United States v. Borden Co.

Background

The Government charged a wide-ranging scheme to fix prices and control the supply of fluid milk shipped into Chicago from Illinois, Indiana, Michigan, and Wisconsin. Defendants included major milk distributors and their trade groups, a cooperative of milk producers called the Pure Milk Association, a milk drivers’ union, some municipal health officials, and two arbitrators. The District Court sustained demurrers and dismissed the indictment, concluding later farm statutes and cooperative statutes removed these actions from the federal antitrust law banning price-fixing.

Reasoning

The central question was whether the Agricultural Marketing Agreement Act, the Capper-Volstead cooperative law, or related farm statutes automatically bar prosecutions under the Sherman Act. The Court held that those statutes do not create blanket immunity. It explained that the Agricultural Act only protects agreements or orders in which the Secretary of Agriculture has participated or issued a valid order, and the Capper-Volstead law does not authorize conspiracies with non-producers to fix prices. The Court therefore found the District Court erred in treating those statutes as removing the Sherman Act’s reach and reversed the dismissal of counts one, two, and four. The Court dismissed the appeal as to count three because that count was defective as a pleading.

Real world impact

The ruling allows federal antitrust prosecutions to go forward against price-fixing and supply-control schemes in agricultural markets unless the action is specifically authorized or approved by the Secretary of Agriculture. The decision does not resolve guilt; it sends the case back for trial on the charged conspiracies.