## Facts

- Eighteen competing railroads operating west of the Mississippi formed the Trans-Missouri Freight Association in 1889.
- The association agreement sought “mutual protection” by establishing and maintaining agreed freight rates, rules, and regulations on competitive routes.
- Member railroads could not change rates on competitive routes without association approval, effectively stabilizing and maintaining rate schedules.
- After the Sherman Antitrust Act of 1890 took effect, the United States filed an equity action under § 4 seeking to enjoin enforcement of the agreement as a restraint of interstate commerce under §§ 1 and 3.
- The trial court dismissed the bill, and the court of appeals affirmed, reasoning in part that railroads were governed by the Interstate Commerce Act and that maintaining “reasonable” rates was not unlawful.
- During litigation, the association was formally dissolved; defendants argued the dissolution mooted the case.

## Issues

1. Whether the Sherman Act applies to common carriers by railroad and their collective rate-setting agreements notwithstanding federal regulation under the Interstate Commerce Act.
2. Whether an agreement among competing railroads to fix and maintain freight rates violates the Sherman Act even if the rates are asserted to be “reasonable” and beneficial.
3. Whether dissolution of the association after judgment mooted the government’s request for injunctive relief.

## Decision

- The Supreme Court reversed and held the Sherman Act applies to railroads and to their agreements restraining interstate commerce.
- The Court held the association agreement constituted a prohibited contract/combination in restraint of interstate trade because it fixed and maintained rates among competitors.
- The Court rejected a limitation of the statute to “unreasonable” restraints and refused to read an implied reasonableness standard into the Act.
- The Court held dissolution of the association did not moot the case or defeat appellate jurisdiction once jurisdiction had attached and equitable relief was sought.
- The Court stated that congressional debates are not authoritative evidence of a statute’s meaning; the enacted text controlled.

## Legal Principles

- The Sherman Act’s prohibition on “every contract, combination . . . or conspiracy, in restraint of trade or commerce among the several States” reaches common carriers by railroad.
- Sector-specific regulation under the Interstate Commerce Act does not authorize competing railroads to enter agreements restraining interstate commerce; the two statutes are not treated as inconsistent.
- Under the Court’s interpretation, the Act is not confined to restraints judged “unreasonable”; competitor agreements fixing prices or rates restrain trade within the statute’s terms regardless of claimed fairness.
- The government need not prove specific anticompetitive intent where restraint is the necessary effect of the agreement.
- An agreement lawful when made may become unlawful upon the effective date of a later statute; continued performance after the statute takes effect can violate the statute.
- Post-judgment dissolution of an alleged unlawful combination does not automatically moot an equity action for an injunction when the challenged conduct occurred and equitable relief may still be warranted.

## Conclusion

The Court held that the Sherman Act applies to railroads and forbids competitors from agreeing to fix and maintain interstate freight rates, even when the rates are described as “reasonable,” and it allowed the government’s injunctive suit to proceed despite the association’s dissolution.


United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290 (1897)