Page:The Green Bag (1889–1914), Volume 24.pdf/284

 The Law of Restraint of Trade however, the distinction between the cases cannot always be easily drawn, and two or more of them are sometimes involved together. "A contract is to be distinguished from a combination. The contract precedes the combination, and the combination is the result of and grows out of the performance of the contract. The law may condemn the invalidity of a com bination in several ways: (1) by refusing to enforce the terms of the combination among the parties to it; (2) by refusing to recognize the combination as having any validity in a controversy between it or its members and persons not members; (3) by interfering through the agency of the state or private individuals in terested, not parties to the combina tion, to prohibit the continuance thereof or prevent its coming into existence, which case arises under statute and is excluded from this discussion, and in each case we must distinguish combina tions between buyers or sellers and combinations between buyers and sellers. The validity of a combination in each case is to be discussed under the fol lowing four headings: (1) as between the members of the combination; (2) as between the combination and com petitors; (3) as between the combina tion and persons buying from or selling to it; (4) as between the combination or members thereof and third persons unconnected with the trade. As to the first, the authorities do not enable us to lay down any principle from which it can be said when a combination is or is not valid as against its members. The most that we can venture is that where the combination obtains control of the market, the law will condemn it by re fusing to enforce it among the parties thereto, but no answer can be made to the question of fact, which is, when does

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a combination have control of the mar ket? "In the aspect of a combination as against competitors, there are two branches of the subject, — the combina tion competing, the combination elimi nating competition. Where the combina tion competes, the restraint is on the trade of the parties competed against, and their right, if any, sounds in tort. Where the combination eliminates com petition, it does so by taking covenants not to trade, which may be annexed to the purchase of a business or taken from parties whose business is not pur chased. Although a distinction has been suggested between the two, it is apprehended that there is none, and the invalidity of the covenant in each case depends on the circumstance that the covenantee is a combination and is, by reason of the covenants, acquir ing control of the market. Since, how ever, the covenant is invalid because of the illegality of the covenantee, there by obtaining control of the market, an innocent covenantor should be per mitted to enforce the contract. Al though this distinction has been sug gested in some cases, it cannot be said to be supported by authority. When the law undertakes to interfere as be tween the buyer and seller on behalf of or against a combination, it presses more freely on the principle of freedom of contract than in any of the cases heretofore discussed. While in those cases the law merely refuses to enforce a contract already made, in this case the interference may involve the making of a contract for the parties. The prin ciple seems to be striving for recogni tion that an individual may be assisted by the law in obtaining favorable terms from a powerful combination. This principle has reached its fullest develop