Petitioners Brief — FTC v. Gratz

Supreme Court brief1920

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INDEX.

: Page.

RN OE AONE, ooo nbs bc annals sa dkace does scenes ce sasacs ce ea 1-7

ignments of error........---- +--+ -- ee ee cece e cece cere steers te ee 8

of of argument. . ~2. 952

(1) The finality ‘of ‘the findings “of fact and conclusions of ‘the

Federal Trade Commission, ‘‘when supported by testi-

mony,” is similar to the finality attributed by this court

, to the Interstate Commerce Commission’s findings and

conclusions in ‘‘nonreparation” cases. ie 10

(2) The Circuit Court of Appeals was without jurisdiction to

set aside the order of the Federal Trade Commission . 21

A. What the court actually did by its order. . HF pe 21

B. The Commission is not _—. to find 2 a ‘general

practice... -s 26

C. If the Commission or + come were to ‘determine that

an ‘unfair method” affected ‘the public they

would be usurping a legislative function already

exercised by Congress when it declared unfair

methods to be unlawful. . ES Ere 28

D. Congress granted the Comsndaaion disc retion as to

when ‘t should proceed against one charged with

unfair methods of competition....-..-..--.-.---- 29

E. The Circuit Court of Appeals reviewed acts within

the discretion of the Commission. 31

(3) The decision of the Circuit Court of Appeals for the Sec ond

Circuit is in conflict with the opinion of Judge Baker in

the Seventh Circuit in the case of Sears, Roebuck & Com-

pany, <i v. Federal Trade Commission (258 Fed.

307) .. 33

(4) The court paary in holidies that “there © was no ev wvidenee rae

support any general practice of respondents to refuse to

sell ties unleas the purchaser bought at the same time the

necessary amount of bagging” (record, p. 481).-.--------- 37

(5) The manner of sale and distribution of ties and bagging fol-

lowed by respondents is known as ‘‘full-line forcing, ” and

is economically an unfair method of competition, under

the public = evidenced 7 the Federal Statutes. ... 46

Memclusion............... bee a Aap ae

170051—20—1 pee

AUTHORITIES CITED.

Page.

Sears Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307.... 9,20,

27, 33, 34, 45

$4 Stat. L. ch. 3501, p. 584... ...--.----eeeccererneserscsereseees 10

B. & O.R. R. Co. v. Pitcairn Coal Co., 215 U. S. 481, 489.......--- 15

Kansas City So. Ry. Co. v. United States, 231 U. 8. 423...---------- 16

Pennsylvania Co. v. United States, 236 U.S. 351.........----+++---- 17,18

Manufacturers Railway Co. v. United States, 246 U. 8. 457....-. 17, 18,19

Illinois Central R. R. Co. v. Interstate Commerce Commission, 206

BF, B, BAD, Bnccccccsccsccssccqscccccccsncccscooscososessccccss 18, 22

Pennsylvania R. R. Co. v. International Coal Co., 230 U. 8. 184, 196. 18, 22

Mitchell Coal & Coke Co. v. Pennsylvania R. R. Co., 230 U. 8. 247,

GET, BOD. ..cccccccccsesccsscscnscescncscccsccccssnsscrccsonscees 18,22

Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 259.....------ 27

Standard Oil Co. v. United States, 221 U. 8. 1, 42-48. .....---2------ 28

International News Service v. Associated Press, 248 U.S. 215...----- 28, 46

Loewe v. Lawlor, 208 U. 8. 274, 204-295. ... 2... 2c eee cece ee eeeecerees xu

APPENDIX.

Findings of fact and conclusions of law by Commission... ....------ 53

The Federal Trade Commission act, section 5..2....c.cceccccccscees 59

Similarity of Federal Trade Commission act and Interstate Com-

merce Commission act, as shown by the proceedings in Congress. . 63

Inthe Supreme Gourt of the United States.

OcToBER TERM, 1919.

FepERAL TRADE COMMISSION, PETITIONER,

AnpeRSON GRATZ AND BENJAMIN GRATZ,

copartners, doing business under the firm

name and style of Warren, Jones & Gratz;

P. P. Williams, W. H. Fitzhugh and

Alexander Fitzhugh, copartners, doing

business under the firm name and style

of P. P. Williams & Co.; aid Charles O.

Elmer, respondents.

ON WRIT OF CERTIORARI TO THE CIRCUIT COURT OF

APPEALS FOR THE SECOND CIRCUIT.

BRIEF FOR THE PETITIONER.

STATEMENT.

This case comes up on a petition for a writ of certi-

orari to review the judgment of the Circuit Court of

Appeals for the Second Circuit, rendered in the

above-entitled case on the 14th day of May, 1919,

which judgment set aside an order of the Federal

Trade Commission, requiring respondents to cease

and desist from certain alleged unfair methods of

(1)

competition. The writ was granted on the 20th day

of October, 1919.

The findings and conclusion are set forth in the

appendix to this brief.

The Federal Trade Commission issued a complaint

against the above-named respondents, calling on

them to show cause why they should not be required

to desist from certain unfair methods of competition

against other manufacturers and distributors of jute

bagging, sugar-bag cloth, and rewoven second-hand

bagging.

The facts are that respondents, Warren, Jones &

Gratz, have their principal office and place of business

in the city of St. Louis, Mo. Respondents, P. P.

Williams & Company, are a copartnership, with

principal place of business at Vicksburg, Miss.,

and respondent, C. O. Elmer, has his place of business

in New Orleans, La. All are engaged in interstate

commerce in the United States in the sale and

distribution of steel ties used for the binding of

bales of cotton and jute bagging used for covering

the bales. Williams & Company and Elmer are

the general selling and distributing agents for the

steel ties manufactured by the Carnegie Steel Com-

pany, amounting to 59 per cent in 1916 and 65 per

cent in 1917, respectively,’ of all those used in the

—

1 }'y un inadvertent vy postaphical error the findings stated the amount of steel ties manu-

factored by the Carnegie Steel Company to be 75 per cent of all those used in the cotton ballsg

business in the Southern States. This error was corrected in the brief and was called to the

attention of the court in oral argument by the chief counsel of the commission. Subse

stently when the petition for writ of certiorari and brief were prepared there wed 8 Xe

Bae mock, and in preparing his brief he reproduced the error as found in the findings'®

3 -

cotton baling business in the Southern States, and

are the general selling and distributing agents of

the American Manufacturing Company, which pro-

duces 45 per cent of all the jute bagging for said

purposes. Anderson Gratz, of the firm of Warren,

Jones & Gratz, was one of the active officers and

one of the vice presidents of the American Manu-

facturing Company. :

The firm of Mente & Company, of New York City

and New Orleans, distributes material known as sugar-

bag cloth in the cotton-growing States, which is used

for wrapping cotton bales. The Carolina Bagging

Company of North Carolina sells and distributes

throughout the cotton-growing States the material

known as rewoven bagging, which is also sold by

other corporations.

Warren, Jones & Gratz and the other respondents

had within the last three years previous to filing of

the complaint adopted and practiced the policy of

refusing to sell steel ties to those dealing with them

unless they also purchased a corresponding amount

of jute bagging. ;

The Carnegie Steel Company dominates tne steel

tie situation to such a degree that it fixes and con-

trols the price of ties throughout the United States.

The Ludlow Manufacturing Association, of Boston,

Mass., manufactures and sells jute bagging to the

extent of about °° per cent of the amount used.

There is also secondhand and sugar-bag cloth used

in the industry amounting to 35 per cent of the

total.

Respondents in many instances refused to sell to

purchasers ties unless they bought a corresponding

amount of bagging, and purchasers were compelled

” to buy bagging in order to get ties.

The Commission found that the refusal to sell steel

ties to purchasers unless they bought jute bagging

was an unfair method of competition in interstate

commerce against other manufacturers, dealers, and

distributors of jute bagging, sugar-bag cloth, and

rewoven secondhand bagging in violation of the pro-

visions of section 5 (Appendix, p. 59) of an act of

Congress, approved September 26, 1914, entitled

“An act to create a Federal Trade Commission, to

_ define its powers and duties, and for other purposes”

(38 Stat., Chap. 311, p. 719), and ordered the re-

spondents to cease and desist from the said policies

and practices.

An appeal was taken by respondents to the United

States Circuit Court of Appeals for the Second Cir-

cuit, under the Federal Trade Commission Act.

That statute provides that the findings of fact of

the Commission are conclusive if supported by tes-

timony.

The Cémmission’s findings of fact and its conclu-

sion are, in part, as follows:

Paragraph 2.—That within three years last

past respondents, Anderson Gratz and Benja-

min Gratz, copartners doing business under the

firm name and style of Warren, Jones & Gratz;

P. P. Williams, W. H. Fitzhugh, ana Alexander

Fitzhugh, copartners doing business under the

firm name and style of P. P. Williams & Com-

pany; and C. O. Elmer adopted and practiced

the policy of refusing to sell steel ties to those

merchants and dealers who wished to buy them

from them unless such merchants and dealers

would also buy from them a corresponding

amount of jute bagging * * *.

Paragraph 4—* * * The dominating and

controlling position occupied by said respond-

ents in the sale and distribution of ties made it

possible for them to force would-be purchasers

of ties also to buy from them bagging manufac-

tured by the American Manufacturing Com-

pany, and in many instances said respondents

refused to sell ties unless the purchaser would

also buy from them a corresponding amount of

bagging, and such purchasers were oftentimes

compelled to buy bagging manufactured by the

American Manufacturing Company from said

respondents in order to procure a sufficient

supply of steel ties used for the purpose afore-

said.

CONCLUSIONS OF LAW.

That the methods of competition set forth

in the foregoing findings as to the facts, in

paragraphs 1, 2, 3, and 4, and each and all

of them, are, under the circumstances therein

set forth, unfair methods of competition in

interstate commerce, against other manu-

facturers, dealers, and distributors of jute

bagging and against other dealers and dis-

tributors in the material known as sugar

bag cloth, and against manufacturers, dealers,

and distributors of the bagging known as

rewoven bagging and secondhand bagging, in

violation of the provisions of section 5 of an

pe RR NT 7 NER eI LMG REE a fs AIRED SIT ph Bie PRES S

act of Congress approved September 26, 1914,

entitled, “An act to create a Federal Trade

Commission, to define its powers and duties,

and for other purposes,” and that there is

not sufficient proof submitted in the hearings

to sustain the paragraph in the complaint

charging a violation of section 3 of an act of

Congress known as the Clayton Act.

