the act, the offending party must have a dominating proportion of the trade or a dominating power over the industry.11

Effect of Restraint.-The effect of the restriction is the most important element in determining reasonableness. The act was primarily adopted for the protection of the public rather than of individuals, and any injury to the public will condemn the restraint.12 The fact that individual competitors of the parties to the restraint may be injured is added proof of its unreasonableness, both as to them and as to the public in whose interest it is to have the benefit of the initiative and competition of many independent tradesmen.13 Our public policy requires the free, untrammeled operation of the law of supply and demand. Any substantial artificial restriction thwarting its natural operation so as to control or enhance prices or to control or limit production going into the normal currents of interstate trade, which of itself affects price and the convenience of the public in readily securing the article, is injurious to the public interest.14 Likewise, any restriction tending to suppress competition by restraining the liberty of traders to engage in business or to transact their business in the ordinary and customary ways, is injurious both to such traders and also to the public.15 Coercion of competitors, impairment of quality, oppression of labor and artificial depression of raw material prices are condemned. The effect of the restraint to make it unlawful must be substantial. It must be more than a harmless regula

11 Swift and Co. vs United States, 196 U. S. 375, 391, 394 (1905); United States vs Reading Co., 40 Sup. Ct. Rep. 425, 432 (1920); United States vs U. 8. Steel Corp., 40 Sup. Ct. Rep. 293 (1920).

12 United States vs D. L. & W. Ry. Co., 238 U. S. 516, 534 (1915); Wilder Mfg Co. vs Corn Products Co., 236 U. S. 165, 174 (1915); Standard Oil Co. vs United States, 221 U. S. 1, 58 (1911); United States vs Union Pacific R. R. Co., 226 U. S. 61, 87, 88 (1912).

13 United States vs Trans-Missouri Freight Assn., 166 U. S. 290, 323 (1897).

14 United States vs Patten, 226 U. S. 525, 542 (1913); Loewe vs Lawlor, 208 U. S. 274, 293 (1908); United States vs Eastern States Retail Lbr. Dealers' Assn., 234 U. S. 600, 609 (1914); United States vs Jellico Mountain Coal & Coke Co., 46 Fed. 432, 435 (1891).

15 Addyston Pipe Co. vs United States, 175 U. S. 211, 244 (1899); United States vs Trans-Missouri Freight Assn., 166 U. S. 290, 323 (1897); Loewe vs Lawlor, 208 U. S. 274, 293 (1908).

tion of competition, it must suppress competition or there must be in the existing control of the parties to the restraint the power to suppress competition.16

The nature of the restraint may likewise be relevant in ascertaining whether or not it is reasonable. The law prohibits only direct restraints of interstate commerce and does not concern itself with restraints which are merely indirect or incidental. The degree of the restraint may also vary with its nature. A restraint may be voluntary or involuntary.18 A voluntary restraint is one imposed by the parties of their own volition, in which event the unlawfulness will be dependent solely upon its effect upon the public. An involuntary restraint, on the other hand, imposes restrictions on competitors and may have added viciousness in its tendency toward the elimination of such competitors with the subsequent economic evils of monopoly. Then, too, the type of competition affected may have a certain relevancy. The law frowns upon any restraint which suppresses either actual or potential competition.19 It is designed to protect both the market of the buyer and the market of the seller, and therefore, looks with disfavor upon restraints of competition either in buying or in selling.20 Coöperative buying agencies, however, may have benefits to the public in the securing of

16 Board of Trade of Chicago vs United States, 246 U. S. 231, 238 (1917).

17 Anderson vs United States, 171 U. S. 615 (1898); Swift & Co. vs United States, 196 U. S. 375, 396 (1905); United States vs Joint Traffic Assn., 171 U. S. 568 (1898); United States vs Patten, 226 U. S. 525 (1913); Field vs Asphalt Co., 194 U. S. 618, 623 (1904); United States vs Northern Securities Co., 193 U. S. 197, 402 (1904).

18 United States vs Patten, 226 U. S. 525, 541 (1913); Loewe vs Lawlor, 208 U. S. 274, 293, 294 (1908); Gompers vs Buck Stove & Range Co., 221 U. S. 418 (1911).

19 United States vs Colgate & Co., 250 U. S. 300, 307 (1919); United States vs Reading Co., 226 U. S. 324, 369, 370 (1912); United States vs Kissel, 218 U. S. 601 (1910); Thomson vs Union Castle S. 8. Co., 166 Fed. 251, 253 (1908); United States vs Union Pacific R. R. Co., 188 Fed. 102, 117 (1911); Penn Sugar Refining Co. vs American Sugar Ref. Co., 166 Fed. 254 (1908).

20 Hard Rubber Co. vs U. S. Rubber Co., 229 Fed. 583, 587, 588 (1916); United States vs Whiting, 212 Fed. 466, 477 (1914); Swift & Co. vs United States, 196 U. S. 375, 399 (1905).

lower prices in turn affecting in a measure the question of reasonableness which a restriction of competition in selling would not have. Again, competition divides itself into competition in price, competition in quality, competition in terms and competition in service. A restriction of competition in service might, in some instances, be of benefit both to the industry and to the public. On the other hand, price is in a way the final expression of competition often including within itself allowances for the cost of other forms of competition and a restriction or control of competition in price, unless it be by some harmless restriction to establish the period of the day in which it would be effective, or possibly to prevent sales below cost, would be beyond question unlawful.

