Section 10. Competitive methods.

EXCLUSIVE CONTRACTS.-Michigan prohibits agreements, understandings, etc., requiring that any particular make or brand of any article of machinery, tools, implements, vehicles, or appliances used in productive industry shall be dealt in by either party to the agree ment to the exclusion of all other makes or brands of such articles; and also prohibits agreements, understandings, etc., providing for the exclusive sale of certain makes or brands of manufactured articles of machinery, tools, implements, vehicles, or appliances used in any branch of productive industry, and stipulating sums to be paid as liquidated damages to either party for every article so sold of other than the specified make or brand.1

North Carolina prohibits sales of goods, wares, or merchandise, etc., directly or indirectly upon the condition that the purchaser shall not deal in the goods, wares, etc., of a competitor of the vendor.

Massachusetts prohibits any person, corporation, etc., doing business in the State from making it a condition of the sale of goods, wares, or merchandise that the purchaser shall not deal in the goods, etc., of any other person, corporation, etc.; but does not prohibit the appointment of sole agents for the sale of, nor the making of contracts for the exclusive sale of goods, wares, or merchandise.3

Massachusetts prohibits also any person, corporation, etc., from making it a condition of any sale or lease of any tool, implement, appliance, or machinery that the purchaser or lessee shall not buy, lease, or use machinery, tools, etc., or material or merchandise of any person, corporation, etc., other than such vendor, or lessor; but this provision does not impair the right, if any, of the vendor or lessor of any tool, machinery, etc., protected by a patent right vested in such vendor or lessor to require by virtue of such patent right the vendee or lessee to purchase or lease from such vendor or lessor such component and constituent parts of said tool, machinery, etc., as the vendee may thereafter require during the continuance of said patent right. This act does not prohibit the appointment of agents or sole agents to sell or lease machinery, tools, implements, or appliances.

1 Michigan, P. A. 1905, No. 229, sec. 2.

2 North Carolina, Laws 1913, chap. 41, sec. 5b.

* Massachusetts, R. L., chap. 56, sec. 1.

Commonwealth v. Strauss, 191 Mass., 545 (1906).-Defendant, agent of Continental Tobacco Co., sold tobacco under an agreement that if the purchaser should not deal in any other tobacco he would be allowed a rebate of 6 per cent. Prices paid by the purchaser were such that if he did not secure the rebate, his sales of this tobacco would not show a satisfactory profit. Held, that the contract was illegal, and that the exception in the statute allowing the appointment of exclusive sales agents did not include such an agreement nor was the rebate system here practiced within exception of statute. Held, further, that the law was not in contravention of articles 1 and 10 of the declaration of rights of the constitution of Massachusetts, nor Article I, section 8, of the Constitution of the United States, or the fourteenth amendment thereof, nor affected by the Federal Antitrust Law.

4 Massachusetts, Laws 1907, chap. 469.

Kansas prohibits a person, firm, corporation, or association of persons doing business in the State from making it a condition of the sale of goods, wares, or merchandise that the purchaser shall not sell or deal in the goods, etc., of any other person, firm, etc. This law does not prohibit the appointment of agents or sole agents for the sale of, nor the making of contracts for the exclusive sale of, goods, etc.1

REFUSAL TO DEAL.-Missouri and South Carolina declare it unlawful for any two or more persons, corporations, etc., engaged in buying or selling any article or thing to enter into any pool, agreement, etc., to control or limit the trade in any article or thing, or to limit competition in such trade by refusing to buy from, or sell to, any other person, corporation, etc., for the reason that such other person is not a member of the pool, agreement, etc., or to boycott, or threaten to boycott, any person for buying from, or selling to, any other person who is not a member of the pool, agreement, etc.2

The Texas law is broader and prohibits (1) two or more persons, corporations, etc., engaged in buying or selling any article of merchandise, produce, or commodity from entering into an agreement or understanding to refuse to buy from or sell to any other person, corporation, etc.; (2) two or more persons, corporations, etc., agreeing to boycott or threaten to refuse to buy from or sell to any person, corporation, etc., for buying from or selling to any other person, corporation, etc.3

Kan. Gen. Stats., 1909, sec. 1649.

* Missouri, R. S., chap. 98, sec. 10300, as amended in 1913; South Carolina, Laws 1902, No. 574, sec. 5. Walsh v. Association of Master Plumbers, 97 Mo. App., 280 (1902).-Plaintiff alleged an agreement between a plumbers' association and dealers and manufacturers, whereby the latter agreed not to sell supplies to others than members of the association, and the former to boycott any dealer selling to nonmembers, entered into for the purpose of fixing prices and limiting production of such articles; alleged further that he had refused to join association and for that reason defendants refused to sell him supplies or permit same to be sold to him. Held, that any remedy existing before the enactment of the antitrust law was not abridged by section 8979, Revised Statutes 1899 (substantially similar to act cited), making it the duty of the attorney general and prosecuting attorneys under his direction to institute proceedings to restrain such violations; that the agreement was unlawful, and that an injunction would lie to restrain the parties to such agreement from keeping its terms or demanding that they be lept, thus leaving the defendant corporations free to deal or not to deal with appellant as they might choose. Held, further, that the petition did not show the association to be illegal, that presumably it was formed for mutual protection and to fight competition, which it might lawfully do by lawful methods to the extent of driving nonmembers out of business; and that the facts alleged would not authorize the court to dissolve the association.

