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FEDERAL TRADE COMMISSION, Petitioner-Appellee, v. William T. REED, President, Reed Candy Company, Respondent-Appellant

United States Court of Appeals for the Seventh Circuit1957-04-11No. No. 11839
243 F.2d 308

Summary

Holding. The FTC possesses authority to exercise the subpoena power granted by Section 9 of the Federal Trade Commission Act in proceedings before the Commission concerning alleged Clayton Act violations. The district court's order requiring Reed to comply with the subpoena was affirmed.

The Federal Trade Commission issued a complaint against Reed Candy Company alleging violations of the Clayton Act and served subpoenas duces tecum requiring the company's president to appear and produce documents. When Reed refused to comply, arguing the FTC lacked subpoena authority in Clayton Act proceedings, the FTC sought enforcement in federal district court. The district court ordered compliance, and Reed appealed, contending that the Clayton Act establishes its own procedure without granting subpoena powers to the FTC.

The core dispute centered on whether the FTC's investigative and subpoena powers under the Federal Trade Commission Act could be deployed in enforcement actions arising under the Clayton Act. Reed argued these statutes operate independently, while the FTC maintained the two laws should be read together as complementary legislation. The court examined the statutory history, legislative purpose, and prior case law to determine the proper relationship between the two acts.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether the FTC has subpoena power in Clayton Act enforcement proceedings
  • Whether the Clayton Act and Federal Trade Commission Act are in pari materia and should be construed together
  • Whether the Clayton Act prescribes a self-contained enforcement procedure excluding FTC investigative powers

Procedural posture

Reed appealed a district court order enforcing an FTC subpoena issued in connection with a Clayton Act complaint, after the district court rejected his motion to quash and ordered his compliance.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

SWAIM, Circuit Judge.

This appeal questions the power of the Federal Trade Commission to issue subpoenas duces tecum in proceedings before the Commission on a complaint charging violation of the Clayton Act, as amended.

On November 21, 1955, the Federal Trade Commission (“F.T.C.”) issued a complaint charging the Reed Candy Company with violation of Section 2(d) of the Clayton Act, as amended, 49 Stat. 1526, 15 U.S.C.A. § 13(d). The proceeding was duly assigned to an examiner of the F.T.C. for hearing and initial decision. The examiner, on February 20, 1956, caused a subpoena duces tecum to be served on William T. Reed, as President of the Reed Candy Company, directing him to appear and testify before the F.T.C. and to produce certain documentary evidence described in the subpoena. Reed’s motion to quash the subpoena was denied by the examiner and on appeal to the F.T.C. the examiner’s ruling was affirmed. On April 4, 1956, another subpoena was issued which was identical in all respects with the first except that the date for the hearing was set for April 11, 1956. Reed did not appear at the April 11 hearing, but his counsel was present and he explained that Reed’s refusal to obey the subpoena was upon the advice of counsel that the F.T.C. lacked subpoena power in proceedings under the Clayton Act.

On May 7, 1956, the F.T.C. filed an application in the United States District Court for the Northern District of Illinois, Eastern Division, for an order requiring Reed to comply with the subpoena. The District Court ordered Reed to appear and show cause why the application should not be granted. After answer to the application of the F.T.C. and a hearing on the matter the District Court, on June 12, 1956, entered an order directing compliance by Reed with the subpoena. From that order Reed has taken this appeal.

The arguments of the parties may be briefly summarized as follows: Reed contends that the Clayton Act, 38 Stat. 730, as amended, 15 U.S.C.A. §§ 12-27, prescribes a self-contained procedure for the enforcement of its provisions and does not contain a substantive grant of subpoena power. The F.T.C. contends that the subpoena and investigational powers granted it by the Federal Trade Commission Act, 38 Stat. 717, as amended, 15 U.S.C.A. §§ 41-46 and 47-58, may properly be used in the discharge of the F. T.C.’s duties under the Clayton Act, as amended. This question has recently been the subject of decision in the district courts. Federal Trade Commission v. Menzies, D.C.Md., 145 F.Supp. 164 (holding for the F.T.C.); and Federal Trade Commission v. Rubin, S.D.N.Y., 145 F.Supp. 171 (holding against the F.T.C.).

During the pendency of this appeal the Menzies decision has been reviewed and aifirmed by the Court of Appeals for the Fourth Circuit, per Judge John J. Parker, Menzies v. Federal Trade Commission, 242 F.2d 81. We agree with the Fourth Circuit that the history, purpose and decisional law concerning the Clayton and Federal Trade Commission Acts demonstrates that they are in pari materia — to be read and construed as one in such manner as to best effectuate the purpose of Congress in enacting them. We hold that the F.T.C. may properly use the subpoena power granted it by Section 9 of the Federal Trade Commission Act, 38 Stat. 722, 15 U.S.C.A. § 49, in proceedings before the F.T.C. on a complaint charging violation of the Clayton Act, as amended. Even if the question were more doubtful than we think, we should be hesitant to reject the conclusion of the F.T.C. fortified as it is by years of administrative practice, consistent and generally unchallenged.

The order of the District Court is

Affirmed.

. On April 2, 1957, the Court of Appeals for the Second Circuit sustained the power of the F.T.C. to subpoena documents pursuant to Section 9 of the Federal Trade Commission Act in a proeeed-ing before the F.T.C. on a complaint charging violation of Section 7 of the Clayton Act. Federal Trade Commission v. Tuttle, 2 Cir., 244 F.2d 605.