Anti Trust

It is a long time since trust-busting was a front-page activity of the U. S. Government. Last week, however, three potent U. S. corporations found themselves involved in anti-trust proceedings. Attorney General William De Witt Mitchell filed suit against Warner Brothers and William Fox and announced a general investigation of the pooled patents held by Radio Corp. of America. This announcement closely followed a ruling in which the U. S. District Court in Wilmington, Delaware, declared that Radio Corp. was following monopolistic practices in its licensing policy.

Simple was the situation regarding the two cinema corporations. Warner Brothers now holds about 71,000 of the 73,000 outstanding shares in First National Pictures, Inc. Acquisition of First National gave Warner Brothers control of about 25% of the U. S. cinema business. William Fox owns about one-third of the shares of Loew's, Inc. (by purchase, last February, of 435,000 shares from the estate and associates of the late Marcus Loew) and this operating control put about 40% of the U. S. cinema business in the hands of the Fox interests. The Attorney General maintained that both these absorptions reduced competition, were therefore violations of the Clayton Act. The object of the suit was to dispossess Warner Brothers of its First National and Fox of its Loew's holdings. More complicated was the radio situation. In December, 1927, several manufacturers of radio tubes protested against Radio Corp.'s stipulating that all makers of radio sets under Radio Corp. patents must install Radio Corp. tubes in their sets. Last week's District Court decision (which will undoubtedly be taken to the Supreme Court) upheld the complaint, whereupon sensationalists reported that Radio Corp. would soon be deprived of its wavelengths. Inasmuch as it will probably take some years for the dispute to receive final legal settlement, and as the Federal Radio Commission is not likely to take any action until the final court has spoken, there seemed no cause for any immediate concern over Radio Corp.'s situation. It should also be added that immediately after the filing of the complaint, Radio Corp. suspended its tube-stipulation clause. More serious, however, might be a general investigation of the original patent pools by which General Electric, Westinghouse, American Telephone & Telegraph and United Fruit insured Radio Corp.'s dominant position. The government has already won a lower court decision in a somewhat similar suit against oil men and their patent pool in oil-cracking. On the other hand, Radio Corp. patents have already withstood a great many legal onslaughts and Radio Corp. officials maintain that their position is impregnable. While the federal government bestirs itself about alleged monopolies, the American Bar Association is suggesting an important amendment to the Clayton Act.* This amendment would authorize the Attorney General and other administrative agents to decide whether proposed mergers, production agreements and other debatable industrial acts might be declared exempt from the workings of anti-trust legislation. There was no question for example, but that the Coolidge administration was well disposed toward the national oil production agreement tentatively reached by major oil producers (see p 44) Yet the Attorney General had no authority to assure the oil men that production restriction would not involve them in anti-trust suits, and in the absence of such assurance the national program was virtually abandoned. If the Bar Association's suggestion is adopted, however, Attorney-Generals of the future will be able to excuse from anti-trust proceedings such programs and activities as appear to be conceived in the interests of the public weal.

*In 1897 the Sherman Act forbade conspiracy in restraint of trade and commerce or monopolization of any part of trade or commerce. Though the law was aimed at large corporations, an attempt was made to apply it as an anti-Labor measure by arguing that a labor union was a conspiracy in restraint of trade. The Clayton Act (1914) restated and explained the Sherman Act and specifically declared that the labor of a human being was not a commodity and that labor unions were not trade-restraining conspiracies.

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