1. Dissemination of information enabling sellers of goods under
contracts for future delivery individually to prevent purchasers
from fraudulently procuring deliveries on the pretense that the
sellers are obligated by their contracts to make them is not an
unlawful restraint of trade, even though the information be
gathered by and disseminated among the sellers themselves through
cooperation. P.
268 U. S.
603.
2. Cooperation of manufacturers in gathering and exchanging (1)
information concerning production of cement and the prices for
which it was sold by them in actual, closed "specific job"
contracts constituting but a part of their business, and (2)
information of transportation costs from chief points of production
held not an unlawful restraint on commerce even assuming
that the result may tend to bring about uniformity of price through
the operation of economic law. P.
268 U. S.
604.
3. In this case, the government did not rely upon any agreement
or understanding for price maintenance, and the record fails to
establish, either directly of by inference, any concerted action
other than that involved in the gathering and dissemination of
information respecting sale and distribution, which, in itself, the
Court finds not unlawful; nor does the evidence show any effect on
price and production except such as would naturally flow from the
dissemination of such information in the trade, and its natural
influence on individual action. P.
268 U. S.
606.
4. In a suit under the Anti-Trust Act to dissolve a trade
association formed by numerous manufacturers of Portland cement, it
appeared: (1) that, following trade practice, each manufacturer
disposed of part of its product through "specific job contracts" --
i.e., contracts in effect obligating the manufacturer to
deliver in the future to the purchaser at a maximum price named,
payable on delivery, the cement required to complete a specified
piece of construction work, but allowing the purchaser the
advantage of any decline, before delivery, in market price, and not
obligating him, in any event, to take the cement contracted for;
(2) that, to prevent
Page 268 U. S. 589
contractors from obtaining more cement than they were entitled
to under such contracts by the practice of entering into several
such contracts with several manufacturers for the same specific
job, the details of such contracts were reported by the members to
the Association, agents of the latter visited the jobs, and the
fullest information respecting the contracts and the use of cement
shipped under them was reported to the members by the secretary,
and there were many cancellations of deliveries under such
contracts on the ground that purchasers were not entitled to
delivery by the terms of their agreements; (3) that the Association
compiled and distributed to its members books listing freight rates
from established basing points to many cities and towns, enabling
the manufacturer to calculate a delivery price on the basis of its
own mill price (determined by itself) to places nearest in point of
freight rate to its own mill, and also to determine at once the
freight differential it must offset in its mill price in order to
compete with other manufacturers serving any other given territory;
(4) that members of the Association rendered monthly detailed
reports concerning delinquent accounts of their customers; (5) and
reports of production, shipments and stock on hand, which, being
compiled and distributed, informed each member fully of the
available supply of cement and by whom it was held; (6) that, by
universal practice of the trade, the price of bags in which cement
was shipped was included in the mill base price, and that quarterly
reports were made to the Association showing the total number of
bags returned to each member by customers during the preceding
quarter and the percentage found unfit for use, but no information
was reported concerning the charge and allowance for bags returned,
the number received from any particular customer, or the portion
found unfit for use; (7) that periodical meetings were held at
which minor subjects, such as return of bags, bag reports, and
trade acceptances were discussed, but not current or future prices,
or production or market conditions, which meetings were not proved
to have resulted in any agreement or in any uniformity of trade
practice.
Held that a purpose to control production and
price of cement could not be inferred from such activities, and
they were not in themselves unlawful restraints of commerce
prohibited by the Anti-Trust Act. P.
268 U. S.
592.
Reversed.
Appeal from a decree of the district court in a suit brought by
the government under the Anti-Trust Act
Page 268 U. S. 590
enjoining the continuance of a combination of various cement
manufacturers in the form of a trade association.
MR. JUSTICE STONE, delivered the opinion of the Court.
