prevail, and the rule laid down is not regarded as inflexible and has been considerably modified. The public welfare is first considered, and if that be not involved, and the restraint upon one party is not greater than the protection of the other party requires, the contract may be sustained. The question is as to whether under particular circumstances of the case and the nature of the particular contract involved the contract is or is not unreasonable. § 81. Illegal combinations in interstate commerce.-A commodity may be the subject of an illegal agreement in restraint of trade, in violation of the act, although it is still subject to the taxing power of a state.1 A combination is subject to the act which includes the suppression of competition in the purchase of cattle in different states, and also the suppression of competition in the sale of meats in different states, where all these acts were part of a single purpose to control and monopolize commerce. Commerce between the states, the court said, was not a technical legal conception, but a practical one drawn from the course of business. When cattle are sent for sale from a place in one state with the expectation that they will end their transit after purchase in another, and when in effect they do so with only the necessary interruption to find a purchaser at the stockyards, and when this is the typical and constantly recurring course, the current thus existing is a current of commerce among the states, and the purchase of the cattle is a part and incident of such commerce.2 The court could not order the defendants to compete, but it could enjoin them from combining not to compete. Where the necessary effect of a combination is to stifle or directly or substantially to restrict competition in interstate commerce it is unlawful under the act; but if the necessary Addyston Pipe & S. Co. v. United States, supra; United States v. Swift, 122 Fed. 529 (1903). 2 Swift v. United States, 196 U. S. 375, 49 L. Ed. 518 (1906). In this case the facts charged in the petition were in effect confessed by the demurrer whereon the injunction was granted. The prac tical difficulty of proving an agreement not to compete from the fact of non-competition was not presented. effect is but incidental and indirectly to restrict competition while its chief result is to foster the trade and increase the business of those who make and operate it, it is not in violation of the act. A combination between a corporation and its officer or agent in violation of the Anti-Trust Act, cannot be formed by the thoughts or acts of the officer or agent alone without the conscious participation in it of any other officer or agent of the corporation, as a union of two or more minds is indispensable to an unlawful combination.1 § 82. Complete suppression of competition not essential.Where a contract is for the direct suppression of competition, such as was shown in the Addyston Pipe case, it is not necessary that the trade in the commodity be completely suppressed in order to render the combination one in restraint of trade. It is sufficient if the contract operates in restraint of trade." In determining whether an association of manufacturers or dealers constitutes a combination in restraint of trade in interstate commerce, the court will consider the whole agreement in all its provisions. Thus an agreement between the manufacturers of tiles not to sell unset tiles to any one other than members at less than the list prices, which were fifty per cent. higher than the prices to members, and membership was dependent on conditions, one of which was the carrying of at least three thousand dollars worth of stock, was held to constitute part of a scheme involving the enhancement of prices, and that the whole thing was so bound together that the transactions within the state were inseparable and became part of a scheme which really amounted to and was a combination in restraint of trade in interstate commerce.3 It is not necessary, however, that a combination should by its terms refer to interstate commerce, and it is enough if its purposes and effect are necessarily to restrain such commerce. 1 A contract which one company makes with another to be its sole agent for the sale of its products, is not in violation of the act. Virtou v. Creamery Package Mfg. Co., C. C. A. 8th Circuit, 179 Fed. 115 (1910); Union Pacific Coal Co. v. U. S., 173 Fed. 737, C. 2 See Addyston Pipe case, supra. 3 Montague v. Lowry, 193 U. S. 38, 48 L. Ed. 608. If it were otherwise, all combinations in restraint of interstate commerce could be so expressed in words as to avoid the statute.1 § 83 (72). Monopoly within the meaning of the act.-The second section of the act makes unlawful and punishable the monopolizing or attempting to monopolize, or combining or conspiring to monopolize any part of trade or commerce among the several states. This section has been extensively discussed. Thus it was early said in a decision by Justice Jackson, then circuit judge and afterwards of the supreme bench,2 that it was very certain that congress did not by this enactment attempt to limit the amount of property that a private citizen might acquire by legitimate and lawful methods. In other words, that is was not the magnitude of the business, but the abuses with the incidental and direct powers thereby acquired which constitutes a monopoly or attempt to monopolize. The difficulty in the construction of this section grew out of the legal meaning of the term "Monopoly," which was a "grant of exclusive right from the sovereign power." In the legal sense, therefore, there must be an exclusive right or privilege on one side and a restriction or restraint on the other which operates to prevent the exercise of the right or liberty open to the public before a monopoly is secured. The meaning of the second section was exhaustively discussed by the supreme court in the Standard Oil case. The court there said that nowhere at common law could there be found a prohibition against the creation of a monopoly by an individual; that is, monopoly in the concrete could only arise from the act of the sovereign power, and such sovereign power being restrained, prohibitions as against individuals were not directed against the creation of monopoly, but only applied to such acts in relation to particular subjects as to which it 1 Gibbs v. McNealy, 55 C. C. A. 70, 118 Fed. Rep. 120 (1902). 