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States, made agreements with the jobbers of wall paper by which the latter agreed to sell the goods purchased at a price fixed by the combination, and to patronize exclusively the members of the combination. The Continental Wall Paper Co., under this contract, sued a jobber for wall paper furnished. The Supreme Court held that the Wall Paper company could not recover, since the contract was part of an illegal combination, quoting with approval (p. 256) the opinion of the Circuit Court of Appeals to the effect that

The jobbers and wholesalers, who were to be coerced into contracts to buy their entire demands from the Continental Wall Paper Company or be driven out of business, were in every State. Before the combination, each of the combining companies was engaged in both State and interstate commerce. The freedom of each, with respect to prices and terms, was restrained by the agreement and interstate commerce directly affected thereby, as well as by the enhancement of prices which resulted. A more complete monopoly in an article of universal use has probably never been brought about.1

The Supreme Court in affirming the decision of the Circuit Court of Appeals said (pp. 266–267):

Upon the whole case, and without further citation of authorities, we adjudge, upon the admitted facts, that the combination, represented by the plaintiff in this case, was illegal under the Antitrust Act of 1890; that it is to be taken as one intended, and which will have the effect directly, to restrain and monopolize trade and commerce among the several States and with foreign States; and that the plaintiff can not have a judgment for the amount of the account sued on, because, for the reasons we have stated, such a judgment would, in effect, aid the execution of the agreements which constituted that illegal combination.

HARTMAN v. JOHN D. PARK & SONS' Co. (153 FED., 24), CIRCUIT COURT OF APPEALS, 1907.-In this case the manufacturer of a proprietary medicine sold the same to wholesale druggists under a contract which bound the latter to maintain certain resale prices, and to retail druggists under a retail-price agreement which bound the retailers to sell at fixed prices. These contracts were held to be illegal under the Sherman Law. The court said (pp. 33, 42):

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* We are * * * unable to discover any legal or economic reason which justly exempts such articles when made from all of the rules of the common law which forbid unreasonable restraints in trade and from the Antitrust Act of Congress in so far as trade in the prepared medicine is the subject of interstate commerce. * * * The plain effect of the "system of contracts," the purposed relation of each to every other being confessed by the very description of the method of carrying on business stated in the bill, is, first, to destroy all competition between jobbers or wholesale dealers in selling complainant's preparations. Complainant restrains himself by agreeing to sell at only one price and to only such persons as will sign one of his system of contracts. The contracting wholesalers or jobbers covenant that they will sell to no one who does not come with complainant's license to buy, and that they will not sell below a minimum price dictated by complainant. Next, all competition between retailers is destroyed, for each such retailer can obtain his supply only by signing one of the uniform contracts prepared for retailers, whereby

1 148 Fed., 947.

he covenants not to sell to any one who proposes to sell again unless the buyer is authorized in writing by the complainant, and not to sell at less than a standard price named in the agreement. Thus all room for competition between retailers, who supply the public, is made impossible. If these contracts leave any room at any point of the line for the usual play of competition between the dealers in the product marketed by complainant, it is not discoverable. Thus a combination between the manufacturer, the wholesalers, and the retailers to maintain prices and stifle competition has been brought about.

DR. MILES MEDICAL Co. v. JOHN D. PARK & SONS' Co. (220 U. S., 373), SUPREME COURT, 1911.-The Dr. Miles Medical Co. sought an injunction to prevent Park & Sons' Co. from selling the Miles medicines at cut rates, on the ground of a contract between the parties by which the resale prices were fixed. The court held that this provision of the contract was repugnant to the Sherman Act, and said, in part (pp. 394, 407-408):

The complainant, a manufacturer of proprietary medicines which are prepared in accordance with secret formulas, presents by its bill a system, carefully devised, by which it seeks to maintain certain prices fixed by it for all the sales of its products both at wholesale and retail. Its purpose is to establish minimum prices at which sales shall be made by its vendees and by all subsequent purchasers who traffic in its remedies. Its plan is thus to govern directly the entire trade in the medicines it manufactures, embracing interstate commerce as well as commerce within the States respectively. *

