Honorable Enrigue.H. Pena             Opinion No. M-412
County Attorney
Room 201                              Re:   Does the formation of
city-County Building                        non-profit food
El Pasol. Texas 79901                       cooperatives violate
                                            the Texas antitrust laws?
Dear Mr. Pena:

     you have requested our.opinion.on       the following question,
to-wit:

           "Does the formation of an unincorporated
     non-profit f00a purchasing cooperative violate
     the: Texasantitrust  law?"

The facts,.as set out.in.your recent letter, are as follows:

     A group of:ultimate..consumers formed.an association for
the purposes of Ipurchasing foodfrom.wholesale   grocery out-
lets and redistributing.,such.food to its membership.   Member-
ship in the association requires the..payment of dues and
such.memberships are-opento   the..general..public. Members
of the..assocfation~are not~..reguired~.to.:purchase
                                                  exclusively
through, the,,association.

     For the purposes.of thisopinion,    the Texas antitrust
laws may:be diuided..into three..categories, namely, "monopolies,"
as defined in SectfonlS.01;   "trusts," in Section 15.02; and
"conspiracies," in Sectionl5.03,,Business    and Commerce Code.

      Section 15.01 Vernon's Civil Statutes, Business and
Commerce Code; limitsa    "monopoly" to a combination or con-
solidation~of.two or more.corporations under circumstances
set out in that~ statute. As set out in your request, the
food cooperatives in question are not incorporated, and
therefore Section 15.01 is inapplicable.

     Section 15.02 defines.a."trust",as being a combination
of capital,.skill, oracts  by two ormore  persons, established




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Hon. ENique   H. Pena, page 2 w-412)



for the following purposes:
          II . . .

          "(b) A.'trust' is a combination of capital,
     skill, or acts by two or more persons to

                 (1) restrict, or tend to.restrict, trade,
                     commerce, aids to comerce, the pre-
                     paration of tangible personal property
                     for market or transportation, or the
                     free pursuit of a lawful business;
                     or

                 (2) fix, maintain, increase, or reduce the
                     price of tangible personal property,
                     the cost of insurance, or the cost
                     of preparing tangible personal pro-
                     perty for market or transportation
                     or

                 (3)~prevent.or lessen competition in

                       (A) the manufacture, transportation,
                           sale, or purchase.of tangible.
                           personal.property;

                       (B) the business of insurance;

                       (C) aias:to oommerce; or

                       (D) preparing.tangible personal.property
                           for marketortranspoztation;   or

                 (I),~affect; control,~or establish the price
                     of tangible personal property, or the
                     cost of.transportatioh, insurance, or
                     preparing.tangible,personal property
                     for .market or.transportation; or

                 (5)   agree

                       (A) not to sell, aispose of, transport,
                           or prepare tangible personal property
                           for market or transportation, or




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Eon. Enrique H..Pena, page   3    (~-43.3)



                        not to make an insurance contract,
                        at a price below a common standard
                        or figure;

                    (B) to rxintain the price of tangible
                        personal property, the charge for
                        transportation  or insurance, or the
                        cost of preparing tangible personal
                        property for market.or transportation
                        at a fixed or graded figure;

                    (Cl to affect or maintain the price of
                        tangible Personal property or the
                        cost of transportation, insurance,
                        or Preparing.tangible.personal
                        property for market or transportation
                        in order to preclude free competition
                        between.or  among themselves or others
                        in the sale or transportation of
                        tangible"~personal~.property, in the
                        busLuess of transportation or in-
                        surauce, or in preparing tang+ble
                        personal property formarket or
                        tranqortation:    or

                    (D) to pool, combine, or unite an interest
                        theY have in the sale or purchase of
                        tangible personal property, or in the
                        charge for transportation, insurance,
                        or preparing tangible,personal property
                        for market or transportation so that
                        the Price of the tangible personal
                        PrcG=tYr   or charge for transporta-
                        tion, insurance, or preparing tangible
                        personal property for market or trans-
                        portation,  might be in any manner
                        affected; or

                (6) regulate, fix, or 1imi.t~the output of
                   .tangible Personal property, or the
                    amount of insurance.undertaken,  or
                    the amcurt of work performed in pre-
                    paring tangible personal property for
                    market  or transportation; or




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Hon. ENique   H. Pena, page 4    (M-412)



                 (7) refrain from engaging in business, or
                     from buying or selling tangible per-
                     sonal property for market or trans-
                     portation; or"

     After a careful' examination of the cases interpreting
Section 15.02, and prior Article 7426, Vernon's Civil Sta-
tutes, which also defined a trust, we fail to find any
situation in which this statute has been applied to an
agreement or contract.between.ultimate consumers.   Inherent
in a typical antitrust arrangement is its.ultimate.purpose;
to raise or maintain consumer prices at non-competitive
levels. A cooperative formed.by ultimate consumers to gain
the advantage of volume purchasing, has the reverse effect;
that of fostering.price competition.

     Texas courts.on'many occasions.have determined that an
unlawful combination exists,.only when there..is a union or
association of parties,.which.might have been otherwise in-
dependent and competing, for the accomplishment of one or
more of the-proscribed purposes set outin Section 15.02
and Article.7426.. Gates v. Hooper, 90 Tex. ~563, 39 S.W. 1079,
1080, (1897); Padgitt v. Lone Star Gas Co., 213 S.W.Zd 133,
(Tex.Civ.App. 1948);..State v. Fairbanks-Morse,~& Co., 246 S.W.2d
647,.(Tex.Civ.App.l951).    The facts, as set out m your
opinion.request, do not'ref1ect.a union or association of
competitors; hence,.Section.l5.02 is inapplicable to the
situation at.hand.

     Section:15.03.i.s also.inapplicable.to the facts as set
out in your opinion request. There is no exclusive dealing
arrangement between the membership and the association, and
the members of~such associations are free to~purchase food
wherever they choose.

                      SUMMARY

               An association of ultimate consumers,
          formed for the purpose of,purchasing food
          products from wholesale grocery,outlets
          and for the further purpose of redistributing
          such food products to its membership, is
          not in violation of the,Texas antitrust
          statutes, Sections 15.01, 15.02, and 15.03, V.C.S.,
          the Business and.Commerce Code. This opinion




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EIon..~ENique 8, Pena; page 5 (M-412)



          is limited:to.the.question.of .the forma-
          tion of .ultimate consumer cooperatives
          and is in no'wsy intended -as an interpre-
          tati.on.of the possible future acts of such
          cooperatives.




Prepared by Thomas W. Mack
Assistsnt.Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
George Kelton, Vice-Chairman

Charles Parrett
Bill Craig
Louis .Neunann
Houghton .BzownLee

W. V. Geppert
Staff Legal Assistant

Hawthorne Phillips
Executive Assistant




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