The court held that—

There is testimony to support the findings

of fact, and therefore the question before us

is whether they do support the Commission’s

conclusion of law that the method of compe-

tition forbidden is unfair within the meaning

of section 5 of the act of September 26, 1914.

(Record, p. 480.)

* * * * *

That unfair methods of competition be-

tween individuals are not contemplated by

the act. * * * We think the unfair

methods, though not restricted to such as

violate the antitrust acts, must be at least

such as are unfair to the public generally.

It seem8 to us that section 5 is intended to

provide a method of preventing practices

unfair to the general public and very par-

ticularly suchas if not prevented will grow

so large as to lessen competition and create

monopolies in violation of the antitrust acts.

(Record, p. 480.)

As we think there is no evidence to support

any general practice of the respondents to

refuse to sell ties unless the purchaser bought

at the same time the necessary amount of the

American Manufacturing Company’s bagging

and that the Commission has no jurisdiction

to determine the merits of specific individual

grievances, the order is reversed. (Record,

p. 482.)

The petitioner maintains that the substantive

law under which it functions is analogous to that

which the the Interstate Commerce Commisssion ad-

ministers, and that the Federal Trade Commision

should be accorded the same discretion in determin-

ing whether a method of competition is unfair as

has been held by this court to be the discretion of

the Interstate Commerce Commission in determin-

ing what is an unreasonable rate or an unjust prac-

tice; that in the light of decisions in “nonrepara-

tion’ interstate commerce cases it is not within the

province of the lower court to review the ultimate

finding of an unfair method of competition by the

petitioner where there is testimony to support the

finding, unless there is a constitutional question in-

volved, the Commission has exceeded its delegated

authority, or has acted arbitrarily; that the court

erred in reversing the petitioner’s order since none

of the three foregoing exceptions were involved;

that as there was evidence to support the findings

they were conclusive; that said court also erred in

setting aside said order on the ground that there was

no “general practice’’ affecting the public shown by

the evidence since the statute does not permit of a

review of the evidence on such grounds; that the

record, however, does contain evidence of a general

practice affecting the public.

ES ERT, Ae MII PIE I LION EE II IGS

ASSIGNMENTS OF ERROR.

The petitioner hereby assigns the following errors

in the opinion and judgment of the Circuit Court of

Appeals: Ns

(1) In setting aside the order of the Federal Trade

Commission ;

(2) In setting aside the order of the Commission

when the findings were supported by testimony;

(3) In reviewing and weighing the evidence and

setting aside the order of the Commission when the

findings were supported by testimony ;

(4) In holding that the findings did not support the

ultimate fact of an unfair method of competition in

commerce in violation of the provisions of section 5

of an act of Congress, approved September 26, 1914,

entitled, ‘‘An act to create a Federal Trade Com-

mission, to define its powers and duties, and for other

purposes ”’ ;

(5) In holding that the findings of fact and conclu-

sion should be set aside on the ground that the Federal

Trade Commission does not have jurisdiction of an

act involving an unfair method of competition in

commerce unless a “general practice” affecting “the

public generally” is established by the evidence;

(6) In holding that the Commission does not have

jurisdiction to entertain cases involving unfair meth-

ods of competition between individual competitors.

mamma se 385 Pe ATER EL WSO FASE ERY NERY AE LOE I MOORE PETTERS

BRIEF OF ARGUMENT.

First.

The finality of the findings of fact and conclusion

of the Federal Trade Commission, “ when supported

by testimony,” is similar to the finality attributed

by this Court to the Interstate Commerce Commis-

sion’s findings and conclusions in “ nonreparation”’

cases.

Second.

The Circuit Court of Appeals was without jurisdiction

to set aside the order of the Federal Trade Commis-

sion.

Third.

The decision of the Circuit Court of Appeals for the

Second Circuit is in conflict with the opinion of

Judge Baker in the Seventh Circuit in the case of

Sears, Roebuck & Company, petitioner, v. Federal

Trade Commission, 258 Federal 307.

Fourth.

The Court erred in holding that “there was no

evidence to support any general practice of re-

spondents to refuse to sell ties unless the purchaser

bought at the same time the necessary amount of

bagging.’’ (Record, p. 481.)

Fifth.

The manner of sale and distribution of ties and

bagging followed by respondents is known as

“full-line forcing,” and is economically an unfair

method of competition, under the public policy

evidenced by the Federal statutes.

(9)

ARGUMENT.

FIRST.

The finality of the findings of fact and conclusion of

the Federal Trade Commission, ‘‘when supported

by testimony,” is similar to the finality attributed

by this Court to the Interstate Commerce Com-

mission’s findings and conclusions in ‘“non-

reparation” cases.

The discussion in this case revolves around the sub-

stantive law in the Federal Trade Commission Act

contained in the following language of Section 5:

“that unfair methods of competition in commerce are

hereby declared unlawful.” The foregoing phrase is

analogous to that part of section 1 of the Interstate

Commerce Act, which is as follows: “and every unjust

and unreasonable charge for such service or any part

thereof is prohibited and declared to be unlawful.”

(34 Stat., ch. 3591, p. 584.)

In view of the fact that the Federal Trade Commis-

sion Act, and particularly the substantive part deal-

ing with unfair methods of competition, was fashioned

by Congress after the substantive part of the Inter-

state Commerce Commission Act dealing with ‘unjust

and unreasonable” charges, attention is here called

to the history of the passage of the Federal Trade

Commission Act, in order to demonstrate wherein the

two acts parallel.

The undisputed declarations in the debates show-

ing that Congress was attempting to create a com-

(10)

mission to handle unfair methods of competition in

commerce similar to that of the Interstate Commerce

Commission in its control of “unjust and unreason-

able’ rates are too numerous to set forth in a brief.

(An index to the debates on this subject will be

found in the appendix herein.)

Light may be obtained from other congressional

sources. In the Sixty-second Congress, Senate reso-

lution No. 98 (62d Cong., 3d sess., Rept. No. 1326),

authorized the Committee on Interstate Commerce

to report to the Senate changes in the laws necessary

to the creation and control of corporations engaged

in interstate commerce. In response to the resolu-

tion hearings were held and a report made on the

26th day of February, 1913 (S. Rept. 1326, 62d Cong.,

8d sess., by Senator Cummins). In commenting on

that report Senator Cummins said as follows!

Every lawyer understands that we can not

delegate to a commission legislative power;

that when we give to an administrative body

the execution of a law of Congress we must

at the same time give it a standard, a guide

and rule which it is to apply to the particular

case and determine whether that particular case

falls under the prohibition of thelaw. * * *

Thus in the Interstate Commerce Commission

act we declared that a common carrier shall not

chargean “‘unreasonable’’ rate forthe transpor-

tation of persons or property. What is an un-

reasonble rate Congress has not attempted to

determine, but has vested the Interstate Com-

merce Commission with the authority to ex-

: amare ie sa PERE GAN RIE EAE POLED OE FE Col

amine and then to determine whether a particu-

lar rate is or is not a reasonable and just rate.

It might be at once said that the Interstate

Commerce Commission has the authority by a

majority vote to declare any rate that it may

see fit to declare a just and reasonable rate,

or otherwise, but that is not expressing it in

the form of law. The office of the Interstate

Commerce Commission is to ascertain, through

an investigation and hearing, whether a par-

ticular rate is a reasonable charge for the

service rendered by a common carrier. Just

so, here we have given in this connection to

the Trade Commission a standard, a rule,

which is just as well understood in the law

as were the words ‘reasonable rate.”’ It is

just as easy to turn either to the civilized sense

of mankind or to the law of the land and ascer-

tain what ‘unfair competition” is as it is to

ascertain what a ‘reasonable rate” is. (Cong.

Ree. pp. 11103—4 ;13045-6 ;13046-8 ; 13049-51.)

No legislation resulted, but on June 13, 1914,

Senator Newlands, chairman of the Committee on

Interstate Commerce, and author of the Federal

Trade Commission Act, submitted a report to the

Senate, to which was appended H. R. 15613, a bill

to create an interstate trade commission, etc.,

passed by the House of Representatives on the

5th day of June, 1914. He reported as a substitute

for the House bill Senate bill No. 4160, with added

provisions regarding unfair competition as con-.

tained in the present Federal Trade Commission

Act. In his report Senator Newlands refers to the

expressions of Senator Cummins in the latter’s

report.

Senator Newlands on the floor of the Senate in

explaining his bill referred to the Interstate Com--

merce Act, and in discussing the phrase ‘reasonable

rate,” said that “the determination of what the

word ‘reasonable’ meant was submitted to the

Interstate Commerce Commission, just as the mean-

ing of the term ‘unfair competition’ is here sub-

mitted to the Trade Commission * * *,”’

Read through the act to regulate commerce

and you will find it bristling with just such

phrases. (Cong. Rec., 2d sess., 63d Cong.,

p. 11084.)

As Congress intrusted the Interstate Commerce

Commission with power to find when a rate was

“unjust”? or ‘unreasonable,’ so in the Federal

Trade Commission Act it empowered the Commis-

sion to determine what was an “unfair method of

competition.” This is clearly evidenced in the

teports of the committees in the House and Senate.

In the report of the Committee on Interstate Com-

merce submitted by Senator Newlands on June 13,

1914 (Rept. No. 597, 63d Cong., 2d sess., p. 13), it is

said:

The committee gave careful consideration to

the question as to whether it would attempt to

define the many and variable unfair practices

which prevail itt commerce and to forbid their

continuance or whether it would, by a general

declaration condemning unfair practices, leave

Pee tc ee eee see RR es REALISE RR RNS TYPES ISIE

it to the Commission to determine what prac-

tices were unfair. It concluded that the latter

course would be the better, for the reason, as

. stated by one of the representatives of the

Illinois Manufacturers’ Association, that there

were too many unfair practices to define, and

after writing 20 of them into the law it would

be quite possible to invent others.

In the statement of the managers on the part of the

House, submitted with the conference report on Sep-

tember 4, 1914 (Rept. No. 1142, 63d Cong., 2d sess.,

p. 19), it was stated:

It is impossible to frame definitions which

embrace all unfair practices. There is no limit to

human inventiveness in this field. Even if all

known unfair practices were specifically defined

and prohibited it would be at once necessary to

begin over again. If Congress were to adopt

the method of definition it would undertake an

endless task. It is also practically impossible

to define unfair practices so that the definition

will fit business of every sort in every part of

this country. Whether competition is unfair

or not generally depends upon the surrounding

circumstances of the particular case. What is

harmful under certain circumstances may be

beneficial under different circumstances.

