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In National Society of Professional Engineers v. United States, 435 U.S. 679 (1978), the Supreme Court upheld a lower court decision that nullified a provision in the canons of ethics adopted by the National Society of Professional Engineers as a violation of the Sherman Antitrust Act. The Supreme Court decided that neither First Amendment protections designed to prevent prior restraint of free speech nor the rights of association prevented the government from limiting agreements that might lead to suppression of trade.


Society of Professional Engineers had provision that prohibited engineers from quoting prices before they were hired

The National Society of Professional Engineers had attempted to justify the provision that prohibited engineers from quoting prices until they had been hired as within a “rule of reason” designed to protect the public interest by keeping engineers from understating costs in a manner that might affect public safety.


Court nullified the provision

In his opinion for the majority, Justice John Paul Stevens reviewed anti-trust precedents. The Court had interpreted that law in Goldfarb v. Virginia State Bar (1975) to distinguish regulation of professions from ordinary businesses. The Court had never interpreted the law to prohibit every contract that restrains trade but had interpreted it flexibly to prohibit acts that “were unreasonably restrictive of competitive conditions.”


Although the statement within the canon of ethics was not price fixing, Stevens noted that “no elaborate industry analysis is required to demonstrate the anticompetitive character of such an agreement. It operates as an absolute ban on competitive bidding.” Rejecting the idea that the judgment constituted “an unconstitutional prior restraint on speech and an unconstitutional prohibition against free association,” Stevens wrote that “the District Court was empowered to fashion appropriate restraints on the Society’s future activities both to avoid a recurrence of the violation and to eliminate its consequences.”


Justice Harry A. Blackmun wrote a concurring opinion, joined by Chief Justice Warren E. Burger, suggesting that part of the majority decision might not have left “enough elbowroom for realistic application of the Sherman Act to professional services.” Burger wrote a partial dissent from that part of the decision prohibiting the society from publishing its views that competitive bidding was unethical.


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