Standard Oil Co. of New Jersey v. United States

Standard Oil Co. of New Jersey v. United States

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Standard Oil Co. of New Jersey v. United States

The Standard Oil Co. of New
Jersey v. United States of 1911 was a landmark Supreme Court
 case in which the Court found
the Standard Oil Company guilty of operating a monopoly
 that eliminated the ability of
other petroleum companies to compete for business. The Court ordered the
dissolution of the Standard Oil Company on the grounds of the Commerce Clause
. It required that the company be broken down into
several companies that would compete for business.

The Standard
Oil Company allegedly engaged in a number of practices that were considered to
be both anti-competitive and illegitimate. The company was accused of making
threats to all those distributors that did not purchase their product, as well
as severely underpricing their products in order to drive all other companies
out of business. Although Standard Oil’s practice of buying out other companies
was not technically illegal, it violated the Sherman Anti-Trust Act by
eliminating the prospect of competition.

The New
Jersey company initially found success by utilizing alternative types of
technology in oil refinery, but eventually expanded their company by buying out
the competition. By the close of the 1800s, Standard Oil controlled the
majority of the petroleum business.

The Court’s decision in this landmark Supreme
Court Case was based on the Commerce Clause which gives Congress the power to
regulate trade among the states. This decision prompted the Supreme Court to
decide that the term “restraint of trade” had come to mean the
forming of monopolies and their consequences. These consequences, as outlined
by the Court’s decision, included higher prices, reduced output, and reduced
quality. The Supreme Court ruled that a monopoly would be in violation of the
Sherman Anti-Trust Act only if it resulted in one of the three listed
consequences.

This
landmark Supreme Court Case also added an important restriction to the Sherman
Anti-Trust Act. Based on the opinion of one of the dissenters, the Sherman
Anti-Trust Act would only be applicable if the actions of the company had been
unreasonable. In this case, it was held that the actions of the Standard Oil
Company of New Jersey were in fact unreasonable. This related to the
allegations of threats that the company supposedly made to distributors and
suppliers who considered doing business with the company’s competitors.

The Standard
Oil Company of New Jersey was divided into smaller companies that were forced
to compete for business. This was all considered constitutional under the
Constitution’s Commerce Clause.
 

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