The Interstate Commerce Act and the Federal

Trade Commission Act then are analogous in the

following respects.

Section 5 of the Federal Trade Commission Act

provides that, “ the commission is hereby empowered

and directed to prevent persons, partnerships, or

corporations, except banks and common carriers,

subject to the acts to regulate commerce, from using

unfair methods of competition in commerce.”

Section 12 of the Interstate Commerce Act pro-

vides that, “the commission is hereby authorized

and required to execute and enforce the provisions

of this act.’”’ By section 15 the Interstate Commerce

Commission there is given general authority to enforce

the various provisions of the Interstate Commerce

Act by making orders to cease and desist. (Balto. &

Ohio R. R. v. U.S. Ex. Rel. Pitcairn Coal Co., 215 U.S.

481, 499.) Likewise the Federal Trade Commission

is authorized to make orders to cease and desist in

eases which in the opinion of the Commission fall

within the general rule of substantive law regarding

unfair competition. The findings of the Federal

Trade Commission as to facts, if supported by testi-

mony, are conclusive.

To recapitulate, it was the intention of Congress to

regulate the operations of carriers by the Interstate

Commerce Act, and by the Federal Trade Commission

act to regulate the operations and transactions of

persons, firms, and corporations other than banks

and carriers. To one was delegated the regulation

of “unjust and unreasonable” practices; and to the

other “unfair” methods. In neither case did Con-

gress attempt to define what was “ unjust, unreason-

able,” or “unfair.”’ In both cases the duty of

deciding what comes within these general terms was

confided to a commission.

17005 1—20—__2

2 Yee

The orders of the Interstate Commerce Commission

“may be suspended or set aside by a court of compe-

tent jurisdiction.” Those of the Federal Trade

Commission may be “affirmed, modified, or set

aside.”’

In view of these points of substantial similarity

it is maintained that the two acts are in pari materia,

and that in construing and interpreting the Federal

Trade Commission Act the court should apply the

rule where the language parallels that has been

applied in interpreting similar language in _ the

Interstate Commerce Act.

In considering the decisions of this court reference

will be made only to “nonreparation” cases, since

the Federal Trade Commission has, concededly, no

jurisdiction to compel reparation.

In Kansas City Southern Railway Company v.

United States, 231 U.S. 423, Mr. Justice Pitney stated

the ryle as follows (p. 439):

The authority conferred by Congress upon

the Commerce Court (act of June 18, 1910; 36

Stat. 539, ¢. 309; Judicial Code, par. 207) with

respect to enjoining or setting aside the orders

of the Commission, like the authority pre-

viously exercised by the Federal Circuit Courts,

was confined to determining whether there had

been violations of the Constitution, or of the power

conferred by statute, or an exercise of power 80

arbitrary as virtually to transcend the authority

conferred. [Italics ours.]

—-- Eo

In Pennsylvania Company v. United States, 236

U.S. 351, Mr. Justice Day reiterates the rule (p. 361):

This section forbids any undue or unreason-

able preference or advantage in favor of any

person, company, firm, corporation, or locality ;

what is such undue or unreasonable preference

or advantage is a question not of law, but of

fact. (Texas & Pacific Ry. v. Interstate Com-

merce Commission, 162 U. 8. 197, 219; Inter-

state Commerce Commission v. Alabama Mid-

land Railway, 168 U.S. 144,170.) If the order

made by the Commission does not contravene

any constitutional limitation and is within the

constitutional and statutory authority of that

body, and not unsupported by testimony, it

can not be set aside by the courts, as it is only

the exercise of an authority which the law vests

in the Commission.

In Manufacturers Railway Company v. United .

States, 246 U. S. 457, the rule that administrative

orders of the Interstate Commerce Commission may

not be disturbed by the courts except upon a showing

that they are unsupported by evidence, made arbi-

trarily, exceed delegated authority, or that a consti-

tutional question is involved, is stated in the following

language (p. 481):

Whether a preference or advantage or dis-

crimination is undue or unreasonable or unjust

is one of those questions of fact that have

been confided by Congress to the judgment

and discretion of the Commission (Interstate

Commerce Commission v. Alabama Midland

Ry. Co., 168 U. 8. 144, 170), and upon which

its decisions, made, the basis of administrative

orders operating in futuro, are not to be

disturbed by the courts except upon a showing

that they are unsupported by evidence, were

made without a hearing, exceed constitu-

tional limits, or for some other reason, amount

to an abuse of power.

This court, alluding to the faet that no definitions

have been attempted, has nevertheless held that the

determination of what is “reasonable”’ or unreason-

able” is a question of fact in a given case and is for

the determination of the Interstate Commerce Com-

mission.

Illinois Central R. R. Co. v. Interstate

Commerce Commission, 206 U.S. 441, 455;

Pennsylvania R. R. Co. v. International

Coal Co., 230 U.S. 184, 196;

Mitchell Coal & Coke Co. v. Pennsylvania

R. R., 230 U.S. 247, 257, 259;

Pennsylvania Company v. United- States,

236 U.S. 351, 361;

Manufacturers Ry. Co. v. United States,

246 U.S. 457.

The rule laid down in Interstate Commerce Com-

mission decisions should be applied in Federal

Trade Commission cases, since the discretion of |

the Federal Trade Commission, in determining

whether an unfair method of competition exists, is

analogous to that of the Interstate Commerce Com-

mission. When, therefore, the findings are “sup-

ported by evidence,” the only grounds upon which

the Circuit Court of Appeals reviews Federal Trade

NTE EE OR BI BS PLN EE IS I ES RTE BS cesta

Commission findings are the three exceptions -enu-

merated in the decisions of this court in “non-

reparation”’ cases.

In its procedure the Federal Trade Commission

finds certain evidentiary facts upon which it bases

an ultimate fact or con-lusion. The findings indi-

eate the “method.”” This method may rest upon

conflicting evidence. So long as the findings are

“supported by testimony” they should not be

reviewable except as hereinbefore stated.

It may be conceded that the evidence would

have warranted a different finding; indeed the

first report of the Commission was to the

contrary; but to annul the Commission’s order

on this ground would be to substitute the judg-

ment of a court for the judgment of the Com-

mission upon a matter purely administrative,

and this can not be done. [Italics ours.]

(Manufacturers Railway Company v. United

States, 246 U.S., 457, 482.)

Having found the ‘‘method” the Commission

determines the ultimate fact as to whether it is

“unfair,” and hence to be prohibited. This is noth-

ing more than arriving at a conclusion as to whether

the evidentiary facts are comprehended within the

phrase ‘‘unfair methods of competition in com-

merce.” To do this the commissioners “exercise

their common sense, as informed by their knowledge

of the general idea of unfair trade at common law,

and stop all those trade practices that have a ca-

pacity or tendency to injure competitors directly

or through deception of purchasers, quite irrespec-

tive of whether the specific practices in question

have yet been denounced in common-law cases.”

(Sears, Roebuck & Co. v. Federal Trade Commission,

supra.)

The Circuit Court of Appeals does not assert that

there is a constitutional question involved in this

case, nor that in passing on the question of the

unfairness of the method the Commission has acted

beyond the scope of its authority, nor arbitrarily.

Said court, however, did undertake to review the

evidence and to determine whether or not the facts

proven disclosed a practice that was ‘‘unfair,”

which the Commission maintains is alone for it to

determine.

The finding that the method practiced was “un-

fair” was a further finding of fact in addition to

those already found. It involved finding the effect

of the acts done as to competitors. It is not dis-

puted that there was evidence pointing to an unfair

result. Hence the Circuit Court of Appeals necess-

arily found the fact of “unfairness” for itself and

ignored the Commission’s finding of such fact.

SECOND.

The Circuit Court of Appeals was without jurisdiction

to set aside the order of the Federal Trade Com-

mission.

The jurisdictional and procedural part of the Fed-

eral Trade Commission Act is set forth in section 5.

The first paragraph, stating that “unfair methods

of competition in commerce are hereby declared un-

lawful,” is the only substantive law in the act. The

second paragraph carries with it the delegation of

power to the Commission to enforce the act. The

third paragraph contains the procedural part of the

act relating solely to the Commission; and the fourth

paragraph contains the procedure by which the acts

of the Commission may be reviewed by the Circuit

Court of Appeals.

It is proposed to measure the decision of the circuit

Court of Appeals in setting aside the order of the

Commission with the langhage in these four para-

graphs of section 5.

A. What the Court Actually Did by its Order.

As a preliminary to this step, it is necessary first

to understand on what grounds the court nullified

the Commission’s order. In its opinion (Record,

p. 480) it declared that “ there is testimony to support

the findings of fact.” Since the determination of

whether the acts complained of were unfair is an

administrative question, the statement of the court

(21)

OEE ee ee ee ee)

that the findings were supported by testimony should

have foreclosed it from reviewing the Commission’s

finding of the ultimate fact that the practices com-

plained of were unfair methods of competition

within section 5 of the statute.

Lilinois Central R. R. Co. v. Interstate Com-

merce Commission, 206 U.S. 441, 455;

Pennsylvania R. R. Co. v. International Coal

Co., 230 U. S. 184, 196;

Mitchell Coal & Coke Co. v. Pennsylvania

R. R. Co., 230 U. S. 247, 257, 259.

The court, however, while admitting that the

findings of primary facts were supported by testi-

mony, found that the Commission’s ultimate finding

namely that the method of competition forbidden

was unfair, was not within the meaning of section

5 of the Federal Trade Commission Act. To do

this, it apparently ignored paragraph 4 of the find-

ings of fact, and sought to reduce it to a finding

of merely individual transactions, holding that the

Commission did not hgve jurisdiction over such

transactions.

Paragraph 4 of the findings of fact (Record, p. 47)

states in part:

That a great many merchants, jobbers, and

dealers in bagging and ties throughout the

cotton-growing States were many times unable

to procure ties from any other firm, except

Anderson Gratz and Benjamin Gratz, co-

partners, doing business under the firm name

and style of Warren, Jones & Gratz, or their

said agents, P. P. Williams, W. H. Fitzhugh,

and Alexander Fitzhugh, copartners, doing

business under the firm name and style of

P. P. Williams & Company, and C. O. Elmer,

and that the said respondents sold and dis-

tributed such a large proportion of the entire

amount of such ties manufactured and sold

in the entire cotton growing section of the

country, that they, the said respondents, had

what amounted to a monopoly of the cotton

tie business of the country, controlling and

distributing such a large proportion of the

entire output of cotton ties that cotton

growers found it impossible to bind the cotton

grown and produced in the Southern States

without applying to and purchasing from the

said respondents ond their agents almost the

entire output of such ties manufactured by

the Carnegie Steel Company. The dominat-

ing and controlling position occupied by said

respondents in the sale and distribution of

ties made it possible for them to force would-

be purchasers of ties to also buy from them

bagging manufactured by the American Man-

ufacturing Company, and, in many instances,

said respondents refused to sell ties unless the

purchaser would also buy from them a cor-

responding amount of bagging and such pur-

chasers were oftentimes compelled to buy

bagging manufactured by the American Man-

ufacturing Company, from said respondents,

in order to procure a sufficient supply of steel

ties used for the purpose aforesaid.

