Source: https://supreme.justia.com/cases/federal/us/234/600/
Timestamp: 2019-04-18 10:47:22+00:00

Document:
Conspiracies are seldom capable of proof by direct testimony, and a conspiracy to accomplish that which is their natural consequence may be inferred from the things actually done.
The Sherman Law, as construed by this Court in the Standard Oil case, while not reaching normal and usual contracts incident to lawful purposes and in furtherance of legitimate trade, does broadly condemn all combinations and conspiracies which restrain the free and natural flow of trade in the channels of interstate commerce.
of listed wholesale dealer in selling direct to consumers tended to prevent member of the association from dealing with the listed dealers referred to in the report, and to directly and unreasonably restrain trade by preventing it with such listed dealer, and was within the prohibitions of the Sherman Law.
While a retail dealer may unquestionably stop dealing with a wholesaler for any reason sufficient to himself, he and other dealer may not combine and agree that none of them will deal with such wholesaler without, in case interstate commerce is involved, violating the Sherman Law.
An act, harmless when done by one person, may become a public wrong when done by many acting in concert in pursuance of a conspiracy. Grenada Lumber Co. v. Mississippi, 217 U. S. 433.
The facts, which involve the determination of whether an arrangement between certain retail lumbermen's associations in regard to their relations with wholesale dealers amounted to a combination and conspiracy in restraint of trade within the prohibitions of the Sherman Act, are stated in the opinion.
"(Name of the Particular Association Circulating it.)"
"STATEMENT TO MEMBERS (WITH THE DATE)"
"You are reminded that it is because you are members of our Association and have an interest in common with your fellow members in the information contained in this statement that they communicate it to you, and that they communicate to you in strictest confidence, and with the understanding that you are to receive it and treat it in the same way."
"The following are reported as having solicited, quoted, or as having sold direct to the consumers:"
"[Here follows a list of the names and addresses of various wholesale dealers.] "
"Members, upon learning of any instance of persons soliciting, quoting, or selling direct to consumers, should at once report same, and in so doing should, if possible, supply the following information:"
"The number and initials of car."
"The name of consumer to whom the car is consigned."
"The initials or name of shipper."
"The date of arrival of car."
and the defendants were enjoined from combining, conspiring, or agreeing together to distribute, and from distributing, to members of the associations named or any other person or persons, any information showing soliciting, quotations, or sales and shipments of lumber and lumber products from manufacturers and wholesalers to consumers of or dealers in lumber, and from the preparation and distribution of the lists above described as the "Official Report," or the use of a similar device.
of retailers in these associations in different states is interstate trade, and that, if the practices are illegal within the Sherman Act, they may be reached by this proceeding. Swift & Co. v. United States, 196 U. S. 375; Loewe v.Lawlor, 208 U. S. 274, 208 U. S. 300.
those for each association being marked with its name, and in that way only being distinguished from those sent to the other associations. The secretary of each association then distributes the lists to his members. Should any wholesaler desire to have his name removed from the list, he can have it done upon satisfactory assurance to the local secretary that he is no longer selling in competition with the retailers. In practice, the greatest care is taken to make the list accurate, and, as a matter of fact, it only contains the names of such wholesalers as are absolutely committed to the practice of competing with retailers for the custom of builders and contractors."
"It was and is conceded by defendants, and the court below found, that the circulation of this information would have a natural tendency to cause retailers receiving these reports to withhold patronage from listed concerns. That was, of course, the very object of the defendants in circulating them."
In other words, the circulation of such information among the hundreds of retailers as to the alleged delinquency of a wholesaler with one of their number had, and was intended to have, the natural effect of causing such retailers to withhold their patronage from the concern listed.
"Applying the rule of reason to the construction of the statute, it was held in the Standard Oil case that as the words 'restraint of trade' at common law and in the law of this country at the time of the adoption of the antitrust act only embraced acts or contracts or agreements or combinations which operated to the prejudice of the public interests by unduly restricting competition, or unduly obstructing the due course of trade, or which, either because of their inherent nature or effect, or because of the evident purpose of the acts, etc., injuriously restrained trade, that the words as used in the statute were designed to have and did have but a like significance."
