Growers of sugar beets brought an action under the Sherman
Antitrust Act, against a defendant who refined beet sugar and
distributed it in interstate commerce, for triple the amount of
damages sustained by reason of an alleged violation of the Act. The
amended bill of complaint alleged, inter alia,
defendant had conspired with other refiners to fix uniform prices
to be paid to growers for sugar beets grown in northern California;
that the refiners had a monopoly of the seed supply and the only
practical market for beets grown in the area, and that, as a
consequence of the conspiracy and the price-fixing formula, the
complainants received less for their beets. Other allegations
showed the unique character of the sugar beet industry in the area;
the dominant position of the refiners in the industry, and the
effects of the conspiracy on interstate commerce. On appeal from a
judgment dismissing the complaint, held:
1. The amended complaint stated a cause of action under the Act.
Pp. 334 U. S.
2. A restraint of the type forbidden by the Act, though arising
in intrastate commerce, falls within the Act's prohibition if its
actual or threatened effect on interstate commerce is sufficiently
substantial. Pp. 334 U. S.
3. The refiners' conspiracy was of the type forbidden, even
though the price-fixing was by purchasers and though the claimants
of treble damages are sellers, instead of customers or consumers.
P. 334 U. S.
4. Monopolization of local business, when achieved by
restraining interstate commerce, is violative of the Sherman Act.
Pp. 334 U. S.
5. The conspiracy being shown to affect interstate commerce
adversely to Congress' policy, the amount of the nation's sugar
industry which the refiners control is irrelevant, so long as
control is exercised effectively in the area involved. P.
334 U. S.
6. Mere change in the form of a commodity, or even complete
change in essential quality by intermediate refining or
Page 334 U. S. 220
does not defeat application of the Sherman Act to practices
occurring either during those processes or before they begin, when
they have the effects forbidden by the Act. P. 334 U. S.
7. The mere fact that the price-fixing in this case related
directly to the beets did not sever or render insubstantial its
effect subsequently in the sale of sugar. P. 334 U. S.
8. In an integrated industry such as this, stabilization of
prices paid for the only raw material inevitably tends toward
reducing competition in the distribution of the finished product.
P. 334 U. S.
9. The interdependence and inextricable relationship between the
interstate and the intrastate effects of the combination and
monopoly are indicated by the provision of the uniform price
agreement which ties in the price paid for beets with the price
received for sugar. Pp. 334 U. S.
10. The monopolistic effects of the refiners' agreement to pay
uniform prices for beets, in the circumstances of this case, not
only deprived the growers of any competitive opportunity for
disposing of their crops, but also tended to increase control over
the quantity of sugar sold interstate, and, through the tie-in
provision, interlaced those interstate effects with the price paid
for the beets. P. 334 U. S.
11. The fact that some growers, though not the complainants, may
have been benefited, rather than harmed does not render the
combination legal or immune to liability for violating the Act. Pp.
334 U. S.
12. Both public and private injury are indicated in this case,
for, in addition to the restraints put upon the public interest in
the interstate sale of sugar, enhancing the refiners' controls,
there are special injuries affecting the growers. P. 334 U. S.
13. The amendment of the complaint in this case so as to
eliminate the words "sugar and sugar beets" from one of the
allegations that the refiners had conspired to "monopolize and
restrain trade" while leaving in many other allegations to the same
effect, did not eliminate, nor constitute a disavowal, disclaimer,
or waiver by the complainants of, the charge of restraint of trade
in sugar, the only interstate commodity. Pp. 334 U. S.
159 F.2d 71, reversed.
Petitioners' amended complaint in an action against respondent
to recover triple damages under the Sherman Act was dismissed by
the District Court. 64 F. Supp. 265. The Circuit Court of Appeals
affirmed. 159 F.2d
Page 334 U. S. 221
71. This Court granted certiorari. 331 U.S. 800. Reversed
p. 334 U. S.
MR. JUSTICE RUTLEDGE delivered the opinion of the Court.
The action is for treble damages incurred by virtue of alleged
violation of the Sherman Act, §§ 1 and 2. 26 Stat. 209, 38 Stat.
731, 15 U.S.C. §§ 1, 2, 7, 15. The case comes here on certiorari,
331 U.S. 800, from affirmance by the Circuit Court of Appeals, 159
F.2d 71, of a judgment of the District Court, 64 F. Supp. 265. That
judgment dismissed the amended complaint as insufficient to state a
cause of action arising under the Act. In this posture of the case,
the legal issues are to be determined upon the allegations of the
amended complaint. [Footnote
The main question is whether, in the circumstances pleaded,
California sugar refiners who sell sugar in interstate commerce may
agree among themselves to pay a uniform price for sugar beets grown
in California without incurring liability to the local beet growers
under the Act. Narrowly, the question is whether the refiners'
Page 334 U. S. 222
together with the allegations made concerning its effects, shows
a conspiracy to monopolize and to restrain interstate trade and
commerce, or one thus affecting only purely local trade and
The material facts pleaded, which stand admitted as if they had
been proved for the purposes of this proceeding, may be summarized
as follows: petitioners' farms are located in northern California,
within the area lying north of the thirty-sixth parallel. The only
practical market available to beet growers in that area was sale to
one of three refiners. [Footnote
] Respondent was one of these. Each season, growers contract
with one of the refiners to grow beets and to sell their entire
crops to the refiner under standard form contracts drawn by it.
Since prior to 1939, petitioners have thus contracted with
The refiners control the supply of sugar beet seed. Both by
virtue of this fact and by the terms of the contracts, the farmers
are required to buy seed from the refiner. The seed can be planted
only on land specifically covered by the contract. Any excess must
be returned to the refiner in good order at the end of the planting
The standard contract gives the refiner the right to supervise
the planting, cultivation, irrigation, and harvesting
Page 334 U. S. 223
of the beets, including the right to ascertain quality during
growing and harvesting seasons by sampling and polarizing. Before
delivering beets to the company, the farmers must make preliminary
preparations for processing them into raw sugar. [Footnote 3
] The refiner has the option to
reject beets if the contract conditions are not complied with and
if the beets are not suitable in its judgment for the manufacture
Prior to 1939, the contract fixed the grower's price by a
formula combining two variables, a percentage of the refiner's net
returns per hundred pounds from sales of sugar and the sugar
content of the individual grower's beets determined according to
the refiner's test. [Footnote
Sometime before the 1939 season, the three refiners entered into
an agreement to pay uniform prices for sugar beets. The mechanics
of the price-fixing arrangement were simple. The refiners adopted
identical form contracts and began to compute beet prices on the
basis of the average net returns of all three, rather than the
separate returns of the purchasing refiner. Inevitably, all would
pay the same price for beets of the same quality.
