The Philadelphia Wholesale Drug Co. et al.

Text (OCR of the scan at left; may contain errors)

CASES DISMISSED. 491

COMPLAINT IN THE MATTER OF THE PHILADELPHIA WHOLESALE DRUG CO. ET AL., AND OPINION BY COMMISSIONER GASKILL DISSENTING FROM THE ACTION OF THE COMMISSION IN DISMISSING THE SAME.¹

COMPLAINT.

I.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it that the Philadelphia Wholesale Drug Company, Frank R. Rohrman, Russell T. Blackwood, A. T. Pollard, Harry Z. Krupp, H. C. Clapham, G. W. Fohr, A. R. Hesske, J. N. G. Long, O. W. Osterlund, H. J. Seigfreid, and F. P. Streeper, all of whom are hereinafter referred to as respondents, have been and are using unfair methods of competition in interstate commerce in violation of the provisions of Section 5 of an Act of Congress, approved September 26, 1914, entitled, “An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,” and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint stating its charges in that respect on information and belief as follows:

PARAGRAPH 1. That the respondent, Philadelphia Wholesale Drug Company, is a corporation organized and existing under the laws of the State of Pennsylvania, with its principal place of business in Philadelphia, in said State. That the respondents Frank R. Rohrman, Russell T. Blackwood, A. T. Pollard, and Harry Z. Krupp are stockholders and chief executive officers of said Philadelphia Wholesale Drug Company. That the respondents H. C. Clapham, G. W. Fohr, A. R. Hesske, J. N. G. Long, O. W. Osterlund, H. J. Seigfreid, and F. P. Streeper are stockholders and members of the Board of Directors of said Philadelphia Wholesale Drug Company.

PAR. 2. That there are in excess of five hundred stockholders of said Philadelphia Wholesale Drug Company, nearly all of whom are engaged in the business of conducting retail drug stores in the State of Pennsylvania and States adjoining thereto, including New Jersey, Delaware, Maryland and Virginia; that in addition to said stockholders there are approximately two hundred and seventy other proprietors of retail drug stores in said States to whom said Philadelphia Wholesale Drug Company has given certain purchasing privileges substantially equal to those enjoyed by the stockholders of said Philadelphia Wholesale Drug Company. That said stockholders and those to whom said purchasing privileges have been given, aggregate approximately eight hundred in number and constitute a

¹ Docket 600. See table preceding, p. 483.

492 FEDERAL TRADE COMMISSION DECISIONS.

class so numerous as to make it impracticable to make them all parties-respondent herein, but those designated herein as respondents are fairly representative of the whole.

PAR. 3. That said respondent Philadelphia Wholesale Drug Company is engaged in the business of buying in wholesale quantities drugs and druggists sundries in the various markets of the world, causing said commodities to be transported from and through various States of the United States other than the State of Pennsylvania, to Philadelphia in the State of Pennsylvania, where such drugs and druggists' sundries are stored in its warehouses and resold and transported to those of its stockholders who conduct retail drug stores and to other proprietors of retail drug stores to whom have been given purchasing privileges substantially similar to those enjoyed by said stockholders, and the sales of said Philadelphia Wholesale Drug Company are limited to its stockholders and to those to whom it has given said purchasing privileges.

PAR. 4. That said respondent Philadelphia Wholesale Drug Company publishes each month and circulates among its stockholders and customers a pamphlet called “Druco News,” which it denominates the official organ of said respondent, and which is devoted to the interests of its stockholders and customers and consists of paid advertisements, news and editorial matter. That in the October, 1919, issue of said publication, and in subsequent issues, complaint was made concerning the refusal of the Mennen Company to allow to said Philadelphia Wholesale Drug Company the same quantity trade discount allowed by said Mennen Company upon purchases of like quantities by other customers, and the statement was made by respondent that if its stockholders and customers should resent this action by said Mennen Company that company would have only itself to blame; that in the December, 1919, issue of said publication, the announcement was made that said respondent had returned certain orders given it by its stockholders and customers for commodities sold by said Mennen Company, and the further statement was made that said respondent would not cooperate with said Mennen Company nor ask its stockholders and customers to do so, so long as said Mennen Company continued to give others a larger discount tha nthat given to said respondent on like purchases. That said action and announcements by said respondent were calculated and intended to inspire resentment against the Mennen Company and to result in the withholding of purchases from and sales of the products of said Mennen Company to and by the stockholders and customers of the Philadelphia Wholesale Drug Company.

PAR. 5. That the use by each and all of said respondents severally and in their common interest, of the above mentioned practices, is

CASES DISMISSED. 493

an unfair method of competition in commerce within the meaning of Section 5 of an Act of Congress, entitled, “An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,” approved September 26, 1914.

II.

And the Federal Trade Commission, further having reason to believe from a preliminary investigation made by it that the Philadelphia Wholesale Drug Company, Frank R. Rohrman, Russell T. Blackwood, A. T. Pollard, Harry Z. Krupp, H. C. Clapham, G. W. Fohr, A. R. Hesske, J. N. G. Long, O. W. Osterlund, H. J. Seigfreid, and F. P. Streeper, herein referred to as respondents, have been and are violating the provisions of Section 5 of an Act of Congress, approved September 26, 1914, entitled, “An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,” issues this complaint, stating its charges in that respect on information and belief as follows:

PARAGRAPH 1. That the several recitals in Paragraphs one to four, inclusive, of Count 1 are hereby charged as fully and completely as though the several paragraphs were herein repeated verbatim.

PAR. 2. That the Philadelphia Wholesale Drug Company, its officers, stockholders and customers holding a purchasing privilege, have conspired, confederated and agreed together to discriminate against and restrict the purchase of the products of the Mennen Company by themselves and the resale by them to customers of their retail stores; that in pursuance of said conspiracy, the said respondents or some of them, caused to be published in the “Druco News,” a monthly publication issued by the Philadelphia Wholesale Drug Company as its official organ devoted to the interests of its stockholders and customers, and circulated among the members and customers of the Philadelphia Wholesale Drug Company and the public, a statement to the effect that the Mennen Company had refused to allow the Philadelphia Wholesale Drug Company the same discount on quantity purchases as were allowed to other purchasers of like quantities, with other matter implying an invitation to the members and customers of the company to resent such action by the Mennen Company and to act in unison to accomplish a common object, viz, to compel the Mennen Company to allow a satisfactory quantity discount to the Philadelphia Wholesale Drug Company by a boycott on the purchase and sale of the Mennen Company’s products.

PAR. 3. That the use by each and all of said respondents severally and in their common interest, of the above mentioned practices, is an unfair method of competition in commerce within the meaning

494 FEDERAL TRADE COMMISSION DECISIONS.

of Section 5 of an Act of Congress, entitled, “An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,” approved September 26, 1914.

DISSENTING OPINION BY COMMISSIONER GASKILL.

I am unable to concur with the majority of the Federal Trade Commission in the dismissal of this complaint. The issues involved seem to be of sufficient importance to warrant the formal statement of my views.

Respondent is an organization of approximately eight hundred retail drug dealers, about one-half of whom are located in the city of Philadelphia. The remainder are distributed throughout the states of Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and Kentucky.

It is engaged in selling drugs and other merchandise to members at cost plus the expenses of doing business, and an additional profit sufficient to pay dividends on the preferred stock. Its net sales in 1919 were $3,504,431.28.

There are approximately twelve hundred retail druggists in the city of Philadelphia, a large proportion of whom are members of the respondent company.

Mennen Company adopted a sales policy for the distribution and sale of its products, involving a discount of ten per cent and five per cent from list prices to retailers purchasing goods in lots of eighteen dozen or over, and a discount of ten per cent, five per cent and three per cent from list prices to wholesale dealers on goods purchased in lots of ten gross or over. Mennen Company classified respondent as a retail dealer and declined to allow to it the same discounts which it allowed to those of its customers whom it classified as wholesale dealers, on like quantities of the same commodity.

Respondent protested to Mennen Company and claimed the discount allowed to wholesalers, which was refused. Whereupon the respondent published in its house organ and circulated among all its members, the following statement:

The Gerhard Mennen Chemical Company of Newark, New Jersey, have a discount for wholesale druggists, which is in excess of that which they have been giving us. We have gone to the expense of money and time of calling upon them at their home office in an endeavor to obtain that extra discount, to which we feel we are entitled, but so far our pleas have been in vain. We have always cooperated with them in promoting the sale of Mennen’s Talcum Powder, but in view of their persistent attitude of discrimination we feel that our stockholders should be apprised of the fact, and if our customers elect to resent their act of discrimination the fault will rest entirely upon the Gerhard Mennen Chemical Company. Should a change of attitude be adopted by Mennen we will notify our friends who favor us with their business.

CASES DISMISSED. 495

It is not now necessary to consider whether the sales policy of Mennen Company involved an unlawful discrimination against the respondent. That will be determined by the Commission in a proceeding directed against the Mennen Company, which is now pending. Even though the action of the Mennen Company had been determined to be illegal, that fact would be no justification for an illegal action by the respondent.

The existence of the respondent and similar organizations marks a departure from the manufacturer-wholesaler-retailer-consumer scheme of distribution. It is a growing characteristic of a period which is concerning itself with the methods of distribution more seriously than ever before. In a number of cases the Commission has asserted the right of such organizations as the respondent to exercise and perform the functions for which they were organized, and has enforced the provisions of law which are intended to guard and protect the development of new methods of competitive distribution.

But it does not follow that the respondent and similar organizations are themselves free to secure their objects by the use of weapons which the law strikes from the hands of their competitors.

The right of the members of the respondent to organize is certain. The right of the organization to apply for recognition as a wholesaler, or to seek the same discounts which any manufacturer may allow to any other purchaser of a like commodity in like quantities, cannot be denied. And the association has the right on behalf of all its members collectively, to protest against an action which it deems to be injurious and to present all just, reasonable and proper arguments in support of its contentions.

Upon the exercise of this right, however, there are very decided limitations. The association as such, may discontinue business relations with a manufacturer who declines to accept the association's ideas. The association may not directly or indirectly, threaten a manufacturer with concerted action of its membership, nor suggest to its membership by any device capable by reasonable interpretation of conveying the suggestion, that cessation of business relations by the members with the manufacturer in question is timely or desirable. The management of the association must not attempt to influence, direct, or control the judgment and actions of its individual members in their relations with a manufacturer or his commodities. To do so is to present at once the appearance of conspiracy to accomplish an unlawful purpose, namely, a hindrance and a restraint upon the operations of the manufacturer in competition with others similarly engaged in the distribution of his product.

Thus an organization which published in its official journal under captions "Unfair" and "We do not patronize," names of manu-

496 FEDERAL TRADE COMMISSION DECISIONS.

facturers employing nonunion labor, with the purpose and effect of inciting its members to boycott the products of such manufacturers and restraining interstate commerce, was restrained by injunction. Gompers v. Bucks Stove and Range Company, 221 U. S. 418.

An association which circulated among its members a report giving names of wholesale dealers who sold direct to consumers, tending to induce its members not to deal with such wholesalers, was likewise enjoined. Eastern States Retail Lumber Dealers Association v. United States, 234 U. S. 600.

An association was enjoined by a decree from publishing lists of wholesale grocers as a means of compelling manufacturers to deal only with them. For violation of this decree the association was held guilty of criminal contempt. United States v. Southern Wholesale Grocers Association, 207 Fed. 434.

A retail lumber dealers' association published a list of manufacturers and wholesalers who sold consumers, cooperative societies, or mail order houses. The system operated to prevent such sales to a great extent. This was held to be a restraint of trade in violation of the Sherman Act. United States v. Hollis, 246 Fed. 611.

The respondent was justified in communicating to its members the fact that it was unable to conclude to its satisfaction its negotiations with the Mennen Company. Had it done nothing more than that and upon the receipt of this information, had any individual member or members acting upon their own initiative, and as a result of their own judgment without suggestion from the association, concluded to discontinue business relations with the Mennen Company or to refrain from handling its product, the Mennen Company would have had no just complaint and free and fair competition would not have been disturbed.

Here then is the line of demarcation. An association like the respondent may protest, argue its position and determine its subsequent conduct, advising its members thereof. But it may not in any degree by communication with its members, set in motion those currents of action which emanating from the central source, reasonably and naturally tend to result in a concerted pressure upon the unwilling manufacturer. Nor may the association seek to add to the logic of its arguments, the element of intimidation or threat of concerted action on the part of its membership. The manufacturer may choose his own customers not in restraint of trade, and must be free to exercise his own uncontrolled judgment. The association is free to continue or discontinue purchasing from a manufacturer. And each individual member of such an association as the respondent, must

CASES DISMISSED. 497

likewise be left free to determine his individual conduct according to his own free will.

