with the businesses of other manufacturers operating in the same way. Hence the action of the manufacturers would not be a

tort.

The Klingel and Park and Sons cases each present a situation where an attempt is made to force the retailers into a combination to keep up prices, but the difference is this: the retailers in the Klingel case are forced in for the purpose of eliminating competition as to prices generally in the retail business. In the Park & Sons case they are forced in to keep up the prices on single articles only as they are fixed by individual manufacturers whose products are in competition with each other. The prices, therefore, in the Park & Sons case, which the retailer keeps up are in fact competitive prices established by the competition of manufacturers each of whom do business in the same way through the retailers.

§ 107. In State v. Huegin 24 three Milwaukee newspapers agreed to refuse advertising space to any person who paid the higher price for advertising space demanded by a fourth and rival newspaper. This agreement was held to be a crime. A fortiori it was a tort to the fourth newspaper.

How is this to be reconciled with the freedom which business rivals have to compete with each other and in so doing to strike? The advertisers were the common employers of the rival newspapers. One group of three newspapers threatened to strikethat is, they threatened that they would not take advertising matter from those advertisers who dealt with the fourth and rival newspaper. What is the difference between this situation and that of a group of employees striking against an employer in order to compel him to discharge a rival group of employees? 25 It is submitted that there is no difference unless we regard the three newspapers as occupying a preponderant position in a particular advertiser's market. If so, then we have the strike by a combination occupying a preponderant position for the purpose of putting out of business the only rival and thereby obtaining a monopoly. The monopoly purpose and the preponderant

24-110 Wis. 189 (1901) [536].

25-As in Allen v. Flood, L. R. [1898] A. C. 1 [337] ante § 96.

position which gives the power necessary to carry out an excluding competitive practice are both present.

§ 107a. Tuttle v. Buck 26 and Dunshee v. Standard Oil Company 27 should be considered together.

In Tuttle v. Buck a complaint was held sufficient which stated in substance that the defendant, a banker and man of wealth and influence in the community, and nowise interested in the occupation of a barber, established a barber shop and employed a barber to carry on the business, not for the sake of entering the business or of profit to himself, but regardless of loss to himself and for the sole purpose of driving the plaintiff out of his established business as a barber. Here we have a simple case of an act on the part of the defendant causing damage to the plaintiff. The only justification-that of freedom to compete with a rival and triumph over him by the usual means of persuasion, advertising, service, and cutting prices-was eliminated because this was not, in fact, competition, it was damage by means of what was competition in form only.

In Dunshee v. Standard Oil Company the plaintiff, a retail dealer, had been accustomed to buy from the Standard, as wholesaler. It gave up this practice and bought from independent wholesalers. The Standard then went into the retail business for the sole purpose of competing with the plaintiff and destroying his business, which it did. The methods used were to seek out the plaintiff's customers and supply their wants before the plaintiff reached them. It does not appear that they cut prices so much as that they gave a prompter service to the plaintiff's customers than the plaintiff could give. When the plaintiff had been driven from the retail business the Standard withdrew from retailing. The Standard Oil Company was held liable in tort on the authority of Tuttle v. Buck.

There is, however, a wide difference between the two cases. In Tuttle v. Buck there was, in fact, no real competitive situation at all. What was in form a competitive method was used as one might use a stone to throw at the plaintiff's shop window. In the Standard Oil Case the defendant was in the oil business,

26-107 Minn. 145, 119 N. W. 946 (1909).

27-152 Ia. 618, 132 N. W. 371 (1911).

and in competition as a wholesaler with other wholesalers. This competition consisted in attempting to secure retailers as customers. Certainly the Standard (apart from any question of its size and preponderant position) could have refused to deal with a retailer who dealt with independent wholesalers. But that step would have been suicidal if the independents were strong in the locality. Under the circumstances the natural and necessary plan would be for the Standard to establish its own retail business. That would mean competition with other retailers; but if, by competing with such retailers or with any one of them it could induce the retailers again to deal with the Standard rather than the Independents, there would be no further need for the Standard to carry on a retail business. It could legitimately retire from the retail branch of the business and become a wholesaler solely.