Since the refiners controlled the seed supply and the only
practical market for beets grown in northern California, when the
new contracts were offered to the farmers, they had the choice of
either signing or abandoning sugar beet farming. Petitioners
accordingly contracted with respondent under this plan during the
1939, 1940, and 1941 seasons. The plan was discontinued after the
Page 334 U. S. 224
season. Because beet prices were determined for the three
seasons with reference to the combined returns of the three
refiners, the prices received by petitioners for those seasons were
lower than if respondent, the most efficient of the three, had
based its prices on its separate returns.
The foregoing allegations set forth the essential features of
the contractual arrangements between the refiners and the growers
and of the agreement among the refiners themselves. Other
allegations were made to complete the showing of violation and
injury. They relate specifically to the peculiarly integrated
character of the industry, effects of the arrangements upon
interstate commerce, and the relation between the violations
charged and the injuries suffered by petitioners.
With reference to the industry in general, it was stated that
sugar beets were grown during the seasons 1938 to 1942 on large
acreages not only in northern California, but also in Utah,
Colorado, Michigan, Idaho, Illinois and other states. The crops so
grown, when harvested, were not
"sold in central markets, as were potatoes, onions, corn, grain,
fruit and berries, but were produced by growers under contract with
manufacturers or processors, and, immediately upon being harvested,
were delivered to these manufacturers and taken to their beet sugar
refineries, where the sugar beets were manufactured by an elaborate
process into raw sugar by the said manufacturers, who thereafter
sold the resulting sugar in interstate commerce."
Then follow the allegations summarized above in note 2 concerning the bulky and semi-perishable
nature of sugar beets
the impossibility of transporting them
over long distances or of storing them cheaply or safely, their
rapid deterioration when ripe, and the necessity for prompt
harvesting and marketing. These allegations must be taken as
intended and effective to put the agreements complained of in the
general setting of
Page 334 U. S. 225
the industry's unique structure and special mode of
The specific allegation is added that the sugar manufactured by
respondent and the other northern California refiners from beets
grown in the region "was, during all of said period (1938 to 1942),
sold in interstate commerce throughout the United States."
By way of legal as well as ultimate factual conclusions, the
amended complaint charged that respondent had unlawfully conspired
with the other northern California refiners to
"monopolize and restrain trade and commerce [Footnote 5
] among the several states and to
unlawfully fix prices to be paid the growers . . . all in violation
of the antitrust laws . . . ,"
and that each refiner no longer competed against the others as
to the price to be paid the growers, but paid the same price on the
agreed uniform basis of average net returns.
There were further charges that, prior to 1939, the northern
California refiners had
"competed in interstate commerce with each other as to the
performance, ability, and efficiency of their manufacturing, sales,
and executive departments, and each strove to increase sales return
and decrease expenses,"
with the result that, for 1938, respondent secured substantially
greater "net gross receipts of sales of sugar" than the other
refiners. These, in turn, were reflected in the payment of 29 1/2
to 52 1/2 cents per ton more to petitioners and other growers
dealing with respondent than was paid by the other refiners to
Page 334 U. S. 226
However, for the seasons 1939, 1940, and 1941, under the new
uniform contracts and prices, "there was no longer any such
competition. . . ." Instead, it was alleged upon information and
belief that, as a result of the alleged conspiracy, respondent did
not conduct its interstate operations as carefully and efficiently
as previously, or "as it would have had said conspiracy not
existed." In consequence, respondent received less in sales returns
for raw sugar and incurred greater expenses than if competition had
been free, and petitioners "did not receive the reasonable value of
their sugar beets."
Further charges were that, as "a direct, expected, and planned
result of said conspiracy, the free and natural flow of commerce in
interstate trade was intentionally hindered and obstructed," so
that, instead of the refiners
"producing and selling raw sugar in interstate commerce . . . in
competition with each other . . . , they became illegally
associated in a common plan wherein they pooled their receipts and
expenses and frustrated the free enterprise system . . . ;"
all incentive to efficiency, economy, and individual enterprise
disappeared, and the refiners operated, "insofar as the growers
were concerned," as if they were one corporation owning and
controlling all factories in the area, but with three completely
separated overheads and with none of the efficiency that
consolidation into one corporation might bring. [Footnote 6
Page 334 U. S. 227
We are not concerned presently with the allegations relating to
the injuries and amounts of damages inflicted upon petitioners,
] except to say that
they are sufficient to present those questions for support by proof
if the allegations made to show a cause of action arising under the
statute are sufficient for that purpose.
In our judgment, the amended complaint states a cause of action
arising under the Sherman Act, §§ 1 and 2, and the complaint was
Broadly, petitioners regard the entire sequence of growing the
beets, refining them into sugar, and distributing it under the
arrangements set forth as a chain of events so integrated and
taking place in interstate commerce or in such close and intimate
connection with it that, for purposes of applying the Sherman Act,
the complete sequence is an entirety, and no part of it can be
segregated from the remainder so as to put it beyond the statute's
Respondent, on the contrary, broadly severs the phase or phases
of growing and selling beets from the later ones of refining them
and of marketing the sugar. The initial growing process, together
with sale of the beets, and it would seem also the intermediate
stage of refining, are taken to be "purely local," since all
Page 334 U. S. 228
within California, therefore were wholly intrastate events, and
consequently were beyond the Sherman Act's reach.
Connected with this severance is the assertion that the
complaint alleges no monopolistic or restrictive effects upon
interstate commerce, but only such effects in the intrastate phases
of the industry.
Much stress is laid upon the so-called interruption of the
sequence at the refining stage. Prior to the interruption, only
beets are involved, afterward, only sugar. Since the two
commodities are different and all that affects the beets takes
place in California, including the restraints alleged upon their
sale, the trade and commerce in beets is wholly distinct from that
in sugar, and is entirely local, as are therefore the restraint and
monopolization of that trade. Admittedly, once the beets are
converted into sugar and the sugar starts on its interstate journey
to the tables of the nation, interstate commerce becomes involved.
