which were mentioned illustratively in the Standard Oil Company Case," as "unfair methods of competition." § 18. Local price cutting: The practice of local price cutting would seem to be substantially the same practice as the price discrimination between purchasers forbidden by section two of the Clayton Law. The practice of local price cutting consists in a monopolistic concern's cutting its prices to a point below the cost of production in localities where there are competitors whom it may wish to destroy, and raising its prices in places where it has little or no competition to a point where the profits there gained will offset the losses due to price cutting in the competitive markets. After the price cutting has accomplished its purpose of driving competitors out of business, profitable prices are, of course, restored.78 unfairness cannot be determined except with reference to the consequences of a given act. The definition of unfair competition, therefore, should be general in terms. Any act or method of competition which hampers, injures or destroys concerns which could compete on the basis of their productive and selling efficiency should be forbidden, as should also any method except productive and selling efficiency which prevents potential competition from becoming actual competition." 29 Polit. Sci. Quart. 282, 283, 490. Mr. Stevens reviewed eleven practices in trade which he said were unfair from an economic standpoint as destroying competition by other means than superior producing and selling efficiency, viz: (1) Local price cutting. (2) Operation of bogus independent concerns. "fighting (3) Maintenance of ships" and "fighting (4) Lease, sale, purchase, or use of certain articles as a condition of the lease, sale, purchase or use of other required articles. (5) Exclusive sale and purchase arrangements. (6) Rebates and preferential contracts. (7) Acquisition of exclusive or dominant control of machinery or goods used in the manufacturing process. (8) Manipulation. (9) Blacklists, boycotts, whitelists, etc. (10) Espionage and use of detectives. (11) Coercion, threats, and intimidation. 29 Polit. Sci. Quart. 284-306, 463-485. See Secs. 18 to 24, infra. 77 Sec. 15, supra. 78 United States v. Great Lakes Towing Co. (1913) 208 Fed. 733, 738. § 19. Payment of rebates: The payment of rebates is ordinarily part of an exclusive purchase and sale arrangement. It is covered by the declaration in section three of the Clayton Law, that it shall be unlawful to allow a "rebate" on the price of goods sold on condition that the purchaser shall not use the goods of a competitor. Under the usual plan for payment of commercial rebates, a seller agrees that if a purchaser shall buy a given commodity exclusively from him during a certain period, he will set aside an amount equal to a given percentage of the price of all goods bought by the purchaser during such period, and will pay over such amount to the purchaser at the end of some subsequent period if, during such subsequent period also, the purchaser shall buy such commodity exclusively from the seller.79 § 20. Bogus independent companies: The operation of a bogus independent company is a device whereby a concern having, or seeking, a monopoly in any line of commerce, establishes at a place where it has troublesome competition, what ostensibly is another competitor, but in truth is merely a secret branch or agency of the parent monopolistic concern.80 The bogus competitor, once established, proceeds to cut prices to a point below the cost of production, in a feigned trade war with its parent concern and all other rivals. If all goes well, the bogus competitor in time gets most of the business in the competitive market, and destroys independent dealers. That having been accomplished, the bogus independent company goes out of business, and leaves its creator a clear field freed from competition. 79 Wilder Mfg. Co. V. Corn Products Co. (1915) 236 U. S. 165, 170; United States v. Great Lakes Towing Co. (1913) 208 Fed. 733, 738-739; United States V. Eastman Kodak Co. (1915) 226 80 Virtue v. Creamery Package Co. (1913) 227 U. S. 8, 26. § 21. Espionage: Espionage of the business of a competitor consists of obtaining information as to the business of a competitor in greater detail, and by other methods, than is possible through ordinary business channels. The methods which have been used in the past embrace the use of spies and detectives, the bribing of the employees of common carriers, and the like. Espionage has already been the subject of specific legislation by Congress, so far as the employees of common carriers are concerned.81 Espionage is ordinarily used not as in itself a means of suppressing competition, restraining trade, or acquiring monopoly, but in order to obtain information as a basis to accomplish those ultimate ends by some other method, as for