2 In re Green, 52 Fed Rep. 104 (1892); citing Morgul Steamship Co. V. Macgregor, App. Cases, part 1, p. 25. 8 4th Blackstone, 159; Case of Monopolies (1601), 11 Coke Reps. Habits of Monopolies (1623), 21 Jas. I, C. 3. 84 B; • See supra, § 77. was deemed if not restrained, some of the consequences of monopoly might result. The word "monopolize" was therefore used in this section in order to reach every act bringing about the prohibited results. Any ambiguity in the term was therefore dissipated in the light of the previous history of the law of restraint of trade and the indication which it gives of the practical evolution by which monopoly and the acts which produce the same results as monopoly, that is, the undue restraint of the due course of trade, all come to be spoken of as and to be indeed synonymous with restraint of trade. The court said further that when the second section is thus harmonized with and intended to be a complement of the first, it becomes obvious that the criterion to be resorted to in any given case for the purpose of ascertaining whether violation of the section has been created, is the rule of reason guided by the established law, and by the plain duty to enforce the prohibitions of the act, and thus the public policy which its restrictions were obviously intended to subserve. It therefore follows that while monopoly in this country, in the strict legal sense, can only be possible in case of rights under patent and copyright laws, in this second section of the act of 1890 the term is used in the sense of attempting to obtain a control of the market and the suppression of competition through unlawful means, that is, through restraint of trade. This is substantially the construction given this section in the different circuit courts and the courts of appeal. Thus it was said by the circuit court of appeals of the eighth circuit,' that the purpose of the second section was the same as that of the first, to prevent the restriction of competition, and should receive the same interpretation. It was not the purpose of the second section to prohibit and punish the customary and universal attempts of all manufacturers and traders engaged in interstate commerce to monopolize a fair share of it in the necessary enlargement of their business, while their attempts left their competitors free to make successful endeavors of the same kind. This was the same construction given to the act by Justice Jackson in the case above referred to, where it was held that the payment of rebates to parties who dealt exclusively with 1 See Continental Tobacco Case, 125 Fed. Rep. 454 (1903). the company did not constitute an attempt to monopolize, as the purchaser was left at liberty to buy where he pleased, and all other sellers of the article were left unrestrained in offering greater inducements.1 § 84 (75). No application to commerce within a state.—The limitation of the jurisdiction of congress to commerce among the states was illustrated in the first case presented to the court involving the construction of the act. That was the Sugar Trust case in 1895.2 In this case the court held that the statute did not reach a manufacturing company which was acquiring by the purchase of the stock of other refining companies through shares of its own stock nearly complete control of the manufacture of refined sugar in the United States. The court said that manufacture precedes commerce, but is not a part of it. The sale as an incident of manufacture, therefore, was distinguished from commerce. This decision disappointed many in their anticipations of the effectiveness of the statute, and this feeling seems to have been shared by the supreme court, as it was said in the first Freight Rate case in 1897, that if the act was not applicable to railroads, there would be very little left for it to apply to. While the growth of combinations in interstate commerce has disappointed these anticipations of the ineffectiveness of the statute, the court has adhered to its ruling that it has no jurisdiction over that part of a combination or agreement which relates wholly to commerce within a state by reason of the fact that the combination also covers the regulation of commerce which is interstate. 1 Sanborn, J., said in United States v. Standard Oil Co., 173 Fed. Rep. 177 (1909): "If the necessary effect is only incidental or indirectly to restrict competi tion, while its chief result is to foster the trade and increase the business of those who make and operate it, it does not violate the law." Hook, J., concurring in the same case said (p. 195): "The scope of the second section con templates the conduct of one person, but the first that of two or more. The intention of congress was to condemn monopolies, not based on legal combinations among several, but secured by single persons, natural or artificial;" and "that the magnitude of the business does not alone constitute monopoly, and that the baneful effect is the same whether the monopoly comes as the gift of the government, or is the result of individual wrongdoing." 2 United States v. Knight Co., 156 U. S. 1, 39 L. Ed. 325 (1895). |