It has been suggested that the publication in the present case lacks the element of common understanding between the association and its members, that it could not operate as a signal for concerted retributive action because no prearranged common purpose had been shown. This is not necessary. It is sufficient that the central authority seeks to play upon a common interest by language which in its usual and accepted meaning is capable of carrying to the interested membership, the suggestion of action in an indicated direction. When the management of the respondent company passed beyond the announcement of the fact that it had been unable to adjust its differences with Mennen Company, and stated:

If our customers elect to resent their act of discrimination the fault will rest entirely upon the Gerhard Mennen Chemical Company. Should a change of attitude be adopted by Mennen we will notify our friends who favor us with their business.

they made an appeal to a common interest which was all that was necessary to a common understanding, and clearly indicated the action which the management must have expected to follow.

In considering the cases cited by counsel for the respondent and as well those cited in support of the complaint, it is to be noted that whereas under the Sherman law proof is required that the conspiracy has reasonably effected its purpose, and has resulted in a restraint of trade, such appearance is not requisite to the application of the Federal Trade Commission Act. Consideration of the debates in Congress and the report of the Conference Committee at the time of the adoption of the act, as well as the language of the act itself, clearly indicates the intention of the framers of this act to deal with possible violations of the Sherman law in their inception, and before they had reached that stage of actual injurious operation requisite to their restraint under that act.

Recognizing this intention in the language of the act, the United States Circuit Court of Appeals for the Seventh Circuit stated:

On the face of this statute the legislative intent is apparent. The Commissioners are not required to aver and prove that any competitor has been damaged or that any purchaser has been deceived. The Commissioners, representing the Government as parens patriae, are to exercise their common sense, as informed by their knowledge of the general idea of unfair trade at common law, and stop all those trade practices that have a capacity or a tendency to injure competitors directly or through deception of purchasers quite irrespective of whether the specific practices in question have yet been denounced in common law cases. Sears, Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307.

To the same effect is the decision of the United States Supreme Court holding that an unfair method of competition arises when

498 FEDERAL TRADE COMMISSION DECISIONS.

there appears a “dangerous tendency unduly to hinder competition or create monopoly.” Federal Trade Commission v. Warren, Jones and Gratz, 253 U. S. 421.

The testimony shows that the respondent and its members did not concertedly cease handling the Mennen products. Their supplies were obtained not from Mennen & Co. but from undisclosed jobbers or wholesalers. But there is also evidence in the case sufficient reasonably to support a finding of fact that subsequent to the publication in question and as a result thereof, a number of the respondent's members did in fact express a resentment against the Mennen Company and depreciated their purchases and sales of that company's products. Such evidence is, however, merely indicative of the tendency of the publication to a hindrance of competition. It is not a controlling factor.

To await consequences and make the application of the act depend upon the proof of accomplished injurious results, is to make the Federal Trade Commission Act a duplication of the Sherman Act, and to deprive it of the special field which it was intended to occupy, that is, of dealing with practices in their inception which if continued to success would fall within the condemnation of the Sherman Act, but which are not within that law because of their incomplete development.

In my opinion upon a proper finding of fact for which there is all necessary support in the testimony, an order to cease and desist should issue.

Appendix I.

ACTS OF CONGRESS FROM WHICH THE COM- MISSION DERIVES ITS POWERS.

FEDERAL TRADE COMMISSION ACT.¹

[Approved Sept. 26, 1914.]

[Public—No. 203—63d CONGRESS.]

[H. R. 15613.]

AN ACT To create a Federal Trade Commission, to define its powers and duties, and for other purposes.

Sec. 1. CREATION AND ESTABLISHMENT OF THE COM- MISSION.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That a commission is hereby created and established, to be known as the Federal Trade Commission (hereinafter referred to as the commission), which shall be composed of five commissioners, who shall be appointed by the President, by and with the advice and consent of the Senate. Not more than three of the commissioners shall be members of the same political party. The first commissioners appointed shall continue in office for terms of three, four, five, six, and seven years, respectively, from the date of the taking effect of this Act, the term of

Five commissioners. Appointed by President, by and with, etc. Not more than three from same political party.

¹ This act has been annotated up to July 1, 1921, and may be found, so annotated, in the preceding volume of the Commission's Reports. Reported decisions of the courts for the period covered by this volume (July 1, 1921, to May 22, 1922) and arising under this act are printed in full in Appendix II hereof (see infra, p. 539 et seq.). Previously reported decisions will be found set forth in Appendix II of Volumes II and III of the Commission's Reports.

It should be noted that the jurisdiction of the Commission is limited by the "Packers and Stockyards Act, 1921," approved Aug. 15, 1921, Ch. 64, 42 Stat., 159, sec. 406 of said Act providing that "on and after the enactment of this Act and so long as it remains in effect the Federal Trade Commission shall have no power or jurisdiction so far as relating to any matter which by this Act is made subject to the jurisdiction of the Secretary [of Agriculture] except in cases in which, before the enactment of this Act, complaint has been served under sec. 5 of the Act, entitled 'An Act to create a Federal Trade Commission, to define its powers and

111213°—23——vol 4——33

500 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 1. CREATION AND ESTABLISHMENT OF THE COMMISSION—Continued.

Term, seven years.

each to be designated by the President, but their successors shall be appointed for terms of seven years, except that any person chosen to fill a vacancy shall be appointed only for the unexpired term of the commissioner whom he shall succeed. The commission shall choose a chairman from its own membership. No commissioner shall engage in any other business, vocation, or employment. Any commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. A vacancy in the commission shall not impair the right of the remaining commissioners to exercise all the powers of the commission.

Chairman to be chosen by commission.

Pursuit other business prohibited.

Removal by President.

Vacancy not to impair exercise of powers by remaining commissioners. Seal judicially noticed.

The commission shall have an official seal, which shall be judicially noticed.

Sec. 2. SALARIES. SECRETARY. OTHER EMPLOYEES. EXPENSES OF THE COMMISSION. OFFICES.

Commissioner's salary, $10,000.

Sec. 2. That each commissioner shall receive a salary of $10,000 a year, payable in the same manner as the salaries of the judges of the courts of the United States. The

duties, and for other purposes,' approved Sept. 26, 1914, or under sec. 11 of the Act, entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,' approved Oct. 15, 1914, and except when the Secretary of Agriculture, in the exercise of his duties hereunder, shall request of the said Federal Trade Commission that it make investigations and report in any case."

In connection with the history in Congress of the Federal Trade Commission Act, see address of President Wilson delivered at a joint session on Jan. 20, 1914 (Congressional Record, vol. 51, pt. 2, pp. 1962-1964, 63d Cong., 2d sess.); report of Senator Cummins from the Committee on Interstate Commerce on Control of Corporations, Persons, and Firms engaged in Interstate Commerce (Feb. 26, 1913, 62d Cong., 3d sess., Rept. No. 1326); Hearings on Interstate Trade Commission before Committee on Interstate and Foreign Commerce of the House, Jan. 30 to Feb. 16, 1914, 63d Cong., 2d sess.; Interstate Trade, Hearings on Bills relating to Trust Legislation before Senate Committee on Interstate Commerce, 2 vols., 63d Cong., 2d sess.; report of Mr. Covington from the House Committee on Interstate and Foreign Commerce on Interstate Trade Commission (Apr. 14, 1914, 63d Cong., 2d sess., Rept. No. 533); also parts 2 and 3 of said report presenting the minority views respectively of Messrs. Stevens and Lafferty; report of Senator Newlands from the Committee on Interstate Commerce on Federal Trade Commission (June 13, 1914, 63d Cong., 2d sess., Rept. No. 597) and debates and speeches, among others, of Congressmen Covington for (references to Congressional Record, 63d Cong., 2d sess., vol. 51, part 9, pp. 8840-8849; 9068; 14925-14933 (part 15); Dickinson for, part 9, pp. 9189-9190; Mann against, part 15, pp. 14939-14940; Morgan, part 9, 8854-8857, 9003-9004, 14941-14943 (part 15); Sims for, 14940-14941; Stevens of N. H. for, 9063 (part 9); 14941 (part 15); Stevens of Minn. for, 8849-8853 (part 9); 14933-14939 (part 15); and of Senators Borah against, 11186-11189 (part 11); 11232-11237, 11298-11302, 11600-11601 (part 12); Brandegee against, 12217-12218, 12220-12222, 12261-12262, 12410-12411, 12792-12804 (part 13), 13103-13105, 13209-13301; Clapp against, 11872-11873 (part 12), 13061-13065 (part 13), 13143-13146, 13301-13302; Cummins for, 11102-11108 (part 11), 11379-11389, 11447-11458 (part 12), 11528-11539,

FEDERAL TRADE ACT. 501

commission shall appoint a secretary, who shall receive a salary of $5,000 a year, payable in like manner, and it shall have authority to employ and fix the compensation of such attorneys, special experts, examiners, clerks, and other employees as it may from time to time find necessary for the proper performance of its duties and as may be from time to time appropriated for by Congress. Appointment of secretary. Salary, $5,000.

Other employees. Salaries fixed by Commission.

With the exception of the secretary, a clerk to each commissioner, the attorneys, and such special experts and examiners as the commission may from time to time find necessary for the conduct of its work, all employees of the commission shall be a part of the classified civil service, and shall enter the service under such rules and regulations as may be prescribed by the commission and by the Civil Service Commission. Except for secretary, commissioners' clerks, and such special experts and examiners as Commission may find necessary, all employees part of classified service.

All of the expenses of the commission, including all necessary expenses for transportation incurred by the commissioners or by their employees under their orders, in making any investigation, or upon official business in any other places than in the city of Washington, shall be allowed and paid on the presentation of itemized vouchers therefor approved by the commission. Expenses of commission allowed and paid on presentation of itemized approved vouchers.

12873-12875 (part 13), 12912-12924, 12987-12992, 13045-13052, 14768-14770 (part 15); Hollis for, 11177-11180 (part 11), 12141-12149 (part 12), 12151-12152; Kenyon for, 13155-13160 (part 13); Lewis for, 11302-11307 (part 11), 12024-12033 (part 13); Lippit against, 11111-11112 (part 11), 13210-13219 (part 13); Newlands for, 9030 (part 10), 10376-10378 (part 11), 11081-11101, 11106-11116, 11594-11597 (part 12); Pomerene for, 12870-12873 (part 13), 12993-12996, 13102-13103; Reed against, 11112-11116 (part 11), 11874-11876 (part 12), 12022-12029, 12150-12151, 12530-12551 (part 13), 12933-12939, 13224-13234, 14787-14791 (part 15); Robinson for, 11107 (part 11), 11228-11232; Saulsbury for, 11185, 11501-11504 (part 12); Shields against, 13059-13061 (part 13), 13146-13148; Sutherland against, 11601-11604 (part 12), 12803-12817 (part 13), 12855-12862, 12980-12986, 13055-13058, 13109-13111; Thomas against, 11181-11185 (part 11), 11598-11600 (part 12), 12862-12869 (part 13), 12978-12980; Townsend against, 11870-11872 (part 12); and Walsh for, 13052-13054 (part 13).

See also Letters from the Interstate Commerce Commission to the chairman of the Committee on Interstate Commerce, submitting certain suggestions to the bill creating an Interstate Trade Commission, the first being a letter from Hon. C. A. Prouty dated Apr. 9, 1914 (printed for the use of the Committee on Interstate Commerce, 63d Cong., 2d sess.); letter from the Commissioner of Corporations to the chairman of the Committee on Interstate Commerce, transmitting certain suggestions relative to the bill (H. R. 15613) to create a Federal Trade Commission, first letter dated July 8, 1914 (printed for the use of the Committee on Interstate Commerce, 63d Cong., 2d sess.); brief by the Bureau of Corporations, relative to sec. 5 of the bill (H. R. 15613) to create a Federal Trade Commission, dated Aug. 20, 1914 (printed for the use of the Committee on Interstate Commerce, 63d Cong., 2d sess.); brief by George Rublee relative to the court review in the bill (H. R. 15613) to create a Federal Trade Commission, dated Aug. 25, 1914 (printed for the use of the Committee on Interstate Commerce, 63d Cong., 2d sess.); and dissenting opinion of Justice Brandeis in Federal Trade Commission v. Gratz, 253 U. S. 421, 429-442. (See case also in Vol. 11 of Commission's Decisions, p. 564 at pp. 570-579.)

502 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 2. SALARIES. SECRETARY. OTHER EMPLOYEES. EXPENSES OF THE COMMISSION. OFFICES—Continued.

Commission may rent suitable offices.

Until otherwise provided by law. the commission may rent suitable offices for its use.

Auditing of accounts.

The Auditor for the State and Other Departments shall receive and examine all accounts of expenditures of the commission.

Sec. 3. BUREAU OF CORPORATIONS. OFFICE OF THE COMMISSION. PROSECUTION OF INQUIRIES.

