Court Opinion

ID: 8815664
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:17:28.41498+00
Date Added: 2024-06-11T17:04:27.694478
License: Public Domain

MANTON, Circuit Judge
(concurring). I concur in the result here announced, and will state my reasons:
In considering the cases which arise under the jurisdiction of the Federal Trade Commission, the distinction between the Sherman Act (Act July 2, 1890, c. 647, 26 Stat. 209) and the act which creates and defines the jurisdiction and duties of the Federal Trade Commission (Act Cong. Sept. 26, 1914, c. 315, § 5, 38 Stat. 719) must be kept in mind. The purposes of the Sherman Act and of the Federal Trade Commission Act are different. The Sherman Act is intended for the prohibition of contracts and combinations in restraint of trade which are of sufficient force of oppression or coercion as amount to a monopoly or trust. In order for the government to succeed in an equity or criminal action, or for a private litigant to succeed, where he seeks damages as a result of such alleged trust or combination, each must successfully bear the burden of establishing a combination which re-strains_ trade. N'o such obligation is imposed upon the Federal Trade Commission before its order may issue requiring an individual, partnership, or corporation engaged in commerce to desist from a practice which might lead eventually to an unlawful trust or combination which would be in restraint of trade. Section 5 of the Federal Trade Act *890prohibits unfair methods of competition in commerce, declaring them unlawful. This act forbids all unfair methods of competition. It doe's not define what is, unfair competition, but leaves that to the commission for determination. Section 5 provides that the commission is empowered and directed to prevent persons, partnerships, or corporations, except banks and common carriers subject to the acts to regulate commerce, by using methods of unfair competition in commerce. It will thus be observed that there is no restriction or qualification to the powers thus conferred, but the method of commerce must be unfair.
This legislation appears to be analogous to that provided for in the creation of the Interstate Commerce Commission. The Interstate Commerce Act (24 Stat. 379) conferred the powers upon the commission to enforce any order or orders provided in the act that it might issue, and it gives to the Interstaté Commerce Commission the power to issue an order to cease and desist a violation. B. & O. R. Co. v. Pitcairn Coal Co., 215 U. S. 481, 30 Sup. Ct. 164, 54 L. Ed. 292. The Interstate Commerce Commission was created for the purpose of receiving and correcting any abuse or injustice perpetrated upon shippers by railroads or injustice to the railroads. What were reasonable rates was to be determined by the commission. It was held by the Supreme Court, with respect to enjoining or setting aside the orders of the commission by the federal courts, that authority of the courts, in reviewing their determination, was confined to whether there had been violations of the Constitution or of the power conferred by statute or any exercise of power so arbitrary as to virtually transcend tire authority conferred. Kansas City Ry. Co. v. United States, 231 U. S. 423, 34 Sup. Ct. 125, 58 L. Ed. 296, 52 L. R. A. (N. S.) 1; Interstate Commerce Comm. v. L. & N. Ry. Co., 227 U. S. 88, 33 Sup. Ct. 185, 57 L. Ed. 431. The Federal Trade Commission Act provides that when an order is made, and it is based upon a finding of unfair competition supported by evidence, it is conclusive upon the courts, and this court so held in Federal Trade Commission v. Gratz, 258 Fed. 314, 169 C. C. A. 330. _
_ In my opinion, Congress had in mind, in this legislation, the prevention of acts which amount to unfair competition at their very inception. In this manner, the Anti-Trust Law was supplemented. To make successful either a criminal prosecution or other liability under the Sherman Act, it is necessary to find that a trust or monopoly is created which restrains trade. One act which may be an act of unfair competition may, of itself, restrain trade and may do damage to a complainant. The Federal Trade Commission Act was intended to reach such an unfair business method where the Anti-Trust Law could not do so. Of course, if all unfair acts were dealt with by the Federal Trade Commission, there would be no monopoly or trust created. It was intended by section 5 of the act to prevent practices or methods of business unfair to the public which, if not prevented, would grow and create monopolies, and thus restrain trade and lessen competition. In the case of Dr. Miles Medical Co. v. Park & Son (220 U. S. 373, 