Regulation of Business – Sherman Act – Expansion of Per Se Doctrine Over Tying Agreements

Through congressional grant defendant’s predecessor acquired approximately forty million acres of land, consisting of every alternate section in a twenty to forty mile wide belt on each side of its railroad track from Lake Superior to Puget Sound. Defendant sold about thirty-seven million acres of its holdings and leased the balance. Many of the sales contracts and most of the leases, together covering several million acres of land, contained “preferential routing” clauses which compelled the grantee or lessee to ship all commodities produced or manufactured on the land over defendant’s lines, unless competitors’ rates were lower or, in some instances, unless their services were better. In an action for injunctive relief by the government, charging that defendant’s “preferential routing,” or tying, agreements were unlawful as unreasonable restraints of trade in violation of section I of the Sherman Act, the district court granted the government’s motion for summary judgment. On appeal, held, affirmed, three justices dissenting and one justice not sitting. Tying agreements are per se unreasonable whenever a party has sufficient economic power with respect to the tying product (land) to restrain appreciably free competition in the market for the tied product (transportation) and a not insubstantial amount of interstate commerce is affected. Northern Pacific Ry. Co. v. United States, 356 U.S. I (1958).