Survey of the Texas Antitrust Laws

• Author: John K. Allison
• Published date: 01 June 1975
• DOI: 10.1177/0003603X7502000201
• Date: 01 June 1975
• Subject Matter: Article

SURVEY

OF THE

TEXAS

ANTITRUST LAWS

by

JOHN

R.

ALLISON·

The

state

of Texas

at

a

very

early

date confronted

the

problem of controlling certain pernicious types of antieom-

petitive behavior. Indeed, the first Texas

antitrust

law was

enacted in

1889,1

one

year

before the enactment by Congress

of the Sherman Act," The

state

law was revised and amended

several times over the years, but much of the restrictive lan-

guage has remained virtually unchanged from

that

initially

employed. Most recently, the

antitrust

laws were revised

and included as a portion of the Texas Business and Com-

merce Code in 1967.

This article will examine the Texas

antitrust

statutes them-

selves, as well as the considerable body of case law

that

has

developed under those statutes.

In

some instances, the Texas

law will be compared with the federal law governing the

par-

ticular activity involved.

THE

STATUTORY

PROHIBITIONS

One of the more notable aspects of the Texas

antitrust

laws is

their

specificity and detail, as contrasted with

the

general prohibitions of the federal Sherman Act," Because

the proscriptions

are

of such a specific nature, the Texas

•Assistant Professor of Business Law, The University of Texas

at Austin.

1

Act

of March 30, 1889.

215 U.S.C.§§1-7 (1970).

. S Of course, the Clayton Act of 1914, 15 U.S.C. §12 et seq. (1970)

and

the Robinson-Patman Act of 1936, which amended Section 2 of

the Clayton Act, 15 U.S.C. §13 (1970),

are

fairly

specific statutes,

but

the general prohibitions of the Sherman

Act

are the foundation

of

federal

antitrust

law. Section 1 of the Sherman Act, 15 U.S.C. §1

(1970), simply prohibits contracts; combinations,

and

conspiracies in

restraint

of trade. Section 2 of the Sherman Act, 15 U.S.C. §2 (1970),

prohibits monopolies

and

attempts or conspiracies to monopolize.

215

216

THE

ANTITRUST

BULLETIN

courts have generally held

that

any activity falling within one

of these provisions is

per

se illegal. Under the general terms

of the Sherman Act a rule of reason is often applied, with only

a few activities being

per

se illegal:' Asomewhat opposite

view appears to prevail under Texas law, in

that

a

per

se rule

is generally applied where the conduct is within the terms

of a specific prohibition,

and

arule of reason is applied

in

only a few exceptional situations," An example of the Texas

approach is found in the early statement of the supreme court

that

"[t]he

act

denounces combinations in

restraint

of trade,

and

makes no distinctions between restrictions which

are

rea-

sonable and those which

are

unreasonable." 6More recently,

the supreme

court

has

stated

that, if

an

unambiguous agree-

ment on

its

face violates the

antitrust

statutes, evidence tend-

ing

to show

that

there

has been no anticompetitive effect will

not

be admitted,"

Generally denounced as illegal by the

state

law

are

mo-

nopolies, trusts,

and

conspiracies in

restraint

of trade," Al-

though this prohibition is

rather

general,

it

is rendered quite

specific by

further

statutory

definition.

4

For

example,

under

the Sherman Act, price fixing, United

States v. Trenton Potteries Co., 273 U.S. 292 (1927); group boycotts,

Klors, Inc. v. Broadway-Hale Stores, Ine., 359 U.S. 207 (1959);

horizontal territorial restraints, United States v. Topco Associates,

405 U.S. 596 (1972) ; and certain vertical territorial restraints, United

States v. Arnold, Schwinn &Co., 388 U.S. 365 (1967), have been

declared illegal per se.

5A rule of reason is applied with respect to ancillary covenants

not to compete, grants of exclusive privileges on the grantor's prem-

ises,

output

and

requirements contracts, and certain restrictions in

leases. These matters will be dealt with subsequently.

6Anheuser-Busch Brewing Ass'n v. Houck, 88 Tex. 184, 30 S.W.

869, 870 (1895).

For

other statements to the same effect, see, Texas

&Pac. Ry. v. Lawson, 89 Tex. 400, 34 S.W. 920 (1896); Potomac

Fire

Ins. Co. v. State, 18 S.W.2d 929 (Tex. Civ.

App.-Austin

1929;

writ

ref'd);

Crandall v. Scott, 161 S.W. 925 (Tex. Civ.

App.-

Amarillo 1913, no

writ);

Comer v. Burton-Lingo Co., 58 S.W. 969

(Tex. Civ.

App,

1900, no

writ);

San Antonio Gas Co. v. State, 54

S.W. 289 (Tex. Civ. App. 1899, wr.it

ref'd).

?Climatic

Air

Distribs. of South Texas v. Climatic

Air

Sales,

162 Tex. 237, 345 S.W.2d 702 (1961).

8

TEX.

Bus. &

COMM.

CoDE

ANN.

§15.04 (1968).

TEXAS

ANTITRUST

LAWS

217

The

term

"monopoly" as defined in the Texas law describes

aquite different concept

than

does the use of the

term

in

federal law.

In

the

latter,

amonopoly is essentially abusi-

ness in possession of such market power so as to be able to

effectively exclude competition,"

In

other

words, the pro-

hibition is aimed

primarily

at

industry

structure

and

only

secondarily

at

behavior, and does

not

require

joint

activity.

However, the

term

"monopoly" is defined by the Texas

statute

as a combination or consolidation of two or more corporations

effected by (1) bringing the direction of

their

affairs under'

common management

or

control to create, or where the com-

mon management

or

control tends to create, a

trust

as

later

defined; or by (2) one corporation acquiring in whole

or

in

part

the stock

or

physical

property

of one

or

more

other

cor-

porations where the acquisition tends to prevent

or

lessen

competition.l"

It

can be seen

that

this provision is aimed

primarily

at

specific conduct,

not

structure,

and

is actually

very

similar to Section 7of the Clayton

Act,11

the federal

statute

relating to mergers

and

acquisitions. As in the Clay-

ton

Act, the

state

statute

applies only to corporations,

it

en-

compasses acquisitions of either stock

or

assets,

and

it

em-

ploys the preventive

test

of "tendency to lessen competition."

The

term

"trust"

in the Texas

statutes

is defined,

rather

exhaustively, as a "combination of capital, skill,

or

acts

by

two

or

more persons"

for

the accomplishment of

any

of

the

seven following

purposes:

(1) to restrict,

or

tend to restrict, trade, commerce, aids

to commerce, the

preparation

of tangible personal

property

for

market

or transportation, or the free

pursuit

of a law-

ful business;

9The term "monopoly" is not defined by the Sherman

Act;

the

delineation has been the work of the courts. See, e.g., American

Tobacco Co. v. United States, 328 U.S. 781 (1946).

10

TEX.

Bus. &

COMM.

CODE

ANN.

§15.01 (1968).

11

15 U.S.C. §18 (1970). Section 7 of the Clayton

Act

prohibits

acquisition by one corporation of the stock or assets of another corpo-

ration where the effect may be to substantially lessen competition or

tend

to create a monopoly in any line of commerce in

any

section of

the

country.