Opinion ID: 1493551
Heading Depth: 1
Heading Rank: 4

Heading: Applicability of Sherman Law.

Text: Counsel admit that the movement of General Motors cars from the factory to the dealer is interstate commerce, argue that this commerce is the appellants' commerce, reason that the movement of the car from the dealer to the retail purchaser is local commerce, and insist that the only restraint charged in the indictment is the restraint in General Motors cars moving from the factory to the dealer. We have already shown that the commerce involved is the dealers' commerce in General Motors cars or, stated in another way, the commerce of dealers' cars purchased in interstate commerce. Paragraph 34 of the indictment charges a restraint on the aforesaid trade and commerce among the several states in General Motors automobiles. This language poses the question as to the extent of the commerce involved in the instant case. Defense counsel reason that the charging language confines itself to the movement of cars between the factory and the dealer, but we are convinced that the commerce alleged to have been restrained encompasses the movement of cars from the manufacturer through the dealers to the retail public. For instance, the indictment describes the movement of General Motors cars from factory to public, shows the dealers' trade as consisting of the purchasing and selling of General Motors cars, and recites the conspirators' activity affecting the buying and selling elements of the dealers' business. The evidence adduced at the trial lends support to this construction of the indictment, telling as it does the story of the entire marketing process of General Motors automobiles from the time they leave GMC to the time they reach the retail purchaser. Moreover, the following requested instruction bears on what the defendants thought at the trial concerning the extent of the commerce involved:    they [the jurors] should find the defendants not guilty, unless they also find that the interstate trade and commerce in General Motors automobiles which moves through the retail outlet    [has] been unduly restrained.    The Court approved the requested instruction and stated that its equivalence had already been given in the instructions to the jury. Undoubtedly the movement of a car from a dealer to a retail purchaser in the same state is intrastate commerce, if considered as an isolated event or as a free transaction in and by itself. The whole picture from the evidence, however, shows a constantly moving flow of General Motors cars, planned and calculated to pass from GMC through GMSC through the dealers to the consumers, in a background where production is projected in advance of retail orders and later adjusted to retail consumption at the production end of the movement. Moreover, as we have already pointed out, the retail and wholesale phases of the commerce in General Motors cars are mutually dependent; restraints placed upon one phase of the commerce necessarily affect the other phase; and without the retail sale there could be no wholesale transaction. The true perspective is to be drawn from the whole picture, and the interstate commerce involved in this case is that from the manufacturer, through the dealers, to the ultimate consumer. Even assuming that the only interstate commerce involved is the movement of cars from the factory to the dealers, a restraint imposed upon the movement of cars from the dealers to the retail public would necessarily affect the shipment and movement of the cars while unquestionably they are in interstate commerce, and consequently we need not really decide when the interstate commerce ends and that which is intrastate commerce begins. As we have shown in part A, the Government tried this case on the theory that the defendants had conspired to restrain the dealers' interstate trade and commerce in General Motors cars by monopolizing the financing essential to the movement of those cars. As we have shown in part B, in the course of the trial, evidence was adduced which indicated the nature of the conspiracy, the purpose and object of the conspirators, the means adopted by the conspirators to carry out the conspiracy such as the coercion and discrimination relating to dealers' use of GMAC, the effect of these restrictions upon financing, and the role played by financing in the movement of automobiles from factory to public. As we have shown in part C, the jury resolved the disputed questions of fact against the appellants and we concluded that the verdict of conviction was supported by substantial evidence. It is plainly inferable from the evidence, quite apart from the concrete acts and things done, that a conspiracy had been formed whose main object and purpose was to monopolize and to control to the greatest possible extent the financing of the trade and commerce in General Motors cars. That the appellants intended to monopolize this financing business is further shown by the acts and things done pursuant to the conspiracy, i. e., the overt acts of coercion and discrimination in connection with dealers' use of GMAC facilities. It is immediately observed that where the specific results of a conspiracy have been shown, the conspirators are presumed to have intended the natural consequences of their acts. The evidence also disclosed that financing constitutes an essential element in the sale of General Motors cars in interstate commerce, so much so that it is indispensable to the free and easy movement of the cars from the factory to the dealer as well as from the dealer to the retail purchaser. Obviously any restrictions imposed upon the retail and wholesale financing of cars sold in interstate commerce, which unreasonably impede the free flow of these cars, violate the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note. Nor does it matter that the financing is considered to be local activity per se, for it is well settled that the federal government may under the Sherman Act regulate local commerce which is intimately related to interstate commerce or local activity which obstructs or burdens interstate commerce. Loewe v. Lawlor, 208 U.S. 274, 301, 28 S. Ct. 301, 52 L.Ed. 488, 13 Ann.Cas. 815; Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.Ct. 96, 68 L.Ed. 308; Bedford Cut Stone Co. v. Stone Cutters, 274 U.S. 37, 46, 47 S.Ct. 522, 71 L.Ed. 916, 54 A.L.R. 791; Local 167, International Brotherhood v. United States, 291 U.S. 293, 297, 299, 54 S. Ct. 396, 78 L.Ed. 804. See also Shreveport Case, 234 U.S. 342, 351-352, 34 S.Ct. 833, 58 L.Ed. 1341; Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229; Chicago Board of Trade v. Olsen, 262 U.S. 1, 35, 43 S.Ct. 470, 67 L.Ed. 839; National Labor Relation Board v. Jones & McLaughlin, 301 U.S. 1, 34-38, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352. In the instant