This is an appeal from a final decree of the District Court for
the Southern District of New York granting a perpetual injunction
in a proceeding brought by the United States under § 4, Chapter
647, of the Act of July 2, 1890, 26 Stat. 209, commonly known as
the Sherman Act. Defendants are the Cement Manufacturers'
Protective Association, an unincorporated association, four
individuals, the officers of the Association and 19 corporations,
members of the Association, engaged in manufacturing and shipping
Portland cement in interstate commerce, in Pennsylvania, New
Jersey, New York, Maryland, and Virginia. The petition, which was
filed on the 30th day of June, 1921, alleges restraint of
interstate commerce in violation of § 1 of the Act. The complaint
prays that the Cement Manufacturers' Protective Association be
adjudged a violation of § 1, and enjoined accordingly. After final
hearing, the district court entered its decree enjoining the
continuance of the Cement Manufacturers' Protective Association and
enjoined it and the several defendants from engaging in the
activities of which the government complains, and of which a
summary account will presently be given.
The Association was organized in January, 1916. Its purposes, as
described by the constitution, were the
"collection
Page 268 U. S. 591
and dissemination of such accurate information as may serve to
protect each manufacturer against misrepresentation, deception, and
imposition, and enable him to conduct his business exactly as he
pleases in every respect, and particularly free from misdirection
by false or insufficient information concerning the following
matters, to-wit:"
"(a) Information concerning credits;"
"(b) Information concerning contracts which have been made for
the delivery of cement sufficiently complete to enable the
manufacturer to protect himself against spurious contracts and like
transactions induced by misrepresentations;"
"(c) Information concerning freight rates on cement;"
"(d) Statistical information as to production, stocks of cement
and clinker on hand, and shipments."
The constitution also provides that
"membership in the Association shall be recognized as implying
that the member is absolutely free to conduct his business exactly
as he pleases in every respect and particular."
Cement is a thoroughly standardized product. It is manufactured
from limestone and shale which are crushed to extreme fineness,
then subjected to high temperatures which process produces a fused
mass which, when cooled ,is known as clinker. The clinker is then
ground into the finished product, which is then ready for
transportation and use. Clinker is not subject to deterioration,
but the ground clinker or cement deteriorates rapidly on exposure
to moisture, and cannot be kept in storage except for a limited
period of time. The defendant corporations are manufacturers of
this product, which is shipped in interstate commerce principally
within the areas of the several states in which the several
defendants are located, and they are competitors in the business of
shipping the product in interstate commerce. From 60 percent to 65
percent of the total product of the several corporate defendants is
sold
Page 268 U. S. 592
to the general trade for immediate use. Of this 60% to 65%,
approximately two-thirds is sold to dealers who are allowed a
differential from the sales price to the retail trade.
The activities of defendant on which the government bases its
case for an injunction may summarily be stated as follows: the
government charges that the defendants, through the activities of
the Association, control prices and production of cement within the
territorial area served by the several defendants in the following
manner:
(1) By the use of "specific job contracts" for future delivery
of cement, accompanied by a system of reports and trade espionage
having as its objective the restriction of deliveries of cement
under those contracts.
(2) By compiling and distributing, among the members, freight
rate books which give the rate of freight from arbitrary basing
points to numerous points of delivery within the territorial area
served by the several defendants;
(3) By exchange of information concerning credits;
(4) By activities of the Association at its meetings.
The government asserts that uniformity of prices and limitation
of production are necessary results of these activities of the
defendants. It does not, however, charge any agreement or
understanding between the defendants placing limitations on either
prices or production. The evidence does not establish that prices
were excessive or unreasonable, and the district court found, "as
compared with the rise of prices of other basic commodities, it is
possible to say that the quotations of cement advanced less than
others." The court also found that competition had not been
destroyed by the Association, and that, upon many occasions, the
defendants were active in endeavoring to take business from
companies associated with them. The court, however, held that the
activities of the defendant in connection with specific job
contracts tended to
Page 268 U. S. 593
limit the amount of cement distributed to the trade under those
contracts; that the exchange of information complained of generally
tended to limit production; that the dissemination of this
information, especially that contained in the freight rate book,
tended to produce uniformity in price, and that there was
accordingly a restraint of commerce within the principles laid down
in
American Column & Lumber Co. v. United States,
257 U. S. 377,
257 U. S. 393;
United States v. American Linseed Oil Co., 262 U.
