Final answer:
The Supreme Court's decision in United States v. E. C. Knight clarified the limits of the federal government's regulatory authority under the commerce clause, establishing a key legal precedent that distinguished between commerce and manufacturing.
Step-by-step explanation:
The case of United States v. E. C. Knight is widely considered a significant legal precedent in the context of American antitrust law. In 1895, the U.S. Supreme Court addressed the scope of the federal government's regulatory authority under the Sherman Act in its decision on this case. The Supreme Court ruled that the national government lacked the authority to regulate manufacturing, distinguishing between commerce among states and the production of goods. This distinction was crucial because it placed manufacturing outside the direct purview of the federal regulatory regime, indicating that such activities fell under state control, not federal. As a result, the case clarified the limits of the commerce clause of the Constitution regarding federal control over business operations. The court's reasoning set a precedent that affected subsequent antitrust litigation and regulation for years, shaping the economic landscape regarding federal and state powers in the United States.