B. EXCEPTIONS TO GENERAL ANTITRUST LAWS Dig. Stat. (Pope, 1937) Resale Price Maintenance Sections 5606 to 5614 validate contracts fixing the resale price of branded commodities. The statute is expressly inapplicable to horizontal agreements between producers, between distributors, or between retailers. See Vol., State Price Control Legislation: Resale Price Maintenance. Cooperatives Section 2310 provides that no cooperative agricultural marketing association organized under the cooperative marketing act, sections 2286 to 2314, shall be deemed to be a combination in restraint of trade or an illegal monopoly. See Tying Contracts and Exclusive Dealing Arrangements, infra. C. SPECIAL ANTITRUST LAWS 1. Special Industry Antitrust Acts CONSTITUTIONAL PROVISIONS Transportation Const. art. XVII, sec. 4, provides that no railroad or canal company shall consolidate with or purchase or control the property of any other railroad or canal company owning or controlling a parallel or competing railroad or canal and that the officers of one company cannot be officers of a competing company. The question whether a railroad or canal is a parallel or competing one is for the jury. STATUTORY PROVISIONS Section 1080 provides that combinations or contracts for the pooling of freight by dividing the earnings of railroads or by equalizing or dividing between railroads the property or passengers carried, are unlawful. Sections 11085, 11093, and 11109 to 11111 provide that parallel or competing railroads shall not consolidate or merge. Insurance Section 7663 provides that insurance companies which are parties to any pool, combination, or agreement to regulate, fix, or maintain rates for property insurance are prohibited from doing business in the State. (Identical with sec. 9408, General Antitrust Laws, supra.) See also secs. 9410 and 9414, supra. Mining Sections 9407 and 9414 provide that the prohibition against combinations to fix prices of commodities specifically includes any products of mining. See General Antitrust Laws, supra. Liquor Section 14122 provides that it shall be unlawful for a manufacturer (a) to be interested directly or indirectly in any premises where malt, vinous, or spirituous liquors are sold at retail, or in any business devoted wholly or partially to the sale of such liquors at retail, by stock ownership, interlocking directors, mortgage or lien or any real or personal property or any other means; (b) to make any loan to any owner. Liens or other interests acquired on or before December 31, 1933, are not included within the provisions of this section. L. 1939, Act 352 Section 1 provides that it shall be unlawful for any manufacturer, rectifier, wholesaler, salesman, carrier, or their agent, or any vendor of alcoholic or malt beverages to give any article of value or to make any loan, directly or indirectly, to a person engaged in the retail liquor business, or to any employees or agents thereof, or perform any services for the benefit of any retail liquor dealer; nor shall they sell any article to a retail liquor dealer other than alcholic and malt beverages at the posted price; it being the intention of this section to prohibit them and their employees from offering any inducement such as secret discounts, rebates different from the posted price, or any loans, gifts, or fictitious sales to induce a retailer to purchase such beverages, and any such gifts, loans or sale, or rebates or discounts to induce such purchase shall be deemed a violation of this section. Section 6 provides than any person violating any of the terms or provisions of this statute shall, upon conviction, be fined in any sum not less than $25 nor more than $100, and shall be cause for the Commissioner of Revenues, in his discretion, to revoke the license or permit of the person violating any of the provisions of this statute, whether convicted or not, if, in his opinion, such person is guilty of violation of any of the provisions hereof. Dig. Stat. (Pope, 1937) Section 14205 provides that no manufacturer, distributor, or wholesaler to whom this act applies shall have any interest, directly or in directly, in the business of any person applying for and securing or holding a permit as retail dealer, or in the furnishings or fixtures used in his place of business, or any lien thereon. Section 14222 provides that any violation of the provisions of this act, or of rules and regulations made pursuant thereto, shall be a misdemeanor, and where a penalty is not specifically stated, shall be punishable by a fine of not more than $500 and imprisonment for not more than 6 months in the discretion of the court. See Tying Contracts and Exclusive Dealing Arrangements, infra. 2. Public Contract Provisions Dig. Stat. (Pope, 1937) Section 11893 provides that the State Purchasing Board may reject all bids for public printing when it believes there has been a combination among the bidders. See projected Vol., Government Purchasing. 