Despite the language in said paragraph 4, and the

court’s statement that “there is testimony to support

the findings of fact,” in a subsequent paragraph of

its opinion (Record, p. 481) the court said:

And we discover no evidence to support the

finding in paragraph 2 that the respondents

“adopted and practiced the policy of refusing

to sell steel ties to those merchants and dealers

who wished to buy them from them unless

such merchants and dealers would also buy

from them a corresponding amount of jute

bagging.” It is the natural and prevailing

custom in the trade to sell ties and bagging

together, just as one witness testified it is

to sell cups and saucers together. Such evi-

dence as there is of a refusal to sell is a refusal

to sell at all to certain persons with whom the

respondents had previous unsatisfactory rela-

tions and a refusal to sell ties without bagging

at the opening of the market in 1916 and 1917

when there was fear that owing to the scarcity

of ties and the prospect of large crops, the

marketing of the cotton crop might be endan-

gered by speculators creating a corner in ties.

The evidence is that with these exceptions the

respondents sold ties without any restrictions

to all who wanted to buy and indeed made

extraordinary efforts to induce the manufac-

turers of ties to increase their output so that

all legitimate dealers and all cotton raisers

should get enough ties and bagging at reason-

able rates to market their cotton. It is only

these exceptional and individual cases, which

established no general practice affecting the

public, that can sustain the findings in para-

graph 4.

The mere placing of the above paragraph in jux-

taposition with the earlier part of the opinion, wherein -

it is stated ‘‘there is testimony to support the find-

ings of fact,’’ presents a contradiction. In the first

instance the court recognizes apparently that it is

foreclosed by the statute from rejecting the Com-

mission’s findings, but subsequently reviewing the

testimony deletes the findings of a general practice

and declares that they do not support the conclusion

which the Commission draws in its ultimate finding,

and one that the court holds the Commission had

no right to find.

In substance, then, the court said that conduct,

illegal if applied to all, can not be forbidden if applied

simply to numerous transactions; that though there

is evidence to support the findings, yet the court

will weigh the evidence, and if it finds exceptions to

the illegal conduct it may so declare them of such

weight as to nullify the sufficiency of the testimony

and prevent the Commission, as a matter of law, from —

finding that an unfair method of competition had

been practiced.

The court said—

* * * it seems to us that unfair methods

of competition between individuals are not

contemplated by the~act (Record, p. 480);

* * * it is only these exceptional and in-

dividual cases, which’ established no general

practice affecting the public, that can sustain

the findings in paragraph four (Record, p.

481); * * * it seems to us that section 5

SPE NENT SRE RE NS ISD

is intended to provide a method of preventing

practices unfair to the general public (Record,

pp. 480, 481); * * * as we think there is

no evidence to support any general practice

of the respondents to refuse to sell ties unless

the purchaser bought at the same time the

necessary amount of the American Manufac-

turing Company’s bagging and that the Com-

mission has no jurisdiction to determine the

merits of specific individual grievances, the

order is reversed. (Record, p. 482.)

B. The Commission is not required to find a general practice.

Conceding for the sake of the argurnent only that

there was no general practice found by the Commis-

sion, it is maintained that a correct reading of sec-

tion 5 demonstrates that the Court had no authority

to set aside the Commission’s order.

The substantive part of the section contains no

language intimating that the Commission must find

a general practice. It says “that unfair methods of

competition in commerce are hereby declared un-

lawful.’ Had Congress intended to require the find-

ing of a general practice, it would have amended the

language so as to read “a general practice of unfair

methods of competition.”

Moreover, in the second paragraph where the au-

thority is delegated to the Commission to enforce

the act, the thing to be prevented would have been

a ‘“‘general practice” of “‘unfair methods of compe-

tition” instead of the unqualified phrase ‘unfair

methods.”

Again, in the procedural and administrative part

of section 5, in the third paragraph, where the Com-

mission is authorized to issue a complaint when any

“unfair method of competition” is practiced, it

would have read under the court’s definition “a gen-

eral practice of any unfair method.” The word

“any’’ would seem to be broad enough to compre-

hend all unfair methods. This is apparently the way

in which the Circuit Court of Appeals for the Sev-

enth Circuit interpreted the act in the case of Sears,

Roebuck & Company v. Federal Trade Commission

(supra), where Judge Baker said:

The Commissioners, representing the Gov-

ernment as parens patriae, are to exercise

their common sense, as ‘informed by their

knowledge of the general idea of unfair trade

at common law, and stop all those trade prac-

tices that have a capacity or tendency to injure

competitors directly or through deception of

purchasers.

This court in giving definition to unfair methods

of practice in commerce has not limited.them to acts

affecting the public generally or practiced generally.

In Hitchman Coal & Coke Co. v. Mitchell et al.,

245 U. S. 229, 259, Mr. Justice Pitney, speaking for

* the court in part, ‘said:

Defendants’ acts can not be justified by

any analogy to competition in trade. They

are not competitors of plaintiff; and if they

were their conduct exceeds the bounds of fair

trade. Certainly, if a competing trader should

endeavor to draw custom from his rival, not

by offering better or cheaper goods, employ-

ing more competent salesmen, or displaying

more attractive advertisements, but by per-

suading the rival’s clerks to desert him under

circumstances rendering it difficult or em-

barrassing for him to fill their places any

court of equity would grant an injunction to

restrain this as unfair competition.

Standard Oil Co. v. United States, 221 U.S.

1, 42-43;

International News Service v. Associated

Press, 248 U. S. 215.

C. If the Commission or Courts were to determine that an “unfalr

method” affected the public they would be usurping a legis-

lative function already exercised by Congress when It declared

unfair methods to be unlawful.

The lower court holds that there must be evidence

to support a finding that the “unfair methods’ com-

plained of affected the public generally. When

Congress declared “unfair methods of competition

in commerce * * * unlawful,” it thereby de-

clared that such unfair methods between individuals

affected, to its injury, the public generally. By its

fiat Congress made them unlawful. It did so because

they were against public policy. Had not “ unfair

methods of competition”’ affected the “ public gener-

ally” Congress would not have outlawed them.

Having done so, it relieved the Commission of the

necessity of so finding, and hence of introducing

evidence to prove facts upon which such a finding

could be made.

I LLNS I LE LE INE DE I ont, HS

Undoubtedly Congress looked at this question just

as a legislative body does when it makes certain acts

a crime, or puts a penalty on certain acts, i. e., qui

tam statutes.

Legislatures penalize certain acts because they affect

the public generally. The district attorney, how-

ever, when prosecuting under such statutes does not

have to prove that the act affects the public, nor

show why Congress declared it unlawful. No more is

the Federal Trade Commission required to show that

an “unfair method” affects the public.

This is evidenced by the language in the procedural

part of section 5, wherein it is declared that “if upon

such hearing the Commission shali be of the opinion

that the method of competition in question is pro-

hibited by this act, it shall make a report in writing

in which it shall state its findings as to the facts,

etc. * * *.” There is nothing in this language

requiring the Commission to find that the “unfair

method affects the public generally.” All it requires

is that the Commission shall find whether the method

was unfair.

D. Congress granted the Commission discretion as to when it

should proceed against one charged with unfair methods of

competition.

Congress, however, desired to give the Commis-

sion discretion as to when it should issue a com-

plaint, and hence it incorporated in section 5 the

following phrase:

Whenever the Commission shall have reason

to believe that any such person, partnership,

Sa abies aaa al ia oil ail Sia

or corporation has been or is using any unfair

method of competition in commerce, and if it

shall appear to the ( ‘Yommission that a proceed-

ing by it in respect thereof would be to the

interest of the public, it shall issue * * *

a complaint. |

The phrase, “if it shall appear to the Commission

that a proceeding by it in respect thereof would be

to the interest of the public,” was inserted to pro-

tect the Commission in its administration of the

law. Congress undoubtedly saw that the Commis-

sion would be deluged with many complaints. This

has been the fact. In the great majority of cases

the charge is against only one competitor. The

purpose of Congress was to give the Commission a

discretion so that it could sift out of the applica-

tions for complaints those of minor importance.

In this way the Commission could escape a deluge

and give its time to those of greater importance.

Had it not been for this discretion the Commission

by the very word “shall” in the act would have

been compelled to issue a complaint whenever an

application was made. Under the beneficient dis-

cretion granted to it in the procedural part of the

act just quoted it has been made physically pos-

sible to attend to the work of the Commission.

It will be further noted that this discretion lodged

in the Commission is in the administrative part of

the section, and not in the jurisdictional or sub-

stantive part.

The administrative part of section 5 says that—

whenever the Commission shall have rea-

son to believe * * * that a proceeding

by it in respect thereof would be to the

intérest of the public * * *.,

Thus it is that the Commission and it alone deter-

mines when a proceeding will be in the interest of

the public before it issues the complaint.

E. The Circuit Court of Appeals reviewed acts within the discretion

of the Commission.

The fourth paragraph of section 5 relates to the

matters to be reviewed by the Circuit Court of Ap-

peals when an appeal is taken from the Commission’s

order. The language is

upon such filing of the application and tran-

script, the court shall cause notice thereof to be

served upon such person, partnership, or cor-

poration, and thereupon shall have juris-

diction of the proceeding and of the question

determined therein.

The word ‘‘proceeding” and the words ‘‘question

determined therein” refer back to the procedural

part of section 5, set forth in the third paragraph.

There the proceeding begins with the issuance of a

complaint. The complaint follows after the Com-

mission hag affirmatively resolved two propositions,

namely: that it has reason to believe that an unfair

method of competition has taken place and that it

would be in the interest of the public to issue the

complaint.

170051—20——_-3

While the Commission follows rules of its own in

resolving these two questions, the action against the

respondent does not begin until a complaint issues

and is served on respondent.

