already in existence, in pre-existing law, some established rule or standard of what was to the "interest of the public" in respect of competition in trade, and must have intended to require that the Trade Commission should refer to, and be guided by, that rule or standard in discharging its administrative function of instituting proceedings designed to bring about action by competent courts to prevent unfair competitive practices.53 When the pre-existing law is examined to ascertain what rule or standard Congress, by the use in the Trade Law of the phrase "interest of the public," intended to impose upon the Trade Commission for its guidance and control in determining when it should, and when it should not, institute proceedings with a view to having the courts enjoin any competitive method as unfair and so repugnant to the Trade Law, it appears that the only conduct in respect of competition in trade which our system of law has ever recognized as wrong and prejudicial to the "interest of the public," is such conduct as may result in undue and unreasonable restraint of trade and the creation or perpetuation of monopoly, which are or may be attended by the enhancement of prices, the destruction of individual opportunity, initiative and independence, and other like injuries to the whole people.54 53 The Clayton Law does not contain any such provision in respect of the "interest of the public" as is found in the Trade Law. Such provision in the Clayton Law would be superfluous. Its place is supplied by those terms of the Clayton Law which expressly make a substantial lessening of competition, and a tendency to create monopoly essential to the unlawfulness of the acts inhibited by sections two, three, seven, and eight of the Clayton Law. See note 36, supra. 54In Nash V. United States (1913) 229 U. S. 373, 376, Mr. Justice Holmes, referring to the Sherman Law, said "that only such contracts and combinations are within the act as, by reason of intent or the inherent nature of the contemplated acts, prejudice the public interests by unduly restricting competition or unduly obstructing the course of trade" It would therefore seem to follow that an indispensable attribute of any and every method of competition which lies within the inhibition of the Trade Law, must be a tendency, or a susceptibility of use, to restrain interstate or foreign trade unduly, or to create or perpetuate monopoly.55 (our italics). See also United States v. American Tobacco Co. (1911) 221 U. S. 106, 179. In United States V. International Harvester Co. (1914) 214 Fed. 987, 1005, Sanborn J., referring to the Sherman Law, said: "It is equally well established that the reason for the prohibition by the English rule of public policy and by the statute under consideration of unreasonable restraints of and attempts to monopolize trade was and is that, by unduly restricting competition, they are injurious to the public in that (1) they raise the prices to the consumers of the articles they affect, (2) limit their production, (3) deteriorate their quality, and (4) decrease the wages of the labor and the prices of the materials required to produce them. Undue injury in the ways just stated to the public (that is to say, to the consumers and makers of the articles produced or sold) is the basis and reason for the prohibition and the test of undue or unreasonable restraint or attempt to monopolize" (our italics). See also, Standard Oil Co. v. United States (1911) 221 U. S. 1, 52, 78; United States v. St. Louis Terminal (1912) 224 U. S. 383, 409. In applying the test of what the "public interest re quires" as the measure of the relief which should be granted to the government in a suit under the Sherman Law, it was held in United States v. Keystone Watch Case Co. (1915) 218 Fed. 502, 519, that the "public interest" required only that the defendant should discontinue the policy of boycott, and the practice of seeking by mere notices to retailers, with whom it was not in any privity of relationship, to prevent the sale of its patented product for less than a certain minimum price. Otherwise stated, the only acts held injurious to the "public interest" were acts which tended directly to restrain trade, perpetuate monopoly, and enhance prices. 55That conclusion, of course, makes the "rule of reason" a part of the Trade Law, just as it is a part of the Clayton Law, as was noted elsewhere. See note 37, supra. It also excludes from the cognizance of the Trade Commission trade practices which, howsoever unfair, nevertheless result ordinarily in merely private wrongs, injurious only to the persons directly affected thereby, such for instance as trade libels, consisting of the disparagement of the goods of a rival, Everett Piano Co. v. Maus (1912) 200 Fed. That view assimilates the power of the Trade Commission in respect of regulating competition, to its other powers. The nature of the acts denounced by those portions of the Clayton Law which the Trade Commission is authorized to enforce,56 and the nature of the subjectmatter in respect of which the Commission's advisory and investigative powers are to be exercised,57 show that the Commission was created to assist in combating the same evils of restraint of trade and monopolization. against which the antitrust laws are directed. Nothing suggests that Congress intended that the Trade Commission should go outside that field of action in exercising the regulative power conferred upon it by the Trade Law in respect of competition. 