United States v. E.C. Knight Co. was a U.S. Supreme Court case that limited Congressional Authority under the Sherman Antitrust Act of 1890 and its application of the Commerce Clause (Article I, Section 8) of the United States Constitution. Through a narrow interpretation of the Commerce Clause Chief Justice Melville Fuller along with 7 concurring Justices asserted that manufacturing was not an element of commerce that could be regulated by Congress pursuant to the Commerce Clause.
The Sherman Antitrust Act of 1890 was established to regulate trust (monopolies) formation that had seen an increase in the past decade which in turn had been burdening competition and interstate commerce. The rise in powerful trusts barred entry into the free market and allowed small groups of industry elites to regulate prices and supply. This legislation made it illegal to create trusts, combinations (monopolies), or pursue any action that would restrain interstate and foreign trade. This landmark case was the first in which the Sherman Antitrust Act was applied.
In an 8-1 decision The Supreme Court of the United States ruled in favor of E.C. Knight Company. The majority opinion, written by Chief Justice Fuller, uses reasoning that manufacturing should be regulated by the state, and declared that there is a distinction between commerce, which is defined as the buying and selling of goods, and manufacturing. He further declared that manufacturing has no hand in commerce in the determination of congressional power. Chief Justice Fuller further stated that Congress is granted the power to suppress monopolies of commerce, but there is no enumerated or implied power to regulate monopolies of manufacturing due to the distinction between manufacturing and commerce. In his strong and influential dissenting opinion Justice Harlan argued that manufacturing affected interstate commerce and therefore should be able to be regulated by the government. Background
The 1890s and decades prior were a time of economic fluctuation uncertainty in the United States and abroad. Many corporations saw opportunity amidst the hardships that competitors and smaller companies within their industry were facing. This period saw an increase in trust formation and the unprecedented growth of large companies gaining extensive control over their respective markets. Congress sought to limit the growth and unethical formation of these trusts and passed the Sherman Antitrust Act of 1890. This act prohibited business actions considered as anti-competitive by the Federal Government and allowed for congressional regulation under the powers of the Commerce Clause.