Federal Trade Commission v. Dean Foods Co.

FTC v. Dean Foods Co, 384 U.S. 597 (1966), is a 1966 decision of the United States Supreme Court holding that the Federal Trade Commission (FTC) may sue in federal court to obtain a preliminary injunction to maintain the status quo against the consummation of a merger that the agency persuasively contends violates the antitrust laws. More broadly, the Dean Foods' case stands for the proposition that a federal agency may, by invoking the “All Writs Act,” seek equitable relief in federal court against a person’s threatened action that will substantially interfere with the agency’s performance of its statutory duty and thus adversely affect the relevant court’s ability to review the agency’s ultimate order with respect to the threatened action.

Background

Dean Foods and Bowman Dairy, two substantial competitors in the sale of milk in the Chicago area, agreed to a merger. Dean was the second largest firm and Bowman the third or fourth, and together they accounted for 23% of sales in the area. The FTC filed an administrative complaint to prevent the merger and sought to maintain the status quo pending completion of administrative hearings by filing a petition with the United States Court of Appeals for the Seventh Circuit for a temporary restraining order and preliminary injunction under the All Writs Act^[1]

The FTC argued that injunctive relief was needed because otherwise Dean would eliminate Bowman as a competitive entity by selling off its milk routes and its plants and equipment. This would prevent restoration of Dean as an effective competitor, in the event that the merger was found unlawful. The FTC maintained that such preemptive action by Dean would effectively deprive the court of appeals of its appellate jurisdiction to review the FTC’s final order, because any order would be meaningless as a practical matter. The Seventh Circuit dismissed the petition on the ground that the FTC lacked authority to seek such relief, since Congress had no passed any statute giving the FTC authority to seek a preliminary injunction. At that point Dean began closing Bowman down and eliminating it as a business.

Opinion of the Court

The Court noted that the FTC had several times, without success, asked Congress to pass a law authorizing it to obtain preliminary injunctions in merger cases. The Court said, “Congress neither enacted nor rejected these proposals; it simply did not act on them.” In any case, the Court added, nothing has limited the courts’ powers under the All Writs Act. “We thus hold that the Commission has standing to seek preliminary relief from the Court of Appeals under the circumstances alleged.”

Subsequent developments

The reasoning of the Court is not limited to the FTC and by its terms would apply with equal force to any other federal agency in similar circumstances. However, the principle may be limited to situations of great urgency. In FTC v. PepsiCo, Inc.,^[2] the FTC sough a preliminary injunction against a merger and the Second Circuit denied it. The court said that, under Dean Foods, an injunction can issue only if the Commission can show that "an effective remedial order, once the merger was implemented, would otherwise be virtually impossible, thus rendering the enforcement of any final decree of divestiture futile." The Second Circuit thought that the merger probably violated the antitrust laws, but did not believe that effective relief would be “virtually impossible.”

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