APPENDIX I

CONDITIONS IN CANADA

The Canadian Criminal Code makes it an indictable offense, punishable by fine and imprisonment, for any one to conspire, combine or agree with any person or any transportation company to unduly limit the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any article or commodity which may be the subject of trade or commerce; or, to restrain or injure trade or commerce in relation to any such article or commodity; or, to unduly prevent, limit, or lessen the manufacture or production of any such article or commodity, or to unreasonably enhance the price thereof; or, to unduly prevent or lessen competition in the production, manufacture, purchase, barter, sale, transportation, or supply of any such article or commodity, or in the price of insurance upon person or property.

In 1910 an Act was passed providing for the investigation of combinations, monopolies, trusts, and mergers. This Act is a step in advance of anything attempted in this country. It provides, first of all, for the appointment of a Registrar of Boards of Investigation. It then goes on:

"Where six or more persons, British subjects resident in Canada and of full age, are of opinion that a combine exists, and that prices have been enhanced, or competition restricted by reason of such combine, to the detriment of consumers or producers, such persons may make an application to a judge for an order directing an investigation into such alleged combine.

"2. Such application shall be in writing, addressed to the judge, and shall ask for an order directing an investigation into the alleged combine, and shall also ask the judge to fix a time and place for the hearing of the applicants or their representative.

"3. The application shall be accompanied by a statement setting forth:

"(a) The nature of the alleged combine and the persons believed to be concerned therein.

"(b) The manner in which the alleged combine affects prices or restricts competition, and the extent to which the alleged combine is believed to operate to the detriment of consumers or producers.

"(c) The names and addresses of the parties making the application and the name and address of one of their number, or of some other person whom they authorize to act as their representative for the purposes of this Act and to receive communications and conduct negotiations on their behalf.

"4. The application shall also be accompanied by a statutory declaration from each applicant, declaring that the alleged combine operates to the detriment of the declarant as a consumer or producer, and that to the best of his knowledge and belief the combine alleged in the statement exists, and that such combine is injurious to trade, or has operated to the detriment of consumers or producers in the manner and to the extent described, and that it is in the public interest that an investigation should be had into such combine."

Within thirty days after receiving the application, the judge is to fix a time and place for hearing applicants. At such hearing applicants may appear in person or by counsel.

"If, upon such hearing, the judge is satisfied that there is reasonable ground for believing that a combine exists which is injurious to trade, or which has operated to the detriment of consumers or producers, and that it is in the public interest that an investigation should be held, the judge shall direct an investigation under the provisions of this Act; or, if not so satisfied, and the judge is of opinion that in the circumstances an adjournment should be ordered, the judge may adjourn such hearing until further evidence in support of the application is given, or he may refuse to make an order for an investigation."

The order of the judge directing investigation is transmitted to the Registrar by registered letter,

"and shall be accompanied by the application, the statement, a certified copy of any evidence taken before the judge, and the statutory declarations. The order shall state the matters to be investigated, the names of the persons alleged to be con

cerned in the combine, and the names and addresses of one or more of their number, with whom, in the opinion of the judge, the Minister should communicate, in order to obtain the recommendation for the appointment of a person as a member of the Board, as hereinafter provided."

Thereupon, a Board of Investigation is appointed, consisting of three members, one of whom is appointed on the recommendation of the persons who made the complaint, the second on the recommendation of the persons against whom the complaint is made, and the third on the recommendation of the two members so chosen.

Provision is made for failure of parties to agree on members. The third member of the Board acts as its chairman. Before entering upon their duties, each member is required to take an oath, the form of which is prescribed in the Act.

"Upon the appointment of the Board, the Registrar shall forward to the chairman copies of the application, statement, evidence, if any, taken before the judge, and order for investigation, and the Board shall forthwith proceed to deal with the matters referred to therein.

"The Board shall expeditiously, fully and carefully inquire into the matters referred to it, and all matters affecting the merits thereof, including the question of whether or not the price or rental of any article concerned has been unreasonably enhanced, or competition in the supply thereof unduly restricted, in consequence of a combine, and shall make a full and detailed report thereon to the Minister, which report shall set forth the various proceedings and steps taken by the Board for the purpose of fully and carefully ascertaining all the facts and circumstances connected with the alleged combine, including such findings and recommendations as, in the opinion of the Board, are in accordance with the merits and requirements of the case.

"2. In deciding any question that may affect the scope or extent of the investigation, the Board shall consider what is required to make the investigation as thorough and complete as the public interest demands.

"The Board's report shall be in writing, and shall be signed by at least two of the members of the Board. The report shall be transmitted by the chairman to the Registrar, together with the evidence, taken at such investigation certified by the chairman, and any documents and papers remaining in the custody

of the Board. A minority report may be made and transmitted to the Registrar by any dissenting member of the Board."

In the event the persons charged are found guilty of any of the acts complained of the statute provides (1) that the Governor in Council may direct that competing goods be admitted into Canada free of duty. (2) That if the exclusive rights and privileges granted under a patent have been abused, information may be filed in the Exchequer Court praying for judgment revoking such patent. (3) A penalty not exceeding $1,000.00 and costs, for each day after the expiration of ten days, or such further extension of time as in the opinion of the Board may be necessary, from the date of the publication of the report of the Board in The Canada Gazette, during which such person so continues to offend.

"The object of this legislation, as expressed in the last annual report of the Department of Labour, is to 'place at the disposal of the people a readier and, it is believed, a more effective means than is now available in Canada of disclosing and of remedying the abuses of combines which may be formed, whether as corporations, monopolies, trusts, or mergers, or in the looser forms of agreements, understandings, or arrangements, for the purpose of unduly enhancing prices or of restricting competition to the detriment of consumers or producers.' In the last annual report of the Department of Labour, a chapter was devoted to this measure, and the text of the same was also published in the form of an appendix." 1

Up to the present time (July 1, 1912) only one application has been made and one Board established, and that in the case of the United Shoe Machinery Company, a Canadian corporation. Application was made on November 10, 1910, but proceedings were stayed by various judicial orders until November, 1911, when the investigation proceeded at Montreal, Toronto, and Quebec, and subsequently completed, but the report of the Board is not yet filed.

'Report of Proceedings under The Combines Investigation Act for the year ended March 31, 1911, being an Appendix to Annual Report of the Department of Labor, 1910-II.

APPENDIX II

CONDITIONS IN ENGLAND

The law in England regarding combinations to maintain prices is in a peculiar condition. It neither approves nor condemns. It simply declines to enforce such agreements. In so far as they restrain trade, they are "unlawful," because monopolies are repugnant to English law, but there is no provision by law for their suppression.

The English courts are committed to this general proposition:

"Parties engaged in trade have the right to push their trade by all lawful means, and to endeavor by all lawful means to keep their trade in their own hands and exclude others from participating therein. It is lawful to make profitable offers to attract customers from competitors, and they may induce customers to deal with them exclusively, by giving notice that to such exclusive customers only will they give the benefit of their more favorable terms."

In a celebrated case, Mogul Steamship Company vs. McGregor, et al., it was decided that certain ship owners might combine and threaten shippers, that if they patronized the ships of a competing company the combination would refuse to handle their freight. This was held to be the meeting of competition by competition.

In the course of his opinion, Lord Watson said:

"I have never seen any reason to suppose that the parties to the agreement had any other object in view than that of defending their carrying trade during the tea season against the encroachments of the appellants and other competitors and of attracting to themselves custom which might otherwise have been carried off by these competitors. This is an object which is strenuously pursued by merchants, great and small, in every branch of commerce, and it is in the eye of the law