Bureau of Corporations absorbed by Commission. Sec. 3. That upon the organization of the commission and election of its chairman, the Bureau of Corporations and the offices of Commissioner and Deputy Commissioner of Corporations shall cease to exist; and all pending investigations and proceedings of the Bureau of Corporations shall be continued by the commission.

Clerks, employees, records, papers, property, appropriations, transferred to Commission. All clerks and employees of the said bureau shall be transferred to and become clerks and employees of the commission at their present grades and salaries. All records, papers, and property of the said bureau shall become records, papers, and property of the commission, and all unexpended funds and appropriations for the use and maintenance of the said bureau, including any allotment already made to it by the Secretary of Commerce from the contingent appropriation for the Department of Commerce for the fiscal year nineteen hundred and fifteen, or from the departmental printing fund for the fiscal year nineteen hundred and fifteen, shall become funds and appropriations available to be expended by the commission in the exercise of the powers, authority, and duties conferred on it by this Act.

Principal office in Washington, but Commission may meet elsewhere. The principal office of the commission shall be in the city of Washington, but it may meet and exercise all its powers at any other place. The commission may, by one or more of its members, or by such examiners as it may designate, prosecute any inquiry necessary to its duties in any part of the United States.

May prosecute any inquiry anywhere in United States.

Sec. 4. DEFINITIONS.

Sec. 4. That the words defined in this section shall have the following meaning when found in this Act, to wit:

“Commerce.”

“Commerce” means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any

FEDERAL TRADE ACT. 503

such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation.

"Corporation" means any company or association incorporated or unincorporated, which is organized to carry on business for profit and has shares of capital or capital stock, and any company or association, incorporated or unincorporated, without shares of capital or capital stock, except partnerships, which is organized to carry on business for its own profit or that of its members.

"Documentary evidence" means all documents, papers, and correspondence in existence at and after the passage of this Act.

"Acts to regulate commerce" means the Act entitled "An Act to regulate commerce," approved February fourteenth, eighteen hundred and eighty-seven, and all Acts amendatory thereof and supplementary thereto.

"Antitrust acts" means the Act entitled "An Act to protect trade and commerce against unlawful restraints and monopolies," approved July second, eighteen hundred and ninety;² also the sections seventy-three to seventy-seven, inclusive, of an Act entitled "An Act to reduce taxation, to provide revenue for the Government, and for other purposes," approved August twenty-seventh, eighteen hundred and ninety-four; and also the Act entitled "An Act to amend sections seventy-three and seventy-six of the Act of August twenty-seventh, eighteen hundred and ninety-four, entitled 'An Act to reduce taxation, to provide revenue for the Government, and for other purposes,'" approved February twelfth, nineteen hundred and thirteen.

SEC. 5. UNFAIR COMPETITION. COMPLAINTS, FINDINGS, AND ORDERS OF COMMISSION. APPEALS. SERVICE.

SEC. 5. That unfair methods of competition in commerce are hereby declared unlawful.

The commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the Acts to regulate commerce, from using unfair methods of competition in commerce.

¹ For text of Sherman Act, see footnote on pp. 513-515. ² Jurisdiction of Commission under this section limited by sec. 406 of the "Packers and Stockyards Act, 1921," approved Aug. 15, 1921, ch. 64, 42 Stat. 159. See second paragraph of footnote on p. 490.

504 ACTS ADMINISTERED BY THE COMMISSION.

SEC. 5. UNFAIR COMPETITION. COMPLAINTS, FINDINGS, AND ORDERS OF COMMISSION. APPEALS. SERVICE—Continued.

Commission to issue complaint when unfair method used and to public interest. Whenever the commission shall have reason to believe that any such person, partnership, or corporation has been or is using any unfair method of competition in commerce, and if it shall appear to the commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect, and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint. The person, partnership, or corporation so complained of shall have the right to appear at the place and time so fixed and show cause why an order should not be entered by the commission requiring such person, partnership, or corporation to cease and desist from the violation of the law so charged in said complaint. Any person, partnership, or corporation may make application, and upon good cause shown may be allowed by the commission, to intervene and appear in said proceeding by counsel or in person. The testimony in any such proceeding shall be reduced to writing and filed in the office of the commission. If upon such hearing the commission shall be of the opinion that the method of competition in question is prohibited by this Act, it shall make a report in writing in which it shall state its findings as to the facts, and shall issue and cause to be served on such person, partnership, or corporation an order requiring such person, partnership, or corporation to cease and desist from using such method of competition. Until a transcript of the record in such hearing shall have been filed in a circuit court of appeals of the United States, as hereinafter provided, the commission may at any time, upon such notice and in such manner as it shall deem proper, modify or set aside, in whole or in part, any report or any order made or issued by it under this section.

To serve same on respondent with notice of hearing.

Respondent to have right to appear and show cause, etc.

Intervention allowed on application and good cause.

Testimony to be reduced to writing and filed.

If method prohibited, Commission to make written report stating findings, and to issue and serve order to cease and desist on respondent.

Modification or setting aside by the Commission of its order.

Disobedience of order. Application to Circuit Court of Appeals by Commission. If such person, partnership, or corporation fails or neglects to obey such order of the commission while the same is in effect, the commission may apply to the circuit court of appeals of the United States, within any circuit where the method of competition in question was used or where such person, partnership, or corporation resides or carries on business, for the enforcement of its order, and shall certify and file with its applica-

FEDERAL TRADE ACT. 505

tion a transcript of the entire record in the proceeding, including all the testimony taken and the report and order of the commission. Upon such filing of the appli- Action by cation and transcript the court shall cause notice thereof Court. Notice to to be served upon such person, partnership, or corpora- respondent. Detion and thereupon shall have jurisdiction of the proceed- cree affirming, ing and of the question determined therein, and shall modifying, or sethave power to make and enter upon the pleadings, testi- ting aside Commony, and proceedings set forth in such transcript a de- mission's order. cree affirming, modifying, or setting aside the order of the commission. The findings of the commission as to the Commission's facts, if supported by testimony, shall be conclusive. findings. Conclu- If either party shall apply to the court for leave to adduce sive if supported additional evidence, and shall show to the satisfaction by testimony. of the court that such additional evidence is material and Introduction of that there were reasonable grounds for the failure to additional eviadduce such evidence in the proceeding before the com- dence, if reasonmission, the court may order such additional evidence able grounds for to be taken before the commission and to be adduced upon failure to adduce the hearing in such manner and upon such terms and con- theretofore. ditions as to the court may seem proper. The commission May be taken may modify its findings as to the facts, or make new before Commisfindings, by reason of the additional evidence so taken, sion. and it shall file such modified or new findings, which, if Commission supported by testimony, shall be conclusive, and its recom- may make new or mendation, if any, for the modification or setting aside modified findings of its original order, with the return of such additional by reason thereof. evidence. The judgment and decree of the court shall be Judgment and final, except that the same shall be subject to review by decree subject to the Supreme Court upon certiorari as provided in section review upon certwo hundred and forty of the Judicial Code. tiorari, but otherwise final.

Any party required by such order of the commission to Petition by recease and desist from using such method of competition spondent to remay obtain a review of such order in said circuit court view upon cerof appeals by filing in the court a written petition pray- tiorari, but othering that the order of the commission be set aside. A copy wise final. of such petition shall be forthwith served upon the com- To be served mission, and thereupon the commission forthwith shall on Commission. certify and file in the court a transcript of the record as hereinbefore provided. Upon the filing of the transcript the court shall have the same jurisdiction to affirm, set Jurisdiction of aside, or modify the order of the commission as in the case Court of Appeals of an application by the commission for the enforcement same as on appliof its order, and the findings of the commission as to the cation by Comfacts, if supported by testimony, shall in like manner be mission and conclusive. Commission's findings similarly conclusive.

506 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 5. UNFAIR COMPETITION, COMPLAINTS, FINDINGS, AND ORDERS OF COMMISSION. APPEALS. SERVICE—Continued.

Jurisdiction of Court exclusive.

The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify orders of the commission shall be exclusive.

Proceedings to have precedence over other cases. Such proceedings in the circuit court of appeals shall be given precedence over other cases pending therein, and shall be in every way expedited. No order of the commission or judgment of the court to enforce the same shall in any wise relieve or absolve any person, partnership, or corporation from any liability under the antitrust acts.³ᵃ

Liability under antitrust acts not affected.

Service of Commission's complaints, orders, and other processes. Complaints, orders, and other processes of the commission under this section may be served by anyone duly authorized by the commission, either (a) by delivering a copy thereof to the person to be served, or to a member of the partnership to be served, or to the president, secretary, or other executive officer or a director of the corporation to be served; or (b) by leaving a copy thereof at the principal office or place of business of such person, partnership, or corporation; or (c) by registering and mailing a copy thereof addressed to such person, partnership, or corporation at his or its principal office or place of business. The verified return by the person so serving said complaint, order, or other process setting forth the manner of said service shall be proof of the same, and the return post-office receipt for said complaint, order, or other process registered and mailed as aforesaid shall be proof of the service of the same.

Personal; or At office or place of business; or By registered mail.

Verified return by person serving, and return post-office receipt, proof of service.

Sec. 6. FURTHER POWERS.⁴

To gather and compile information, and to investigate with reference to organization, business, etc., of corporations, except banks and common carriers. Sec. 6. That the commission shall also have power— (a) To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any corporation engaged in commerce, excepting banks and common carriers subject to the Act to regulate commerce, and its relation to other corporations and to individuals, associations, and partnerships.

³ For text of Sherman Act, see footnote on pp. 513-515. As enumerated in last paragraph of sec. 4 of this act, see p. 503. ⁴ Provisions and penalties of secs. 6, 8, 9, and 10 of this Act made applicable to the jurisdiction, powers, and duties conferred and imposed upon the Secretary of Agriculture by sec. 402 of the "Packers and Stockyards Act, 1921," approved Aug. 15, 1921, ch. 64, 42 Stat. 159.

FEDERAL TRADE ACT. 507

(b) To require, by general or special orders, corporations engaged in commerce, excepting banks, and common carriers subject to the Act to regulate commerce, or any class of them, or any of them, respectively, to file with the commission in such form as the commission may prescribe annual or special, or both annual and special, reports or answers in writing to specific questions, furnishing to the commission such information as it may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals of the respective corporations filing such reports or answers in writing. Such reports and answers shall be made under oath, or otherwise, as the commission may prescribe, and shall be filed with the commission within such reasonable period as the commission may prescribe, unless additional time be granted in any case by the commission. To require annual or special reports from corporations, except banks and common carriers. Such reports to be under oath, or otherwise, and filed within such reasonable period as commission may prescribe.

(c) Whenever a final decree has been entered against any defendant corporation in any suit brought by the United States to prevent and restrain any violation of the antitrust Acts, to make investigation, upon its own initiative, of the manner in which the decree has been or is being carried out, and upon the application of the Attorney General it shall be its duty to make such investigation. It shall transmit to the Attorney General a report embodying its findings and recommendations as a result of any such investigation, and the report shall be made public in the discretion of the commission. To investigate, either on own initiative or application of Attorney General, observance of final decree entered under antitrust acts. To transmit findings and recommendations to Attorney General.

(d) Upon the direction of the President or either House of Congress to investigate and report the facts relating to any alleged violations of the antitrust Acts by any corporation. To investigate, on direction President or either House, alleged violations of antitrust acts.

(e) Upon the application of the Attorney General to investigate and make recommendations for the readjustment of the business of any corporation alleged to be violating the antitrust Acts in order that the corporation may thereafter maintain its organization, management, and conduct of business in accordance with law. To investigate and make recommendations, on application of Attorney General, for readjustment of business of alleged violator of antitrust acts.

(f) To make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient To make public, as it deems expedient, portions of information obtained.

5 For text of Sherman Act, see footnote on pp. 513-515. As enumerated in last paragraph of sec. 4 of this act, see p. 503.

508 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 6. FURTHER POWERS—Continued.

To make reports to Congress, together with recommendations for new legislation. To provide for the publication of its reports and decisions. To classify corporations, and make rules and regulations incidental to administration of Act. To investigate foreign trade conditions involving foreign trade of United States, reporting to Congress with recommendations deemed advisable.

in the public interest; and to make annual and special reports to the Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use. (g) From time to time to classify corporations and to make rules and regulations for the purpose of carrying out the provisions of this Act. (h) To investigate, from time to time, trade conditions in and with foreign countries where associations, combinations, or practices of manufacturers, merchants, or traders, or other conditions, may affect the foreign trade of the United States, and to report to Congress thereon, with such recommendations as it deems advisable.

Sec. 7. SUITS IN EQUITY UNDER ANTITRUST ACTS. COMMISSION AS MASTER IN CHANCERY.

Court may refer suit to Commission.