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The bill asserts the importance of a standard retail price and alleges generally that confusion and damage have resulted from sales at less than the prices fixed. But the advantage of established retail prices primarily concerns the dealers. The enlarged profits which would result from adherence to the established rates would go to them and not to the complainant. It is through the inability of the favored dealers to realize these profits, on account of the described competition, that the complainant works out its alleged injury. If there be an advantage to a manufacturer in the maintenance of fixed retail prices, the question remains whether it is one which he is entitled to secure by agreements restricting the freedom of trade on the part of dealers who own what they sell. As to this, the complainant can fare no better with its plan of identical contracts than could the dealers themselves if they formed a combination and endeavored to establish the same restrictions, and thus to achieve the same result, by agreement with each other. If the immediate advantage they would thus obtain would not be sufficient to sustain such a direct agreement, the asserted ulterior benefit to the complainant can not be regarded as sufficient to support its system.

But agreements or combinations between dealers, having for their sole purpose the destruction of competition and the fixing of prices, are injurious to the public interest and void. They are not saved by the advantages which the participants expect to derive from the enhanced price to the consumer.

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The complainant's plan falls within the principle which condemns contracts of this class. It, in effect, creates a combination for the prohibited purposes.

Section 24. The Sherman Act not void for uncertainty.

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Since the decisions of the Supreme Court in the Standard Oil and Tobacco cases, it has frequently been urged that the Sherman Antitrust Act is unconstitutional in that it is too vague and indefinite to create a criminal offense. This objection was disposed of by the Supreme Court in the following case.

NASH v. UNITED STATES (229 U. S., 373), SUPREME COURT, 1913.An indictment returned in the circuit court against the American Naval Stores Co., the National Transportation & Terminal Co., and six individuals charged a conspiracy in restraint of trade and a conspiracy to monopolize trade contrary to the Sherman Act. A demurrer questioning both the validity of the penal provisions of the act and the sufficiency of the indictment was overruled. Five individual defendants were found guilty, fined, and sentenced to three months' imprisonment; this judgment being affirmed by the Circuit Court of Appeals. A writ of certiorari was granted by the Supreme Court which said in part (pp. 376-378):

The objection to the criminal operation of the statute is thought to be warranted by The Standard Oil Co. v. United States, 221 U. S. 1, and United States v. American Tobacco Co., 221 U. S. 106. Those cases may be taken to have established that only such contracts and combinations are within the act as, by reason of intent or the inherent nature of the contemplated acts, prejudice the public interests by unduly restricting competition or unduly obstructing the course of trade. 221 U. S. 179. And thereupon it is said that the crime thus defined by the statute contains in its definition an element of degree as to which estimates may differ, with the result that a man might find himself in prison because his honest judgment did not anticipate that of a jury of less competent men. The kindred proposition that "the criminality of an act cannot depend upon whether a jury may think it reasonable or unreasonable. There must be some definiteness and certainty," is cited from the late Mr. Justice Brewer sitting in the Circuit Court. Tozer v. United States, 52 Fed. Rep. 917, 919. But apart from the common law as to restraint of trade thus taken up by the statute the law is full of instances where a man's fate depends upon his estimating rightly, that is, as the jury subsequently estimate it, some matter of degree. If his judgment is wrong, not only may he incur a fine or a short imprisonment, as here; he may incur the penalty of death.

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We are of opinion that there is no constitutional difficulty in the way of enforcing the criminal part of the act.

The judgment of the lower court was reversed on the ground of error in the charge to the jury and the case is pending.

Section 25. Character of judicial proceedings under the act.

Judicial proceedings under the Sherman Law may be divided into five broad classes: (1) Criminal prosecutions; (2) suits in equity by the Government; (3) condemnation proceedings by the Government with respect to goods transported in interstate commerce; (4) actions by private parties for treble damages; (5) actions at law or suits in equity between private parties where the law has been pleaded in defense, or where relief has been affirmatively sought from restraints imposed by agreements. CRIMINAL PROCEEDINGS.-Indictments under the act have charged conspiracies in restraint of trade or commerce, or monopolizing or attempting to monopolize the same. The facts alleged in indictments have differed widely. Fixing prices and limiting and apportioning output, taken together, have been the basis of indictments in some cases; in others the employment of alleged unfair or

oppressive methods of competition have been charged as constituting evidence of an intent to violate the law. Among the acts of competition which have been complained of are the following: (1) Cutting prices, in some cases even below the cost of production, for the purpose of injuring competitors; (2) attempting to bribe employees of competitors to obtain information concerning their business; (3) bribing employees of transportation and express companies to disclose secrets as to competitors' shipments; (4) knowingly making false statements for the purpose of injuring competitors; (5) securing the product of competitors and advertising it at greatly reduced prices to injure the reputation of the product; (6) threatening or engaging in persecutive litigation to harass competitors or their patrons; (7) using bogus independent concerns to obtain secrets of competitors; (8) inducing employees of competitors to leave their service for the purpose of embarrassing them and restraining their trade; (9) refusing to sell to persons who handle the product of competitors.