After the complaint issues the procedural section

requires the Commission to take testimony, at which

time the respondent is allowed to cross-examine wit-

nesses of the Commission and to put in its own testi-

mony, and the testimony is reduced to writing and

a hearing held.

“Tf upon such hearing the Commission shall be of

the opinion that the method of competition is pro-

hibited by this act,” it makes its findings and issues

an order against the respondent. The action of the

Commission to be reviewed begins with the complaint

and ends with the order to cease and desist.

In the present case the court invaded the discre-

tionary domain granted to the Commission by Con-

gress at that stage previous to the issuance of the

complaint where the Commission determines whether

it has reason to believe that an unfair method of

competition has been practiced and whether “a pro-

ceeding by it * * * would be to the interest of

the public,” and said in substance that the Commis-

sion had no right to issue the complaint since in the

opinion of the court the public was not affected

generally.

RAT RE RE PRR RMT ON Cigaeee Se SORE Ray OES A PES PR EM

THIRD.

The decision of the Circuit Court of Appeals for the

Second Circuit is in conflict with the opinion of

Judge Baker in the Seventh Circuit in the case of

Sears, Roebuck & Company, petitioner, v. Federal

Trade Commission_(supra).

The lower court’s attention was called to the

Sears, Roebuck & Company case, but it declared

that—

the practice there prohibited as unfair was

extensive advertising containing false and

misleading statements calculated to deceive

all purchasers and to discredit all competitors.

It was clearly a method unfair to the public

generally,

and hence there was a public interest involved,

“whereas in the case at bar no such showing was

made, and, therefore, there was no public interest

involved. It is a debatable question as to whether

the advertisements of Sears, Roebuck & Company

were reaching as large a public and affecting as

many people as were affected by the respondents,

who were holding a dominant and controlling position

in the sale and distribution of steel ties to the extent

of about 65 per cent, and also were distributing 45

per cent of the jute bagging used in the cotton in-

dustry of the South. At best the question is doubtful.

If one were to hazard a guess the preponderance

might lie in favor of a greater part of the public being

(33)

ultimately affected by the control of the distribu-

tion of steel ties and jute bagging.

The lower court has also said that—

no authority is given to any individual to

present his grievances and the Commission is

to interpose only in the interest of the public,

The Commission has been unable to find anything

in the law that forbids it to act upon the complaint

of an individual against a single competitor, if it

- appears to-it that there is disclosed a method of unfair

competition. The language of Judge Baker in the

Sears, Roebuck & Company v. Federal Trade Commis-

sion case, states the position of the Commission very

clearly, where he says:

The Commissioners are not required to aver

and prove that any competitor has _ been

damaged or that any purchaser has been de-

ceived. The Commissioners, representing the

Government as parens patriae, are to exercise

their common sense as informed by their knowl-

edge of the general idea of unfair trade at

common law, and stop all those trade practices

that have a capacity or a tendency to injure

competitors directly or through deception of

purchasers quite irrespective of whether the

specific practices in question have yet been

denounced in common law cases.

The words of Chief Justice Fuller in Loewe v. Lawlor

(208 U. S. 274, 294-295) states the principle at

common law where he says:

* * * and there is no doubt that (to

quote from the well-known work of Chief

PEG LEE SIGS OCI TS EE

Justice Erle on Trade Unions) at common

law every person has individualéy, and the

public also has collectively, a right to require

that the course of trade should be kept free

from unreasonable obstruction.

If the Commission has the jurisdiction to ‘stop all

those trade practices that have a capacity or a ten-

dency to injure competitors directly,”’ then surely

it had the authority to order the respondents in the

instant case to cease where they held a dominating

position and refused to sell steel ties except where a

corresponding amount of jute bagging was bought.

The capacity or tendency to injure the competitor

who has only jute bagging to sell, which might be of a

better or equal quality, but which would be lost in

competition with respondents because of respondent’s

ability to sell owing to the control of steel ties, is so

obvious that it does not need elucidation. Such an

actual power, coupled with such a practice as it set

forth in a letter dated June 24, 1916, to Messrs. P. P.

Williams & Company, from Warren, Jones, & Saeate,

in which it says:

Do not sell any ties to any one without bag-

zing to match, as we do not propose to furnish

buyers of sugar bags any ties if we can help

it. * * * In this way we may possibly

be able to control [y] supply and prices to

some extent. * * * (Record, p. 261.)

must eventually restrain trade and create a situation

in which the public is interested.

LLB IONE LIE SC LG ST

If the purpose of the Federal Trade Commission

Aet, as was often reiterated in the debates in Con-

gress, was to stop at their inception practices which

led up to restraint of trade, or a tendency to

monopolize, the Federal Trade Commission must have

the authority to stop all trade practices “that havea

capacity or tendency to injure competitors directly,”

and the public eventually. This, it would appear

from the language of the act, the reports and the

debates that Congress intended to give to the Com-

mission.

. . " . - _— H, —

BADE AALE LMAO. LILO LE LLLOME LE EGE ALISO PL LEED LIAL E

FOURTH.

The Court erred in holding that “‘there was no evidence

to support any general practice of respondents to

refuse to sell ties unless the purchaser bought at

the same time the necessary amount of bagging.”

(Record, p. 481.)

There is no contention on the part of the court

that the method of compelling those wishing to buy

steel ties to also purchase jute bagging is not unfair.

It is only that the testimony did not prove a general

practice affecting the public, and that hence the Com-

mission’s finding that the unfair method was con-

trary to section 5 of the Federal Trade Commission

Act was erroneous. The Commission maintains that

the lower court did not have the power to review

the findings on this ground, but if this court should

decide otherwise, the Commission submits evidence

showing a general practice.

The letter dated St. Louis, Missouri, June 24, 1916,

to Messrs. P. P. Williams & Company from Warren,

Jones & Gratz, exemplifies a general practice:

WarREN, Jones & Gratz,

St. Louis, Mo., June 24, 1916.

Messrs. P. P. Wituiams & Co.,

Vicksburg, Miss.

GENTLEMEN: * * * Do not sell any ties

to anyone without bagging to match, as we

do not propose to furnish buyers of sugar bags

any ties if we can help it.

(37)

ae Re ee

You will have to be very careful about sales,

as there is a disposition on the part of buyers

to overbuy, and as the supply of bagging and

ties this year will be limited, we will have to

be very careful not to sell too much to any

one party at these opening prices. In this

way we may possibly be able to control [y]

supply and prices to some extent. * * *

Yours, very truly,

Warren, Jones & Gratz.

(Record, p. 261.)

Later—

Messrs. P. P. WituraMs & Company,

Vicksburg, Mississippi.

GENTLEMEN: * * * These ties to be sold

in every instance only to people who buy at

least 30 yards of bagging with each bundle of

ties, for the same shipment as the ties.

You must be very careful and not let people

like Goyer pick you up on ties without a pro-

portionate quantity of bagging.

As to bagging, do not sell over 1,000,000

yards without further instructions from us, as

there is a strong probability of an early ad-

vance in both bagging and ties.

Yours, very truly,

WarrEN, JoNES & GRATZ.

(Record, p. 262.)

. WaRREN, JoNES & GRATZ,

St. Louis, Mo., June 24, 1917.

P. P. Wrtutams & Company,

Vicksburg, Mississippi.

GENTLEMEN: Last year we sold the Goyer

Company a round lot of ties. Please do not

sell them any ties this year except with a pro-

portionate quantity of bagging, as every bun-

dle of ties we see in sight will be needed to go

with our bagging, and we do not want to sup-

ply people with ties who are using bagging pur-

chased of others. Therefore we shall not

write Goyer offering them any ties except with

bagging.

Yours, truly,

WARREN, JONES & GRATZ,

(Record, p. 262.)

Mr. H. R. Murray,

°/, Warren, Jones & Gratz, St. Louis, Mo.

Dear Sir: Mr. Taylor, of the Goyer Com-

pany, tells me that you have at last consented

to sell him:

11,000 bdls. ties.

125,000 yards bagging.

I am glad you did this, and I advised him to

send the telegram which he sent you as he

seemed to have so much feeling on the subject,

and I felt that as he had bought his ties from

you or us every year for the past 8 or 10 years

that it was up to us to protect him as far as we

could. Now, that he has bought this quantity

of bagging and ties from you, we will not push

him, particularly on ties, in the territory imme-

diately around Greenville, as we had intended

to do if he bought elsewhere. * * *

Yours, very truly,

P. P. Witui1ams & Co.

(Record, p. 263.)

OI NE IOI LILLE LLNS BLE LLIN A Pa ARs, OI TE RY IS a

In substantiation of the general practice, the follow-

ing excerpts are taken from the testimony of those

who were refused cotton ties unless they purchased

bagging from the respondents:

Mr. G. O. Korndorffer, of the firm of Rumble &

Wensel Co., testified as follows ( Record, p. 58, 54, 55):

A. We have represented the Ludlow folks

for, I suppose—well I would say 40 years; at

any rate the whole 30 years I have been con-

nected with my firm, in Natchez; and last sea-

son, 1916, we had an awful time trying to get

ties and we could not get any ties from any

so-called independents, or Warren, Jones &

Gratz, or P. P. Williams & Co., without buying

American bagging, and you will see by the bill

there [indicating] that we were forced to buy

100,000 yards of American bagging to get ties.

Q. How much bagging were you required to

buy in order to get the 5,000 bundles of ties?

A. 100,000 yards of bagging.

Q. At that time state whether or not you

were already supplied with bagging.

A. We were, sir.

Q. What kind of bagging did you have on

hand?

A. Ludlow bagging, manufactured in Bos-

ton, Mass.

Q. How did the Ludlow bagging compare

with the American bagging, at that time, as

to quality and price?

A. Well, in our section of the country it has

a preference over any other bagging.

Q. Which has the preference?

A. The Ludlow.

Q. How did the price compare with th»

American bagging?

A. Identically the same.

Q. Would you have bought the American

bagging, Mr. Korndorffer, but for the fact that

you were forced to buy it in order to get ties?

A. No, sir.

Mr. Charles M. Platter, of the firm of Boren &

Stewart Co. (Inc.), introduced the following telegram

(Record, p. 92):

PostaL TELEGRAPH-CABLE Co.

67ks od 52 1132am.

A 8r. Lovts, Mo., June 26, 1916.

Boren & Stewart Co.,

Dallas.

Telegram received; will book your order for

one hundred thousand yards bagging with

thirty-three hundred bundles ties to match,

but can not sell you six thousand bundles

in addition as our supply of ties is limited;

we are not selling ties to anyone except with

proportional amount bagging. Answer if

satisfactory.

