The Mennen Case

The United States Circuit Court of Appeals for the Second Circuit handed down a decision of great importance to those manufacturers and jobbers who have feared legal complications as a result of some customary selling or distributing method. The decision was upon an appeal of the Mennen Company against an order of the Federal Trade Commission. This order forbade the Mennen Company to adopt any system of discount upon the basis of a classification of its customers as jobbers, wholesalers, retailers, " or any similar classification which relates to the customers' form of organization, business policy, business methods." The Mennen Company argued that it was entitled to allow wholesalers a discount based on their greater distributing faculties, and that it had not discriminated against individuals, but merely classified its customers. The court upheld the appeal.

A short time ago this decision would have caused little comment because it was taken for granted that a company could sell its products as it chose, provided it did not combine with others to limit distribution or maintain high prices. But in the Beechnut Packing Co. case in 1922 the Supreme Court held that where there is a " suppression of the freedom of competition by methods in which the company secures the cooperation of its distributors and customers, which are quite as effectual as agreements express or implied," the Federal Trade Commission may properly interfere.