251 U.S. 417, 40 S. Ct. 293 (1920)
The United States brought suit against the United States Steel Corporation and twelve subsidiary operating companies that it controlled through stock ownership.1 The Corporation was formed in 1901 as a holding company that combined prior combinations, bringing under its control approximately 180 independent steel concerns and accounting for 80 to 90 percent of the country's steel output.2 From 1901 until 1911, the Corporation participated in pools, associations, trade meetings, and the Gary Dinners beginning in 1907 to stabilize prices in cooperation with competitors, though these arrangements were discontinued nine months before the filing of the complaint.3
Subsequently, the Corporation acquired additional companies, including the Shelby Steel Tube Company, the Union Steel Company, and the Tennessee Company, with the last acquisition receiving the approval of President Theodore Roosevelt.4 The bill was filed in the District Court in 1911 seeking dissolution and other relief under the Sherman Anti-Trust Act.5 The case was heard by four district judges who agreed that the bill should be dismissed but disagreed on the reasons, with their opinions issued in 223 Fed. Rep. 55.6
By December 31, 1913, the Corporation's total assets exceeded $1,800,000,000, its capital stock outstanding was $868,583,600, and its surplus was $151,798,428.7 The Supreme Court heard arguments in March 1917, restored the case for reargument in May 1917, heard reargument in October 1919, and issued its decision on March 1, 1920.8 Justice McKenna delivered the opinion of the Court, with Justices McReynolds and Brandeis taking no part, and Justice Day filing a dissent joined by Justices Pitney and Clarke.9
Whether the United States Steel Corporation and its subsidiaries violated the Sherman Anti-Trust Act by forming combinations that restrained trade and monopolized the steel industry?10
The Sherman Anti-Trust Act prohibits combinations that restrain trade or monopolize any part of interstate commerce. The statute is directed against the realization of monopoly, not against an expectation of it, and requires overt acts rather than mere size or unexerted power.11
No. The Corporation was formed in 1901 as a holding company combining prior combinations, bringing under its control approximately 180 independent steel concerns and accounting for 80 to 90 percent of the country's steel output.12 The power attained was much greater than that possessed by any one competitor—it was not greater than that possessed by all of them. Monopoly, therefore, was not achieved. The opposing conditions were underestimated, and competitors had to be persuaded by pools, associations, trade meetings, and the Gary Dinners, which were abandoned nine months before the suit was brought from a conviction of their futility.13 The Corporation did not exert power to fix prices independently, and its competition was genuine, direct, and vigorous.14
The acquisitions, including the Tennessee Company with President Roosevelt's approval, did not demonstrate illegal purpose in the current operations.15
The United States Steel Corporation and its subsidiaries did not violate the Sherman Anti-Trust Act in a manner that requires dissolution of the Corporation.16
Related opinions on this issue
Joined by Justices Pitney And Clarke
Justice Day dissented, concluding that the record leaves no fair room for a doubt that the defendants were formed in violation of the Sherman Act.17 He agreed with the conclusions of Judges Woolley and Hunt that the combinations were designed to control business conditions for illegal purposes.18 The formation of the corporations constituted combinations between competitors in violation of law intended to remove competition and directly restrain trade.19
Justice Day argued that the power obtained by the corporation brought under its control large competing companies which were of themselves illegal combinations.20 Great profits to be derived from unified control were the object of these organizations.21 He concluded that if the Sherman Act is to be given efficacy, there must be a decree undoing so far as is possible that which has been achieved in open, notorious, and continued violation of its provisions.22
The bill should not be dismissed but remanded for a plan of effective dissolution.23
Whether the Corporation's size, productive capacity, and acquisitions established an illegal monopoly or restraint of trade independent of any exertion of power?24
The Sherman Anti-Trust Act does not make mere size an offense or the existence of unexerted power an offense. It requires overt acts and trusts to its prohibition of them and its power to repress or punish them.25
No. The size of the Corporation is not an offense under the law, as the law does not make mere size an offense or the existence of unexerted power an offense.26 The Corporation was greater in size and productive power than any of its competitors, equal or nearly equal to them all, but its power over prices was not and is not commensurate with its power to produce.27 The acquisitions did not change this assessment because the Corporation minded its own business and its actions were imitated rather than imposed through dominance.28
The Corporation's size, productive capacity, and acquisitions did not establish an illegal monopoly or restraint of trade independent of any exertion of power.29
Related opinions on this issue
Joined by Justices Pitney And Clarke
Justice Day dissented on this point as well, stating that the combination has acquired a dominant position in the trade which enables it to control prices and production when it sees fit to exert its power.30 Its total assets on December 31, 1913, were in excess of $1,800,000,000; its outstanding capital stock was $868,583,600; its surplus $151,798,428.31 Justice Day maintained that such an organization thus fortified and equipped could if it saw fit dominate the trade and control competition.32
The exercise of the power may be withheld or exerted with forbearing benevolence does not place such combinations beyond the authority of the statute which was intended to prohibit their formation.33
Whether the Corporation's participation in price-stabilizing arrangements with competitors, followed by their abandonment before suit, required dissolution of the Corporation and its subsidiaries?34
The Sherman Anti-Trust Act authorizes courts of equity to prevent and restrain violations, with discretion to adapt remedies to existing conditions rather than enforce abstractions that may injure the purpose of the law.35 Practices abandoned before suit with no dangerous probability of resumption do not require dissolution.36
No. The participation in price-stabilizing arrangements with competitors was abandoned before the suit was brought, and there is no evidence of an intention to resume them or dangerous probability of resumption.3738 The arrangements were transient in their purpose and effect and were abandoned from a conviction of their futility.39 The court has discretion to adapt remedies to existing conditions, and dissolution would risk injury to the public interest, including a material disturbance of and serious detriment to the foreign trade.40 The Government did not avail itself of the offer of the District Court to retain jurisdiction to restrain future illegal acts.41
The Corporation's participation in price-stabilizing arrangements with competitors, followed by their abandonment before suit, did not require dissolution of the Corporation and its subsidiaries.42
Related opinions on this issue
Joined by Justices Pitney And Clarke
Justice Day dissented, asserting that the unlawful organization exerted its power to control and maintain prices by pools, associations, trade meetings, and as the result of discussion and agreements at the so-called Gary Dinners.43 He maintained that these facts established that the corporation violated the law in its formation and by its immediate practices, and that the power thus obtained had within its control the domination of the trade.44 Justice Day concluded that the only effectual remedy was to dissolve the combination and the companies comprising it.45
The cause should be remanded to the District Court where a plan of effective and final dissolution of the corporations should be enforced by a decree framed for that purpose.46