## Facts

- The market for lead antiknock gasoline additives in the 1970s was highly concentrated, with four principal producers, including E.I. du Pont de Nemours & Co. and Ethyl Corporation.
- The Federal Trade Commission brought an administrative proceeding under § 5 of the FTC Act challenging certain pricing-related practices.
- The FTC did not allege an agreement, conspiracy, or predatory conduct; it found the challenged practices were independently adopted and “neither restrictive, predatory, nor adopted for the purpose of restraining competition.”
- The FTC targeted three unilateral practices:
  - Use of a delivered-price system that included transportation costs in the quoted price.
  - Providing advance notice of price increases beyond the 30 days required by contract.
  - Using most-favored-nation clauses promising no customer would be charged more than other customers.
- The FTC concluded these practices reduced uncertainty, facilitated price parallelism, and helped maintain supracompetitive prices, thereby substantially lessening competition in violation of § 5.
- Du Pont and Ethyl petitioned for review under § 5(c); the consolidated petitions sought to set aside the FTC’s final order.

## Issues

1. Whether § 5 of the FTC Act permits condemnation of unilateral, non-predatory, non-collusive “facilitating practices” based on a theory that they may ease oligopolistic price coordination.
2. Whether substantial evidence supported the FTC’s finding that the challenged practices actually had a significant adverse effect on competition by substantially lessening competition or maintaining supracompetitive prices.

## Decision

- The court set aside (vacated) the FTC’s order as to Du Pont and Ethyl.
- The court held that, although § 5 may reach some conduct beyond the Sherman Act, the FTC must still show concrete competitive harm or a demonstrated threat of such harm.
- The court concluded the record did not contain substantial evidence that the practices caused or materially contributed to supracompetitive pricing or otherwise substantially lessened competition.
- The court warned that the FTC’s approach risked converting § 5 into an unbounded power to condemn ordinary business practices in concentrated industries based on theory rather than demonstrated effects.

## Legal Principles

- § 5 is not a general public-interest mandate; liability must be grounded in antitrust-oriented limits tied to harm to competition.
- Unilateral conduct that is not collusive, predatory, or restrictive cannot be condemned under § 5 absent substantial evidence of actual anticompetitive effect (or a sufficiently demonstrated likelihood of such effect on the record presented).
- Parallel pricing and conscious interdependence in an oligopoly, without more, do not establish illegality.
- Common commercial practices (including delivered pricing, advance price announcements, and MFN clauses) may have legitimate business justifications; the FTC must prove anticompetitive effects rather than rely on structural inferences and theoretical facilitation of coordination.
- On judicial review, FTC findings must be supported by substantial evidence; where the agency’s own standard requires proof of actual effects, it must supply evidence matching that requirement.

## Conclusion

The Second Circuit vacated the FTC’s § 5 order because the Commission failed to produce substantial evidence that unilateral facilitating practices in an oligopoly actually harmed competition, and the court rejected a theory of liability that would allow § 5 to reach ordinary business conduct based primarily on speculative coordination concerns.


E.I. du Pont de Nemours & Co. v. F.T.C., 729 F.2d 128 (2d Cir. 1984)