## Facts

- Sugar Institute, Inc. was a trade association of fifteen cane sugar refining corporations and related individuals.
- The member refiners dominated the market, refining nearly all imported raw cane sugar processed in the United States and supplying roughly 70–80% of refined sugar consumed domestically.
- The Institute was formed to curb “unfair” merchandising practices, including secret rebates and concessions.
- Members agreed to abolish customer discriminations by requiring each company to publicly announce in advance its prices, terms, and conditions of sale and to adhere to them strictly until publicly changed.
- The Institute also imposed coordinated restrictions affecting competitive conditions, including limits on:
  - Use of brokers and warehousemen
  - Transportation practices and absorption of freight charges
  - Number of consignment points and ports of entry
  - Long-term contracts and quantity discounts
  - Disclosure to buyers of certain trade statistics collected for members
- The United States brought a Sherman Act action seeking to dissolve the Institute and enjoin the alleged conspiracy restraining interstate and foreign commerce in refined sugar.
- The district court declined to dissolve the Institute but permanently enjoined defendants from engaging in forty-five specified activities.
- Defendants appealed directly to the Supreme Court.

## Issues

1. Whether competitors’ agreement to announce prices, terms, and conditions in advance and to adhere to them, combined with supplementary trade restrictions, constituted an unreasonable restraint of trade in violation of the Sherman Act.
2. Whether cooperative efforts to eliminate unfair trade practices and share industry information are lawful when implemented through coordinated rules that restrict independent competitive decision-making.

## Decision

- The Supreme Court affirmed the decree in substance, sustaining broad injunctive relief against the challenged concerted practices.
- The Court held that cooperative action to address injurious practices is not automatically unlawful, even if it tends to stabilize markets or produce “fairer” price levels.
- The Court concluded, however, that the Institute’s concerted requirement of strict adherence to announced prices, terms, and conditions, together with reinforcing restrictions on contracting and distribution practices, unreasonably restrained trade.
- The Court explained that permissible information collection and dissemination becomes unlawful when used as part of a plan imposing unwarranted restrictions on competition.

## Legal Principles

- The Sherman Act condemns unreasonable restraints of interstate commerce; legality depends on close scrutiny of the facts and the restraint’s relation and degree.
- Competitors may cooperate through reasonable means to protect their trade from injurious practices and improve competitive conditions, even if stabilization results.
- Laudable motives do not legalize concerted action that restrains competition unreasonably.
- An agreement among competitors to adhere to previously announced prices, terms, and conditions is unlawful when it restricts independent pricing and contracting discretion.
- Collection and dissemination of trade statistics may be lawful, but becomes unlawful when integrated into a restrictive plan (e.g., to suppress competition or support coordinated pricing).

## Conclusion

The Court upheld extensive injunctive relief against a dominant trade association’s coordinated program requiring advance price announcements with strict adherence and related restraints, holding that such concerted rules crossed from permissible cooperation into an unreasonable restraint of trade under the Sherman Act.


Sugar Inst., Inc. v. United States, 297 U.S. 553 (1936)