## Facts

- Simplicity Pattern Co. manufactured and sold tissue dress patterns nationwide to thousands of retail outlets.
- Simplicity’s customers included (1) larger retailers (e.g., department stores) that sold patterns for profit and (2) smaller retailers (e.g., fabric stores) that sold patterns largely as an accommodation to fabric purchasers.
- Simplicity furnished certain advertising, promotional, and display services and facilities to larger customers that it did not provide to smaller customers on proportionally equal terms.
- The Federal Trade Commission found the disparity in services and facilities constituted discrimination in violation of § 2(e) of the Clayton Act, as amended by the Robinson-Patman Act, and issued a cease-and-desist order.
- Simplicity argued (1) there was no demonstrated injury to competition in pattern sales and (2) any service differences were justified by cost differences in serving large accounts.

## Issues

1. Whether the larger and smaller retail customers were “competitors” for purposes of § 2(e) despite differences in merchandising purpose and no specific showing of injury to competition in pattern sales.
2. Whether, once competition between purchasers is established, either (a) absence of competitive injury or (b) “cost justification” under § 2(b) is a defense to a prima facie § 2(e) violation.

## Decision

- The Supreme Court sustained the FTC’s finding that the two classes of customers competed for purposes of § 2(e).
- The Court held that, where competing purchasers are shown, discriminatory furnishing of services or facilities not offered on proportionally equal terms violates § 2(e) without an additional requirement to prove injury to competition.
- The Court held that § 2(b) “cost justification” is not available as a defense to discrimination in services and facilities charged under § 2(e).
- The Court affirmed the FTC’s cease-and-desist order and rejected the appellate court’s remand for consideration of a cost-justification defense.

## Legal Principles

- A seller violates Robinson-Patman Act § 2(e) by furnishing promotional services or facilities to some purchasers without offering them to competing purchasers on proportionally equal terms.
- For § 2(e) liability, once competition between favored and disfavored purchasers is established, a separate showing of actual injury to competition is not required.
- The § 2(b) cost-justification defense applicable to certain price-discrimination claims does not excuse discriminatory services or facilities under § 2(e).
- The FTC may infer competitive relationships from the commercial setting when supported by the record.

## Conclusion

The Court upheld the FTC’s order against a pattern manufacturer for providing unequal promotional services to larger retailers, holding that § 2(e) prohibits such discrimination among competing purchasers without proof of competitive injury and without a cost-justification defense.


Fed. Trade Comm'n v. Simplicity Pattern Co., 360 U.S. 55 (1959)