ANALYSIS

OF STATE ANTITRUST LAWS

(Scope Note)

S

I. TRUSTS, COMBINATIONS, AND MONOPOLIES

TRIKING but not surprising is the degree of connection between

State and Federal antitrust legislation. The events and influences that shaped the course of public opinion, some conspicuous and some obscure, operated through the legislative bodies of State and Nation at the same time. Usually the seeds of legislation in this field produce first fruits in a few States and the enactment of Federal law has had a stimulating effect elsewhere.

The Sherman Antitrust Act of 18901 was neither the first nor the last of a series of enactments of the same general character. A dozen States had already established constitutional declarations or statutes to the same end. Two-thirds of the States had fallen in line by 1898. This wave of legislation differed from such later movements as those sponsored by organized groups of special interests. Later legislation. favoring farmers' cooperatives or resale price maintenance follows a limited number of definite patterns. Not only long phrases but complete statutes are frequently identical in numerous jurisdictions. The nineteenth century antitrust legislation, however, presents as many variant forms as might be expected from a popular reaction against both the power and the abuses of power of organized business. On the whole the drafting of the State statutes does not reach the moderate standard represented by the Sherman Act. Although enforcement of the national legislation has not been conspicuously successful, a comparatively small number of words have there served to form a basis of governmental restraint upon business abuses at least as effective as that achieved under more verbose State enactments. This is of course partly due to the fact that the Federal administration is 126 Stat. 209 (1890) (15 U. S. C. A. (1927) Secs. 1-4).

more often able to command the strength and independence to deal with powerful enterprises conducted on a regional or on a national scale.

General antitrust laws, while doubtless promoted in part by popular distrust of big business, make no reference to the absolute or relative size of permissible combinations in the form of corporations or otherwise. The sort of detail encompassed in such State legislation is illustrated by the elaborate Texas Antitrust Law of 1889, which formed the basis of the "Reagan Amendment" to the Sherman bill. The definitions there embodied references to combinations of capital skill or acts, restrictions in trade, commerce or the free pursuit of any lawful business, preventing or lessening competition, fixing or maintaining any standard whereby prices would be in any manner affected or controlled, agreements to withhold any article or commodity from the market or to preclude free and unrestricted competition in its sale or transportation or to pool, combine or unite any interest whereby prices might be in any manner affected, regulating or limiting production, boycotts, and combinations to abstain from business or from the market.

In this and other State statutes of the same type a great variety of expressions connected with production, transportation, sale, purchase, and insurance chiefly hold close to the basic ideas of agreement or combination lessening competition with particular reference to production and price control. The evil almost universally appearing as the central objective of the draftsman seems to be limitation of price competition with a view to raising prices, but arrangements to limit production or combinations of buyers with a view to lowering the prices of commodities or produce fall within the language of all of the statutes in this group.

No uniformity obtains in the remedies for violations, although general similarity to the Sherman Act prevails in several respects. The acts commonly make violations crimes punishable by fines up to a few thousand dollars and by imprisonment for maximum periods

2

This statute, Gen. L. 1889, p. 141, rendered inoperative by a technical decision that, while it defined and purported to punish trusts, monopolies and conspiracies in restraint of trade, it did not prohibit or declare them illegal (Queen Insurance Co. v. State, 3 Tex. Civ. App. 545, 22 S. W. 1048 (1893)), was substantially reenacted in 1903 (Gen. L. 1903, c. 94, p. 119), with the necessary brief formal declaration to make it operative. Texas has since been one of the few States active in antitrust prosecution.

This phrase used in the definition of trust in the Texas Act was made the basis of a definition of monopoly in the South Carolina Act of 1897, XXII, 434, S. C. Code (1932) Sec. 6625, and expanded into "any union, or combination or consolidation, or affiliation of capital, credit, property, assets, trade, custom, skill or acts, or any other valuable thing or possession." No fruits of such assiduity are manifest.

ranging from 6 months to 10 years. Individuals participating in or causing the violations of corporations are frequently covered by a separate penal section. An unusual section in Tennessee makes all persons and corporations that become members of an interdicted combination jointly and severally liable to pay the debts of each member as fully as if all were partners in the creation of such debts. The attorney general is commonly charged with the duty of instituting proceedings in equity to restrain violations of the act, and jurisdiction of courts to issue the necessary decrees is expressed or unequivocally implied. In lieu of the forfeiture of property provided by section 6 of the Sherman Act, State antitrust legislation, particularly of early vintage, prominently features provisions for the forfeiture of the charters of domestic corporations and for the ouster of foreign corporations from the privilege of doing business in the State. Private parties injured by violations are commonly authorized to sue for double or triple damages. Injunction suits by private individuals to restrain violations of the statutes, not authorized until 1914 by Federal law, were earlier allowed by statute or court decision in several States and are now commonly available. The area covered by the substantive provisions of the Sherman Act was thus thoroughly cultivated by State legislation before the turn of the century, although some States did not enter this field until later and a few still have no antitrust legislation properly so called.