The indictments alleging acts of competition as evidence of an intent to restrain or monopolize trade or commerce have not depended on any single practice to show a violation of the law, but have set out a number of such practices. In several cases of this character demurrers to the sufficiency of the indictments have been overruled, the court holding that the acts set forth, if proven, were sufficient to constitute a violation of the law. Other indictments have depended on such direct restraints of trade as fixing prices and limiting output. The members of a number of manufacturers' associations which fixed prices and limited and apportioned among themselves the production of various kinds of wire have been indicted, and on pleas of nolo contendere heavy fines imposed. A prosecution for a conspiracy to run a corner on the New York Cotton Exchange was successful, as also one against members of the Society of Equity for preventing the shipment in interstate commerce of the tobacco of nonmembers. The members of labor unions have likewise been convicted for conspiracies to restrain trade.

Eighty-four indictments have been returned under the act. In 6 of these a verdict of guilty was secured; in 5 a verdict of not guilty was returned; in 10 demurrers to the indictments were sustained or the indictment quashed; in 28 cases pleas either of guilty or nolo contendere were entered, and sentences of fine or imprisonment imposed. In only one case, however, has a prison sentence been imposed and served, and this was on a plea of guilty. In several other cases prison sentences have been imposed, but the cases are now pending on appeal. Seventeen prosecutions have been dismissed by the Government, or judgments for the Government in the lower court. have been reversed and the cases dismissed; and 18 criminal cases remain to be finally disposed of.

1 See pp. 96, 114.

In addition to indictments, there have been a number of prosecutions for criminal contempt. Among the more important of these was the conviction of certain members of the Southern Wholesale Grocers' Association for violations of a consent decree entered in a suit in equity by the Government. Convictions were obtained and fines imposed in this case. (See pp. 488, 491.)

SUITS IN EQUITY BY THE GOVERNMENT.-Eighty-seven suits in equity have been instituted by the Government under the act. The more important of these suits have been for the dissolution of combinations in corporate form or of associations alleged to be in violation of the act. A large number of bills, however, have prayed for injunctions against violations of the act by individuals or corporations, or have sought to enjoin the further performance of contracts or agreements in restraint of trade.

Of the suits brought, judgments have been had in favor of the Government in 29 cases; in 13, decisions adverse to the Government have been rendered, or the bills have been dismissed by the Government or the cases allowed to rest after the bills were filed or the judgments on demurrer were rendered in favor of the Government. Consent decrees have been entered in 15 suits, and 30 suits are now pending.

CONDEMNATION PROCEEDINGS.-Only one case has been brought by the Government to condemn property seized in the course of transportation from one State to another. In this instance, 175 cases of cigarettes were seized, but were subsequently released under bond and the case ultimately dismissed.

ACTIONS FOR TREBLE DAMAGES.-Fifty-three actions for treble damages have been brought by private parties under section 7 of the Antitrust Act. The results of these cases are not available in detail. From such information as can be had at this time it appears that in only a small proportion of the cases have damages been recovered. In a number of these cases, however, demurrers to the declarations. have been overruled and the records show that the cases were subsequently dismissed. From this it appears probable that some of them were dismissed as a result of compromise between the parties.

OTHER SUITS BETWEEN PŘIVATE PARTIES.-Seventy-four suits between private parties tried in the United States courts have required some interpretation or application of the law. These cases have included actions on contracts which the defendants contended were in violation of the act, or in which it was urged that the plaintiff was an unlawful combination in restraint of trade, and the court should therefore not enforce the contract; suits in equity to restrain violations of license agreements under the patent act and for damages for

1 The data for cases between private parties is taken from the United States and Federal Reports. It is probable, therefore, that the figures do not include all the cases, as the reports do not contain opinions in

all cases that arise.

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