Highlights from the Sherman Act, Section 1 Case History. Judicial interpretation of section 1 takes it shape from three key decisions. U.S. v. Addyston Pipe & Steel (1899) U.S. v. Trenton Potteries, et al (1927) U.S. v. Socony-Vacuum Oil, et al (1940).
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Highlights from the Sherman Act, Section 1 Case History
Judicial interpretation of section 1 takes it shape from three key decisions.
Key issue in the “early days” of section 1 enforcement: Would the courts apply a per se rule? That is, is price fixing illegal per se?
Highlights of Addyston Pipe & Steel
The defendants in Addyston pipe & Steel tried unsuccessfully to sway the court toward a rule of reason approach. Judge Taft of the Federal Circuit Court said, in effect: “It does not matter if price-fixing agreement merely served to control cut-throat, mutually destructive price wars.
Highlights of Trenton Potteries
Appalachian Coals v. U.S. [288 U.S. 344 (1933)]
17 producers of bituminous coal stabilized prices through the use of an exclusive selling agency. The Justice Department obtained an injunction dissolving the cartel but Appalachian Coals appealed--successfully, as it turned out.
The Supreme Court veered in the direction of a rule of reason standard for section 1. Chief Justice Hughes: "As a charter of freedom, the [Sherman] Act has a generality and adaptability comparable to that found to be desirable in constitutional provisions." And later: "[A] close and objective scrutiny of particular conditions and purposes is necessary in each case. Realities must dominate judgment. The mere fact that the parties to an agreement eliminate competition between themselves is not enough to condemn it."
U.S. v. Socony Vacuum Oil, et al [310 U.S. 150 (1940)]
Antitrust scholars view the Appalachian coals decision as a depression era freak. In the Socony Vacuum decision, the court took its cue from Trenton Potteries.
The Supreme Court ruling in Socony Vacuum has been the definitive ruling on section 1 for more than 60 years. If you face price-fixing charges, it is no use to say “I did it, but let me explain why.” Rather, your defense is “I didn’t do it.”
Price-fixing is illegal per se
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