In the case of Boston Store of Chicago v. American Graphophone Company et al., 1917, the U.S Supreme Court was tasked with determining whether a contract that required buyers to sell products at fixed prices constituted illegal price fixing under the Sherman Antitrust Act. The Boston Store had purchased phonographs from American Graphophone and Columbia Phonograph but objected to contractual terms requiring them to maintain set resale prices. They argued this violated antitrust laws designed to promote competition by preventing monopolies and restrictive trade practices. However, in its decision, the court ruled against Boston Store stating that such contracts did not constitute an unlawful restraint on trade as they were part of vertical agreements (between manufacturers and retailers) rather than horizontal ones (among competitors). This ruling essentially allowed for what is known as "resale price maintenance" - where a manufacturer can dictate minimum retail pricing for their product.

In the dissenting opinion for Boston Store of Chicago v. American Graphophone Company, Justice Oliver Wendell Holmes Jr. argued that the Sherman Act did not apply to this case because it was not intended to regulate retail prices or prevent price discrimination between different customers. He believed that the majority's interpretation of the law would lead to absurd results and could potentially criminalize normal business practices such as giving discounts for bulk purchases or charging higher prices in areas where competition is less intense. Furthermore, he disagreed with their view that a manufacturer who sells its products at fixed prices is necessarily engaged in an illegal restraint of trade, arguing instead that such arrangements can often be justified on legitimate economic grounds and should therefore be evaluated on a case-by-case basis rather than being categorically prohibited.