1. The provision of the judgment dismissing, as to certain of
the defendants, the complaint in a suit to restrain alleged
violations of the Sherman Act is here affirmed by an equally
divided Court. P. 321 U. S.
2. A distributor of a trademarked article in interstate commerce
may not limit by agreement, express or implied, the price at which
or the persons to whom its purchaser may resell, except as
authorized by the Miller-Tydings Act. P. 321 U. S.
3. The evidence in this case supports the District Court's
finding of a combination and conspiracy between the Soft-Lite
company (a distributor of trademarked pink-tinted ophthalmic
lenses) and wholesalers to maintain resale prices through a
distribution system in violation of the Sherman Act. On review of
its decree, held:
(a) The order of the District Court directing cancellation of
Soft-Lite's arrangements with wholesalers and cessation of
systematic price suggestions was justified by the findings. P.
321 U. S.
Whether the conspiracy and combination was achieved by agreement
or by acquiescence of the wholesalers, coupled with assistance in
effectuating its purpose, is immaterial.
(b) Clauses of the decree which hold null and void certain
resale price maintenance contracts entered into by Soft-Lite and
wholesalers subsequent to the Miller-Tydings Act, and which forbid
enforcement of such contracts and the execution of any others for
six months after notice of cancellation, are justified in view of
the illegality of the distribution system previously existing and
because the contracts in respect of a portion of the resales are
not immunized by the Act. P. 321 U. S.
Equity has power to eradicate the evils of a condemned scheme by
prohibition of the use of admittedly valid parts of an invalid
Page 321 U. S. 708
(c) Provisions of the decree giving representatives of the
Department of Justice certain broad visitatorial powers, as
construed by this Court, were within the power and discretion of
the District Court. P. 321 U. S.
(d) A provision of the decree directing the defendants to
submit, on the written request of the Department of Justice, such
reports in writing "with respect to any of the matters continued in
this judgment" as may be necessary to enforce it is too indefinite
for judicial enforcement, and therefore inappropriate. Pp.
321 U.S. 725
, 321 U. S.
(e) The Government's requests that the decree require Soft-Lite
to sell its product to any person offering to pay cash therefor,
and that the prohibition against Soft-Lite's systematically
suggesting resale prices and its execution of resale price
maintenance contracts under the Miller-Tydings Act be made
permanent, are denied. P. 321 U. S.
modified and affirmed.
Cross-appeals from a decree which, in a suit to restrain alleged
violations of the Sherman Act, dismissed the complaint as to
certain of the defendants and gave injunctive relief against
MR. JUSTICE REED delivered the opinion of the Court.
The United States of America brought suit in the District Court
for the Southern District of New York against the Bausch & Lomb
Optical Company, a corporation, and the Soft-Lite Lens Company,
Inc., and several of the chief officers of each, to restrain
violations of the Sherman Act. Jurisdiction was conferred on the
trial court by Section 4 of the Act, 15 U.S.C. § 4, and upon this
Court by Section 2 of the
Page 321 U. S. 709
Act of February 11, 1903, 15 U.S.C. § 29, and Judicial Code §
The complaint alleged that Bausch & Lomb and Soft-Lite and
their officers contracted, combined, and conspired to restrain
trade in pink tinted lenses for eyeglasses, contrary to Sections 1
and 3 of the Sherman Act. [Footnote
] The allegations of the complaint were upheld by the trial
court as to Soft-Lite and certain of its officers and dismissed as
to Bausch & Lomb and its officers. United States v. Bausch
& Lomb Optical Co., 45 F.
The findings and opinion upon which the decree is molded show
that Soft-Lite is the sole distributor of pink
Page 321 U. S. 710
tinted lenses under the trade name "Softlite." Their plan of
dealing follows. As no patents or secret processes are relied upon,
and as Soft-Lite limits itself to distribution only, the tradename,
salesmanship, and business experience of Soft-Lite are the
qualities upon which it must primarily depend for its profits as a
distributor. Soft-Lite buys its lenses from Bausch & Lomb. It
sells to wholesalers, who in turn sell to retailers, who in turn
sell to the public. Laying aside the variations in operating costs
of wholesalers as compared with other wholesalers and of retailers
as compared with other retailers, the opportunity for profits which
can be divided between Soft-Lite, the wholesalers, and the
retailers depends upon the difference between the price per lens
that Soft-Lite pays Bausch & Lomb and the price the ultimate
consumer pays the retailer. A wider spread between original
purchase and final prices, which is maintained by artificial fixing
of the prices demanded from the ultimate consumer, furnishes the
links of the distribution chain more profit for division among
themselves. This is true regardless of volume or price, although
these factors, of course, affect the aggregate profits available
for division among the dealers who have a part in distribution. In
its self-restricted field, Soft-Lite is successful. Roughly
speaking, for the years 1938, 1939, and 1940 in the United States,
it has sold one-third of the pink tinted lenses for one-half of the
gross receipts. Other manufacturers than Bausch & Lomb and
other distributors than Soft-Lite do the remainder of the
Soft-Lite has arrangements with Bausch & Lomb for the
purchase from them of lenses and blanks, with wholesalers of
optical glass for the supply of this material to retail opticians,
and, in turn, with these retailers for sales promotion. This is an
integrated plant for the distribution of Soft-Lite's optical
specialty, the pink tinted glass for easing eye strain. The plan of
distribution for this
Page 321 U. S. 711
commodity has developed over more than a quarter of a century of
The arrangement with Bausch & Lomb had its origin in 1924.
