In the case of Northern Pacific Railway Company et al. v. Puget Sound & Willapa Harbor Railway Company, 1918, the Supreme Court was asked to determine whether a contract between two railway companies violated antitrust laws. The Northern Pacific Railway had granted exclusive rights to use its tracks and facilities to Puget Sound & Willapa Harbor Railway in exchange for an agreement that Puget would not compete with Northern Pacific on certain routes. A lower court ruled this as a violation of the Sherman Antitrust Act because it restrained trade by eliminating competition on those routes. However, upon appeal, the Supreme Court reversed this decision stating that such agreements were common in railroading due to practical necessities and did not necessarily constitute restraint of trade if they served legitimate business purposes without unduly suppressing competition. The court held that while exclusivity could potentially be used anti-competitively, it wasn't inherently so; thus each case needed individual examination rather than blanket prohibition under antitrust laws.

In the dissenting opinion for Northern Pacific Railway Company et al. v. Puget Sound & Willapa Harbor Railway Company, Justice Holmes disagreed with the majority's interpretation of the contract between Northern Pacific and Puget Sound. He argued that there was no explicit provision in their agreement which prevented Northern Pacific from building a competing line or station, nor did it guarantee exclusive rights to Puget Sound over any particular territory. Furthermore, he contended that even if such an implicit understanding existed, it would be unenforceable due to its anti-competitive nature under federal law at that time. Therefore, according to Justice Holmes' view, Northern Pacific should not have been held liable for breach of contract as determined by the majority ruling.