N. Pac. Ry. CO. v. UNITED STATES - 356 U.S. 1, 78 S. Ct. 514 (1958)

Rule:

There are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable -- an inquiry so often wholly fruitless when undertaken. Among the practices which the courts have heretofore deemed to be unlawful in and of themselves are price fixing, division of markets, group boycotts, and tying arrangements. 

Facts:

Under § 4 of the Sherman Act, the Government sued in a Federal District Court for a declaration that appellant railroad's "preferential routing" agreements are unlawful as unreasonable restraints of trade under § 1 of the Act. Such agreements were incorporated in deeds and leases to several million acres of land in several Northwestern States, originally granted to the railroad to facilitate its construction. They compel the grantees and lessees to ship over the railroad's lines all commodities produced or manufactured on the land, provided its rates (and in some instances its service) are equal to those of competing carriers. Many of the goods produced on such lands are shipped from one State to another. After various pretrial proceedings, the Government moved for summary judgment. The district judge made numerous findings based on pleadings, stipulations, depositions and answers to interrogatories; granted the Government's motion; and enjoined the railroad from enforcing such "preferential routing" clauses. 

Issue:

Did the preferential clauses in question amount to unlawful tying agreements?

Answer:

Yes.

Conclusion:

The Supreme Court held that the preferential clauses in question amounted to unlawful tying agreements, in view of proof that the preferential clauses were executed as a consequence of the railroad's use as leverage of the substantial economic power which it possessed by virtue of its extensive land holdings, that the amount of commerce affected by the preferential clauses was not insubstantial, and that the preferential clauses conferred no benefit upon the grantees or lessees.