At that time, this manufacturer of optical glass undertook to grind
pink tinted lenses for Soft-Lite out of foreign glass imported by
the latter, but very soon the two parties arranged for Bausch &
Lomb to manufacture the glass as well. At the very beginning,
Bausch & Lomb agreed that any orders for pink tinted lenses
which it might receive would be transmitted to Soft-Lite. A list of
Soft-Lite customers, wholesale and retail, was furnished Bausch
& Lomb. It appeared better to both seller and buyer to extend
their arrangement by a contract in which Bausch & Lomb
undertook to manufacture and sell pink tinted glass and lenses of
Soft-Lite. To avoid the danger to Soft-Lite's business of
indiscriminate selling by Bausch & Lomb of this pink glass
specialty, Bausch & Lomb agreed that it would not sell pink
tinted glass to lens manufacturers or pink tinted lenses to the
optical trade. Soft-Lite buys exclusively from Bausch &
The legal position of Bausch & Lomb and Soft-Lite is that of
buyer and seller. Their relations through the years have been
close, friendly, and mutually satisfactory. Bausch & Lomb knows
generally of the Soft-Lite distribution system, both as
manufacturer for an active customer and as an owner of stock in
wholesale optical goods companies, which subsidiary companies
handled a large part of Soft-Lite's goods as jobbers. The officials
of the two corporations carried on discussions and correspondence
with respect to wholesale customers, retail outlets, prices,
advertising policies, the standing of dealers, and general trade
information. As to trade adjuncts for optical glass distribution
such as cleaning cloths, lens cabinets, etc., Soft-Lite and Bausch
& Lomb cooperated even to the extent
Page 321 U. S. 712
of agreeing to charge identical prices for such marketing
In 1926, the arrangement between Bausch & Lomb and Soft-Lite
was given a somewhat more formal character by a letter of the
manufacturer advising its customer as follows:
"Since the very beginning of our relations with you in
connection with this transaction, it has been understood that we
would safeguard your interests in every way, and it has never been
our intention to make competition for you by either marketing a
tinted lens of our own or producing similar tinted glass for other
manufacturers, and it is our intention to abide by this
"On the other hand, however, it is difficult to foresee the
progress of science in producing glass possessing better properties
than is obtainable at the present time, and, in that event, we feel
certain that you would not in any way desire to impede our progress
in that direction."
"We hope that this may be sufficient guarantee to you that we do
not wish to do anything that would look like competition in
connection with the Soft-Lite, and we naturally expect that your
efforts in the sale of same will be continued as at present for an
indefinite period unless by consent of both parties concerned a
different arrangement is agreed upon."
"Yours very truly,"
"BAUSCH & LOMB OPTICAL COMPANY"
"P.S. Tinted lenses such as Crookes, Fieuzal, Smoke, Amber, etc.
which we are now manufacturing it is understood will not come under
the above arrangement."
Minor variations in the plan have occurred since that letter.
Bausch & Lomb patented a lens called "Nokrome." Soft-Lite was
advised that, when Soft-Lite glass was used in the Nokrome lens,
Soft-Lite should have exclusive distribution. There were other
patented lenses manufactured
Page 321 U. S. 713
by Bausch & Lomb. Sometimes these lenses were ground from
pink tinted glass and sometimes from other colors. Since these
patented lenses were distributed by Bausch & Lomb under a
licensee system, interference arose. Soft-Lite and Bausch &
Lomb made mutually satisfactory adjustments so that their
respective retailers might have some of the advantages of dealing
in the Bausch & Lomb patented lenses ground out of Soft-Lite
Again, Soft-Lite was released from its obligation to take second
quality lenses and Bausch & Lomb agreed to sell them only in
foreign countries where Soft-Lite had no offices and at prices
acceptable to both Soft-Lite and Bausch & Lomb.
Reference has been made to the fact that Bausch & Lomb owned
stock in optical wholesale companies which distributed Soft-Lite
lenses and blanks. A stipulation stated that
"Bausch & Lomb, through its ownership of a majority of the
outstanding voting stock of each said wholesale companies, has
power to coordinate and control the sales and pricing policies of
said wholesale companies."
These subsidiaries were acquired by Bausch & Lomb "at
intervals subsequent to the original arrangement with Soft-Lite."
They now are the largest outlet for Soft-Lite Lenses, taking sixty
percent of Soft-Lite sales. They were substantial customers of
Soft-Lite before they became affiliates of Bausch & Lomb.
