ILLINOIS

REGULATION OF PRICE COMPETITION

A. RESALE PRICE MAINTENANCE

Rev. Stat. (Smith-Hurd, 1939), c. 1211⁄2

Fair Trade Act

Sec. 188. Contract relating to sale not invalid because of certain provisions. Be it enacted by the People of the State of Illinois, represented in the General Assembly:

No contract relating to the sale or resale of a commodity which bears, or the label or content of which bears, the trade-mark, brand, or name of the producer or owner of such commodity and which is in fair and open competition with commodities of the same general class produced by others shall be deemed in violation of any law of the State of Illinois by reason of any of the following provisions which may be contained in such contract:

(1) That the buyer will not resell such commodity except at the price stipulated by the vendor.

(2) That the producer or vendee of a commodity require upon the sale of such commodity to another, that such purchaser agree that he will not, in turn, resell except at the price stipulated by such producer or vendee.

Such provisions in any contract shall be deemed to contain or imply conditions that such commodity may be resold without reference to such agreement in the following cases:

(1) In closing out the owner's stock for the purpose of discontinuing delivery of any such commodity: Provided, however, That such stock is first offered to the manufacturer of such stock at the original invoice price, at least ten (10) days before such stock shall be offered for sale to the public.

(2) When the goods are damaged or deteriorated in quality, and notice is given to the public thereof.

(3) By any officer acting under the orders of any court. (1935, July 8, L. 1935, p. 1436, sec. 1.)

Sec. 189. Advertising for sale at less than stipulated price.— Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of section 1 of this Act, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby. (1935, July 8, L. 1935, p. 1436, sec. 2.)

Sec. 190. Contract not included.-This act shall not apply to any contract or agreement between producers or between wholesalers or between retailers as to sale or resale prices. (1935, July 8, L. 1935, p. 1436, sec. 3.)

Sec. 191. Title of act.-This act may be known and cited as the "Fair Trade Act." (1935, July 8, L. 1935, p. 1436, sec. 4.)

Judicial Decisions

Application of the Antitrust Law.

A contract establishing defendant as the exclusive agent for the sale of plaintiff's dress patterns whereby the defendant agreed to sell the patterns at the prices printed on the labels thereof is not invalid under the antitrust law and is not in restraint of trade, the contract being one of agency and not of sale. Wieboldt v. The Standard Fashion Co., 80 Ill. App. 67 (1898).

Constitutionality of the Act.

The Fair Trade Act is constitutional. It is not a price-fixing statute but merely permits designated private persons to contract with respect to resale prices. The nonsigners' clause is applicable only to persons who have purchased the goods with notice of a price. restriction. The violation of the statute consists of the misuse of the trade-mark of the produce, and the price restriction is adopted as an appropriate means to prevent such misuse. Section 2 (sec. 189) is not a denial of due process but merely prevents abuse of the goodwill of the owner of the commodity. The classification of identified goods in the statute as distinguished from unidentified commodities is a reasonable one, there being a basic difference between the two. Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U. S. 183, 57 Sup. Ct. 139, 81 L. Ed. 109 (1936); affg Joseph Triner Corp. v. McNeil, 363 Ill. 559, 2 N. E. (2d) 929 (1936), and Seagram-Distillers Corp. v. Old Dearborn Distributing Co., 363 Ill. 610, 2 N. E. (2) 940 (1936); Joseph Triner Corp. v. Oransky, 365 Ill. 19, 5 N. E. (2d) 213 (1936).

Application of the Act.

A commodity bearing the trade-mark of the producer, shipped into Illinois by a retailer from outside the State for the purpose of resale within the State, is subject to the provisions of the Fair Trade Act with respect to a resale price contract, as it had ceased to be in interstate commerce and had become part of the commerce within the State. Old Fort Dearborn Wine & Liquor Co. v. Old Dearborn Distributing Co., 287 Ill. App. 617, 4 N. E. (2d) 764 (1936) (text of opinion not printed), see 106 CCH, 25003.

A wholesale distributor can maintain an action for violation of a resale price restriction. Old Fort Dearborn Wine & Liquor Co. v. Old Dearborn Distributing Co., 287 Ill. App. 187, 4 N. E. (2d) 658 (1936).

A noncontracting dealer who purchases the commodity with notice of a resale price restriction thereon, is bound by such restriction. Old Dearborn Distributing Co. v. Seagram-Distillers Corp., supra; Old Fort Dearborn Wine & Liquor Co. v. Old Dearborn Distributing Co., supra.