In the case of Liggett & Myers Tobacco Company v. United States, 1926, the U.S Supreme Court ruled in favor of the government's right to regulate interstate commerce under its antitrust laws. The tobacco company had been accused by the federal government of violating these laws through a series of mergers that resulted in an alleged monopoly over cigarette production and sales. The court held that such consolidation was indeed anti-competitive and therefore illegal under existing legislation - specifically, Section 7 of the Clayton Act which prohibits acquisitions or mergers that may substantially lessen competition or tend to create a monopoly. This decision reinforced federal power to prevent monopolies from forming via corporate consolidations.

In the dissenting opinion for Liggett & Myers Tobacco Company v. United States, Justice McReynolds argued that the Sherman Act was not intended to prohibit price discrimination or control competition in a way that would discourage businesses from making legitimate efforts to increase their market share. He believed that it was natural and necessary for companies to compete with each other by offering lower prices or better products, and this should not be considered illegal under antitrust laws. Furthermore, he disagreed with the majority's interpretation of "restraint of trade," arguing that it should only apply to practices which are clearly harmful or unfair, rather than those which simply result in one company gaining an advantage over its competitors. In his view, the court had overstepped its bounds by interfering too much in business affairs and stifling healthy competition.