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words just quoted and declares such discrimination unlawful only where the effect“ may be to substantially lessen competition or tend to create a monopoly." Moreover, to the unimportant and proper exceptions contained in the House bill is added the exception of discrimination "made in good faith to meet competition."

The wisdom of the first of these two changes can scarcely be doubted. The purpose of all competition, at least in a sense, is to destroy the business of competitors. Price discrimination is an all but universal practice and is not necessarily injurious or calculated to bring about a monopoly. The House bill if broadly interpreted would virtually have prohibited price discrimination altogether; it went too far. On the other hand, to permit price discrimination when made to“ meet competition "may largely defeat the effectiveness of this section. The great corporation or combination that seeks to drive out a small competitor by price discrimination usually maintains that all it does is in good faith to meet competition.

The Standard Oil Company, for example, may have the entire oil trade of a given town. It may be charging excesssive prices there. A competitor seeking to gain a foothold enters the town and offers oil at a somewhat lower price, but still a fair price. The Standard meets this price, perhaps goes below it. The merchants being accustomed to deal with the Standard give little patronage to the competitor, who must cut again, and so the process goes on till prices are below cost. Meantime the Standard recoups itself for reduced prices in the town in question by advancing them elsewhere; the less fortunate competitor is driven out of business. It is doubtful

whether under the phraseology of the new statute such tactics could be held unlawful, altho they certainly would tend to create monopoly.

It would appear, therefore, that the section with regard to price discrimination, so far from adding to the effectiveness of the general provision as to unfair competitive methods, may actually weaken it.

The Senate, as already indicated, struck out the provision of the House bill prohibiting in general terms the practice of restrictive sales and leases. It substituted, however, a somewhat similar provision relating only to patented articles. The Senate evidently feared lest the holder of a patent might claim by reason of the patent the right to do that which if done by others would be held unfair competition. The courts had already upheld restrictive sales and leases of patented articles. In conference, however, this section of the bill was again made general in application, explicit reference being made to both patented and unpatented articles. Section 3 of the anti-trust act declares it unlawful for any person to lease or sell goods or fix a price therefor on the condition or understanding that the lessee or purchaser shall not use or deal in the goods of a competitor. In conference was added the qualification " where the effect. ...

may be to substantially lessen competition or tend to create a monopoly."

Again there can be no doubt of the wisdom of this qualifying clause. It is common in many branches of business to make sales or leases subject to the condition of exclusive patronage. The practice is by no means necessarily objectionable. It is substantially akin to the practice of establishing agencies which handle goods on commission or on a salary basis, and which are not

allowed to handle similar goods of other sellers. One seller has one dealer to handle his goods exclusively, another competing seller another dealer and so on. Competition instead of being restrained may be made the more effective thereby. Often this may be the only effective way of securing the distribution of the goods in a given locality. An unqualified prohibition of

tying contracts” would have been unfortunate. On the other hand, such contracts have been in some cases an important means of creating or protecting monopoly, and where that is the case they should be prohibited as the law now prohibits them.

It may be noted that there was a provision in the bill as it passed the House making it unlawful for mine operators and certain other concerns to refuse to sell their products to any responsible person. struck out by the Senate as of doubtful constitutionality and has not been restored.

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We come now to consider those provisions of the new legislation which seek to clarify and extend the definitions of forbidden contracts and combinations in restraint of trade. These provisions, which are confined to the anti-trust act, relate chiefly to intercorporate stockholdings and to interlocking directorates.

If broadly interpreted, the Sherman anti-trust act without amendment could be made to reach every harmful, or potentially harmful, combination in restraint of interstate trade, however indirect its form. That act declares “every contract, combination in the

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form of trust or otherwise, or conspiracy in restraint of trade” to be unlawful. The language is comprehensive in the extreme. To be sure, the Supreme Court has declared that the Sherman act must be interpreted in

light of reason ”; that there may be certain contracts or combinations which restrain trade in only a reasonable manner and which Congress did not intend to make unlawful. President Taft and others have made it clear, however, that the Court did not in this statement refer to any contract or combination that would in any way injure the people, nor did it contemplate substituting its own judgment for that of Congress. Those restraints of trade which in the light of reason might be held lawful are only of a very limited class, such as were lawful at common law, and such as practically every one recognizes to be perfectly legitimate. There were members of Congress who proposed so to amend the Sherman act as to leave no discretion whatever to the courts. Practically, tho they would not have stated it in so many words, they would have had the law declare any restraint of trade, whether reasonable or unreasonable, to be unlawful. Better counsels prevailed, however, and no such provision appears in the new legislation.

The Sherman law being thus broad and comprehensive, the lawyer and the economist alike look with critical eye upon any attempt to add to its definitions. Has the new legislation strengthened our ability to prevent combinations in restraint of trade ? Has it forbidden anything which ought not to be forbidden ? Has it gone far enough, or gone too far ?

Section 7 of the anti-trust act contains the provisions on intercorporate stockholdings. It declares,

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first, that no corporation shall acquire directly or indirectly any part of the stock of another corporation, where the effect "may be to substantially lessen competition " between the two corporations, “or to restrain such commerce or to tend to create a monopoly.” A similar provision is made with regard to holding companies; no corporation may acquire stocks in two or more corporations under the conditions above set forth. Common carriers are included among the corporations covered.

There are various exceptions to these broad prohibitions, but the only one of importance relates to stockholdings heretofore acquired. In other words, the act applies only to future acquisitions of stock and does not undertake to undo things already accomplished. Of course there is a clause to the effect that the act shall not make lawful anything theretofore prohibited by the anti-trust laws; intercorporate stockholdings which were unlawful under the Sherman act may still be attacked.

This section seems to add nothing of real value to the Sherman act. Moreover, if strictly construed, it prohibits that which should not be prohibited. Under the Sherman law the courts have already held intercorporate stockholdings unlawful when they result in unreasonable restraint of trade or in a tendency toward monopoly. Several of the great trust cases decided by the Supreme Court have turned on this point, the Standard Oil case, the Tobacco case, the Northern Securities case, the Union Pacific case and others. The new law, however, prohibits the acquisition of stocks not merely where competition in the trade, – that is in the business concerned as a whole, - is restrained; but also where merely the competition between the partic

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