§ 195. Combination as element of illegality.-In the exercise of the power to prescribe for commerce "the rule of free competition" the prohibition of the act might well have been directed broadly and generally against restrictions upon competition generally, or, to use the language of the act, "restraints of trade or commerce." That is to say, there might well have been omitted from the act the element of combination as appearing in the prohibition against "every contract, combination in the form of trust or otherwise, or conspiracy," 32 etc. Such element of combination is, indeed, omitted from the prohibition against "monopolizing or attempting to monopolize," though here again appears the element of combination in the accompanying prohibition against "combining or conspiring" to monopolize. It would seem that in view of the broad prohibition against "monopolizing or attempting to monopolize," the act applies to the case of a restriction produced by the acts of a corporation,33 or illegal, many sorts of contracts and agreements that prior thereto were not only legal, but were regarded as meritorious and beneficial, and has materially restricted the area within which freedom of contract may be exercised." So in U. S. v. American Tobacco Co., 164 Fed. 700, 702 (C. C. N. Y., 1908), it was said as to the combination held il legal (see §§ 193, 198): "What benefits may have come from this combination, or from the others complained of, it is not material to inquire, nor need subsequent business methods be considered, nor the effects on production or price." See as to evidence of benefits. So in another opinion (p. 717): "The combination may not reduce the prices paid to the growers of raw materials, may not increase the prices charged to consumers, may not seek to exclude all others from the field, may be free from coercion or oppression, and yet if it restrict competition, if it restrain trade, rea sonably or unreasonably, it falls within the statute." 32 As to whether there is any distinction between a "contract" and a "combination" or "conspiracy," as the words are used in this connec tion, see dissenting opinion of Holmes, J., in Northern Securities Co. v. U. S., 193 U. S. 197, 409; 24 Supm. 436, 471; 48 L. Ed. 679 (1904). It was contended by him that "there is no combination in restraint of trade until something is done with the intent to exclude strangers to the combination from competing with it in some part of the business which it carries on." See also Rice v. Standard Oil Co., 134 Fed. 464 (C. C. N. J., 1905), where the declaration in an action under § 7 was held defective in failing to observe such distinction. See Tribolet v. U. S., 95 Pac. 85; 16 L. R. A. N. S. 223 (Supm. Ct. Ariz., 1908). 33 See § 150. even a mere individual. It has already been pointed out that the element of combination is in no sense a necessary incident of an illegal restriction upon competition.35 To include it in the act seems not only unnecessary, but even harmful, as tending to produce confusion as to the proper application of the act. § 196. Acts of corporation.-In determining the application of the act, it seems, as a rule, immaterial whether the transactions involved are the acts of individuals, or of corporations. Thus the "contract," "combination" or "conspiracy" may be one not only among individuals, but among corporations solely, or among corporations and individuals.36 And, as has just been suggested,37 it would seem that the act applies to a restriction 34 See U. S. v. MacAndrews, etc., Co., 149 Fed. 823, 836 (C. C. N. Y., 1906), where, however, it was said that there is no reason "why any number of persons may not enjoy a monopoly, or may not attempt to monopolize." See also dissenting opinion of Holmes, J., supra. 35 See § 129. 36 By S8 of the act "the word 'person,' or 'persons,' wherever used in this act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country." 