Mogul Steamship Co. V. Mcgregor 1889(Case Summary)

This influential case explored the limits of lawful competition and the principle of damnum sine injuria (damage without legal injury), emphasizing that actions taken in furtherance of fair business competition do not constitute a legal wrong, even if they cause economic harm to competitors.

Facts of Mogul Steamship Co. v Mcgregor

1. Mogul Steamship Co. operated ships for trading between China and England.
2. McGregor and other shipping companies formed a trade association to monopolize the shipping trade.
3. The association offered rebates and discounted rates to customers who exclusively used their services, effectively excluding Mogul Steamship Co. from the market.
4. Mogul Steamship Co. suffered significant losses and sued, claiming the association’s practices were unlawful and amounted to restraint of trade.

Issues framed

1. Whether the formation of a trade association that drives competitors out of the market constitutes an actionable wrong?
2. Whether economic harm caused by lawful business strategies give rise to a claim for damages?

Judgment of Mogul Steamship Co. v Mcgregor

 The court applied common law principles of competition and the doctrine of damnum sine injuria.

The court recognized that while the plaintiff suffered economic harm, the defendants’ actions were not unlawful. The practices were aimed at securing a competitive advantage, a legitimate goal in a free market. It was emphasized that business competition is not actionable unless it involves fraud, coercion, or other unlawful means.

The House of Lords ruled in favor of McGregor, dismissing Mogul Steamship Co.’s claim.