United States v. E. C. Knight Company
United States v. E. C. Knight Co., 156 U.S. 1 (1895), also known as the "Sugar Trust Case", was a United States Supreme Court case that limited the government's power to control monopolies.
Background
In 1890, the U.S. Congress enacted the Sherman Antitrust Act, an attempt 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 outlawed 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 Supreme Court interpreted the Sherman Antitrust Act.
The Case
In 1892 the E. C. Knight Company gained control of the American Sugar Refining Company which itself controlled 98% of the American sugar refining industry. President Grover Cleveland, in his second term of office (1893-1897), directed the Federal government to sue the Knight Company under the provisions of the Sherman Antitrust Act.
The Decision
Handed down on January 21 1895 in an 8-1 decision, the opinion of the court was delivered by Chief Justice Melville Weston 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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