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Appalachian Coals, Inc. v. United States - 288 U.S. 344, 53 S. Ct. 471 (1933)

Rule:

Only such contracts and combinations are within the Sherman Anti-Trust Act, 26 Stat. 209, as, by reason of intent or the inherent nature of the contemplated acts, prejudice the public interests by unduly restricting competition or unduly obstructing the course of trade. In applying this test, a close and objective scrutiny of particular conditions and purposes is necessary in each case. Realities must dominate the judgment.

Facts:

Plaintiff United States brought this case against Defendants, a combination of producers of bituminous coal and their selling agency, to enjoin a combination alleged to be in restraint of interstate commerce in bituminous coal and in attempted monopolization of part of that commerce, in violation of §§ 1 and 2 of the Sherman Anti-Trust Act, 26 Stat. 209. The District Court of the United States for the Western District of Virginia, composed of three Circuit Judges, made detailed findings of fact and entered final decree granting the injunction. 

Issue:

Were Defendants' efforts to remove abuses, make competition fairer, and promote the essential interests of commerce in light of the unfortunate state of the coal industry precluded by the Anti-Trust laws?

Answer:

No

Conclusion:

The U.S. Supreme Court reversed the decree granting plaintiff government an injunction against defendants, bituminous coal producers, under the Sherman Anti-Trust Act (Act). The Supreme Court concluded that the Government had failed to show adequate grounds for an injunction. The Court found that the question of the application of the statute was one of intent and effect. Here, the industry was in distress, suffering from overexpansion and from a serious relative decline from the growing use of substitute fuels. It was afflicted by injurious practices within itself that demanded correction. The Court found that the unfortunate state of the industry would not justify any attempt unduly to restrain competition or to monopolize, but that the existing situation prompted defendants to make an honest effort to remove abuses, make competition fairer, and, thus, promote the essential interests of commerce. The Court concluded that the Act did not preclude this, and remanded the case to the district court.

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