## Facts

- Anheuser-Busch, Inc. (AB) sold beer nationally and competed with local and regional brewers in distinct geographic submarkets, including the St. Louis area.
- Following an industry-wide wage increase (1953–1954), many brewers raised prices in most markets; in St. Louis, AB and local competitors did not raise prices.
- AB’s sales declined nationally and in St. Louis, and AB responded in St. Louis with temporary price reductions (making St. Louis AB’s lowest-priced market), increased advertising, operational modernization, and product-related changes.
- AB’s St. Louis market share rose to about 39.3% by March 1955, then fell to about 17.5% the next year after prices rose again and AB’s St. Louis prices returned to being higher than local competitors’ prices.
- The FTC alleged primary-line price discrimination under Clayton Act § 2(a) (as amended by the Robinson-Patman Act), based on AB charging lower prices in St. Louis than in other markets and asserting AB’s financial capacity to sustain local losses.
- A hearing examiner found a § 2(a) violation; the FTC adopted the decision (with modifications) and issued a cease-and-desist order.
- The Seventh Circuit initially set aside the order for lack of “price discrimination,” but the Supreme Court reversed on that threshold point and remanded for consideration of competitive injury, AB’s meeting-competition defense, and the scope of the order.

## Issues

1. Whether substantial evidence supported the FTC’s finding that AB’s market-selective lower prices created a reasonable possibility of primary-line competitive injury under § 2(a).
2. Whether AB’s pricing was justified as a good-faith effort to meet competition rather than predatory discrimination.
3. Whether the FTC’s cease-and-desist order could stand, including whether it was overbroad.

## Decision

- The court set aside the FTC’s cease-and-desist order.
- Although price differences existed (as established on remand), the FTC failed to prove actual or probable injury to competition as required by § 2(a).
- The FTC’s theory, resting largely on AB’s size and capacity to subsidize losses, was deemed speculative on this record.
- Because a § 2(a) violation was not supported by substantial evidence, the order was invalidated.

## Legal Principles

- Under § 2(a), a price difference is not itself unlawful; illegality turns on whether the discrimination may substantially lessen competition, tend to create a monopoly, or injure competition.
- Primary-line price discrimination requires substantial evidence of actual or probable injury to competition, not merely evidence of vigorous competition or shifting market shares.
- A firm’s financial capacity to subsidize selective low prices, without proof of predatory pricing effects or a likely competitive harm, is insufficient to establish the required competitive injury.
- Temporary, market-specific price reductions and related promotional efforts may be consistent with lawful competition absent evidence of exclusionary harm.

## Conclusion

The Seventh Circuit held that, even assuming AB engaged in price discrimination through price differences, the FTC did not carry its burden to show a reasonable possibility of competitive injury under Robinson-Patman Act § 2(a); the court therefore set aside the FTC’s cease-and-desist order.


Anheuser-Busch, Inc. v. Fed. Trade Comm'n, 289 F.2d 835 (7th Cir. 1961)