5 of that Act. Each proceeding included as respondents a tire company and an oil company, attacking their sales commission arrangements so that the proceedings were, in practical effect, industry-wide. *fn6"

 On March 9, 1961, the Commission's final order was entered, holding that the Atlantic-Goodyear sales commission contract constituted an unfair method of competition under Section 5 of the Federal Trade Commission Act. Orders were entered by the Commission enjoining future use of the sales commission plan. *fn7"

 These orders were then appealed, first to the Court of Appeals for the Seventh Circuit, Goodyear Tire & Rubber Company v. FTC, 331 F.2d 394 (7th Cir. 1964), and then to the Supreme Court of the United States, Atlantic Refining Company v. FTC, 381 U.S. 357, 14 L. Ed. 2d 443, 85 S. Ct. 1498 (1965).

 Discussion

 A fair consideration of plaintiff's motion and its reliance upon specific precedents compels a careful review of the several cases in question and ...


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