S. 371.
It is conceded, and the court below found, that before the
organization of the present association, there was substantial
uniformity of trade practices in the cement trade, so far as is
pertinent to the present discussion, in the following respects:
(1) The sale of cement by specific job contracts for future
delivery;
(2) The selling of cement, f.o.b. delivery;
(3) Using freight basing points in the quotation of prices;
(4) Including in all quotations for sale of cement a freight
rate from a basing point to the place of delivery;
(5) Charging purchasers of cement for bags in which the product
is shipped and allowing credit for bags returned to the
manufacturers in good condition.
Since there is no exchange of information among the defendants
with respect to contracts for the sale of cement for immediate
delivery, which constitutes more than 60% of the business, the
government's contention before this Court centered upon the use of
the specific job contract by defendants and their activities in
connection with such contracts, since, without the use of the
specific job contract, the other activities complained of could
have no substantial bearing on restraint of competition with
respect either to prices or production. It will therefore be
necessary to
Page 268 U. S. 594
consider more at length the activities of the defendants in
connection with specific job contracts, and incidentally their
other activities as related to sales of cement under specific job
contracts and the information exchanged with respect to such
contracts.
Specific Job Contracts
The specific job contract and the practices of the trade with
respect to making deliveries in performance of those contracts were
customary in the trade long before any of the collective activities
complained of in this case. We do not understand the government to
contend that the use of specific job contracts by defendants, or
that their use generally by the trade, is the result of any
agreement or understanding, or, in itself, constitutes any
violation of the Sherman Law. It is contended that the violation
arises rather from the cooperation among the several defendants in
acquiring and distributing information with reference to specific
job contracts and the effect of the dissemination of that
information on the trade, to which reference will now be made.
The specific job contract is a form of contract in common use by
manufacturers of cement whereby cement is sold for future delivery
for use in a specific piece of construction which is described in
the contract. As was stated in the opinion of the court below, they
are contracts
"whereby a manufacturer is to deliver, in the future, cement to
be used in a specific piece of work, such as a particular building
or road, and the obligation is that the manufacturer shall furnish
and the contractor shall take only such cement as is required for
or used for the specific purpose."
These contracts have, by universal practice, been treated by
cement manufacturers as, in effect, free options customarily made
and acted upon on the understanding that the purchaser is to pay
nothing until after
Page 268 U. S. 595
the delivery of the cement to him; that he is not obligated, in
any event, to take the cement contracted for unless he chooses to;
that he is not held to the price named in the contract in the event
of a decline in the market price, whereas the manufacturer may be
held to the contract price if the market advances, and may be held
for the delivery of the full amount of cement required for the
completion of the particular piece of construction described in the
contract. The practical effect and operation of the specific job
contract, therefore, is to enable contractors who are bidding upon
construction work to secure a call or option for the cement
required for the completion of that particular job at a price which
may not be increased, but may be reduced if the market declines. It
enables contractors to bid for future construction work with the
assurance that the requisite cement will be available at a
definitely ascertained maximum price.
In view of the option features of the contract referred to, the
contractor is involved in no business risk if he enter into several
specific job contracts with several manufacturers for the delivery
of cement for a single specific job. The manufacturer, however, is
under no moral or legal obligation to supply cement except such as
is required for the specific job. If, therefore, the contractor
takes advantage of his position and of the peculiar form of the
specific job contract, as modified by the custom of the trade, to
secure deliveries from each of several manufacturers of the full
amount of cement required for the particular job, he in effect
secures the future delivery of cement not required for the
particular job, which he is not entitled to receive, which the
manufacturer is under no legal or moral obligation to deliver, and
which presumably he would not deliver if he had information that it
was not to be used in accordance with his contract. The activities
of the defendants complained of are directed toward securing this
information and communicating it
Page 268 U. S. 596
to members, and thus placing them in a position to prevent
contractors from securing future deliveries of cement which they
are not entitled to receive under their specific job contracts, and
which experience shows they endeavor to procure, especially in a
rising market.