But only then is it affected, and nothing occurring before the
journey begins, or, at any rate, before the beets become sugar,
substantially affects or, for purposes of the statute's
application, has relevance to that commerce.
Thus, sugar, together with its interstate sale and
transportation, is absolutely divorced from sugar beets, their
production, sale, and delivery to the refiner. Manufacture breaks
the relationship, and, with it, all consequences growing out of the
restraints for the interstate processes and the purposes of the
statute. In other words, since the restraints precede the
interstate marketing of the sugar and immediately affect only the
local marketing of the beets, they have no restrictive effect upon
the trade and commerce in sugar.
This very nearly denies that sugar beets contain sugar. It
certainly denies that the price of beets and restrictions upon it
have any substantial relation in fact or in legal
Page 334 U. S. 229
significance for the statute's purposes to the price of sugar
sold interstate, when the restrictions take place within the
confines of a single state and before the interstate marketing
The broad form of respondent's argument cannot be accepted. It
is a reversion to conceptions formerly held, but no longer
effective to restrict either Congress' power, Wickard v.
Filburn, 317 U. S. 111
the scope of the Sherman Act's coverage. The artificial and
mechanical separation of "production" and "manufacturing" from
"commerce," without regard to their economic continuity, the
effects of the former two upon the latter, and the varying methods
by which the several processes are organized, related, and carried
on in different industries, or indeed within a single industry, no
longer suffices to put either production or manufacturing and
refining processes beyond reach of Congress' authority or of the
It is true that the first decision under the Sherman Act applied
those mechanical distinctions with substantially nullifying effects
for coverage both of the power and of the Act. United States v.
E. C. Knight Co., 156 U. S. 1
this one, that case involved the refining and interstate
distribution of sugar. But because the refining was done wholly
within a single state, the case was held to be one involving
"primarily" only "production" or "manufacturing," although the vast
part of the sugar produced was sold and shipped interstate,
] and this was the
main end of the enterprise. The interstate distributing phase,
Page 334 U. S. 230
however, was regarded as being only "incidentally,"
"indirectly," or "remotely" involved, and to be "incidental,"
"indirect," or "remote" was to be, under the prevailing climate,
beyond Congress' power to regulate, and hence outside the scope of
the Sherman Act. See Wickard v. Filburn, supra
317 U. S. 119
decision made the statute a dead letter for
more than a decade, and, had its full force remained unmodified,
the Act today would be a weak instrument, as would also the power
of Congress, to reach evils in all the vast operations of our
gigantic national industrial system antecedent to interstate sale
and transportation of manufactured products. Indeed, it and
succeeding decisions embracing the same artificially drawn lines
produced a series of consequences for the exercise of national
power over industry conducted on a national scale which the
evolving nature of our industrialism foredoomed to reversal.
Page 334 U. S. 231
We do not stop to review again in detail the familiar story of
the progression of decision to that end, perhaps not told elsewhere
more succinctly or pertinently than in Wickard v. Filburn,
Suffice it to say that, after coming back to life again in the
case, 193 U.
, for matters of transportation, the Sherman Act
received a second rebirth in 1911 with the decisions in
Standard Oil Co. v. United States, 221 U. S.
, and United States v. American Tobacco Co.,
221 U. S. 1
Cf. United States v. South-Eastern Underwriters Assn.,
322 U. S. 533
322 U. S. 553
Not thereafter could it be foretold with assurance that
application of the labels of "production" and "manufacture,"
"incidental" and "indirect," would throw protective covering over
those processes against the Act's consequences. Very soon also came
the Shreveport Rate Cases, 234 U.
, again in the field of transportation, but
inevitably to add force and scope to the Standard Oil
rulings that manufacturing companies lay
within the reach of the power and of the
Page 334 U. S. 232
statute, deriving no immunity for their conduct violative of the
prohibitions merely from the fact of engaging in that character of
With extension of the Shreveport
influence to general
application, [Footnote 11
it was necessary no longer to search for some sharp point or line
where interstate commerce ends and intrastate commerce begins in
order to decide whether Congress' commands were effective. For the
essence of the affectation doctrine was that the exact location of
this line made no difference if the forbidden effects flowed across
it to the injury of interstate commerce or to the hindrance or
defeat of congressional policy regarding it.
The formulation of the Shreveport
doctrine was a great
turning point in the construction of the commerce clause,
comparable in this respect to the landmark of Cooley v.
Board of Wardens,
12 How. 299. For, while the
latter gave play for state power to work in the field of commerce,
the former broke bonds confining Congress' power and made it an
effective instrument for fulfilling its purpose. The
doctrine cut Congress loose from the haltering
labels of "production" and "manufacturing" and
Page 334 U. S. 233
gave it rein to reach those processes when they were used to
defy its purposes regarding interstate trade and commerce. In doing
so, the decision substituted judgment as to practical impeding
effects upon that commerce for rubrics concerning its boundaries as
the basic criterion of effective congressional action.
The transition, however, was neither smooth nor immediately
complete, particularly for applying the Sherman Act. The old ideas
persisted in specific applications as late as the 1930's. But after
the historic decisions of 1911, and even more following the
decision, a constantly growing number of others
rejected the ides that production and manufacturing are "purely
local," and hence beyond the Act's compass, simply because those
phases of a combination restraining or monopolizing trade were
carried on within the confines of a single state or, of course, of
several states. [Footnote
] The struggle for supremacy between the conflicting
approaches was long continued. But more and more, until the climax
came in the late 1930's, this Court refused to decide those issues
of power and coverage merely by asking whether the restraints or
monopolistic practices, shown to have the forbidden effects on
commerce, took place in a phase or phases of the total economic
process which, apart from other phases and from the outlawed
effects, occurred only in intrastate activities. [Footnote 13
Page 334 U. S. 234
In view of this evolution, the inquiry whether the restraint
occurs in one phase or another, interstate or intrastate, of the
total economic process is now merely a preliminary step, except for
those situations in which no aspect of or substantial effect upon
interstate commerce can be found in the sum of the facts presented.
