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United States v. E. C. Knight Co.

United States v. E. C. Knight Co. 156 US 1 1895, also known as the Sugar Trust Case, is a Supreme Court case that limited the government's power to control monopolies.

Background

In 1890, the U.S. Congress enacted the Sherman Antitrust Act, which attempted to curb concentrations of economic power that significantly reduced competition between businesses. One of its two main provisions outlawed all trade combinations or agreements that severely restrict trade between states or with foreign powers. The second is to outlaws any attempts to monopolize trade within the United States. The case United States v. E. C. Knight Co. is the first instance in which the U. S. Supreme Court interpreted the Sherman Antitrust Act.

The Case

By 1892 the American Sugar Refining Company controlled 98% of the American sugar refining industry, when the E. C. Knight Company gained control of it. President Grover Cleveland, in his second term of office (1893-1897), immediately directed the Federal government to sue the Knight Company under the provisions of the Sherman Antitrust Act.

The Decision

Handed down on 21 January 1895 in an 8-1 decision, the opinion of the court was delivered by Chief Justice Melville Fuller[?]. Justice John Marshall Harlan[?] dissented.

The court ruled against the government, declaring that manufacturing--in this case, refining--was a local activity not subject to congressional regulation of interstate commerce.

Clearly, the decision permitted the combination of manufacturers, thereby putting most business monopolies out of the reach of the Sherman Antitrust Act. It was not until the Theodore Roosevelt and Taft Administrations that serious trust-busting would take place by the Federal government.

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