Members are required to make to the secretary of the Association
prompt reports of all specific job contracts, describing in detail
the contract and giving the name and address of the purchaser, the
amount of cement required, the price and delivery point, also the
date of expiration of the contract. They are also required to make
detailed reports of all changes in the contract, including
increases in the amount of cement to be delivered and
cancellations. The Association also employs "checkers," whose
business it is, by actual inspection and inquiry, to ascertain, so
far as possible, the amount of cement required for specific jobs
referred to in specific job contracts, and whether cement shipped
under specific job contracts is actually used or required for use
under such contracts. Without entering into any detailed discussion
of this phase of the activity of defendants, we accept fully the
government's contention that the defendants regularly take all
practicable steps to ascertain whether cement contracted for under
the specific job type of contract was actually being used for the
job described in the contract, and that the fullest information
with respect to such contracts and the use of cement shipped under
said contracts is reported to the members of the Association
through the mediation of the secretary.
The government does not contend that the activities of the
Association with respect to specific job contracts diminished the
number of such contracts, or that they diminished in any way the
obligations of members of the Association upon such contracts.
There is, however, abundant evidence to show that there were actual
cancellations of deliveries on the ground that contractors were
Page 268 U. S. 597
not entitled, under the terms of their contracts, to receive
such deliveries. In 1920, of 1,392 contracts investigated and found
to be "padded" to the extent of more than 3,500,000 barrels of
cement, 978 were partially cancelled to the extent of 2,014,653
barrels.
The Association Freight Rate Book
The custom in the cement trade of selling cement at a delivered
price, which includes the mill price, the price of bags, and
freight charges, was an established trade practice before the
organization of the defendant association. As required by the
bylaws of the defendant association, it has distributed to its
members freight rate books, listing freight rates from established
basing points to practically every city and town in the northeast
section of the United States. The freight rates contained in the
freight rate book are compiled from the official tariffs and
translated from the rate per ton of the official tariffs into the
rate per barrel of 380 pounds, the unit for the sale of cement.
Similar lists of freight rates embracing substantially the same
subject matter were prepared and used by individual manufacturers
before the organization of the defendant association. The
Association freight rate book took the place of previous separate
publications by individual manufacturers, with a consequent saving
of money and increase of accuracy and a more thorough and
continuous checking of rates. The basing points from which freight
rates were calculated were not selected by the Association, but
were the same as those appearing in prior books published by
individuals before the publication of the Association freight rate
book. The basing points are points of actual shipment from which
the larger proportion of the cement in a given locality in which
cement is manufactured is actually shipped. The rates published are
the actual rates, omitting fractions of cents between the basing
points and actual points of delivery.
Page 268 U. S. 598
Manufacturers customarily, and for the purpose of the convenient
conduct of their business, maintain a uniform base or factory price
so far as the customers of the individual manufacturer are
concerned. That is to say, the business is conducted on a
"one-price" basis. In order, however, to determine the delivered
price, there must be added to the factory price of a given
manufacturer the cost of transportation to the point of delivery.
Prompt quotations of a delivered price therefore involves the
ability to carry out promptly the mechanical process of adding to
the mill price the cost of transportation to the point of delivery.
Lists of freight rates in convenient and readily available form are
therefore necessary adjuncts to the quotation of delivery prices
for cement.
