the foundation at Saint Astier of competing factories, which was contrary to the principle of liberty of commerce and industry; that thus the agreement attacked ought to be annulled also by application of articles 1131 and 1133 of the Civil Code. * * *

The French courts have developed a very extensive law regarding unfair competition based on article 1382 of the Civil Code, but no applications have been noted to the practices of combinations. (See p. 569.)

SPECIAL LAWs.-In connection with the laws to prevent the destruction of competition the following provision in a French mining decree is of interest:

It is prohibited to any concessionaire of mines, of whatever nature they may be, to unite his concessions with other concessions of the same kind, by association, acquisition or in any manner, without the authorization of the Government.1

For violation of this decree the penalty provided is the same as for violation of article 419 of the Penal Code. (See p. 269.)

A law concerning associations enacted in 19012 provides in article 12 that an association chiefly composed of foreigners and having its principal place of business in a foreign country whose operations have the effect to disturb the normal conditions of the market for securities or for commodities, under conditions affected by articles 75 to 101 of the Penal Code, may be dissolved, and if the directors, etc., of an association so dissolved maintain or reestablish it contrary to law, they shall be punished by fine or imprisonment. This law, however, does not appear to have had any practical application.

While certain Government monopolies have been established in France, for example, in tobacco, there do not appear to be any instances of private industrial monopolies established by law.*

Section 13. Italy.

The criminal laws of Italy concerning persons who artificially affect prices generally relate only to those who use fraud or violence. The civil law is substantially similar in its most pertinent sections to that of France, although interpreted more liberally. A notable feature of Italian legislation is the establishment of a compulsory cartel in the sulphur industry.

CRIMINAL LAW. The principal provisions of the Italian Penal Code, which have any clear relation to cartels, are articles 165,

1 Décret du 23 octobre, 1852, No. 4567, art. 1.

Loi relative au contrat d'association du 1 juillet, 1901.

3 These articles relate chiefly to military matters, including materials of war.

A bill was recently introduced in the Chamber of Deputies, according to the public press, which provided for the establishment of a company, in which the Government should be a stockholder, for they purpose of importing and refining petroleum, but according to the account given, monopoly powers were not to be conferred upon it. (See National Petroleum News, March, 1914, p. 52.)

Codice Penale.

30035°-16-18

293, 299, and 326. Article 293, in the first paragraph, provides as follows:

ART. 293. Whoever, by spreading false reports, or by other fraudulent means, produces upon the public market or in the exchanges of commerce an increase or diminution in the rates of wages, produce, merchandise or securities, negotiable on the public markets or admitted to the lists of the exchanges, is punished with imprisonment of from three to thirty months and with a fine from five hundred to three thousand lire.

Heavier penalties are provided in a second paragraph of this section in case brokers of exchanges are guilty of a violation of the law. This differs from article 419 of the French Penal Code, in being applicable only to those who use fraudulent methods.

Similar in general character to this law is article 326 of the same code, which provides as follows:

ART. 326. Whoever, by false reports, or other fraudulent means produces a scarcity or dearness of victuals, is punished with imprisonment of from one to five years and with a fine of from five hundred to five thousand lire; to which penalty is added temporary interdiction from public offices, extended to the exercise of his profession if the culprit is a public broker.

Furthermore, interference with the freedom of industry or commerce is prohibited in article 165 as follows:

ART. 165. Whoever, by violence or threats restricts or impedes in whatever manner the freedom of industry or of commerce, is punished with imprisonment up to twenty months and with a fine of from one hundred to three thousand lire.

Article 299, which relates to bidding at auctions, provides in part as follows:

ART. 299. Whoever, by force or threats, gifts, promises, collusion or other fraudulent means impedes or disturbs the operation of public auctions or private bids for the account of the public administration, or procures the absence of the bidders, is punished with imprisonment from three to twelve months and also with a fine of one hundred lire.

Greater penalties are enforceable if the parties in question are clothed with a public office. The same section provides further:

He who for money or other utility given or promised to him or to others abstains from competing at the said auctions or private bids is punished with imprisonment up to six months or with a fine from one hundred to two thousand lire.

