ground, and the like-with no single factor controlling.229 One thing seems clear from Yellow Cab and Columbia Steel, discussed above: a specific intent to monopolize is not shown, in the case of a merger, by the sole fact that the acquiring company intends to treat the acquired company as a subsidiary, even though that intention may be accurately described, in some sense at least, as a "deliberate, calculated scheme to control" the acquired company's policies. In the Columbia Steel case, proof would have required evidence that the purchase was part of a larger plan for gaining monopoly power by a series of mergers before the acquisition could have been condemned as part of an unlawful attempt under Section 2. 4. "Trade or Commerce Among the Several States, or With Foreign Nations" Underlying all Sherman Act problems is the scope of "trade or commerce among the several States, or with foreign nations." Measuring "trade or commerce" limits raises at least three principal issues: (1) The functional scope of the words "trade or commerce"; (2) the territorial distinction between interstate and local commerce; and (3) the breadth of "trade or commerce *** with foreign nations", a topic treated in the next section on Foreign Commerce. The phrase in the statute corresponds closely to the language used in Article 1, section 8 of the Constitution, and has been construed, except perhaps with regard to foreign commerce,230 to be as inclusive as the constitutional limits of Congress' power to regulate commerce. As the Court put it in United States v. South-Eastern Underwriters Ass'n., in passing the Sherman Act Congress meant "to go to the utmost extent of its Constitutional power in restraining trust and monopoly agreements." 231 The words "trade or commerce" used in Section 1 of the Sherman Act, and "any part of the trade or commerce" in Section 2, take meaning both from their common law sense and from their part in a broad statutory plan. They have been construed to include all sorts of economic activities, so long as the requisite interstate effect is found. The term "trade or commerce" is not limited to economic activities involving the production and physical movement of goods. Thus 229 See United States v. Columbia Steel Co., 334 U. S. 495, 531-533 (taking into consideration U. S. Steel's history of acquisitions, but not permitting it to control in view of the intervening Government sale of the Geneva plant to U. S. Steel). See United States v. Aluminum Co. of America, 148 F. 2d 416, 443 (2d Cir. 1945); American Banana Co. v. United Fruit Co., 213 U. S. 347, 357-359 (1909). 231 322 U. S. 533, 558 (1944). 230 banking, insurance, finance, the business of conducting hospitals and making organized provision for medical care 232 all may come within its scope. In 1922, however, the Federal Baseball case held that baseball involves "purely state affairs", with only incidental effects on interstate commerce.233 Since 1922, changes have marked the constitutional concept of "commerce" as well as the commercial character of baseball. Nonetheless, the Supreme Court has recently held in Toolson v. New York Yankees, Inc.234 that where a business has for thirty years developed in reliance on a Supreme Court ruling, it was not subject to antitrust, and where Congress has not by legislation overruled that decision, the Court would not reverse itself, with potentially severe retrospective effect. However Toolson's reliance on an "understanding" 235 with organized baseball presaged later holdings in International Boxing 286 and Shubert 237 that "Toolson was a narrow application of stare decisis," 238 not necessarily applicable to business involving other sports or the arts. Thus, the Committee believes it is sound to confine Toolson to its particular factual situation. 241 For Toolson is in terms difficult to rationalize, since Paul v. Virginia,239 upon which Federal Baseball Club relied, was expressly overruled in United States v. South-Eastern Underwriters Ass'n.240 with an equally retrospective effect, although not in a treble damage action. It has never been the law that particular decisions, even on consent, were "contracts" or "understandings" between courts and litigants.2 And the argument of protecting business interests built up in reliance on prior decisions, if extended, could dangerously limit the adaptability and growth of the law. Chief Justice Hughes' comparison of the antitrust laws with constitutional provisions underscores the danger in this field of rigidly adhering to precedents which time may prove 232 Since at common law contracts in unreasonable restraint of the physician's right to practice his profession were often held to be unenforceable, the business aspects of the learned professions fall within the limits of the Sherman Act, both in the District of Columbia and federal territories, if they fall within the jurisdictional reach of the "trade or commerce" clauses of the Act. United States v. American Medical Ass'n., 110 F. 2d 703 (D. C. Cir. 1940) cert. denied 310 U. S. 644 (1940); see further 130 F. 2d 233 (D. C. Cir. 1942), 317 U. S. 519 (1943). See also United States v. Oregon Medical Society, 343 U. S. 326, 338-339 (1952). Federal Baseball Club v. National League, 259 U. S. 200, 208-209 (1922). 234 346 U. S. 356 (1953). 233 236 United States v. International Boxing Club of New York, Inc., U. S. Sup. Ct., decided Jan. 31, 1955. 237 United States v. Lee Shubert, U. S. Sup. Ct., decided Jan. 31, 1955. 241 See e. g. United States v. Swift & Co., 286 U. S. 106, 115 (1932). to be incorrect. We believe that if South-Eastern Underwriters is sound, the Toolson case is unsound. We express no opinion on whether legislation is desirable with specific reference to organized baseball. b. Interstate and Intrastate Commerce The Supreme Court has long since reversed United States v. E. C. Knight Co.,242 which held manufacturing not to be "trade or commerce". At the present time, the distinction between intrastate and interstate commerce, while sometimes decided by lower courts rather arbitrarily, does not seem to present a major issue calling for reconsideration either by the courts or Congress. The broad doctrine of Mandeville Island Farms, Inc. v. American Crystal Sugar Co.,243 and United States v. Employing Lathers Ass'n. of Chicago,244 permits attacking local restraints of great importance to the people and economy of particular areas, where such restraints have interstate effects. Principal controversy centers, therefore, on other "commerce" issues, for example, the scope of "trade or commerce *** with foreign nations" to which we now turn. 242 156 U. S. 1 (1895). 