To ascertain and report an appropriate form of decree. Commission to proceed on notice to parties and as prescribed by court. Exceptions. Proceedings as in other equity causes. Court may adopt or reject report in whole or in part.

Sec. 7. That in any suit in equity brought by or under the direction of the Attorney General as provided in the antitrust Acts,⁶ the court may, upon the conclusion of the testimony therein, if it shall be then of opinion that the complainant is entitled to relief, refer said suit to the commission, as a master in chancery, to ascertain and report an appropriate form of decree therein. The commission shall proceed upon such notice to the parties and under such rules of procedure as the court may prescribe, and upon the coming in of such report such exceptions may be filed and such proceedings had in relation thereto as upon the report of a master in other equity causes, but the court may adopt or reject such report, in whole or in part, and enter such decree as the nature of the case may in its judgment require.

Sec. 8. COOPERATION OF OTHER DEPARTMENTS AND BUREAUS.⁷

To furnish, when directed by President, records, papers, and information, and to detail officials and employees.

Sec. 8. That the several departments and bureaus of the Government when directed by the President shall furnish the commission, upon its request, all records, papers, and information in their possession relating to any corporation subject to any of the provisions of this Act, and

⁶ For text of Sherman Act, see footnote on pp. 513-515. As enumerated in last paragraph of sec. 4 of this act, see p. 503. ⁷ Provisions and penalties of secs. 6, 8, 9, and 10 of this Act made applicable to the jurisdiction, powers, and duties conferred and imposed upon the Secretary of Agriculture by sec. 402 of the "Packers and Stockyards Act, 1921," approved Aug. 15, 1921, ch. 64, 42 Stat. 159.

FEDERAL TRADE ACT. 509

shall detail from time to time such officials and employees to the commission as he may direct.

SEC. 9. EVIDENCE. WITNESSES. TESTIMONY. MAN- DAMUS TO ENFORCE OBEDIENCE TO ACT.¹⁰

SEC. 9. That for the purposes of this Act the commis- Commission to sion, or its duly authorized agent or agents, shall at all have access to reasonable times have access to, for the purpose of ex- documentary eviamination, and the right to copy any documentary evi- dence and right dence of any corporation being investigated or proceeded to copy same. against; and the commission shall have power to require May require atby subpœna the attendance and testimony of witnesses and tendance of witthe production of all such documentary evidence relating nesses and proto any matter under investigation. Any members of the duction of evicommission may sign subpœnas, and members and ex- dence. aminers of the commission may administer oaths and af- Subpœnas, firmations, examine witnesses, and receive evidence. oaths, affirma- Such attendance of witnesses, and the production of tions, examinasuch documentary evidence, may be required from any tion of witnesses. place in the United States, at any designated place of Reception of evihearing. And in case of disobedience to a subpœna the dence. commission may invoke the aid of any court of the United Witnesses and States in requiring the attendance and testimony of wit- evidence may be nesses and the production of documentary evidence. required from any place in United States.

Any of the district courts of the United States within Disobedience the jurisdiction of which such inquiry is carried on may, to a subpœna. in case of contumacy or refusal to obey a subpœna issued Commission may to any corporation or other person, issue an order requir- invoke aid of any ing such corporation or other person to appear before the United States commission, or to produce documentary evidence if so court. ordered, or to give evidence touching the matter in ques- In case of contion; and any failure to obey such order of the court may tumacy or disbe punished by such court as a contempt thereof. obedience of subpœna, any district court in jurisdiction involved may order obedience.

Upon the application of the Attorney General of the Disobedience United States, at the request of the commission, the dis- thereafter puntrict courts of the United States shall have jurisdiction ishable as conto issue writs of mandamus commanding any person or tempt. corporation to comply with the provisions of this Act or Mandamus from any order of the commission made in pursuance thereof. District Courts on application of Attorney General to enforce compliance with Act.

The commission may order testimony to be taken by Commission deposition in any proceeding or investigation pending may order depounder this Act at any stage of such proceeding or investi- sitions at any stage.

¹⁰ Provisions and penalties of secs. 6, 8, 9, and 10 of this act made applicable to the jurisdiction, powers, and duties conferred and imposed upon the Secretary of Agriculture by sec. 402 of the “Packers and Stockyards Act, 1921,” approved Aug. 15, 1921, ch. 64, 42 Stat. 169.

510 ACTS ADMINISTERED BY THE COMMISSION.

SEC. 9. EVIDENCE. WITNESSES. TESTIMONY. MAN- DAMUS TO ENFORCE OBEDIENCE TO ACT—Continued.

May be taken gation. Such depositions may be taken before any person before person designated by designated by the commission and having power to ad- Commission.

minister oaths. Such testimony shall be reduced to writ- Testimony to be reduced to ing by the person taking the deposition, or under his diwriting, etc.

rection, and shall then be subscribed by the deponent. Appearance, testimony, and Any person may be compelled to appear and depose and production of evidence may be to produce documentary evidence in the same manner as compelled as in proceeding before witnesses may be compelled to appear and testify and Commission.

produce documentary evidence before the commission as hereinbefore provided.

Witness fees, same as paid for Witnesses summoned before the commission shall be like services in United States paid the same fees and mileage that are paid witnesses in courts.

the courts of the United States, and witnesses whose depositions are taken and the persons taking the same shall severally be entitled to the same fees as are paid for like services in the courts of the United States.

Incriminating testimony or evi- No person shall be excused from attending and testifydence no excuse for failure to ing or from producing documentary evidence before the testify or produce. commission or in obedience to the subpoena of the commission on the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to criminate him or subject him to a pen- But natural alty or forfeiture. But no natural person shall be proseperson shall not be prosecuted cuted or subjected to any penalty or forfeiture for or on with respect to matters involved. account of any transaction, matter, or thing concerning which he may testify, or produce evidence, documentary or otherwise, before the commission in obedience to a subpoena issued by it: Provided, That no natural person so Perjury ex- testifying shall be exempt from prosecution and punishcepted.

ment for perjury committed in so testifying.

SEC. 10. PENALTIES.

Failure to testify or to pro- SEC. 10. That any person who shall neglect or refuse to duce documentary evidence. attend and testify, or to answer any lawful inquiry, or to Offender subject to fine or impris- produce documentary evidence, if in his power to do so, onment, or both.

in obedience to the subpoena or lawful requirement of the commission, shall be guilty of an offense and upon conviction thereof by a court of competent jurisdiction shall be punished by a fine of not less than $1,000 nor more than $5,000, or by imprisonment for not more than one year, or by both such fine and imprisonment.

a Provisions and penalties of secs. 6, 8, 9, and 10 of this Act made applicable to the jurisdiction, powers, and duties conferred and imposed upon the Secretary of Agriculture by sec. 402 of the " Packers and Stockyards Act, 1921," approved Aug. 15, 1921, ch. 64, 42 Stat. 159.

FEDERAL TRADE ACT. 511

Any person who shall willfully make, or cause to be made, any false entry or statement of fact in any report required to be made under this Act, or who shall willfully make, or cause to be made, any false entry in any account, record, or memorandum kept by any corporation subject to this Act, or who shall willfully neglect or fail to make, or to cause to be made, full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertaining to the business of such corporation, or who shall willfully remove out of the jurisdiction of the United States, or willfully mutilate, alter, or by any other means falsify any documentary evidence of such corporation, or who shall willfully refuse to submit to the commission or to any of its authorized agents, for the purpose of inspection and taking copies, any documentary evidence of such corporation in his possession or within his control, shall be deemed guilty of an offense against the United States, and shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not less than $1,000 nor more than $5,000, or to imprisonment for a term of not more than three years, or to both such fine and imprisonment.

If any corporation required by this Act to file any annual or special report shall fail so to do within the time fixed by the commission for filing the same, and such failure shall continue for thirty days after notice of such default, the corporation shall forfeit to the United States the sum of $100 for each and every day of the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States, and shall be recoverable in a civil suit in the name of the United States brought in the district where the corporation has its principal office or in any district in which it shall do business. It shall be the duty of the various district attorneys, under the direction of the Attorney General of the United States, to prosecute for the recovery of forfeitures. The costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States.

Any officer or employee of the commission who shall make public any information obtained by the commission without its authority, unless directed by a court, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine not exceeding $5,000,

False entries, statements, or tampering with accounts, records, or other documentary evidence, or willful failure to make entries, etc., or

Willful refusal to submit documentary evidence to Commission.

Offender subject to fine or imprisonment, or both.

Failure of corporation to file required report.

Forfeiture for each day's continued failure.

Recoverable in civil suit in district where corporation has principal office, or does business.

Various district attorneys to prosecute for recovery.

Unauthorized divulgence of information by employees of Commission punishable by fine or imprisonment or both.

512 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 10. PENALTIES—Continued.

or by imprisonment not exceeding one year, or by fine and imprisonment, in the discretion of the court.

Sec. 11. ANTITRUST ACTS AND ACT TO REGULATE COMMERCE. Not affected by this act.

Sec. 11. Nothing contained in this Act shall be construed to prevent or interfere with the enforcement of the provisions of the antitrust Acts⁹ or the Acts to regulate commerce, nor shall anything contained in the Act be construed to alter, modify, or repeal the said antitrust Acts or the Acts to regulate commerce or any part or parts thereof. Approved, September 26, 1914.

THE CLAYTON ACT.¹ [Approved Oct. 15, 1914.] [PUBLIC—No. 212—63D CONGRESS.] [H. R. 15657.]

AN ACT To supplement existing laws against unlawful restraints and monopolies, and for other purposes. Sec. 1. DEFINITIONS.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That "antitrust laws," as used herein, includes the Act entitled "An Act to protect trade and commerce against unlawful restraints and monopolies," approved "Antitrust laws."

⁹ For text of Sherman Act, see footnote on pp. 513-515. As enumerated in last paragraph of sec. 4 of this Act, see p. 503. ¹ This act has been annotated up to July 1, 1921, and may be found, so annotated, in the preceding volume of the Commission's Reports. Subsequent reported decisions for the period covered by this volume (July 1, 1921, to May 22, 1922) and bearing on the provisions of this act affecting the Commission, are: Canfield Oil Co. v. Federal Trade Commission, 274 Fed. 571 (see opinion set forth in Appendix II of this volume at p. 542 et seq.); Sinclair Refining Co. v. Federal Trade Commission, 276 Fed. 686 (see opinion set forth in Appendix II of this volume at p. 552 et seq.); Auto Acetylene Light Co. v. Prest-O-Lite Co., Inc., 276 Fed. 537; Standard Fashion Co. v. Magrane-Houston Co., 258 U. S. —, 42 Sup. Ct. 360, and United Shoe Machinery Corporation v. United States, 258 U. S. —, 42 Sup. Ct. 363. It should be noted in connection with this law— That the so-called Shipping Board Act (sec. 15, ch. 451, 64th Cong., 1st sess.) provides that "every agreement, modification, or cancellation lawful under this section shall be excepted from the provisions of the Act approved July 2, 1890, entitled 'An Act to protect trade and commerce against unlawful restraints and monopolies,' and amendments and acts supplementary thereto * * *"; That the jurisdiction of the Commission is limited by the "Packers and Stockyards Act, 1921," approved Aug. 15, 1921, ch. 64, 42 Stat. 159, sec. 406 of said Act, providing that "on and after the enactment of this Act and so long as it remains in effect the Federal Trade Commission shall have

CLAYTON ACT. 513

July second, eighteen hundred and ninety-two; sections seventy-three to seventy-seven, inclusive, of an Act entitled “An Act to reduce taxation, to provide revenue for the Government, and for other purposes,” of August twenty-seventh, eighteen hundred and ninety-four; an Act entitled “An Act to amend sections seventy-three and seventy-six of the Act of August twenty-seventh, eighteen hundred and ninety-four, entitled ‘An Act to reduce taxation, to provide revenue for the Government,

no power or jurisdiction so far as relating to any matter which by this Act is made subject to the jurisdiction of the Secretary [of Agriculture], except in cases in which, before the enactment of this Act, complaint has been served under sec. 5 of the Act entitled ‘An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,’ approved Sept. 26, 1914, or under sec. 11 of the Act entitled ‘An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,’ approved October 15, 1914, and except when the Secretary of Agriculture, in the exercise of his duties hereunder, shall request of the said Federal Trade Commission that it make investigations and report in any case”; and That by the last paragraph of sec. 407 of the Transportation Act, approved Feb. 28, 1920, ch. 91, 41 Stat. 456 at 482, the provisions of the Clayton Act and of all other restraints or prohibitions, State or Federal, are made inapplicable to carriers, in so far as the provisions of the section in question, which relate to division of traffic, acquisition by a carrier of control of other carriers and consolidation of railroad systems or railroads, are concerned.

