delivered the opinion of the Court.
We granted certiorari to determine whether a parent corporation and its wholly owned subsidiary are legally capable of conspiring with each other under § 1 of the Sherman Act.
I
A.
The predecessor to petitioner Regal Tube Co. was established in Chicago in 1955 to manufacture structural steel *756tubing used in heavy equipment, cargo vehicles, and construction. From 1955 to 1968 it remained a wholly owned subsidiary of C. E. Robinson Co. In 1968 Lear Siegler, Inc., purchased Regal Tube Co. and operated it as an unincorporated division. David Grohne, who had previously served as vice president and general manager of Regal, became president of the division after the acquisition.
In 1972 petitioner Copperweld Corp. purchased the Regal division from Lear Siegler; the sale agreement bound Lear Siegler and its subsidiaries not to compete with Regal in the United States for five years. Copperweld then transferred Regal’s assets to a newly formed, wholly owned Pennsylvania corporation, petitioner Regal Tube Co. The new subsidiary continued to conduct its manufacturing operations in Chicago but shared Copperweld’s corporate headquarters in Pittsburgh.
Shortly before Copperweld acquired Regal, David Grohne accepted a job as a corporate officer of Lear Siegler. After the acquisition, while continuing to work for Lear Siegler, Grohne set out to establish his own steel tubing business to compete in the same market as Regal. In May 1972 he formed respondent Independence Tube Corp., which soon secured an offer from the Yoder Co. to supply a tubing mill. In December 1972 respondent gave Yoder a purchase order to have a mill ready by the end of December 1973.
When executives at Regal and Copperweld learned of Grohne’s plans, they initially hoped that Lear Siegler’s non-competition agreement would thwart the new competitor. Although their lawyer advised them that Grohne was not bound by the agreement, he did suggest that petitioners might obtain an injunction against Grohne’s activities if he made use of any technical information or trade secrets belonging to Regal. The legal opinion was given to Regal and Copperweld along with a letter to be sent to anyone with whom Grohne attempted to deal. The letter warned that Copperweld would be “greatly concerned if [Grohne] contem*757plates entering the structural tube market... in competition with Regal Tube” and promised to take “any and all steps which are necessary to protect our rights under the terms of our purchase agreement and to protect the know-how, trade secrets, etc., which we purchased from Lear Siegler.” Petitioners later asserted that the letter was intended only to prevent third parties from developing reliance interests that might later make a court reluctant to enjoin Grohne’s operations.
When Yoder accepted respondent’s order for a tubing mill on February 19, 1973, Copperweld sent Yoder one of these letters; two days later Yoder voided its acceptance. After respondent’s efforts to resurrect the deal failed, respondent arranged to have a mill supplied by another company, which performed its agreement even though it too received a warning letter from Copperweld. Respondent began operations on September 13,1974, nine months later than it could have if Yoder had supplied the mill when originally agreed.
Although the letter to Yoder was petitioners’ most successful effort to discourage those contemplating doing business with respondent, it was not their only one. Copperweld repeatedly contacted banks that were considering financing respondent’s operations. One or both petitioners also approached real estate firms that were considering providing plant space to respondent and contacted prospective suppliers and customers of the new company.
B
In 1976 respondent filed this action in the District Court against petitioners and Yoder.1 The jury found that *758Copperweld and Regal had conspired to violate §1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1, but that Yoder was not part of the conspiracy. It also found that Copperweld, but not Regal, had interfered with respondent’s contractual relationship with Yoder; that Regal, but not Copperweld, had interfered with respondent’s contractual relationship with a potential customer of respondent, Deere Plow & Planter Works, and had slandered respondent to Deere; and that Yoder had breached its contract to supply a tubing mill.
At a separate damages phase, the judge instructed the jury that the damages for the antitrust violation and for the inducement of the Yoder contract breach should be identical and not double counted. The jury then awarded $2,499,009 against petitioners on the antitrust claim, which was trebled to $7,497,027. It awarded $15,000 against Regal alone on the contractual interference and slander counts pertaining to Deere. The court also awarded attorney’s fees and costs after denying petitioners’ motions for judgment n.o.v. and for a new trial.