] For, given a
restraint of the type forbidden by the Act, though arising in the
course of intrastate or local activities, and a showing of actual
or threatened effect upon interstate commerce, the vital question
becomes whether the effect is sufficiently substantial and adverse
to Congress' paramount policy declared in the Act's terms to
constitute a forbidden consequence. If so, the restraint must fall,
and the injuries it inflicts upon others become remediable under
the Act's prescribed methods, including the treble damage
doctrine did not contemplate that
restraints or burdens become or remain immune merely because they
take place as events prior to the point in time when interstate
commerce begins. Exactly the contrary is comprehended, for it is
the effect upon that commerce, not the moment when its cause
arises, which the doctrine was fashioned to reach.
Obviously, therefore, the criteria respondent would have us
follow furnish no basis for reaching the result it seeks.
Page 334 U. S. 235
Only by returning to the Knight
approach, and severing
the intrastate events relating to the beets, including the price
restraints, from the later events relating to the sugar, including
its interstate sale, could we conclude there were no forbidden
restraints or practices touching interstate commerce here. At this
late day, we are not willing to take that long backwards step.
We turn, then, to consider the questions posed upon the amended
complaint that are relevant under the presently controlling
criteria. These are whether the allegations disclose a restraint
and monopolistic practices of the types outlawed by the Sherman
Act; whether, if so, those acts are shown to produce the forbidden
effects upon commerce, and whether the effects create injury for
which recovery of treble damages by the petitioners is
It is clear that the agreement is the sort of combination
condemned by the Act, [Footnote
] even though the price-fixing was by purchasers, [Footnote 16
] and the persons
specially injured under the treble damage claim are sellers, not
customers or consumers. [Footnote 17
] And even if it is assumed that the final aim
of the conspiracy was control of the local sugar beet market, it
does not follow that it is outside the scope of the Sherman Act.
For monopolization of local business, when achieved by restraining
interstate commerce, is condemned
Page 334 U. S. 236
by the Act. Stevens Co. v. Foster & Kleiser,
311 U. S. 255
311 U. S. 261
And a conspiracy with the ultimate object of fixing local retail
prices is within the Act if the means adopted for its
accomplishment reach beyond the boundaries of one state. United
States v. Frankfort Distilleries, 324 U.
The statute does not confine its protection to consumers, or to
purchasers, or to competitors, or to sellers. Nor does it immunize
the outlawed acts because they are done by any of these. Cf.
United States v. Socony-Vacuum Oil Co., 310 U.
; American Tobacco Co. v. United States,
328 U. S. 781
Act is comprehensive in its terms and coverage, protecting all who
are made victims of the forbidden practices by whomever they may be
perpetrated. Cf. United States v. South-Eastern Underwriters
at 322 U. S.
Nor is the amount of the nation's sugar industry which the
California refiners control relevant, so long as control is
exercised effectively in the area concerned, Indiana Farmer's
Guide v. Prairie Farmer, 293 U. S. 268
293 U. S. 279
United States v. Yellow Cab Co., 332 U.
, 332 U. S. 225
the conspiracy being shown to affect interstate commerce adversely
to Congress' policy. Congress' power to keep the interstate market
free of goods produced under conditions inimical to the general
welfare, United States v. Darby, 312 U.
, 312 U. S. 115
may be exercised in individual cases without showing any specific
effect upon interstate commerce, United States v. Walsh,
331 U. S. 432
331 U. S.
-438; it is enough that the individual activity, when
multiplied into a general practice, is subject to federal control,
Wickard v. Filburn, supra,
or that it contains a threat to
the interstate economy that requires preventive regulation.
Consolidated Edison Co. v. Labor Board, 305 U.
, 305 U. S.
Moreover, as we said in the Frankfort Distilleries
". . . there is an obvious distinction to be drawn between
Page 334 U. S. 237
a course of conduct wholly within a state and conduct which is
an inseparable element of a larger program dependent for its
success upon activity which affects commerce between the
, 324 U. S. 297
That statement is as true of the situation now presented as of the
one then before us, although, instead of restraining trade in order
to control a local market, petitioners control a local market in
which they purchase. For this is not a case involving only "a
course of conduct wholly within a state;" it is rather one
"conduct which is an inseparable element of a larger program
dependent for its success upon activity which affects commerce
between the states,"
and, in such a case, it is not material that the source of the
forbidden effects upon that commerce arises in one phase or another
of that program.
In view of all this, it is difficult to understand respondent's
argument that the complaint does not allege that the conspiracy had
any effect on interstate commerce, except on the basis of the
discarded criteria discussed in 334 U. S.
contention ignores specific allegations which we have set forth.
But, apart from that fact, it rests only on a single grounding
which, in the circumstances of this case, is little, if any, more
than a different phrasing of the criteria supplanted by the
This is that the change undergone in the manufacturing stage
when the beets are converted into sugar makes the case different,
for the Sherman Act's objects, than it would be if the identical
commodity were concerned from the planting stage through the phase
of interstate distribution, e.g.,
if the commodity were
wheat, as was true in Wickard v. Filburn, supra,
raisins purchased by packers from growers and shipped interstate
after packing, cf. Parker v. Brown, 317 U.
, 317 U. S.
Page 334 U. S. 238
We do not stop to consider specific and varied situations in
which a change of form amounting to one in the essential character
of the commodity takes place by manufacturing or processing
intermediate the stages of producing and disposing of the raw
material intrastate and later interstate distribution of the
finished product; or the effects, if any, of such a change in
particular situations unlike the one now presented. [Footnote 18
] For mere change in the form of
the commodity, or even complete change in essential quality by
intermediate refining, processing, or manufacturing, does not
defeat application of the statute to practices occurring either
during those processes or before they begin, when they have the
effects forbidden by the Act. [Footnote 19
] Again, as we have said, the vital thing is
the effect on commerce, not the precise point at which the
restraint occurs or begins to take effect in a scheme as closely
knit as this in all phases of the industry. Hence, in this case,
the mere fact that the price-fixing related directly to the beets
did not sever or render insubstantial its effect subsequently in
the sale of sugar.