instance by local price cutting, or exclusive sale arrangements.82 § 22. Fighting brands: Another practice of the same general nature, and designed to accomplish the same end of destroying competition, is the use of so-called "fighting brands,” “flying squadrons" and "fighting ships.''83 A "fighting brand" is a particular brand of a commodity made by a concern seeking a monopoly in its line of manufacture, for the purpose of being sold below the cost of production, solely to the customers of such concern's competitors. When by the marketing of a "fighting brand" at a price below the cost of production, all of the customers of the monopolistic concern's competitors have been won away, the manufacture and sale of the "fighting brand" is discontinued. The regular salesmen 814 U. S. Comp. Stat. (1913) Tit. 56A, Ch. A, Sec. 8583, (6), (7), p. 3855. 82United States V. Eastman Kodak Co. (1915) 226 Fed. 62, 78. 83 United States v. Hamburgh American S. S. Line (1914) 216 of the monopolistic concern rarely sell a "fighting brand." For them to do so would expose such concern's connection with the "fighting brand," and so tend to defeat the purpose of putting the "fighting brand" upon the market. A "fighting brand" is usually marketed by special salesmen, known as "flying squadrons," who do not, as their principal business, handle the brands commonly offered for sale by the monopolistic concern, or solicit orders from the trade generally, but confine their activities to marketing "fighting brands" and to soliciting patronage from the customers of the monopolistic concern's competitors. So-called "fighting ships" are vessels employed by steamship combinations to prevent competitors from obtaining traffic. When a competitor of the combination seeks passengers or a cargo and announces a sailing date, the combination advertises a sailing for the same date and offers rates below the cost of transportation, with the result that the competitor cannot obtain any traffic. § 23. Full line forcing: A variation of the "tying contract", is found in the practice of "full-line forcing," so called. That device is resorted to by a concern which manufactures a number of different articles all intended for use in a single industry, as for instance in agriculture, and desires to secure or perpetuate a monopoly in that line of trade. Some one of the articles made by the monopolistic concern may be very desirable, and may be exclusively controlled by patents or otherwise. The other articles may be not any more desirable, or even less desirable, than similar articles produced by independent manufacturers. When the monopolistic concern forces dealers to carry a full line of all of its products, as a condition to supplying them with the controlled product, that constitutes what is called "full line forcing." The forcing of products upon dealers in this man ner, naturally drives from the market like products of independent manufacturers, and tends to create a monopoly in the hands of the concern which does the forcing.83a § 24. Boycotts and blacklists: Boycotts and blacklists constitute another device of the same general nature for suppressing competition and restraining trade. They are frequently employed as auxiliary to exclusive sale and purchase arrangements, and agreements to maintain prices. When so employed, they are used to render it impossible for persons who once violate an exclusive sale and purchase arrangement, or a price-fixing agreement, subsequently to do business with the concern, or concerns, seeking to create or perpetuate a monopoly. Boycotts and blacklists have also been used as direct and primary restraints upon trade in certain lines of industry.84 Thus an association of retailers may blacklist and refuse to do business with manufacturers or wholesalers who sell directly to consumers, and wholesalers may blacklist, and refuse the ordinary trade discounts to, retailers who buy directly from manufacturers. The obvious effect of such practices is of course to restrain trade and eliminate competition. § 25. Definition impossible: Other practices of the same nature as those above reviewed, might be instanced.85 But the illustrations given are sufficient to 83a United States v. United Shoe Machinery Co. (1915) 227 Fed. 507, 508-509. 84 Eastern States Lumber Assn. v. United States (1914) 234 U. S. 600, 605-609; Straus v. Am. Publishers' Assn. (1913) 231 U. S. 222, 235; Lawlor v. Loewe (1915) 235 U. S. 522; United States v. Keystone Watch Case Co. (1915) 218 Fed. 502, 511, 512. 85 Nash v. United States (1913) 229 U. S. 373, 375-376; Standard Sanitary Mfg. Co. v. United States (1912) 226 U. S. 20; United States v. American Tobacco Co. (1911) 221 U. S. 106, 181-182; Peoples Tobacco Co. v. American Tobacco Co. (1909) 170 Fed. 396, 399-403; Ware-Kramer Tobacco Co. v. American Tobacco Co. (1919) 180 Fed. 160, 166-168; United States |