Law School Case Brief

United States v. Trenton Potteries Co - 273 U.S. 392, 47 S. Ct. 377 (1927)

Rule:

Only those restraints upon interstate commerce which are unreasonable are prohibited by the Sherman Act. It does not follow that agreements to fix or maintain prices are reasonable restraints and therefore permitted by the statute, merely because the prices themselves are reasonable. Reasonableness is not a concept of definite and unchanging content. A court's view of what is a reasonable restraint of commerce is controlled by the recognized purpose of the Sherman Anti-Trust Law itself. 

Facts:

Trenton Potteries Company and 22 other corporations in the business of making pottery for use in bathrooms (the pottery companies) (defendants) coordinated to fix the prices of their products. Together, the pottery companies controlled 82 percent of the business for bathroom-pottery fixtures in the United States. The federal government (plaintiff) brought a complaint against the pottery companies, alleging that the companies had conspired to fix prices in violation of the Sherman Act. In district court, an instruction was submitted to the jury, stating that the jurors should find the pottery companies guilty if the companies had engaged in a price-fixing agreement, regardless of the reasonableness of the prices or the actual effect of the agreement on the prices. The jury returned a guilty verdict. The court of appeals overturned the verdict, holding that the jury instruction had misstated the law. The government appealed the decision.

Issue:

Is an agreement of those controlling over 80% of the business of manufacturing and distributing sanitary pottery, to fix and maintain uniform prices if the prices were reasonable, valid?

Answer:

No.

Conclusion:

The United States Supreme Court reinstated the decision of the district court below convicting respondents of violating the Sherman Anti-Trust Law. Respondents were convicted of combining to fix and maintain uniform prices for the sale of sanitary pottery, in restraint of interstate commerce. The circuit court of appeals reversed the judgment. On appeal, the Court was faced with the issue of deciding whether the trial judge correctly withdrew from the jury the consideration of the reasonableness of particular restraints charged. As respondents made no request to charge with respect to venue or the jurisdictional necessity of overt acts within the district, they were not permitted to reap the benefit of their own omission. Further, the Court held that the testimony of respondents' witness on cross-examination did not prejudice the respondents in any substantial way so as to require a reversal. Also, the Court could not say that the discretion of the district court was improperly exercised in excluding the conclusions of the witnesses as to competitive conditions when full opportunity was given to prove by relevant data the conditions of the industry within the period in question.