Soft-Lite is treated by its wholesale customers alike, whether or
not the customers are Bausch & Lomb affiliates. It is equally
true that all wholesalers have cooperated with Soft-Lite in the
development of its system.
Bausch & Lomb thus profited from the Soft-Lite business in
two ways: first, by profit made in manufacturing and selling to
Soft-Lite; second, by sharing, through stock
Page 321 U. S. 714
ownership of wholesale distributors of Soft-Lite's goods, in the
profits which lay between the Soft-Lite selling price and the
consumer purchase price. Bausch & Lomb, the evidence shows,
understood well as early as 1925 the advantages to itself through
these subsidiaries of the Soft-Lite Plan, which secured an
increased profit for division among distributing agencies. As a
consequence, Bausch & Lomb concerned itself with prices charged
to wholesalers by Soft-Lite, discussed each step of the price
mark-up from Soft-Lite up to the consumer, insisted that reductions
in its prices to Soft-Lite should be passed along the distribution
line, and, through its affiliated corporations, cooperated in the
price arrangements and the elimination of undesirable
Soft-Lite's control of distribution did not cease with this sale
of its goods to optical wholesalers. It sought as wholesale outlets
distributors who were free from business alliances with Soft-Lite's
competitors. It sold only to wholesalers who were willing to
cooperate with its policy. These wholesalers it designated as
dealers, and sold its goods only through them. Soft-Lite's
wholesalers were allowed to resell only to retailers who held
licenses from Soft-Lite. When retailers were licensed, the
wholesalers were notified that they were at liberty to sell to the
specified retailer. On the cancellation of the license, the
wholesalers were notified in writing that the retailer was no
longer entitled to receive Soft-Lite lenses. If a wholesaler did
business with unapproved retailers, it was excluded from
Soft-Lite's list of designated wholesalers. The wholesalers were
required to distribute with each pair of Soft-Lite lenses a
numbered certificate called a "Protection Certificate." By this
certificate, the wholesale outlet for Soft-Lite lenses found in the
hands of unlicensed retailers could be traced by Soft-Lite. The
wholesalers were told that the certificates were intended for
Page 321 U. S. 715
this purpose. Soft-Lite indicated to the wholesalers the prices
to be received by them from retailers by means of published price
lists. Through these price lists, made available to wholesalers and
retailers alike, the retailers could determine the prices
wholesalers were to charge.
It was determined by the District Court (and this finding is
without challenge) that Soft-Lite and the wholesalers understood
that material deviation would result in the discontinuance of the
offending wholesaler as an outlet.
Soft-Lite's plan of distribution was rounded out by its
arrangements with the retail optical concerns. As we have just
pointed out, the retailers knew from the published lists the prices
the wholesalers were expected to charge them. The retailers were
selected by Soft-Lite with care equal to that used in selecting
wholesalers. Soft-Lite, in the words of its brief, was
"manufactured and advertised as a quality product, Soft-Lite must
be sold as such." "Ethical" retailer opticians and optometrists
were sought. Those who quoted prices in their advertisements or
operated as adjuncts to department or jewelry stores were frowned
upon. Retail prices to consumers were not fixed by Soft-Lite. It
seems to be admitted, however, that the retailer was required to
maintain prevailing local price schedules. An application form
dated February 1, 1939, for retail stock licensees calls for
representations to that effect from the Soft-Lite representative
recommending the application and the approval of a Soft-Lite
wholesaler. This practice apparently applied to all retailers. The
District Court found that retailers agreed to sell the lenses at
prices prevailing in the locality, and that Soft-Lite required
retailers to sell the pink tinted lenses "at a premium over
comparable untinted lenses."
Under its present system, Soft-Lite grants a revocable,
exclusive, and nontransferable "license" to the retailer to
Page 321 U. S. 716
buy Soft-Lite lenses and lens blanks from "licensed" Soft-Lite
distributors or wholesale "licensees" and to resell the lenses at
prevailing prices in the locally where the retailer is located. In
turn, the licensee agrees to promote the sale of Soft-Lite lenses
and to do nothing to injure their prestige. The licensee was
required to state that he understood that the substitution of other
lenses for Soft-Lite would adversely affect that prestige. The
licensee further agreed to sell only under the tradenames and mark
of Soft-Lite, and only to the consumer or patient. [Footnote 2
The retailer's agreement to conform to the license requirements
was enforced by surveillance through Soft-Lite's salesmen and by
cancellation of the retailer's license if he failed to abide by its
terms. Wholesalers were notified of such cancellation.
The Miller-Tydings Act of August 17, 1937, 50 Stat. 693, amended
the Sherman Act so as to permit minimum prices for the resale of a
commodity which bears the trademark of the distributor in states
where contracts of that description are legal by statute so far as
intrastate transactions are concerned, and, beginning in 1940,
Soft-Lite has entered into resale price maintenance contracts with
a number of wholesalers, presumably in conformity with the
Miller-Tydings Act. The District Court was of the view that these
contracts "came into existence as a patch upon an illegal system of
distribution of which they have become an integral part."
