Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1922-04-11
FALLS WITHIN SCOPE
CLAYTON ACT SECTION
Federal Statutes Prohibit
Such Practices When They
Create Monopoly.
LOWER TRIBUNALS ARE UPHELD
Congress Did Not Intend, by Inv. to
Reach Remote
CnscH.
tBy Associated Press.l

WASHINGTON. April l0.-Con-
tracts OF sale made by manufacturers.
requiring retail dealers exclusively
TO handle their products. which may
have the effect to lessen substantial
ly competition, were today heit % b.
invalid by the Supreme Cour-
The opinion was delivered by Jus
tice Day In case brought uy ,he
Standard Fashion Company. New
York corporation. against the Mag
and sought to. compel that retail
company to observe the terms OF a
contract. which the Supreme Cdhr;
declared was one OF sale and not Of
agency or joint venture. Being a
contract OF sale. Justice Day stated.
the only question which remained for
the court 10 determine was whether
the facts established that II woald
substantially lessen competition.
Adopting the findings -of the CIR.
cult Court OF Appeals for the first
circuit Of the results obtained
through the contract. the supreme
Court reached the conclusion. that
the contract. properly Interpreted.
with its restrictive covenant, brings
II fairly within the section OF the
Clayton act under consideration" l.,
therefore. affirmed the decision OF the
Circuit Court, which held the COR
tract invalid
Features AnniyEed.
After describing minutely the prnc-
tees OF the Standard Fashion Com
pany under the contract, Justice Day
analyZcd certain features. pointing
out that the Clayton act souSh, 10
reach the agreements embraced with
in its sphere in their incipiency." and
TO determine their legality by
specific tests or its own. which de-
clare Illegal contracts for sale male
upon the agreement or understand
ing that the purchaser shall not deal
in the goods OF competitor of the
seller. which may substantially les
sen competition or tend TO create IA
monopoly
Justice Day stated that the court
did not think that the purpose OF
the statute in using the word may"
was TO prohitit the mere posaibil:,y
of the consequences described" but
that 1T was intended TO prevent
such agreements as would under the
circumstances disclosed Un the pres
cnt casc) probably lessen competi-
tiOn or create an actual tendency TO
monopoly" Congress by the statute
did not intend ito reach every re-
mote lcsscning Of competitions" he
added. ard disclosed this purpose by
T~"viding hat the contracts should
be prohibited when they caused a
!essening" OF competition which
vas "substaEtial.'
Government lntervencs
Under its contract. the Standard
Fashion Company agreed to sell its
standard patterns at discount OF
80 per cent from retail prices. and
to allow certain return privileges
when between certain dates semi
annually II would receive in ex.
change at nine -tcnths cost discarded
patterns. In July. 1917. the Ma
Crane Houston Co, decided TO dis
continue the sale of the Standard
Fashion Company patterns and place
en- sale in its store patterns OF a
rival pattern company. II was 10
enforce its contract that the fashion
company brought suit
The decision in the United States
District Court for massachusetts, as
we'll as OF the Circuit Court of An
peals. were adverse TO its conten-
tions. those courts holding that the
contract was in violation OF the
Clayton act. and. thd&efore, not en-
forccable. when the case reached
the Supreme Court the Federal gov
ernmcnt interviewed. filing n brief In
which II contended for the construc-
ton placed upon the contract by
the lower courts.