Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1919-06-23
MANUFACTURERCAN
FIX RESALE PRICES
Supreme Court Hands Down an
Opinion That Will Prove
Guide.
COLGATE CASE VERDICT
Decision Settles Right of Refusal
to Sell and Eliminates
Evil.
COLGATE CASE VERDICT
BY j. FRED ESSARY.

Bi j. FRED ESSARY.
WASHINGTON. June - - After
years Of doubt ana uncertainty on the
bart OF the business interests of the
nation regarding the right Of a manu-
iacturcr to fix the resale price of his
goods and TO control the conditions un-
der which that resale may take place.
the Supreme Court OF the United
States has rendered a clear-cut deci-
sion upon the question which prob
ably settles the whole matter by fur
nishinS a safe guide for the manutac-
iurer. the wholesaler and the retailer
in the conduct Of his business
This opinion. prepared by Associate
Justice McReynolds. was handed down
III the Colgate case. which originated
IN the Eastern District of Virginia,
and which is now beginning TO attrac,
nation wide interest. 1t seems 10 ST.
lcnce for all time any question con-
cerninE the right of refusal to SILL, on
The part uf manufacturer. In the
absence of any monopolistic purpose.
While the operation OF this decision
II confined TO Interstate commerce. and
can only be effective in controlling
distributors to whom sales are made
Directly 1t will afford large meas
from which business generally has suf-
fered for many years, the most opprcs-
sive of which has been the confusion
which has existed as to what trans
actions are legal ana what are Illegal.
Opinion in Virginia Case.
The case in question arose when the
government brought an Indictment
against Colgate & Co. charging that
company with unlawfully creating a
combination with Wholesale and retail
dealers for the purpose OF compelling
the dealers to resell the goods Of Col
gate at prices hxed by the company.
ana FOR the purpose OF preventing the
dealers from reselling the products at
lower prices. thereby suppressinis COM
petition among the dealers in viola
tlon OF the antitrus: laws
Among the things cited by the gov
ernment which Colgate did TO carry
out the purposes of the combination
was the distribution among the deal
form prices TO be charged: Il virtual
demand upon them TO adhere to such
prices, stating that no sales would be
made TO those who did not; requests.
often complied with. for information
regarding dealers who had departed
from the specified prices: the placing
price fixing upon suspended list;
uniform -efusa! to SELL to any who
taiIed to give assurance to adhere TO
the fixed resale prices. and the unre-
stricted sales 10 dealers with estab-
'!shed accounts which had observed
the specified prices.
Deny Existence of Contracts.
II does not appear from the record
that the Colgate interests challenged
any OF these statements. but in eff
ttct pleaded guilty, In SO far as any
guilt might be involved. But the de-
PENDANTS Insisted that no contracts
were entered into on their part with
the dealers in restraint OF trade or TO
ever.
The question at issue. therefore, was
whether a manufacturer OF products
shipped in interstat. commerce. is sub
lect TO or iminal prosecution under the
sherman law, for entering into a COM
bination because he agrees with his
Wholesale and retail customers upon
prices claimed by them 10 be reason
able At which the products OF the
TO sell his products to those who do
not maintain the resale prices fixed by
the agreement.
This made Ii necessary for the court
to determine how far one may control
and dispose of his own property: that
Is 10 say, whether there is any limfta-
tauon to that control. II he proceeds
with its disposition in n lawful man-
ner. Ihat he may not do SO fraudu-
lently. co!lusively and in unlawful
combination with others. the court said
was obvious. But the court took the
ground that it by no means follows
that the manufacturer of given
article may not. without incurring any
criminal liability. refuse absolutely to
sell his article at any price. or to sell
at fixed sum TO a customer with the
understanding that such customer will
resell! only AZ price agreed upon be-
tween them, and should the customer
not observe the understanding as to
retail prices. exercise his undoubted
right to deal with such person.
Sums Up the Decision.
Justice McReynolds summed the
whole decision up In the following
paragraph of his decision:
The. purpose OF the Sherman act is
TO proninit monopolies. contracts and
else OF their rights by those engaged
or who wish TO engage. in trade and
commerce--in word, to preserve the
right OF freedom to trade.
'In the absence of any purpose 10
create or maintain monopoly. the act
does not restrict the long recognized
engaged in an entirely private busi-
ness. freely TO exercise his own inde-
pendent discretion as to parties with
whom he will deal. And, Of course.
cumstances under which he will re-
fuse TO sell"
The effect OF this decision will
rect bearing upon the attitude Of the
Federal Trade Commission. for ex
ample toward some of the unfair
practices" which that body has been
engaged in stamping out upon the gen
eral theory that had been established
in what is known as the O'DonnelI
and Gillette safety razor cases. that
producer had no right to fix the retail
price OF his goods.
The Smnrnmc Court has not held tina (
smch prices may be fixed provide,
there is no monopoly involved and no
design or effect of restraining trade. |
and the business interests Of the coun-
try may now understand, for the frs.
time. Just how far they may PROCEED
In controlling the resale OF products.
whether II be In the case or the whole
saler to the retailer or the retailer to
the consumer.
MRS 0hRRc KIIICN