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Appendix A. Sherman Anti-Trust Act

Appendix B. Clayton Act

Appendix C. Webb Export Act

Appendix D. Capper-Volstead Act

Appendix E. Federal Trade Commission Act

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TRADE ASSOCIATION ACTIVITIES AND THE LAW

CHAPTER I

THE RULES OF COMPETITION

DEMOCRACY, in industry as in government, is the American ideal. Our laws regulating the conduct of business, have all been formulated to protect the individual trader, to encourage initiative, to preserve opportunity and to maintain for the public the great political, social and economic benefits which flow from a competitive system of industry.

Two rules of competition of great economic importance have been written into our statute books. The one prohibits all unreasonable restraints of trade. The other, supplementing the first, makes unlawful the use of unfair methods of competition. These two prohibitions, while modified and amplified by other statutes, embody the spirit and purpose of the federal regulation of business.

The Sherman Anti-Trust Act.-The Sherman Anti-Trust Act of 1890 broadly speaking prohibits all unreasonable restraints of trade. The Act is comprehensive and reaches all such restraints regardless of the methods used to accomplish

1 See Appendix A. The Act of July 2, 1890 (26 Stat. 209) contains two prohibitions. Section 1 is aimed at combined actions designed to restrict competition and declares unlawful every conceivable contract, combination or conspiracy which directly restrains trade. Standard Oil Company vs United States, 221 U. S. 1, 60; Northern Securities Co. vs United States, 193 U. S. 197. The existence of such a contract, conspiracy or combination may be implied from a course of dealing or other circumstances. Frey & Sons vs Cudahy Packing Co., 41 Supreme Court Rep. 451; Eastern States Retail Lumber Dealers' Association vs United States, 234 U. S. 600, 608, 609 (1914); American Column and Lumber Co. vs United States, 42 Sup. Ct. Rep. 114, 117 (1921). Section 2 prohibits monopoly

them.

To determine the reasonableness or unreasonableness of a restraint of trade, it is necessary to consider the factors which naturally appeal to the reason as justifying or condemning the restraint. The extent, the effects, and the nature of the restraint, the methods by which the power to restrain was secured, the intention, of the parties and the particular facts of the industry involved should all be considered, but basically the real and final test is whether or not the restraint, by reason either of the intent of the parties or of the inherent nature of the acts done or contemplated, suppresses or has within it the power to suppress competition to the public detriment.3

or any attempt to monopolize any part of interstate or foreign commerce and was intended to supplement the first section to make certain that the public policy embodied in that section could not be evaded. Standard Oil Co. vs United States, 221 U. S. 1, 60 (1911). It is a very important enlargement of the prohibitions of the first section in the following two respects: First: as is not generally understood, it applies to individual as well as combined action, while the first section applies only to contracts, combinations, or conspiracies, which require two or more parties. Northern Securities Co. vs United States, 193 U. S. 197, 404 (1904); Standard Oil Co. vs United States, 221 U. S. 1, 61 (1911). Secondly: it adds to the methods which are prohibited. The term monopoly, by legal interpretation, has come to have a synonymous meaning with the phrase "restraint of trade" in the first section. Standard Oil Co. vs United States, 221 U. S. 1, 61 (1911). The phrase "attempt to monopolize" is therefore construed to embrace any and all attempts of any nature to accomplish an undue restraint of trade, thus making the prohibition of unreasonable restraints of trade complete and all embracing. Ibid., p. 61. There appears, however, to be a tendency on the part of the Supreme Court to distinguish between a monopoly acquired by combination and a monopoly acquired by individual action. In the case of a monopoly acquired by individual action, if no unfair or improper business methods were used in acquiring it, the court seems inclined not to hold such a monopoly a violation of the Act, although their decisions may be construed as holding only that there is no legal prohibition against individual action approaching monopoly so long as the control does not become so great as to have a dominating power over the industry. United States vs United Shoe Machinery Co., 247 U. S. 32 (1918); United States vs U. S. Steel Corp., 40 Sup. Ct. Rep. 293, 297, 298, 299 (1920).

2 American Tobacco Co. vs United States, 221 U. S. 106, 181 (1911); United States vs United Shoe Machinery Co., 247 U. S. 36, 69 (1918).

8 Nash vs United States, 229 U. S. 373, 376 (1913); Board of Trade of Chicago vs United States, 246 U. S. 231, 238 (1917); United States vs

Extent of Restraint.-The extent of the restraint is of course an important factor in determining its unreasonableness. The restriction must be on a substantial part of the interstate commerce in the article, although it need be only a very small percentage of the total interstate traffic of the country in such product. The phrase "any part of the trade or commerce among the several states or with foreign nations" affected by the act, has both a geographical and distributive significance, including both any portion of the United States and any one of the classes of things forming a part of interstate or foreign commerce. Therefore, monopolization of the trade of a single city directly affecting interstate commerce may be a violation of the act. It is not necessary that the control or restraint should extend for a protracted period or beyond such a period as is required to bring in a new supply. A control of a large percentage of the trade in an article is an indication of a violation and places upon the parties the burden of showing that it was acquired by lawful means. In determining the extent of the control or restraint exercised, substitute materials which are only in a larger sense competitive are not considered nor is that portion of the production which is for the manufacturers' own use. Lower grades, however, of the same material, which have the same uses and actively compete in the markets, should properly be considered in any estimate of the extent of control exercised.10 To constitute a monopoly within the meaning of Reading Co., 40 Sup. Ct. Rep. 425, 432 (1920); United States vs Union Pacific R. R. Co., 226 U. S. 61, 88 (1912); Harriman vs Northern Security Co., 197 U. S. 244, 291 (1905).

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4 United States vs Union Pacific R. R. Co., 226 U. S. 61, 88 (1912); Montague vs Lowry, 193 U. S. 46 (1904); United States vs Whiting, 212 Fed. 466, 474 (1914).

5 Standard Oil Co. vs United States, 221 U. S. 1, 61 (1911).

• Montague vs Lowry, 193 U. S. 38, 45 (1904).

7 United States vs Patten, 226 U. S. 525; United States vs Corn Products Refining Co., 234 Fed. 964, 1012 (1916); Lee Line Steamers vs Memphis H. & R. Packet Co., 277 Fed. 5, 8 (1922).

8 United States vs Eastman Kodak Co., 226 Fed. 62, 79 (1915); United States vs Swift and Co., 196 U. S. 375, 391, 394 (1905).

9 O'Halloran vs American Sea Green State Co., 207 Fed. 187, 193, 194 (1913); United States vs American Can Co., 230 Fed. 859, 899 (1916).

10 Bigelow vs Calumet & Hecla Mining Co., 167 Fed. 704, 730 (1908).

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