## Facts

- The Chicago Board of Trade (CBOT), a major grain exchange with about 1,600 members, facilitated multiple forms of grain trading, including spot sales, futures, and “to arrive” contracts for grain in transit or to be shipped to Chicago within a set time.
- CBOT held a regular daily trading session, followed by a short “call” session during which “to arrive” trades were made.
- CBOT adopted a “call rule” providing that, between the close of the daily call and the opening of the next day’s regular session, members could not buy or offer to buy “to arrive” grain at a price other than the closing bid established at the call.
- Members remained free to trade privately with each other at any time, and to trade with non-members off the exchange premises.
- The United States challenged the call rule as an unlawful restraint of trade under § 1 of the Sherman Antitrust Act.
- The district court struck allegations about the rule’s history, purpose, and effects; excluded supporting evidence; and held the rule unlawful.

## Issues

1. Whether CBOT’s call rule was an unreasonable restraint of trade prohibited by § 1 of the Sherman Act.
2. Whether the district court erred by excluding allegations and evidence concerning the rule’s history, purpose, and actual or probable effects.

## Decision

- The Supreme Court reversed the district court.
- The Court held the call rule did not violate § 1 because, in context, it was a limited regulation that did not unreasonably restrain competition.
- The Court held the district court erred by striking and excluding evidence about the rule’s history, the perceived problem, the rationale for the remedy, and the purpose sought, because those matters are relevant under § 1 analysis.

## Legal Principles

- Under § 1, “every” agreement regulating trade restrains in some degree; the legality turns on whether the restraint merely regulates (and may thereby improve competitive conditions) or instead suppresses or destroys competition.
- Rule-of-reason analysis generally considers: facts specific to the business; conditions before and after the restraint; the restraint’s nature and its actual or probable effects; and the restraint’s history, the perceived evil, the reason for the chosen remedy, and the objective pursued.
- Evidence of purpose and history is not dispositive, but it may help courts interpret facts and predict competitive consequences.
- A price-affecting rule is not automatically unlawful; the scope, market context, and competitive impact are central to determining reasonableness.

## Conclusion

The Court held that CBOT’s after-hours call rule, though it fixed the permissible “to arrive” price for a limited period, was lawful under the Sherman Act because its narrow scope and lack of appreciable effect on general prices or market volume showed it functioned as a reasonable market regulation rather than a restraint that suppressed competition.


Chicago Bd. of Trade v. United States, 246 U.S. 231 (1918)