§ 118. Restriction upon competition, whether necessarily illegal.-A monopoly created by the crown seems to have been necessarily illegal,12 and, subject to the limitations hereafter considered,13 the same seems true of what is strictly a monopoly, that is, a complete restriction upon competition, resulting from the acts of individuals. But, however it may have been as to restrictions upon competition created by the crown, it seems clear enough that not all restrictions upon competition resulting from the acts of individuals are illegal.14 This results from the view that road. So in Hare v. London & Northwestern Ry. Co., 2 Johnson & Hemming, 80, 103 (Eng. Ch., 1861), an agreement among competing railroad companies for a division of profits in certain fixed proportions, was held not illegal, as preventing competition, in the absence of statutory provisions. The court said: "It is a mistaken notion that the public is benefited by pitting two railway companies against each oth er till one is ruined, the result being at last to raise the fares to the highest possible standard." So far as such restrictions are held illegal in England, it would seem to be according to the test of reasonable ness. See Collins v. Locke, § 133, infra. On the other hand, as was pointed out in U. S. v. Addyston Pipe & Steel Co., supra (85 Fed. 286; 29 C. C. A. 155; 46 L. R. A. 133), the decision in Mogul S. S. Co. v. McGregor, App. Cas. (1892), 25, is not in point on this branch of our subject. 12 This statement may, however, be subject to the same limitation as that referred to in note 13, infra. 13 Thus, as to the character of the article monopolized, see § 131. 14 In U. S. Vinegar Co. v. Foehrenbach, 148 N. Y. 58, 64; 42 N. E. 403 (1895), it was said: "Not all combinations are condemned and self-preservation may justify prevention of undue and ruinous competition, when the prevention is sought by fair and legal methods." To similar effect, Rafferty v. Buffalo City Gas Co., 37 App. D. 618; 56 N. Y. Suppl. 288 (1899). See dissenting opinion of Holmes, J., in Northern Securities Co. v. U. S., 193 U. S. 197; 24 Supm. 436; 48 L. Ed. 679 (1904). It was said in Oakdale Manuf. Co. v. Garst, 18 R. I. 484; 28 Atl. 973; 23 L. R. A. 639; 49 Am. St. Rep. 784 (1894): "It does not follow that every combination in trade, even though such combination may have the effect to diminish the number of competitors in business, is therefore illegal. Such a rule would produce greater public injury than that which it would seek to cure. It would be impracticable. It would forbid partnerships and sales by those engaged in a common business. It would cut off consolidations to secure the advantages of united capital and economy of administration. It would prevent all restrictions and exclusive privileges, and hamper the familiar conduct of commerce in many ways. There may be many such arrangements which will be beneficial to the parties and not in seems to be generally accepted, that the economic effects of a restriction upon competition are not necessarily evil, in other words, that unrestricted competition results in economic evils, capable of prevention or removal by some degree at least of restriction upon such competition.15 A different view of such jurious to the public." See State v. Eastern Coal Co., 70 Atl. 1 (Supm. Ct. R. I., 1908). See as to regulation of cemetery association, Roanoke Cemetery Co. v. Goodwin, 101 Va. 605; 44 S. E. 769 (1903). In Oakes v. Cattaraugus Water Co., 143 N. Y. 430; 38 N. E. 461; 26 L. R. A. 544 (1894), it was held not illegal for a person whose business is threatened with competition, to persuade his competitor to abandon his business and take employment with the other, at a stated compensation. 15 In Brown v. Jacobs Pharmacy Co., 115 Ga. 429, 450; 41 S. E. 553, 562; 57 L. R. A. 547, 558; 90 Am. St. Rep. 126 (1902), it was said: "It seems that in some cases in New York and elsewhere, an idea has arisen of determining how much competition is desirable, and apparently of holding that extreme competition is undesirable, and a combination to meet it is not unlawful." The unsatisfactory character of such a standard was pointed out by Taft, J., in U. S. v. Addyston Pipe & Steel Co., 85 Ied. 271, 284; 29 C. C. A. 141, 153; 46 L. R. A. 122, 132 (6th C., 1898), and see note to Harding v. American Glucose Co. (74 Am. St. Rep. 244). Although other grounds were relied on, the court, in Kellogg v. Larkin, 3 Pinney (Wis.), 123, 150; 56 Am. Dec. 164, 180 (1851), thus vigorously attacked the maxim that "competition is the life of trade": "If it be true that competition is the life of trade, it may follow such premises that he who relaxes competition commits an act injurious to trade; and not only so, but he commits an act of overt treason against the commonwealth. But I apprehend it is not true that competition is the life of trade. On the contrary, that maxim is one of the least reliable