Addyston Pipe and Steel Company v. United States

Infobox SCOTUS case
Litigants=Addyston Pipe and Steel Co. v. U.S.
ArgueDateA=April 26
ArgueDateB=27
ArgueYear=1899
DecideDate=December 4
DecideYear=1899
FullName=Addyston Pipe and Steel Company et al., Appts., v. United States
USVol=175
USPage=211
Citation=
Prior=
Subsequent=
Holding=Upheld the rule of reason doctrine regarding U.S. antitrust laws.
SCOTUS=1898-1902
Majority=Peckham
JoinMajority=Fuller, Harlan, Gray, Brewer, Brown, Shiras, White, McKenna
LawsApplied=First, Fourteenth amendment, Commerce Clause

"Addyston Pipe and Steel Co. v. United States", 85 F. 271 (6th Cir. 1898), was an important case in which the United States Court of Appeals for the Sixth Circuit determined that U.S. antitrust laws, as set forth in the Sherman Antitrust Act, were to be governed by a rule of reason. The opinion was written by Chief Judge William Howard Taft (who later became President of the United States, and then Chief Justice of the United States Supreme Court). Taft's reasoning was eventually adopted by the Supreme Court as the proper interpretation of the Sherman Act.

Facts

The defendants were pipemakers who were operating in agreement, so that when municipalities offered projects available to the lowest bidder, all companies but the one designated would overbid, thus guaranteeing the success of the designated low bidder (although it was still possible for a company outside the group to win).

Issue

The defendants asserted that this was a reasonable restraint of trade, and that the Sherman Act could not have meant to prevent such restraints.

Opinion of the court

The Sixth Circuit noted that it would be impossible for the Sherman Act to prohibit every restraint of trade, for that would even encompass employment contracts which, by their nature, restrain the employee from working elsewhere during the time that they are being paid to work for the employer. Therefore, reasonable restraints were permitted, but this would only apply "if the restraint was ancillary" to the main purpose of the agreement. No conventional restraint of trade can be enforced unless:
# it is ancillary to the main purpose of the lawful contract; and
# it is necessary to protect enjoyment of legit fruits or to protect from dangers.If the primary purpose is to restrain trade, then the agreement is invalid, and in this case, the restraint was direct, and therefore invalid.

Later developments

This case was appealed to the Supreme Court as "Addyston Pipe and Steel Company v. United States", 175 U.S. 211 (1899) [ussc|175|211|Text of the opinion on appeal on Findlaw.com] , but in that case the defendants did not attack the reasoning of the Sixth Circuit. Instead, they argued that there had been no interstate commerce (to which the Sherman Act was restricted). The Supreme Court disagreed, noting that there was interstate shipping of the pipes being sold.

ee also

*List of United States Supreme Court cases, volume 175

References