## Facts

- A New York trade association of retail lumber dealers, along with affiliated local retail associations and officers, operated across multiple Eastern states.
- Some wholesale lumber dealers sold lumber directly to consumers, competing with retail dealers.
- The association collected information about wholesalers engaging in direct-to-consumer sales and circulated “official reports” identifying those wholesalers to retail members.
- The reports were distributed with the understood effect that members would cease or avoid dealing with wholesalers named in the reports.
- The practical result was a coordinated refusal by retail dealers to purchase from listed wholesalers, intended to pressure wholesalers to stop direct sales to consumers.
- The challenged conduct affected interstate transactions in lumber moving between states.

## Issues

1. Whether circulating “official reports” identifying wholesalers and inducing members to stop dealing with them constituted a combination or conspiracy in restraint of interstate trade under the Sherman Act.
2. Whether a concerted refusal to deal is unlawful under the Sherman Act even if each dealer could unilaterally choose to stop dealing with a wholesaler.
3. Whether an agreement may be inferred from circumstantial evidence and the natural consequences of the parties’ coordinated conduct.

## Decision

- The Supreme Court affirmed the district court’s decree enjoining the defendants’ practices.
- The Court held that the association’s reporting system and the resulting collective refusal to deal constituted a combination and conspiracy that directly and unreasonably restrained interstate commerce in violation of the Sherman Act.
- The Court rejected the characterization of the reports as mere information sharing where their function and effect were to deter members from dealing with listed wholesalers.
- The Court held that an agreement could be inferred from the coordinated acts and their predictable consequences.

## Legal Principles

- The Sherman Act condemns combinations and conspiracies that restrain the free and natural flow of interstate trade; not all cooperative arrangements are unlawful, but organized restraints that suppress competition are.
- A retail dealer may independently stop dealing with a wholesaler for reasons sufficient to the dealer, but dealers may not combine and agree that none will deal with that wholesaler where interstate commerce is involved.
- An act that may be lawful when done by one firm can become unlawful when done by many acting together pursuant to an agreement to restrain trade.
- Conspiracies are rarely proved by direct testimony; an agreement may be inferred from coordinated conduct and its natural consequences.
- A trade association’s blacklist or boycott mechanism that induces members to withhold purchases from targeted sellers can constitute an unreasonable restraint of trade when it restricts interstate commerce.

## Conclusion

The Court upheld an injunction against a retail lumber trade association’s coordinated dissemination of “official reports” used to organize a group boycott of wholesalers, holding that concerted refusals to deal that restrict interstate commerce are unlawful restraints of trade under the Sherman Act and may be proved through circumstantial evidence.


Eastern States Retail Lumber Dealers’ Ass’n v. United States, 234 U.S. 600 (1914)