Denison, J., dissenting. that way the Commission will be freed from private quarrels and controversies." The two amendments made in conference can be traced back in the record and measurably interpreted by it. In meeting the objection that "unfair competition" would mean "palming off," and nothing else, Senator Hollis, of the committee, said (page 12145): "If * * the words 'unfair competition' have a peculiar and limited meaning, applicable only to the substitution of one man's goods for another's, * * it is very easy to separate the two words, unfair' and 'competition,' so that they will not become mixed with [that] particular sort of methods. * It would be very easy to make the operation of this act certain by specifying that unfair methods of competition are prohibited. Therefore ** * I suggest-and I hope the chairman of the committee will consider the suggestion and agree to it-that the words 'unfair' and 'competition' be separated by some word that will not do them any harm, such as 'oppressive,' or 'methods of,' so that there will not be the particular label that has been attached in many * cases. * Apparently the conferees adopted this suggestion. [998] Commenting on and repeating the frequent assertion that the law was not intended for those acts of competition, unjustifiable as between traders, for which existing laws gave remedy, Senator Cummins, in the course of the main discussion, said (page 13151): "The unfair competition with which the public is concerned is unfair competition whch is inconsistent with or repugnant to the continuance of competition as a force in the business life of the country." Senator McCumber said (page 13304): "There are many practices which might be unfair as between competitors, the result of which is beneficial to the public [as, by forcing lower prices to meet it], and it only ceases to be beneficial to the public when the effect of the competition is such that it destroys one of the competitors.” It was apparently to meet this view that the conference committee made its second amendment, requiring an initial finding of public interest. This review leads me to the conclusion with which this discussion opened, viz. that the jurisdiction of the Commis Denison, J., dissenting. sion is limited to those situations indicating at least substantial tendency to restraint of trade or monopoly. There is, however, another, or second, view not without support in the record. It is that the jurisdiction extends also to cases of "palming off," if the sufficient "public interest" exists. Against this view it is to be noted that such result was foreign to the general purpose of the act, was not called for in addition to existing remedies, and was not urged in reports or debates, as well as that the words "methods of " were inserted for the seeming purpose of avoiding this meaning. For this view it is to be said that Congress chose a phrase, “unfair methods of competition," that was so analogous to the phrase, "unfair competition," which had been judicially defined as "palming off," that the courts must accept this fixed meaning as indicating one at least of the results accomplished by the law." I come to this again, after considering the course of the judicial decisions. The act passed in 1914. No case seems to have reached the courts until 1919, when, at about the same time, the Sears-Roebuck Case was decided by the Seventh C. C. A. (258 Fed. 307, 169 C. C. A. 323, 6 A. L. R. 358), and the Gratz Case by the Second C. C. A. (258 Fed. 314, 169 C. C. A. 330, 11 A. L. R. 793). The Sears-Roebuck Case was typical of the class which, in my judgment, was not intended to be brought within the act. Competitors complained that the Sears-Roebuck Company promoted the sale of its goods by advertising certain nonexistent merits; there is no suggestion, in the opinion, that the practice tended toward monopoly or restraint of competition; the court evidently assumed, perhaps for lack of any challenge, that "unfair competition" in this act would have the broadest natural meaning as in private controversies between traders-an inference in express conflict with the repeatedly declared purposes of House and Senate. The case was not reviewed by the Supreme Court. • Particularly some of the discussions in the House, after the section 5 was reported by the managers, lend support to the theory that the "palming off" subject was thought to be within the power granted, when upheld by the necessary public interest. Denison, J., dissenting. [999] In the Gratz Case it appeared that the unfair methods complained of did have to do with a restriction thought to be undue restraint of trade, tending to monopoly. When the case reached the Supreme Court (253 U. S. 421, 40 Sup. Ct. 572, 64 L. Ed. 993) the majority thought that the practices in question did not unlawfully restrain competition, and hence that the act was not violated. Justice Brandeis, dissenting, thought that the methods used were undue restraint, and he reviewed the origin and purposes of the Trade Commission. He makes it clear that the whole purpose of the act creating the Commission was to aid the anti-trust acts. In 1920, in the Asbestos Case (Second C. C. A.) 264 Fed. 509, 18 A. L. R. 546, it was held that for one competitor to bribe the employees of another was not an unfair method of competition, within section 5, because such practices were not a matter of public interest. Both this decision and the previous one