CHAPTER V.

PROVISIONS FOR ENFORCEMENT; PARTICULARLY, PROCEDURE UNDER SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT, AND UNDER SECTION 11 OF THE CLAYTON LAW, TO MAKE EFFECTIVE SECTIONS 2, 3, 7, AND 8, OF SAID LAW.

1. Necessity For and Means of Enforcement.

2. Statutes Differ in Important Particular.

3. Procedure Before Commission Described.

4. Congress Prescribed Only Limited Review.

5. Commendatory Rulings Not Part of Legislative Plan.

6. Service of Process.

1. NECESSITY FOR ANd means of ENFORCEMENT.

Necessity for Reform Caused Evolution of these Laws.The abuse of freedom in conducting corporate enterprises, and the practice of creating and conducting chartered bodies solely to advance some trade-restraining scheme, are subjects that have been considered by Congress for many years, and numerous corrective laws relating thereto have been added to the statute books. The Federal Trade Commission Act and the Clayton Law are but the latest in this series of Anti-trust legislation. The Commission is specially authorized to report to Congress (Commission Act, section 6, paragraph f), as to the additional enactments which it may deem advisable.

Means to Enforce Required.-But laws of this nature intended to combat and destroy abuses of such long standing and affecting such powerful interests are not self-acting, and adequate provisions for the enforcement of their mandatory or prohibitory features must be carefully prepared; otherwise, the laws will be ignored or disobeyed with impunity. The procedure is contained in Section 5 of the Federal Trade Commission Act and Section II of the Clayton Law. In terms they are practically identical, except that the Commission is only authorized by the firstnamed law to file a complaint when "it shall appear to the Com

mission that a proceeding by it in respect thereof would be to the interest of the public,"-Section 5, Federal Trade Commission Act. Under the Clayton Law, instances where infraction of its provisions shall be followed by proceedings, civil or criminal, are set forth specifically and in detail; whereas in the Federal Trade Commission Act the responsibility for exercising a wise discretion devolves squarely upon the Commission itself.

2. STATUTES differ IN IMPORTANT PARTICULAR. A Distinction Noted.-Doubtlesss there is a reason for this peculiar feature of the statute creating the Commission, and this reason probably consists in the determination by Congress that every infraction of the Clayton Law shall be considered a matter affecting "the public interest"; whereas violations of the rules established to prevent unfair methods of competition in commerce might often appear too trivial or too open to excuse or to a reasonable doubt to warrant seriously entertaining the belief that such a proceeding would be "to the interest of the public." Such seems the logical inference from the wording of these statutes,— as well as from the surrounding circumstances that should always be studied and given weight when seeking to arrive at the legislative intent which is the essence of every law.

Means of Securing Information not Specified.-On one point Section 5 of the Federal Trade Commission Act is curiously deficient. It does not state how the information shall be obtained on which the Commission is to act in cases where the "public interest" is concerned. This omission was no doubt due to inadvertence on the part of the lawmakers. In actual practice, those features will, no doubt, be supplied by the Rules and Regulations which the Commission will adopt.1 A sworn affidavit or declaration would be sufficient to inform the Commission as to the specified violation of the Federal Trade Commission Act or Anti-trust laws, and this paper would form a basis on which the conscience of the Commission could rest the charge contained in the formal complaint which Section 5 prescribes for the commencement of a proceeding where the "interest of the public" is involved. While the opinion of the Commission is left by statute as the controlling element in deciding the question of recognizing or ignoring the particular charge so far as instituting a proceeding thereon is concerned, the party who feels aggrieved is not left entirely to the

I See Rules of Practice before the Commission, pages 232-235, post.

discretion of the Commission for his right of redress. While a controversy and matter having an importance entirely personal to the parties concerned would not be entitled to attention under Section 5, yet there would be a "twilight zone" where courts might well disagree with the conclusion of the Commission and would see a public interest in having the particular matter heard and decided in due course. In brief, there must be exceptions to the rule laid down in Section 5; and some outside board or tribunal would necessarily have to act as the court of review, when such exceptional cases were shown to exist. Such a useful provision is found in practice, for mandamus proceedings would lie to compel the Commission to assume jurisdiction, in case it arbitrarily refused to take cognizance of the charge, after due compliance with the formalities required by the rules.1

It has no doubt been abundantly shown that the element of discretion is given in large measure under the Federal Trade Commission Law, Section 5; whereas under Section II of the Clayton Law the person who alleges a grievance is in effect the moving party. With this peculiar feature of the statute disposed of, we shall pass on to consider the nature of the proceeding instituted under Section 5 of the Federal Trade Commission Act and Section II of the Clayton Law.

