• Last updated on November 11, 2022

When upholding a lower court’s decree to break up the Standard Oil Company, the Supreme Court concluded that the Sherman Antitrust Act (1890) forbade only unreasonable combinations or agreements in restraint of trade.

The Standard Oil case occurred at a time of great controversy concerning the meaning of the Sherman Antitrust Act of 1890. One of the main questions was whether the law prohibited all “combinations in restraint of trade,” or only some of them. In 1897 the Supreme Court had ruled that the law applied to all such combinations. In reversing this interpretation in the Standard Oil case, Chief Justice Edward D. WhiteWhite, Edward D.;Standard Oil Co. v. United States[Standard Oil Co. v. United States] argued that both the common law tradition and congressional intent supported the notion that only unreasonable and harmful monopolies and other combinations were illegal. Justice John Marshall Harlan concurred with the dissolution of Standard Oil, but he denounced the rule of reason as inconsistent with the clear words of the statute. Despite many criticisms, the rule of reason endured as a judicial standard because it provided a pragmatic and flexible approach to antitrust enforcement without breaking up the modern corporate economy.Rule of reason;Standard Oil Co. v. United States[Standard Oil Co. v. United States]

This 1911 editorial suggests that tobacco trusts might be the next after the oil industry to be censured by the Supreme Court.

(Library of Congress)

Antitrust law

Commerce, regulation of

Rule of reason

Sherman Antitrust Act

Categories: History