Friday, November 16, 2012

Fashion Originators Guild of America v. FTC case brief


Fashion Originators Guild of America v. FTC case summary
312 U.S. 457 (1941)

FACTS
-Members of Guild design, manufacture, sell, and/or distribute women’s clothing
-After make a design and sell it, others copy designs at lower prices, a.k.a: “style piracy”
-Boycott retailers and decline to sell to those who sell garment copies of those designs belonging to Guild members
-Retailers signed agreements agreeing to cooperate w/ boycott program for fear that the manufacturers would stop dealing w/ them
-Guild has card system they distribute to manufacturers: red = non-cooperators; white = cooperators
-Also audits members’ books and sends shoppers to retailers to see if violating agreements
-FTC issued a cease & desist order

ISSUE
-Do Guild agreements restrict field of competition violating both Sherman & Clayton Acts?

HOLDING

-Yes, it narrows the outlets to which manufacturers can sell and sources from which retailers can buy; subjects all members and retailers to comply w/ an organized boycott; takes away freedom of action of individual members and has necessary tendency and as its purpose and effect the direct suppression of competition . Upholds the cease & desist order

ANALYSIS

-Commerce is restrained by driving out of business the small dealers and worthy men whose lives have been spent therein, and who might be unable to readjust themselves to their altered surroundings.

Link to Case

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