718, Victor Safe & Lock Co. v. Deright (1906) 147 Fed. 211, Nonpareil Cork Mfg. Co. v. Keasbey & Mattison Co. (1901) 108 Fed. 721, Gott v. Pulsifer (1877) 122 Mass. 235; "unfair competition", in the sense of imitating the name or label of a trade rival, or the trade dress of his goods, and thereby deceiving the public and palming off upon it one's own goods as and for the goods of another, which act obviously may, or may not, injure the public in a pecuniary sense, depending upon whether the goods so deceitfully palmed off upon the public are inferior or equal in quality to the goods of the trader whose name or label is imitated, McLean v. Fleming (1877) 96 U. S. 245, Goodyear Co. v. Goodyear Rubber Co. (1888) 128 U. S. 598; slander of title to a patent, Flint v. Hutchinson Smoke Burner Co. (1892) 110 Mo. 492, Cousins v. Merrill (1865) 16 U. C. C. P. 114; and sending out false notices that a rival's goods are made in infringement of a patent, and threatening in bad faith to sue the purchasers of such goods as infringers, Adriance Platt & Co. v. National Harrow Co. (1903) 121 Fed. 827, Emack v. Kane, (1888) 34 Fed. 46. If, however, those practices, although usually and ordinarily private wrongs merely, should be adopted for the purpose of unduly restraining trade or acquiring a monopoly and should be found susceptible of effective use to accomplish that wrong to the public then it would seem that the Trade Commission might take cognizance of them under its power to prevent unfair methods of competition. · 56 Secs. 4, 9, 10, 11, 12, supra. 57 Secs. 5, 6, supra; Chapters III and IV, infra. Again, the fact that in order to prevent the methods of competition generically declared unlawful by the Trade Law, Congress has provided substantially the same statutory proceedings 58 as to enforce compliance with sections two, three, seven and eight of the Clayton Law, suggests that the competitive methods intended to be denounced by the Trade Law are acts of the same general nature, susceptible of being adequately prevented by the same proceedings, as the price discriminations, exclusive purchase and sale arrangements, intercorporate shareholding, and interlocking directorates which are specifically described and declared unlawful in the Clayton Law. The indicia of unlawfulness common to all of the practices forbidden by sections two, three, seven and eight of the Clayton Law are the eliminating or substantial lessening of competition, the restraining of commerce, and the creating of monopoly.59 The same indicia must, it would seem, be indispensable to a competitive trade practice before it can be held to be within the purview of the Trade Law. That conclusion accords with the sense in which the words "unfair methods of competition" were used in the majority opinion of the United States Supreme Court in the Standard Oil Company Case. In that case, in outlining the contents of the government's bill of complaint, Mr. Chief Justice White, for the majority of the court, said that after charging that the Standard Oil Trust and the Standard Oil Company had monopolized and restrained interstate commerce in petroleum, "the bill at great length additionally set forth various means by which the monopoly and restraint complained of was continued." The averments of the bill as to the various means by which the monopoly and 58 Sec. 29, infra, * * * 59 Secs. 4, 9, 10, 11, 12, supra. * * restraint, once established, had been continued could, the Chief Justice said, properly be grouped under the head, among others, of "restraint and monopolization by unfair methods of competition, such as local price cutting at the points where necessary to suppress competition; espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent" (our italics).60 The phrase "unfair methods of competition" thus appears to have been used by the Supreme Court as generically descriptive of various trade practices the effect of which had been to suppress competition, restrain trade unduly, and create or perpetuate monopoly. That use of the phrase in the Standard Oil Company Case was brought to the attention of the Senate while the Trade Law was being debated there.61 It therefore seems reasonable to conclude that when Congress inserted the words "unfair methods of competition" in the Trade Law, the legislative intention was that those words should be understood and construed in the same sense as that in which the Supreme Court had used them. § 16. Unfairness essential to violation of Trade Law: It is not, however, to be concluded that the fact that the effect of a given trade practice may be to suppress competition, restrain trade unduly, and create or perpetuate monopoly is sufficient, in and of itself, to make such practice unlawful within the purview of the Trade Law. To reach that conclusion would be to ignore the character of the practices mentioned illustratively in the Standard Oil Company Case as "unfair methods of competition,' and to fail to give due effect to the word "unfair" as 60 Standard Oil Co. v. United States (1911) 221 U. S. 1, 42-43. 6151 Cong. Rec. 13220, 13225 (bound vol. pp. 12143, 12148). 62 Sec. 15, supra. |