# United States v. U.S. Steel (1920) **Argued:** March 1917 · **Reargued:** October 1919 · **Decided:** March 1, 1920 · **4–3, Justice Joseph McKenna** · 251 U.S. 417 The decision that made **size itself lawful** for a quarter century, and the precise holding [[Learned Hand]] repudiated in [[United States v. Alcoa]]. [[J.P. Morgan]] had assembled the corporation in 1901 out of Carnegie Steel and nine other firms — the first billion-dollar company, holding something like 80–90% of national output at formation, down to roughly half by the time of suit. Justices McReynolds and Brandeis both recused (McReynolds had been Attorney General when the case was prepared), leaving seven to decide it. ## The holding The government's case rested partly on the "Gary dinners" — gatherings hosted by chairman Elbert Gary at which the industry's executives coordinated prices. The Court's answer was that the dinners had been abandoned before suit, no competitor complained of coercion, and no customer complained at all: > "shall we declare the law to be that size is an offense, even though it minds its own business, because what it does is imitated? ... But we must adhere to the law, and the law does not make mere size an offense, or the existence of unexerted power an offense. It requires overt acts." Justice Day, dissenting with Pitney and Clarke, thought the conclusion "does violence to the policy which the law was intended to enforce" and amounted to "a practical nullification of the act itself." ## The unexerted-power doctrine The rule that emerged — **a dominant firm violates §2 only through overt anticompetitive acts, never through structure alone** — is the high-water mark of American structural permissiveness. Combined with the [[Rule of Reason]] and the *E. C. Knight* commerce reasoning, it meant that after 1920 a corporation could hold half a national market indefinitely so long as it behaved politely. That held until 1945, when Hand wrote in *Alcoa* that Congress "did not condone 'good trusts' and condemn 'bad' ones; it forbad all," and that a firm which maintains 90% by anticipating demand has monopolized whether or not it committed identifiable bad acts. The irony is that the pendulum swung all the way back. *Trinko* (2004) restored something close to McKenna's rule for the modern era — monopoly power and monopoly pricing are "an important element of the free-market system" absent "an element of anticompetitive conduct." See [[Verizon v. Trinko]] and [[US Antitrust and Monopoly Timeline]].