3. PROCEDURE BEFORE COMMISSION DESCRIBED.

Method of Procedure before Commission.-A proceeding of this nature is begun by the service of a complaint which has been previously issued by the Commission or Board according as the particular case relates to trade or common carriers, or banks. The complaint shall specify a date of hearing not less than 30 days after service on the defendant. Upon the return day defendant shall be entitled to appear and to show cause why an order should not be entered by the Commission or Board requiring such corporation, individual, or firm to cease and desist from the violation of the law so charged in said complaint. Since the powers required to be exercised in deciding questions of this nature are essentially judicial, it is very plain that the statute must intend that all the requirements of due process of law shall be attended to in full measure so that the terms of the Constitution

ia Interstate Commerce Commission v. Humboldt Steamship Company, 224 U. S. 474, 484.

shall not be impaired, but on the contrary, the parties shall have ample opportunities to present and urge their arguments and supporting cases. Express provisions in Sections 5 and 11 permit persons or corporations to intervene, upon due cause shown. In the vast majority of cases the persons interested in the issue raised by the complaint will be large. The result should be a thorough understanding of the situation and of the respective rights of the parties, since the subject will be presented to the Commission from every angle.

When the testimony is closed, it shall be filed in the office of the Commission. If upon such hearing the Commission shall be of the opinion that the method of competition in question is prohibited by either of these laws, it shall make a report in writing in which it shall state its findings as to the facts, and shall issue and cause to be served on such person, partnership, or corporation an order requiring such party to cease and desist from using such methods of competition. Until such order is disobeyed the Commission retains full possession and jurisdiction of the matter; but should the defendant fail to comply with the terms of the order, either that party or the Commission may file a transcript of the entire record with United States Circuit Court of Appeals which shall then assume jurisdiction as to the enforcement of the order, and by its decree affirm, modify or set it aside, as the case may require. The findings of the Commission, if supported by evidence, are binding upon the court, though it is provided that the matter may be retransferred to the Commission for further testimony if the court requires more light upon one or more aspects of the case.

Means for Review Provided.—The wording of the statute is not altogether clear as to the practice connected with the time and manner of service required to make effective the orders of the Commission; but no doubt these points are among the details that will be elaborated in the rules. As has been stated, the Commission retains full jurisdiction of the matters pending before it until such time as a transcript is filed with the United States Circuit Court of Appeals. Until such time of filing the Commission may modify or set aside in whole or in part any report or order issued under either of the Sections, 5 or II, as specified above. The nature of this review must be judicial, for the Constitution has been held to forbid the delegation to the Circuit Court of Appeal of authority of any description other than judicial.

The scheme which the statute contemplates is quite obvious. The Congressional intent is that the Circuit Court of Appeals shall constitute a reviewing commission, which has ample authority to cancel, alter or confirm the original ruling. The court, as we have seen, must act only upon the testimony or proceedings before the original Commission or Board; it has no right to add to or change the record, excepting the resultant order.

4. CONGRESS PRESCRIBED ONLY LIMITED REVIEW. Procedure Affords a Limited Review. This subject was debated before Congressional committees and a diversity of opinion as to the nature and extent of the review of the Commission's rulings developed at those sessions. After much argument, the consensus of opinion was that a "limited review" was called for, viz: that the Appellate Court should have no right to introduce new evidence, while retaining full power to revise the Commission's order in the premises.2

This view prevailed in the final draft, and it is now incorporated in the statute that where the Circuit Court of Appeals sees that further evidence is called for in the protection of the rights of any party, it may send the matter back to the Commission, with orders to take additional testimony upon such terms as seem equitable and fair. The Commission thereupon resumes jurisdiction and may recommend to the Circuit Court of Appeals to revise or revoke its former rulings when it returns such additional evidence. No doubt the court may take testimony upon the question whether the case should be returned to the Commission for further testimony, though nothing specifically appears in the law on that point. Three Separate Opinions Provided; with Final Review by Supreme Court. The general plan, accordingly, provides for three and under certain circumstances four opinions before the final decree becomes effective in a given case: (a) The Federal Trade Commission or Interstate Commerce Commission, as the situation calls for, files its complaint, hears the testimony and enters its order. (b) Upon a proceeding to enforce said order or upon an appeal by any defendant the Circuit Court of Appeals has authority to review the order and to enter its own decree, canceling, changing, or affirming said mandate, but only on the

2 For substance of the discussion of the proposed Interstate Trade Commission bill, in the Senate, in 1912, see Appendix M, pages 304-334.