The use of basing points for the purpose of computing freight
rates appears not to have been the result of any collective
activity on the part of defendants or cement manufacturers
generally, nor were they arbitrarily selected. Their use is rather
the natural result of the development of the business within
certain defined geographical areas. When a manufacturer establishes
his factory at a given point of production and sells his product in
a territory which is contiguous freight-wise to his factory, other
mills established in the vicinity and serving the same territory,
in order to compete in that territory, must either secure a like
freight rate or they must sell at a mill price which will permit
them to deliver cement at a price which will enable them to compete
with the mill or mills located at the basing point, which is the
principal point of production in the territory which is contiguous
in point of freight rate to the basing point. If such competing
mills secure the same freight rate through the adoption of a
blanket freight rate by the Interstate Commerce Commission, as was
done in the Lehigh Valley, the rate from the basing point would in
every case be identical with the freight rate for the competing
mills. If there were no
Page 268 U. S. 599
blanket freight rate, the competing mills must still use the
rate from a given basing point in order to compete with the mills
located in the vicinity of that chief point of production. In
either case, the freight rate from the basing point is an essential
element in making a delivered price, since selling by any
particular manufacturer at the lowest of the delivered prices
computed from several basing points is a necessary procedure in
competing in the sale of cement. The freight rate book therefore
not only enables the manufacturer to calculate a delivered price on
the basis of his own mill price, which he determines, to points in
the territory nearest in point of freight rate to his own mill, but
it enables him also to determine at once the freight differential
which he must offset in his mill price in order to compete with
other manufacturers serving any other given territory.
Exchange of Information Concerning Credits
Members of the Association render monthly reports of all
accounts of customers two months or more overdue, giving the name
and address of the delinquent debtor, the amount of the overdue
account in ledger balance, accounts in hands of attorneys for
collection, and any explanation, as, for example, when the account
was treated by the debtors as offset of a balance due for bags, or
was otherwise disputed. There are also reports showing the general
total of delinquent accounts in comparison with those for the last
12 months, and reports of payments of accounts placed in the hands
of attorneys. There was a form, seldom used, for answering
inquiries as to whether a particular name had appeared in the
monthly report, and, if so, where. There were never any comments
concerning names appearing on the list of delinquent debtors. The
government neither charged nor proved that there was any agreement
with respect to the use of this information
Page 268 U. S. 600
or with respect to the persons to whom or conditions under which
credit should be extended. The evidence falls far short of
establishing any understanding on the basis of which credit was to
be extended to customers, or that any cooperation resulted from the
distribution of this information, or that there were any
consequences from it other than such as would naturally ensue from
the exercise of the individual judgment of manufacturers in
determining, on the basis of available information, whether to
extend credit or to require cash or security from any given
customer.
Statistical Information
The statistical activities of the Association, other than those
relating to specific job contracts which have already been referred
to, dealt with information as to existing supplies of cement and
the so-called bag report, which gave information concerning
returned bags which are the usual containers in which cement is
shipped and delivered.
Each member of the Association, in addition to the reports on
specific job contracts already referred to, sends to the
Association a monthly statement of its production of clinker and
ground cement, shipments, and stock on hand for the past month and
for the corresponding periods of the previous year. These were
compiled and distributed to members without any change or comment.
In addition, semimonthly statements of shipments were also received
and likewise distributed. Each member of the Association was thus
given full information as to the available supply of cement and by
whom it was held.
By universal practice, the price of bags in which cement is
shipped is included and becomes a part of the mill base price. This
is usually at the rate of 10 cents per bag. The bag reports were
made quarterly. and contained two items -- the total number of bags
returned to each member
Page 268 U. S. 601
during the preceding quarter and the percentage thereof found
unfit for use. The reports show that the loss varied from about 3/4
of 1% by one manufacturer to about 4 1/2% by another, and the
diversity continued throughout the period covered by the reports.
In 1918, a questionnaire was sent out inquiring as to the practice
of each company to determine whether better results were obtained
by cleaning before or after counting, showing that some counted
before cleaning and some after cleaning, and some both before and
after. No information was reported concerning the charge and
allowance or deposit for bags returned, or concerning the number
received from any particular customer, or the portion found unfit
for use.