37 See § 195; Continental Wall Paper Co. v. Lewis Voight & Sons Co., 148 Fed. 939; 78 C. C. A. 567 (6th C., 1906); McConnell V. Camors-McConnell Co., 152 Fed. 321; 81 C. C. A. 429 (5th C., 1907). But hardly in accord with the view expressed in the text seems Davis v. Booth, 131 Fed. 31; 65 C. C. A. 269 (6th C., 1904), where a purchase by a corporation was held not within the act, notwithstanding the purchase by it of other like property to an extent that tend ed to create a power to monopolize the market. It was said: "There is a clear distinction which seems to be lost sight of in the argument here, between the aggregation of properties by purchase when the seller no longer retains an interest in the property, and a combination of owners and properties under one management, where each owner's interest is continued in the combination. To this latter class belongs the case of Merz Capsule Co. v. U. S. Capsule Co., 67 Fed. 414 (C. C. Mich., 1895); affirmed in McCutcheon v. Merz Capsule Co., 71 Fed. 787; 19 C. C. A. 108; 31 J. R. A. 415 (6th C., 1896). It may be that the practice of acquiring by a single corporation, through purchase of a great number of single plants in several States of power to control the market of a given commodity in a wide area of territory, may become injurious to the public; but, if so, it would seem that the limitations and the means for the restriction and correction required must be supplied by the lawmaking power, since the old law against forestalling the market has become obsolete." We submit that produced by the acts of a corporation, that is to say, a single corporation, as well as to those of a mere individual. In view of the plenitude of the power of Congress to prescribe for commerce within the scope of the commerce clause, "the rule of free competition," it is no objection to the application of the act to a given corporation, that it was created under the laws of a State.38 § 197. Contract, etc., among those engaged in transporta this "clear distinction" is utterly unsubstantial, the case being within § 2 directed against "every person (including a corporation, under 8) monopolizing or attempting to monopolize," etc. There was, however, reserved for consideration the effect of the circumstance that payment for the property consisted partly of stock of the purchasing corporation. But in U. S. v. American Tobacco Co., 164 Fed. 700, 718 (C. C. N. Y., 1908), the act was held applicable to a "consolidation of interests, more or less sharply competitive, through the formation of a corporation and the transfer to it of the respective properties and business of such competitors." The distinction stated in Davis v. Booth, supra, was recognized, it being said: "The testimony in this case shows repeated instances where, upon the transfer of a competing business, the vendors merely changed the form of their investment. They transferred their property and received in exchange stock in the transferee corporation. They exchanged large interests in a small property for small interests in a large property. Instead of standing by themselves, they combined." See also dissenting opinion of Holmes, J., in Northern Securities Co. v. U. S., infra. See article in 9 Columbia Law Rev. 95 (1909) by G. F. Canfield. 38 Thus, in Northern Securities Co. v. U. S., 193 U. S. 197; 24 Supm. 436; 48 L. Ed. 679 (1904). there was held to be no constitutional objection to the application of the act to the organization of a corporation under the laws of a State, by stockholders of competing railroad corporations engaged in commerce within the scope of the commerce clause, the corporation so organized to hold the stock of the constituent corporations. See elaborate dissenting opinion of White, J. (193 U. S. 367; 24 Supm. 473 et seq. So held notwithstanding the 10th Amendment to the Federal Constitution). See also U. S. v. American Tobacco Co., supra. For discussion of effect of decision in Northern Securities Co. v. U. S., see articles in 16 Harv. Law Rev. 539 (1902-3); 17 Id. 41 (1903-4) by C. C. Langdell; Id. 151 by Frederick Pollock; Id. 474 by "J. C. G."; Id. 533 by Victor Morawetz; 22 Id. 114 (1908) by G. C. Todd; 11 Yale Law Jour. 387 (1901-2) by E. B. Whitney; 13 Id. 57 (1903-4) by D. H. Chamberlain; 1 Mich. Law Rev. 251 (1902-3) by H. L. Wilgus; 6 Id. 361 (1908) by E. R. Sutherland; 3 Columbia Law Rev. 169, 221, 305 (1903) by C. F. Randolph; 4 Id. 315 (1904) by G. tion, e. g., by railroad.-Although, as just seen, the act seems to apply to a restriction produced by the acts of a corporation, or even a mere individual, the element of combination being unnecessary to produce illegality, yet we shall now confine our attention to such restrictions as result from a "contract," "combination" or "conspiracy." Such a contract, etc., may, as we shall see, be among either those engaged in transportation, commonly called carriers, or among those not so engaged, thus those engaged in the production or sale of an article that is transported. There scarcely needs pointing out the applicability of the act to such a restriction resulting from a contract, etc., among those engaged in transportation, thus by railroad, "among the several States or with foreign nations." 