Indeed, that severance would not necessarily take place if the
manufacturing stage had produced a much greater change in
commodities than was effected here. But, under the facts
characterizing this industry's operation and the tightening of
controls in this producing area by the new agreements and
understandings, there can be no question that their restrictive
consequences were projected substantially into the interstate
distribution of the sugar, as the amended complaint repeatedly
Page 334 U. S. 239
they permeated the entire structure of the industry in all its
phases, intrastate and interstate.
We deal here, as petitioners say, with an industry tightly
interwoven from sale of the seed through all the intermediate
stages to and including interstate sale and distribution of the
sugar. In the middle of all these processes, and dominating all of
them, stand the refiners. They control the supply and price of
seed, the quantity sold, and the volume of land planted, the
processes of cultivation and harvesting, the quantity of beets
purchased and rejected, the refining and the distribution of sugar,
both interstate and local.
Some of these controls have been built up by taking advantage of
the opportunities afforded by the industry's unique character, both
natural and in its general pattern and habits of organization;
] others by
utilizing the key positions these advantages give the refiners to
put contractual restraints upon the growers by their separate
actions; [Footnote 21
still greater ones by the refiners' ability,
Page 334 U. S. 240
by virtue of their central and dominating place thus achieved,
to agree among themselves upon further restrictions.
Even without the uniform price provision and with full
competition among the three refiners, their position is a
dominating one. The growers' only competitive outlet is the one
which exists when the refiners compete among themselves. There is
no other market. The farmers' only alternative to dealing with one
of the three refiners is to stop growing beets. They can neither
plant nor sell except at the refiners' pleasure and on their terms.
The refiners thus effectively control the quantity of beets grown,
harvested, and marketed, and consequently of sugar sold from the
area in interstate commerce, even when they compete with each
other. They dominate the entire industry. And their dominant
position, together with the obstacles created by the necessity for
large capital investment and the time required to make it
productive, makes outlet through new competition practically
impossible. Upon the allegations, it is absolutely so for any
single growing season. A tighter or more all-inclusive monopolistic
position hardly can be conceived.
When, therefore, the refiners cease entirely to compete with
each other in all stages of the industry prior to marketing the
sugar, the last vestige of local competition is removed, and, with
it, the only competitive opportunity for the grower to market his
product. Moreover, it is inconceivable that the monopoly so created
will have no effects for the lessening of competition in the later
interstate phases of the overall activity, or that the effects in
those phases will have no repercussions upon the prior ones,
including the price received by the growers.
There were, indeed, two distinct effects flowing from the
agreement for paying uniform growers' prices, one immediately upon
the price received by the grower, rendering
Page 334 U. S. 241
it devoid of all competitive influence in amount; the other, the
necessary and inevitable effect of that agreement, in the setting
of the industry as a whole, to reduce competition in the interstate
distribution of sugar.
The idea that stabilization of prices paid for the only raw
material consumed in an industry has no influence toward reducing
competition in the distribution of the finished product, in an
integrated industry such as this, is impossible to accept. By their
agreement, the combination of refiners acquired not only a monopoly
of the raw material, but also and thereby control of the quantity
of sugar manufactured, sold, and shipped interstate from the
northern California producing area. In substance and roughly, if
not precisely, they allocated among themselves the market for
California beets substantially upon the basis of quotas
competitively established among them at the time the uniform price
arrangement was agreed upon. It is hardly likely that any refiner
would have entered into an agreement with its only competitors the
effect of which would have been to drive away its growers, or,
therefore, that many of the latter would have good reason to shift
their dealings within the closed circle. Thus, control of quantity
in the interstate market was enhanced.
This effect was further magnified by the fact that the widely
scattered location of sugar beet growing regions and their
different accessibilities to market [Footnote 22
] give the refiners of each region certainly
some advantage over growers and refiners in other regions, and
undoubtedly large ones over those most distant from the segment of
the interstate market served by reason of being nearest to
Finally, the interdependence and inextricable relationship
between the interstate and the intrastate effects
Page 334 U. S. 242
of the combination and monopoly are shown perhaps most clearly
by the provision of the uniform price agreement which ties in the
price paid for beets with the price received for sugar. The
percentage factor of interstate receipts from sugar which the
grower's contract specifies shall enter his price for beets makes
that price dependent upon the price of sugar sold interstate. The
uniform agreement's effect, when added to this, is to deprive the
grower of the advantage of the individual efficiency of the refiner
with which he deals -- in this case, the most efficient of the
three -- and of the price that refiner receives. It is also to
reflect in the grower's price the consequences of the combination's
effects for reducing competition among the refiners in the
interstate distribution of sugar.
In sum, the restraint and its monopolistic effects were
reflected throughout each stage of the industry, permeating its
entire structure. This was the necessary and inevitable effect of
the agreement among the refiners to pay uniform prices for beets,
in the circumstances of this case. Those monopolistic effects not
only deprived the beet growers of any competitive opportunity for
disposing of their crops by the immediate operation of the uniform
price provision; they also tended to increase control over the
quantity of sugar sold interstate, and finally, by the tie-in
provision, they interlaced those interstate effects with the price
paid for the beets.
These restrictive and monopolistic effects, resulting
necessarily from the practices allegedly intended to produce them,
fall squarely within the Sherman Act's prohibitions, creating the
very injuries they were designed to prevent, both to the public and
to private individuals.
It does not matter, contrary to respondent's view, that the
growers contracting with the other two refiners may have been
benefited, rather than harmed, by the combination's
Page 334 U. S. 243
effects, even if that result is assumed to have followed. It is
enough that these petitioners have suffered the injuries for which
the statutory remedy is afforded. For the test of the legality and
immunity of such a combination, in view of the statute's policy, is
not that some others than the members of the combination have
profited by it operation. It is, rather, whether the statute's
policy has been violated in a manner to produce the general
consequences it forbids for the public, and the special
consequences for particular individuals essential to the recovery
of treble damages. Both types of injury are present in this case,
for, in addition to the restraints put upon the public interest in
the interstate sale of sugar, enhancing the refiner's controls,
there are special injuries affecting the petitioners resulting from
those effects, as well as from the immediate operation of the
uniform price arrangement itself.