That Public No. 146, Sixty-seventh Congress, approved Feb. 8, 1922, permits, subject to the provisions set forth, associations of producers of agricultural products for the purpose of “preparing for market, handling, and marketing in interstate and foreign commerce such products * * *.” (See also in this general connection the limitation imposed in connection with the appropriations for enforcing the Sherman Act as set forth in the following note:) *The Sherman Act (26 Stat. 209), which, as a matter of convenience, is printed herewith. While the Act itself has not been amended, appropriations for the fiscal years ending June 30, 1920, 1921, 1922, and 1923 (Sundry Civil Appropriation Act, July 19, 1919, ch. 24, 41 Stat. 208, Sundry Civil Appropriation Act, June 5, 1920, ch. 235, 41 Stat. 922, Sundry Civil Appropriation Act, Mar. 4, 1921, ch. 161, 41 Stat. 1411, and State, Justice, and Judiciary Appropriation Act, June 1, 1922, ch. 204, sess. II, 42 Stat. 613, respectively), were made contingent upon no part of the moneys being— “Spent in the prosecution of any organization or individual for entering into any combination or agreement having in view the increasing of wages, shortening of hours or bettering the conditions of labor, or for any act done in furtherance thereof, not in itself unlawful: Provided further, That no part of this appropriation shall be expended for the prosecution of producers of farm products and associations of farmers who cooperate and organize in an effort to and for the purpose to obtain and maintain a fair and reasonable price for their products.” The act, omitting the usual formal “Be it enacted,” etc., follows:

CONTRACTS, COMBINATIONS, ETC., IN RESTRAINT OF TRADE ILLEGAL.

SECTION 1. Every contract, combination in the form of 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. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand

514 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 1. DEFINITIONS—Continued.

and for other purposes,” approved February twelfth, nineteen hundred and thirteen; and also this Act. “Commerce.” “Commerce,” as used herein, means trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States or the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any insular possession or other place under the jurisdiction of the United States: Provided, That nothing in this Act contained shall apply to the Philippine Islands.

“Person or The word “person” or “persons” wherever used in persons.”

this Act shall be deemed to include corporations and associations existing under or authorized by the laws of

dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

PERSON MONOPOLIZING TRADE GUILTY OF MISDEMEANOR—PENALTY.

SEC. 2. 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, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

COMBINATIONS IN TERRITORIES OR DISTRICT OF COLUMBIA ILLEGAL—PENALTY.

SEC. 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

ENFORCEMENT.

SEC. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such

CLAYTON ACT. 515

either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country.

Sec. 2. PRICE DISCRIMINATION.¹ Sec. 2. That it shall be unlawful for any person en- Unlawful where gaged in commerce, in the course of such commerce, either effect may be to directly or indirectly to discriminate in price between substantially different purchasers of commodities, which commodities lessen competiare sold for use, consumption, or resale within the United tion or tend to States or any Territory thereof or the District of Colum- create a monopbia or any insular possession or other place under the oly. jurisdiction of the United States, where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of com-

petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises.

ADDITIONAL PARTIES.

Sec. 5. Whenever it shall appear to the court before which any proceeding under section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.

FORFEITURE OF PROPERTY.

Sec. 6. Any property owned under any contract or by any combination, or pursuant to any conspiracy (and being the subject thereof) mentioned in section one of this act, and being in the course of transportation from one State to another, or to a foreign country, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law.

SUITS—RECOVERY.

Sec. 7. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit court of the United States, in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.

"PERSON" OR "PERSONS" DEFINED.

Sec. 8. That 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.

¹ On provisions of the Shipping Board Act, Packers and Stockyards Act, 1921, and Transportation Act, limiting the scope of the Clayton Act in certain cases, see second, third, and fourth paragraphs of the footnote on pp. 512-513.

111213°—23—vol 4——34

516 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 2. PRICE DISCRIMINATION—Continued.

But permissible if based on difference in grade, quality, or quantity, or in selling or transportation cost, or if made to meet competition, and

merce: Provided, That nothing herein contained shall prevent discrimination in price between purchasers of commodities on account of differences in the grade, quality, or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling or transportation, or discrimination in price in the same or different communities made in good faith to meet competition: And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade.

Vendor may select own customers if not in restraint of trade.

Sec. 3. TYING OR EXCLUSIVE LEASES, SALES OR CONTRACTS.⁴

Unlawful where effect may be to substantially lessen competition.

Sec. 3. That it shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies or other commodities, whether patented or unpatented, for use, consumption or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.

Sec. 4. VIOLATION OF ANTITRUST LAWS—DAMAGES TO PERSON INJURED.

May sue in any United States district court, and recover threefold damages, including cost of suit.

Sec. 4. That any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws ⁵ may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect

⁴ On provisions of the Shipping Board Act, Packers and Stockyards Act, 1921, and Transportation Act, limiting the scope of the Clayton Act in certain cases, see second, third, and fourth paragraphs of the footnote on pp. 512–513.

⁵ For text of Sherman Act, see footnote on pp. 513–515. As enumerated in Clayton Act, see first paragraph thereof on pp. 512–513.

CLAYTON ACT. 517

to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.

SEC. 5. PROCEEDINGS BY OR IN BEHALF OF UNITED STATES UNDER ANTITRUST LAWS. FINAL JUDGMENTS OR DECREES THEREIN AS EVIDENCE IN PRIVATE LITI- GATION. INSTITUTION THEREOF AS SUSPENDING STATUTE OF LIMITATIONS.

SEC. 5. That a final judgment or decree hereafter ren- Prima facie evidered in any criminal prosecution or in any suit or pro- dence against ceeding in equity brought by or on behalf of the United same defendant States under the antitrust⁶ laws to the effect that a de- in private litigafendant has violated said laws shall be prima facie evi- tion. dence against such defendant in any suit or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, This section shall not apply to Consent judgconsent judgments or decrees entered before any testi- ments or decrees mony has been taken: Provided further, This section shall excepted. not apply to consent judgments or decrees rendered in criminal proceedings or suits in equity, now pending, in which the taking of testimony has been commenced but has not been concluded, provided such judgments or decrees are rendered before any further testimony is taken.

Whenever any suit or proceeding in equity or criminal Running of prosecution is instituted by the United States to prevent, statute of limitarestrain or punish violations of any of the antitrust laws, tions with rethe running of the statute of limitations in respect of spect to private each and every private right of action arising under said rights suspended laws and based in whole or in part on any matter com- pending proceedplained of in said suit or proceeding shall be suspended ing by the United during the pendency thereof. States under antitrust laws.

SEC. 6. LABOR OF HUMAN BEINGS NOT A COMMODITY OR ARTICLE OF COMMERCE.

SEC. 6. That the labor of a human being is not a com- Labor, agriculmodity or article of commerce. Nothing contained in the tural, or hortiantitrust laws⁶ shall be construed to forbid the existence cultural organiand operation of labor, agricultural, or horticultural or- zations and their ganizations, instituted for the purposes of mutual help, members, organand not having capital stock or conducted for profit, or ized for mutual to forbid or restrain individual members of such organi- help and without zations from lawfully carrying out the legitimate objects capital stock, not affected by antitrust laws with respect to their legitimate objects.

⁶ For text of Sherman Act, see footnote on pp. 513–515. As enumerated in Clayton Act, see first paragraph thereof on pp. 512–514.

518 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 6. LABOR OF HUMAN BEINGS NOT A COMMODITY OR ARTICLE OF COMMERCE—Continued.

thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.

Sec. 7. ACQUISITION BY CORPORATION OF STOCK OR OTHER SHARE CAPITAL OF OTHER CORPORATION OR CORPORATIONS.¹

Of other corporation. Prohibited where effect may be to substantially lessen competition, restrain commerce, or tend to create a monopoly.

Sec. 7. That no corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital of another corporation engaged also in commerce, where the effect of such acquisition may be to substantially lessen competition between the corporation whose stock is so acquired and the corporation making the acquisition, or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce.

Of two or more other corporations. Prohibited where effect may be to substantially lessen competition, restrain commerce, or tend to create a monopoly.

No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share capital of two or more corporations engaged in commerce where the effect of such acquisition, or the use of such stock by the voting or granting of proxies or otherwise, may be to substantially lessen competition between such corporations, or any of them, whose stock or other share capital is so acquired, or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce.

Purchase solely for investment excepted.

This section shall not apply to corporations purchasing such stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful business, or the natural and legitimate branches or extensions thereof, or from owning and holding all or a part of the stock of such subsidiary corporations, when the effect of such formation is not to substantially lessen competition.

Formation of subsidiary corporations for immediate lawful business also excepted.

¹ On provisions of the Shipping Board Act, Packers and Stockyards Act, 1921, and Transportation Act, limiting the scope of the Clayton Act in certain cases, see second, third, and fourth paragraphs of the footnote on pp. 512–513. It should be noted also that corporations for export trade are excepted from the provisions of this section. (See p. 536, sec. 3.)

CLAYTON ACT. 519

Nor shall anything herein contained be construed to prohibit any common carrier subject to the laws to regulate commerce from aiding in the construction of branches or short lines so located as to become feeders to the main line of the company so aiding in such construction or from acquiring or owning all or any part of the stock of such branch lines, nor to prevent any such common carrier from acquiring and owning all or any part of the stock of a branch or short line constructed by an independent company where there is no substantial competition between the company owning the branch line so constructed and the company owning the main line acquiring the property or an interest therein, nor to prevent such common carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any other such common carrier where there is no substantial competition between the company extending its lines and the company whose stock, property, or an interest therein is so acquired. Common carriers excepted with reference to branch or tap lines where no substantial competition.

Nothing contained in this section shall be held to affect or impair any right heretofore legally acquired: Provided, That nothing in this section shall be held or construed to authorize or make lawful anything heretofore prohibited or made illegal by the antitrust laws,9 nor to exempt any person from the penal provisions thereof or the civil remedies therein provided. Existing rights heretofore lawfully acquired not affected.

SEC. 8. DIRECTORS, OFFICERS, OR EMPLOYEES OF BANKS, BANKING ASSOCIATIONS, OR TRUST COMPANIES OPERATING UNDER LAWS OF UNITED STATES AND DIRECTORS OF OTHER CORPORATIONS.8

SEC. 8. That from and after two years from the date of the approval of this Act no person shall at the same time be a director or other officer or employee of more than one bank, banking association or trust company, organized or operating under the laws of the United States, either of which has deposits, capital, surplus, and undivided profits aggregating more than $5,000,000; and no private banker or person who is a director in any bank Not to serve more than one bank, banking association, or trust company if deposits, capital, surplus, and undivided profits aggregate over $5,000,000.

8 For text of Sherman Act, see footnote on pp. 513-515. As enumerated in Clayton Act, see first paragraph thereof on pp. 512-514. 9 By the last paragraph of the Act of Sept. 7, 1916, amending the Federal Reserve Act, ch. 461, 39 Stat. 752 at 756, it is provided that the provisions of sec. 8 shall not apply to “A director or other officer, agent or employee of any member bank” who may, “with the approval of the Federal Reserve Board be a director or other officer, agent or employee of any” bank or corporation, “chartered or incorporated under the laws of the United States or of any State thereof, and principally

520 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 8. DIRECTORS, OFFICERS, OR EMPLOYEES OF BANKS, BANKING ASSOCIATIONS, OR TRUST COMPANIES OPERATING UNDER LAWS OF UNITED STATES AND DIRECTORS OF OTHER CORPORATIONS—Contd.

or trust company, organized and operating under the laws of a State, having deposits, capital, surplus, and undivided profits aggregating more than $5,000,000, shall be eligible to be a director in any bank or banking association organized or operating under the laws of the United States. The eligibility of a director, officer, or employee under the foregoing provisions shall be determined by the average amount of deposits, capital, surplus, and undivided profits as shown in the official statements of such bank, banking association, or trust company filed as provided by law during the fiscal year next preceding the date set for the annual election of directors, and when a director, officer, or employee has been elected or selected in accordance with the provisions of this Act it shall be lawful for him to continue as such for one year thereafter under said election or employment.

How eligibility determined.

Not to serve more than one bank, banking association, or trust company located in city or incorporated town or village of more than 200,000 inhabitants.

No bank, banking association or trust company, organized or operating under the laws of the United States, located in any city or incorporated town or village of more than two hundred thousand inhabitants, as shown by the last preceding decennial census of the United States, shall have as a director or other officer or employee any private banker or any director or other officer or employee of any other bank, banking association or trust company located in the same place: Provided, That nothing in this section shall apply to mutual savings banks not having a capital stock represented by shares: Provided further, That a director or other officer or employee of such bank, banking association, or trust company may be a director or other officer or employee of not more than one other bank or trust company organized under the laws of the United States or any State where the entire capital stock of one is owned by stockholders in the other: And provided further, That nothing contained in this section shall forbid

Savings banks without capital (share) stock excepted.

