CLAYTON ACT

[Approved Oct. 15, 1914]

[PUBLIC NO. 212-63D CONGRESS 26]

[H. R. 15657]

An Act To supplement existing laws against unlawful restraints and monopolies, and for other purposes

Sec. 1. DEFINITIONS. (38 Stat. 730; 15 U. S. C. A., sec. 12.)

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That "antitrust laws," as used herein, includes the Act entitled "An Act to protect

20 Published, as amended, from time to time, including amendments made by RobinsonPatman Anti-Discrimination Act, approved June 19, 1936. (See p. 47 following.) For statutory definition of "antitrust acts," see sec. 4, above. For text of Sherman Act, see p. 45 following.

Reported decisions of the courts for the period March 16, 1915, to May 4, 1930, inclusive, and bearing on the provisions of this act affecting the Commission, may be found, with a few exceptions, in the Commission publication entitled "Statutes and DecisionsFederal Trade Commission-1914-1929.”

Exceptions referred to follow: Parker v. New England Oil Corporation, 8 F. (2d) 392, 418; Radio Corporation of America v. United Radio & Electric Corporation et al., 50 F. (2d) 206; Swift & Co. v. United States, 276 U. S. 311, 319; United States v. Bates Valve Bag Corporation et al., 39 F. (2d) 162; Sidney Morris & Co. v. National Association of Stationers, etc., 40 F. (2d) 620 (C. C. A.).

Decisions in which the Commission was a party and the outstanding decisions bearing on the provisions of this act in which the Commission was not a party for the period subsequent to December 31, 1929, are published in this volume.

It should be noted that this law is limited to some extent by certain provisions of other acts, as follows:

SHIPPING ACTS

The so-called "Shipping Board Act" (sec. 15, ch. 451, 64th Cong., 1st sess., 39 Stat. 728, 734; 46 U. S. C. A. 814) provides that "every agreement, modification, or cancellation lawful under this section shall be excepted from the provisions of the act approved July 2, 1890, entitled 'An act to protect trade and commerce against unlawful restraints and monopolies,' and amendments and acts supplementary thereto Sec. 204 (a) of the Merchant Marine Act, 1936, approved June 29, 1936 (Public, No. 835, 74th Cong., 2d sess., 49 Stat. 1985) provides, among other things, that "All the functions, powers, and duties vested in the former United States Shipping Board by the Shipping Act, 1916, the Merchant Marine Act, 1920, the Merchant Marine Act, 1928, the Intercoastal Shipping Act, 1933, and amendments to those acts, and now vested in the Department of Commerce pursuant to section 12 of the President's Executive order of June 10, 1933, are hereby transferred to the United States Maritime Commission" created by said act to administer the same; that (in sec. 904) "Whenever the words 'United States Shipping Board' or the words 'the Board' are used in any prior act, such acts are hereby amended so that such words shall be applicable to the United States Maritime Commission"; and authorized the President (sec. 204 (b)), after two years from the effective date of the act, "to transfer, by Executive order, to the Interstate Commerce Commission any or all the regulatory powers, regulatory duties, and regulatory functions which, by this title, are vested in the United States Maritime Commission."

EXPORT TRADE ACT

Sec. 3 of the Export Trade Act, reprinted at p. 42 herein, excepts, under prescribed conditions, ownership of stock of corporations engaged in export trade.

PACKERS AND STOCKYARDS ACT

The jurisdiction of the Commission is limited by the Packers and Stockyards Act, 1921, approved Aug. 15, 1921, ch. 64, 42 Stat. 159 (amended by an act approved Aug. 14, 1935, Public, No. 272 (49 Stat. 648), to include live poultry dealers and handlers as therein

trade and commerce against unlawful restraints and monopolies," approved July second, eighteen hundred and ninety: 27 sections seventy-three to seventy-seven, inclusive, of an Act entitled, "An Act to

specified), sec. 406 of said act (7 U. S. C. A. 227) providing that "on and after the enactment of this act and so long as it remains in effect the Federal Trade Commission shall have no power or jurisdiction so far as relating to any matter which by this act is made subject to the jurisdiction of the Secretary [of Agriculture], except in cases in which, before the enactment of this act, complaint has been served under sec. 5 of the act entitled 'An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,' approved Sept. 26, 1914, or under sec. 11 of the act entitled 'An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,' approved Oct. 15, 1914, and except when the Secretary of Agriculture, in the exercise of his duties hereunder, shall request of the said Federal Trade Commission that it make investigations and report in any case."

TRANSPORTATION ACT

By the last paragraph of sec. 407 of the Transportation Act, approved Feb. 28, 1920, ch. 91, 41 Stat. 456 at 482; 49 U. S. C. A. 5 (8), the provisions of the Clayton Act and of all other restraints or prohibitions, State or Federal, are made inapplicable to carriers, insofar as the provisions of the section in question, which relate to division of traffic, acquisitions by a carrier of control of other carriers and consolidations of railroad systems, or railroads, are concerned.

