In the 1945 case American Tobacco Co. et al. v. United States, the Supreme Court ruled that four major tobacco companies had violated antitrust laws by conspiring to monopolize and restrain trade in violation of the Sherman Antitrust Act of 1890. The court found that these corporations controlled approximately 80% of all domestic leaf tobacco purchases, which they used to manipulate prices and stifle competition from smaller businesses in a variety of ways including price-fixing agreements and exclusive contracts with wholesalers or retailers for their products' distribution rights. This decision reaffirmed the government's authority to regulate large industries under federal law when they engage in anti-competitive practices detrimental to consumers or other businesses.

In the dissenting opinion for American Tobacco Co. et al. v. United States, Justice Frankfurter argued that the majority's decision to find the tobacco companies guilty of violating antitrust laws was based on a misinterpretation of those laws and an overreach of judicial power. He contended that Congress had not intended for these laws to punish businesses simply because they were successful or dominant in their industry, but rather only if they engaged in unfair practices to achieve or maintain this dominance. Furthermore, he believed that it was inappropriate for courts to make determinations about what constituted "reasonable" business behavior; such decisions should be left up to lawmakers and regulatory agencies with more expertise in economic matters.