Federal Trade Commission v. Mary Carter Paint Company/Opinion of the Court

Respondent Mary Carter Paint Company manufactures and sells paint and related products. The Federal Trade Commission ordered respondent to cease and desist from the use of certain representations found by the Commission to be deceptive and in violation of § 5 of the Federal Trade Commission Act, 38 Stat. 719, as amended, 52 Stat. 111, 15 U.S.C. § 45 (1964 ed.). 60 F.T.C. 1830, 1845. The representations appeared in advertisements which stated in various ways that for every can of respondent's paint purchased by a buyer, the respondent would give the buyer a 'free' can of equal quality and quantity. The Court of Appeals for the Fifth Circuit set aside the Commission's order. 333 F.2d 654. We granted certiorari, 379 U.S. 957, 85 S.Ct. 661, 13 L.Ed.2d 553. We reverse.

Although there is some ambiguity in the Commission's opinion, we cannot say that its holding constituted a departure from Commission policy regarding the use of the commercially exploitable word 'free.' Initial efforts to define the term in decisions were followed by 'Guides Against Deceptive Pricing.' These informed businessmen that they might advertise an article as 'free,' even though purchase of another article was required, so long as the terms of the offer were clearly stated, the price of the article required to be purchased was not increased, and its quality and quantity were not diminished. With specific reference to two-for-the-price-of-one offers, the Guides required that either the sales price for the two be 'the advertiser's usual and customary retail price for the single article in the recent, regular course of his business,' or where the advertiser has not previously sold the article, the price for two be the 'usual and customary' price for one in the relevant trade areas. These, of course, were guides, not fixed rules as such, and were designed to inform businessmen of the factors which would guide Commission decision. Although Mary Carter seems to have attempted to tailor its offer to come within their terms, the Commission found that it failed; the offer complied in appearance only.

The gist of the Commission's reasoning is in the hearing examiner's finding, which it adopted, that

'the usual and customary retail price of each can of Mary     Carter paint was not, and is not now, the price designated in      the advertisement ($6.98) but was, and is now, substantially      less than such price. The second can of paint was not, and is     not now, 'free,' that is, was not, and is not now, given as a      gift or gratuity. The offer is, on the contrary, an offer of     two cans of paint for the price advertised as or purporting      to be the list price or customary and usual price of one      can.' 60 F.T.C., at 1844.

In sum, the Commission found that Mary Carter had no history of selling single cans of paint; it was marketing twins, and in allocating what is in fact the price of two cans to one can, yet calling one 'free,' Mary Carter misrepresented. It is true that respondent was not permitted to show that the quality of its paint matched those paints which usually and customarily sell in the $6.98 range, or that purchasers of paint estimate quality by the price they are charged. If both claims were established, it is arguable that any deception was limited to a representation that Mary Carter has a usual and customary price for single cans of paint, when it has no such price. However, it is not for courts to say whether this violates the Act. '(T)he Commission is often in a better position than are courts to determine when a practice is 'deceptive' within the meaning of the Act.' Federal Trade Comm'n v. Colgate-Palmolive Co., 380 U.S. 374, 385, 85 S.Ct. 1035, 1043, 13 L.Ed.2d 904. There was substantial evidence in the record to support the Commission's finding; its determination that the practice here was deceptive was neither arbitrary nor clearly wrong. The Court of Appeals should have sustained it. Federal Trade Comm'n v. Colgate-Palmolive Co., supra; Carter Products, Inc. v. Federal Trade Comm'n, 5 Cir., 323 F.2d 523, 528.

The Commission advises us in its brief that it believes it would be appropriate here 'to remand the case to it for clarification of its order.' The judgment of the Court of Appeals is therefore reversed and the case is remanded to that court with directions to remand to the Commission for clarification of its order.

It is so ordered.

Judgment of Court of Appeals reversed and case remanded to the Commission.

Mr. JUSTICE STEWART took no part in the decision of this case.

Mr. Justice HARLAN, dissenting.