"all contracts or acts which were unreasonably restrictive of competitive conditions, either from the nature or character of the contract or act, or where the surrounding circumstances were such as to justify the conclusion that they had not been entered into or performed with the legitimate purpose of reasonably forwarding personal interest and developing trade but, on the contrary, were of such a character as to give rise to the inference or presumption that they had been entered into or done with the intent to do wrong to the general public and to limit the right of individuals, thus restraining the free flow of commerce and tending to bring about the evils, such as enhancement of prices, which were considered to be against public policy."
"But the principle announced by the Court was general. It [the Sherman Act] covered any illegal means by which interstate commerce is restrained, whether by unlawful combinations of capital, or unlawful combinations of labor, and we think also whether the restraint be occasioned by unlawful contracts, trusts, pooling arrangements, blacklists, boycotts, coercion, threats, intimidation, and whether these be made effective, in whole or in part, by acts, words, or printed matter."
And see Montague & Co. v. Lowry, 193 U. S. 38.
These principles are applicable to this situation. Here are wholesale dealers in large number engaged in interstate trade upon whom it is proposed to impose as a condition of carrying on that trade that they shall not sell in such manner that a local retail dealer may regard such sale as an infringement of his exclusive right to trade, upon pain of being reported as an unfair dealer to a large number of other retail dealers associated with the offended dealer, the purpose being to keep the wholesaler from dealing not only with the particular dealer who reports him, but with all others of the class who may be informed of his delinquency.
conditions, which necessarily impede or burden the due course of such trade or commerce, or restrict the common liberty to engage therein."
United States v. Patten, 226 U. S. 541. This record abounds in instances where the offending dealer was thus reported, the hoped-for effect, unless he discontinued the offending practice, realized, and his trade directly and appreciably impaired.
But it is said that, in order to show a combination or conspiracy within the Sherman Act, some agreement must be shown under which the concerted action is taken. It is elementary, however, that conspiracies are seldom capable of proof by direct testimony, and may be inferred from the things actually done, and when, in this case, by concerted action, the names of wholesalers who were reported as having made sales to consumers were periodically reported to the other members of the associations, the conspiracy to accomplish that which was the natural consequence of such action may be readily inferred.
class of undue and unreasonable restraints such as was the particular subject of condemnation in Loewe v. Lawlor, supra.
The argument that the course pursued is necessary to the protection of the retail trade and promotive of the public welfare in providing retail facilities is answered by the fact that Congress, with the right to control the field of interstate commerce, has so legislated as to prevent resort to practices which unduly restrain competition or unduly obstruct the free flow of such commerce, and private choice of means must yield to the national authority thus exerted. Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 175 U. S. 241-242.
"There is no evidence that these defendants have in any manner other than by the rules above mentioned hindered or impeded others in shipping, trading, or selling their stock, or that they have in any way interfered with the freedom of access to the stock yards of any and all other traders and purchasers, or hindered their obtaining the same facilities which were therein afforded by the stock yards company to the defendants as members of the exchange, and we think the evidence does not tend to show that the above results have flowed from the adoption and enforcement of the rules and regulations referred to. "
As distinguished from this situation, the present case shows that the trade of the listed wholesalers is hindered or impeded; that competition is suppressed and the natural flow of commerce interfered with as the direct result of the circulation of the official reports in the manner stated. The case is quite different from the Anderson case. And see Montague & Co. v. Lowry, supra.
"when the plaintiffs in error combine and agree that no one of them will trade with any producer or wholesaler who shall sell to a consumer within the trade range of any of them, quite another case is presented. An act harmless when done by one may become a public wrong when done by many acting in concert, for it then takes on the form of a conspiracy, and may be prohibited or punished if the result be hurtful to the public or to the individual against whom the concerted action is directed."

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.