Addyston Pipe & Steel Co. v. United States - 175 U.S. 211, 20 S. Ct. 96 (1899)

Rule:

If an agreement or combination directly restrains not alone the manufacture, but the purchase, sale or exchange of the manufactured commodity among the several States, it is brought within the provisions of the Anti-Trust Act, 26 Stat. 209 (1890). The power to regulate such commerce, that is, the power to prescribe the rules by which it shall be governed is vested in Congress, and when Congress has enacted a statute, any agreement or combination which directly operates, not alone upon the manufacture, but upon the sale, transportation, and delivery of an article of interstate commerce, by preventing or restricting its sale, thereby regulates interstate commerce to that extent and to the same extent trenches upon the power of the national legislature and violates the Act.

Facts:

Appellee commenced an action against appellants with regard to certain provision under the Anti-Trust Act (Act), 26 Stat. 209 (1890). Appellee alleged in its complaint that appellants were carrying on an illegal combination in restraint of trade with respect to the cast-iron pipe industry. According to the complaint, appellants entered into a combination and conspiracy among themselves, by which they agreed that there should be no competition between them in any of the States or Territories mentioned in the agreement. The trial court dismissed the petition, but the court of appeals reversed.

Issue:

Under the circumstances, did the appellants violate the Anti-Trust Act?

Answer:

Yes.

Conclusion:

The Court affirmed the decision of the court of appeals. The Court concluded that appellants' contract or combination plainly violated the Anti-Trust Act. According to the Court, where the direct and immediate effect of a contract or combination among particular dealers in a commodity was to destroy competition between them and others, so that the parties to the contract or combination may obtain increased prices for themselves, such contract or combination amounts to a restraint of trade in the commodity, even though contracts to buy such commodity at the enhanced price are continually being made. Moreover, the Court opined that Congress was empowered to regulate interstate commerce, and the Act was a legitimate exercise of power thereunder. Thus, Congress's declaration that any contract where the natural and direct effect thereof was to regulate interstate commerce would be void and prohibited was upheld.