The fact that that arrangement is the source of both effects
cannot be taken to mean that neither is outlawed by the statute, in
view of their interdependence and the completely unified and
comprehensive nature of the scheme as respects its interstate and
intrastate phases. The policy of the Act is competition. It cannot
be flouted, as has been done here, by artificial nomenclatural
severance of the plan's forbidden effects, any more than by such a
segmentation of the integrated industry into legally unrelated
phases. Nor can the severance be made in such a case merely by
virtue of the fact that a refining or manufacturing process
constitutes an intermediate stage in the whole.
To compare an industry so completely interlocked in all its
stages, by all-inclusive contract as well as by industrial
structure and organization, with one like producing, processing,
and marketing fruits, vegetables, corn, or other products
susceptible of various uses and under conditions
Page 334 U. S. 244
affording varied outlets for market, both local and interstate,
in the raw or refined state, in which neither such a contractual
nor such industrial integration exists, is to ignore the facts of
industrial life. So is it also to make conclusive comparisons with
other industries in which the manufacturing process requires and
has available a greater variety of raw materials for making the
finished product, and involves a longer and more extensive process
of change, than does extracting the sugar content of beets to make
We deal with the facts before us. With respect to others which
may be significantly different for purposes of violating the
statute's terms and policy, we await another day. [Footnote 23
Little more remains to be said concerning the amended complaint.
The allegations comprehend all that we have set forth. We do not
stop to restate them, leaving their substance at this point for
reference to the summary made at the beginning of this opinion.
Respondent has presented its argument as if the amended
complaint omitted all reference to restraint or effects upon
interstate trade in sugar, and confined these allegations to the
trade in beets. It is true that, at the
Page 334 U. S. 245
hearing which followed filing of the amended complaint,
petitioners at one point, apparently in response to some intimation
from the court, eliminated the words "sugar and sugar beets" from
one of the allegations that the refiners had conspired to
"monopolize and restrain trade and commerce among the several
states. . . ." [Footnote
Respondent takes this elision as effective to constitute an
express disavowal by petitioners of any charge of restraint of
trade in sugar, the only interstate commodity.
Page 334 U. S. 246
The amendment did not eliminate or affect numerous other
allegations which in effect repeated the charge in various forms
and with reference to various specific effects upon interstate as
well as local phases of the commerce. Some of these explicitly
specified trade or commerce in sugar, [Footnote 25
] others designated the trade affected as
interstate, which on the facts could mean only sugar. Moreover,
petitioners deny the disavowal, both in intent and in effect. They
say the elision was insubstantial, since, in the clause from which
it was made, the allegation of conspiracy to monopolize and
restrain interstate commerce remained, and the only interstate
trade was in sugar. We think the amendment, for whatever reason
made, was not effective to constitute a disavowal, disclaimer, or
The allegations are comprehensive and, for the greater part,
specific, concerning both the restraints and their effects. They
clearly state a cause of action under the Sherman Act.
The judgment of the Circuit Court of Appeals is reversed, and
the cause is remanded to the District Court for further proceedings
in conformity with this opinion.
Reversed and remanded.
The original complaint contained three counts, the first
alleging violations of the Sherman Act, and the second and third
charging breach of contracts made in 1940 and 1941, respectively.
In order to expedite decision and review upon the Sherman Act
contention, by stipulation, the amended complaint was filed setting
forth, with an amendment to be noted, see note 5
only the allegations of the Sherman
Act count. The stipulation provided for following this course
without prejudice to further assertion by petitioners of rights
under the two contract counts within a specified period following
final determination of the Sherman Act issues.
It was alleged that the beets, when harvested, are
"bulky and semi-perishable, and incapable of being transported
over long distances or of being stored cheaply or safely for any
extended period . . . when ripe, deteriorated rapidly if kept in
the ground and not harvested, and it was necessary to harvest them
promptly when matured."
There were also allegations that initial outlay, annual upkeep
and operating expenses, and time required for erecting and
equipping a refinery were so great that no competition from any new
refinery could be expected short of two years, at best; that the
three refiners had a monopoly in the area of the supply of seeds
and of refining, and that no grower in the region could sell beets
at a profit except to one of the three refiners.
These include cutting off the beet tops, trimming the crowns in
a specified way, and removing all foreign substances likely to
interfere with factory work.
Net returns from sugar sales were measured by gross sales price
less selling expenses directly applicable to sugar. Monthly
settlements were made for beets delivered during the preceding
month on the estimated net returns of the refiner. But final
settlement had to be deferred until the end of the season, when net
returns could be accurately determined.
Paragraph XIX of the amended complaint summarized petitioners'
conclusions as follows:
"By reason of the foregoing acts of the defendant and its said
conspirators, interstate commerce in sugar was illegally
restrained, competition therein
was not only substantially
lessened, but was destroyed,
the price of sugar beets was
illegally fixed, and an illegal monopoly was established, all in
violation of the antitrust laws of the United States to the damage
of plaintiffs as aforesaid."
(Emphasis added.) Cf.
notes 5 and
| 5 and
It is not clear whether damages were to be measured by the
difference between the prices actually paid and those that would
have been paid if based on respondent's separate returns, or by the
difference between the prices paid and the prices set by the
Secretary of Agriculture, pursuant to the Sugar Act of 1937, 50
Stat. 910, 7 U.S.C. § 1131(d); see
5 Fed.Reg. 5231. But
that is an issue that need not concern us now. Petitioner
Mandeville Island Farms prayed judgment for $315,043.80; petitioner
Zuckerman for $112,192.14.
It has been previously noted here that the Court applied these
labels as a heritage from prior decisions under the commerce
clause, dealing not, as the Knight
case, with an act or
acts of Congress, but with the validity of state statutes,
Wickard v. Filburn, 317 U. S. 111
317 U. S. 121
United States v. South-Eastern Underwriters Assn.,
322 U. S. 533
322 U. S.
-545, an approach reflecting Marshall's idea of the
mutual exclusiveness of state and national power in this area and
ignoring the later evolution of different conceptions in
Cooley v. Board of
12 How. 299. See Prudential Ins. Co.
v. Benjamin, 328 U. S. 408
328 U. S.
Compare, e.g., United States v. E.C. Knight Co.,
156 U. S. 1
with Standard Oil Co. v. United States, 221 U. S.
, and United States v. American Tobacco Co.,
221 U. S. 1
Hammer v. Dagenhart, 247 U. S. 251
with United States v. Darby, 312 U.