AGRICULTURAL AND FISHERY ASSOCIATIONS

Public, No. 146, Sixty-seventh Congress, approved Feb. 18, 1922 (42 Stat. 388; 7 U. S. C. A. 291, 292), permits, subject to the provisions set forth, including necessary corrective action by the Secretary of Agriculture for undue price enhancement, associations of producers of agricultural products for the purpose of "preparing for market, handling, and marketing in interstate and foreign commerce such products * * " See also. in this general connection, the Cooperative Marketing Act, approved July 2, 1926, 44 Stat. 803 (7 U. S. C. A. 455).

Public. No. 464, 73d Cong., approved June 25, 1934 (48 Stat. 1213, 15 U. S. C. A., sec. 166-1), permits, subject to provisions set forth, including similar corrective action by the Secretary of Commerce, associations of persons engaged in the fishery industry for the purpose of "collectively catching, producing, preparing for market, processing, handling, and marketing in interstate and foreign commerce, such products of said persons so engaged." COMMUNICATIONS, MOTOR CARRIER, AND OTHER LEGISLATON

Other legislation which should be noted includes

The "Communications Act of 1984," June 19, 1934, Public, No. 416, 48 Stat. 1064 (see, further, footnote on page 33);

The "Motor Carrier Act, 1935," providing for the regulation of the transportation of passengers and property by motor carriers operating in interstate and foreign commerce, and for other purposes, through the amendment of the Insterstate Commerce Act, as therein provided, approved August 9, 1935, Public No. 255 (49 Stat. 543);

Hog cholera serum and virus legislation, sections 56 to 60 of the Agricultural Adjustment Act, as amended August 24, 1935, Public, No. 320, authorizing and providing for marketing agreements as therein specified with manufacturers of and dealers in anti-hog-cholera serum and hog-cholera virus for the purpose of insuring the maintenance of an adequate supply thereof (49 Stat. 750, 781, 782); and

The "Federal Alcohol Administration Act," approved August 29, 1935, Public, No. 401 (49 Stat. 977). directed to regulating interstate and foreign commerce, as therein specified, in, and other matters having to do with, distilled spirits, wine, and malt beverages, and including the licensing under Section 3 of persons to engage therein, to take effect, as respects those engaging therein for resale at wholesale and transactions in interstate or foreign commerce, July 1, 1936 (as extended by joint resolution No. 73, approved February 29, 1936), and as respects the labeling provisions thereof as a part of Section 5 of said act dealing with unfair competition and unlawful practices in said industry, to take effect on August 15, 1936, in the case of distilled spirits, and December 15, 1936, in the case of wine and malt beverages (as extended and modified in various respects by Secs. 501-508 of the "Liquor Tax Administration Act," approved June 26, 1936, Public, No. 815).

Tobacco interstate compacts.-By act approved April 25, 1936, Public No. 534, Congress gave its consent, subject to certain qualifications, among others, re regimentation, price

See footnote on p. 22.

reduce taxation, to provide revenue for the Government, and for other purposes," of August twenty-seventh, eighteen hundred and ninety-four; an Act entitled "An Act to amend sections seventythree and seventy-six of the Act of August twenty-seventh, eighteen hundred and ninety-four, entitled 'An Act to reduce taxation, to provide revenue for the Government, and for other purposes,' proved February twelfth, nineteen hundred and thirteen; and also this Act.

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fixing, and monopoly, to such compacts between the states to govern production of, and commerce in, tobacco, the legislation also including, among other things, certain provisions in the event of such compacts with respect to Porto Rican tobacco.

The Tobacco Control Act, Public, No. 483, approved June 28, 1934 (48 Stat. 1275), the Cotton Act of 1934 (excepting Section 24 thereof, authorizing the Secretary of Agriculture to develop new and extended uses for cotton, etc.), approved April 21, 1934, Public, No. 169 (48 Stat. 598), and the Potato Act of 1935, Sections 201 to 233, inclusive, of Public, No. 320, to amend the Agricultural Adjustment Act, approved August 24, 1935, said sections being known as the "Potato Act of 1935" (49 Stat. 750, 782), were repealed by an act approved February 10. 1936 (Public, No. 433), following the decision of the Supreme Court on January 6, 1936, in U. S. v. Butler et al., holding invalid certain provisions of the Agricultural Adjustment Act, 1933, approved May 12, 1933, Chapter 25 (48 Stat. 31), namely, the so-called "processing and floor stock taxes" imposed by the Act, as constituting parts of a plan and means to an unconstitutional end, i. e., regulation and control of agricultural production, which constituted a matter within the reserved powers of the states and one beyond the powers delegated to the federal government.

