## Facts

- The United States prosecuted Socony‑Vacuum Oil Co. and other major oil companies, along with individual officers and employees, for conspiring to fix gasoline prices in the Midwestern states in violation of § 1 of the Sherman Act.
- In the mid‑1930s, defendants participated in a coordinated program to purchase surplus “distress” gasoline on spot markets.
- The program involved regularly determining surplus quantities, assigning sellers to buyers within the group, and purchasing distress gasoline at prevailing market prices with the intent to raise and maintain prices.
- By removing a portion of spot-market supply, the program contributed to stabilizing the spot market and increasing spot prices.
- Prices paid by jobbers and consumers were linked to spot prices; the government presented evidence that these buyers paid more than they would have absent the conspiracy.
- A jury in federal district court convicted the corporate and individual defendants; the court of appeals reversed; the Supreme Court reviewed and reversed the court of appeals, reinstating the convictions.

## Issues

1. Whether an agreement among competitors to raise, peg, or stabilize prices—implemented through coordinated purchases of surplus gasoline—constitutes unlawful price fixing per se under Sherman Act § 1.
2. Whether defendants may avoid liability by showing they lacked market control, did not eliminate all competition, did not impose rigid or uniform prices, or acted to address claimed “competitive evils” such as “ruinous competition.”

## Decision

- The Supreme Court reversed the court of appeals and reinstated the jury convictions.
- The Court held that a combination formed for the purpose and with the effect of raising, fixing, pegging, or stabilizing prices in interstate commerce is illegal per se under Sherman Act § 1.
- The Court rejected defenses based on asserted lack of market power, incomplete market coverage, the presence of other causes of price movements, or claimed procompetitive motives.
- The Court held that price fixing does not require rigid, uniform, or inflexible prices; coordinated action that tamps with price structures falls within the per se rule.

## Legal Principles

- Agreements among competitors that raise, depress, fix, peg, or stabilize prices in interstate or foreign commerce are unlawful per se under Sherman Act § 1.
- For per se unlawful price fixing, courts do not evaluate reasonableness or weigh claimed competitive benefits; asserted aims such as stopping “ruinous competition” are not a defense.
- Liability does not depend on proof that conspirators controlled the market or eliminated all competition; interference with market pricing through concerted action is sufficient.
- Price fixing includes agreements that affect price levels through varied mechanisms, including coordinated purchasing programs, even when transactions occur at prevailing market prices.

## Conclusion

The Court treated coordinated competitor buying designed to stabilize and raise prices as per se unlawful price fixing, making clear that neither claimed economic justifications nor lack of market dominance prevents Sherman Act § 1 liability for agreements that manipulate price levels.


United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940)