|United States v. E.C. Knight Co.|
|Argued October 4, 1894|
Decided January 21, 1895
|Full case name||United States v. E.C. Knight Co.|
|Citations||156 U.S. 1 (more)|
|Manufacturing is not considered an area that can be regulated by Congress pursuant to the commerce clause.|
|Majority||Fuller, joined by Field, Gray, Brewer, Brown, Shiras, Jackson, White|
|U.S. Const. Art. I, Sec 8.|
United States v. E. C. Knight Co., 156 U.S. 1 (1895), also known as the "Sugar Trust Case," was a United States Supreme Court antitrust case that severely limited the federal government's power to pursue antitrust actions under the Sherman Antitrust Act. In Chief Justice Melville Fuller's majority opinion, the Court held that Congress could not regulate manufacturing, thus giving state governments the sole power to take legal action against manufacturing monopolies. The case has never been overruled, but in Swift & Co. v. United States and subsequent cases the Court has held that Congress can regulate manufacturing when it affects interstate commerce.
In 1892, the American Sugar Refining Company gained control of the E. C. Knight Company and several others which resulted in a 98% monopoly of the American sugar refining industry. President Grover Cleveland, in his second term of office (1893–1897), directed the national government to sue the Knight Company under the provisions of the Sherman Antitrust Act to prevent the acquisition. The question the court had to answer was, "could the Sherman Antitrust Act suppress a monopoly in the manufacture of a good, as well as its distribution?"
The court held "that the result of the transaction was the creation of a monopoly in the manufacture of a necessary of life" but ruled that it "could not be suppressed under the provisions of the act". The court ruled that manufacturing—in this case, refining—was a local activity not subject to congressional regulation of interstate commerce. Fuller wrote:
That which belongs to commerce is within the jurisdiction of the United States, but that which does not belong to commerce is within the jurisdiction of the police power of the State. . . . Doubtless the power to control the manufacture of a given thing involves in a certain sense the control of its disposition, but . . . affects it only incidentally and indirectly.
Under the Knight decision, any action against manufacturing monopolies would need to be taken by individual states, making such regulation extremely difficult with regards to out-of-state monopolies because states are prohibited from discriminating against out-of-state goods by, among other things, the Dormant Commerce Clause and Article I section 10 of the U.S. Constitution. The ruling prevailed until the end of the 1930s, when the court took a different position on the national government's power to regulate the economy.
In the dissent, Harlan argued "the doctrine of the autonomy of the states cannot properly be invoked to justify a denial of power in the national government to meet such an emergency." He continued to argue the Constitution gives Congress "authority to enact all laws necessary and proper" to regulate commerce, citing McCulloch v. Maryland. .
Although the decision was never expressly overturned, the Court later retreated from this position in a series of cases (see for example Swift and Company v. United States) that defined various steps of the manufacturing process as part of commerce. Eventually, E.C. Knight came to be a precedent narrowed to its precise facts, with no force whatsoever.
- American sugar industry
- Commerce Clause
- Sugar companies of the United States