244 347 U. S. 198 (1954). CHAPTER II "Trade or Commerce With Foreign Nations" * We emphasize at the outset that antitrust is but one of several interrelated governmental policies touching on the foreign trade and na * In addition to the Sherman Act (15 U. S. C. §§ 1 and 2 [1952]), other antitrust statutes include provisions relating to foreign commerce. "Unfair methods of competition" in Section 5 of the Federal Trade Commission Act (15 U. S. C. § 44 [1952]), embracing potential as well as full blown Sherman Act violations, applies to "commerce *** with foreign nations or **between *** any state *** or foreign nation." 15 U. S. C. § 44 [1952]). Section 1 of the Clayton Act (15 U. S. C. § 12 [1952]) defines "commerce" to include "commerce with foreign nations." Section 2 (a) of the Robinson-Patman Act (15 U. S. C. § 12 [1952]) amendment to the Clayton Act and Section 3 of the Clayton Act apply only when the transactions there covered involve "use, consumption or resale within the United States or any territory or place under its jurisdiction." But Sections 2 (c), (d) and (e) of the Robinson-Patman Act apparently apply also to goods sold for export. (Baysoy v. Jessop Steel Co., 90 F. Supp. 303 [W. D. Pa. 1950]). Section 7 of the Clayton Act as amended (15 U. S. C. § 7 [1952]) applies to the acquisition by a corporation engaged in commerce of the whole or part of the capital stock or assets of another corporation also engaged in commerce. As yet there is no judicial precedent for its application to foreign commerce but the Act appears to cover mergers of American and foreign companies where there is the specified effect within the United States. The Wilson Tariff Act (15 U. S. C. § 8 et seq. [1952]) in effect applies the Sherman Act to importers. Section 73 of this Act (Id. at §8) declares that “Every combination, conspiracy, trust, agreement, or contract" made by or between two or more persons, "either of whom *** is engaged in importing any article from any foreign country into the United States" is illegal and void, when intended to operate in restraint of lawful trade or to increase the market price of any imported articles in any part of the United States, "or of any manufacture into which such article enters or is intended to enter." Section 76 of the Act, seldom invoked, provides for seizure of articles "imported into and being within" the United States, "owned under any contract or by any combination, or pursuant to any conspiracy" in restraint of trade (15 U. S. C. § 11 [1952]). This follows a similar provision contained in Section 6 of the Sherman Act (15 U. S. C. § 6 [1952]), but in the latter section, the property must be “in the course of transportation" from one state to another, or to a foreign country. The Panama Canal Act (15 U. S. C. § 31 [1952]) forbids any vessels from passing through the canal if owned, chartered or doing business in violation of the Sherman or Wilson Tariff Acts. Other Acts relating to foreign trade which have antitrust provisions include the Shipping Act of 1916 (46 U. S. C. § 801 [1952]); Tariff Act of 1930 (46 U. S. C. § 1337 [1952]); Revenue Act of 1916 ("antidumping provisions") (15 U. S. C. § 71 et seq. [1952]); Marine Insurance Association Act (46 U. S. C. § 885 [1952]). tional security programs of the United States. Accordingly, while we do not treat directly these other programs, we recognize the need for their coordination with antitrust in order to avoid or minimize any policy conflict. We caution that resolution of possible conflict in any given case may go beyond the range of discretion of the Attorney General, the Federal Trade Commission or other agencies charged with administration and enforcement of the antitrust laws. As in other parts of this report, this Committee has made no independent factual study to provide any basis for determining whether our antitrust laws have helped or hindered the foreign commerce of the United States or for generalizing about the effect of antitrust on any related governmental policy. Accordingly, we reject any proposal for blanket exemption of foreign commerce from the antitrust laws. We, therefore, focus largely on clarification and improvement of the criteria for interpreting existing statutory standards. The Committee, in any event, believes that the generality of the Sherman Act standards provides the desired flexibility for adaptation, consistent with antitrust objectives, to any special problems of foreign commerce. Thus we do not favor their substantial revision to define specifically legal and illegal conduct in foreign commerce transactions. First, we analyze jurisdiction under the antitrust laws over persons or conduct beyond the territorial limits of the United States. Second, we treat the content of the words, "trade of commerce ** with foreign nations" in the Sherman Act. Third, we discuss the inquiries relevant to the legal tests for determining injury to foreign trade or commerce. Finally, we consider procedures for coordinating antitrust with related government policies as well as exemptions provided by Congress to promote such policies. A. EXTRATERRITORIAL JURISDICTION The foreign commerce clause of the Sherman Act was first before the Supreme Court in American Banana Co. v. United Fruit Cos 2 See infra for discussion of this aspect. *213 U. S. 347 (1909). Cf. United States v. Nord Deutscher Lloyd, 223 U. S. 512 (1912). There a steamship company was indicted under the Immigration Act of 1907 for forcing security and return passage money from aliens prior to transporting them here. The trial court sustained a demurrer to the indictment on the ground that the money was paid and received in Germany. The Supreme Court, reversing, said: "The Statute, of course, has no extraterritorial operation, and the defendant cannot be indicted here for what he did in a foreign country. American Banana Co. v. United Fruit Co., 213 U. S. 347. But the parties in Germany could make a contract which would be of force in the United States. When therefore, in Bremen the alien paid and the defendant received the 150 rubles for a return passage, they created a condition which was operative in New York. *** Retention of the money [in New York], with * * * intent [to secure payment of their passage to Bremen] was an affirmative violation of the statute." Id. at 517-518. |