Warren, Jones & GRATz.

Mr. Ed Brin, manager of the Brin Store at Terrell,

Tex., introduced the following letters (Record, pp.

148, 149):

WarreEN, Jones & GRATz,

St. Louis, Mo., June 24, 1916.

Tue Brin Store,

Terrell, Texas.

GENTLEMEN: Yours of the 24th. ‘While we

shall make our opening pzices on bagging and

EO LREL EOI SD EN MO I EN a TOS OM

ties next Monday, we can not at this time

offer you any ties except with a proportionate

quantity of bagging. In other words, if you

buy from us 30,000 yards of bagging, we will

sell you 1,000 bundles of ties. It is neces-

sary to handle our business in this way owing

to our small supply of ties.

Yours, truly,

WarreEN, Jones & Gratz.

WarreEN, Jones & GRATz,

St. Louis, Mo., June 26, 1916.

THE Brin Srore,

Terrell, Texas.

GENTLEMEN: Your letter of the 24th. Our

supply of ties is limited—barely enough to go

with the bagging we will sell. It may be pos-

sible that we will have some surplus ties after

we get through selling ties with bagging, but

this is very uncertain. As you are well aware,

all steel manufacturers have been crowded

with work for the past year or more, and it

has been a difficult matter for us to induce

any of them to make ties.

Yours, very truly,

WARREN, Jones & GRATz.

Mr. Brin also testified as follows (Record, p. 158):

Q. What did they say? Did they say they

did not have ties at that time?

A. They said they were short of ties and

did not have ties except to match the bagging.

That is what they wrote me.

Mr. Paul Kling, secretary of H. & C. Newman

(Ltd.), cotton factors of New Orleans, testified as

follows (Record, p. 186):

Q. Tell what that conversation was.

A. Mr. Elmer reported that he could not

fill an order for, I think it was, 5,000 bundle

of ties which he had taken in the morning of

the day in question, because Warren, Jones

& Gratz declined to fill the order, because we

had not purchased any bagging from them.

Q. Now, will you please state approximately

the time in 1916?

A. May or June of 1916.

Mr. Kling also introduced the following telegram

received by his company from Warren, Jones & Gratz

(Record, p. 186):

Our supply ties limited; manufacturers say

impossible increase output; we must use our

limited supply to go with our bagging; we are

offering all parties in this way, discriminating

against none; therefore can not accept your

order three thousand bundles.

In reaching its ultimate finding the Commission

had necessarily to take into consideration many facts

which it could not set forth in the findings, because of

limitation of space. It should be remembered that it

was known to respondents and the public that there

was every promise in the early part of the season of

1916 of a tremendous cotton crop. This fact is ad-

mitted throughout respondents’ evidence. The re-

spondents refused to sell ties unless bagging were

bought until it was evident that the cotton crop

Sy Mae tno gta et ae elit ot Raa ea aa

would be much smaller than expected (Record, 264,

265, 266, 272, 371) and there might be some difficulty

in disposing of all the supply of ties. Then the re-

spondents sold ties without bagging. (Record, pp.

66, 100, 269, 270, 363, 365.) This becomes important

when considering the claim of the respondents that

the parties who were refused ties without bagging

finally got all the ties they wanted before they were

needed by the farmers.

Since respondents knew in the latter part of the

season 1916 that the cotton crop was then a failure,

the Commission was well within its rights in giving

little weight to the evidence tending to show that

respondents sold ties without bagging.

For example, on August 30, 1916, the respondents

wrote to P. P. Williams & Co. as follows (Record, p.

264):

Dear Sirs: Your letter of the 28th. Your

assumption is correct: On account of the short

cotton crop we are anxious for bagging and tie

business.

In the early part of 1917 there were many refusals

to sell ties without bagging, similar to the refusals in

1916. (Record, pp. 108, 115, 120, 126, 136, 137, 272,

273, and 363.) Therefusals ceased some time in May,

but the records of the Federal Trade Commission

show that Mr. Robertson, a representative of the

Commission, was in Mississippi by this time inves-

tigating conditions in other bagging industries.

(Record, pp. 137, 190, 271, and 272.)

TP PES 2 LOR GUNMA PRLS ON: BAOPOU LD ELI apes Tite TI

That the respondents ceased from objectionable

practices in May, or sold ties without bagging at that

time, might have been due to the fact that the in-

“ vestigation was pending and the Commission was

justified in placing little importance on the temporary

cessation of respondents’ objectionable methods.

The failure to continue the practice was no reason

why the Commission’s order to cease and desist should

not issue. (Sears, Roebuck & Co. v. The Federal

Trade Commission, supra.)

The explanations of Mr. Gratz as to why he refused

to sell to various witnesses who testified in this case

that they were unable to buy ties without bagging,

were not binding upon the Commission, which, in the

rightful exercise of its jurisdiction, was warranted in

giving little weight to the testimony of an interested

witness or even rejecting it entirely. (Record, p. 342

and following.)

The defense of Mr. Gratz that he was trying to

prevent speculation by insisting that those who

purchased ties should also purchase bagging when

the latter already had bagging was not impressive,

for if he was stopping speculation by an unfair

method of competition, he was undoubtedly doing

more harm to the competitor and the consumer

than if speculation went unchecked. Since the

respondents admittedly dominated the market and

fixed the price on new steel ties, it was difficult to

see wherein there was a probability of much specula-

tion.

FIFTH.

The manner of sale and distribution of ties and

bagging followed by respondents is known as

‘full-line forcing,’’ and is economically an unfair

method of competition, under the public policy

evidenced by the Federal statutes.

This country, having adopted the competitive

process in business, has declared by its statutes that

the economi¢ struggle of manufacturers and distribu-

tors to secure the patronage of customers for their

products as the most beneficial method for society.

It has come to be accepted that fair methods of

competition are based solely upon relative produc-

tion, selling costs, and efficiency, and that unlawful

interference with these essentials of competition

constitutes unfairness. Paraphrasing a statement

of Mr. Justice Pitney in the case of International

News Service v. The Associated Press (supra), unfair

competitior may well be defined as a process amount-

ing to an unauthorized interference with the normal

operation of a competitor’s legitimate business.

It is obvious that any method employed in com-

petition which produces such interferences must

prevent competitive units from competing as severely

as their relative costs and efficiency would warrant,

and becomes an “unfair method.”

Applying this postulate to the findings of the pres-

ent case, we have some concerns manufacturing bag-

ging and other entirely distinct organizations en-

(46)

ee TT ee ,

SEES GAS NOONE Dea eae ae Catan Lost agree ee mp ater

BS ah a Hest tN a a sts

gaged in the manufacture of ties. Because of the

fact that ties and bagging are used together by the

ultimate consumer a practice has grown up whereby

manufacturers and dealers in bagging frequently, if

not usually, supply both ties and bagging together

to the purchaser.

This practice, when purely voluntary, is econom-

ically desirable from the standpoint of the purchasers.

It is a service feature given in connection with the -

sale of bagging, whereby the purchaser of bagging

and ties is enabled to purchase his requirements for

these articles from a single organization instead of

being compelled to negotiate independentiy with a

seller of bagging and a seller of ties in order to obtain

his requirements.

There is nothing violative of the rule of fair compe-

tition in the fact that the sellers of bagging also

carry ties to accommodate customers desiring to

purchase both.

The circumstances involved in the state of facts

presented by this record are, however, entirely dis-

tinct from those just described. The innecent prac-

tice of selling ties and bagging together, evolved as

an economic service feature, was transformed by

respondents into a weapon of compulsion. Knowing

that there was a scarcity of ties, and admittedly

having contracted for 98 or 99 per cent, the greater

proportion of the new production of the Carnegie

Company, the only heavy producer of such ties,

Warren, Jones & Gratz declared that they would

170051—20——-4

EE EI LOLI ILI OLE EAS I

supply ties only where a proportionate amount of

bagging was purchased from them by those desiring

ties.

The practice of supplying ties with sales of bag-

ging when both are sought and ordered, and of sup-

plying ties only on condition that proportionate

amounts of bagging are ordered, is in practical effect

as far apart as the two poles. Under the one system

there is nothing to interfere with the relative effi-

ciency of the manufacturers and sellers of bagging.

Each disposes of his bagging on its merits and sup-

plies ties to the purchaser when and if desired.

Each manufacturer and seller may sell his bagging

on the basis of his costs, prices, quality, adaptability

to the uses of the purchaser, and such incidental

service as he may see fit to give, and he does this in

competition with other manufacturers and _ sellers

likewise so engaged. Some of these purchasers de-

sire regular grades of bagging, some sugar-bag cloth,

others secondhand bagging, and yet others rewoven

bagging.

From an economic standpoint all are entitled to buy

the class they desire and manufacturers and dealers

are entitled te whatever volume of bagging business

accrues to them by reason of purchasers’ preferences,

the prices and service which the manufacttrers and

sellers afford. This is fair competition on the basis

of efficiency, for each competing seller will obtain that

proportion of the business to which its relative costs

and efficiency entitles it in competition with the rela-

tive costs and efficiencies of competing organizations.

DOME TE LS CP RRS SE TRH ORT LR mine ee

This method ‘‘is wise and in the interest of the public

and should be continued,” but it is in marked con-

trast to respondents’ method of selling ties only in

proportion to the bagging purchased.

Under respondents’ system the prospective pur-

chaser gf bagging can not select and purchase bagging

as and where he may desire and in accordance with

the price, quality, and character of the bagging re-

quired and the service afforded by the seller. On the

contrary, he is compelled to purchase largely, if not

entirely, irrespective of these conditions, and to buy

to a greater or less extent from the bagging seller or

sellers controlling the necessary ties. Not only does

this enable those following this method to make any

price they may choose, but it necessarily deprives

competitors of bagging business which might, and in

many cases would, undoubtedly have gone to them

had it been possible for prospective purchasers to

have purchased on the basis of the price, quality of

the bagging, and service of the sellers, irrespective of

the matter of ties.

In the lower court counsel for respondents in his

brief carefully italicised the following sentence con-

tained in the letter of Gratz to Wallace of July 7, 1916:

To gain an advantage on our competitors

and guard ourselves from disaster, we should

have taken the Carnegie Company’s whole

1,400,000 bundles, and would have been glad

to do so except for the broader policy protect-

ing the Carnegie Company’s trade by giving ties

to anyone who had been their customer in years

at ee

One may well consider what would have been the

result upon competitors of respondents had the Gratz

Company been able to purchase as they ‘‘would have

been glad to do”’ the entire Carnegie output, and re-

sold the same solely on condition that proportionate

amounts of bagging be purchased therewith. This

method counsel for respondents characterizes as

‘‘wise,”’ in the interest of the public, and ‘‘just to

both manufacturer and consumer.”’

