PENNSYLVANIA I. TRUSTS, COMBINATIONS, AND MONOPOLIES A. GENERAL ANTITRUST LAWS CONSTITUTIONAL PROVISIONS No provisions. STATUTORY PROVISIONS Stat. Ann. (Purdon, 1931), tit. 18 Section 211 prohibits a conspiracy to cheat and defraud any person or body corporate of his or their money or other property or to do any dishonest, malicious or unlawful act to the prejudice of another. Judicial Decisions Application of the Common Law. An agreement entered into by five corporations dividing among themselves in certain proportions the markets for bituminous coal of two coal regions and providing for the control of prices, determination of sales policies, and entry into certain agreements with anthracite coal dealers was held to be an unreasonable restraint of trade and illegal. The Morris Run Coal Co. v. The Barclay Coal Co., 68 Pa. 173 (1871). That the true object of this combination was to lessen overhead expense, advance the quality of coal, and better serve their customers was immaterial in view of the wide scope, general influence, and injurious effects of the contract. Ibid. But see Monongahela River Consol. Coal & Coke Co. v. Jutte, 210 Pa. 288, 59 Atl. 1088 (1904), affirming the test of reasonableness in determining the legality of agreements, but questioning, whether on such facts, this court would have reached the same conclusion. A bill in equity for an accounting sought by a member of a combi. nation of 45 brewers whose object among other things, was to regulate and control the price of beer in their territory was dismissed because the combination was unlawful in tending to destroy competition and to create a monopoly in an article of daily consumption. Nester et al. v. Continental Brewing Co. et al., 161 Pa. 473, 29 Atl. 102 (1894). A provision in a traffic agreement between railroad companies restricting the contracting parties from encouraging or aiding in any manner the construction of competitive railway lines was held illegal. Bald Eagle Val. R. R. Co., et al. v. Nittany Val. R. R. Co., et al., 171 Pa. 284, 33 Atl. 239 (1895). The court, however, did enjoin violation of another provision in the same agreement whereby the defendant agreed to give to the plaintiff line all of its traffic to and from their ore lands, furnace, and certain other railroad junctions. This provision does not restrain competition, and as it is separable from all other provisions of the agreement, the defendant is liable for its breach. Ibid. When a contract between two connecting railroads for an arrangement of through rates was held reasonable, the injury suffered by a competing barge owner through loss of business is "damnum absque injuria." Munhall v. Penn. Ry. et al. (2 cases) 92 Pa. 150 (1879). Defendant was an association of members selling building supplies; all members of defendant association but plaintiff resisted a strike called by a labor union. Whereupon, defendant association members refused to deal with plaintiff, and brought pressure to bear on other dealers so as to prevent plaintiff from obtaining building supplies. This action was brought against defendant members for damages. It was held that at common law, refusal to sell is not actionable and that the combination in this case was not a conspiracy to fix prices and restrain trade but a combined effort for the purpose of resisting the labor union's demand for increased wages which would ultimately result in higher prices to be paid by conconsumers. "The element of an unlawful combination to restrain trade because of greed of profit to themselves, or of malice toward plaintiff or others is lacking, and this is the essential element on which are founded all decisions as to common law conspiracy in this class of cases." Cote v. Murphy et al., 159 Pa. 420, 28 Atl. 190 (1894). See also Buchanan v. Kerr et al., 159 Pa. 433, 28 Atl. 195 (1894). Specific performance of a contract entered into by four nonparallel and noncompeting railroads to exchange traffic cars, sell coupon passenger tickets, make through bills of lading, apportion earnings on a mileage basis, and generally operate in harmony for the development of traffic between them was granted. Two of the parties also agreed to send traffic "so far as they lawfully could" to destinations over the other two lines. The contract was held not to be in violation of the common law nor forbidden by the constitution. Cumberland Val. R. R. Co. v. Gettysburg and H. Ry. Co., 177 Pa. 519, 35 Atl. 952 (1896). Plaintiff corporation purchased numerous mines and acquired a number of coal-carrying vessels and towboats as well as a substantial number of coal landings. In acquiring such interests it obtained from the sellers contracts not to compete in the territory of the Monongahela, Ohio, and Mississippi Rivers and their tributaries for a period of 10 years. Defendant, one of the sellers entering into such agreement, began to compete with plaintiff in the restricted territory. In suit for a restraining order, court entered an order enforcing the covenant not to compete and restrained defendant because the contract in question was not an agreement in restraint of trade. Although plaintiff owned substantial interests, there was no intent on its part to monopolize. There was no attempt to control prices or suppress competition as limitless areas were as yet unexploited. Monongahela River Consolidated Coal & Coke Co. v. Jutte, supra. Compare the Morris Coal Co. case, supra. See Contracts not to Compete, infra. The consolidation of a gaslight, gas heating, and electric company, in pursuance of statutory provisions for corporate consolidations, does not violate "any law or constitutional inhibition." Motter v. Kennett Township Electric Co. et al., 212 Pa. 613, 62 Atl. 104 (1905). The refusal by a public service commission to permit construction of additional routes to compete with another telephone company was sustained even though thereby creating a monopoly. Perry County Tel. & Tel. Co. v. Public Service Commission, 265 Pa. 274, 108 Atl. 659 (1919). In quasi public enterprises competition may tend to burden rather than to advance public interests. Ibid. A combination of two newspapers organized to establish a single sales force to distribute their respective papers is not invalid. Philadelphia Record Co. v. Curtis-Martin Newspapers, Inc., et al., 305 Pa. 372, 157 Atl. 796 (1931). B. EXCEPTIONS TO GENERAL ANTITRUST LAWS Stat. Ann. (Purdon, Supp., 1938) tit. 73, c. 4 Sections 201 to 207 validate contracts fixing the resale price of branded articles. The statute is expressly inapplicable to horizontal agreements between wholesalers, between producers, or between retailers. See Vol. State Price Control Legislation: Resale Price Maintenance. C. SPECIAL ANTITRUST LAWS 1. Special Industry Antitrust Acts CONSTITUTIONAL PROVISIONS Stat. Ann. (Purdon, 1930) Const. art. XVII, sec. 4, provides that no railroad, canal, or other corporation, or lessees, purchasers, or managers of any railroad or canal corporation shall consolidate stock, property, or franchises of such corporation with, or lease or purchase works or franchises of, or in any way control any other railroad or canal corporation having under its control a parallel or competing line. It further prohibits such corporations from having officers in common. Const. art. XVII, sec. 5, provides that no common carrier shall engage in mining or manufacturing articles for transportation over its works, nor engage in any other business save that of common carriers; but mining and manufacturing companies may carry its products on its own railroad or canal not exceeding 50 miles in length. Const. art. XVI, sec. 12, provides that no telegraph company shall consolidate with, or hold a controlling interest in the stock or bonds of any other telegraph company owning a competing line, or acquire, by purchase or otherwise, any other competing line of telegraph. STATUTORY PROVISIONS Stat. Ann. (Purdon, 1931), tit. 67 Section 761 prohibits common carriers from directly or indirectly engaging in mining or manufacturing articles for transportation over its works; nor shall such company, directly or indirectly engage in any other business than that of common carrier, or hold or acquire lands, except as shall be necessary for carrying on its business; but |