case GMC and the other conspirators made use of their monopoly over the supply of General Motors cars and their power over the economic fate of General Motors dealers, to force GMAC on dealer-purchasers and retail purchasers of General Motors cars, in effect tying the GMAC finance conditions and restrictions to the wholesale purchase and retail sale of General Motors cars. That this conduct constituted an unreasonable restraint on the dealers' interstate commerce and trade in General Motors cars has been shown in part C and will presently be emphasized again, the obstruction obviously operating at a time when the cars no longer belonged to GMC and were already moving in the channels of interstate commerce. See International Business Machines v. United States, supra; Radio Corporation v. Lord, 3 Cir., 28 F.2d 257. See also Dr. Miles Medical Co. v. Park & Sons Co., 220 U.S. 373, 403-407, 31 S.Ct. 376, 55 L.Ed. 502. Cf. Carbice Corp. v. American Patents, 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819; dissent, Federal Trade Commission v. Gratz, 253 U.S. 421, 441, 40 S.Ct. 572, 64 L.Ed. 993. Unquestionably such a conspiracy as here shown violates the Sherman law, for it operates to force unreasonable terms and conditions upon independent traders and to impose control restrictions upon their trading, coercive conduct which necessarily burdens the interstate trade and commerce in their product and unduly limits their liberty to do business in the interstate markets. See Binderup v. Pathe Exchange, 263 U.S. 291, 312, 44 S.Ct. 96, 68 L. Ed. 308; Loewe v. Lawlor, supra, 208 U.S. 293, 294, 28 S.Ct. 301, 52 L.Ed. 488, 13 Ann. Cas. 815; United States v. Patten, 226 U.S. 525, 541, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.S., 325. Condemnation of such a conspiracy is inevitable, for the theory in back of the Sherman law is to protect the free movement of goods in interstate commerce against unreasonable restraints, to assure open interstate markets where traders may freely negotiate sales, and to preserve the normal competitive forces which otherwise might operate in these markets. Counsel for the appellants rely heavily on Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311, 128 A.L.R. 1044, and insist that it renders the Sherman law inapplicable to our factual situation. The Apex case emphasizes market control as a prerequisite for the violation of the Sherman Act and holds that the only kind of restraint prohibited by the Act is that which involves some form of market control. Not only is market control present in the instant case, but a peculiarly pernicious form of it is exhibited. This becomes apparent at once when it is observed that GMC occupies a dominant position in the automobile industry, that GMC commands the supply of General Motors cars, that GMC and GMSC control the economic fate of General Motors dealers and that the market for General Motors cars is really the dealers' market in the sense that the cars subject to the trade and commerce therein no longer belong to GMC. And in this connection it is to be noted that the result is a restraint of trade in General Motors cars, interference with the competitive forces that otherwise would control the marketing of General Motors cars and creation of a forced and artificial market for GMAC. It is only because the appellants control the marketing of General Motors cars that they are able to condition the sale of dealers' cars, restrict the liberty of the traders dealing in General Motors cars and create a non-competitive market for GMAC. For that matter GMC has always dominated the market for General Motors cars to a considerable extent, but it was only when control of the marketing process was perfected by the appellants and was directed at the creation of an artificial non-competitive market for GMAC, that it extended beyond legitimate business demands and became a menace to the interests of the public. Indeed it is difficult to imagine a more extensive or drastic form of market control than is shown by this record, extending as it did throughout the wholesale and retail phases of the marketing process and affecting as it did the movement of and trading in cars belonging to the dealers. Manifestly, the result constituted a definite restraint of interstate trade in General Motors cars. In fact, the trade in General Motors cars was suppressed entirely in instances where dealer-purchasers and retail purchasers would not or could not use GMAC, and the competition among General Motors dealers and the other dealers for car sales financed through independent finance companies was eliminated. In addition, there resulted a restraint on the commerce in instruments of credit and to that extent a suppression of competition by the independent discount companies. Thus it is seen that the dealer-purchasers and retail purchasers of General Motors cars are deprived of the many advantages derived from free competition, and certain members of the public are even deprived of an opportunity to purchase a General Motors car, when they are prevented from financing these cars except on terms dictated by the appellants. It appears that the appellants have increased the sales of GMAC by methods contrary to the public interest. In the final analysis, the public has suffered as much at least as the appellants have gained. This Court held in Pick Mfg. Co. v. General Motors Corporation, supra, that GMC's refusal to sell cars to dealers, except on condition that they agree to use General Motors replacement parts when repairing General Motors cars, did not constitute a violation of Section 3 of the Clayton Act, 15 U.S.C.A. § 14. Counsel for the appellants argue that the GMAC condition is as essential to the protection of manufacturer's goodwill as the parts condition in the Pick case. We have already pointed out that the finance condition in this case bears no reasonable relation to manufacturer's goodwill and that goodwill can be protected in many ways without coercion of the dealers. International Business Machines v. United States, supra, 298 U.S. 139, 56 S.Ct. 701, 80 L.Ed. 1085. It is conceivable that the owner of a General Motors car would blame GMC for the car's improper performance caused by a defective part, especially if he did not know the origin of the trouble, but it is improbable that he would blame GMC because he was dispossessed or defrauded by an independent finance company. The finance restriction operates on the retail purchaser as well as on the dealer, and the competing discount companies are unable to finance General Motors cars. The parts restriction in the Pick case operated on the General Motors dealer only, and the competition of other parts manufacturers was not completely destroyed. We hold that the coercive course of action indulged in, falls within reach of the Sherman law.