In the 1928 case Baltimore & Ohio Railroad Company et al. v. United States et al., the U.S Supreme Court ruled that a railroad company could not charge more for a short haul than for a long one over the same line in the same direction, even if there was competition on shorter routes but none on longer ones. The Interstate Commerce Commission had previously ordered railroads to cease this practice of charging higher rates for shorter distances, which violated section 4 of the Interstate Commerce Act (the "long and short haul clause"). The railroads argued that they should be allowed to charge less where they faced competition from water carriers or other means of transport. However, their appeal was rejected by both lower courts and then by Supreme Court justices who upheld these rulings unanimously.

In the dissenting opinion for Baltimore & Ohio Railroad Company v. United States, it was argued that the Interstate Commerce Commission (ICC) did not have the authority to mandate a specific division of joint rates between railroads. The dissenting justices contended that such power would essentially allow ICC to regulate internal affairs and management of private businesses, which is beyond its jurisdiction as defined by Congress. They believed this case represented an overreach into corporate decision-making processes and could set a dangerous precedent for future governmental intervention in business operations. Furthermore, they expressed concerns about potential negative impacts on competition among railroad companies due to imposed rate divisions.