It is accepted by all parties that the transactions of Bausch
& Lomb and Soft-Lite are in interstate commerce as the term
"commerce" is used in the Sherman Act.
Page 321 U. S. 717
The judgment of the District Court determined that Soft-Lite and
certain of its officers had contracted and conspired with optical
wholesalers and retailers to violate the Sherman Anti-Trust Act in
the following particulars:
"(a) by entering into so-called 'license' agreements with
optical retailers which fix the prices at which said retailers
shall sell Soft-Lite lenses; (b) by entering into so-called
'license' agreements with optical retailers which provide that said
retailers will sell such lenses only to the public; (c) by entering
into agreements with wholesale customers which provide that the
said wholesalers will sell Soft-Lite lenses and blanks only to
retailers who are designated as 'licensees' by the defendant
Soft-Lite Lens Company, Inc.; (d) by entering into agreements with
wholesale customers which fix the prices at which said wholesalers
shall sell Soft-Lite lenses and blanks; (e) by entering into 'Fair
Trade' resale price maintenance contracts with said wholesalers as
an integral part of the illegal distribution system of Soft-Lite
blanks and lenses, and (f) by enforcing the agreements set forth in
subdivisions (a) through (e) of this paragraph."
The judgment directs Soft-Lite to cancel its license agreements
with retailers and its Fair Trade resale price maintenance
contracts and agreements with wholesalers fixing prices and
restricting their resales to Soft-Lite's retail licensees.
Soft-Lite and its agents are enjoined from enforcing these
contracts or using identification devices, such as the "Protection
Certificates," for tracing resales of lenses or blanks purchased
from Soft-Lite. They are likewise forbidden to enter into any other
agreement similar in effect or purpose to those adjudged unlawful,
except the Fair Trade contracts. These latter may be renegotiated
after six months from the notices of cancellation which the
judgment directs to issue. There is also a prohibition against
Soft-Lite's and its officers' systematically
Page 321 U. S. 718
suggesting resale prices on lens or blanks for said six months.
Bausch & Lomb and various individuals are adjudged to be free
of the violations which are charged in the complaint. The right to
inspect records and to interview officers and employees is reserved
to the Department of Justice in the manner set out below. [Footnote 3
] Finally, jurisdiction of
the case is retained for further orders or directions, including
modification or termination of any of the provisions as well as
their enforcement. Cf. Sugar Institute v. United States,
297 U. S. 553
297 U. S.
Two appeals are before us. The Government seeks to establish
that the agreement of Bausch & Lomb not to sell pink tinted
glass or lenses to any competitor of Soft-Lite and not to compete
with Soft-Lite in the marketing of any
Page 321 U. S. 719
pink tinted lens unreasonably restrains commerce in violation of
the Sherman Act. By its appeal, the Government urges also a
broadening of the decree by the substitution of a permanent instead
of a six months' injunction against new Fair Trade agreements and
against systematic suggestion of resale prices by Soft-Lite. It
also asks an addition to the decree requiring Soft-Lite to sell its
product without discrimination to any person offering to pay cash
The other appeal is by Soft-Lite and those of its officers who
are enjoined. This appeal attacks the provisions of the judgment
cancelling agreements of Soft-Lite with wholesalers to charge
uniform prices to retailers, enjoining systematic suggestions of
resale prices and execution of Fair Trade resale price maintenance
contracts even for six months, and allowing future discovery by the
Department of Justice in order to police the decree.
Since the alleged illegality of the Soft-Lite distribution
system is the heart of the scheme which the Government attacks, we
shall examine first the judgment from the standpoint of Soft-Lite's
objections to it, and then from that of the Government's desired
additions as to Soft-Lite.
As the Court is equally divided upon the issue raised in the
Government's appeal in No. 62 by its request for a reversal of the
provision of the judgment which dismisses Bausch & Lomb and its
officers from the proceeding, that provision stands affirmed.
Our task of examining Soft-Lite's objections is simplified by
the frank recognition of those appellants that "the retail license
provisions binding dealers to sell at locally prevailing prices and
only to the public constitute illegal restraints." Our former
decisions compel this conclusion.
Page 321 U. S. 720
Price-fixing, reasonable or unreasonable, is "unlawful per
" United States v. Socony-Vacuum Oil Co., Inc.,
310 U. S. 150
310 U. S. 218
United States v. Trenton Potteries, 273 U.
, 273 U. S. 397
Ethyl Gasoline Corp. v. United States, 309 U.
, 309 U. S. 458
Fashion Originators' Guild v. Trade Comm'n, 312 U.
, 312 U. S. 465
668. The retailer's price to his customer is the single source of
stable profits for all handlers.
These illegal contracts cannot be considered, however, as
happenings completely insulated from other incidents of the
Soft-Lite distribution system. When we turn to the provisions of
the decree which are attacked here by Soft-Lite, requiring it to
cancel its resale price agreements with wholesalers as well as
retailers and to avoid such requirements for six months either by
contract or suggestion, and thereafter to act only in accordance
with the Miller-Tydings Act, we must first note that it is plain
that the arrangements for price maintenance in the wholesalers'
sales to retailers are an integral part of the whole distribution
system. Not only are Soft-Lite wholesalers carefully selected and
cooperative, but they may sell only to Soft-Lite's retail
licensees. Undesirable wholesalers are excluded from the system,
and the District Court found that, by means of published wholesale
price lists, put in the hands of wholesalers and retailers alike,
resale prices of wholesalers are designated by Soft-Lite. The
requirement of the wholesalers' recommendation as to the business
character of the applicant for a retail license, the evidence of
espionage, the limitation of resales to Soft-Lite retail licensees,
the existence of the "Protection Certificate" to mark the
wholesaler who might violate the arrangement, the uniformity of the
prices, as prescribed in Soft-Lite's published lists, which are
charged retailers by wholesalers -- all amply support -- indeed
require -- the inference of the trial court that a conspiracy to
maintain prices down the distribution system existed between the
wholesalers and Soft-Lite through the years prior to this suit.
Page 321 U. S. 721
Soft-Lite is the distributor of an unpatented article. It sells
to its wholesalers at prices satisfactory to itself. Beyond that
point, it may not project its power over the prices of its
wholesale customers by agreement. A distributor of a trademarked
article may not lawfully limit by agreement, express or implied,
the price at which or the persons to whom its purchaser may resell,
except as the seller moves along the route which is marked by the
Miller-Tydings Act. Dr. Miles Medical Co. v. John D. Park &
Sons Co., 220 U. S. 373
220 U. S. 404
Even the additional protection of a copyright, Bobbs-Merrill
Co. v. Straus, 210 U. S. 339
Interstate Circuit, Inc. v. United States, 306 U.
, 306 U. S. 221
and cases cited, or of a patent, United States v. Masonite
Corp., 316 U. S. 265
316 U. S. 276
Mercoid Corp. v. Mid-Continent Investment Co.,
320 U. S. 661
cases cited, add nothing to a distributor's power to control prices
of resale by a purchaser. The same thing is true as to restriction
of customers. Fashion Guild v. Trade Comm'n, 312 U.
, 312 U. S. 465
Standard Sanitary Mfg. Co. v. United States, 226 U. S.
, 226 U. S. 47
Montague & Co. v. Lowry, 193 U. S.
, 193 U. S.
Not only do the appellants urge that conspiracy between
Soft-Lite and the wholesalers should not be found from the
foregoing evidence, but they also say that they come within the
scope of certain of our cases which are said to indicate that a
simple refusal to sell to customers who will not resell at prices
fixed by the seller is permissible under the Sherman Act. They cite
United States v. Colgate & Co., 250 U.
; Federal Trade Commission v. Beech-Nut
Packing Co., 257 U. S. 441
257 U. S.
-453; Federal Trade Commission v. Sinclair
Refining Co., 261 U. S. 463
261 U. S.
-476, and Federal Trade Commission v. Curtis
Publishing Co., 260 U. S. 568
260 U. S. 582
None of these cases involves, as the present case does, an
agreement between the seller and purchaser to maintain resale
Page 321 U. S. 722
case turned upon the sufficiency on
demurrer of an indictment under the Sherman Act against a
manufacturer for requiring its dealers to maintain prices. As the
indictment was construed to allege only specification of resale
prices by the manufacturer and refusal to deal with customers who
did not maintain them, this Court held the indictment insufficient
as no reference was made in it to a purpose to monopolize, and, in
such a posture, the Sherman Act
"does not restrict the long recognized right of trader or
manufacturer engaged in an entirely private business, freely to
exercise this own independent discretion as to parties with whom he
will deal; and, of course, he may announce in advance the
circumstances under which he will refuse to sell."
250 U.S. at 250 U. S. 302
250 U. S.
-307. Cf. United States v. A. Schrader's
Sons, 252 U. S. 85
252 U. S.
case recognizes that a simple refusal to
sell to others who do not maintain the first seller's fixed resale
prices [Footnote 4
] is lawful,
but adds as to the Sherman Act,
"He [the seller] may not, consistently with the act, go beyond
the exercise of this right, and by contracts or combinations,
express or implied, unduly hinder or obstruct the free and natural
flow of commerce in the channels of interstate trade."
257 U.S. at 257 U. S. 453
The Beech-Nut Company, without agreements, was found to suppress
the freedom of competition by coercion of its customers through
special agents of the company, by reports of competitors about
customers who violated resale prices, and by boycotts of
pp. 257 U. S. 451
257 U. S. 454
As the decision as to the Curtis Company involved only selling
agencies, 260 U.S. at 260 U. S. 581
and that as to Sinclair the restricted use of a distributor's
gasoline tanks, 261 U.S. at 261 U. S. 474
they are inapplicable to a consideration of a refusal by a
distributor to sell except to chosen dealers.
Page 321 U. S. 723
As in the Beech-Nut
case, there is more here than more
acquiescence of wholesalers in Soft-Lite's published resale price
list. The wholesalers accepted Soft-Lite's proffer of a plan of
distribution by cooperating in prices, limitation of sales to, and
approval of retail licensees. That is sufficient. Interstate
Circuit, Inc. v. United States, 306 U.
, 306 U. S.
-227; United States v. Masonite Corp.,
316 U. S. 265
316 U. S.
-275; Sugar Institute v. United States,
297 U. S. 553
297 U. S.
So far as the wholesalers are concerned, Soft-Lite and its
officers conspired and combined among themselves and with at least
some of the wholesalers to restrain commerce by designating
selected wholesalers as sub-distributors of Soft-Lite products, by
fixing resale prices, and by limiting the customers of the
wholesalers to those recommended by the wholesalers and approved by
Soft-Life -- all in violation of the Sherman Act. This finding
justifies the order directing cancellation of the wholesale
arrangements and cessation by Soft-Lite of systematic price
suggestions. Whether this conspiracy and combination was achieved
by agreement or by acquiescence of the wholesalers coupled with
assistance in effectuating its purpose is immaterial.
Soft-Lite makes objection also to the clause of the decree which
holds null and void certain resale price maintenance contracts
entered into by Soft-Lite and many of its wholesalers after the
passage of the Miller-Tydings Amendment to the Sherman Act on
August 17, 1937. See note
Objections on the same grounds apply to other
clauses of the decree forbidding enforcement of these existing
"Fair Trade" contracts with wholesalers and Soft-Lite's entering
into any others until six months after certain notices of
cancellation which are required by the decree but which have not
yet been given owing to this appeal. Soft-Lite contends that the
"Fair Trade" agreements are strictly within the terms of the
Page 321 U. S. 724
Act, and we assume the correctness of that position. [Footnote 5
] The disadvantage at which
these clauses place Soft-Lite towards its customers and competitors
is pointed out.
The District Court [45 F. Supp. 399] said that these contracts
"came into existence as a patch upon an illegal system of
distribution," and as an integral part of that system. As some
wholesalers do certain cutting and edging work on the blanks for
sale to retailers who do not do this grinding for themselves, the
"Fair Trade" contracts for fixing resale prices apply only to those
sales, known as "stock" sales, where the lenses and blanks are
resold in the same form in which they come from Soft-Lite. See
United States v. Univis Lens Co., 316 U.
, 316 U. S.
-254. We think that, where a distribution system
exists, prior to the making of such price maintenance contracts,
which is illegal because of unallowable price-fixing contracts, and
where that illegality necessarily persists in part because a
portion of the resales are not covered by the "Fair Trade"
contracts, as just explained, subsequent price maintenance
contracts, otherwise valid, should be cancelled, along with the
invalid arrangements, in order that the ground may be cleansed
effectually from the vice of the former illegality. Equity has
power to eradicate the evils of a condemned scheme by prohibition
of the use of admittedly valid parts of an invalid whole.
United States v. Univis Lens Co., 316 U.
, 316 U. S. 254
Ethyl Gasoline Corp. v. United States, 309 U.
, 309 U. S. 461
Cf. Standard Oil Co. v. United States, 221 U. S.
, 221 U. S. 78
United States v. Union Pacific R. Co., 226 U. S.
, 226 U. S. 96
226 U. S. 470
226 U. S.
-477; Aikens v. Wisconsin, 195 U.
, 195 U. S.
The last objection brought forward by Soft-Lite to the decree is
that paragraph 9, which is set out in full in note �321 U
S. 725� 3, is an unconstitutional
exercise of judicial power by virtue of the provisions of the
Fourth and Fifth Amendments or at any rate, an improper use of the
trial court's discretion.
The first sentence requires Soft-Lite to permit authorized
representatives of the Department of Justice to have access to all
records and documents of Soft-Lite which are in Soft-Lite's
control, "relating to any of the matters contained in this judgment
. . . subject to any legally recognized privilege." [Footnote 6
] The second sentence we construe
to forbid Soft-Lite or its officers from directing its personnel to
refuse to discuss with investigators of the Department the affairs
of Soft-Lite relating to any of the matters contained in the
judgment and from barring from their property investigators who may
appear unprovided with search warrants. This second sentence
purports to give no other right of investigation of the affairs of
the appellants. The third and last sentence directs the defendants
to submit on the written request of the Department such reports in
writing "with respect to any of the matters contained in this
judgment" as may be necessary to enforce it.
There is nothing in the United States Code relating to
monopolies and combinations in restraint of trade which makes
provision for such broad visitatorial powers. Without this
statutory authority, United States officials could not require the
corporation to submit to this examination without a search warrant.
Go-Bart Importing Co. v. United States, 282 U.
, 282 U. S.
-358; United States v. Louisville & N. R.
Co., 236 U. S. 318
236 U. S.
-338. Cf. Guthrie v. Harkness, 199 U.
