## Facts

- Sugar beet growers in northern California alleged that several sugar refiners, including American Crystal Sugar Co., controlled the only practical market for their beets.
- Growers alleged refiners used standard form contracts requiring growers to sell their entire beet crop to a refiner, buy seed from the refiner, and submit to extensive supervision over cultivation and harvesting.
- The complaint alleged refiners controlled sugar beet seed supply, giving them practical control over production and entry.
- Growers alleged the refiners conspired to fix uniform prices paid for sugar beets in northern California, using a formula that tied beet prices to the refiners’ sugar prices.
- The refiners processed beets into sugar and distributed the sugar in interstate commerce.
- Growers sought treble damages under §§ 1 and 2 of the Sherman Act based on restraint of trade and monopolization.

## Issues

1. Whether an agreement among local purchasers of sugar beets to pay uniform prices states a Sherman Act claim when the refined sugar is sold in interstate commerce.
2. Whether purchaser price-fixing that depresses input prices is actionable under the Sherman Act, and whether injured sellers may seek treble damages.
3. Whether monopolization of a local market violates Sherman Act § 2 when accomplished through restraints affecting interstate commerce.

## Decision

- The Supreme Court reversed the dismissal of the amended complaint and remanded.
- The Court held the complaint adequately alleged violations of Sherman Act §§ 1 and 2.
- The Court held intrastate restraints fall within the Sherman Act when their actual or threatened effect on interstate commerce is sufficiently substantial.
- The Court held buyer price-fixing is the type of restraint forbidden by the Sherman Act, even when the plaintiffs seeking treble damages are sellers rather than consumers.
- The Court held monopolization of local business is actionable under § 2 when achieved by restraining interstate commerce; national market share is not required if control is effective in the relevant area.

## Legal Principles

- Conduct occurring within one state is covered by the Sherman Act if it has a sufficiently substantial actual or threatened effect on interstate commerce.
- Intermediate processing or changes in a commodity’s form do not bar Sherman Act coverage when the challenged practices, occurring before or during processing, have forbidden effects on interstate trade.
- Price-fixing by purchasers (a buyers’ cartel) that depresses prices paid to sellers is prohibited by the Sherman Act, and injured sellers may seek treble damages.
- Monopolization of a local market violates Sherman Act § 2 when accomplished through restraints affecting interstate commerce; the relevant question is effective control in the area involved, not national industry dominance.
- In an integrated industry, collusion in the input market can restrain competition in the interstate distribution of the finished product.

## Conclusion

The Court held that alleged coordinated suppression of sugar beet purchase prices and related local market control could violate the Sherman Act because the conduct was tied to an integrated industry whose output moved in interstate commerce, and because the Act forbids buyer price-fixing and local monopolization that substantially affect interstate trade.


Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219 (1948)