3. Anticoercive Financing Statutes Dig. Stat. (Pope, 1937) Sections 9419 to 9433 are identical in text with the California statute. See Cal. Gen. Laws (Deering, 1937), Act 5137, secs. 1 to 15. set forth in full at pp. 50-54, infra. Judicial Decisions Public Contracts Provision. In an action to restrain Board of Commissioners from advertising anew for bids, the Court held that the legislature may disaffirm a contract for public printing upon evidence that the successful bidder was a member of a combination to suppress bids and stifle competition, such a contract being invalid as against public policy. Woodruff v. Berry, 40 Ark. 251 (1882). II. CONTRACTS NOT TO COMPETE No statutory provisions. Judicial Decisions Restrictive Covenants Ancillary to the Sale of a Business. The general rule as expressed by one court is: "This court has upheld contracts in partial restraint of trade but in doing so we have recognized that where the contract results in the creation of a monopoly it is void as contrary to public policy." Patterson v. Rogers, 148 Ark. 222, 229 S. W. 711 (1921). Under this rule it has been held that a contract in reasonable restraint of trade with reference to a particular business, where ancillary to its sale and the goodwill thereof, is valid and enforceable. Wright v. Marshall, 182 Ark. 890, 33 S. W. (2d) 43 (1930); Bloom v. Home Insurance Agency, 91 Ark. 367, 121 S. W. 293 (1909); Kimbro v. Wells, 112 Ark. 126, 165 S. W. 645 (1914). Application of Statute. A contract not to compete is not in violation of section 9407 et seq., when its purpose is not to stifle competition. Bloom v. Home Insurance Agency, supra; Kimbro v. Wells, supra. It has been repeatedly held that a contract not to compete in the same city, town, or county is a reasonable restraint of trade and the restriction will be enforced. McClure v. Young, 193 Ark. 188, 98 S. W. 2d 877 (1936); Hultsman v. Carroll, 177 Ark. 432, 6 S. W. 2d 551 (1928); Kruger v. Strom, 174 Ark. 1179, 298 S. W. 882 (1927); Robbins v. Plant, 174 Ark. 639, 297 S. W. 1027 (1927); Barnett v. Mays, 153 Ark. 1, 239 S. W. 379 (1922); Wakenight v. Spear & Rogers, 147 Ark. 342, 227 S. W. 419 (1921); Harris v. Irby, 146 Ark. 403. 225 S. W. 635, (1920); Hampton v. Caldwell & Hall, 95 Ark. 387, 129 S. W. 816 (1910); Daniels v. Brodie, 54 Ark. 216, 15 S. W. 467 (1891). A contract not to compete for a specific term of years when ancillary to the sale of a business is enforceable as a reasonable restraint. A contract not to compete for periods up to 20 years has been held valid. McClure v. Young, supra; Kruger v. Strom, supra; Robbins v. Plant, supra; Harris v. Irby, supra; Daniels v. Brodie, supra. has also been held that a contract not to compete as long as the purchaser engages in that business is valid and enforceable. Hultsman v. It Carroll, supra; Barnett v. Mays, supra; Wakenight v. Spear & Rogers, supra; Hampton v. Caldwell & Hall, supra. Restrictive Covenants Ancillary to the Sale of a Professional Practice. A contract by a physician to permanently retire from the practice of medicine in a particular city and vicinity, in consideration of $250 upon "sale" of practice is reasonable and valid. The court stated that the reason for upholding this contract is as valid in the case of a profession as in the case of a trade or business. Webster v. Williams, 62 Ark. 101, 34 S. W. 537 (1896). Restrictive Covenants Not Ancillary to the Sale of a Business Interest. Where plaintiff's predecessor had contracted with defendant to pay the latter $400 annually if defendant would rescind his agreement with plaintiff's competitor to open a cotton gin in competition with plaintiff, such contract is against public policy and void. While a contract in partial restraint of trade, ancillary to the sale of business is enforceable, this contract was entered into for the purpose of suppressing competition and promoting monopoly and hence is unenforceable as an unreasonable restraint of trade. Shapard v. Lesser, 127 Ark. 590, 193 S. W. 262 (1917). III. TYING CONTRACTS AND EXCLUSIVE DEALING ARRANGEMENTS Dig. Stat. (Pope, 1937) Section 14122 (c) provides that it shall be unlawful for a manufacturer of alcoholic liquors to enter into a contract with a retailer whereby the retailer agrees to confine his sales to the products manufactured by one manufacturer and that such a contract is void. See, Special Antitrust Laws: Liquor, supra. Cooperatives Section 2302 provides that a cooperative marketing association may enter into contracts with its members, requiring the members to sell all or any specified part of their commodities exclusively to or through the association for a period of not over 10 years. The statute further |