SUPREME COURT OF THE UNITED STATES
STANDARD OIL CO. V. UNITED STATES
337 U.S. 293
NO. 279. ARGUED MARCH 3-4, 1949 - DECIDED JUNE 13, 1949
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA
In a suit brought by the United States under the Antitrust Laws, the District court enjoined an oil company and its wholly owned subsidiary from enforcing or entering into exclusive supply contracts with independent dealers in petroleum products and automobile accessories. 78 F.Supp. 850.
The companies appealed directly to this court.
1. Under contracts entered into by an oil company with independent dealers in petroleum products and automobile accessories, the dealer agreed to purchase exclusively from the company all of his requirements of one or more of the products marketed by the company. In 1947 the contracts affected a gross business of $58,000,000, comprising 6.7% of the total in a seven-state area in which the company sold its products.
Held: the contracts were violative of § 3 of the Clayton act and the company was properly enjoined from enforcing or entering into them. pp. 294-314.
2. The requirement of § 3 of the clayton act of a showing that the effect of the contracts "may be to substantially lessen competition" is here satisfied by proof that competition has been foreclosed in a substantial share of the line of commerce affected. pp. 299-314.
(A) in view of the widespread adoption of such contracts by the company's competitors and the availability of alternative ways of obtaining an assured market, evidence that competitive activity has not actually declined is inconclusive. p. 314.
(B) the company's use of the contracts creates just such a potential clog on competition as it was the purpose of § 3 to remove wherever, were it to become actual, it would impede a substantial amount of competitive activity. p. 314.
3. The fact that nearly all the products sold by the company to California dealers are produced in that state does not exempt the company's requirements contracts with California dealers as not substantially affecting interstate commerce, since the effect of those contracts is to prevent the California dealers from dealing with out-of-state as well as local suppliers and thus to lessen competition in both interstate and intrastate commerce. Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, distinguished. pp. 314-315.
78 F.Supp. 850, Affirmed.
Mr. Justice Frankfurter delivered the opinion of the court.