# United States v. American Tobacco (1911) **Argued:** January 3–6, 1910 · **Reargued:** January 9–12, 1911 · **Decided:** May 29, 1911 · **8–1, Chief Justice Edward White** · 221 U.S. 106 Decided two weeks after the [[Standard Oil Breakup]], by the same Court, on the same theory — and the two cases together are the reason "trust-busting" entered the language. James Buchanan Duke's combination had absorbed some 250 companies; the suit named 65 corporations and 29 individuals. ## Market position The share depends entirely on which product line you pick, which is why the numbers in circulation range from 22% to 97%. At the peak of the first consolidation the combination held roughly **86% of cigarettes**, about **51% of little cigars**, **26% of smoking tobacco**, and **22% of plug**. The commonly repeated "90% of the tobacco market" is a cigarette figure applied to the whole industry. ## The holding White applied the [[Rule of Reason]] announced in *Standard Oil*: the combination was an unreasonable restraint under §1 and a monopolization under §2, built by absorbing competitors and by predatory tactics. The case was remanded for the lower court to devise > "some plan or method of dissolving the combination and of recreating, out of the elements now composing it, a new condition which shall be honestly in harmony with and not repugnant to the law." Justice Harlan again concurred in the result and dissented from the reasoning, accusing the majority of "judicial legislation" for reading the word "unreasonable" into a statute that says "every." ## The remedy, and why it is the cautionary tale The trust was divided into four principal successors: **American Tobacco, R.J. Reynolds, Liggett & Myers, and P. Lorillard**, with British-American Tobacco and United Cigar Stores separated out. Duke helped design the dissolution plan himself. What emerged was not competition but a stable four-firm oligopoly that raised prices in lockstep for the next half-century, faced a criminal price-fixing conviction in 1946 (*American Tobacco Co. v. United States*), and successfully resisted health regulation into the 1990s. **A monopoly converted into an oligopoly is the standard failure mode of structural relief**, and this is its founding example — the same pattern that turned [[Standard Oil]] into a handful of majors and the seven RBOCs of the [[AT&T Breakup]] back into two carriers within 22 years. Winning the case and changing the market are separate problems. See [[US Antitrust and Monopoly Timeline]].