The Bituminous Coal Conservation Act of 1935, approved August 30, 1935, Public, No. 402 (49 Stat. 991), was held unconstitutional by the Supreme Court in the case of Carter v. Carter Coal Co. et al., May 18, 1936, 298 U. S. 238, 56 S. Ct. 855, 80 L. Ed. 749. The National Industrial Recovery Act.-All the provisions of Title 1 of said act, delegating power to the President to approve or prescribe codes of fair competition and providing for the enforcement thereot, were repealed by joint resolution approved June 14. 1935 (Public Res. No. 26), 49 Stat. 375, the provisions of section 5 of said title relating to agreements thereunder and exemptions from the provisions of the antitrust laws. limited as therein specified to minimum wages, maximum hours, prohibition of child labor, and prohibition of unfair competitive practices "which offend against existing law, including the antitrust laws, or which constitute unfair methods of competition under the Federal Trade Commission Act," and the date for the termination of said Title 1 extended and fixed as of April 1, 1936. Said joint resolution followed the decision of the Supreme Court in the Schechter case on May 27, 1935 (295 U. S. 495), ho'ding the code provisions of said act unconstitutional as therein set' forth.

For the history in Congress of the Robinson-Patman Act, see S. 3154, 74th Cong., 1st sess., as introduced by Mr. Robinson, May 13, 1935; Report No. 1502, Committee on the Judiciary, amending S. 3154, February 3, 1936; S. 4171 as introduced by Mr. Borah and Mr. Van Nuys, February 24, 1936, and referred to the Committee on the Judiciary; hearings on price discrimination before a subcommittee of the Committee on the Judiciary on S. 4171, March 24 and 25, 1936; amendments to S. 3154 proposed April 29, 1936; S. 3154 as introduced in the House of Representatives, May 1, 1936; hearings before the House Committee on the Judiciary on H. R. 8442, H. R. 4995, H. R. 5062, July 10. 11, 17, 18, 19, 1935, amending the Clayton Act; H. R. 8442 as introduced in the House by Mr. Patman and referred to the Committee on the Judiciary, June 11, 1935; Report No. 2287 from the Committee on the Judiciary committed to the Committee of the Whole House on the state of the Union, March 31, 1936; H. R. 8442 as passed by the House of Representatives, May 28, 1936, as referred to the Senate, May 29, and as printed by the House with the amendment of the Senate, June 2, 1936; House Conference Report No. 2951 to accompany H. R. 8442, submitted June 8, 1936, and debates in Congress, June 11, 1935, to July 9, 1936.

This is the Sherman Act (26 Stat. 209; 15 U. S. C. A., sec. 1, et seq.) printed at p. 45 following. While the language of the Sherman Act itself has not been altered, certain exemptions therefrom have been enacted as follows: Agreements, etc., unlawful under sec. 15 of the Shipping Board Act (39 Stat. 728, 734); associations organized or operating under the Export Trade Act (40 Stat. 516, 517, printed at p. 42 herein); agricultural associations under Act of Feb. 18, 1922 (42 Stat, 388), footnote p. 21.

"Commerce," as used herein, means trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States or the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any insular possession or other place under the jurisdiction of the United States: Provided, That nothing in this Act contained shall apply to the Philippine Islands.

The word "person" or "persons" wherever used in this Act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country.

Sec. 2. DISCRIMINATING IN PRICE, SERVICE, OR FACILITIES." (49 Stat. 1526; 15 U. S. C. A., sec. 13, as amended.)

SEC. 2. (a) That it shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in

This section of the Clayton Act contains the provisions of the Robinson-Patman AntiDiscrimination Act, approved June 19, 1936, amending Section 2 of the original Clayton Act, approved Oct. 15, 1914. For certain exemptions from the provisions of the later act re cooperatives and purchases for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit, see Robinson-Patman Act, printed at p. 47 herein.

The text of sec. 2, prior to its amendment, follows:

SEC. 2. That it shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities, which commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of commerce: Provided, That nothing herein contained shall prevent discrimination in price between purchasers of commodities on account of differences in the grade, quality, or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling or transportation, or discrimination in price in the same or different communities made in good faith to meet competition: And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade.

For provisions of the Shipping Board Act, Packers and Stockyards Act, 1921, and Transportation Act, limiting the scope of the Clayton Act in certain cases, see footnote on p. 20.

any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered: Provided, however, That the Federal Trade Commission may, after due investigation and hearing to all interested parties, fix and establish quantity limits, and revise the same as it finds necessary, as to particular commodities or classes of commodities, where it finds that available purchasers in greater quantities are so few as to render differentials on account thereof unjustly discriminatory or promotive of monopoly in any line of commerce; and the foregoing shall then not be construed to permit differentials based on differences in quantities greater than those so fixed and established: And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade: And provided further, That nothing herein contained shall prevent price changes from time to time where in response to changing conditions affecting the market for or the marketability of the goods concerned, such as but not limited to actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned.

(b) Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima-facie case thus made by showing justification shall be upon the person charged with a violation of this section, and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Provided, however, That nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor.

[1527] (c) That it shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein