Women's sportswear jobbers in Boston, selling in interstate
commerce about 80% of their annual production approximating
$8,800,000, agreed by contract to employ only those stitching
contractors who were unionized, and also members of a particular
trade association, and to divide all their work among association
members who, as to price and quality, were comparable with
nonmembers.
Held:
1. The intent and effect of the agreement was substantially to
restrict competition, prices and markets in violation of § 1 of the
Sherman Act. Pp.
336 U. S.
461-463.
2. The effect of the agreement being to restrain interstate
commerce, it is immaterial whether or not the stitching contractors
themselves may have been engaged only in intrastate business. Pp.
336 U. S.
464-465.
3. Inclusion in the contract of a provision which limited the
work to union shops which were also members of the trade
association did not immunize the agreement from attack under § 1 of
the Sherman Act. Pp.
336 U. S.
463-464.
75 F. Supp. 112, reversed.
In a suit by the United States to enjoin violations of § 1 of
the Sherman Act and for other relief, the District Court, after
trial, denied the relief sought. 75 F. Supp. 112. On direct appeal
to this Court,
reversed, p.
336 U. S. 465.
Page 336 U. S. 461
MR. JUSTICE JACKSON delivered the opinion of the Court.
The District Court, after trial, has denied the Government's
plea for an injunction and other relief against appellees under the
Sherman Act. [
Footnote 1] 75 F.
Supp. 112. The cause is brought here by direct appeal, as Congress
has authorized. [
Footnote 2]
Defendants below and appellees here are an unincorporated trade
association, its officers, and members. There is no serious
controversy as to facts. Our review must determine whether or not
they establish the Government's right to the relief which has been
denied.
We first should be satisfied that the activities on which
restraints are alleged to have been exerted constitute commerce
among states. The industry involved is women's sportswear. It is
carried on by jobbers who maintain sales offices in New York and
engage in nationwide competition for orders, chiefly by means of
traveling salesmen who solicit throughout the country. Upon
receiving an order, the jobber buys the fabrics and cuts them to
the customer's fancy. In most cases, he then sends the cut material
to a contractor who does the stitching, puts on such accessories as
the buttons and the bows, and returns the completed garments to the
jobber, who promptly ships them to the customer.
That the jobbers maintain a current of commerce, substantial in
volume and interstate in character, seems clear. The Boston area
ranks fifth in this country's production of women's sportswear. Its
jobbers obtain about 80% of the cloth used from sources outside of
Massachusetts. At least 80% of the finished sportswear
Page 336 U. S. 462
is sold and shipped to customers outside of that State. Thus,
the industry in Massachusetts subsists on a constant influx of
cloth and outgo of garments which pass through the hands of the
stitching contractors for an essential operation.
Our next inquiry is whether the accused combination, which is
made up of stitching contractors, has imposed upon this interstate
trade restraints of a character and magnitude to violate the
Sherman Act. The Association is made up of members who handle at
least 50% of all sportswear produced in Boston. The cost of this
contractor's operation is about 25% of the jobber's sale price, and
its variations are reflected in wholesale and retail prices. The
Association's executive director took steps to induce jobbers to
enter into a written agreement, among other things, to employ only
members of the Association, refrain from dealing with nonmembers,
and accept no secret price rebates. When the jobbers hesitated,
stoppage of production was threatened, and. when they refused
because they were advised that it would violate antitrust laws, the
Association ordered contractors to stop work for three jobbers,
which was done, and work for them was not resumed until the jobbers
obtained a state court injunction. The proposed agreement was then
revised, and ultimately was signed by twenty-one jobbers who handle
a gross annual volume of about $8,800,000, that being a substantial
portion of the Boston output.
The agreement in final form, together with the circumstances of
its making, is alleged to constitute an illegal restraint of trade.
Terms relevant to the issue require jobbers to give all of their
work to available Association members who are in good standing with
the International Ladies' Garment Workers Union, provided such
contractors are "comparable" as to price and quality of work with
nonmember contractors having contracts with the same Union. The
jobber is to furnish a written order specifying
Page 336 U. S. 463
price, and is forbidden to receive secret rebates. A jobber can
give work to a nonmember only in continuance of an existing
relationship. The jobber will give no new contract to any stitcher
who ceases to be a member of the Association. The Association
agrees to assist the jobber in getting sufficient contractors as
the amount of his work "may equitably require," and the jobber
agrees that he will divide his work "as equally and equitably as
possible among the Association contractors engaged by him." The
District Court found that one of the purposes of the Association
was to maintain the standard of prices. The Government also recites
evidence suggesting that the Association policed the membership to
prevent price competition and excluded from membership "newcomers
in the trade."
In the light of its origin and the circumstances of the
industry, it seems clear that the intent and effect of the
agreement is substantially to restrict competition and to control
prices and markets. It prohibits the jobbers from awarding work to
others (with minor exceptions) unless their prices are not
"comparable" to those of association members. It effects for
Association members a virtual monopoly of work at "comparable"
prices. Work given to members must be allocated "equitably," not by
reference to price or quality of work. And it apparently
contemplates boycott by the Association of jobbers who do not
subscribe to these terms. That such a contract restrains trade in
violation of the Sherman Act is obvious, even if the restraints in
actual practice under it do not go beyond its express terms, which
the evidence indicates to be likely.
It is argued that inclusion of the labor provisions makes the
agreement immune from attack under the antitrust laws. The
stitching contractor, although he furnishes chiefly labor, also
utilizes the labor through machines, and has his rentals, capital
costs, overhead, and profits. He
Page 336 U. S. 464
is an entrepreneur, not a laborer.
Cf. Columbia River
Packers Association v. Hinton, 315 U.
S. 143. The labor provisions were incorporated into the
second proposal after the first was rejected as violating the
antitrust laws, and seem to give nothing to labor that it was not
already getting for itself from other, as well as from these,
manufacturers. The restraints here went beyond limiting work to
union shops; it limited it to those union shops also members of the
Association. The trial court found no evidence that the union
participated in making the agreement. And, if it did, benefits to
organized labor cannot be utilized as a cat's-paw to pull
employers' chestnuts out of the antitrust fires.
Allen-Bradley
Co. v. Local Union No. 3, 325 U. S. 797.
The trial court appears to have dismissed the case chiefly on
the ground that the accused Association and its members were not
themselves engaged in interstate commerce. This may or may not be
the nature of their operation, considered alone, but it does not
matter. Restraints, to be effective, do not have to be applied all
along the line of movement of interstate commerce. The source of
the restraint may be intrastate, as the making of a contract or
combination usually is; the application of the restraint may be
intrastate, as it often is; but neither matters if the necessary
effect is to stifle or restrain commerce among the states. If it is
interstate commerce that feels the pinch, it does not matter how
local the operation which applies the squeeze.
The manifest purpose and intent of the contract in question was
to restrain the jobbers from free choice among stitching
contractors on equal terms. The business affected by the restraint
is interstate commerce. The volume affected is substantial. While
the restraint of the final contract is more moderate than the one
first attempted, and its dollar-and-cents effect on the
commerce
Page 336 U. S. 465
might be difficult to appraise, it is sufficient to warrant
judgment cancelling the contract and enjoining carrying out of the
plan it embodies.
The judgment is
Reversed.
[
Footnote 1]
Section 1 of the Act of July 2, 1890, c. 647, 26 Stat. 209, as
amended, 15 U.S.C. § 1.
[
Footnote 2]
15 U.S.C. § 29; 28 U.S.C. § 2101.