Scenario 1: Basic Facts

1
Scenario 1 Basic Facts

• Year 1893
• Location Cleveland, Ohio
• Two major cement contractors Smith and Jones
• They contract Smith handles all north town
  business Jones handles all south business
• Goal To protect their businesses
• Larson Large building contractor in south end
  doesnt like Jones south-end monopoly

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Scenario 1

• In 1893, what would have been best arguments on
  behalf of Smith and Jones position?
• In 1893, what would have been best arguments on
  behalf of Larsons position?

3
Scenario 3

• In 1904, what would have been best arguments
  against Smith/Jones position?
• In 1904, what would have been best arguments in
  support of Smith/Jones position?

4
Pro 1893 Smith-Jones Arguments

• Historical background of Sherman Act Huge trusts
  that punished masses
• Legislative intent of Sherman Act Not clear, but
  big trust focus
• No authority under commerce clause
• Common law unreasonableness showing required
• Freedom to contract fundamental liberty

5
Pro 1893 Larson Arguments

• Clear words of statute
• Lack of clear legislative intent
• Uncertainties of reasonableness
• Congress, not court, is source for new conditions

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E.C Knight Company

• Decided 1895 First monopoly case
• American sugar bought four refiners and had U.S.
  monopoly. All in Penn. Government challenged.
• Supreme court affirmed dismissal.
• C.J. Fuller Not interstate commerce. State, not
  Fed, issue.

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Trans-Missouri Freight

• Railroad competitors set freight rates to protect
  each other.
• Majority (Peckman) No intent or reasonableness
  defense all direct retrain agreements bad.
• Dissent (White) Liberty of contract, freedom of
  trade real purpose. Law against a few used to
  hurt many. Rule of reason should be standard.
  Railroad rate wars are ruinous.

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Questions re Trans-Missouri Freight

• Is price fixing ever good?
• Did railroad rate case make it harder for
  majority? For dissent?
• What are liberty of contract, freedom of trade?
  What are the sources of these rights?
• What is protectionism? Is it part of antitrust?
  Should it be?

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Scenario 2 Basic Facts

• Year 1900
• Smith Jones division contract expanded to four
  states
• Smith Jones shared a portion of profits, made
  joint investments and rose to the level of a
  common law partnership
• Any new arguments?

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Addyston Pipe Steel

• 1898 8th Circuit Taft Decision
• Cast iron pipe carter to control prices in key
  states
• Defendants arguments
• - Members of association
• - No monopoly
• - Not all states only partial restraints
• - Restraints reasonable to prevent ruinous
  competition
• - Other competitors existed outside cartel.
• - Public not injured when only ruinous
  competition stopped.

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Questions Addyston Pipe Steel

• What percent of market?
• Did they set unreasonable prices? Was this
  relevant to decision?
• What is the difference between primary and
  ancillary restrain, per Taft?
• What was impact of common law?
• What is impact of public interest factor?

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Tafts Ancillary Restraints

• Non-compete from business seller
• Retiring partner non-compete
• Partners non-compete with other partners
• Non-compete from partial business buyer
• Employee non-comp covenants
• Contrast with Naked Restraint

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Scenario 3 Basic Facts

• Year 1904
• Smith-Jones form New Jersey holding company
• Smith-Jones consolidate through holding company.
• Smith-Jones acquire 10 other firms through
  holding company
• Divide market in 15 states