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U.S. Supreme Court

Mandeville Island Farms v. American Crystal Sugar, 334 U.S. 219 (1948)

Mandeville Island Farms, Inc. v. American Crystal Sugar Co.

No. 75

Argued November 19, 1947

Decided May 10, 1948

334 U.S. 219


Growers of sugar beets brought an action under the Sherman Antitrust Act, against a defendant who refined beet sugar and distributed it in interstate commerce, for triple the amount of damages sustained by reason of an alleged violation of the Act. The amended bill of complaint alleged, inter alia, that the defendant had conspired with other refiners to fix uniform prices to be paid to growers for sugar beets grown in northern California; that the refiners had a monopoly of the seed supply and the only practical market for beets grown in the area, and that, as a consequence of the conspiracy and the price-fixing formula, the complainants received less for their beets. Other allegations showed the unique character of the sugar beet industry in the area; the dominant position of the refiners in the industry, and the effects of the conspiracy on interstate commerce. On appeal from a judgment dismissing the complaint, held:

1. The amended complaint stated a cause of action under the Act. Pp. 334 U. S. 221-246.

2. A restraint of the type forbidden by the Act, though arising in intrastate commerce, falls within the Act's prohibition if its actual or threatened effect on interstate commerce is sufficiently substantial. Pp. 334 U. S. 227-235.

3. The refiners' conspiracy was of the type forbidden, even though the price-fixing was by purchasers and though the claimants of treble damages are sellers, instead of customers or consumers. P. 334 U. S. 235.

4. Monopolization of local business, when achieved by restraining interstate commerce, is violative of the Sherman Act. Pp. 334 U. S. 235-236.

5. The conspiracy being shown to affect interstate commerce adversely to Congress' policy, the amount of the nation's sugar industry which the refiners control is irrelevant, so long as control is exercised effectively in the area involved. P. 334 U. S. 236.

6. Mere change in the form of a commodity, or even complete change in essential quality by intermediate refining or processing, chanroblesvirtualawlibrary

Page 334 U. S. 220

does not defeat application of the Sherman Act to practices occurring either during those processes or before they begin, when they have the effects forbidden by the Act. P. 334 U. S. 238.

7. The mere fact that the price-fixing in this case related directly to the beets did not sever or render insubstantial its effect subsequently in the sale of sugar. P. 334 U. S. 238.

8. In an integrated industry such as this, stabilization of prices paid for the only raw material inevitably tends toward reducing competition in the distribution of the finished product. P. 334 U. S. 241.

9. The interdependence and inextricable relationship between the interstate and the intrastate effects of the combination and monopoly are indicated by the provision of the uniform price agreement which ties in the price paid for beets with the price received for sugar. Pp. 334 U. S. 241-242.

10. The monopolistic effects of the refiners' agreement to pay uniform prices for beets, in the circumstances of this case, not only deprived the growers of any competitive opportunity for disposing of their crops, but also tended to increase control over the quantity of sugar sold interstate, and, through the tie-in provision, interlaced those interstate effects with the price paid for the beets. P. 334 U. S. 242.

11. The fact that some growers, though not the complainants, may have been benefited, rather than harmed does not render the combination legal or immune to liability for violating the Act. Pp. 334 U. S. 242-243.

12. Both public and private injury are indicated in this case, for, in addition to the restraints put upon the public interest in the interstate sale of sugar, enhancing the refiners' controls, there are special injuries affecting the growers. P. 334 U. S. 243.

13. The amendment of the complaint in this case so as to eliminate the words "sugar and sugar beets" from one of the allegations that the refiners had conspired to "monopolize and restrain trade" while leaving in many other allegations to the same effect, did not eliminate, nor constitute a disavowal, disclaimer, or waiver by the complainants of, the charge of restraint of trade in sugar, the only interstate commodity. Pp. 334 U. S. 244-246.

159 F.2d 71, reversed.

Petitioners' amended complaint in an action against respondent to recover triple damages under the Sherman Act was dismissed by the District Court. 64 F.Supp. 265. The Circuit Court of Appeals affirmed. 159 F.2d chanroblesvirtualawlibrary

Page 334 U. S. 221

71. This Court granted certiorari. 331 U.S. 800. Reversed and remanded, p. 334 U. S. 246.

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