United States v. Reading Co.

Background

The United States sued a group of railroad and coal companies that together controlled most anthracite coal production and transportation from Pennsylvania to tide‑water markets. The Government said the companies used a holding company (the Temple Iron Company) and uniform long‑term “sixty‑five percent” purchase contracts with independent miners to choke off competition and stop a proposed rival railroad that would have carried coal to New York markets.

Reasoning

The main question was whether these acts amounted to an illegal combination to restrain interstate trade. The Court found there was not enough evidence of a formal pooling agreement among the carriers, but it agreed that the Temple Iron purchase scheme unlawfully blocked the competing railroad and served as an instrument of collective control. The Court also concluded the uniform sixty‑five percent contracts were part of a concerted plan to control independent output and competition. The Court affirmed the lower court as to the Temple Iron combination, reversed on the contracts, and ordered those contracts cancelled and permanently enjoined.

Real world impact

The decision cancels and bars enforcement of the uniform long‑term purchase contracts and upholds relief against the holding‑company scheme that was used to shut out a rival railroad. Independent coal operators, carriers, and coastal coal markets will be directly affected. The Court declined to enjoin several other smaller transactions made only by some defendants, leaving those matters dismissed without prejudice.

Dissents or concurrances

Three Justices did not participate in the consideration or decision of this case.