Where entire stock of one bank, etc., owned by stockholders of other, also excepted.

engaged in international or foreign banking, or banking in a dependency or insular possession of the United States," in the capital stock of which such member bank may have invested under the conditions and circumstances set forth in the Act.

On provisions of the Shipping Board Act, Packers and Stockyards Act, 1921, and Transportation Act, limiting the scope of the Clayton Act in certain cases, see second, third, and fourth paragraphs of the footnote on pp. 612-513.

CLAYTON ACT. 521

a director of class A of a Federal reserve bank, as defined in the Federal Reserve Act from being an officer or director or both an officer and director in one member bank: And provided further, That nothing in this Act shall prohibit any private banker or any officer, director, or employee of any member bank or class A director of a Federal reserve bank, who shall first procure the consent of the Federal Reserve Board, which board is hereby authorized, at its discretion, to grant, withhold, or revoke such consent, from being an officer, director, or employee of not more than two other banks, banking associations, or trust companies, whether organized under the laws of the United States or any State, if such other bank, banking association, or trust company is not in substantial competition with such banker or member bank.

The consent of the Federal Reserve Board may be procured before the person applying therefor has been elected as a class A director of a Federal reserve bank or as a director of any member bank.¹⁰

That from and after two years from the date of the approval of this Act no person at the same time shall be a director in any two or more corporations, any one of which has capital, surplus, and undivided profits aggregating more than $1,000,000, engaged in whole or in part in commerce, other than banks, banking associations, trust companies and common carriers subject to the Act to regulate commerce, approved February fourth, eighteen hundred and eighty-seven, if such corporations are or shall have been theretofore, by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the provisions of any of the antitrust laws.¹¹ The eligibility of a director under the foregoing provision shall be determined by the aggregate amount of the capital, surplus, and undivided profits, exclusive of dividends declared but not paid to stockholders, at the end of the fiscal year of said corporation next preceding the election of directors, and when a director has been elected in accordance with the provisions of this Act it shall be lawful for him to continue as such for one year thereafter.

[Class A director of Federal reserve bank excepted, and Private banker or officer, etc., of member bank, or class A director may serve, with consent of Federal Reserve Board, not more than two other banks, etc., where no substantial competition.]

[Consent may be secured before applicant elected director.]

[Not to serve two or more presently or previously competing corporations if capital, surplus, and undivided profits aggregate more than $1,000,000, and elimination of competition by agreement would violate antitrust laws.]

[How eligibility determined.]

¹⁰ The part of the section immediately preceding beginning with, "And provided further, That nothing in this Act" to this point, amendments made by act May 15, 1910, ch. 120, and act May 20, 1920, ch. 206.

¹¹ For text of Sherman Act, see footnote on pp. 513-515. As enumerated in Clayton Act, see first paragraph thereof on pp. 512-514.

522 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 8. DIRECTORS, OFFICERS, OR EMPLOYEES OF BANKS, BANKING ASSOCIATIONS, OR TRUST COMPANIES OPERATING UNDER LAWS OF UNITED STATES AND DIRECTORS OF OTHER CORPORATIONS—Contd.

Eligibility at time of election or selection not changed for one year. When any person elected or chosen as a director or officer or selected as an employee of any bank or other corporation subject to the provisions of this Act is eligible at the time of his election or selection to act for such bank or other corporation in such capacity his eligibility to act in such capacity shall not be affected and he shall not become or be deemed amenable to any of the provisions hereof by reason of any change in the affairs of such bank or other corporation from whatsoever cause, whether specifically excepted by any of the provisions hereof or not, until the expiration of one year from the date of his election or employment.

Sec. 9. WILLFUL MISAPPLICATION, EMBEZZLEMENT, ETC., OF MONEYS, FUNDS, ETC., OF COMMON CARRIER A FELONY.

Sec. 9. Every president, director, officer or manager of any firm, association or corporation engaged in commerce as a common carrier, who embezzles, steals, abstracts or willfully misapplies, or willfully permits to be misapplied, any of the moneys, funds, credits, securities, property or assets of such firm, association or corporation, arising or accruing from, or used in, such commerce, in whole or in part, or willfully or knowingly converts the same to his own use or to the use of another, shall be deemed guilty of a felony and upon conviction shall be fined not less than $500 or confined in the penitentiary not less than one year nor more than ten years, or both, in the discretion of the court.

Penalty. Fine or imprisonment, or both.

May prosecute in district court of United States for district where offense committed. Prosecutions hereunder may be in the district court of the United States for the district wherein the offense may have been committed.

Jurisdiction of State courts not affected. Their judgments a bar to prosecution hereunder. That nothing in this section shall be held to take away or impair the jurisdiction of the courts of the several States under the laws thereof; and a judgment of conviction or acquittal on the merits under the laws of any State shall be a bar to any prosecution hereunder for the same act or acts.

CLAYTON ACT. 523

SEC. 10. LIMITATIONS UPON DEALINGS AND CONTRACTS OF COMMON CARRIERS.

SEC. 10. That after two years from the approval of this Act no common carrier engaged in commerce shall have any dealings in securities, supplies or other articles of commerce, or shall make or have any contracts for construction or maintenance of any kind, to the amount of more than $50,000, in the aggregate, in any one year, with another corporation, firm, partnership or association when the said common carrier shall have upon its board of directors or as its president, manager or as its purchasing or selling officer, or agent in the particular transaction, any person who is at the same time a director, manager, or purchasing or selling officer of, or who has any substantial interest in, such other corporation, firm, partnership or association, unless and except such purchases shall be made from, or such dealings shall be with, the bidder whose bid is the most favorable to such common carrier, to be ascertained by competitive bidding under regulations to be prescribed by rule or otherwise by the Interstate Commerce Commission. No bid shall be received unless the name and address of the bidder or the names and addresses of the officers, directors and general managers thereof, if the bidder be a corporation, or of the members, if it be a partnership or firm, be given with the bid.

Any person who shall, directly or indirectly, do or attempt to do anything to prevent anyone from bidding or shall do any act to prevent free and fair competition among the bidders or those desiring to bid shall be punished as prescribed in this section in the case of an officer or director.

Every such common carrier having any such transactions or making any such purchases shall within thirty days after making the same file with the Interstate Commerce Commission a full and detailed statement of the transaction showing the manner of the competitive bidding, who were the bidders, and the names and addresses of the directors and officers of the corporations and the members of the firm or partnership bidding; and whenever the said commission shall, after investigation or hearing, have reason to believe that the law has been violated in and about the said purchases or transactions it shall transmit all papers and documents and its own views or findings regarding the transaction to the Attorney General.

Dealings in securities, etc., and contracts for construction or maintenance, aggregating more than $50,000 a year to be by bid in case director, etc., of common carrier, also director, etc., of other party or has a substantial interest therein.

Bidding to be competitive under regulations prescribed by Interstate Commerce Commission, and to show names and addresses of bidder, officers, etc.

Penalty for preventing or attempting to prevent free and fair competition in bidding.

Carrier to report transactions hereunder to Interstate Commerce Commission.

Commission to report violations and its own findings to Attorney General.

524 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 10. LIMITATIONS UPON DEALINGS AND CONTRACTS OF COMMON CARRIERS—Continued.

Misdemeanor for director, etc., to knowingly vote for, direct, aid, etc., in violation of this section.

If any common carrier shall violate this section it shall be fined not exceeding $25,000; and every such director, agent, manager or officer thereof who shall have knowingly voted for or directed the act constituting such violation or who shall have aided or abetted in such violation shall be deemed guilty of a misdemeanor and shall be fined not exceeding $5,000, or confined in jail not exceeding one year, or both, in the discretion of the court.

Penalty.

Effective date extended to Jan. 1, 1921.

The effective date on and after which the provisions of section 10 of the Act entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” approved October fifteenth, nineteen hundred and fourteen, shall become and be effective is hereby deferred and extended to January first, nineteen hundred and twenty-one: Provided, That such extension shall not apply in the case of any corporation organized after January twelfth, nineteen hundred and eighteen.12

Except as to corporations organized after Jan. 12, 1918.

Sec. 11. JURISDICTION TO ENFORCE COMPLIANCE. COMPLAINTS, FINDINGS, AND ORDERS. APPEALS. SERVICE.13

Jurisdiction as respectively applicable vested in—

Interstate Commerce Commission;

Federal Reserve Board; and

Federal Trade Commission.

Sec. 11. That authority to enforce compliance with sections two, three, seven and eight of this Act by the persons respectively subject thereto is hereby vested: in the Interstate Commerce Commission where applicable to common carriers, in the Federal Reserve Board where applicable to banks, banking associations and trust companies, and in the Federal Trade Commission where applicable to all other character of commerce, to be exercised as follows:

Commission or board to issue complaint if believes secs. 2, 3, 7, or 8 violated, and serve same with notice of hearing on respondent or defendant.

Whenever the commission or board vested with jurisdiction thereof shall have reason to believe that any person is violating or has violated any of the provisions of sections two, three, seven and eight of this Act, it shall issue and serve upon such person a complaint stating its charges in that respect, and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint. The person so

12 Above paragraph, sec. 501 of the Transportation Act, Feb. 28, 1920, ch. 91, 41 Stat. 456 at 499. 13 On provisions of the Shipping Board Act, Packers and Stockyards Act, 1921, and Transportation Act, limiting the scope of the Clayton Act in certain cases, see second, third, and fourth paragraphs of the footnote on pp. 512–513.

CLAYTON ACT. 525

complained of shall have the right to appear at the place Respondent to and time so fixed and show cause why an order should have right to apnot be entered by the commission or board requiring such pear and show person to cease and desist from the violation of the law cause, etc. so charged in said complaint. Any person may make ap- Intervention plication, and upon good cause shown may be allowed may be permitby the commission or board, to intervene and appear in ted for good said proceeding by counsel or in person. The testimony cause. in any such proceeding shall be reduced to writing and Transcript of filed in the office of the commission or board. If upon testimony to be such hearing the commission or board, as the case may be, filed. shall be of the opinion that any of the provisions of said In case of viosections have been or are being violated, it shall make a lation commisreport in writing in which it shall state its findings as to sion or board to the facts, and shall issue and cause to be served on such make written reperson an order requiring such person to cease and desist port stating findfrom such violations, and divest itself of the stock held ings, and to isor rid itself of the directors chosen contrary to the pro- sue and serve orvisions of sections seven and eight of this Act, if any der to cease and there be, in the manner and within the time fixed by said desist on respondorder. Until a transcript of the record in such hearing ent. shall have been filed in a circuit court of appeals of the Commission or United States, as hereinafter provided, the commission board may modior board may at any time, upon such notice and in such fy or set aside manner as it shall deem proper, modify or set aside, in its order until whole or in part, any report or any order made or issued transcript of recby it under this section. ord filed in Circuit Court of Ap- If such person fails or neglects to obey such order of peals. the commission or board while the same is in effect, the In case of discommission or board may apply to the circuit court of obedience of its appeals of the United States, within any circuit where order, commisthe violation complained of was or is being committed or sion or board where such person resides or carries on business, for the may apply to Cirenforcement of its order, and shall certify and file with cuit Court of Apits application a transcript of the entire record in the peals for enforceproceeding, including all the testimony taken and the ment of its order, report and order of the commission or board. Upon such and file tranfiling of the application and transcript the court shall script of record. cause notice thereof to be served upon such person and Court to cause thereupon shall have jurisdiction of the proceeding and notice thereof to of the question determined therein, and shall have power be served on reto make and enter upon the pleadings, testimony, and spondent and to proceedings set forth in such transcript a decree affirm- have power to ing, modifying, or setting aside the order of the commis- enter decree affirming, modifying, or setting aside order of commission or board.

526 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 11. JURISDICTION TO ENFORCE COMPLIANCE. COMPLAINTS, FINDINGS, AND ORDERS. APPEALS. SERVICE—Continued.

Findings of commission or board conclusive if supported by testimony. The findings of the commission or board as to the facts, if supported by testimony, shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the commission or board, the court may order such additional evidence to be taken before the commission or board and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The commission or board may modify its findings as to the facts, or make new findings, by reason of the additional evidence so taken, and it shall file such modified or new findings, which, if supported by testimony, shall be conclusive, and its recommendation, if any, for the modification or setting aside of its original order, with the return of such additional evidence. The judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari as provided in section two hundred and forty of the Judicial Code.

Introduction of additional evidence may be permitted on application, and showing of reasonable ground for failure to adduce theretofore.

Commission or board may make new or modified findings by reason thereof.

Judgment and decree subject to review upon certiorari, but otherwise final.

Petition by respondent to review order to cease and desist.