; Carter v. Carter Coal Co., 298 U.
, with Sunshine Coal Co. v. Adkins,
310 U. S. 381
United States v. Chicago, etc., R. Co., 282 U.
, and Railroad Retirement Board v. Alton R.
Co., 295 U. S. 330
with United States v. Lowden, 308 U.
; Hopkins v. United States, 171 U.
, with Stafford v. Wallace, 258 U.
; Employers' Liability Cases,
207 U. S. 463
207 U. S. 498
with Virginian R. Co. v. Federation, 300 U.
, 300 U. S. 557
and Weiss v. United States, 308 U.
; New York Life Insurance Co. v. Deer Lodge
County, 231 U. S. 495
authorities cited, with United States v. South-Eastern
Underwriters Assn., 322 U. S. 533
and Prudential Insurance Co. v. Benjamin, 328 U.
the discussion in 317 U.S. at
317 U. S.
-120. See also Prudential Ins. Co. v.
Benjamin, 328 U. S. 408
United States v. South-Eastern Underwriters Assn.,
322 U. S. 533
Labor Board v. Jones & Laughlin, 301 U. S.
; United States v. Darby, 312 U.
; United States v. Wrightwood Dairy Co.,
315 U. S. 110
Stern, The Commerce Clause and the National Economy, 1933-1946, 59
Harv.L.Rev. 645, 883.
case dealt with the second Agricultural
Adjustment Act and the power of Congress to enact it. But,
referring to the first Interstate Commerce Act and the Sherman Act,
the Court in the Filburn
case (pp. 317 U. S.
-122), said that those statutes "ushered in new
phases of adjudication" requiring a different approach to
interpretation of the Commerce Clause, although,
"when it first dealt with this new legislation, the Court
adhered to its earlier pronouncements and allowed but little scope
to the power of Congress."
For the latter statement, the Knight
case was cited as
the principal example.
The doctrine encompassed fundamentally not merely an expanding
factor in federal power over transportation. It was, rather, an
integer in the sum of power over commerce, of which authority over
transportation was but a part. The "affectation" approach was
actually a revival of Marshall's "necessary and proper" doctrine,
cf. Wickard v. Filburn, 317 U. S. 111
317 U. S.
-122, but unqualified by his idea of mutual
exclusiveness, see note
Once applied to transportation and the Interstate Commerce
Acts, it was inevitable that the approach would be extended to the
productive and industrial phases of the national economy and the
statutes regulating them, including the Sherman Act. Time and
events were disclosing ever more clearly the impact of their
effects upon interstate trade and commerce. And this was posing the
same necessity for regulation as in the field of transportation, in
order to protect and preserve the national commerce and carry out
Congress' policy regarding it.
United States v. Reading Co., 253 U. S.
; United States v. Keystone Watch Case Co.,
218 F. 502; Pennsylvania Sugar Refining Co. v. American Sugar
166 F. 254; United States v. E. I. Du Pont
de Nemours & Co.,
188 F. 127. See
Holmes dissenting in Hammer v. Dagenhart, 247 U.
, 247 U. S.
Montague & Co. v. Lowry, 193 U. S.
; Swift & Co. v. United States,
196 U. S. 375
United States v. Patten, 226 U. S. 525
Binderup v. Pathe Exchange, 263 U.
; Federal Trade Commission v. Pacific Paper
Assn., 273 U. S. 52
Stevens Co. v. Foster & Kleiser Co., 311 U.
; Bigelow v. RKO Radio Pictures,
327 U. S. 251
In United States v. Frankfort Distilleries,
324 U. S. 293
324 U. S. 297
"It is true that this Court has on occasion determined that
local conduct could be insulated from the operation of the
Anti-Trust laws on the basis of the purely local aims of a
combination, insofar as those aims were not motivated by the
purpose of restraining commerce, and where the means used to
achieve the purpose did not directly touch upon interstate
The decisions cited were Industrial Association of San
Francisco v. United States, 268 U. S. 64
Levering & Garrigues Co. v. Morrin, 289 U.
; United Leather Workers v. Herkert &
Meisel Trunk Co., 265 U. S. 457
cf. Local 167 v. United States, 291 U.
, 291 U. S. 297
and United States v. Hutcheson, 312 U.
United States v. Frankfort Distilleries, 324 U.
, and authorities cited.
Cf. United States v. Socony-Vacuum Oil Co.,
310 U. S. 150
American Tobacco Co. v. United States, 328 U.
; United States v. Patten, 226 U.
; Swift & Co. v. United States,
196 U. S. 375
Each case involved outlawed practices by persons who were both
purchasers and sellers, and forbidden effects upon sellers as well
as purchasers and consumers.
See note 16
Compare Arkadelphia Milling Co. v. St. Louis Southwestern R.
Co., 249 U. S. 134
with Cloverleaf Butter Co. v. Patterson, 315 U.
Swift & Co. v. United States, 196 U.
; American Tobacco Co. v. United States,
328 U. S. 781
United States v. Aluminum Co. of America,
The natural factors include the peculiar nature of the crop in
its limitation to a single primary and commercially profitable use,
the necessity for immediate and nearby marketing to follow directly
upon harvesting, and the well known fact that sugar beets are grown
only in widely scattered regions specially adapted to the crop in
soil, climate, and availability of water in large quantities during
the growing season.
Resulting in large part from the natural limitations stated in
note 20 and the fact that
extracting the sugar content from the beets is an elaborate and
technical process is the further important fact that the processing
cannot be done by the growers individually
or even in small
cooperative groups, but requires specialized and large scale
business organization, equipment, and investment. All these
factors, and perhaps others, combine to make the refining stage of
the industry a specialized manufacturing one to be carried on
separately from growing, to establish the refiners' key place in
the entire industry, and thus to leave the growers completely at
the refiners' mercy for the profitable production of beets except
as the latter may compete among themselves.
See note 20
It is suggested that Parker v. Brown, 317 U.
, is inconsistent with our conclusion here. The
Court there held first that the Sherman Act did not apply because
the program was sponsored by the California. Contrary to the
present suggestion, the opinion assumes that the relation between
the intrastate and the interstate commerce in raisins was
sufficient to justify federal regulation if the state-sponsored
program of prorating had been "organized and made effective solely
by virtue of a contract, combination, or conspiracy of private
persons, individual or corporate." 317 U.S. at 317 U. S. 350
The case therefore contains no suggestion, on the facts or on the
law, contrary to the result now reached.
