unduly, and create monopoly, but also that the practice should be "unfair." § 17. What is "unfair": The word "unfair" is undeniably indefinite in sense and meaning. What one person may consider "unfair" in competitive trade, another may perhaps regard as legitimate. Conceivably, members of a court may disagree as to whether or not, under the circumstances of a particular case, a given method of competition is "unfair", just as in one case they were unable to agree and adjudge whether or not certain regulations there involved constituted an "unreasonable" restraint of trade within the purview of the Sherman Law.64 That, however, is of no consequence, so far as concerns the validity of the Trade Law. The Trade Law does not purport to denounce any competitive act as a crime. It does not provide for the imposition of a fine upon, or for the imprisonment of, any person guilty of practising "unfair methods of competition." Whatsoever the peril, under the Sherman Law,65 of practising "unfair methods of competition", a person resorting to such practices incurs no other risk, under the Trade Law, than that the Trade Commission, by proceeding as pointed out in the statute, may obtain the order of a court requiring him to cease and desist from such practice. Vague as it is in making unfairness a standard of unlawfulness in respect of methods of competition in commerce, the Trade Law would nevertheless seem to be sufficiently definite to escape being declared void for uncertainty.66 64 United States V. Periodical Clearing House, an unreported case, referred to in 216 Fed. 973. 65 Secs. 27, 28, infra. 66 Nash v. United States (1913) 229 U. S. 373, 376-378; Standard Oil Co. v. United States (1911) 221 U. S. 1, 69-70; Mutual Film Corp. v. Ohio Indus'l Comm. (1915) 236 U. S. 230, 245-246, 247; Fox v. Washington (1915) 236 U. S. 273. Cf., International Harvester Co. v. Kentucky (1914) 234 U. S. 216, 221-224. See also, note 37, supra, and note 71, infra. So far as the practical administration of the Trade. Law is concerned, the elasticity of meaning of the word "unfair", as applied to competitive practices, may result in some difficulty. But the Trade Commission and the courts must make shift to determine as best they may, from the circumstances of each case, whether the particular competitive practice involved therein is "unfair" within the meaning of the Trade Law, just as other agencies of government have to determine other questions for the solution of which there is no very certain standard to which reference may be made, as for instance the question of what constitutes an "unjust" discrimination, and what an “undue" preference, under the interstate commerce laws,67 and what an "undue" and "unreasonable" restraint of trade under the Sherman Law.68 The difficulty of determining what is "unfair," within the purview of the Trade Law, is hardly to be regarded as insuperable. Prior to the enactment of the Trade Law, the courts in discussing monopoly cases not involving any "unfair competition" in the accepted sense of palming off one man's goods as and for the goods of another,69 had referred to the "business conduct" of a corporation "towards its competitors" as "honorable, clean and fair," and had used such expressions as "legitimate competition" and "fair competition," and "unfair competition."70 If the courts knew then, as it must be assumed they did, what business conduct on the part 674 U. S. Comp. Stat. (1913) Tit. 56A, Ch. A, Secs. 8564, 8565, p. 3825. 68 See note 37, supra. 69 See note 55, supra. 70United States v. International Harvester Co. (1914) 214 Fed. 987, 1002; United States v. Standard Oil Company (1909) 173 Fed. 177, 191, 197; Ware-Kramer Tobacco Co. v. American Tobacco Co. (1910) 180 Fed. 160, 165, 170; United States v. Patterson (1913) 205 Fed. 292, 297, 301. of a corporation towards competitors was honorable, clean and fair, and what competition was legitimate, fair, and unfair, they can probably apply with reasonable satisfaction the word "unfair" as used in the Trade Law in forbidding "unfair methods of competition.''71 Likewise individuals engaged in commerce who really wish to obey the Trade Law's inhibition against "unfair methods of competition," will probably be able for the most part to keep on the side of safety. Within limits, the word "fair" has about the same meaning for one normal man as for another. Persons who may be in doubt as to whether or not any given competitive method held in contemplation is fair, may find a guide to proper action in considering the requirement of "common social duty" which, although somewhat vague, has been recognized by the law as a criterion of correct conduct in analogous situations.72 They may take account also of judicial dicta to the effect "that there is more of the Decalogue in the common law respecting the trading of merchants than is sometimes supposed," and that "the ancient adage 'Live and let live' has its application to 71In United States v. Keystone Watch Case Co. (1915) 218 Fed. 502, 518, in considering what was "unreasonable restraint of trade", and having in mind no doubt the Clayton Law and the Trade Law, McPherson J., said: "On this subject we are certainly able to say some things with confidence. Competitors must not be oppressed or coerced; fraudulent or unfair or oppressive rivalry must not be pursued. And if these words are criticized as too general, we may reply that such generality is apparently unavoidable, as some recent legislation of Congress tes tifies, and, moreover, we may safely deny that the words are too vague for satisfactory use; for it must be remembered that the common agreement of moral opinion in the community furnishes an adequate guide to their practical meaning and their practical application. They are not likely to be misapprehended or misapplied" (our italics). Cf., note 37, supra, and also cases cited in note 66, supra. 72Nash v. United States (1913) 229 U. S. 373, 377. 73United States v. Standard Oil Co. (1909) 173 Fed. 177, 196. trade, and is a safe rule to go by," and that "competition for trade is likened to a race in which all may enter, but in which there must be no unfair jostling or hampering of others. Each one is free to exert all his powers, and distance, if he can, all competitors and win all the prizes; but he must run fairly and accord to others a like freedom."75 They may see also what economists have regarded as unfairness in competitive practices.76 And they may be guided by observing the nature of the practices of local price cutting, payment of rebates, operation of bogus independent companies, and espionage 74 United States V. Patterson (1912) 201 Fed. 697, 717. 75 United States v. Motion Pic ture Patents Co. (1915) 225 Fed. 800, 805. 76E. Dana Durand, in his lectures on "The Trust Problem", delivered at Harvard University in April, 1914, referred to "Price discriminations and other unfair methods of competition" (our italics). In addition to "price discriminations", he recognized as "unfair competitive methods" the obtaining of preferential rates from common carriers, and exclusive purchase and sale arrangements. 28 Quart. Journ. Econ. 391, 392-394. And William S. Stevens, writing on "Unfair Competition", in the Political Science Quarterly, in June and September, 1914, said: "Fair competition in an economic sense signifies a competition of economic or productive efficiency. On economic grounds an organization is entitled to remain in business so long and only so long as its production and selling costs enable it to hold its * * own in a free and open market. Unfortunately competi tion is not always conducted under such conditions of equal opportunity in a free and open market. Productive and selling efficiency alone do not always permit an organization to survive, owing to the introduction of methods and practices which destroy the freedom of the market, which hamper the productive or selling efficiency of other units and which prevent efficient potential competitors from becoming actual rivals. Such artificial restrictions are clearly unfair, since they hinder or prevent other organizations from competing to the extent which their productive and selling efficiency may warrant. If there be a sound basis for competition, it lies in the preservation of the economically efficient and the destruction of the inefficient. It follows that methods which destroy the efficient along with the inefficient are economically unjustifiable and must be regarded as unfair. ** In many cases 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. 17Sec. 15, supra. 78 United States v. Great Lakes Towing Co. (1913) 208 Fed. 733, 738. |