Any party required by such order of the commission or board to cease and desist from a violation charged may obtain a review of such order in said circuit court of appeals by filing in the court a written petition praying that the order of the commission or board be set aside. A copy of such petition shall be forthwith served upon the commission or board, and thereupon the commission or board forthwith shall certify and file in the court a transcript of the record as hereinbefore provided. Upon the filing of the transcript the court shall have the same jurisdiction to affirm, set aside, or modify the order of the commission or board as in the case of an application by the commission or board for the enforcement of its order, and the findings of the commission or board as to the facts, if supported by testimony, shall in like manner be conclusive.

To be served on commission or board which thereupon to certify and file transcript of record in the court.

Jurisdiction of Court of Appeals same as on application by commission or board and commission's or board's findings similarly conclusive.

Jurisdiction of Court of Appeals exclusive.

The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify orders of the commission or board shall be exclusive.

CLAYTON ACT. 527

Such proceedings in the circuit court of appeals shall be given precedence over other cases pending therein, and shall be in every way expedited. No order of the commission or board or the judgment of the court to enforce the same shall in any wise relieve or absolve any person from any liability under the antitrust Acts.14

Proceedings to have precedence over other cases, and to be expedited. Liability under antitrust acts not affected.

Complaints, orders, and other processes of the commission or board under this section may be served by anyone duly authorized by the commission or board, either (a) by delivering a copy thereof to the person to be served, or to a member of the partnership to be served, or to the president, secretary, or other executive officer or a director of the corporation to be served; or (b) by leaving a copy thereof at the principal office or place of business of such person; or (c) by registering and mailing a copy thereof addressed to such person at his principal office or place of business. The verified return by the person so serving said complaint, order, or other process setting forth the manner of said service shall be proof of the same, and the return post-office receipt for said complaint, order, or other process registered and mailed as aforesaid shall be proof of the service of the same.

Service of commission's or board's complaints, orders, and other processes. Personal; or At office or place of business; or By registered mail.

Verified return of person serving, and return post-office receipt, proof of service.

SEC. 12. PLACE OF PROCEEDINGS UNDER ANTITRUST LAWS. SERVICE OF PROCESS.

SEC. 12. That any suit, action, or proceeding under the antitrust laws 14 against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

Proceeding may be instituted or process served in district of which corporation an inhabitant or wherever it may be found.

SEC. 13. SUBPŒNAS FOR WITNESSES IN PROCEEDINGS BY OR ON BEHALF OF THE UNITED STATES UNDER ANTITRUST LAWS.

SEC. 13. That in any suit, action, or proceeding brought by or on behalf of the United States subpœnas for witnesses who are required to attend a court of the United States in any judicial district in any case, civil or crimi-

14 For text of Sherman Act, see footnote on pp. 513-515. For Antitrust Acts as enumerated in Clayton Act, see first paragraph thereof on pp. 512-514.

528 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 13. SUBPŒNAS FOR WITNESSES IN PROCEEDINGS BY OR ON BEHALF OF THE UNITED STATES UNDER ANTITRUST LAWS—Continued.

May run into any district, but permission of trial court necessary in civil cases if witness lives out of district and more than 100 miles distant.

nal, arising under the antitrust laws¹⁵ may run into any other district: Provided, That in civil cases no writ of subpoena shall issue for witnesses living out of the district in which the court is held at a greater distance than one hundred miles from the place of holding the same without the permission of the trial court being first had upon proper application and cause shown.

Sec. 14. VIOLATION BY CORPORATION OF PENAL PROVISIONS OF ANTITRUST LAWS.

Deemed also that of individual directors, officers, etc.

A misdemeanor.

Penalty, fine or imprisonment, or both.

Sec. 14. That whenever a corporation shall violate any of the penal provisions of the antitrust laws,¹⁵ such violation shall be deemed to be also that of the individual directors, officers, or agents of such corporation who shall have authorized, ordered, or done any of the acts constituting in whole or in part such violation, and such violation shall be deemed a misdemeanor, and upon conviction therefor of any such director, officer, or agent he shall be punished by a fine of not exceeding $5,000 or by imprisonment for not exceeding one year, or by both, in the discretion of the court.

Sec. 15. JURISDICTION OF UNITED STATES DISTRICT COURTS TO PREVENT AND RESTRAIN VIOLATIONS OF THIS ACT.

District attorneys, under direction of Attorney General, to institute proceedings.

Proceedings may be by way of petition setting forth the case, etc.

After due notice, Court to proceed to hearing and determination as soon as may be.

Pending petition instituting proceeding Court may make temporary restraining order or prohibition.

Sec. 15. That the several district courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this Act, and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition, the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition, and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises. Whenever it shall appear to the court before which any such proceeding may be pending that the ends

¹⁵ For text of Sherman Act, see footnote on pp. 513–515. For Antitrust Acts as enumerated in Clayton Act, see first paragraph thereof on pp. 512–514.

CLAYTON ACT. 529

of justice require that other parties should be brought before the court, the court may cause them to be summoned whether they reside in the district in which the court is held or not, and subpoenas to that end may be served in any district by the marshal thereof.

Court may summon other parties.

SEC. 16. INJUNCTIVE RELIEF AGAINST THREATENED LOSS BY VIOLATION OF ANTITRUST LAWS.

SEC. 16. That any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws,¹⁶ including sections two, three, seven and eight of this Act, when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings, and upon the execution of proper bond against damages for an injunction improvidently granted and a showing that the danger of irreparable loss or damage is immediate, a preliminary injunction may issue: Provided, That nothing herein contained shall be construed to entitle any person, firm, corporation, or association, except the United States, to bring suit in equity for injunctive relief against any common carrier subject to the provisions of the Act to regulate commerce approved February fourth, eighteen hundred and eighty-seven, in respect of any matter subject to the regulation, supervision, or other jurisdiction of the Interstate Commerce Commission.

Open to any person, firm, etc., on same conditions and principles as other injunctive relief by courts of equity against threatened conduct that will cause loss or damage.

Preliminary injunction may issue upon proper bond and showing.

But United States alone may sue for injunctive relief against common carrier subject to Act to Regulate Commerce.

SEC. 17. PRELIMINARY INJUNCTIONS. TEMPORARY RESTRAINING ORDERS.

SEC. 17. That no preliminary injunction shall be issued without notice to the opposite party.

No preliminary injunction without notice.

No temporary restraining order shall be granted without notice to the opposite party unless it shall clearly appear from specific facts shown by affidavit or by the verified bill that immediate and irreparable injury, loss, or damage will result to the applicant before notice can be served and a hearing had thereon. Every such temporary restraining order shall be indorsed with the date and hour of issuance, shall be forthwith filed in the clerk's office and entered of record, shall define the in-

No temporary restraining order in absence of a showing of immediate and irreparable injury or loss.

Temporary restraining order, to show date and hour of issue, define injury, etc.

¹⁶ For text of Sherman Act, see footnote on pp. 513-515. For Antitrust Acts as enumerated in Clayton Act, see first paragraph thereof on pp. 512-514.

530 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 17. PRELIMINARY INJUNCTIONS. TEMPORARY RESTRAINING ORDERS—Continued.

It without notice, issuance of preliminary injunction to be disposed of at earliest possible moment.

jury and state why it is irreparable and why the order was granted without notice, and shall by its terms expire within such time after entry, not to exceed ten days, as the court or judge may fix, unless within the time so fixed the order is extended for a like period for good cause shown, and the reasons for such extension shall be entered of record. In case a temporary restraining order shall be granted without notice in the contingency specified, the matter of the issuance of a preliminary injunction shall be set down for a hearing at the earliest possible time and shall take precedence of all matters except older matters of the same character; and when the same comes up for hearing the party obtaining the temporary restraining order shall proceed with the application for a preliminary injunction, and if he does not do so the court shall dissolve the temporary restraining order. Upon

Opposite party may move dissolution or modification on two days' notice.

two days' notice to the party obtaining such temporary restraining order the opposite party may appear and move the dissolution or modification of the order, and in that event the court or judge shall proceed to hear and determine the motion as expeditiously as the ends of justice may require.

Sec. 263 of Judicial Code repealed.

Section two hundred and sixty-three of an Act entitled "An Act to codify, revise, and amend the laws relating to the judiciary," approved March third, nineteen hundred and eleven, is hereby repealed.

Sec. 266 not affected.

Nothing in this section contained shall be deemed to alter, repeal, or amend section two hundred and sixtysix of an Act entitled "An Act to codify, revise, and amend the laws relating to the judiciary," approved March third, nineteen hundred and eleven.

Sec. 18. NO RESTRAINING ORDER OR INTERLOCUTORY ORDER OF INJUNCTION WITHOUT GIVING SECURITY.

Except as provided in sec. 16 of this act.

Sec. 18. That, except as otherwise provided in section 16 of this Act, no restraining order or interlocutory order of injunction shall issue, except upon the giving of security by the applicant in such sum as the court or judge may deem proper, conditioned upon the payment of such costs and damages as may be incurred or suffered by any party who may be found to have been wrongfully enjoined or restrained thereby.

CLAYTON ACT. 531

SEC. 19. ORDERS OF INJUNCTION OR RESTRAINING ORDERS—REQUIREMENTS.

SEC. 19. That every order of injunction or restraining order shall set forth the reasons for the issuance of the same, shall be specific in terms, and shall describe in reasonable detail, and not by reference to the bill of complaint or other document, the act or acts sought to be restrained, and shall be binding only upon the parties to the suit, their officers, agents, servants, employees, and attorneys, or those in active concert or participating with them, and who shall, by personal service or otherwise, have received actual notice of the same.

Must set forth reasons, be specific, and describe acts to be restrained.

Binding only on parties to suit, their officers, etc.

SEC. 20. RESTRAINING ORDERS OR INJUNCTIONS BETWEEN AN EMPLOYER AND EMPLOYEES, EMPLOYERS AND EMPLOYEES, ETC., INVOLVING OR GROWING OUT OF TERMS OR CONDITIONS OF EMPLOYMENT.

SEC. 20. That no restraining order or injunction shall be granted by any court of the United States, or a judge or the judges thereof, in any case between an employer and employees, or between employers and employees, or between employees, or between persons employed and persons seeking employment, involving, or growing out of, a dispute concerning terms or conditions of employment, unless necessary to prevent irreparable injury to property, or to a property right, of the party making the application, for which injury there is no adequate remedy at law, and such property or property right must be described with particularity in the application, which must be in writing and sworn to by the applicant or by his agent or attorney.

Not to issue unless necessary to prevent irreparable injury.

Threatened property or property rights must be described with particularity.

And no such restraining order or injunction shall prohibit any person or persons, whether singly or in concert, from terminating any relation of employment, or from ceasing to perform any work or labor, or from recommending, advising, or persuading others by peaceful means so to do; or from attending at any place where any such person or persons may lawfully be, for the purpose of peacefully obtaining or communicating information, or from peacefully persuading any person to work or to abstain from working; or from ceasing to patronize or to employ any party to such dispute, or from recommending, advising, or persuading others by peaceful and lawful means so to do; or from paying or giving to, or withholding from, any person engaged in such dispute,

Not to prohibit any person or persons from terminating any relation of employment, recommending others by peaceful means so to do, etc.

111213°—23—vol 4——35

532 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 20. RESTRAINING ORDERS OR INJUNCTIONS BE- TWEEN AN EMPLOYER AND EMPLOYEES, EMPLOYERS AND EMPLOYEES, ETC., INVOLVING OR GROWING OUT OF TERMS OR CONDITIONS OF EMPLOYMENT—Contd.

any strike benefits or other moneys or things of value; or from peaceably assembling in a lawful manner, and for lawful purposes; or from doing any act or thing which might lawfully be done in the absence of such dispute by any party thereto; nor shall any of the acts specified in this paragraph be considered or held to be violations of any law of the United States.

Acts specified in this paragraph not to be considered violations of any law of the United States.

Sec. 21. DISOBEDIENCE OF ANY LAWFUL WRIT, PROCESS, ETC., OF ANY UNITED STATES DISTRICT COURT, OR ANY DISTRICT OF COLUMBIA COURT.

Sec. 21. That any person who shall willfully disobey any lawful writ, process, order, rule, decree, or command of any district court of the United States or any court of the District of Columbia by doing any act or thing therein, or thereby forbidden to be done by him, if the act or thing so done by him be of such character as to constitute also a criminal offense under any statute of the United States, or under the laws of any State in which the act was committed, shall be proceeded against for his said contempt as hereinafter provided.

If act done also a criminal offense under laws of United States or of State in which committed, person to be proceeded against as hereinafter provided.

Sec. 22. RULE TO SHOW CAUSE OR ARREST. TRIAL. PENALTIES.

