The sun., 1919-02-27
The Right OF Manufacturers to
Control Prices.

How far does the law permit a
manufacturer to control the price at
which the goods that he makes shall
be sold after he has parted with his
title to an original purchaser? This
question has Recently been passed
upon by Judge AUGUSTUS y. HAND in
the United States District Court for
the Southern District of New York
The view which he has taken of the
law is more favorable to manufac-
turers than those expressed or implied
in earlier decisions.
The precise question before Judge
HAND was whether a manufacturer
who sold only to dealers who would
agree in turn that they would sell
only TO consumers and at specified
prices thereby violated the provisions
of the well known Sherman act, which
provides that every contract in re-
straint of trade or commerce among
the several States or with foreign ma
tons shall be illegal, and that persons
who enter into such a contract shall
be deemed guilty Of misdemeanor.
Judge HAND finds nothing in the
Sherman act Itself or in any decisions
of an Appellate Court constituting 1t
which prevents single trader from
rejecting 4 customer because he does
not like the prices at which the Gus
toner resells his goods. or otherwise
disapproves Of his customers mode of
doing business This being so. he ar
CUES that the fact that the manufac-
turer extends his policy Of refusing to
sell the goods which he makes to any
| one OF many customers who may In
: sist upon cutting prices cannot make
the manufacturers act any more Il.
legal than It would be If confined to a
single person. He says:
at Is impossible TO see how single
person may choose one customer or re.
| jet one customer without improperly
and not separately select or reject a
number Of customers with equal free
dom"
| There Is a case which was decided
by the Supreme Court of the United
States in 1911 which at first blush
seems in conflict with this decision by
Judge HAND. In that case II appeared
that an Indiana corporation was en-,
| gagged in the manufacture and Sare OF
proprietary medicines under secret
formula. It's practice was to sell IT.
medicines to jobbers and wholesale
druggists, who in turn sold them to
retail druggists for sale to consum,
ers. 1t fixed not only the price of the
sales which 1t made itself 10 jobberS
and wholesale dealers, bur also the re,
tail prices which consumers were to
be charged. This system of contracts
was held by the Supreme Court of the
United States TO be combination
destructive of competition, injurious
to the public interest and void. The
| prevailing opinion was written by Mr.
Justice HUGHEs; and all the other
members of the court concurred with
the exception OF Mr.. Justice LURToN
who took no part, and Mr.. Justice
HOLMES, who disSented.
Judge HAND distinguishes this case
in the Supreme Court from that be
fore him by saying that the sales by
the manufacturing concern TO variou,
purchasers accompanied by contracts
fixing the prices of rcsales were held
to he an unlawful restraint of trade
and he argues that the opinion of the
Supreme Court therein was not broad
enough to prohibit manufacturer
from choosing only such customers II!
should he satisfactory to him. Judg,
HAND was evidently strongly i'm