Meetings
The constitution and bylaws of the Association provided for
monthly meetings. A full and accurate stenographic report of all
discussions at meetings was kept and made available to the
government, and, as is stated in the government's brief:
"the Association's counsel was present at every meeting to steer
the discussions away from illegal subjects and to have them confine
the matters strictly within the purview of the bylaws and the
constitution of the Association."
During the only period of rising markets since the
relinquishment of war control, the spring and summer of 1920, no
meetings were held during July and August. The later minutes
contained complaints at smallness of attendance, and the number of
companies represented at meetings varied from 11 to 17, with an
average attendance of about two-thirds of the total membership of
19 corporations. There was no discussion at these meetings of
current prices, no comment on conditions or as to prospect of
market, production, or prices. Excerpts from the minutes are set
out by the government's brief at great length, indicating
Page 268 U. S. 602
that, from time to time, individual representatives of the
companies expressed themselves on subjects of minor importance,
such as return of bags and bag reports, discounts, the use of trade
acceptances where customers desired more than the customary 30
days' discount. But, with reference to these suggestions and
discussions, either no action was taken or action was taken adverse
to the suggestions made. There is no evidence that any agreement
was reached affecting any of the matters discussed, nor does the
government point specifically to any uniformity of trade practice
or custom followed which is urged as even inferentially the result
of activities at meetings.
Legal Consequence of Defendants'
activities
From these various activities of the defendants, the government
deduces a purpose to control the price of cement which it is
charged was to be accomplished by the control of the supply of
cement on the market and by intimate association of the defendants
in the exchange of information and a ready means of quoting a
delivered price at any point. Cement was to be kept from the market
by the use of the specific job contract accompanied by the
systematic gathering and reporting of information with reference to
the specific jobs and the amount of cement required for their
completion. The two essential elements in the conspiracy to
restrain commerce charged, therefore, are: (a) the gathering and
reporting of information which would enable individual members of
the Association to avoid making deliveries of cement on specific
job contracts which by the terms of the contracts they are not
bound to deliver, and (b) the gathering of information as to
production, price of cement sold on specific job contracts, and
transportation costs not differing essentially from similar
information disseminated by the Maple Flooring Association which is
the subject of
Page 268 U. S. 603
the opinion in
Maple Flooring Association v. United States
ante, p.
268 U. S. 563.
That a combination existed for the purpose of gathering and
distributing these two classes of information is not denied. That a
consequence of the gathering and dissemination of information with
respect to the specific job contracts was to afford to
manufacturers of cement opportunity and grounds for refusing
deliveries of cement which the contractors were not entitled to
call for, an opportunity of which manufacturers were prompt to
avail themselves, is also not open to dispute. We do not see,
however, in the activity of the defendants with respect to specific
job contracts any basis for the contention that they constitute an
unlawful restraint of commerce. The government does not rely on any
agreement or understanding among members of the Association that
members would either make use of the specific job contract, or that
they would refuse to deliver "excess" cement under specific job
contracts. Members were left free to use this type of contract and
to make such deliveries or not as they chose, and the evidence
already referred to shows that, in 1920, padded specific job
contracts were cut down something less than two-thirds of the total
amount of the padding as a result of the of gathering and reporting
this information. It may be assumed, however, if manufacturers take
the precaution to draw their sales contracts in such form that they
are not to be required to deliver cement not needed for the
specific jobs described in these contracts, that they would, to a
considerable extent, decline to make deliveries upon receiving
information showing that the deliveries claimed were not called for
by the contracts.
Unless the provisions in the contract are waived by the
manufacturer, demand for and receipt of such deliveries by the
contractor would be a fraud on the manufacturer, and, in our view,
the gathering and dissemination of information which will
enable
Page 268 U. S. 604
sellers to prevent the perpetration of fraud upon them, which
information they are free to act upon or not as they choose, cannot
be held to be an unlawful restraint upon commerce even though, in
the ordinary course of business, most sellers would act on the
information and refuse to make deliveries for which they were not
legally bound.
In
Swift & Co. v. United States, 196 U.
