In 1935, Socony-Vacuum Oil Company, Inc., and several other midwestern oil companies (defendants) met and verbally agreed to divide up the spot market for gasoline so that each oil company would be matched with an independent refinery. Whenever spot-market gasoline became available, the designated oil company would purchase the gasoline at market price. The effect of the arrangement was to remove the unpredictability of spot gasoline as a market factor on the price of gasoline at retail. The price of gasoline became stabilized at a certain price point, and the oil companies began to charge more at the retail level. The United States (plaintiff) brought a complaint, alleging that the oil companies had engaged in unlawful concerted action in violation of the Sherman Act. In district court, a jury returned a verdict for the government. The court of appeals reversed, finding that the oil companies’ actions should not have been considered a per se violation. The government appealed the decision.