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gested, or otherwise. Interesting possibilities suggest themselves as to the consequences to the members of the Commission, under the Sherman Law and other statutes relating to conspiracies,31 if the Commission should assume to give advance approval of any given proposed trade plan, and it should subsequently turn out, after the plan had been executed, or was in process of execution, that the antitrust laws had been, or were being, violated thereby. And, of course, it is abundantly clear that no informal ruling by the Commission could protect any person relying upon it, if a course of conduct in trade, approved in advance by the Commission, should subsequently be drawn into question before a court, and be deemed unlawful by the court. Even when an administrative officer possesses unquestionable authority to make a ruling or regulation determinative of what specific act or acts, if performed, shall, or shall not, constitute a violation of a general rule or standard of conduct fixed by statute, the government is not estopped to proceed against a violator of the statute by the circumstance that the act constituting the violation was within the terms of the administrative ruling, if the act was in truth repugnant to the statute.32

§ 9. Violations of the Clayton Law: As rules of conduct, sections two, three, seven and eight of the Clayton Law are indisputably vague.33 The general nature of the acts, that is, price discriminations, exclusive purchase and sale arrangements, intercorporate shareholding, and interlocking directorates, which those sections of the Clayton Law denounce as unlawful, is

31 See, for instance, 4 U. S. Comp. Stat. (1913) Tit. 69A, Ch. 4, Sec. 10201, p. 4694.

32 William J. Morley v. Hertz (1911) 185 Fed. 757, 760.

33 See Sec. 4, supra; Secs. 10 to 12, infra.

clear enough. But the general declarations of what is unlawful are so hedged about with qualifications, provisos, and exceptions as to inject a large element of uncertainty into a determination of whether a given act or course of conduct, if pursued, will or will not constitute a violation of the Clayton Law and give occasion for the institution of preventive proceedings by the Commission.34

§ 10. Price discriminations, and exclusive purchase and sale arrangements:35 Neither a discrimination in price between different purchasers of commodities, nor an exclusive purchase and sale arrangement, is unlawful under the Clayton Law, unless the "effect" thereof may be "to substantially lessen competition or tend to create a monopoly in any line of commerce."'36 In thus making the unlawfulness of a discrimination in price and of an exclusive purchase and sale arrangement depend upon whether its "effect" may be "to substantially lessen competition, or tend to create a monopoly", the Clayton

34 See note 37, infra.

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35 Clayton Law, Secs. 2 and 3. 36 While obviously, as was said in United States V. Keystone Watch Case Co. (1915) 218 Fed. 502, 507, "restraint of trade * is not always the same thing as the mere restraint of competition", nevertheless the words "to substantially lessen competition", as used in the Clayton Law, appear to mean neither more nor less than substantially and unreasonably to restrain trade. In Great Atlantic & Pacific Tea Co. Cream of Wheat Co. (1915) 224 Fed. 566, 574, Hough J., referring to the Clayton Law, said that section two thereof "plainly identi

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fies the lessening of competition
with restraint of trade" (our
italics). In Standard Oil Co. v.
United States (1911) 221 U. S.
1, 57, 61, Mr. Chief Justice White
said that "acts which it was con-
sidered had a monopolistic ten-
dency, especially those which were
thought to unduly diminish com-
petition
came also in a
generic sense to be spoken of and
treated
as being in re-
straint of trade", and that "the
acts which produce the same re-
sult as monopoly
all
came to be spoken of as, and to
be indeed synonymous with, re-
straint of trade" (our italics).
Cf., note 38, infra.

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Law renders it exceedingly difficult for a person engaged in interstate commerce to tell in advance whether, if he shall discriminate in price between purchasers or make an exclusive purchase and sale arrangement he will thereby violate the law, because in the nature of things he cannot foresee very clearly what ultimate "effect" upon competition, trade, and monopoly his conduct may have.37

37 Since the words "to substantially lessen competition" as used in the Clayton Law appear to mean, in effect, unduly to restrain trade (note 36 supra, note 38, infra), the "rule of reason" is of course as much a part of the Clayton Law as it is of the Sherman Law. Standard Oil Co. v. United States (1911) 220 U. S. 1, 60. Cf., note 55, infra. And the essential uncertainty of the "rule of reason" cannot be gainsaid, especially when the standard of reason must be applied prophetically to determine in advance the lawfulness of the possible or probable effect of a given course of conduct, if such course of conduct shall be adopted. "But

where is a court to find the standard of reason? It seems to us that it must be found in the gradually accumulated results of general experience and observation, in the gathered wisdom of the community, for this is the product of a common and a prolonged effort by men who theorize and by practical men alike to deal as fairly, as justly, and as equitably as may be possible with situations that are often obscure and complicated,

and of high importance to large classes and to many individuals. Obviously a standard should have a true relation to the subject measured; and, since the inquiry here is whether in a given case trade is likely to be, or has actu ally been, unduly restrained, reason can answer the question only by going to the facts of life and drawing upon the accumulated store of knowledge.

