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tion is an old phrase but its meaning has been narrowly limited by the Courts in some decisions.3
In establishing the legislative standard declaring unfair methods of competition unlawful Congress supplemented the rule of the Sherman law and added substantially to the protection afforded to business by the court decisions referred to. The purpose of Congress was to inhibit in their inception those methods which if allowed to continue unchecked or unregulated, would produce the evils to the public which the Sherman law was designed to prevent.
The Clayton law is commonly known as the Supplemental Anti-trust law and is amendatory of the Sherman law. It established new legislative standards by condemning certain price discriminations, lease or sale contracts known as tying contracts, ownership of stock by one corporation in another, and interlocking directors, officers or employees. These new standards are not in conflict with or in limitation of the standard established in the Trade Commission law. They condemn practices upon which Congress desired to place its stamp of special disapproval, although they might be comprehended within the inhibition of the Trade Commission law against unfair methods of competition.
It is to be noted that in adopting this new rule of public policy Congress has safeguarded the rights of corporations and persons against whom charges have
3. Unfair competition was held to be misrepresentation of the character or brand of goods, attempting to obtain or obtaining trade secrets in violation of the rights of the owners thereof, and similar practices. Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U. S. 118, 140; Coats v. Merrick Thread Co., 149 U. S. 561; Fischer v. Blank, 138 N. Y. 244, 252; 33 N. E. 1040, 1041; Rathbone Sard & Co. v. Champion Steel Range Co., 189 Fed. 26, 30; Eastman Kodak Co. v. Reichenbach, 79 Hun. 183, 194; Little v. Gallus, 38 N. Y. Supp. 487, 490.
been or are to be made. The Trade Commission cannot file complaint unless the proceeding appears to be in the public interest. Opportunity for hearing is given. The orders of the Commission are not selfenforcing. There is no penalty for failure to obey them. Opportunity to review the orders in the Courts by any or all parties to Commission proceedings is provided for and the Commission can only enforce its orders after Court proceedings for that purpose. It is doubtful whether there is any private right of action for alleged violations of the prohibition against unfair methods of competition until after the Commission has passed upon the facts in question. The inquisitorial powers of the Commission are not effective as against persons but only as against corporations.
No new crimes are defined or created in the Trade Commission law, except such as concern officers or employees of the Commission. Penalties, of course, are provided for persons who fail to appear as witnesses or produce evidence or who wilfully falsify, mutilate or destroy records.
Formerly the Department of Justice alone was vested with authority to enforce the public policy of the Sherman law both by proceedings in equity and by criminal prosecutions, but the ex parte character of the proceedings prior to actually starting the cases in the Courts hampered the government and greatly and unnecessarily annoyed those under attack. The new machinery provides what promises to be substantial relief from these conditions.
The large body of reports and rulings to be published by the Trade Commission will soon be of material assistance to business men in ascertaining the application of these laws to the different lines
4.-State of Minnesota vs. Northern Securities Company et al., 194 U. S. 48 at page 71.
of business. Like the decisions of the Interstate Commerce Commission, the decisions of the Trade Commission will come from one body and will undoubtedly be consistent in their interpretation and elucidation of the statutes.
That the new laws as they now stand are perfect will not be claimed. In a later portion of this discussion we call attention to some probable defects that may call for amendment.
FEDERAL TRADE COMMISSION LAW AND CLAYTON LAW COMPARED.
It would have been possible to combine the provisions of the Trade Commission and Clayton laws in one enactment. Legislative expediency possibly suggested two laws instead of one, and there is some substantial basis for two separate laws. The Trade Commission law is general in its scope, declaring unfair methods of competition unlawful, and creating the Commission to determine the facts and enforce the rule. But the Commission may act only when it believes a proceeding would be in the public interest. This is one of the distinguishing characteristics of the Trade Commission law. In establishing the rule against unfair methods of competition and placing its interpretation with the Commission and Courts, Congress did not relinquish the right further to legislate on the subject or to declare specific acts unlawful. Contemporaneously with its consideration of the measures ultimately enacted into the Trade Commission law, Congress had under consideration and subsequently by only a few days passed the Clayton law in which it declared price discrimination, tying contracts, stock ownership by one corporation in another, and interlocking directors, officers or em
ployees, to be unlawful, subject to certain limitations. In declaring them unlawful it bound the Trade Commission and the Courts so to regard them. Congress, by declaring them unlawful, relieved the Trade Commission of the duty of determining whether or not they constitute unfair methods of competition. They are condemned as they are, whether unfair methods of competition or not. Congress apparently deemed the wrongs occasioned by them so common and serious as to justify special legislation. It enacted that private persons suffering injury to their business or property by reason of such wrongs should be entitled to recover threefold damages in actions based thereon. The Trade Commission law contains no such provision. No action for damages, threefold or otherwise, is authorized therein against one found to have violated its provisions. That Congress intended substantially to differentiate between the Trade Commission law and the Clayton law is apparent from the fact that in defining "Anti-trust laws" in both of its new enactments Congress omitted the Trade Commission law from the definition.
INHIBITION OF THE TRADE COMMISSION LAW.
"Unfair Methods of Competition in Commerce Are Hereby Declared Unlawful."
This declaration of Congress is the backbone of the Trade Commission law. It is a new legislative standard-the declaration of a new Federal policy. It is universal in its application to persons, partnerships or corporations doing business in interstate or foreign commerce, but no power for its enforcement is given as against banks and common carriers. It
is not limited by definition. Indeed, Congress considered whether or not it should define the words and declined to adopt amendments to the reports of the committees attempting to make such definition. The reason undoubtedly was that to enumerate would be to weaken and offer opportunities for evasion. Large numbers of well known practices might be specifically listed by way of definition but the ingenuity of man could easily circumvent any catalogue of specific acts.
From the fact that the Trade Commission, whose duty it is to enforce this new standard of business conduct, is authorized to do so only when it shall first determine that a proceeding will be in the public interest, it is plain that Congress intended to prevent the use of only such methods of competition in interstate commerce as will have a harmful effect upon the public.
INHIBITIONS OF THE CLAYTON LAW.
Under section 11 of the Clayton law the Trade Commission cannot inquire whether a proceeding to enforce the inhibitions of the Clayton law will be in the public interest, but must act if the law has been violated.
1. Price Discrimination.
Section 2 of the Clayton law makes certain discriminations in price between different purchasers of commodities unlawful, and section 11 gives the Trade Commission, Interstate Commerce Commission and Federal Reserve Board authority to enforce the provisions of section 2 if and where applicable to ordinary business corporations, common carriers and