A condemnation under this article was upheld on appeal.1 CIVIL LAW.-The chief provisions of the civil law 2 in Italy regarding the relation of contracts to the principles of good morals and public order (arts. 1119 and 1122 of the Civil Code) are identical with those of France (arts. 1131 and 1133; see p. 272), and need not be repeated here. Article 1104 of the Civil Code also provides that for a valid contract it is necessary that there be a lawful ground.

1 P. M.-Colombo, Cassazione, 5 aprile, 1906; Giurisprudenza italiana, Vol. LVIII, 1906, II. p. 306. 2 Codice Civile.

* See also article 12 of the "Provisions concerning the publication, interpretation, and application of the laws in general," and Art. 1160 of the Civil Code, which is similar to Art. 1172 of the French Civil Code.

The interpretation of the law, however, has been much more liberal in Italy and, apparently, cartel agreements have never been held invalid. In a case decided by the court of appeal of Naples on July 2, 1900, the right of such associations to regulate prices, etc., was expressly upheld. In 1903 the court of cassation of Naples declared that a combination of producers to prevent injurious competition and to maintain remunerative prices was not invalid under the civil law. The court said in part (p. 625):

The court of appeals has properly concluded that in the Penal Code there is no prohibitive rule in this respect. Then it considered if it could find any prohibition in article 1122 of the Civil Code, a complement to article 1104 which requires as an essential to a contract a lawful ground for an obligation, which declares that the ground is unlawful when it is contrary to law, to good morals or to public order. And such a prohibition it did not find in these provisions of the code, nor is there any agreement therein forbidden by law. It has been justly observed that there is nothing unlawful in the fact of the association or union and in the assumption of obligation on the part of the associates, because this is an exercise of liberty and not a violation of the same, and because the limitation of the acts of the contracting parties is an effect characteristic of all contracts."

In a more recent case where the bakers of Parma had made an agrecment which expressly provided for fixing selling prices the court held that the agreement was not invalid.3

The Italian Civil Code contains in article 1151 a provision practically identical with that of the French civil law (art. 1382) regarding unfair competition, namely:

ART. 1151. Whatever act of a person causes damage to another obliges him by the fault of whom it happened to compensate the damage.

An instance of the application of this provision to a monopolistic combination is found in the following case: A company called Società Salviati Jesurum C. L. was formed to combine the businesses of several dealers in Venetian specialties. The same parties organized another company called the Venice Hotels (Ltd.), which arranged to direct its patrons to the shops of the firstmentioned company. Pauly e C., a rival dealer in Venetian specialties, by means of printed advertisements, warned foreigners in Venice of the said combination and solicited their patronage, and was sued for damages by the combination. In defense the claim was made that the combination was guilty of unfair competition and that the combination in itself constituted an injury. The court held that as Pauly e C. was established after the formation of the combination the question of its monopolistic character and effects was purely academic, so

1 Corte d'Appello, Napoli, 2 luglio, 1900; Annali della Giurisprudenza italiana, vol. 34, marzo, 1900, pp. 460-462.

2 Algranati c. Società Viterià, Corte di cassazione, Napoli, 26 maggio, 1903; Monitore dei Tribunali, 1903, p. 625.

a Soc. fornai e pastai c. Finella, Tribunale di Parma, 25 febbraio 1910, Rivista di Diritto Commerciale, 1910, p. 280.

far as the defendant was concerned, and that the latter had no standing in court for the purpose of showing that the combination was contrary to the freedom of commerce.1

1

SPECIAL LAWS.—In a special law regarding emigration it is provided that in case of a combination of shipping concerns to refuse transportation to emigrants at rates approved and established by the Government their licenses shall be withdrawn."

