The Federal Trade Commission v. American Tobacco Company case in 1926 revolved around the issue of unfair competition and deceptive practices by the tobacco company. The FTC accused American Tobacco Company of using misleading advertising to promote its products, thereby violating Section 5 of the Federal Trade Commission Act which prohibits "unfair or deceptive acts or practices in commerce." However, the Supreme Court ruled in favor of American Tobacco Company, stating that while their business methods might be viewed as harsh and aggressive, they did not constitute an unfair method of competition under federal law. This decision was based on a narrow interpretation of what constituted 'unfair' trade practices at that time.

The dissenting opinion in the Federal Trade Commission v. American Tobacco Company case argued that the majority's decision was an overreach of federal power and a misinterpretation of antitrust laws. The dissenters believed that there was no evidence to suggest that the American Tobacco Company had engaged in unfair methods of competition, as defined by Section 5 of the Federal Trade Commission Act. They contended that merely being large or successful does not constitute illegality under this law, nor does it automatically lead to a suppression of competition. Furthermore, they disagreed with the majority's view on price-fixing agreements among competitors, arguing such arrangements could be legal if they did not unduly restrain trade or create monopolies. In their view, these agreements were part and parcel of normal business operations rather than inherently anti-competitive practices.