causing the retailers not to deal with such wholesalers. What objection was there to this? Two groups of lumber dealers were in competition-the wholesalers and the retailers. Both were competing for the trade of the consumer. The wholesalers were really trying to break into the retail trade. It is of course in the public interest that they should compete. Very well, how may this competition be carried on? Is competition in price the only method of competition which the courts will permit? Certainly not. It happened that the retailers bought from the wholesalers. May not retailers then cease buying from the wholesalers for the purpose of defeating them in this competitive struggle? Would not such an act be exactly the same as the act of striking by employees to compel their employer to refuse to recognize a rival group of employees working for the same employer and by this means enable the strikers to triumph in their competitive struggle with the rival group of workers? If the employer started to work on his own job with his workmen and they struck to prevent him, the situation would be precisely the same as the action by the Retail Lumber Dealers. Such acts of striking, whether by employees against an employer 45 or a Retail Dealers' Association against the wholesalers, 46 are not by themselves illegal. Such acts have been regularly held to be legitimate methods of competition. They do not become illegal simply because they succeed in defeating the rival. Why? Because the public interest is, on the whole, better served by permitting this freedom of action to compete and the triumph of some competitors over others than it is by calling the strike in and of itself an unfair method of competition and illegal and tortious and by this means maintaining the status quo of existing competition. § 133. The situation is altered as soon as one can say that the strikers or the blacklisters have a preponderant position in the field, and in consequence a power which makes it impossible for any rival to retaliate by the use of the same competitive methods.47 Size ipso facto deprives the preponderant unit of the 45-Allen v. Flood, L. R. [1898] A. C. 1 [337], ante § 96. 46-Bohn Mfg. Co. v. Hollis, 54 Minn. 223 (1893) [473], ante § 101. 47-Martell v. White, 185 Mass. 255 (1904) [478], ante § 102; Macauley v. Tierney, 19 R. I. 255 (1895) [487], ante § 103. right to use methods of competition which, in the hands of smaller units, are legal. The result in the Lumber Dealers' Association case is to be supported on the ground that the retailers had sufficient size and preponderant position in the retail business so that they were deprived of a method of competition which was in and of itself lawful. § 134. There are, however, two difficulties with the opinion of the court: First, the case as reported does not disclose any facts clearly indicating the size and preponderant position of the retailers in any market. One may guess from statements made that they constituted a large and powerful organization; but if this fact be left to guesswork, one may also hazard the surmise that the wholesalers would have been quite as powerful and perhaps more so if they had been organized and that the wholesalers were, therefore, potentially at least, quite able to retaliate by refusing to sell to any retailer who belonged to an association which blacklisted any member of the Wholesalers' Association. If such was the case, it was not the business of the courts to say that the succcess of one competitor over another by the use of its power to refuse to deal with the other became a tort by the mere fact of success or because it was used for the purpose of successful competition in securing business. Secondly, it is not at all clear that the court concedes the right of any combination of retail lumber dealers, however insignificant in size, to act in concert in refusing to deal with wholesalers who sell to consumers direct. The opinion, while conceding that any one retail lumber dealer may refuse to deal with a wholesaler for any reason he pleases, intimates that two or more could not do so.48 This sounds like the proposition that a single 48-"A retail dealer has the unquestioned right to stop dealing with a wholesaler for reasons sufficient to himself, and may do so because he thinks such dealer is acting unfairly in trying to undermine his trade. 'But,' as was said by Mr. Justice Lurton, speaking for the court in Grenada Lumber Co. v. Mississippi, 217 U. S. 433, 54 L. ed. 826 (1910), 'when the plaintiffs in error combine and agree that no one of them will trade with any producer or wholesaler who shall sell to a customer within the trade range of any of them, quite another case is presented. An act harmless when done by one may become a public wrong when done by many acting in concert, for it then takes on the form of a conspiracy, and may be prohibited or punished, if the re workman may strike for any reason he pleases, but that if two or more do so in concert it is an unlawful conspiracy. It is difficult to believe that a court unhampered by any statute or previous decision dealing directly with the point and