, 199 U. S. 158
The provision was evidently
Page 321 U. S. 726
sought and allowed to enable the Government to obtain
information as to the operations of Soft-Lite subsequent to the
judgment declaring Soft-Lite's distribution operations unlawful, to
guide the responsible officials of the Department of Justice in
their duty to protecting the public against a continuance of the
illegal combination and conspiracy without the necessity of the
expense and difficulty of extended investigation or renewed
hearings under the jurisdiction retained for modification or
enforcement. If reasonably necessary to wipe out the illegal
distribution system, we see no constitutional objection to the
employment by equity of this method. In the immediately preceding
paragraphs of this opinion which discuss the power of the trial
court to compel the cancellation of "Fair Trade" agreements
executed during and as a part of the unlawful distribution system,
we cited important precedents of this Court which uphold equity's
authority to use quite drastic measures to achieve freedom from the
influence of the unlawful restraint of trade. These precedents are
applicable here. The test is whether or not the required action
reasonably tends to dissipate the restraints and prevent evasions.
Doubts are to "be resolved in favor of the government and against
the conspirators." Local 167 v. United States,
291 U. S. 293
291 U. S. 299
Warner & Co. v. Lilly & Co., 265 U.
, 265 U. S.
The Fifth Amendment does not protect a corporation against
self-incrimination through compulsory production of its papers,
Wilson v. United States, 221 U. S. 361
221 U. S. 375
Hale v. Henkel, 201 U. S. 43
201 U. S. 74
Wheeler v. United States, 226 U.
, although it does protect an individual, Boyd
v. United States, 116 U. S. 616
corporation is chartered with special powers only. Its creator, the
State, may examine into its records to see whether or not the
privileges have been abused. Our dual form of government
necessarily authorizes the United States to
Page 321 U. S. 727
exercise these powers in the vindication of its own laws.
Hale v. Henkel, supra.
case pointed out
that, as to individuals, the extortion of his private papers by
subpoena was not only compelling self-incrimination, but was also
an unreasonable search and seizure within the Fourth Amendment. 116
U.S. at 116 U. S. 634
Upon further examination of the problem of the interrelation of the
two Amendments in Hale v. Henkel,
201 U.S. at 201 U. S. 72
this Court reached the conclusion that the Fourth Amendment was not
intended to interfere with "the power of courts to compel, through
a subpoena duces tecum,
the production, upon a trial in
court, of documentary evidence," so long as the scope of the
subpoena was reasonable. The power of Congress to require
disclosure of corporate documents, a question adverted in Hale
p. 201 U. S. 77
but not decided, was upheld in United States v. Louisville
& Nashville R. Co., supra.
The scope of equity's power,
Sherman Act, Sec. 4, 26 Stat. 209, to obviate continued restraint
on trade in accordance with the Congressional direction as to the
use of the injunction against violators of the Sherman Act is no
more restricted in its field than that of Congress.
The appropriateness of the visitatorial remedy raises a
different question. Of course, a mere prohibition of the precise
scheme would be ineffectual to prevent restraints. United
States v. Trans-Missouri Freight Assn., 166 U.
, 166 U. S. 308
The circumstances of each case control the breadth of the order.
Labor Board v. Express Pub. Co., 312 U.
, 312 U. S. 436
The other provisions of the decree are important. If, in the
present case, Soft-Lite was required for the indefinite future to
sell its goods to any buyer with cash to pay the purchase price,
there would not be the same need for visitatorial powers. The first
sentence of the provision of the decree under discussion compels
the disclosure only of papers relating to the matters contained in
the judgment. This we think is limited
Page 321 U. S. 728
sufficiently to satisfy the rule as to necessary certainty.
Wilson v. United States, supra.
We cannot say that the
first two sentences of the 9th paragraph of the decree, as herein
construed, were beyond the discretion of the trial judge. We are of
the view that the third sentence, relating to reports, is too
indefinite for judicial enforcement, and therefore improper.
Cf. Swift & Co. v. United States, 196 U.
, 196 U. S.
The United States seeks extensions of the decree as entered
against Soft-Lite. In the Government's view, the existing
prohibitions, although coupled with the retention of jurisdiction
for further orders or directions, including modification and
enforcement, are insufficient to prevent continuance of the
purposes and effects of the unlawful Soft-Lite distribution system.
Specifically, we are asked to direct the inclusion of requirements
that Soft-Lite file "with the district court a written instrument
providing that it will sell its product, without discrimination, to
any person offering to pay cash therefor."
The Sherman Act is intended to prevent unreasonable restraints
of commerce. The Clayton amendment, 38 Stat. 731, outlawed
agreements with customers which restricted the customer from
dealing with the products of a competitor of the seller. Persons
injured by unlawful restraints may recover three-fold damages. The
Federal courts have jurisdiction of suits to enjoin violations.
