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Antitrust Keyed to Areeda, 8th Ed.
Northern Pacific Railway Co. v. United States
Citation:
356 U.S. 1, 78 S.Ct. 514, 21 L.Ed.2d 545 (1958)Facts
In 1864 and 1870, Congress granted the predecessor of Northern Pacific Railway Company approximately 40 million acres of land in Northwestern states to facilitate construction of a railroad from Lake Superior to Puget Sound. The granted lands contained timber, minerals, oil, and land suitable for agriculture, grazing, and industrial purposes. By 1949, Northern Pacific had sold about 37 million acres but reserved mineral rights in 6.5 million acres, with most unsold land being leased. In many sales contracts and most lease agreements, Northern Pacific inserted “preferential routing” clauses requiring grantees or lessees to ship over its lines all commodities produced on the land, provided its rates (and sometimes service) equaled those of competing carriers. These lands were strategically located in checkerboard fashion amid private holdings and within economic distance of transportation facilities. The government filed suit under Section 4 of the Sherman Act, seeking a declaration that these preferential routing agreements were unlawful as unreasonable restraints of trade under Section 1. The district court granted summary judgment for the government and enjoined Northern Pacific from enforcing existing clauses or entering into future agreements containing them.
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