In the Standard Oil Co. of California v. United States case in 1976, the U.S Supreme Court ruled that Standard Oil's exclusive supply contracts with independent gas stations were a violation of antitrust laws, specifically Section 1 of the Sherman Act. The court found that these "requirements contracts," which obligated dealers to purchase all their gasoline and petroleum products from Standard Oil for extended periods (often up to five years), had an adverse effect on competition by preventing other suppliers from entering or expanding within the market. This decision was significant as it clarified how antitrust laws applied to vertical restraints imposed by companies with substantial market power and set a precedent for future cases involving similar issues.

In the dissenting opinion for Standard Oil Co. of California v. United States, Justice William Rehnquist argued that the majority's decision to apply per se illegality to vertical price fixing agreements was a departure from precedent and an overextension of antitrust laws. He contended that previous cases had established a rule of reason approach in evaluating such arrangements, which considers factors like market power and competitive effects rather than automatically deeming them illegal. Rehnquist also criticized the majority's reliance on legislative history, asserting it was not clear enough to justify their interpretation. Furthermore, he expressed concern about potential negative impacts on small businesses unable to compete with larger corporations without these pricing agreements.