Legislative Restrictions on Marketing Integration

Abstract

The struggle of one type of business concern to protect itself against competitive encroachments either from new forms of business, or merely from additions to its ranks of more of the same type of competitors,1 is probably as old as man himself. For where self-interest resides, there one finds resourcefulness in the fashioning of protective weapons. And for each weapon that is removed, judicially or otherwise, from the hands of its fashioners, new ones spring forth from the fertile minds behind those hands. Even as early man devised tangible weapons to wield against encroaching competitors in the form of human or animal enemies who threatened his food supply, so the modern man eternally attempts to devise intangible weapons to wield against threats to his established form of livelihood. The man in the business of marketing goods or services today finds his livelihood threatened, among other ways, by the competition created through the evolution of those new forms of distribution achieved by the horizontal or vertical integration of previously separate products or functions. Horizontally, the threat to existing merchandising patterns takes the form of integration in one business unit, or under common ownership, of what might be designated as unrelated lines of business or merely as the marketing of many goods or services instead of one or a limited number. Through vertical integration, the old-line seller is faced with combination in one unit of either production and distribution or the various stages of the distribution process itself. To meet this competition, or the threat of it, resort is had to the legal weapon of protective legislation, though an attempt is made to disguise the real purpose in its use under the gaudy trappings of declarations that it is all done in the interest of protecting the public against practices dangerous to its health2 or practices promotive of monopoly.3 Such attack invites resistance, for the newly developing forms of dis* A.B., 1929, Goucher College; LL.B., 1932, Columbia University. Assistant Administrative Attorney, Marketing Laws Survey. 1 For a discussion of the efforts of business to protect itself against this form of competition, see Silverman, Bennett and Lechliter, Control by Licensing Over Entry into the Market, supra this issue, an example of which is the adoption by mere occupational groups (barbers and beauty culturists, and other service trades) of a professional status with concomitantly stringent requirements set up for entry therein. 2 See, infra, the discussion of legislation restricting the sale of food to food establishments, and the sale of drugs to registered pharmacists. 8 See, infra, the discussion of restrictions on the retail merchandising of appliances by public utilities, on the ownership of theaters by motion picture producers, and on the wholesaling of groceries by the meat-packing companies.