in the Gratz Case are based upon the provision of section 5 that public interest must be involved before the Commission proceeds. The court found that there was no public interest of any kind, and so had no occasion to consider the limiting definitions repeatedly made in the House and Senate. At about the same time the same court considered the Beechnut Case, 264 Fed. 885. This again involved a supposed restriction of competition, tending to monopoly. The court thought the facts did not make the restraint unlawful. The whole question considered was whether the methods employed would violate the Anti-Trust Act, or, as stated by the court (page 889), "is that the method is unfair, because it stifles competition and so restrains trade." Judge Manton said (page 890) that "it was intended by section 5 to prevent practices of methods * unfair to the public which, if not prevented, would grow and create monopolies, and thus restrain trade and lessen competition." This case was reviewed by the Supreme Court and reversed. 257 U. S. 441, 42 Sup. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882. The majority of the court thought that the Beechnut methods of price restriction Denison, J., dissenting. were within the forbidden unlawful restraint of trade, and the reversal was for this reason. Justice Day said (257 U. S. p. 453, 42 Sup. Ct. 154, 66 L. Ed. 307, 19 A. L. R. 882) that the Trade Commission Act "was intended to supplement previous anti-trust legislation." The dissent is only as to the unduly restraining character of the Beechnut methods. Next in order came the National Harness Association Case, before this court. 268 Fed. 705. We sustained the Commission's order, but the whole complaint was that the methods attacked were part of a plan to suppress competition throughout the trade. Nothing else was involved or considered. The same situation existed in the Gasoline Pump Cases, in the Second, Sixth, and Seventh Circuits (273 Fed. 478, 17 A. L. R. 389; 274 Fed. 571; 276 Fed. 686), where the practices involved were thought not unduly restrictive, and the Commission's order was vacated. When the Supreme Court came to consider and affirm these cases, April 9, 1923 (43 Sup. Ct. 450, 67 L. Ed. 746), its whole discussion is consistent with, and indeed indicates, the idea that the unfair competition contemplated by section 5, is that which unduly restricts competition. [1000] In Kinney-Rome Co. v. Federal Trade Commission (C. C. A. 7) 275 Fed. 665, 18 A. L. R. 542, it was held that giving a commission to the salesmen of jobbers was not unfair competition. The court, inferentially, made the same assumption as in the Sears-Roebuck Case. Other cases, not necessary to cite, have involved merchants' associations' and jobbers' practices-plainly undue restraint of trade, if unfair at all. With an exception yet to be noted, this recital covers all the judicial decisions under this act which are found up to date. Save for the Sears-Roebuck and Guaranty Veterinary Co. Cases, they are all at least consistent with the conclusion that there is no unfair competition under section 5 unless there is a tendency to monopoly. The exception, not yet noticed, is the Winstead Hosiery Case. When this was before the Second C. C. A. (272 Fed. 957), there was no occa Denison, J., dissenting. sion to consider whether the statute went beyond undue restriction of competition, since the court concluded that the defendant's acts were not unfair. It was without doubt assumed by the court that the statute did have a broader scope, else the court never would have reached the question which it considered and decided. So far as the report indicates, the contention that section 5 reached only such unfair competition as tended to monopoly was in no way brought to the attention of the court." The same thing is true as to the treatment of the case in the opinion of the Supreme Court (258 U. S. 483, 489, 42 Sup. Ct. 384, 66 L. Ed. 729), though attention was drawn in the argument to the fact that "the purpose behind the act was the regulation of competition," and reference was made to Senate Report 597. The court found that public deception was caused by the labels and "the facts show that it is to the interest of the public that a proceeding to stop the practice be brought; and they show also that the practice constitutes an unfair method of competition as against manufacturers of all wool knit underwear and as against those manufacturers of mixed wool and cotton underwear who brand their product truthfully. The opinion concludes: "As a substantial part of the public was still misled by the use of the labels which the Winstead Company employed, the public had an interest in stopping the practice as wrongful; and since the business of its trade rivals who marked their goods truthfully was necessarily affected by that practice, the Commission was justified in its conclusion that the practice constituted an unfair method of competition." Here was a typical case of "palming off" of his goods by one dealer, not as those of another individual, but as those of another class. The case must be taken as approving, though sub silentio, what I have called the second view of the phrase "unfair methods of competition," making it include the fixed judical definition of "unfair competition," even when there is no tendency to monopoly or • The Royal Baking Powder Case (C. C. A. 2), 281 Fed. 744, is essentially like the Winstead Case. |