The effect of such a system as that employed by

respondents is to force upon various concerns and or-

ganizations in greater or less proportions, bagging

which they would not purchase under other condi-

tions, thereby depriving other bagging sellers of busi-

ness which they would otherwise obtain were the

bagging purchased upon the basis of its price, quality,

and service afforded by the seller. The method, there-

fore, is clearly violative of the rule of fair competition

because respondents by the employment of this method,

obstructed, interfered with, and embarrassed competing

bagging manufacturers and dealers in making sales of

this product.

They have in greater or less proportion obtained

business not upon the basis of the quality and price

of their goods and such services as they might render,

but upon the basis of an arbitrary requirement made

possible by their control of ties. The unfairness of

the method is best illustrated by the letter of Warren,

Jones & Gratz to P. P. Williams & Co., dated June 24,

1916, which gave the following instructions:

FORDE DIL LEAR IPO EROS LE I A ORD

Do not sell ties to anyone without bagging

to match, as we do not propose to furnish

buyers of sugar bags any ties if we can help it.

Thus, from the respondents’ own words, this court

may learn to what extent, in the language of counsel,

“the method adopted by the defendants is proper

and just to both manufacturer and consumer.”

Under such a practice it is obvious that prospective

purchasers of sugar-bag cloth neither can nor will

continue to buy that commodity if they can not

obtain ties. Instead they will be compelled, under

the circumstances, to buy jute bagging from respon-

dents. Such a system is both improper and unjust

to sugar-bag manufacturers.

Pursued to its logical conclusion, should respon-

dents retain a large control of the supply of ties, they

might well run competitors in bagging out of business

and produce a practical monopoly or at least a serious

restraint of commerce to the public detriment.

It is maintained that the requirement that a prs-

portionate quantity of American bagging bought

with each purchase of ties compelled certain pur-

chasers of bagging to buy not in a free and open

market, and in accordance with prices, quality of

goods, and incidental services of the sellers, on the

basis of their control of ties, and with little or no

reference to the elements of quality, price, and

service. The effect of this was (a) to handicap such

purchasers by preventing them from securing the

goods which they would have purchased in the

REEFS ERA BED AE PE RE EST IN

2 - 3 ’

absence of such restrictions; (b) to prevent other

manufacturers of bagging from obtaining that pro-

portion of the bagging business which they would

have obtained upon the basis of their relative costs

and efficiencies in the absence of the method of

respondents; and (c) to promote an unfair method of

competition.

CONCLUSION.

Wherefore, it is respectfully submitted that the

order of the Circuit Court of Appeals be set aside,

and that the order of the Federal Trade Commission

be affirmed.

Auex. C. Kina,

Solicitor General.

Huston THOMPSON,

Federal Trade Commissioner.

CLauDE R. Porter,

Chief Counsel of the Federal Trade Commission.

APPENDIX.

Finpincs or Fact anp ConcLusions oF LAW BY

CoMMISSION.

FINDINGS OF FACT.

Paragraph 1.—That Anderson Gratz and Benjamin

Gratz, copartners, doing business under the firm name

and style of Warren, Jones & Gratz, one of the

respondents, is a copartnership whose principal

office and place of business is in the City of St. Louis,

State of Missouri; that P. P. Williams, W. H. Fitzhugh

and Alexander Fitzhugh, copartners, doing business

under the firm name and style of P. P. Williams &

Company, is a copartnership with its principal office

and place of business in the city of Vicksburg, State

of Mississippi; and that the other respondent, C. O.

Elmer, has his principal office and place of business

in the city of New Orleans, State of Louisiana; that

all of said respondents are now, and were at all

times hereinafter mentioned, engaged in commerce

among the several States and Territories of the

United States in the sale and distribution of steel

ties, manufactured and used for the purpose of bind-

ing bales of cotton, and jute bagging, manufactured

and used for the purpose of covering and wrapping

bales of cotton; and that the respondents, P. P.

Williams, W. H. Fitzhugh and Alexander Fitzhugh,

_ copartners, doing business under the firm name and

style of P. P. Williams & Company, and C. O. Elmer

were, and aré general selling and distributing agents

for the said Anderson Gratz and Benjamin Gratz,

(53)

copartners, doing business under the firm name and

style of Warren, Jones & Gratz, in the sale and dis-

tribution of said articles of commerce; and that the

said Anderson Gratz and Benjamin Gratz, copartners,

doing business under the firm name and style of

Warren, Jones & Gratz, were and are the general

selling and distributing agents for the Carnegie Steel

Company located at Pittsburgh, Pa., in the sale and

distribution of steel ties manufactured and used for

the purpose aforesaid; and that the said Anderson

Gratz and Benjamin Gratz, copartners, doing busi-

ness under the firm name and style of Warren, Jones

& Gratz, were and are the general selling and distri-

buting agents of the American Manufacturing (‘om-

pany, the principal office of which is in the city of

Brooklyn, State of New York, for the sale and dis-

tribution throughout the States, commonly known

as cotton States, of jute bagging manufact ired and

used for the purpose aforesaid; and that Mente &

Company with offices in the cities of New York and

New Orleans, and many other persons sell and dis-

tribute a material known as sugar bag cloth in inter-

state commerce throughout the cotton growing States

of this country, which material is used for the pur-

pose of wrapping bales of cotton; and that the Carolina

Bagging Company, located at Henderson, N. C.,

manufactures, sells and distributes in interstate com-

merce, throughout the cotton growing States of this

country, what is known as rewoven bagging, and that

said material known as rewoven bagging is manu-

factured and sold by other corporations and co-

partnerships in interstate commerce.

Paragraph 2.—That within three years last past

respondents, Anderson Gratz and Benjamin Gratz,

copartners, doing business under the firm name and

TO IN NTE pn OO OE ges OE

style of Warren, Jones & Gratz; P. P. Williams,

W. H. Fitzhugh, and Alexander Fitzhugh, copartners,

doing business under the firm name and style of

P. P. Williams & Company; and C. O. Elmer, adopted

and practiced the policy of refusing to sell steel ties

to those merchants and dealers who wished to buy

them from them unless such merchants and dealers

would also buy from thevn a corresponding amount of

jute bagging. The purpose and effect of said policy

was to force those dealers, jobbers, and merchants

who wished to buy steel ties from the said Anderson

Gratz and Benjamin Gratz, copartners, doing business

under the firm name and style of Warren, Jones &

Gratz, either through themselves or their general

agents, P.P. Williams, W.H. Fitzhugh, and Alexander

Fitzhugh, copartners, doing business under the firm

name and style of P. P. Williams & Company and

C. O. Elmer, to also buy at the same time from said

respondents a corresponding amount of American

bagging manufactured by the American Manufactur-

ing Company, of which manufacturing company the

the said respondents, Anderson Gratz and Benjamin

Gratz, copartners, doing business under the firm

name and style of Warren, Jones & Gratz, were the

sole selling and distributing agents in all the territory

west of the Mississippi River, where cotton is grown

and where bagging and ties are sold for the purpose of

covering and wrapping bales of cotton.

Paragraph 3.—That the said respondents, Anderson

Gratz and Benjamin Gratz, copartners, doing busi-

ness under the firm name and style of Warren, Jones

& Gratz, were and are the sole selling and distributing

agents of the Carnegie Steel Company of Pittsburgh,

Pa., in the sale and distribution of its entire output

of steel ties made and sold for the purpose of binding

ed ee oe eee ie

bales of cotton; and that the Carnegie Steel Company

manufactures and sells annually about 75' per cent

of all the steel ties manufactured for seeh purpose

in the United States; and that the Carnegie Steel

Company sufficiently dominates the cotton tie situa-

tion in the United States to enable it to fix and

control the price of such ties throughout the country;

and that about 45 per cent of the jute bagging re-

quired to cover the cotton crop of the Southern

States is annually manufactured by the American

Manufacturing Company and about 20 per cent by

the Ludlow Manufacturing Associates of Boston,

Mass., and-the remaining requirement for baling

the cotton crop, viz, about 35 per cent is made up

by the use of second-hand bagging and a material

called sugar bag cloth. This cloth, as well as the

second-hand or reweven bagging, is in considerable

demand by cotton balers and is sold and distributed

by dealers throughout the Southern States in active

competition with the jute bagging manufactured by

the American Manufacturing Company and sold and

distributed by the said respondents.

Paragraph 4.——-That a great many merchants,

jobbers, and dealers in bagging and ties throughout

the cotton-growing States were many times unable

to procure ties from any other firm except Anderson

Gratz and Benjamin Gratz, copartners, doing busi-

ness under the firm name and style of Warren,

Jones & Gratz, or their said agents, P. P. Williams,

W. H. Fitzhugh, and Alexander Fitzhugh, copart-

ners, doing business under the firm name and style

of P. P. Williams & Company, and C. O. Elmer,

and that the said respondents sold arid distributed

such a large proportion of the entire amount of such

ties manufactured and sold in the entire cotton-

! See note, p. ?.

BRR ae | RR ar re er EE DR es RES

growing section of the country, that they, the said

respondents, had what amounted to a monopoly

of the cotton tie business of the country, controlling

and distributing such a large proportion of the entire

output of cotton ties that cotton growers found it

impossible to bind the cotton grown and produced

in the Southern States without applying to and

purchasing from the said respondents and _ their

agents almost the entire output of such ties manu-

factured by the Carnegie Steel Company. The

dominating and controlling position occupied by

said respondents in the sale and distribution of ties

made it possible for them to force would-be pur-

chasers of ties to also buy from them bagging manu-

factured by the American Manufacturing Company

and, in many instances, said respondents refused

to sell ties unless the purchaser would also buy

from them a corresponding amount of bagging and

such purchasers were oftentimes compelled to buy

bagging manufactured by the American Manufac-

turing Company, from said respondents, in order to

procure a sufficient supply of steel ties used for the

purpose aforesaid.

CONCLUSIONS OF LAW.