Texas, Laws 1903, Chap. XCIV, sec. 3; Rev. Civ. Stats. (1911), Art. 7798.

State v. Racine Sattley Co., 184 S. W., 400 (Teras, 1911).-In an action to recover penalties it was alleged that defendant was a manufacturer of farming implements and buggies, and that it contracted with a dealer at Waco to give him the exclusive sale of its goods at such place, the latter agreeing not to buy or sell any other makes of like goods. On demurrer, held a violation of the antitrust act of 1903.

Star Mill & Elevator Co. v. Fort Worth Grain & Elevator Co., 146 S. W., 604 (Teras, 1912).-Fort Worth Grain & Elevator Co. made agreement with the Star Mill Co. not to buy grain from farmers, brokers, or others not regularly engaged in grain business in Panhandle of Texas. Held, that such agreement was direct violation of law (Act 1903, Chap. XCIV, secs, 3, 4) and therefore void and not enforceable.

Nickels v. Prewitt Auto Co., 149 S. W., 1094 (Texas, 1912).-Appellant Nickels contracted with the Prewitt Auto Co. for the exclusive agency for its machines in a specified territory for a fixed period. Appellant gave notes in payment for machines and when sued set up in defense that the contract violated the Texas Antitrust Law of 1903, above cited. Held, that the contract was not in violation of the antitrust law, as

The statutes of Indiana provide

That any person, firm or association of persons who shall make any contract or enter into any agreement or make any combination or enter into any arrangement, directly or indirectly, to induce, procure or prevent any wholesale or retail dealer in or manufacturer of merchandise or of supplies or of material or article intended for trade or used by any mechanic, artisan or dealer in the prosecution of his business from selling such supplies to any dealer or to any mechanic or artisan; and that any dealer in or manufacturer of such supplies or material or article of trade or supplies or material to be used by any mechanic, artisan or dealer, who shall be a party, directly or indirectly, to any such contract, combination or arrangement, or who shall upon the request of any party to any such contract, combination or arrangement refuse to sell such articles of trade, supplies or materials, or articles sold by any dealer or used by any mechanic, or artisan, to any such person or persons who may require them in the prosecution of their said business, for the reason that said dealer, mechanic or artisan is not a member of a combination or association of persons, shall be guilty of conspiracy against trade.' A Nebraska statute, in substance, prohibits persons, etc., dealing in, handling, or consigning grain, from forming, maintaining, or contributing to any pool, trust, combination, etc., for the prevention of competition among buyers, sellers, or dealers in grain, or which tends to prevent the fullest competition in the purchase, sale, or dealing in grain by persons, etc., not doing business through such pool, trust, combination, etc.; or for the prevention of competition by requiring members not to deal with nonmembers; or which requires its members to refuse to sell, purchase, or consign grain to any person, etc., who purchases or receives grain from nonmembers; or which has for one of its objects the prevention of any person, etc., not shipping grain through elevators, whether operated by members or not, from finding purchasers, by boycotting or threatening to boycott such purchasers.2

it did not prohibit the company from making sales elsewhere, nor did it attempt to fix prices, nor prohibit appellant from purchasing or selling other articles of the same kind purchased elsewhere.

Wood v. Teras Ice & Cold Storage Co., 171 S. W., 497 ( Texas, 1914).-Under a contract, an ice manufac turer and wholesaler agreed to sell a retail ice dealer at a fixed price, or the market price if it should fall below the price fixed, a certain quantity of ice or as much more as his trade required, provided the former was able to supply the extra ice. The retailer, in turn, agreed to purchase all his ice from this wholesaler if he could supply his demands. The retailer sued for breach of contract, claiming that the wholesaler refused to furnish ice at the contract price, and that he was compelled to go into the market and purchase ice at an increased price. On appeal, judgment for defendant was affirmed, the court holding that the contract was contrary to Rev. Stats., 1911, art. 7798, sub. 1; that the purpose of the statute is to make illegal such a contract without reference to the intent of the parties and without reference to its actual effect; and further that the fact that one of the parties was a wholesaler and the other a retailer does not take the contract out of a statute applying to parties engaged in the same character of business.

1 Indiana, Stats., sec. 3884.

* Nebraska, Laws 1897, chap. 80, sec. 1.

State v. Omaha Elevator Co. et al., 75 Nebr., 637 (1996),—Defendants were members of the Nebras' a Grain Dealers' Association, the main objects of which were to control the price of grain, destroy compe tition, and drive out “irregular” and independent dealers. The association sought to compel “irregular ” dealers to become "regular," or to force them out of business by controlling the bidding in the purchase or sale of grain. Prices were fixed and the markets divided. Held, that such acts were illegal under the law of 1903.

