Standard Oil Co. of New Jersey v. United States
Encyclopedia : S : ST : STA : Standard Oil Co. of New Jersey v. United States
| Standard Oil Co. of New Jersey v. United States | ||||||||
|---|---|---|---|---|---|---|---|---|
 Supreme Court of the United States | ||||||||
| Argued March 14-16, 1910 Decided May 15, 1911 | ||||||||
| ||||||||
| Holding | ||||||||
| The Standard Oil Compant was deemed an illegal trust under the Sherman Act, and was split into many smaller companies. Several individuals, including John D. Rockefeller, were fined. | ||||||||
| Court membership | ||||||||
| ||||||||
| Case opinions | ||||||||
| ||||||||
| Laws applied | ||||||||
| Sherman Anti-Trust Act |
Facts
Over a period of decades, the Standard Oil Company of New Jersey had bought up virtually all of the oil refining companies in the United States. Initially, the growth of Standard Oil was driven by superior refining technology and consistency in the kerosene products (i.e., product standardization) that were the main use of oil in the early decades of the company's existence. The management of Standard Oil then reinvested their profits in the acquisition most of the refining capacity in the Cleveland area, then a center of oil refining, until they controlled the refining capacity of that key production market. They then used that market dominance to obtain favorable transportation rates from the railroads, putting pressure on the smaller and less organized refining capacity throughout the northeast, compelling their competition to sell out or face bankruptcy, until Standard controlled most of the refining capacity of the U.S. By the 1880s, Standard Oil was using their stranglehold on refining capacity to begin integrating backward into oil exploration and crude oil distribution and forward into retail distribution of its refined products to stores and, eventually, service stations throughout the U.S. Standard allegedly used its size and clout to undercut competitors in a number of ways that were considered "anti-competitive," including underpricing and threats to suppliers and distributors who did business with Standard's competitors. The government sought to prosecute Standard Oil under the Sherman Antitrust Act. The main issue before the Court was whether it was within the power of the Congress to prevent one company from acquiring numerous others through means that might have been considered legal in common law, but still posed a significant constraint on competition by mere virtue of their size and market power, as implied by the Anti-trust Act.Opinion of the Court
The Court found this was within the power of Congress under the Commerce Clause. The Court also endorsed the rule of reason enunciated by William Howard Taft in Addyston Pipe and Steel Company v. United States, 85 F. 271 (6th Cir. 1898), written when the latter had been Chief Judge of the United States Court of Appeals for the Sixth Circuit. However, the Court found that the behavior of the Standard Oil Company went beyond the limitations of this rule.Justice John Marshall Harlan wrote a separate opinion, concurring in the result, but dissenting in the Court's adoption of the rule of reason.
External link
- ↑ [221 U.S. 1] (Text of the opinion on Findlaw.com)
Sources
McConnell Brue: Economics, Sixteenth Edition
From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.