31 Sup. Ct. 376, 55 L. Ed. 502) the Supreme Court *891held that where the defendant successfully prevented competition by fixing resale prices between purchasers of the products of the defendant, this amounted to a restraint of trade and was a violation of the Sherman Anti-Trust Act of July 2, 1890. The only difference between the price fixing of the Dr. Miles Case and the price fixing in the “Beech-Nut merchandising policy,” which the Federal Trade Commission in the case at bar has found offensive as an unfair method of competition, is that in the former case there was an agreement in writing provided for, while in the latter the success or failure of the plan depended upon a tacit understanding with the purchasers and prospective purchasers. It is difficult to see any difference between a written agreement and a tacit understanding. In each case, if the agreement, written or unwritten, is not lived up to, it means that the prospective purchaser could not buy or obtain the goods he wished. This may of itself create a restraint of trade. In the case of Boston Store v. American Graphophone Co., 246 U. S. 8, 20, 21, 38 Sup. Ct. 257, 259 (62 L. Ed. 551, Ann. Cas. 1918C, 447), speaking of the Dr. Miles Case, the court said:
“It was decided that under tin; general law the owner of movables (in that case, proprietary medicines compounded by a secret formula) could not sell the movables and lawfully by contract fix a price at which the product should afterward be sold, because to do so would be at one and the same time to sell and retain, to part with and yet to hold, to project the will of the seller, so as to cause it to control the movable parted with when it was not subject to his will, because owned by another, and thus to make the will of the seller nnwar-rantcdly take the place of tlio law of the land as to such movables. It was decided that the power to make the limitation as to price for the fuiuro could not be exerted consistently with the prohibitions against restraint of trade and monopoly contained in the Anti-Trust Law.”
In the plan of the petitioner herein, called a “suggestion,” which in truth is a tacit understanding, to do precisely what was done in the Dr. Miles Case, disobedience of the “suggestion” would result in a failure to be able to buy further from the petitioner. It has. been held that the trader or manufacturer who carries on an entirely private business may sell to whom he pleases. U. S. v. Trans-Missouri Freight Assn., 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007. And this case was approved in United Stales v. Colgate, 250 U. S. 300, 39 Sup. Ct. 465, 63 L. Ed. 992. However, in the Colgate Case, the court dealt solely with the purpose of the Anti-Trust Act in its prohibition of monopolies, contracts, and combinations which interfere with the free exercise of the rights of a merchant to engage in trade and commerce. The court said that, in the absence of any purpose to create or maintain a monopoly, the act docs not restrict the right of a trader or manufacturer, engaged in an entirely private business, freely to exercise his own independent discretion as to the parties with whom he will deal. It distinguishes the Dr. Miles Case for the reason that it was found in this case there existed an unlawful combination which was effected through contracts which undertook to prevent dealers from freely exercising the right to sell. Referring to the facts in the Colgate Case, the court said:
*892“Considering all said in the opinion1 (notwithstanding some serious doubts), we are unable to accept the construction placed upon it by the government. We cannot, e. g., wholly disregard the statement that ‘the retailer, after buying, could, if he chose, give away his purchase or sell it at any price he saw fit, or not sell it at all; his course in these respects being affected only by the fact that he might by his action incur the displeasure of the manufacturer who could refuse to make further sales to him, as he had the undoubted right to do.’ And we must conclude that, as interpreted below, the indictment does not charge Colgate & Co. with selling its products to dealers under agreements which obligated the latter not to resell except at prices fixed by the company.”
In view of this recent pronouncement in the Colgate Case, and even accepting the finding of facts of the commission, I think we are forced to the conclusion that the acts found and charged in the method of doing business under the “Beech-Nut merchandising policy” are not-unfair methods of competition, and that therefore this court must hold, as a matter of law, that the commission exceeded its power in making the order appealed from.

 Opinion below.