## Facts

- Morton Salt Company manufactured and sold table salt in interstate commerce, including its “Blue Label” brand.
- Morton used a “standard quantity discount system” under which delivered prices decreased as purchase quantities increased.
- In practice, only five large chain-store companies purchased enough Blue Label salt to obtain the lowest price tier.
- The lowest-tier purchasers could resell Blue Label salt at retail prices that independent retailers served by higher-priced wholesalers could not reasonably match.
- After an administrative hearing, the Federal Trade Commission found Morton had discriminated in price among different purchasers of like grade and quality in violation of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, and issued a cease-and-desist order.
- Morton argued the schedule was formally available to all purchasers meeting the quantity thresholds and that the differentials reflected cost savings from larger-volume sales and shipment economies.
- The Seventh Circuit set aside the FTC’s findings and order and directed dismissal; the FTC sought review.

## Issues

1. Whether Morton’s quantity discount program constituted unlawful price discrimination under § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act.
2. What showing of competitive injury is required under § 2(a): proof of actual harm or a reasonable possibility that competition may be harmed.
3. Whether the FTC’s findings and cease-and-desist order were supported by substantial evidence and were properly sustained.

## Decision

- The Supreme Court reversed the Seventh Circuit and sustained enforcement of the FTC’s cease-and-desist order.
- The Court held Morton’s quantity discounts were price discrimination within the meaning of the Act when they produced the proscribed effect on competition.
- The Court held the FTC need only show that Morton charged one purchaser a higher price for like goods than it charged one or more of that purchaser’s competitors; the seller then bears the burden to justify the differential.
- The Court held the Act does not require proof that discrimination actually harmed competition, only that there is a reasonable possibility it may have that effect.
- The Court held the FTC’s finding of injury to customers’ competitive opportunities—because they paid substantially more than competitors for the same goods—was sufficient, and the FTC’s findings were supported by the evidence.

## Legal Principles

- Price discrimination under Robinson-Patman is established, in customer-level competitive-injury cases, by showing different prices to competing purchasers for commodities of like grade and quality.
- Competitive injury need not be proven as actual, realized harm; it is enough that the discrimination creates a reasonable possibility of substantial harm to competition.
- Substantial price differentials between competing purchasers that are sufficient to influence resale pricing support an inference that discrimination may substantially lessen competition.
- Once discriminatory price differentials among competing purchasers are shown, the burden shifts to the seller to prove an affirmative defense such as cost justification (cost savings attributable to quantity production, delivery, or sale) or good-faith meeting of a competitor’s equally low price.
- Reviewing courts should not displace the FTC’s supported fact-finding on competitive injury and the likely effects of discriminatory pricing.

## Conclusion

The Court held that Morton’s quantity discount program violated Robinson-Patman where substantial differentials favored a few large chains and created a reasonable possibility of competitive injury; the FTC could infer injury from disadvantaged competitive opportunities, and Morton bore the burden of proving cost-based or other statutory justification.


FTC v. Morton Salt Co., 334 U.S. 37 (1948)