Compulsory sulphur cartel. The sulphur industry of Sicily was for some time practically controlled by the Anglo-Sicilian Sulphur Co., but, on account of competition from the United States, that company came into difficulties and thereby a sharp crisis developed in the Sicilian industry. For this reason the Italian Parliament in 1906 established a compulsory cartel.3

The cartel thus established by law embraces all the sulphur producers of Sicily, and is called "Obligatory Association for the Sicilian Sulphur Industry." It was formed for 12 years dating from August 1, 1906. The purpose of the association is to conduct the sale of the raw sulphur for the common profit of the members. Sulphur for export to Italian or European markets must be sold at the same prices to all who desire it. The price of the sulphur sold in Italy for agriculture must not exceed the average price of sulphur for three years preceding less 5 per cent. The association has the sole right to sell sulphur, and its export from Sicily by others without its assent is forbidden. The cartel may establish by-laws restricting the production of sulphur when market conditions make it necessary, but such restriction must first have the approval of the Government.

From the proceeds of sale of sulphur is deducted (a) the cost of administration (not to exceed 1 lira per ton); (b) the amount necessary to cover the expenses incurred in connection with the miners' credit bank, and the rebate on the price of sulphur sold for consumption in Italy, as well as any expenses for the support of laborers deprived of employment through a restriction of production; and (c) a tax of 0.50 lira per ton to be used for old age and invalid pensions for sulphur miners. The association has the particular duty to establish and operate warehouses in Sicilian ports for the storage of sulphur, to accumulate funds for the establishment of a miners' credit bank to make loans to producers of raw sulphur, etc., at interest not exceeding 5 per cent, and to provide for old age and invalid insurance for sulphur miners.

The government of the cartel is lodged in a general assembly of 50 delegates, a board of directors, and a director general. The director

1 Società Salviati Jesurum C. L. c. Ditta Pauly e C., Tribunale di Venezia, 14 aprile 1904; Rivista di Diritto Commerciale, 1904, II, p. 455.

2 Legge 31 gennaio, 1901, sulla emigrazione, No. 23.

3 Legge portante proveddimentie l'istituzione di un consorzio obbligatorio per l'industria solfifera siciliana, 15 luglio, 1906, N. 333. A translation of this law is given in Exhibit E of this report (see p. 781).

general is named by the Italian Government. The general assembly is partly named by certain Government officials, partly by certain chambers of commerce, and partly elected by the sulphur producers. The voting power of the cartel members is based on the quantity of sulphur produced. Disputes between members and the association are settled by an arbitration court, the personnel of this court being prescribed in general terms in the law. The Italian Government provided a loan of two million lire at a low interest rate for starting the miners' credit bank.

By a subsequent law certain minor modifications were made in the substantive provisions, including the right to sell sulphur below the normal price in certain instances, and restricting the right to open new mines to parties furnishing evidence of financial ability to conduct operations in a rational and efficient manner, while various changes were also made with respect to the organization and government of the combination.

Citrus Products Law.-A law was passed on July 5, 1908,2 which established a commission for the promotion of the oitrus products industry. Among other things the commission is authorized (1) to furnish certificates of analysis of certain citrus products shipped, shipment without such certificate being prohibited; (2) to advance money at interest to producers of citrus products up to two-thirds of their value; (3) to sell for the producers citrus products confided to it, a minimum selling price being fixed for each year; (4) to levy a tax on the said citrus products analyzed by it, in order to provide for expenses of administration, etc., a different kind of tax being levied on products intrusted to it for sale than on those sold by others.

Section 14. Spain.

There are various provisions of the Penal Code of Spain which punish with imprisonment and fine those who disturb the natural course of prices of commodities, securities, or other things which are matters of contract, as determined by free competition, by spreading false reports or "any other artifice." In case the commodity is of prime necessity, the maximum penalties shall be inflicted. Lesser penalties are provided in article 593 of the same code for those who commit acts of a similar character for the same purpose, where the act does not involve a delict, but the distinction between the two is not clear.

To attempt to keep competitors away from public auctions by threats, gifts, promises, or other artifices in order to influence the

1 Legge No. 361, 30 guigno, 1910, concernente i provvedimenti per l'industria solfifera siciliana. Gazz. Uff. 1 luglio, 1910.

2 Legge No. 404, 5 luglio 1908, concernente i provvedimenti per favorire il commercio degli agrumi e loro derivati (Gazz. Uff. 17 luglio 1908).

Código Penal, arts. 557, 558.