See note 5
of explaining the deletion, the record contains only the statement
of the stipulation, cf. note 1
that the amended complaint eliminated "what the
Court considered an ambiguity in the [original] complaint." With no
further support from the record, it has been assumed that the
ambiguity so elided was the reference to restraint of interstate
trade in sugar, and hence the petitioners, in making it, stated
themselves out of court.
Apart from the fact that the elision did not affect numerous
other like allegations, see note 6 and text
the deletion included the specifications
of both "sugar and sugar beets." From this the literal inference,
if any of the sort could be made, would be that the elision was
intended to withdraw all charges of monopoly or restraint of trade,
whether in sugar or in beets, and thus to concede there was no case
under the Sherman Act, a conclusion obviously at war with the
remaining allegations of restraint of trade in both sugar and sugar
But if any difference between the two could be assumed as having
been intended, it is much more likely that the supposed ambiguity
deleted arose from the reference to interstate trade in beets,
since the allegation as a whole referred only to "interstate trade
and commerce," and, on the facts pleaded, the only trade in beets
was intrastate (considered apart, as respondent would do, from its
relation to and effects upon the trade in sugar).
In any event, the case is to be decided upon the sum of the
allegations of the amended complaint, not upon conjecture as to why
a particular and, we think, immaterial amendment of one allegation
was made. Indeed, the entire allegation could have been elided
without affecting the substance or validity of the remainder of the
amended complaint to state a cause of action under the Sherman Act.
There was more than enough without it.
in the allegation quoted in note 6
as well as others set forth in the text
preceding that note.
MR. JUSTICE JACKSON with whom MR. JUSTICE FRANKFURTER joins,
It appears to me that the Court's opinion is based on
assumptions of fact which the petitioner disclaimed in the court
below. These assumptions are permissible inferences from the
amended complaint only if we disregard the way in which the
amendments came about.
Page 334 U. S. 247
On hearing, the trial judge apparently considered that a cause
of action would be stated only if the complaint alleged that the
growing contracts affected the price of sugar in interstate
commerce. But the contracts accompanying the pleadings indicated
that the effects ran in the other direction. The market price of
interstate sugar was the base on which the price of beets was to be
figured. The latter price was derived from the income which
respondent and others received from sugar sold in the open market
over the period of a year. The trial judge therefore suggested that
the references to restraint of trade in sugar in interstate
commerce created an ambiguity in the complaint. Accordingly, the
plaintiff, at the suggestion of the court and for the specific
purpose of this appeal, filed an amended complaint which completely
eliminated the charge that the agreements complained of affected
the price of sugar in interstate commerce, and eliminated the two
"to enable the Court herein to pass upon the sufficiency of the
first count and, further, to make possible a speedy and inexpensive
review by appeal if the Court held that the first count was
The District Court then held that, since no beets
Page 334 U. S. 248
whatever moved in interstate commerce, and since there was no
charge in the amended complaint that the cost or quality of the
product which did move in interstate commerce was in any way
affected, no cause of action was
Page 334 U. S. 249
stated. The appeal was taken, and the Circuit Court of Appeals
This Court, however, decides the case as though the original
complaint as it related to sugar had not only remained unchanged,
but had been proved by evidence. Despite the deletion from the
complaint of the allegation concerning the price of sugar, the
Court assumes, without allegation or evidence, that the price of
sugar is affected, and, on that basis, builds its thesis that the
Sherman Act has been violated. I think, in fairness to the
litigants and the District Court, the petitioner's case should be
disposed of here on the same basis on which it was pleaded to the
On the proceedings in the courts below, I would affirm the
judgment of the District Court.
* The full text of the Stipulation and Order which was executed
by counsel for both parties, and by the District Judge, is as
"Whereas, in oral argument on November 13, 1945, on the motion
of defendant to dismiss, etc., Hon. Ben Harrison, the United States
District Judge before whom said matter was argued, stated from the
bench to counsel herein that he felt that the first cause of
action, if supplemented by copies of the contracts attached to the
defendant's motion to dismiss, would not state facts sufficient to
constitute a cause of action, and suggested that it would be a
tremendous saving of time and expense if the complaint were amended
(a) by setting forth copies of the agreements involved in the first
count, (b) by eliminating what the Court considered an ambiguity in
the complaint, and (c) by the parties' entering into a stipulation
to eliminate from the pleadings, for the purpose of the appeal only
and without prejudice to the rights of the plaintiffs, the second
and third causes of action, so as to enable the Court herein to
pass upon the sufficiency of the first count on its merits and,
further, to make possible a speedy and inexpensive review by appeal
if the Court held that the first count was insufficient;"
"Now, Wherefore, the parties stipulate, without plaintiffs'
waiving their rights under the second and third counts and without
prejudice to any of plaintiffs' rights thereunder, as follows,
"1. Plaintiffs will file an amended complaint herein, attaching
copies of the forms of contract in use in 1938, 1939, 1940, and
1941, and omitting the second and third counts."
"2. Said omission of the said second and third counts shall be
without prejudice to any of the rights of the plaintiffs as to any
cause or causes of action included or includible therein by
amendment, and shall not be a retraxit or a dismissal with
"3. Defendant herein waives, for the period of time hereinafter
set forth, any and all statutes of limitations now or hereafter
applicable to the second or third causes of action or any matters
therein set forth or includible therein by amendment, and waives
the defense of laches as to the second and third causes of action
or any matters therein set forth or includible therein by
"4. Plaintiffs may at any time prior to six months after the
decision on appeal as to the sufficiency of the first count has
become final, either amend the amended complaint herein by
realleging said second and third counts or any portion of either,
or, at any time during said period, file a separate action or
actions setting forth said second and third counts or any portion
of either, all with the same force and effect as if said second and
third counts were continuously included herein as second and third
counts from the date of the commencement of this action."
"5. The waiver of the statute of limitations and of the defense
of laches herein set forth, and the stipulation permitting the
amendment of the amended complaint or the filing of a separate
action or actions hereinabove set forth, shall continue until six
months after the determination on appeal as to the sufficiency of
the first count has become final."