When should the standard of reasonableness be applied? Evidently this will depend on the time when the question is submitted for decision. This time may either precede the proposed course of conduct, or it may follow the beginning of such a course so quickly that no body of experience, or no sufficient body, has yet come into existence. In that event the nature of things compels the court to enter the field of prophecy, or of probable anticipation. In such a situation, nothing else can be done.

In this world we must do our best with the means at our disposal. Even if prophets are always in danger of being discredited by the event, we are sometimes compelled to speculate about the fu

As to price discriminations, further uncertainty as to what will constitute a violation of law arises out of the declaration in section two of the Clayton Law that vendors of goods in interstate commerce shall not be prevented from selecting their own customers 38 in bona fide transactions, and not in restraint of trade, and that a discrimination in price between different purchasers of commodities may be made with propriety if the discrimination (1) is on account of differences in the grade,

ture; and our duty then is to check our speculations as much as possible by taking account of such probabilities as may arise from past experience and observation." McPherson J. in United States v. Keystone Watch Case Co. (1915) 218 Fed. 502, 516-517 (our italics). Cf., also note 71, infra.

38 In Great Atlantic & Pacific Tea Co. v. Cream of Wheat Co. (1915) 224 Fed. 566, 574, Hough J., referring to section two of the Clayton Law said: "But price discrimination is only forbidden when it 'substantially' lessens competition. Construing the whole section together, the last exception reads in effect that a 'vendor may select his own bona fide customers providing the effect of such selection is not to substantially and unreasonably restrain trade'" (court's italics). In the same case, on appeal (227 Fed. 46, 49), Lacombe, J., held that neither under the Sherman Law, nor the Clayton Law, had we "yet reached the stage where the selection of a trader's customers is made for him by the government", the trader's business not constituting a monopoly or a

quasi-monopoly. Cf., also, note 36, supra. The extent of the right of a trader to select his own customers, in the sense of refusing to supply his goods to anybody except upon some restrictive condition, as for instance that the purchaser should not sell the article purchased for less than a fixed minimum price, and then enforcing that restrictive condition, was a matter of uncertainty, especially as to patented articles, prior to the enactment of the Clayton Law. See Dr. Miles Medical Co. v. Park & Sons Co. (1911) 220 U. S. 373, and Bauer v. O'Donnell (1913) 229 U. S. 1, in both of which cases the court was of divided opinion; and Ford Motor Co. v. Union Motor Sales Co. (1914) 225 Fed. 373, and American Graphaphone Co. v. Boston Store (1915) 225 Fed. 785, which appear to be in conflict with each other. See also United States v. Motion Picture Patents Co. (1915) 225 Fed. 800, 805. It is not apparent that the Clayton Law has dissipated any of the uncertainty which, prior to its enactment, existed in that regard.

quality, or quantity of the commodity sold, or (2) makes only due allowance for difference in the cost of selling or transportation, or (3) is made in good faith, in the same or different communities to meet competition.

§ 11. Intercorporate shareholding: Equal difficulty and uncertainty is involved in determining when intercorporate shareholding, and the acquisition of stock by ✓ a holding company, will constitute a violation of the Clayton Law.

The acquisition by one corporation engaged in commerce of the stock of another, and the acquisition by a corporation not engaged in commerce of the stock of two or more corporations which are so engaged, are forbidden by the Clayton Law39 only if "the effect of such acquisition may be to substantially lessen competition" between the corporations engaged in commerce, or "to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce." If one corporation shall acquire shares of stock of another, it is manifestly impossible to foresee accurately what ultimately may be the "effect" thereof upon competition, restraint of commerce, and monopoly. If, after the acquisition by one corporation of the stock of another, competition between the corporations shall be lessened to a degree, it must necessarily be exceedingly difficult, if not impossible, to establish with reasonable certainty either that the acquisition of the stock stands as a cause for the lessening of competition as an effect, or that competition has been so "substantially" lessened as to result in a violation of the Clayton Law.

40

That, however, is not all. Not only is the rule against intercorporate stock-ownership vague in terms and difficult of application, but in addition numerous exceptions

39 Clayton Law, Sec. 7.

40 See note 37, supra.

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