LOCAL PRICE DISCRIMINATION.-Twenty-three States1 (Arkansas, California, Indiana, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Utah, Wisconsin, and Wyoming) have passed so-called "antidiscrimination" statutes which, broadly speaking, prohibit any person or corporation engaged in the production, manufacture, or distribution of a commodity from discriminating between different localities of the State by selling such commodity at a lower rate in one section than another, allowance being made for the difference in quality and in the cost of transportation. The statutes vary principally in the following particulars:

(a) The character of the article or commodity in the purchase or sale of which discrimination is prohibited; some dealing with a single class of commodities, such as petroleum products, and others with any commodity in general use.

(b) Intent; some statutes prohibiting the acts if done for the purpose of destroying competition, while under others a specific intent is not necessary to complete the offense.

(c) Allowances; in some States differences in cost of transportation are considered in determining whether discriminations exist, while in others differences in grade or quality may also be considered. The trend of legislation is indicated below.

Discrimination in sales and purchases. These statutes may be divided into two general classes--those prohibiting local price cutting and those prohibiting discriminations in the purchase of a commodity. Each of the States above named except Oregon forbids sales at a lower price in one locality than in another. Oklahoma further prohibits sales "at the same rate or price at a point away from that of production or manufacture as at the place of production or manufacture, after making due allowance for the difference, if any, in the grade, quantity or quality, and in the actual cost of transportation from the point of production or manufacture, if the effect or intent thereof is to establish, or maintain a virtual monopoly hindering competition, or restriction of trade."

Thirteen of these States (Indiana, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, South Dakota,

1 Arkansas, Laws 1913, Act 51; California, Laws 1913, chap. 276; Indiana, Laws 1913, p. 304; Iowa, Laws 1913, chap. 310; Kansas, Gen. Stats., 1909, chap. 85, Laws 1915, chap. 368; Louisiana, Laws 1908, Act 128; Massachusetts, Laws 1912, chap. 651; Michigan, P. A. 1913, No. 135; Minnesota, Laws 1907, chap. 269, Laws 1913, chap. 230; Mississippi, Code 1906, sec. 5002, as amended by Laws 1908, chap. 119, sec. 1; Missouri, R. S., 95, as amended 1913, sec. 10314; Montana, Laws 1913, chaps. 7, 8; Nebraska, Acts 1913, chap. 117; New Jersey, Laws 1913, chap. 14; North Carolina, Laws 1913, chap. 41, sec. 5 (e); North Dakota, Laws 1907, chaps. 258, 260, Laws 1913, chap. 287; Oklahoma, Constitution, Art. IX, sec. 45, Act June 10, 1908, sec. 5, Laws 1913, chap. 114; Oregon, Laws 1915, chap. 344; South Carolina, Acts 1909, No. 7; South Dakota, Laws 1907, chap. 131, Laws 1913, chap. 356; Utah, Comp. Laws 1907, secs. 1762x-1762x7, Laws 1913, chaps. 12, 41; Wisconsin, Laws 1909, chap. 395, Laws 1913, chap. 165; Wyoming, Laws 1911, chap. 62, Laws 1915, chap. 23.

Utah, Wisconsin, and Wyoming) prohibit, under certain conditions, purchases at a higher rate in one locality than in another.

Class of articles or commodities.-Thirteen States (Kansas, Louisiana, Massachusetts, Montana, Nebraska, New Jersey, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, Wisconsin, and Wyoming) prohibit discriminations in connection with the purchase (or sale) of "any commodity in general use."

The variations from the above are as follows:

Missouri, "any commodity or article of commerce in general use." South Dakota, "any commodity in general use, or product." (South Dakota has two such statutes with slightly different terms.) New Jersey and Oklahoma prohibit such discriminations in the sale of "any commodity of general use" or in "rendering any service to the public," and California, in the sale or furnishing of "any commodity of general use or consumption or the product or service of any public utility."

Mississippi prohibits such discriminations in the sale of "a commodity" or in "rendering any service or manipulating, handling or storing any commodity."

Iowa, "any commodity of commerce."

North Carolina, "any thing of value."

Arkansas, "news for publication."

Kansas, "news and news reports for newspaper use."

Utah, "information or news for publication."

Michigan, "petroleum products.

Minnesota, "petroleum or any of its products."

Indiana, "milk or milk products."

Minnesota, Oregon, and Wisconsin (1909), “milk, cream or butter fat."

North Dakota, "milk, cream, butter fat, grain or any commodity in general use." (Two statutes in North Dakota.)

Utah and Wyoming (1915), "milk, cream or butter fat" and "poultry or eggs.'

Specific intent.-As indicated below, the statutes vary considerably in the provisions relating to intent.

"With the view of injuring the business of another." (North Carolina.)

"Who shall destroy or attempt to destroy competition." (Mississippi.)1

"Intentionally, for the purpose of destroying competition." (Kansas and Wyoming.)

1 Although the statute provides that it shall be sufficient to make out a prima facie case to show a sale or offer for sale at a lower price, or a lower charge for services, at one place in the State than another, it is necessary to allege an intent to destroy competition and thereby create a monopoly. Standard Oil Co. of Ky. r. State, 104 Miss., 886 (1913).