United States.—Under the common law of the United States as under English common law agreements in restraint of trade are not enforceable. In 1890 there was passed the Sherman Anti Trust Act which prohibited under severe penalties "every con tract, combination in the form of trust or otherwise. or con spiracy, in restraint of trade or commerce among the several States, or with foreign nations" and declares it to be an offence to "monopolize, or attempt to monopolize, or combine or conspire, . . . to monopolize any part of the trade or commerce among the several States or with foreign nations." Much difficulty arose over the interpretation of the act, partly because of its abstract termi nology and partly because of uncertainty as to whether it invalidat ed all, or merely unreasonable, restraints of trade. Successive Su preme Court decisions made the position increasingly clear, but in general in the direction of a more liberal interpretation of the statute. From the 1912 decision in the case of the United States Steel Corporation it appeared that the legality of a combination depended on the proportion of the industry it represented, and a 1911 decision made contracts not illegal unless in unreasonable re straint of trade. As a result of these decisions it was felt that the Sherman Act needed strengthening and, on the other hand, it had become evident that some power of dispensation was required to modify the cruder effects of the act. Consequently, in 1914, two further acts were passed, the Clayton Act, and the Federal Trade Commission Act. The Clayton Act legalizes certain activities of trade associations which were declared illegal under the Sherman Act. It makes it illegal for a company to acquire shares in another company if this leads to "a real diminution of the competition between companies" or "tends to establish a monopoly"; it pro hibits price discrimination between different purchasers which aims at lessening competition or creating monopoly; and the giving of discounts or rebates on condition that the buyer shall not use or deal in the goods of competitors ; and it contains provisions against the holding of posts simultaneously in different companies by directors and employees.
The Federal Trade Commission Act established a commission, to which was assigned two main tasks : to investigate and report on the organization and conduct of corporations charged with vio lations of the anti-trust laws and to prevent unfair competition. The commission was authorized, after a hearing, to issue orders against continuation of unfair competitive practices. It could appeal to a circuit court for enforcement of such an order.
Legislation since 1914 has authorized combinations in several industries, including shipping, export trade, marine insurance, railroad transportation, and agriculture. The Recovery Act of 1933, while in effect, exempted from anti-trust law any practices of industry groups authorized by "codes of fair competition." Also, the Sherman Act was amended in 1937 to permit contracts for maintaining resale prices of branded commodities. The price discrimination clause of the Clayton Act, on the other hand, was strengthened in 1936.
British Attitude to Anti-Trust Laws.—As seen by British eyes legislation of the Sherman and Clayton kind is not easily made effective without the doing of more harm than good. The Committee on Trusts, appointed in Feb. 1918, turned its attention
rather to what might be called "policing" action than to repres sion. It sought for ways in which combinations might be con trolled or supervised to safeguard the public interest from the abuse of monopoly power while being left free to achieve all those economies and improvements which combination alone can furnish. Public ownership, public control, public competition, profit limi tation and profit taxation were passed under review. In all these schemes three main difficulties were encountered: first, that of de fining a monopolistic concern ; second, that of distinguishing right ful rewards of enterprise and efficiency from the exactions of monopoly; and, third, that of determining the datum on which rate of profit can be calculated. These suggestions were one by one rejected as limited in scope, difficult of application, or haz ardous in reaction, and the committee turned its attention in other directions. It was thought that if fuller publicity in regard to the conduct and earnings of business concerns generally, and of the working and effects of combinations in particular, could be se cured, the desired object would be in great measure achieved. It was also thought that some machinery should be provided whereby suspected or alleged abuses could be penalized.
Accordingly, the conclusion was reached that there should be established a department of state charged with the duty of in forming itself as to the nature, extent and development of com binations of all kinds in so far as they tend to the restraint of trade and the creation of monopolies, and of making preliminary in quiry into complaints made in regard to them, also that a tribunal should be set up to which the department could apply for powers to obtain particular information, and would refer for full in vestigation cases in which combinations appeared to act injuri ously to the public interest. The requisite publicity would thereby be secured in two ways : the relevant facts as to offences proved before the tribunal would be made public, and the department would present annually to parliament a report upon the nature, extent and development of combinations. Publicity thus secured would not only be in itself a considerable safeguard against the abuse of monopolistic power, but it would serve to reveal actions and developments for which publicity alone was not a sufficient safeguard, and against which further action should be taken, whether in the form of nationalization, public competition or the control of prices and profits. These conclusions formed in sub stance the recommendations of the committee, but such recom mendations did not result in legislation of the suggested type.
The fact that the recommendations of the Committee on Trusts have not been adopted in British legislation is not surprising, con sidering the fundamental change in the attitude of the people since the World War—and especially during the second decade after the war—toward trade and industrial combinations. The former emphasis upon competition between individual units of business has been supplanted to an important degree by an attitude of ap proval of concerted or co-operative action by means of combina tion. This attitude toward business combination has been evident among British statesmen as well as business leaders.