of the host that may be picked up in every market place. It is in fact the shibboleth of mere gambling speculation, and is hardly entitled to take rank as an axiom in the jurisprudence of this country. I believe universal observation will attest that for the last quarter of a century competition in trade has caused more individual distress, if not more public injury, than he want of competition. Indeed, by reducing prices below or raising them above values (as the nature of the case prompted), competition has done more to monopolize trade, or to se cure exclusive advantages in it, than has been done by contract," Similar views as to the evils of competition had been expressed in Palmer v. Stebbins, 3 Pick. (Mass.) 188; 15 Am. Dec. 204 (1825); Chappel v. Brockway, 21 Wend. (N. Y.) 157, 165 (1839). In Pierce v. Fuller, 8 Mass. 223; 5 Am. Dec. 102 (1811), an agreement between proprietors of two rival stages between Boston and Providence, that one should not run a stage between those points, was sustained. The court economic effects has, however, led to judicial declaration in sweeping condemnation of any restriction upon competition,16 said: "The public appear to have no interest in this question." In a note by Francis Wharton in 11 Fed. 11, it is suggested that this decision, and that in Perkins v. Lyman, 9 Mass. 522 (1813), may be explained on the ground that the acts complained of were breaches of trust. In Whitney v. Slayton, 40 Me. 224 (1855), the tendency in this country to excessive competition in business, was regarded as ground for liberally construing exceptions to the common-law rule against contracts in restraint of trade. In Central Shade Roller Co. v. Cushman, 143 Mass. 353; 9 N. E. 629 (1887), a combination among manufacturers and sellers of curtain fixtures known as "wood balance shade rollers," to sell at a uniform price for their common benefit, dividing the profits, was sustained, they being the principal dealers and substantially supplying the market, though others were engaged in the business "in a small way." The court said: "The general purpose of the combination was to prevent, or rather to regulate, competition between the parties to it in the sale of the particular commodity which they made. This is a lawful purpose. Even if such an agreement tends to raise the price of the commodity, it is one which the parties have a right to make. To hold otherwise would be to impair the right of persons to make contracts, and to put a price on the products of their own industry." In Skrainka v. Scharringhausen, 8 Mo. App. 522 (1880), an agreement among twenty-four proprietors of stone-quarries in a portion of St. Louis, providing for the sale of all the rubble buildingstone of such quarries by a common agent for a period of six months, at prices fixed by the agreement, was sustained. By its terms the agreement was designed to prevent the depression of prices resulting from competition, making it impossible to work quarries at a profit. We shall show elsewhere (§ 161) that here the court improperly applied the test of space limit. In U. S. v. Joint Traffic Assoc., 171 U. S. 505, 576, 577; 19 Supm. 25, 34; 43 L. Ed. 259 (1898), were discussed the effects of competition upon the business of railroadswhether favorable or otherwise to the commerce in which they are engaged. The agreement under consideration was held to directly and effectually stifle competition and thus be within the prohibition of the Federal anti-trust act against contracts "in restraint of trade or commerce," "notwithstanding there are possibilities that a restraint of trade may also follow competition that may be indulged in until the weaker roads are completely destroyed, and the survivor thereafter raises rates and maintains them." 16 A very little consideration will show the untenability of, for instance, the following oft-quoted statement in Hooker v. Vandewater, 4 Denio (N. Y.), 349; 47 Am. Dec. 258 (1847): "Competition is the life of trade. It follows that whatever destroys or even relaxes competition in trade is injurious, if not fatal, to it." See also State ex rel. v. Portland Natural Gas & Oil Co., though, as may readily be inferred, there is no decision to that effect. § 119. Presumption against validity of restriction upon competition. In some instances has been declared the existence of a presumption against the validity of a restriction upon competition.17 On the other hand, the existence of such a presumption has been denied,18 and it seems at least doubtful whether, if it exist, it is of substantial service. $ 120. Substantial control of supply as test of legality.—If now a complete restriction upon competition be illegal, and if also there be nothing necessarily illegal in a mere restriction upon competition, where is the line of distinction between a legal and an illegal restriction? On the one hand, a restriction resulting in the control of 100 per cent. of the supply of a given commodity within a given area is illegal. On the other hand, a restriction resulting in the control of, say, only five or ten per cent. of such supply within such area is doubtless not illegal, at 153 Ind. 483; 53 N. E. 1089; 53 L. R. A. 413; 74 Am. St. Rep. 314 (1899). The prohibitions contained in the anti-trust acts (cc. XIX, XX) commonly expressly include incomplete, as well as complete, restrictions upon competition, as witness the use of the words "destroy," "prevent," "lessen," "hinder,” “restrain,” “limit," "restrict," "obstruct," "delay," "defeat," "preclude,” or the like, as applied to combinations in restriction upon competition, or, as it is sometimes expressed, "full "full and free," or "free, fair and full," or "unrestricted," or "free and unrestricted" competition. 17 Hoffman v. Brooks, 23 Am. Law Reg. (N. S.) 648 (Super. Ct. Cin., 1884). So in Morris Run Coal Co. V. Barclay Coal Co., 68 Pa. St. 173, 185; 8 Am. Rep. 159, 164 (1871), such presumption was applied, but under the mistaken supposition, elsewhere considered (§ 160), that the doctrine against restrictions upon competition, is based on that against contracts in restraint of trade. In Cleveland, Columbus, Cincinnati, etc., Ry. Co. v. Closser, 126 Ind. 348, 360, 363; 26 N. E. 159, 163, 164; 9 L. R. A. 754, 760, 761; 22 Am. St. Rep. 593, 603, 605 (1890); Chicago, Indianapolis, etc., Ry. Co. v. Southern Indiana Ry. Co., 38 Ind. App. 234, 239; 70 N. E. 843, 845 (1904), the presumption was applied to combinations among competing carriers. 18 U. S. v. Trans-Missouri Freight Assoc., 58 Fed. 58, 78; 7 C. C. A. 15, 82; 24 L. R. A. 73, 87 (8th C., 1893); and see Leslie v. Lorillard, 110 N. Y. 519, 533; 18 N. E. 363, 366; 1 L. R. A. 456, 461 (1888); Herriman v. Menzies, 115 Cal. 16, 21; 46 Pac. 730, 731; 35 L. R. A. 318, 319; 56 Am. St. Rep. 82 (1896). least, not necessarily.19 But where shall the line be drawn? Clearly not at 100 per cent., that is to say, it is unnecessary that the restriction be complete, in order that it be illegal.20 But shall it be drawn at 60 or 70 or 80 or 90 per cent.? The an 19 In Booth v. Davis, 127 Fed. 875, 879 (C. C. Mich., 1904), where a contract was enforced against the objection that "the complainant was a trust and a monopoly," it appeared that its business was "but a small fraction of that done by other dealers in the same commodities in the territory covered by its operations, and that it was but one of several hundred dealers in that territory." See, however, § 121. 20 See Addyston Pipe & Steel Co. v. U. S., 175 U. S. 211, 237; 20 Supm. 96, 106; 44 L. Ed. 136 (1899); Waters-Pierce Oil Co. v. Texas, 212 U. S. 86, 109; 29 Supm. 220, 226 (1909); U. S. v. Coal Dealers' Assoc., 85 Fed. 252, 264 (C. C. Cal., 1898); Montague v. Lowry, 115 Fed. 27; 52 C. C. A. 621; 63 L. R. A. 58 (9th C., 1902); U. S. v. MacAndrews, etc., Co., 149 Fed. 823 (C. C. N. Y., 1906); Bigelow v. Calumet & Hecla Mining Co., 155 Fed. 869 (C. C. Mich., 1907); Monarch Tobacco Works v. American Tobacco Co., 165 Fed. 774, 781 (C. C. Ky., 1908); Stewart v. Stearns & Culver Lumber Co., 48 So. 19, 26 (Supm. Ct. Fla., 1908); Dunbar v. American Telephone, etc., Co., 224 Ill. 9; 79 N. E. 423; 115 Am. St. Rep. 132 (1906); Chicago, Wilmington, etc., Coal Co. v. People, 114 Ill. App. 75, 112 (1904); Sanford v. People, 121 Ill. App. 619 (1905); Chapin v. Brown, 83 Iowa, 156; 48 N. W. 1074; 12 L. R. A. 428; 32 Am. St. Rep. 297 (1891); State v. Smiley, 65 Kan. 240, 262; 69 Pac. 199, 206; 67 L. R. A. 903, 912 (1902); Klingel's Pharmacy v. Sharpe, 104 Md. 218; 64 Atl. 1029; 7 L. R. A. N. S. 976; 118 Am. St. Rep. 399 (1906); Hunt v. Riverside Co-operative Club, 140 Mich. 538; 104 N. W. 40; 112 Am. St. Rep. 420 (1905); State ex inf. Crow v. Firemen's Fund Ins. Co., 152 Mo. 1, 44; 52 S. W. 595, 607; 45 L. R. A. 363, 376 (1899); State ex inf. Crow v. Armour Packing Co., 173 Mo. 356, 391; 73 S. W. 645, 653; 61 L. R. A. 464, 474; 96 Am. St. Rep. 515 (1903); Heim Brewing Co. v. Belinder, 97 Mo. App. 64, 69; 71 S. W. 691, 692 (1902); Kosciusko Oil Mill & Fertilizer Co. v. Wilson Cotton Oil Co., 90 Miss. 551; 43 So. 435; 8 L. R. A. N. S. 1053 (1907); People v. North River Sugar Refining Co., 54 Hun, 355, 377; 3 N. Y. Suppl. 401, 413; 2 L. R. A. 33, 42 (1889); De Witt Wire-Cloth Co. v. N. J. Wire-Cloth Co., 16 Daly, 529; 14 N. Y. Suppl. 277; affirmed, it seems, in 38 N. Y. State Reporter, 1023 (1891); Bailey v. Master Plumbers, 103 Tenn. 99, 114; 52 S. W. 853, 856; 46 L. R. A. 561, 565 (1899); Pocahontas Coke Co. v. Powhatan Coal & Coke Co., 60 W. Va. 508, 525; 56 S. E. 264, 271; 10 L. R. A. N. S. 268, 282; 116 Am. St. Rep. 901 (1907). See also American Handle Co. v. Standard Handle Co., 59 S. W. 709, 718 (Tenn. Ch. App., 1900). Thus in Texas Standard Oil Co. v. Adoue, 83 Tex. 650; 19 S. W. 274; 15 L. R. A. 598; 29 Am. St. Rep. 690 (1892), a combination of manufacturers of the products of |