United States v. E. C. Knight Co (1895)

The American Sugar Refining Company acquired almost complete control over the refined sugar industry in the United States when it bought out four major sugar companies in Philadelphia. The government claimed that the purchases were in violation of the Sherman Antitrust Act and that it would restrain the trade and commerce of refined sugar among the states by creating a monopoly. The Sherman Antitrust Act was passed in 1890 and aimed to stop the concentration of wealth and economic power that was being acquired by giant corporations. The government attempted to invalidate the company’s purchase by taking them to court and the lower court ended up dismissing the entire case.

The government appealed to the Supreme Court in their final attempt to stop the monopoly from forming. The Supreme Court chose to hear the case on appeal. The Constitutional issue raised was if Congress had the authority to suppress a manufacturing monopoly by exercising the Commerce Clause? The Court’s 8-1 decision held that manufacturing was a local activity and therefore, it cannot be subjected to congressional regulation of interstate commerce using the Commerce Clause.

The Supreme Court said in its reasoning that the government may suppress monopoly only when it is a monopoly of commerce and that was not the case here. Chief Justice Fuller presented the majority opinion and said:

“That which belongs to commerce is within the jurisdiction of the United States, but that which does not belong  to commerce is within the jurisdiction of the police power of the State. . . . Doubtless the power to control the manufacture of a given thing involves in a certain sense the control of its disposition, but . . . affects it only incidentally and indirectly.”

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