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THE GREEN BAG
III Still we are confronted at the outset with the established law for freedom in competi tion and the undoubted desire for its main tenance. Competition is firmly believed by the mass of men to be worth more to society than it costs; and therefore, so long as com petition by a combination has no different effect upon the course of trade than com petition by an individual has, it must be allowed to go on however ruinous it may be to rivals in business. Not until we have a plain case where combined effort can be shown to be altogether different in its opera tion from individual action can the compe tition of a combination be held unfair while similar methods are held fair enough for an individual. Perhaps the most noteworthy case in this connection is Mogul Steamship Company v. McGregor, because of the great opinion of Lord Justice Bowen, L. R. 23 Q. B. D. 598. The actual facts of that case also make it a crucial one. The defendants were a number of ship-owners who formed themselves into a league or conference for the purpose of ulti mately keeping in their own hands the control of the tea carriage from certain Chinese ports, and for the purpose of driving the plaintiffs and other competitors from the field. In order to succeed in this object, and to dis courage the plaintiffs' vessels from resorting to those ports, the defendants during the "tea harvest" of 1885 combined to offer to the local shippers very low freights, with a view of generally reducing or "smashing" rates, and thus rendering it unprofitable for the plaintiffs to send their ships thither. Moreover, they offered a rebate of five per cent to all local shippers and agents who would deal exclusively with vessels belong ing to the conference — a rebate which would be forfeited if at any time outside ships were used. It is impossible to give a fair impression of Lord Bowen's opinion by extracts from it; but his points may be shown. Considered as mere competition he found, of course, no
cause of action; on that point he said in one place: "The offering of reduced rates by the defendants in the present case is said to have been 'unfair.' This seems to assume that, apart from fraud, intimidation, molestation, or obstruction of some other personal right in rem or in personam, there is some natural standard of 'fairness' or 'reasonableness' (to be determined by the internal consciousness of judges and juries) beyond which competition ought not in law to go. There seems to be no authority, and I think, with submission, that there is no sufficient reason, for such a proposition. It would impose a novel fetter upon trade. The defendants, we are told by the plain tiffs' counsel, might lawfully lower rates pro vided they did not lower them beyond a 'fair freight,' whatever that may mean. To attempt to limit English competition in this way would probably be as hopeless an endeavor as the experiment of King Canute." On the point of combination as an element in the case, he could not see that this made any difference: "But it is perfectly legiti mate, as it seems to me, to combine capital for all the mere purposes of trade for which capital may, apart from combination, be legitimately used in trade. To limit com binations of capital, when used for purposes of competition, in the manner proposed by the argument of the plaintiffs, would, in the present day, be impossible — would be only another method of attempting to set boundaries to the tides." As to the first point, it would seem that the same policy which permits an individual trader to cut prices to any extent although his rival is thereby damaged would allow a combination to lower rates in competition against its rivals. Indeed, the public is benefited when many lower prices as it is when a single man does; and a rival must meet the low price made by his combined rivals as he must the reduced rate of a single opponent. But as to the second point — query: Shall a combination be per mitted to take the attitude that they will
