## Facts

- The American Tobacco Company, Liggett & Myers Tobacco Company, and R.J. Reynolds Tobacco Company collectively held at least 68% and often over 75% of the national cigarette market for years.
- The companies sold cigarettes through similar distribution channels, selling to jobbers at wholesale list prices who then sold to retailers.
- The companies maintained identical list prices and promptly matched one another’s list-price changes.
- In 1931, despite historically low tobacco leaf prices, Reynolds raised the price of its most popular cigarette and American and Liggett raised theirs to the same price the same day.
- The United States charged that the firms combined and conspired to fix prices and to control and dominate interstate cigarette commerce, acquiring and maintaining the power to exclude competitors and raise prices.
- A jury convicted the companies of, among other counts, conspiracy in restraint of trade (§1) and monopolization and conspiracy to monopolize (§2) under the Sherman Act.
- The Supreme Court granted review limited to whether §2 monopolization requires proof of actual exclusion of competitors.

## Issues

1. Whether proof of actual exclusion of competitors is required to establish monopolization under §2 of the Sherman Act.
2. Whether separate convictions for conspiracy to restrain trade (§1) and conspiracy to monopolize (§2) impermissibly punish the same offense.

## Decision

- The Supreme Court affirmed the §2 convictions.
- Actual exclusion of competitors is not a required element of monopolization under §2 when a combination or conspiracy to dominate trade is coupled with power and intent to exclude competitors to a substantial extent.
- For conspiracy to monopolize, the government need not prove power and intent to exclude all competitors or a plan to exclude all competitors.
- Convictions for conspiracy to restrain trade under §1 and conspiracy to monopolize under §2 do not merge; they are separate offenses.

## Legal Principles

- Monopolization under Sherman Act §2 is established by a combination or conspiracy, group power to exclude actual or potential competitors from some part of interstate commerce, and intent and purpose to exercise that power; proof of actual exclusion is unnecessary.
- The relevant inquiry for monopoly power is the existence of power to raise prices or exclude competition when desired, not whether prices were in fact raised or competition actually excluded.
- A Sherman Act conspiracy does not require a formal written or spoken agreement; it may be inferred from a course of dealing and surrounding circumstances, including parallel conduct lacking economic justification.
- Liability under §2 turns on the unlawful objective and result sought (acquiring or maintaining monopoly power), not on the legality of the particular means when viewed in isolation.
- Conspiracy in restraint of trade (§1) and conspiracy to monopolize (§2) require different elements and support separate convictions and punishment.

## Conclusion

The Court held that §2 monopolization does not require proof that competitors were actually excluded; it is enough to show a concerted scheme coupled with monopoly power and intent to use that power, and it permitted separate convictions for §1 and §2 conspiracies as distinct crimes.


American Tobacco Co. v. United States, 328 U.S. 781 (1946)