That the methods of competition set forth in the

foregoing Findings as to the Facts, in paragraphs

1, 2, 3 and 4, and each and all of them are, under

the circumstances therein set forth, unfair methods

of competition in interstate commerce, against other

manufacturers, dealers and distributors of jute

bagging, and against other dealers and distributors

in the material known as sugar bag cloth, and against

manufacturers, dealers, and distributors of the bag-

2 Meng BeRy

PERERA

ay’

ging known as rewoven bagging and second-hand

bagging, in violation of the provisions of Section 5

of an Act of Congress, approved September 26,

1914, entitled ‘“‘An Act to Create a Federal Trade

Commission, to Define its Powers and Duties, and

For Other Purposes;” and that there is not sufficient

proof submitted in the hearings to sustain the para-

graph in the complaint charging a violatian of

Section 3 of an act of Congress known as the Clayton

Act.

[SEAL.] WiuuraM B. Cover, Chairman.

JOHN FRANKLIN Fort,

Victor Murbock,

Commissioners.

Ses SEER RRS SEALS EE IG ENS OI pas 3 na

THE FEDERAL TRADE COMMISSION ACT.

Section 5 of an act of Congress, approved Septem-

ber 26, 1914, entitled, ‘‘An act to create a Federal

Trade Commission, to define its powers and duties,

and for other purposes.” (38 Stat., Chap. 311, p. 719.)

sec. 5. That unfair methods of competition in

commerce are hereby declared unlawful.

The commission is hereby empowered and directed

to prevent persons, partnerships, or corporations,

except banks, and common carriers subject to the

acts to regulate commerce, from using unfair methods

of competition in commerce.

Whenever the commission shall have reason to

believe that any such person, partnership, or cor-

poration has been or is using any unfair method of

competition in commerce, and if it shall appear to the

commission that a proceeding by it in respect thereof

would be to the interest of the public, it shall issue

and serve upon such person, partnership, or corpora-

tion a complaint stating its charges in that respect

and containing a notice of a hearing upon a day and

at a place therein fixed at least thirty days after the

service of said complaint. The person, partnership,

or corporation so complained of shall have the right

to appear at the place and time so fixed and show

cause why an order should not be entered by the

commission requiring such person, partnership, or

corporation to cease and desist from the violation of

the law so charged in said complaint. Any person,

partnership, or corporation may make application,

and upon good cause shown may be allowed by the

commission to intervene and appear in said proceeding

by counsel or in person. The testimony in any such

proceeding shall be reduced to writing and filed in the

office of the commission. If upon such hearing the

(59)

secs vrei hPL OLR PINE OL IS IT ae

ANNE LEE LASSE REPT LAI GONE IEE Steg SEP

MOREOCT

commission shall be of the opinion that the method

of competition in question is prohibited by this act it

shall make a report in writing in which it shall state

its findings as to the facts and shall issue and cause to

be served on such person, partnership, or corporation

an order requiring such person, partnership, or cor-

poration to cease and desist from using such method

of competition. Until a transcript of the record in

such hearing shall have been filed in a circuit court

of appeals of the United States, as hereinafter pro-

vided, the commission may at any time, upon such

notice and in such manner as it shall deem proper,

modify or set aside, in whole or in part, any report

or any order made or issued by it under this section.

If such person, partnership, or corporation fails

or neglects to obey such order of the commission

while the same is in effect, the commission may

apply to the circuit court of appeals of the United

States, within any circuit where the method of

competition in question was used or where such

person, partnership, or corporation resides or carries

on business, for the enforcement of its order, and

shall certify and file with its application a transcript

of the entire record in the proceeding, including all

the testimony taken and the report and order of the

commission. Upon such filing of the application

and transcript the court shall cause notice thereof

to be served upon such person, partnership, or cor-

poration and thereupon shall have jurisdiction of

the proceeding and of the question determined therein,

and shall have power to make and enter upon the

pleadings, testimony, and proceedings set forth in

such transcript a decree affirming, modifying, or

setting aside the order of the commission. The

findings of the commission as to the facts, if sup-

ported by testimony, shall be conclusive. If either

party shall apply to the court for leave to adduce

additional evidence, and shall show to the satisfac-

tion of the court that such additional evidence is

material and that there were reasonable grounds fot

failure to adduce such evidence in the proceeding

ee a »

before the commission, the court may order such

additional evidence to be taken before the commis-

sion and to be adduced upon the hearing in such

manner and upon such terms and conditions as to

the court may seem proper. The commission may

modify its findings as to the facts, or make new

findings, by reason of the additional evidence so

taken, and it shall file such modified or new findings,

which, if supported by testimony, shall be conclu-

sive, and its recommendation, if any, for the modifica-

tion or setting aside of its original order, with the

return of such additional evidence. The judgment

‘and decree of the court shall be final, except that

the same shall be subject to review by the Supreme

Court upon certiorari as provided in section two

hundred and forty of the Judicial Code.

Any party required by such order of the commis-

sion to cease and desist from using such method of

competition may obtain a review of such order in

said circuit court of appeals by filing in the court a

written petition praying that the order of the commis-

sion be set aside. A copy of such petition shall be

forthwith served upon the commission, and there-

upon the commission forthwith shall certify and

file in the court a transcript of the record as herein-

before provided. Upon the filing of the transcript

the court shall have the same jurisdiction to affirm,

set aside, or modify the order of the commission as

in the case of an application by the commission for

the enforcement of its order, and the findings of the

commission as to the facts, if supported by testimony,

shall in like manner be conclusive.

The jurisdiction of the circuit court of appeals of

the United States to enforce, set aside, or modify

orders of the commission shall be exclusive.

Such proceedings in the circuit court of appeals

shall be given precedence over other cases pending

therein, and shall be in every way expedited. No

order of the commission or judgment of the court to

enforce the same shall in anywise relieve or absolve

any person, partnership, or corporation from any

liability under the antitrust acts.

Complaints, orders, and other processes of the

commission under this section may be served by

anyone duly authorized by the commission, either

(a) by delivering a copy thereof to the person to be

served, or to a member of the partnership to be

served, or to the president, secretary, or other

executive officer or a director of the corporation to be

served; or (b) by leaving a copy thereof at the

principal office or place of business of such person,

partnership, or corporation; or (c) by registering and

mailing a copy thereof addressed to such person,

partnership, or corporation at his or its principal

office or place of business. The verified return by -

the person so serving said complaint, order, or other

process setting forth the manner of said service shall

be proof of the same, and the return post-office

receipt for said complaint, order, or other process

registered and mailed as aforesaid shall be proof of

the service of the same.

PLE ERENT SOE RNG TO iy BEL LEN OR EE LEN

SIMILARITY OF FEDERAL TRADE COMMISSION

ACT AND INTERSTATE COMMERCE ACT, AS

SHOWN BY THE PROCEEDINGS IN CONGRESS.

Senator Newlands: Page 11082, Congressional Rec-

ord, volume 51, part 11; page 11084, Congressional

Record, volume 51, part 11; page 11086, Congres-

sional Record, volume 51, part 11; page 11112,

Congressional Record, volume 51, part 11; page

11235, Congressional Record, volume 51, part 11.

Senator Cummins: Page 11103, Congressional Rec-

ord, volume 51, part 11; page 11104, Congressional

Record, volume 51, part 11; page 11379, Congres-

sional Record, volume 51, part 11; page 11451,

Congressional Record, volume 51, part 12; page

12916, Congressional Record, volume 51, part 13;

pages 13004-13006, Congressional Record, volume 51,

part 13; page 13047, Congressional Record, volume

51, part 13; page 13050, Congressional Record,

volume 51, part 13; page 13063, Congressional

Record, volume 51, part 13.

Senator Hollis: Page 12142, Congressional Record,

volume 51, part 12.

Senator Lewis: Page 12147, Congressional Record,

volume 51, part 12; pages 12925-12926, Congressional

Record, volume 51, part 13.

Senator Walsh: Page 13052, Congressional Record,

volume 51, part 13.

Mr. Covington: Page 14928, Congressional Record,

volume 51, part 15.

Mr. Stevens: Page 14938, Congressional Record,

volume 51, part 15.

170051—20——5 (63)

en eos Fae hat At ha EE : 4 ¥

Report of Senate Committee on Interstate Commerce:

Congressional Record, volume 51, part 11, pages

11087, 11089.

Report No. 533, House of Representatives, Com-

mittee on Interstate and Foreign Commerce: Congres-

sional Record, volume 51, part 7, page 6714.

Congress intended to provide a broad rule covering

all unfair competition and to confer on the Commis-

sion power to decide what came within the rule:

Senator Newlands: Page 11084, Congressional Ree-

ord, volume 51, part 11; page 11090, Congressional

Record, volume 51, part 11; page 11107-8, Congres-

sional Record, volume 51, part 11; page 11112, Con-

gressional Record, volume 51, part 11; page 11189,

Congressional Record, volume 51, part 11; page 12221,

Congressional Record, volume’51, part 12; page 12939,

Congressional Record, volume 51, part 13; page 13048,

Congressional Record, volume 51, part 13.

Senator Cummins: Page 11104, Congressional Ree-

ord, volume 51, part 11; page 11388, Congressional

Record, volume 51, part 11; page 12653, Congres-

sional Record, volume 51, part 13; page 13006, Con-

gressional Record, volume 51, part 13.

Senator Robinson: Page 11231, Congressional Ree-

ord, volume 51, part 11.

Senator Hollis: Page 12146, Congressional Record,

volume 51, part 12.

Senator White: Page 13108, Congressional Record,

volume 51, part 13.

Report of Senate Committee on Interstate Commerce,

page 11090, Congressional Record, volume 51, part 11.

Conference Report, pages 14768, 14769, Congres-

sional Record, volume 51, part 15.

Conference Report, pages 14919, 14925, Congres-

sional Record, volume 51, part 15.

LORE EERE ATE DAE I LETS STE SOE OTRO TEI

The jurisdiction of the Circuit Court of Appeals

was intended to be restricted exclusively to questions

of law: ,

Senator Cummins: Page 11104, Congressional Rec-

ord, Volume 51, Part 11; page 11451, Congressional

Record, Volume 51, part 12; page 13004, Congres-

sional Record, Volume 51, part 13; page 13007,

Congressional Record, Volume 51, part 13; page

13045, Congressional Record, Volume 51, part 13;

page 13050, Congressional Record, Volume 51, part

13; page 13063, Congressional Record, velume 51,

part 13.

Senator Newlands: Pages 11182-3, Congressional

Record, volume 51, part 11; page 12217, Congres-

sional Record, volume 51, part 12.

Senator Kenyon: Page 13156, Congressional Rec-

ord, volume 51, part 13.

Mr. Sims: Page 14940, Congressional Record,

volume 51, part 15.

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.