Sec. 22. That whenever it shall be made to appear to any district court or judge thereof, or to any judge therein sitting, by the return of a proper officer on lawful process, or upon the affidavit of some credible person, or by information filed by any district attorney, that there is reasonable ground to believe that any person has been guilty of such contempt, the court or judge thereof, or any judge therein sitting, may issue a rule requiring the said person so charged to show cause upon a day certain why he should not be punished therefor, which rule, together with a copy of the affidavit or information, shall be served upon the person charged, with sufficient promptness to enable him to prepare for and make return to the order at the time fixed therein. If upon or by such return, in the judgment of the court, the alleged contempt be not sufficiently purged, a trial shall be directed at a time and place fixed by the court: Provided, however,

Court or judge may issue rule to show cause why person charged should not be punished.

Trial if alleged contempt not sufficiently purged by return.

CLAYTON ACT. 533

That if the accused, being a natural person, fail or refuse to make return to the rule to show cause, an attachment may issue against his person to compel an answer, and in case of his continued failure or refusal, or if for any reason it be impracticable to dispose of the matter on the return day, he may be required to give reasonable bail for his attendance at the trial and his submission to the final judgment of the court. Where the accused is a body corporate, an attachment for the sequestration of its property may be issued upon like refusal or failure to answer.

In all cases within the purview of this Act such trial may be by the court, or, upon demand of the accused, by a jury; in which latter event the court may impanel a jury from the jurors then in attendance, or the court or the judge thereof in chambers may cause a sufficient number of jurors to be selected and summoned, as provided by law, to attend at the time and place of trial, at which time a jury shall be selected and impaneled as upon a trial for misdemeanor; and such trial shall conform, as near as may be, to the practice in criminal cases prosecuted by indictment or upon information.

If the accused be found guilty, judgment shall be entered accordingly, prescribing the punishment, either by fine or imprisonment, or both, in the discretion of the court. Such fine shall be paid to the United States or to the complainant or other party injured by the act constituting the contempt, or may, where more than one is so damaged, be divided or apportioned among them as the court may direct, but in no case shall the fine to be paid to the United States exceed, in case the accused is a natural person, the sum of $1,000, nor shall such imprisonment exceed the term of six months: Provided, That in any case the court or a judge thereof may, for good cause shown, by affidavit or proof taken in open court or before such judge and filed with the papers in the case, dispense with the rule to show cause, and may issue an attachment for the arrest of the person charged with contempt; in which event such person, when arrested, shall be brought before such court or a judge thereof without unnecessary delay and shall be admitted to bail in a reasonable penalty for his appearance to answer to the charge or for trial for the contempt; and thereafter the proceedings shall be the same as provided herein in case the rule had issued in the first instance.

Failure of natural person to make return. Attachment against person.

If body corporate, attachment for sequestration of its property.

Trial may be by court or, upon demand of accused, by jury.

Trial to conform to practice in criminal cases prosecuted by indictment or upon information.

Penalty, fine or imprisonment, or both.

Fine paid to United States or complainant or other party injured. If accused natural person, fine to United States not to exceed $1,000.

Court or judge may dispense with rule and issue attachment for arrest.

Accused to be brought before judge promptly and admitted to bail. Proceedings thereafter same as if rule had issued.

534 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 23. EVIDENCE. APPEALS.

Evidence may Sec. 23. That the evidence taken upon the trial of any be preserved by persons so accused may be preserved by bill of exceptions, bill of exceptions.

Judgment re- and any judgment of conviction may be reviewed upon viewable upon writ of error. writ of error in all respects as now provided by law in criminal cases, and may be affirmed, reversed, or modified Granting of as justice may require. Upon the granting of such writ writ to stay execution, and of error, execution of judgment shall be stayed, and the Accused to be accused, if thereby sentenced to imprisonment, shall be admitted to bail.

admitted to bail in such reasonable sum as may be required by the court, or by any justice, or any judge of any district court of the United States or any court of the District of Columbia.

Sec. 24. CASES OF CONTEMPT NOT SPECIFICALLY EM- BRACED IN SEC. 21 NOT AFFECTED.

Committed in Sec. 24. That nothing herein contained shall be conor near presence of court, or strued to relate to contempts committed in the presence In disobedience of the court, or so near thereto as to obstruct the adminisof any lawful writ or process tration of justice, nor to contempts committed in disin suit or action by or in behalf obedience of any lawful writ, process, order, rule, decree, of United States.

or command entered in any suit or action brought or And other cases not in sec. 21. prosecuted in the name of, or on behalf of, the United Punished in States, but the same, and all other cases of contempt not conformity with prevailing usages specifically embraced within section twenty-one of this at law and in equity. Act, may be punished in conformity to the usages at law and in equity now prevailing.

Sec. 25. PROCEEDINGS FOR CONTEMPT. LIMITATIONS. Must be insti- Sec. 25. That no proceeding for contempt shall be intuted within one year. stituted against any person unless begun within one year Not a bar to from the date of the act complained of; nor shall any criminal prosecution. such proceeding be a bar to any criminal prosecution for Pending pro- the same act or acts; but nothing herein contained shall ceedings not affected. affect any proceedings in contempt pending at the time of the passage of this Act.

Sec. 26. INVALIDITY OF ANY CLAUSE, SENTENCE, ETC., NOT TO IMPAIR REMAINDER OF ACT.

Sec. 26. If any clause, sentence, paragraph, or part of this Act shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, such judgment But to be con- shall not affect, impair, or invalidate the remainder fined to clause, sentence, etc., di- thereof, but shall be confined in its operation to the clause, rectly involved.

sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

Approved, October 15, 1914.

WEBB ACT. 535

WEBB ACT.¹

[Approved Apr. 10, 1918.]

[PUBLIC—No. 126—65TH CONGRESS.]

[H. R. 2316.]

AN ACT To promote export trade, and for other purposes.

Sec. 1. DEFINITIONS.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the words “export trade” wherever used in “Export trade.” this Act mean solely trade or commerce in goods, wares, or merchandise exported, or in the course of being exported from the United States or any Territory thereof to any foreign nation; but the words “export trade” shall not be deemed to include the production, manufacture, or selling for consumption or for resale, within the United States or any Territory thereof, of such goods, wares, or merchandise, or any act in the course of such production, manufacture, or selling for consumption or for resale. That the words “trade within the United States” “Trade within wherever used in this Act mean trade or commerce among the United the several States or in any Territory of the United States.” States, or in the District of Columbia, or between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or between the District of Columbia and any State or States.

That the word “Association” wherever used in this “Association.” Act means any corporation or combination, by contract or otherwise, of two or more persons, partnerships, or corporations.

SEC. 2. ASSOCIATION FOR OR AGREEMENT OR ACT MADE OR DONE IN COURSE OF EXPORT TRADE—STATUS UNDER SHERMAN ANTITRUST LAW.

SEC. 2. That nothing contained in the Act entitled “An Association not Act to protect trade and commerce against unlawful re- illegal if organstraints and monopolies,” approved July second, eighteen ized for and enhundred and ninety,² shall be construed as declaring to gaged in export be illegal an association entered into for the sole purpose trade solely. of engaging in export trade and actually engaged solely in

¹ With the exception of a reference thereto in the case of United States v. United States Steel Corporation, 251 U. S. 417 at 453, this act appears as yet neither to have been involved in nor referred to in any reported case.

² For text of Sherman Act, see footnote on pp. 513–515.

536 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 2. ASSOCIATION FOR OR AGREEMENT OR ACT MADE OR DONE IN COURSE OF EXPORT TRADE—STATUS UNDER SHERMAN ANTITRUST LAW—Continued.

Nor agreement, nor act, if not in restraint of trade within the United States, or of the export trade of any domestic competitor, and

such export trade, or an agreement made or act done in the course of export trade by such association, provided such association, agreement, or act is not in restraint of trade within the United States, and is not in restraint of the export trade of any domestic competitor of such association: And provided further, That such association does not, either in the United States or elsewhere, enter into any agreement, understanding, or conspiracy, or do any act which artificially or intentionally enhances or depresses prices within the United States of commodities of the class exported by such association, or which substantially lessens competition within the United States or otherwise restrains trade therein.

If such association does not artificially or intentionally enhance or depress prices of, or substantially lessen competition, or restrain trade in commodities of class exported.

Sec. 3. ACQUISITION BY EXPORT TRADE CORPORATION OF STOCK OR CAPITAL OF OTHER CORPORATION.

Sec. 3. That nothing contained in section seven of the Act entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” approved October fifteenth, nineteen hundred and fourteen,³ shall be construed to forbid the acquisition or ownership by any corporation of the whole or any part of the stock or other capital of any corporation organized solely for the purpose of engaging in export trade, and actually engaged solely in such export trade, unless the effect of such acquisition or ownership may be to restrain trade or substantially lessen competition within the United States.

Lawful under Clayton Act unless effect may be to restrain trade or substantially lessen competition within United States.

Sec. 4. FEDERAL TRADE COMMISSION ACT EXTENDED TO EXPORT TRADE COMPETITORS.

Sec. 4. That the prohibition against “unfair methods of competition” and the remedies provided for enforcing said prohibition contained in the Act entitled “An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,” approved September twenty-sixth, nineteen hundred and fourteen,⁴ shall be construed as extending to unfair methods of competition used in export trade against competitors engaged in ex-

³ See ante, p. 512, et seq.

⁴ See ante, p. 489, et seq.

WEBB ACT. 537

port trade, even though the acts constituting such unfair methods are done without the territorial jurisdiction of the United States.

Even though acts involved done without territorial jurisdiction of United States.

SEC. 5. OBLIGATIONS OF EXPORT TRADE ASSOCIATIONS UNDER THIS ACT. PENALTIES FOR FAILURE TO COMPLY. DUTIES AND POWERS OF COMMISSION.

SEC. 5. That every association now engaged solely in export trade, within sixty days after the passage of this Act, and every association entered into hereafter which engages solely in export trade, within thirty days after its creation, shall file with the Federal Trade Commission a verified written statement setting forth the location of its offices or places of business and the names and addresses of all its officers and of all its stockholders or members, and if a corporation, a copy of its certificate or articles of incorporation and by-laws, and if unincorporated, a copy of its articles or contract of association, and on the first day of January of each year thereafter it shall make a like statement of the location of its offices or places of business and the names and addresses of all its officers and of all its stockholders or members and of all amendments to and changes in its articles or certificate of incorporation or in its articles or contract of association. It shall also furnish to the commission such information as the commission may require as to its organization, business, conduct, practices, management, and relation to other associations, corporations, partnerships, and individuals. Any association which shall fail so to do shall not have the benefit of the provisions of section two and section three of this Act, and it shall also forfeit to the United States the sum of $100 for each and every day of the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States, and shall be recoverable in a civil suit in the name of the United States brought in the district where the association has its principal office, or in any district in which it shall do business. It shall be the duty of the various district attorneys, under the direction of the Attorney General of the United States, to prosecute for the recovery of the forfeiture. The costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States.

Export trade associations or corporations to file statement with Federal Trade Commission showing location of offices, names, and addresses of officers, etc., and also articles of incorporation or contract of association, etc.

To furnish also information as to organization, business, etc.

Penalties, loss of benefit of secs. 2 and 3, and fine.

District attorneys to prosecute for recovery of forfeiture.

538 ACTS ADMINISTERED BY THE COMMISSION.

Sec. 5. OBLIGATIONS OF EXPORT TRADE ASSOCIATIONS UNDER THIS ACT. PENALTIES FOR FAILURE TO COMPLY. DUTIES AND POWERS OF COMMISSION—Continued.

Federal Trade Commission to investigate restraint of trade, artificial or intentional enhancement or depression of prices or substantial lessening of competition by association.

Whenever the Federal Trade Commission shall have reason to believe that an association or any agreement made or act done by such association is in restraint of trade within the United States or in restraint of the export trade of any domestic competitor of such association, or that an association either in the United States or elsewhere has entered into any agreement, understanding, or conspiracy, or done any act which artificially or intentionally enhances or depresses prices within the United States of commodities of the class exported by such association, or which substantially lessens competition within the United States or otherwise restrains trade therein, it shall summon such association, its officers, and agents to appear before it, and thereafter conduct an investigation into the alleged violations of law. Upon investigation, if it shall conclude that the law has been violated, it may make to such association recommendations for the readjustment of its business, in order that it may thereafter maintain its organization and management and conduct its business in accordance with law. If such association fails to comply with the recommendations of the Federal Trade Commission, said commission shall refer its findings and recommendations to the Attorney General of the United States for such action thereon as he may deem proper.

May recommend readjustment in case of violation.

To refer findings and recommendations to Attorney General if association fails to comply with recommendation.

Commission given same powers as under Federal Trade Commission Act so far as applicable.

For the purpose of enforcing these provisions the Federal Trade Commission shall have all the powers, so far as applicable, given it in “An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes.” ⁵

Approved, April 10, 1918.

⁵ See ante, p. 409, et seq.