of any report known to be false or which there is no reasonable ground to believe."

Section 24. Preventing competitors from obtaining raw material or machinery.

The Government alleged that the Aluminum Co. of America owned from 80 to 90 per cent of the raw material in the United States which entered into a crude product, and controlled by contract the disposition of the remainder; and by contract with foreign companies prevented the importation of such raw material, and that the said company through subsidiaries controlled from 50 to 70 per cent of the manufacture of finished products from this raw material. This company was restrained1 from:

1. Delaying shipments of raw material to any manufacturer competing with its own subsidiaries in the manufacture and sale of finished products, without reasonable notice and cause.

2. Refusing to ship or to continue shipments of such material to a competing manufacturer upon contracts or orders, and particularly on partially-filled orders.

3. Delaying bills of lading on such shipments.

4. Furnishing known defective material to such competitors.

5. Charging higher prices for crude or semifinished products to manufacturers competing with its subsidiaries than it charged under like conditions to such subsidiaries.

6. Refusing to sell crude or semifinished products to prospective competitors on like terms and conditions of sale as it sold to its subsidiaries.

7. From demanding, as a condition precedent to selling such material to a competitor, that it should divulge the terms which the competitor would make to secure the work in connection with which the material would be used and from giving this information to its subsidiaries or others.

8. Requiring competitors not to compete in certain lines with the company or its subsidiaries as a condition of securing material.

9. Representing that unless companies dealt with it or its subsidiaries they would be unable to secure a sufficient supply of the material, or at a price that would enable them to compete with it; or that their supply would be cut off entirely.

10. Preventing the expansion of the business of other manufacturers by threatening to cut off their supply of raw material if they attempted to enlarge their business.

11. Raising the price of crude or semifinished products to its subsidiaries in order to raise it to competing manufacturers.

1 Consent decree.

In United States . General Electric Co. et al., the Government alleged, among other things, that the defendants either prevented or hindered the manufacturers of raw material and machinery employed in the manufacture of lamps from selling to competitive companies with the purpose and result of driving them out of business, or forcing them to sell out to the defendants or to join the combination. The General Electric Co. and the lamp-manufacturing defendants were enjoined1 from "making or carrying out directly or indirectly, any contracts with any manufacturer or manufacturers of lamp-making machinery, or with any manufacturer or manufacturers of bulbs and tubing for incandescent lamps, whereby such manufacturers, or any of them shall be bound not to sell the goods, manufactured by them, respectively, to others than the said defendants or any of them, or hindered from so doing or obligated to sell to the said defendants or any of them, at other and different prices and terms of payment than those to which they severally may sell to other purchasers."

Section 25. Coercion, threats, and intimidation.

1

THREATS TO ESTABLISH COMPETING PLANTS.-In United States v. Central-West Publishing Co. et al., the defendants were enjoined 1 from threatening competitors of either of them that they must cease competing or sell out to one or the other of them, and from threatening that unless they did their industries would be destroyed by the establishment of near-by plants to actively compete with them, "or by any other method of unfair competition." The above-named companies were also enjoined from threatening any customer of a competitor with starting a competing plant unless he patronized one or the other of the defendants.2

1 Consent decree.

* Cf. Petition in United States v. Corn Products Refining Co., in which it was alleged that the defendant "informed the various candy manufacturers throughout the country that it expected them to purchase a certain very large percentage of the glucose needed by them from the Corn Products Refining Company; that if said company did not get a suthcient percentage of such glucose business, it would go into the candy manufacture itself in competition with such manufacturers," and that pursuant to this threat it acquired control of the Novelty Candy & Chocolate Co. for the purpose (among others) of retaliation against those manufacturing confectioners purchasing starch and glucose from independ ent manufacturers.

And see Rice v. Standard Oil Co., 134 Fed., 464, 469 (C. C., 1905), where it was alleged, among other things, that the defendant and its associates operated "retail stores for the sale of groceries, oil, and other commodities in localities where retailers banded together and agreed to purchase and did purchase oil of the plaintiff, for the purpose of injuring such retailers and customers of the plaintiff by destroying their grocery or other business so long as they should buy oil of the plaintiff," and that they also sold groceries and merchandise "to the customers of the plaintiff's customers at such ruinous prices as to threaten ruin and loss to the plaintiff's customers." The court sustained a motion to dis miss the declaration on the ground that the averments were too vague, and observed that the plaintiff failed to name any of his customers who were thus affected. See also Standard Oil Co. v. Doyle, p. 459.

THREATS TO SUE FOR INFRINGEMENT OF PATENTS.-The New Departure Manufacturing Co. and other corporations engaged in the manufacture and sale of bicycle accessories and parts, particularly coaster brakes, formed a combination to fix prices and for other purposes, the scheme being built around a system of licensing the sale and use of articles in the construction of which a basic patent was professedly necessary. On the dissolution of this combination at the suit of the Government these corporations were enjoined1 from warning, harassing, or intimidating by means of personal acts, letters or advertisements any corporations or persons in relation to the sale, shipment, and trade in bicycle accessories and parts. By reference to the petition in this case it appears that the intimidation consisted of threats to sue jobbers and dealers for infringement in case they dealt in any coaster brake other than that of the members of the combination.

Section 26. Miscellaneous.

RETENTION OF COMPETITOR'S PROPERTY.-The Central-West Publishing Co., the Western Newspaper Union, and the Western Newspaper Union of New York were enjoined 1" from in any manner retaining or permitting the retention by their agents or employees of plate metal or other property belonging to the American Press Association, or other competitor," and the American Press Association was likewise prohibited from retaining property belonging to the Western Newspaper Union.