Congress has been liberal in enacting remedies to enforce the
anti-monopoly statutes. But in no instance has it indicated an
intention to interfere with ordinary commercial practices. In a
business, such as Soft-Lite, which deals in a specialty of a luxury
or near-luxury character, the right to select its customers may
well be the most essential factor in the maintenance of the highest
Page 321 U. S. 729
service. We are, as the District Court apparently was, loath to
deny to Soft-Lite this privilege of selection. United States v.
Colgate & Co., 250 U. S. 300
250 U. S. 307
Federal Trade Comm'n v. Raymond Co., 263 U.
, 263 U. S. 573
We have no reason to doubt that Soft-Lite will conform meticulously
to the requirements of the decree. When it is shown to the trial
court that it has not done so will be an appropriate time for the
Government to urge this addition to the decree.
What we have just said as to the Government's request for a
requirement of sales by Soft-Lite to all applicants for its
commodities is relevant to the Government's other request for
modification of the decree to make permanent the six months'
prohibition against Soft-Lite's systematically suggesting resale
prices on its lenses and the execution of resale price maintenance
contracts under the Miller-Tydings Act. The path is narrow between
the permissible selection of customers under the decision in
Colgate & Co.
and unlawful arrangements as to prices
under this decree, but we think Soft-Lite is entitled to traverse
it, after a reasonable interim to dissipate unlawful advantages,
with such aid as Congress has given by the Miller-Tydings Act. The
suggestion for a permanent injunction is unacceptable.
These conclusions lead us to modify the judgment by striking out
the last sentence of paragraph 9, quoted in note 3
As so modified, the judgment is affirmed.
MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.
* Together with No. 64, Soft-Lite Lens Co., Inc., et al. v.
also on appeal from the District Court of the
United States for the Southern District of New York.
26 Stat. 209, as amended 50 Stat. 693:
"SECTION 1. Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations, is hereby declared to
be illegal: Provided,
That nothing herein contained shall
render illegal, contracts or agreements prescribing minimum prices
for the resale of a commodity which bears, or the label or
container of which bears, the trademark, brand, or name of the
producer or distributor of such commodity and which is in free and
open competition with commodities of the same general class
produced or distributed by others, when contracts or agreements of
that description are lawful as applied to intrastate transactions,
under any statute, law, or public policy now or hereafter in effect
in any State, Territory, or the District of Columbia in which such
resale is to be made, or to which the commodity is to be
transported for such resale, and the making of such contracts or
agreements shall not be an unfair method of competition under
section 5, as amended and supplemented, of the Act entitled 'An Act
to create a Federal Trade Commission, to define its powers and
duties, and for other purposes,' approved September 26, 1914:
That the preceding proviso shall not
make lawful any contract or agreement, providing for the
establishment or maintenance of minimum resale prices on any
commodity herein involved, between manufacturers, or between
producers, or between wholesalers, or between brokers, or between
factors, or between retailers, or between persons, firms, or
corporations in competition with each other. . . ."
Section 3 governs similar conduct in territories of the United
States and the District of Columbia.
In 1939, a change was made from the license agreement not to
deal in any lens similar in tint, color, or shade to Soft-Lite
lenses. The change followed an agreed order of the Federal Trade
Commission of June 23, 1938, Docket No. 2717, In the Matter of
Soft-Lite Lens Co., Inc.
"9. That, for the purpose of securing compliance with this
Judgment, authorized representatives of the Department of Justice,
upon the written request of the Attorney General or an Assistant
Attorney General, shall be permitted access, within the office
hours of said defendants, and upon reasonable notice, to books,
ledgers, accounts, correspondence, memoranda, and other records and
documents in the possession or the control of the said defendants,
or any of them, relating to any of the matters contained in this
judgment, such access to be subject to any legally recognized
privilege. Any authorized representative of the Department of
Justice, subject to the reasonable convenience of the said
defendants, shall be permitted to interview officers or employees
of said defendants without interference, restraint or limitation by
said defendants; provided, however, that any such officer or
employee may have counsel present at such interview. Said
defendants, upon the written request of the Attorney General, or an
Assistant Attorney General, shall submit such reports with respect
to any of the matters contained in this Judgment as from time to
time may be necessary for the purpose of enforcement of this
Judgment; provided, however, that the information obtained by the
means permitted in this paragraph shall not be divulged by any
representative of the Department of Justice to any person other
than a duly authorized representative of the Department of Justice
except in the course of legal proceedings in which the United
States is a party or as otherwise required by law."
Robinson-Patman Act, § 1, 49 Stat. 1526.
the decision below, 45 F.
, 399. We do not understand the opinion of the
District Court to impugn the validity of bilateral contracts,
identical in form, between a producer or distributor, on the one
hand, and their customers on the other, entered into under the
The wording of the sentence includes the papers of the
individual defendants who are officers of Soft-Lite. The United
States disclaims in its brief, page 55, so broad a meaning. We
accept the suggested interpretation that the paragraph relates only
to the papers belonging to the corporation. Cf. Wilson v.
United States, 221 U. S. 361
221 U. S. 376
221 U. S.