Appalachian Coals, Inc. v. United States

288 U.S. 344 (1933)

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Nature of the Case

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Facts

Ds are 137 producers of bituminous coal. In 1929, the total production of bituminous coal east of the Mississippi River was 484,786,000 tons, of which Ds mined 58,011,367 tons or 11.96 percent. In the so-called Appalachian territory, the total production was 107,008,209 tons, of which Ds' production was 54.21 percent, or 64 percent if the output of 'captive' mines (16,455,001 tons) be deducted. Ds created an exclusive selling agency. By uniform contracts, separately made, each D constitutes the Company an exclusive agent for the sale of all coal (with certain exceptions) which the producer mines in Appalachian territory. The company agreed to establish standard classifications, to sell all the coal of all its principals at the best prices obtainable and, if all cannot be sold, to apportion orders upon a stated basis. The Company was to be paid a commission of ten percent of the gross selling prices. P's contention, which the District Court sustained, is that the plan violates the Sherman Anti-Trust Act because it eliminates competition among Ds themselves and also gives the selling agency power substantially to affect and control the price of bituminous coal in many interstate markets. The District Court held that 'this elimination of competition and concerted action will affect market conditions, and have a tendency to stabilize prices and to raise prices to a higher level than would prevail under conditions of free competition.' The court added that the selling agency 'will not have monopoly control of any market nor the power to fix monopoly prices.' Ds insisted that the primary purpose of the formation of the selling agency was to increase the sale, and thus the production, of Appalachian coal through better methods of distribution, intensive advertising and research; to achieve economies in marketing, and to eliminate abnormal, deceptive and destructive trade practices. They disclaim any intent to restrain or monopolize interstate commerce. The court enjoined the operation of the company. The Supreme Court granted certiorari.