PURCHASE OF STOCK FOR THE PURPOSE OF HARASSING A COMPETITOR.The Western Newspaper Union, the Western Newspaper Union of New York, the Central-West Publishing Co., and certain individuals were enjoined1 from causing any person or company to purchase stock or become interested in the American Press Association, a competitor, for the purpose or with the effect of harassing said association by unconscionable or unreasonable demands for an examination of its books or inquiry into its business methods, or the institution of suits with such or like purpose in view.3

FEDERAL TRADE COMMISSION ACT AND OTHER ACTS RELATING TO METHODS OF COMPETITION.

Section 27. Federal Trade Commission Act.

In section 5 of the Federal Trade Commission Act, approved September 26, 1914, unfair methods of competition in commerce are declared unlawful and the Commission is empowered to prohibit the

1 Consent decree.

2 Cf. Warren Mills r. New Orleans Seed Co., p. 408.

2 Cf. Funck v. Farmers' Elevator Co. of Gowrie et al., p. 400; and Forrest v. Ry. Co., p. 461.

use of such methods. The language of this section has been quoted in full on page 130. The substantive law of the section is as follows: SEC. 5. That unfair methods of competition1 in commerce are hereby declared unlawful.

The commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the acts to regulate commerce, from using unfair methods of competition in com

merce.

Authority is given the commission to proceed under this law if in its opinion such action is in the public interest.

Section 28. Clayton Antitrust Act.

Sections 2 and 3 of the Clayton Act, approved October 15, 1914, prohibit certain practices to lessen competition with respect to price discrimination and exclusive contracts. The language of these two sections is as follows:

SEC. 2. That it shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly to discriminate in price between different purchasers of commodities, which commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of commerce: Provided, That nothing herein contained shall prevent discrimination in price between purchasers of commodities on account of differences in the grade, quality, or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling or transportation, or discrimination in price in the same or different communities made in good faith to meet competition: And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade.

SEC. 3. That it shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies or other commodities, whether pat

1 In United States r. Keystone Watch Case Co. et al., 218 Fed., 502, 518 (D. C., 1915), Mel'herson, Circuit Judge, said in part: "Whatever makes it more difficult for such persons to carry on their business restrains them, and restrains their trade; but (to speak generally) as every successful effort of a merchant to increase his own trade makes it harder for his rivals to succeed, and therefore restrains their trade, and as Congress certainly did not intend to condemn the proper exercise of business zeal and energy, we must recur to the rule of reason and ask not merely what is restraint of trade, but what is unreasonable restraint of trade? On this subject we are certainly able to say some things with confidence. Competitors must not be oppressed or coerced; fraudulent or unfair or oppressive rivalry must not be pursued. And if these words are criticized as too general we may reply that such generality is apparently unavoidable, as some recent legislation of Congress testifies, and, moreover, we may safely deny that the words are too vague for satisfactory use; for it must be remembered that the common agreement of moral opinion in the community furnishes an adequate guide to their practical meaning and their practical application. They are not likely to be misapprehended or misapplied."

ented or unpatented, for use, consumption or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.

By section 11 the Federal Trade Commission is authorized to enforce compliance with sections 2 and 3 of the act.

This legislation is of such recent date that there are as yet few decisions of courts to throw light on its construction or its application to concrete facts.

In Elliott Machine Co. v. Center1 the defendant urged that section 3 of the Clayton Act was not retroactive and could not affect contracts entered into before its enactment. This contention was denied, Sessions, J., saying, in part:

The statute does not in terms except from its operation any agreements or contracts, past, present or future, and in the absence of such exception, it is to be presumed that Congress intended to prohibit not only the making of future contracts but also the further performance of past contracts of the kind specified. * * * It is now too well settled to admit of controversy that a contract to do a thing, lawful when made, may be avoided by subsequent legislation making it unlawful and that an Act of Congress may lawfully affect rights which had their inception before its passage.2

In Sperry & Hutchinson Co. v. Fenster et al. it appeared that the plaintiff issued trading stamps to subscribers who agreed to distribute the stamps only to customers, and that the defendants obtained such stamps from subscribers under conditions equivalent to a purchase and gave them to their own customers as an inducement for trading. On an application for a preliminary injunction the defendants contended that the plaintiff's practice of seeking to enjoin and in certain States to prosecute dealers using such stamps without having subscribed for the right so to do, and without having obtained the stamps by payment to the issuing company, is contrary to the decisions of the United States Supreme Court and to the provisions of the laws forbidding monopoly. Chatfield, J., issued & temporary injunction, saying, in part:

1 227 Fed., 124 (D. C., 1915).

2 Citing L. & N. R. R. Co. v. Mottley, 219 U. S., 467 (1911); Armour Packing Co. v. U. S., 209 U. S., 56 (1908); P. B. & W. R. R. Co. v. Schubert, 224 U. S., 603 (1912); Addyston Pipe & Steel Co. v. U. S., 175 US., 211 (1899); Portland Ry. Co. v. Oregon R. R. Comm., 229 U. S., 397 (1913); A. C. L. R. Co. v. Finn, 195 Fed., 685 (C. C. A., 1912); Holt v. Henley, 193 Fed., 1020 (C. C. A., 1912).

219 Fed., 755, 756 (D. C., 1915).

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