United States v. Columbia Steel Co. - 334 U.S. 495, 68 S. Ct. 1107 (1948)

Rule:

The general language of the Sherman Act, 15 U.S.C.S. §§ 1 and 2, has been construed as prohibiting only unreasonable restraints, not all possible restraints of trade.

Facts:

The United States sued under § 4 of the Sherman Act to enjoin the acquisition by the appellee United States Steel Corporation of the assets of Consolidated Steel Corporation, largest independent steel fabricator on the West Coast, as a violation of §§ 1 and 2 of the Act. According to the complaint, the acquisition would be in restraint of trade, because all manufacturers other than United States Steel would be excluded from the business of supplying Consolidated's requirements of rolled steel products, and because existing competition between Consolidated and United States Steel in the sale of structural fabricated products and pipe would be eliminated. The United States further alleged that the proposed acquisition, in the light of previous acquisitions by United States Steel, was an attempt to monopolize the production and sale of fabricated steel products in the Consolidated market area. The district court denied the action. The United States sought a review of the decision. 

Issue:

By acquiring the largest independent steel fabricator on the West Coast, did United States Steel violate the Sherman Act? 

Answer:

No.

Conclusion:

The Court affirmed the decision of the trial court. The Court held that the amount of competition that would be eliminated by the proposed contract was so insignificant that the restraint imposed was a reasonable restraint and not an attempt to monopolize and therefore not prohibited by the Sherman Act (the Act), 15 U.S.C.S. § 1 et seq. The United States failed to prove that the acquisition would unreasonably lessen competition by excluding all other manufacturers from supplying the steel fabricator's rolled steel product requirements because the proposed vertical integration by acquisition was not prohibited by § 1. The United States also failed to prove that United States Steel attempted to monopolize in violation of § 2 because United States Steel’s reasons for acquiring the steel fabricator were not prohibited by the Act.