In the 1944 case of Allen Bradley Co. v. Local Union No. 3, International Brotherhood of Electrical Workers, the U.S Supreme Court ruled that labor unions could be held liable for antitrust violations under certain circumstances. The court found that a union and manufacturers had conspired to create a closed shop in New York City's electrical equipment industry which effectively eliminated competition from non-unionized firms outside the city by refusing to handle their products unless they opened plants within city limits and employed only union members. This was deemed an unreasonable restraint on trade as it violated Section 1 of the Sherman Antitrust Act due to its monopolistic nature and negative impact on interstate commerce.

In the dissenting opinion for Allen Bradley Co. v. Local Union No. 3, Justice Frank Murphy argued that the majority's decision to allow a labor union and employers to conspire in order to monopolize an industry was fundamentally flawed and contrary to public policy. He contended that such agreements were inherently anti-competitive, stifling competition by excluding nonunion workers from employment opportunities and preventing out-of-state companies from entering the market. Furthermore, he asserted that these practices violated federal antitrust laws designed to promote free trade and protect consumers from price-fixing schemes or other forms of collusion among businesses seeking unfair advantages over their competitors.