Source: https://openjurist.org/312/us/457
Timestamp: 2019-04-19 02:22:57+00:00

Document:
As Amended Mar. 31, 1941.
Messrs. Charles B. Rugg, of Boston, Mass., and Milton C. Weisman, of New York City, for petitioners.
Some of the members of the combination design, manufacture, sell and distribute women's garments—chiefly dresses. Others are manufacturers, converters or dyers of textiles from which these garments are made. Fashion Originators' Guild of America (FOGA), an organization controlled by these groups, is the instrument through which petitioners work to accomplish the purposes condemned by the Commission. The garment manufacturers claim to be creators of original and distinctive designs of fashionable clothes for women, and the textile manufacturers claim to be creators of similar original fabric designs. After these designs enter the channels of trade, other manufacturers systematically make and sell copies of them, the copies usually selling at prices lower than the garments copied. Petitioners call this practice of copying unethical and immoral, and give it the name of 'style piracy.' And although they admit that their 'original creations' are neither copyrighted nor patented, and indeed assert that existing legislation affords them no protection against copyists, they nevertheless urge that sale of copied designs constitutes an unfair trade practice and a tortious invasion of their rights. Because of these alleged wrongs, petitioners, while continuing to compete with one another in many respects, combined among themselves to combat and, if possible, destroy all competition from the sale of garments which are copies of their 'original creations.' They admit that to destroy such competition they have in combination purposely boycotted and declined to sell their products to retailers who follow a policy of selling garments copied by other manufacturers from designs put out by Guild members. As a result of their efforts, approximately 12,000 retailers throughout the country have signed agreements to 'cooperate' with the Guild's boycott program, but more than half of these signed the agreements only because constrained by threats that Guild members would not sell to retailers who failed to yield to their demands threats that have been carried out by the Guild practice of placing on red cards the names of noncooperators (to whom no sales are to be made), placing on white cards the names of cooperators (to whom sales are to be made), and then distributing both sets of cards to the manufacturers.
The one hundred and seventy-six manufacturers of women's garments who are members of the Guild occupy a commanding position in their line of business. In 1936, they sold in the United States more than 38% of all women's garments wholesaling at $6.75 and up, and more than 60% of those at $10.75 and above. The power of the combination is great; competition and the demand of the consuming public make it necessary for most retail dealers to stock some of the products of these manufacturers. And the power of the combination is made even greater by reason of the affiliation of some members of the National Federation of Textiles, Inc.—that being an organization composed of about one hundred textile manufacturers, converters, dyers, and printers of silk and rayon used in making women's garments. Those members of the Federation who are affiliated with the Guild have agreed to sell their products only to those garment manufacturers who have in turn agreed to sell only to cooperating retailers.
Not only does the plan in the respects above discussed thus conflict with the principles of the Clayton Act; the findings of the Commission bring petitioners' combination in its entirety well within the inhibition of the policies declared by the Sherman Act itself. Section 1 of that Act makes illegal every contract, combination or conspiracy in restraint of trade or commerce among the several states; Section 2 makes illegal every combination or conspiracy which monopolizes or attempts to monopolize any part of that trade or commerce. Under the Sherman Act 'competition, not combination, should be the law of trade.' National Cotton Oil Co. v. Texas, 197 U.S. 115, 129, 25 S.Ct. 379, 381, 382, 49 L.Ed. 689. And among the many respects in which the Guild's plan runs contrary to the policy of the Sherman Act are these: it narrows the outlets to which garment and textile manufacturers can sell and the sources from which retailers can buy (Montague & Co. v. Lowry, 193 U.S. 38, 45, 24 S.Ct. 307, 309, 48 L.Ed. 608; Standard Sanitary Manufacturing Co. v. United States, 226 U.S. 20, 48, 49, 33 S.Ct. 9, 14, 15, 57 L.Ed. 107); subjects all retailers and manufacturers who decline to comply with the Guild's program to an organized boycott (Eastern States Retail Lumber Dealers' Association v. United States, 234 U.S. 600, 609-611, 34 S.Ct. 951, 953, 954, 58 L.Ed. 1490, L.R.A.1915A, 788); takes away the freedom of action of members by requiring each to reveal to the Guild the intimate details of their individual affairs (United States v. American Linseed Oil Co., 262 U.S. 371, 389, 43 S.Ct. 607, 611, 67 L.Ed. 1035); and has both as its necessary tendency and as its purpose and effect the direct suppression of competition from the sale of unregistered textiles and copied designs (United States v. American Linseed Oil Co., supra, 262 U.S. at 389, 43 S.Ct. at 611, 67 L.Ed. 1035). In addition to all this, the combination is in reality an extra-governmental agency, which prescribes rules for the regulation and restraint of interstate commerce, and provides extra-judicial tribunals for determination and punishment of violations, and thus 'trenches upon the power of the national legislature and violates the statute.' Addyston Pipe 3 Steel Co. v. United States, 175 U.S. 211, 242, 20 S.Ct. 96, 107, 44 L.Ed. 136.
2 Cir., 114 F.2d 80. Because of inconsistency between the holding below and that of the First Circuit Court of Appeals in Wm. Filene's Sons Co. v. Fashion Originators' Guild of America, 90 F.2d 556, we granted certiorari. 311 U.S. 641, 61 S.Ct. 175, 85 L.Ed. —-.
26 Stat. 209, 15 U.S.C. § 1 et seq., 15 U.S.C.A. § 1 et seq.; 38 Stat. 730, 15 U.S.C. § 12 et seq., 15 U.S.C.A. § 12 et seq.; 38 Stat. 717, 15 U.S.C. § 41 et seq., 15 U.S.C.A. § 41 et seq.
In one instance a fine of $1,500 was imposed, and the Guild notified its membership that a fine of $5,000 would be assessed in case of future violation.
Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 453—455, 42 S.Ct. 150, 154, 155, 66 L.Ed. 307, 19 A.L.R. 882. See 26 Stat. 209, 15 U.S.C. § 1 et seq., 15 U.S.C.A. § 1 et seq.; 38 Stat. 730, 15 U.S.C. § 12 et seq., 15 U.S.C.A. § 12 et seq.; 38 Stat. 717, 15 U.S.C. § 41 et seq., 15 U.S.C.A. § 41 et seq. By 38 Stat. 734, 15 U.S.C. § 21, 15 U.S.C.A. § 21, the Federal Trade Commission is expressly given authority to enforce the Clayton Act.
Cf. Federal Trade Commission v. R. F. Keppel & Bro., 291 U.S. 304, 314, 54 S.Ct. 423, 427, 78 L.Ed. 814; Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 357, 42 S.Ct. 360, 362, 66 L.Ed. 653.
Federal Trade Commission v. Raladam Co., 283 U.S. 643, 647, 51 S.Ct. 587, 589, 75 L.Ed. 1324, 79 A.L.R. 1191. And see remarks of Senator Cummins, Chairman of the Committee which reported the bill, 51 Cong.Rec. 11455, quoted by Brandeis, J., in Federal Trade Commission v. Gratz, 253 U.S. 421, 435, 40 S.Ct. 572, 577, 64 L.Ed. 993.
United States v. Trans-Missouri Freight Association, 166 U.S. 290, 323, 17 S.Ct. 540, 552, 41 L.Ed. 1007.

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