## Facts

- Sinclair Refining Co. and other gasoline refiners/wholesalers sold gasoline in interstate commerce.
- Refiners leased or loaned underground gasoline storage tanks and pumps to retail dealers at nominal rentals, sometimes alleged to be below cost.
- The leases required that the equipment be used only with gasoline supplied by the lessor (exclusive-use condition).
- The FTC alleged the practice suppressed competition in both gasoline sales and the market for tanks and pumps, and issued cease-and-desist orders requiring firms to abandon the practice.
- Circuit courts of appeals set aside multiple FTC orders; the Supreme Court reviewed the consolidated cases on certiorari.

## Issues

1. Whether leasing tanks and pumps at nominal rentals conditioned on exclusive use with the lessor’s gasoline violated the Clayton Act’s exclusive-dealing provisions.
2. Whether the same practice constituted an “unfair method of competition” under § 5 of the Federal Trade Commission Act.
3. Whether the FTC may prohibit common competitive business practices to equalize competitors absent conduct that violates antitrust standards.

## Decision

- The Supreme Court affirmed the judgments setting aside the FTC’s orders.
- The challenged leasing-and-exclusive-use practice did not violate the Clayton Act on the record presented.
- The practice was not an “unfair method of competition” under § 5 of the FTC Act.
- The FTC lacked general authority to compel competitors to a common level or to interfere with ordinary business methods absent a sufficient legal basis.

## Legal Principles

- Exclusive-dealing arrangements fall within the Clayton Act only when their effect may be to substantially lessen competition or tend to create a monopoly; nominal or below-cost leasing alone is insufficient without adequate proof of the proscribed competitive effect.
- Section 5 of the FTC Act does not authorize the FTC to prohibit lawful competitive conduct merely because it advantages certain firms or makes competition harder for rivals.
- The FTC’s unfair-competition power is limited; it cannot impose arbitrary trade standards or restructure competition without showing conduct that fits within the statute’s prohibitions.

## Conclusion

The Court held that nominal-rent leases of gasoline tanks and pumps conditioned on exclusive use with the lessor’s gasoline were not unlawful under the Clayton Act and did not constitute unfair competition under the FTC Act, and it rejected the FTC’s attempt to use § 5 as a broad mandate to standardize business practices.


Federal Trade Comm’n v. Sinclair Refining Co., 261 U.S. 463 (1923)