Early Section 1 Cases

Central legal question: what is a "restraint of trade" based on the history of the Sherman Act?

Court wants to develop a doctrine that condemns conduct and respects the common law without requiring difficult factual determinations
Defendants will argue that a literal meaning of Section 1 would outlaw contracts, pointing out that the restraint of trade is (1) ancillary to a lawful purpose or (2) reasonable under the common law
Plaintiffs will argue that the statute says "every" CCC. If this is rejected, P will argue that the ROT is the (1) purpose of the agreement (i.e., not ancillary), (2) lacks a lawful purpose, and (3) is unreasonable under the common law

Caselaw:

Holding: "every" contract in restraint of trade is illegal
- D unsuccessfully argues that
  - Association and rates are necessary to cover fixed costs
  - Rates are reasonable
  - And members still had the ability to lower rates
- However, the Court is skeptical about determining reasonable rates
Facts: 18 railroads create an association to set rates
Dissent: Section 1 only condemns unreasonable ROT, interpreting "every" literally is unworkable, would outlaw contracts
Note: the dissent's view is what was ultimately adopted by modern antitrust - see Standard Oil

Holding: common law condemned cartel that had no purpose other than to restrain trade
- 2 categories of restraints:
  1. Absolutely prohibited agreements: no purpose other than to restrain trade
    - Condemned absolutely at common law
  2. Ancillary restraints: restrain trade at the time of enforcement, but at the time of agreement can facilitate the underlying, legitimate transaction and promotes trade
    - Should be assessed for reasonableness
- Here, the cartel represented an absolutely prohibited agreement
Facts: cast-iron pipe manufacturers formed cartel to rig bids on municipal contracts.
Note: narrow approach of only considering reasonableness of "ancillary" ROT not adopted, Standard Oil elected to broaden consideration of reasonableness to all ROT