reaching the problem today for the first time with full power to solve it by the application of the rule of reason could seriously put forward any such proposition. Even, however, if the Supreme Court's decision in the Lumber Dealers' Association case be regarded as inconsistent with the results reached by common law courts, that does not mean that the Sherman Act specifies as illegal conduct which at common law was legal. It only means that the supreme court, in the exercise of its functions as a common law court, reaching results as common law courts are accustomed to do, obtained a different result from some other common law court; or that it exercised its prerogative to determine for itself what the common law was. § 135. In Loewe v. Lawlor 49 the secondary boycott by the hatters' union was held to be illegal because in violation of the Sherman Act and the employer recovered triple damages. The union members boycotted dealers throughout the country who handled the plaintiff's hats. This was done for the purpose of inducing such dealers not to handle the plaintiff's hats. The plaintiffs were damaged, and pressure was thus brought to bear upon them to compel them to unionize their shop and thus aid the National Hatters' Union in its competitive struggle with non-union labor. The preponderant position of the hatters' union in the United States was brought out by the number of employees in the union and by the fact that seventy out of eighty-two manufacturers in the hat business had acceded to the demands of the union to exclude non-union labor. In accordance with the common law, the secondary boycott by itself was a tort,5 and might be expected to be held illegal under the Sherman Act; but the additional facts showing a preponderant position in the business of the boycotting hatters was sufficient to have made sult be hurtful to the public or to the individual against whom the concerted action is directed.''' 49-208 U. S. 274 (1908) [1166]; 50 also Lawlor v. Loewe, 235 U. S. some acts torts which otherwise might have been lawful though rather strenuous methods of competition. §136. In Thomsen v. Cayser 51 a judgment for triple damages secured by a shipper against a combination of steamship lines which established a uniform freight rate and made a rebate to those shippers dealing exclusively with the combination was sustained. In the opinion of the court it was intimated that the combination employed "'fighting ships' to kill off competing vessels which, tempted by the profits of the trade, used the free and unfixed courses of the seas, to paraphrase the language of counsel, to break in upon defendants' monopoly." Here we have the same methods of competition which were found not to constitute a tort in Mogul Steamship Co. v. McGregor, Gow & Co.52 Again we must ask whether these methods are per se illegal under the Sherman Act, regardless of the size and preponderant position of the combination, or does the court assume the existence of such size and preponderant position from its effectiveness or from any other evidence? 51-243 U. S. 66 (1917). $94. CHAPTER IX THE DICTA OF THE UNITED STATES SUPREME COURT § 137. So far as the actual decisions of the United States Supreme Court are concerned, they are consistent with the view that not every contract, combination, or conspiracy which is (however slightly) in restraint of trade according to the literal significance of those words, is illegal. The decisions of the courts are equally consistent with the view that the act condemns only contracts, combinations, and conspiracies in restraint of trade which are deemed illegal according to some standard which is outside the language of the act-either the standard of the common law or the standard of the rule of reason. But when we look at the dicta of the court we find that originally there was much uncertainty in the choice to be made between the possible views. § 138. In United States v. Trans-Missouri Freight Association 1 the court, speaking by Mr. Justice Peckham, said: "the contract may be a restraint of trade, but still be valid at common law." The court thus intimated that the Sherman Act might hit restraints of trade which were valid at common law.2 There was no call for this statement and it has given rise to a great 1-166 U. S. 290 (1897) [826]. 2-[877] "A contract may be in restraint of trade, and still be valid at common law. Although valid, it is nevertheless a contract in restraint of trade, and would be so described either at common law or elsewhere. By the simple use of the term 'contract in restraint of trade,' all contracts of that nature, whether valid or otherwise, would be included, and not alone that kind of contract which was invalid and unenforceable as being in unreason able restraint of trade. When, therefore, the body of an act pronounces as illegal every contract or combination in restraint of trade or commerce among the several states, etc., the plain and ordinary meaning of such language is not limited to that kind of contract alone which is in unreasonable restraint of trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has been omitted by Congress.'' |