In 1911 the United States Supreme Court agreed on a "rule of reason" as the principle to apply in antitrust cases. The key case was Standard Oil Company of New Jersey et. al. v. United States. Standard Oil was John D. Rockefeller's "oil trust." The government charged Standard Oil with violating the Sherman Act through unreasonable restraints of trade. The government, and many popular writers, claimed that Standard Oil had used its power to prevent other oil firms from competing with it. Standard Oil, in this view, had become a giant firm through unfair competition. The Supreme Court in 1911 agreed.
The Rule of Reason became the guiding principle of antitrust law after 1911. On a case-by-case basis, the Courts would determine if a firm became large through fair or unfair means. If a company became large through succeeding in fair competition with its rivals, the courts would allow it to remain big. If, as was the situation in 1911 and other famous cases, the courts found that a firm such as Standard Oil had become large unfairly, then the courts ordered them broken up.
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