268 U.S. 563 (1925), 342, Maple Flooring Manufacturers' Association v. United States

Docket Nº:No. 342
Citation:268 U.S. 563, 45 S.Ct. 578, 69 L.Ed. 1093
Party Name:Maple Flooring Manufacturers' Association v. United States
Case Date:June 01, 1925
Court:United States Supreme Court
 
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Page 563

268 U.S. 563 (1925)

45 S.Ct. 578, 69 L.Ed. 1093

Maple Flooring Manufacturers' Association

v.

United States

No. 342

United States Supreme Court

June 1, 1925

Argued December 1, 2, 1924

Reargued March 3, 1925

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE WESTERN DISTRICT OF MICHIGAN

Syllabus

1. In a suit to enjoin a trade association under the Anti-Trust Act in which the government adduced, as evidence of guilty purpose, the history of earlier combinations which this one had superseded, held that there was no evidence of any present agreement or purpose to produce any effect on commerce other than that which necessarily would flow from the activities of the present association, and that the only question was whether that association, as actually conducted, had a necessary tendency to cause direct and undue restraint of competition condemned by the Act. P. 577.

2. Each case arising under the Sherman Act must be determined upon the particular facts disclosed by the record, and opinions of the Court in those cases must be read and applied in the light of their facts, with clear recognition of essential differences in that regard. P. 579.

3. Trade associations or combinations of individuals or corporations, which, as in this case, openly and fairly gather and disseminate information as to the cost of their product, the actual prices it has brought in past transactions, stocks on hand, and approximate cost of transportation from the principal point of shipment to points of consumption, and meet and discuss such statistics without reaching or attempting to reach any agreement or concerted action respecting prices, production, or the restraining of competition, do not thereby engage in an unlawful restraint of commerce. P. 582.

4. In a suit under the Anti-Trust Act to dissolve a trade association formed by numerous manufacturers of hardwood flooring, the following activities were complained of: (1) computation and distribution among the members of information as to the average cost of their products, based (a) on cost of raw material as ascertained and averaged by the association's secretary from reports of actual sales of rough lumber by members in open market, (b) on manufacturing costs ascertained through questionnaires sent the members, and (c) on percentage of waste in milling, ascertained through test runs made by selected members under direction of

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the secretary; (2) compilation and distribution among them of booklets showing freight rates from a basing point to numerous points to which their products were shipped, enabling members to quote delivered prices promptly; (3) gathering by periodical reports from members of information as to the quantity and kind of flooring sold by them, dates of sales and prices received, average freight rates, commissions paid, amount and kinds of stock on hand, and of unfilled orders, monthly production and new orders booked, which information, embracing only past and closed transactions and omitting names of purchasers, current prices, and many other details, was transmitted in summarized form to the members by the secretary of the association, without, however, revealing the identity of members in connection with specific information transmitted, and was given wide publicity through publication in trade journals, communication to the Department of Commerce, etc.; (4) monthly meetings at which problems of the industry were discussed, without discussion or agreement upon prices. Held that such activities did not constitute an unlawful restraint on commerce. Am. Column Lumber Co. v. United States, 257 U.S. 377; United States v. Am. Linseed Oil Co., 262 U.S. 371, distinguished. P. 568.

Reversed.

Appeal from a decree of the district court awarding an injunction, in a suit brought by the government under the Anti-Trust Act against a combination, in the form of a trade association, of manufacturers of hardwood flooring lumber.

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STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

By bill in equity filed March 5, 1923, the United States asked an injunction restraining the defendants, who are appellants here, from violating § 1 of the Act of Congress of July 2, 1890, entitled, "An act to protect trade and commerce against unlawful restraints and monopolies," 26 Stat. 209, commonly known as the Sherman Act.

The defendants are the Maple Flooring Manufacturers' Association, an unincorporated "trade association;" twenty-two corporate defendants, members of the association, engaged in the business of selling and shipping maple, beech, and birch flooring in interstate commerce, all but two of them having their principal places of business in Michigan, Minnesota, or Wisconsin (one defendant being located in Illinois and one in New York); the several individual representatives of the corporate members of the association, and George W. Keehn, secretary of the association. Of the corporate defendants, approximately one-half own timber lands and sawmills [45 S.Ct. 579] and are producers of the rough lumber from which they manufacture finished flooring, sold and shipped in interstate commerce. The other defendants purchase rough flooring lumber in the open market and manufacture it into finished flooring which is sold and shipped in interstate commerce. In 1922, there were in the States of Illinois, Michigan, Minnesota, and Wisconsin, seventeen nonmember manufacturers of maple, beech, and birch flooring, and there were fifty-eight nonmember manufacturers of maple, beech, and birch flooring in the United States who reported to the government. In that year, thirty-eight nonmember manufacturers reported a manufacturing capacity of 238,610,000 feet of flooring of the types mentioned, and during the same year the manufacturing capacity of the defendants was 158,400,000 feet. Estimates

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submitted in behalf of the government indicate that, in the year 1922, the defendants produced 70 percent of the total production of these types of flooring, the percentage having been gradually diminished during the five years preceding, the average for the five years being 74.2 percent. It is also in evidence that, aside from nonmember manufacturers who reported to the government, there are numerous other nonmember manufacturers of such flooring in the United States and Canada. The defendants own only a small proportion of the total stand, in the United States, of maple, beech, and birch timber from which the various types of flooring produced and sold by defendants is manufactured.

In March, 1922, the corporate defendants organized the defendant, the Maple Flooring Manufacturers' Association, but for many years prior to that time, and certainly since 1913, a substantial number of the corporate defendants have participated actively in maintaining numerous successive trade associations of the same name which were predecessors of the present association. The oral testimony and documentary evidence have covered a wide range, and have reached a great volume which it will be impossible, within the limits of an opinion, to review in detail. The defendants have engaged in many activities to which no exception is taken by the government and which are admittedly beneficial to the industry and to consumers, such as cooperative advertising and the standardization and improvement of its product. The activities, however, of the present association of which the government complains may be summarized as follows:

(1) The computation and distribution among the members of the association of the average cost to association members of all dimensions and grades of flooring.

(2) The compilation and distribution among members of a booklet showing freight rates on flooring from Cadillac,

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Michigan, to between 5,000 and 6,000 points of shipment in the United States.

(3) The gathering of statistics which at frequent intervals are supplied by each member of the association to the secretary of the association given complete information as to the quantity and kind of flooring sold and prices received by the reporting members, and the amount of stock on hand, which information is summarized by the secretary and transmitted to members, without, however, revealing the identity of the members in connection with any specific information thus transmitted.

(4) Meetings at which the representatives of members congregate and discuss the industry and exchange views as to its problems.

Before considering these phases of the activities of the association, it should be pointed out that it is neither alleged nor proved that there was any agreement among the members of the association either affecting production, fixing prices, or for price maintenance. Both by the articles of association and in actual practice, members have been left free to sell their product at any price they choose, and to conduct their business as they please. Although the bill alleges that the activities of the defendants hereinbefore referred to resulted in the maintenance of practical uniformity of net delivered prices as between the several corporate defendants, the evidence fails to establish such uniformity, and it was not seriously urged before this Court that any substantial uniformity in price had in fact resulted from the activities of the association, although it was conceded by defendants that the dissemination of information as to cost of the product and as to production and prices would tend to bring about uniformity in prices through the operation of economic law. Nor was there any direct proof that the activities of the association had affected prices adversely to consumers. On the contrary, the defendants offered a great volume of evidence tending to show that the trend of

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