Methods Employed. The methods by which the restraint or the power to restrain was attained may also have a certain bearing on the question of reasonableness.21 It was not the purpose of the law to discourage efficiency and where the control was secured by the usual and normal methods of doing business, the courts are inclined to hold the acquirement of power not to be unlawful unless it is such as to be a dominating power over the entire industry.22 But when the means used are of such a nature to justify the conclusion that they are not employed with the legitimate purpose of reasonably developing trade but are on the contrary done with the intent to do wrong to the public, and to limit unduly the rights of competition, they make the plan unlawful.28 Therefore, it may reasonably be said that any act which is designed to injure the public by forcing an increase in price, or lessening their opportunity to secure goods and the like, or any acts fraudulent or coercive, which restrict the rights of competitors freely to do business, will be condemned as unreasonable and will make any plan of which they are a part, which hinders competition an unreasonable restraint of trade. Even usual and normal methods when used by a great organi

21 United States vs Reading Co., 226 U. S. 324, 370 (1911); United States vs Union Pacific R. R. Co., 226 U. S. 61 (1912); Board of Trade of Chicago vs United States, 246 U. S. 36 (1918).

22 United States vs U. S. Steel Corp., 40 Sup. Ct. Rep. 293, 297, 298 (1920); United States vs Reading Co., 226 U. S. 324, 352 (1911).

23 Standard Oil Co. vs United States, 221 U. S. 1, 58 (1911).

zation with monopolistic intent may become abnormal because of their far-reaching and certain effect in eliminating competition.24 In doubtful cases, the normality of the method may depend upon the intent and the intent may be inferred both from the extent of the control secured and the methods used.25 If the necessary result of the restraint is a material restriction of competition, intent is immaterial or at least is presumed.26 If intent were essential to establish a violation of the law, it would be inferred from the extent of the control secured and from the methods used.27 The intent of the parties becomes material only where there is a threatened rather than an accomplished restraint of trade. Then, although the restraint or the power to restrain may not yet have been secured, a knowledge of the intent may enable the court to interpret the facts and predict the probable attainment of the restraint, enjoining it at once for the protection of the public.28 And proof of intent is essential in an alleged "attempt to monopolize" for there must at least be shown an intent in order to create a dangerous probability of the restraint resulting, which will warrant action of the court.29 The alleged good intention of the parties will not be considered, for a good intention can not excuse a public injury.3

30

Facts Peculiar to Industry.-The facts peculiar to the par

24 United States vs Great Lakes Towing Co., 208 Fed. 733, 744 (1913). 25 United States vs Reading Co., 226 U. S. 324, 370 (1911).

26 United States vs Trans-Missouri Freight Association, 166 U. S. 290, 340 (1897); United States vs Reading Co., 226 U. S. 324, 370 (1911); United States vs Swift & Co., 196 U. S. 375, 397 (1905); United States vs Patten, 226 U. S. 526, 543 (1913); United States vs Terminal R. R. Association, 224 U. S. 383, 395 (1912).

27 Standard Oil Co. vs United States, 221 U. S. 1, 75-76 (1911). 28 Board of Trade of Chicago vs United States, 246 U. S. 231, 238 (1917).

29 United States vs Swift & Co., 196 U. S. 375.

30 Board of Trade of Chicago vs United States, supra; United States vs Great Lakes Towing Co., 208 Fed. 733, 744 (1913); Thomson vs Cayser, 243 U. S. 85, 86 (1917); United States vs Motion Pictures Co., 225 Fed. 800, 808 (1915); Eastern States Retail Lbr. Dealers' Assn. vs United States, 234 U. S. 600, 613 (1914); United States vs Standard Sanitary Mfg. Co., 226 U. S. 20, 49 (1912); United States vs Union Pac. R. R. Co., 226 U. S. 61, 93 (1912).

ticular business or industry may also directly bear upon the fairness and the reasonableness of the restriction.

Where there is an unlimited supply of raw materials and only small capital is needed to engage in the business, the potential competition of others who would be attracted to the trade if high prices were charged, may be so complete a protection to the public that a restraint otherwise unreasonable might be held reasonable.31 An agreement between persons engaged in quasi-public employments, monopolistic in character, might be held unreasonable on slighter grounds than an agreement between ordinary commercial competitors, against whom the competition of other parties might be effective.32

The Clayton Act. The so-called Clayton Act of 1914 declares unlawful certain forms of price discriminations, exclusive or tying contracts, holding companies and interlocking directorates where their effect may be to substantially lessen competition or to tend toward monopoly. This act supplements but does not alter, except as it legalizes certain farmers' and labor organizations as such, the prohibitions of the Sherman Act. Its purpose was to prohibit those trade practices which Congress felt singly and of themselves were not covered by the existing Anti-Trust Acts, with the idea of arresting in their incipiency the creation of monopolies or unreasonable restraints of trade.33 The Sherman Act in its practical application dealt almost entirely with consummated restraints; the Clayton Act defines and prohibits the specific methods, even though used by one individual, by which Congress felt unreasonable restraints of trade might be attained. The test of lawfulness as to these practices is possibly more strict than the test of the Sherman Law. The Clayton Act is directed at the potential evils in these practices and the test is, therefore, not whether they unduly

34

31 United States vs American Can Co., 230 Fed. 859, 900 (1916); United States vs Quaker Oats Co. et al., 232 Fed. 499, 502 (1916).

32 United States vs Whiting, 212 Fed. 466, 475 (1914); But contra see United States vs Prince Line, 220 Fed. 230, 232 (1915).

33 Report 698, Senate Committee on Judiciary, page 1, 63rd Congress,

2nd Session. For copy of the Act, see Appendix B.

34 United Shoe Machinery Corp. vs United States, 42 Sup. Ct. 363 (1922).