So long as we leave out of consideration all question of size and preponderant position of the Standard Oil Company in the oil business, it is difficult to perceive why its acts were not justified by the social interest in the freedom to compete. The moment, however, it is assumed that the Standard Oil Company had a preponderant position in the business, the whole situation is changed. The use of its power to put the independents out of business, by using a localized competitive effort against the independent wholesalers' customer, becomes an unfair and illegal method of competition, and a tort to the retailer damaged. The justification arising from the social interest in the freedom to compete fails.

The true distinction between the two cases is this: In Tuttle v. Buck there was no competitive struggle at all. In the Standard Oil Case there was, but the defendant competitor occupied a preponderant position in the business which limited its freedom to compete and caused acts of competition to be torts which would not have been if employed by well matched units of inconspicuous size.

PART 2

THE SHERMAN ACT

CHAPTER VII

PROBLEM OF CONSTRUCTION

§108. The Sherman Act has given the Federal government an opportunity to deal through its judicial department with contracts, combinations, and conspiracies in restraint of trade, monopolies, and attempts to monopolize.1 The first sentence of the act declares certain contracts, combinations and conspiracies to be illegal generally. It reads:

"Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal.''

Section 2, which speaks of monopoly or attempts to monopolize, merely declares that

"every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor.''

1-Standard Oil Co. v. United, States, 221 U. S. 1 (1910) [1089] ("The debates show that doubt as to whether there was a common law of the United States which governed the subjects in the absence of the legislation was among the influences leading to the passage of the act."')

21 Cong. Rec. 3151-3152: "Mr. Kenna. If the Senator will permit me, I should like to ask him whether a monopoly such as he defines is

prohibited at common law. I ask the Senator from Massachusetts whether a monopoly coming within the definition which he gives is prohibited at common law. Mr. Hoar. I so understand it. Mr. Kenna. Then why should this bill proceed to denounce that very monopoly? Mr. Hoar. Because there is not any common law of the United States."

There is no explicit provision that the acts of monopolizing or attempting to monopolize are generally illegal. Nevertheless, monopolies and attempts to monopolize are properly regarded as prohibited. Whether this is because monopolies or attempts to monopolize are really included in the prohibition of the first section or because they are made illegal by the second section is immaterial. Indeed, the United States Supreme Court in the Standard Oil Case suggests that the second section may include acts which were not covered by the first.2

§ 109. The most important question regarding the construction of the Sherman Act is this: Does the prohibition of the act apply to every contract, combination, and conspiracy which is (however slightly) in restraint of trade, according to the literal significance of those words; or does it apply only to every illegal contract, combination or conspiracy in restraint of trade -the determination of what contracts, combinations, and conspiracies are illegal, because in restraint of trade, being left to a standard outside of the act? In short, does the act by its terms prohibit any specified conduct, or does it simply induct the federal courts into a new federal jurisdiction there to operate and obtain results based on some standard outside the terms of the act?

§ 110. There are three ways of describing this outside standard: It may be called the standard of the common law. It may be described as the fiat of the court itself, based upon its collective judgment and reason. It may be referred to as an authority to obtain results, just as a common law court reached them, i.e., by the exercise of a certain technique of judicial reasoning, which includes a consideration of the conclusions which other common law courts have reached while at the same

2-Standard Oil Co. v. United States 221 U. S. 1 (1910) [1098]: "In other words, having by the first section forbidden all means of monopolizing trade, that is, unduly restraining it by means of every contract, combination, etc., the second section seeks, if possible, to make the prohibitions of the act all the more complete and perfect

by embracing all attempts to reach the end prohibited by the first section, that is, restraints of trade, by any attempt to monopolize, or monopolization thereof, even although the acts by which such results are attempted to be brought about or are brought about be not embraced within the general enumeration of the first section,''