70

Statutes of 13 States declared that a conspiracy to injure the "public trade" or "trade or commerce" is a misdemeanor, punishable by fine and imprisonment. Horizontal price-fixing arrangements and combinations to prevent competition have been held to be conspiracies within the meaning of such a provision.sa

'E.g., Tex. Stat. (Vernon, 1936) Pen. Code, art. 1637 (Acts of 1907, p. 457). This extreme penalty is exceptional, but occurs in a few other States.

Cf. Clayton Act, 38 Stat. 736 (1914) sec. 14 (15 U. S. C. A. (1927) secs. 22-25). "This, like many other drastic penal provisions, such as forfeiture of property of a combination under sec. 6 of the Sherman Act, does not seem to have been applied to any appreciable extent. The section was once cited in a case affirming the constitutionality of the statute as a whole, but the reports and digests do not seem to afford indication of its application.

7 26 Stat. 210 (1890) (15 U S. C. A. (1927) sec. 6).

7 Clayton Act, 38 Stat. 737 (1914) sec. 16 (15 U. S. C. A. (1927) sec. 26). Alabama Code Ann. (Michie, Supp. 1936), sec. 3571; Illinois Rev. Stat. (Smith-Hurd), c. 38, sec. 139; Iowa Code (1939), sec. 13-162; Maine Rev. Stat. (1930), c. 138, sec. 25; Minnesota Stat. (Mason, 1927), sec. 10055; Mississippi Code Ann. (1930), sec. 830; Nevada Comp. Laws (Hillyer, 1929), sec. 10061; New York Cons. Laws (McKinney), vol. 39, art. 54, sec. 580; North Dakota Comp. Laws Ann. (1913), sec. 9441; South Dakota Comp. Laws (1939), sec. 13.0301; Tennessee Code Ann. (Michie, 1938), sec. 11064; Utah Rev. Stat. Ann. (1933), sec. 103-11-1; Washington Rev. Stat. Ann. (Remington, 1932), sec. 2382. Sa People v. Dwyer, 145 N. Y. Supp. 748, 160 App. Div. 542 (1914); People y. North River Sugar Refining Co., 7 N. Y. Supp. 406 (1889) aff'd, 121 N. Y. 582, 24 N. E. 834; Unckles v. Colgate, et al., 25 N. Y. Supp. 672 (1893) aff'd, 148 N. Y. 210235°-40—vol. 1- -4

86

Three States 8 punish conspiracies "to defraud the State."

Under such a provision in Oklahoma, it was held that the prevention of competition in the letting of public contracts was an offense within the meaning of the statute.sc

State as well as Federal authorities had experience emphasizing the platitude that the enactment of legislative prohibitions and penalties is easier than their effective enforcement. The delays of litigation are particularly acute where complicated states of fact must emerge, from myriad papers and many witnesses, first in the minds of prosecuting attorneys and then in the minds of the members of tribunals usually unacquainted with the business in question. The situation is aggravated where, as frequently, the defendant considers it good policy to refuse all cooperation in the exposition of the facts. The exceptional need for the discovery of evidence was even more acute than the need for expedition. These considerations led to Federal legislation of 1903 known as the Immunity Act 10 and the Expediting Act." The former, and, to a lesser extent, the latter, have their counterpart in State legislation. The correspondence upon a chronological basis, however, is less noteworthy. Missouri originally granted immunity from criminal prosecution for matters disclosed in what are commonly called "antitrust affidavits" 12 and in 1891 Tennessee included immunity provisions in its general antitrust act. State legislation of this kind, however, is otherwise virtually confined to the 12-year period centered on 1903, the year of the first Federal Immunity Act.

Development of workable procedure smacks of sterile legalism to the layman and also to the lawyer-legislator more preoccupied with popular politics than with legal science. Consequently adjective legislation does not pass over the country on waves of popular interest, but grows in a more leisurely fashion. Nevertheless, before 1910 several States had enacted elaborate provisions for discovery, backed at least on paper by potent sanctions as exemplified by an Arkansas stat

529, 43 N. E. 59; People v. Sheldon, 39 N. Y. 251, 34 N. E. 785 (1893); W & V. Coal Co. v. People, 214, Ill. 421, 73 N. E. 770 (1905); Drake et al., v. Siebold, 30 N. Y. Supp. 697 (1894); Sultan v. Star Co., 174 N. Y. Supp. 52, 106 Misc. 43 (1919).

8b Georgia Code Ann. (Park, et al., 1936), secs. 26-4201 to 26-4204; Nebraska Comp. Stat. (1929), sec. 28-301; Oklahoma Stat. Ann. (1936), tit. 21, sec. 424. se State v. Young, 20 Oklahoma Cr. 383, 203 Pac. 484.

'Many pages were consumed at the outset of the monumental record in U. S. v. Standard Oil Company of New Jersey (see 221 U. S. 1. 9 Cases and Points, p. 13 (1911)) in the examination of the secretary of the defendant corporation, who seemed to know next to nothing about the business of the company or about its records, or who would know about it or them, or where the records were kept or could be found.

10 32 Stat. 854 (1903) (22 U. S. C. A. (1927), sec. 86).

"32 Stat. 823 (1903) (15 U. S. C. A. (1927), secs. 28-29).

12 Mo. Stat. Ann. (1932), c. 47, art. 3, sec. 8728, (L. 1891, p. 186, sec. 7, superseded by L. 1895, p. 237).