S. 375,
196 U. S. 395,
this Court approved a decree which provided that defendants should
not be restrained
"from establishing and maintaining rules for the giving of
credit to dealers where such rules in good faith are calculated
solely to protect the defendants against dishonest or irresponsible
dealers."
Distribution of information as to credit and responsibility of
buyers undoubtedly prevents fraud and cuts down to some degree
commercial transactions which would otherwise be induced by fraud.
But, for reasons stated more at length in our opinion in
United
States v. Maple Flooring Association, supra, we cannot regard
the procuring and dissemination of information which tends to
prevent the procuring of fraudulent contracts or to prevent the
fraudulent securing of deliveries of merchandise on the pretense
that the seller is bound to deliver it by his contract as an
unlawful restraint of trade, even though such information be
gathered and disseminated by those who are engaged in the trade or
business principally concerned.
Nor, for the reasons stated, can we regard the gathering and
reporting of information, through the cooperation of the defendants
in this case, with reference to production, price of cement in
actual closed specific job contracts and of transportation costs
from chief points of production in the cement trade, as an unlawful
restraint of commerce, even though it be assumed that the result of
the gathering and reporting of such information tends to bring
about uniformity in price.
Agreements or understanding among competitors for the
maintenance of uniform prices are, of course, unlawful,
Page 268 U. S. 605
and may be enjoined, but the government does not rely on any
agreement or understanding for price maintenance. It relies,
rather, upon the necessary leveling effect upon prices of knowledge
disseminated among sellers as to some of the important factors
which enter into price. It is conceded that there is a substantial
uniformity of price of cement. Variations of price by one
manufacturer are usually promptly followed by like variation
throughout the trade. As already indicated, the larger proportion
of the product of the defendants is distributed through dealers,
and prices to dealers are not reported to or through the
Association. It is contended by the government that the report of
prices on specific job contracts in effect informs the members of
the Association of prices to dealers, since the differential
allowed to dealers is well known in the trade. However this may be,
the fact is that any change in quotation of price to dealers
promptly becomes well known in the trade through reports of
salesmen, agents, and dealers of various manufacturers. It appears
to be undisputed that there were frequent changes in price, and
uniformity has resulted not from maintaining the price at fixed
levels, but from the prompt meeting of changes in prices by
competing sellers.
It is urged by the defendants that such uniformity of price as
existed in the trade was due to competition. They offered much
evidence tending to show complete independence of judgment and of
action of defendants by large expenditures in competitive sales
efforts and by variations in the volume of their production and
shipment, earnings, and profits. A great volume of testimony was
also given by distinguished economists in support of the thesis
that, in the case of a standardized product sold wholesale to fully
informed professional buyers, as were the dealers in cement,
uniformity of price will inevitably result from active, free, and
unrestrained competition, and the government in its brief concedes
that
"undoubtedly
Page 268 U. S. 606
the price of cement would approach uniformity in a normal market
in the absence of all combinations between the manufacturers."
We realize also that uniformity of price may be the result of
agreement or understanding, and that an artificial price level not
related to the supply and demand of a given commodity may be
evidence from which such agreement or understanding or some
concerted action of sellers operating to restrain commerce may be
inferred. But here, the government does not rely upon agreement or
understanding, and this record wholly fails to establish, either
directly or by inference, any concerted action other than that
involved in the gathering and dissemination of pertinent
information with respect to the sale and distribution of cement to
which we have referred, and it fails to show any effect on price
and production except such as would naturally flow from the
dissemination of that information in the trade and its natural
influence on individual action.
For reasons stated in
United States v. Maple Flooring
Association, supra, such activities are not, in themselves,
unlawful restraints upon commerce, and are not prohibited by the
Sherman Act.
The judgment of the district court is reversed.
THE CHIEF JUSTICE and MR. JUSTICE SANFORD and MR. JUSTICE
McREYNOLDS, in a separate opinion, dissented from the opinions of
the majority in this case and the next preceding.
See
ante, pp.
268 U. S.
586-587.