## Facts

- The National Society of Professional Engineers (NSPE) adopted a Code of Ethics stating that engineers should not engage in competitive bidding.
- The canon effectively barred members from providing price or fee information for engineering services until after a client selected an engineer based on qualifications.
- The United States brought a civil action under § 1 of the Sherman Act, alleging the no-bidding canon suppressed competition.
- The district court held the canon unlawful on its face and enjoined NSPE from enforcing the rule.
- The D.C. Circuit affirmed and modified the injunction to prohibit NSPE from adopting any official statement implying competitive bidding is unethical.
- The Supreme Court granted certiorari to review whether the restraint could be justified under the rule of reason.

## Issues

1. Whether an NSPE ethical canon banning competitive bidding for engineering services is a restraint of trade prohibited by § 1 of the Sherman Act.
2. Whether the rule of reason permits such a ban based on assertions that price competition would harm public safety or professional ethics.
3. Whether the modified injunction improperly restricted NSPE’s speech or association when it barred official statements implying competitive bidding is unethical.

## Decision

- The Supreme Court affirmed the judgment finding a § 1 violation and sustaining the injunction as modified.
- The Court held the canon, on its face, restrained trade as an agreement among competitors to withhold price information from potential customers.
- Applying the rule of reason, the Court rejected NSPE’s public-safety and ethics justification because it depended on the premise that competition itself is undesirable.
- The Court upheld remedial restrictions on NSPE’s future official policies and statements about bidding as measures to prevent recurrence and dissipate effects of the unlawful agreement.

## Legal Principles

- Under § 1, agreements among competitors that restrict the availability of price information and impose an across-the-board ban on competitive bidding are anticompetitive restraints of trade.
- The rule of reason asks whether a challenged restraint promotes or suppresses competition; it does not accept defenses that treat competition itself as unreasonable.
- Professional status and asserted public-safety concerns do not create an exemption from the Sherman Act for collective restraints that eliminate price competition.
- Ethical norms may be evaluated under the rule of reason when they regulate competitive conduct, but rules that remove price competition altogether are unlawful.
- Courts may impose injunctive relief that restricts a defendant association’s official policies and enforcement mechanisms when necessary to prevent renewed antitrust violations and eliminate their consequences.

## Conclusion

The Court held that NSPE’s prohibition on competitive bidding was an unlawful restraint of trade under Sherman Act § 1 and that the rule of reason does not allow a professional association to suppress price competition based on claims that competition threatens public safety or ethics; the modified injunction was sustained as a proper antitrust remedy.


Nat'l Soc'y of Pro. Eng'rs v. United States, 435 U.S. 679 (1978)