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U.S. Supreme Court

Northern Pacific R. Co. v. United States, 356 U.S. 1 (1958)

Northern Pacific Railway Co. v. United States

No. 59

Argued January 7-8, 1958

Decided March 10, 1958

356 U.S. 1


Under § 4 of the Sherman Act, the Government sued in a Federal District Court for a declaration that appellant railroad's "preferential routing" agreements are unlawful as unreasonable restraints of trade under § 1 of the Act. Such agreements were incorporated in deeds and leases to several million acres of land in several Northwestern States, originally granted to the railroad to facilitate its construction. They compel the grantees and lessees to ship over the railroad's lines all commodities produced or manufactured on the land, provided its rates (and in some instances its service) are equal to those of competing carriers. Many of the goods produced on such lands are shipped from one State to another. After various pretrial proceedings, the Government moved for summary judgment. The district judge made numerous findings based on pleadings, stipulations, depositions and answers to interrogatories; granted the Government's motion; and enjoined the railroad from enforcing such "preferential routing" clauses.

Held: The judgment is affirmed. Pp. 356 U. S. 2-12.

(a) A tying arrangement, whereby a party agrees to sell one product only on condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier, is per se unreasonable, and unlawful under the Sherman Act whenever the seller has sufficient

Page 356 U. S. 2

economic power with respect to the tying product to restrain appreciably free competition in the market for the tied product, and a "not insubstantial" amount of interstate commerce is affected. Pp. 356 U. S. 5-7.

(b) On the record in this case, the undisputed facts established beyond any genuine question that appellant possessed substantial economic power by virtue of its extensive landholdings, which it used as leverage to induce large numbers of purchasers and lessees to give it preference, to the exclusion of its competitors, in carrying goods or produce from the land transferred to them, and that a "not insubstantial" amount of interstate commerce was and is affected. Pp. 356 U. S. 7-8.

(c) The essential prerequisites for treating appellant's tying arrangements as unreasonable per se were conclusively established in the District Court, and appellant has offered to prove nothing there or here which would alter this conclusion. P. 356 U. S. 8.

(d) The conclusion here reached is supported by International Salt Co. v. United States, 332 U. S. 392, which was not limited by Times-Picayune Publishing Co. v. United States, 345 U. S. 594. Pp. 356 U. S. 8-11.

(e) That appellant's "preferential routing" clauses are subject to certain exceptions and may have been administered leniently does not avoid their stifling effect on competition. Pp. 356 U. S. 11-12.

142 F.Supp. 679, affirmed.

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