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any of the provisions of said section 2 as amended by this Act, it may reopen such original proceeding and may issue and serve upon such person its complaint, supplementary to the original complaint, stating its charges in that respect. Thereupon the same proceedings shall be had upon such supplementary complaint as provided in section 11 of said Act of October 15, 1914. If upon such hearing the Commission shall be of the opinion that any act, practice, or method charged in said supplementary complaint has been committed, used, or carried on since the effective date of this amendatory Act, or is being committed, used or carried on, in violation of said section 2 as amended 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 serve upon such person its order modifying or amending [1528] its original order to include any additional violations of law so found. Thereafter the provisions of section 11 of said Act of October 15, 1914, as to review and enforcement of orders of the Commission shall in all things apply to such modified or amended order. If upon review as provided in said section 11 the court shall set aside such modified or amended order, the original order shall not be affected thereby, but it shall be and remain in force and effect as fully and to the same extent as if such supplementary proceedings had not been taken.

Sec. 3. DISCOUNTS, REBATES, ALLOWANCES, DISCRIMINATING AGAINST RECIPIENT'S COMPETITORS; AND PLACE DISCRIMINATION AND SALE OR OFFER AT UNREASONABLY LOW PRICES TO DESTROY OR ELIMINATE COMPETITION. (49 Stat. 1528; 15 U. S. C. A., sec. 13a.)

SEC. 3. It shall be unlawful for any person engaged in commerce, in the course of such commerce, to be a party to, or assist in, any transaction of sale, or contract to sell, which discriminates to his knowledge against competitors of the purchaser, in that, any discount, rebate, allowance, or advertising service charge is granted to the purchaser over and above any discount, rebate, allowance, or advertising service charge available at the time of such transaction to said competitors in respect of a sale of goods of like grade, quality, and quantity; to sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States; or, to sell, or contract to sell, goods at unreasonably low prices for the purpose of destroying competition or eliminating a competitor.

Any person violating any of the provisions of this section shall, upon conviction thereof, be fined not more than $5,000 or imprisoned not more than one year, or both.

Sec. 4. COOPERATIVES AND SCHOOL AND SIMILAR EXEMPTIONS." (49 Stat. 1528; 15 U. S. C. A., sec. 13b.)

SEC. 4. Nothing in this Act shall prevent a cooperative association from returning to its members, producers, or consumers the whole, or any part of, the net earnings or surplus resulting from its trading operations, in proportion to their purchases or sales from, to, or through the association.

Approved, June 19, 1936.

By Public, No. 550, 75th Cong., ch. 283, 3d sess. (H. R. 8148), approved May 26, 1938, it was further provided "That nothing in the Act approved June 19, 1936 (Public, Numbered 692. Seventy-fourth Congress, second session), known as the Robinson-Patman Antidiscrimination Act, shall apply to purchases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit."

DECISIONS PERTAINING TO THE FEDERAL TRADE COMMISSION ACT AND TO SECTIONS 2, 3, 7, 8, AND 11 OF THE CLAYTON ACT, IN MATTERS TO WHICH THE FEDERAL TRADE COMMISSION WAS A PARTY

INTERNATIONAL SHOE COMPANY v. FEDERAL TRADE COMMISSION

(Supreme Court of the United States, 280 U. S. 291, 50 Sup. Ct.

Rep. 89)

(Certiorari to the Circuit Court of Appeals for the First Circuit)

No. 42

Argued December 2, 3, 1929. Decided January 6, 1930

[Case before Commission reported in 9 F. T. C. 441]

Section 7 of the Clayton Act forbids one corporation to acquire stock of another corporation (both being engaged in interstate commerce), where the effect of such acquisition may be to substantially lessen competition between them or to restrain such commerce in any section or community, and declares that it shall not apply to corporations purchasing such stock solely for investment and not using the same to bring about the substantial lessening of competition. Held:

1. In a suit to enforce an order of the Federal Trade Commission requiring one corporation to divest itself of the stock of another alleged to have been acquired by the former in violation of this section, findings of the Commission that substantial competition existed between the two corporations at the time of such acquisition and that the effect of such acquisition was substantially to lessen such competition and to restrain interstate commerce, can not be accepted if not supported by the evidence.

[292] 2. The section forbids only such stock acquisitions as probably will result in lessening competition to a substantial degree, i. e., to such a degree as will injuriously affect the public, and is inapplicable where there was no pre-existing substantial competition to be affected.

3. In the present case, it is plain that the products of the two shoe-manufacturing companies in question, because of the difference in appearance and workmanship, appealed to the tastes of entirely different classes of consumers; that while a portion of the product of each company went into the same States, in the main the product of each was in fact sold to a different class of dealers and found its way into distinctly separate markets, so that, in respect of 95% of the business, there was no competition in fact and no contest, or observed tendency to contest, in the market for the same pur

chasers; and when this is eliminated, what remains is of such slight consequence as to deprive the finding that there was any substantial competition between the two corporations of any real support in the evidence.

4. The existence of competition is a fact to be disclosed by observation rather than by the processes of logic; and the testimony of the officers of the corporation proceeded against that there was no real competition between it and the other in respect of the products in question, is to be weighed like other testimony to matters of fact, and, in the absence of contrary testimony or reason for doubting the accuracy of observation or the credibility of the witnesses, should be accepted.

5. In the case of a corporation with resources so depleted, and the prospect of rehabilitation so remote, that it faces the grave probability of a business failure with resulting loss to its stockholders and injury to the communities where its plants are operated, the purchase of its capital stock by a competitor (there being no other prospective purchaser), not with a purpose to lessen competition, but to facilitate the accumulated business of the purchaser and with the effect of mitigating seriously injurious consequences otherwise probable, is not in contemplation of law prejudicial to the public and does not substantially lessen competition or restrain commerce within the intent of the Clayton Act.

29 F. (2d) 518, reversed.

Certiorari, 279 U. S. 832, to review a judgment of the Circuit Court of Appeals affirming on appeal an order of the Federal Trade Commission.

[293] Mr. Charles Nagel, with whom Messrs. Frank Y. Gladney, R. E. Blake, and J. D. Williamson were on the brief, for petitioner. Assistant to the Attorney General O'Brian, with whom Solicitor General Hughes and Messrs. Charles H. Weston, Special Assistant to the Attorney General, Robert E. Healy, Chief Counsel, Federal Trade Commission, and Baldwin B. Bane, special attorney, were on the brief, for respondent.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

This was a proceeding instituted by complaint of the Federal Trade Commission against petitioner charging a violation of § 7 of the Clayton Act, c. 323, 38 Stat. 730, 731 (U. S. C., title 15, § 18), which provides:

"No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital of another corporation engaged also in commerce, where the effect of such acquisition may be to substantially lessen competition between the corporation whose stock is so acquired and the corporation making the acquisition, or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce.

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"This section shall not apply to corporations purchasing such stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition."

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