39 F. Canfield; 7 Id. 582 (1907) by D. W. Brown; 43 Am. Law Reg. N. S. 358 (1904) by H. W. Bikle. But in State ex rel. v. Superior Court, 98 Pac. 739 (Supm. Ct. Wash., 1909), the act was held not to apply to the action of two competing railroad corporations in causing to be incorporated another, each acquiring half its stock. 39 Thus, in U. S. v. Trans-Missouri Freight Assoc., 166 U. S. 290; 17 Supm. 540; 41 L. Ed. 1007 (1897); U. S. v. Joint Traffic Assoc., 171 U. S. 505; 19 Supm. 25; 43 L. Ed. 259 (1898), the act was held applicable to agreements among competing railroad corporations to establish and maintain rates. So in Northern Securities Co. v. U. S., 193 U. S. 197; 24 Supm. 436; 48 L. Ed. 679 (1904), to an organization by stockholders of two competing railroad corporations (the Great Northern and Northern Pacific, having substantially parallel lines from the Great Lakes and the Misissippi River to the Pacific Ocean at Puget Sound) of a "holding" corporation which should hold the shares of stock of the constituent corporations, such shareholders in lieu of their shares to receive shares in the holding corporation. Such holding corporation became the holder of more than ninetenths of the stock of one, and more than three-fourths of that of the other of these corporations. There was held to be no constitutional objection to such application of the act. See elaborate dissenting opinion of White, J. For subsequent proceedings, see Continental Securities Co. v. Northern Securities Co., 66 N. J. Eq. 274; 57 Atl. 876 (1904); Harriman v. Northern Securities Co., 197 U. S. 244; 25 Supm. 493; 49 L. Ed. 739 (1905). A contrary conclusion under the like prohibition of the Minnesota act seems to have been reached in State v. Northern Securities Co., 123 Fed. 692 (C. C. Minn., 1903). To similar effect with U. S. v. Trans-Missouri Freight Assoc. and U. S. v. Joint Traffic Assoc., is Delaware, L. & W. R. Co. v. Frank, 110 Fed. 689 (C. C. N. Y., 1901). See as to decision in U. S. v. § 198. Contract, etc., among those not engaged in transportation, e. g., those engaged in production or sale.-As just stated a restriction upon competition may be the result of a contract, combination, or conspiracy, not among those engaged in transportation, but among those not so engaged, thus those engaged in the production or sale of an article that is transported. It is true, as already seen, that the act has no application to such production or sale, considered by themselves.10 But it may well be that, for instance, those engaged in such production or sale enter into a contract, combination, or conspiracy, in restriction upon competition in transportation of the article produced or sold.11 Trans-Missouri Freight Assoc., In Ceballos v. Munson S. S. Line, 93 App. D. 593; 87 N. Y. Suppl. 811 (1904), it was held not to apply to an agreement between carriers for payment of percentages on freight. The court said: "There was no provision as to maintaining rates or as to preventing competition. Prices were not fixed, dealings were not confined to a combination of persons, nothing tended towards a monopoly." As to agreement by carriers to give exclusive privilege of transportation, see Delaware, L. & W. R. Co. v. Kutter, 147 Fed. 51, 62; 77 C. C. A. 315, 326 (2d C., 1906). 40 See § 189. 41 See Wheeler-Stenzel Co. v. National Window Glass Jobbers' As soc., infra; U. S. v. American Tobacco Co., infra. As elsewhere stated (see § 191) probably some of the instances here considered are in reality cases of mere "restraints of trade or commerce" that are outside of the narrower class of "restrictions upon competition." That there is no constitutional objection to the application of the act to such contracts, see § 179. In U. S. v. Trans-Missouri Freight Assoc., 166 U. S. 290, 342; 17 Supm. 540, 559; 41 L. Ed. 1007 (1897), it was held to apply to a continuance after its passage of an agreement entered into before. In Addyston Pipe & Steel Co. v. U. S., 175 U. S. 211; 20 Supm. 96; 44 L. Ed. 136 (1899); affirming U. S. v. Addyston Pipe & Steel Co., 85 Fed. 271; 29 C. C. A. 141; 46 L. R. A. 122 (6th C., 1898), it was held to apply to a combination that eliminated competition among bidders for contracts involving the sale of an article for delivery within another State and increased prices beyond a reasonable sum. The transaction was held no less one of interstate commerce, because of the seller agreeing to manufacture the article |