C
The United States Court of Appeals for the Seventh Circuit affirmed. 691 F. 2d 310 (1982). It noted that the exoneration of Yoder from antitrust liability left a parent corporation and its wholly owned subsidiary as the only parties to the § 1 conspiracy. The court questioned the wisdom of subjecting an “intra-enterprise” conspiracy to antitrust liability, when the same conduct by a corporation and an unincorpo*759rated division would escape liability for lack of the requisite two legal persons. However, relying on its decision in Photovest Corp. v. Fotomat Corp., 606 F. 2d 704 (1979), cert. denied, 445 U. S. 917 (1980), the Court of Appeals held that liability was appropriate “when there is enough separation between the two entities to make treating them as two independent actors sensible.” 691 F. 2d, at 318. It held that the jury instructions took account of the proper factors for determining how much separation Copperweld and Regal in fact maintained in the conduct of their businesses.2 It also held that there was sufficient evidence for the jury to conclude that Regal was more like a separate corporate entity than a mere service arm of the parent.
We granted certiorari to reexamine the intra-enterprise conspiracy doctrine, 462 U. S. 1131 (1983), and we reverse.
Review of this case calls directly into question whether the coordinated acts of a parent and its wholly owned subsidiary can, in the legal sense contemplated by § 1 of the Sherman Act, constitute a combination or conspiracy.3 The so-called “intra-enterprise conspiracy” doctrine provides that § 1 liability is not foreclosed merely because a parent and its subsidiary are subject to common ownership. The doctrine derives from declarations in several of this Court’s opinions.
*760In no case has the Court considered the merits of the intra-enterprise conspiracy doctrine in depth. Indeed, the concept arose from a far narrower rule. Although the Court has expressed approval of the doctrine on a number of occasions, a finding of intra-enterprise conspiracy was in all but perhaps one instance unnecessary to the result.
The problem began with United States v. Yellow Cab Co., 332 U. S. 218 (1947). The controlling shareholder of the Checker Cab Manufacturing Corp., Morris Markin, also controlled numerous companies operating taxicabs in four cities. With few exceptions, the operating companies had once been independent and had come under Markin’s control by acquisition or merger. The complaint alleged conspiracies under §§ 1 and 2 of the Sherman Act among Markin, Checker, and five corporations in the operating system. The Court stated that even restraints in a vertically integrated enterprise were not “necessarily” outside of the Sherman Act, observing that an unreasonable restraint
“may result as readily from a conspiracy among those who are affiliated or integrated under common ownership as from a conspiracy among those who are otherwise independent. Similarly, any affiliation or integration flowing from an illegal conspiracy cannot insulate the conspirators from the sanctions which Congress has imposed. The corporate interrelationships of the conspirators, in other words, are not determinative of the applicability of the Sherman Act. That statute is aimed at substance rather than form. See Appalachian Coals, Inc. v. United States, 288 U. S. 344, 360-361, 376-377.
“And so in this case, the common ownership and control of the various corporate appellees are impotent to liberate the alleged combination and conspiracy from the impact of the Act. The complaint charges that the restraint of interstate trade was not only effected by the combination of the appellees but was the primary object *761of the combination. The theory of the complaint... is that ‘dominating power’ over the cab operating companies ‘was not obtained by normal expansion . . . but by deliberate, calculated purchase for control.’” Id., at 227-228 (emphasis added) (quoting United States v. Reading Co., 253 U. S. 26, 57 (1920)).
It is the underscored language that later breathed life into the intra-enterprise conspiracy doctrine. The passage as a whole, however, more accurately stands for a quite different proposition. It has long been clear that a pattern of acquisitions may itself create a combination illegal under § 1, especially when an original anticompetitive purpose is evident from the affiliated corporations’ subsequent conduct.4 The Yellow Cab passage is most fairly read in light of this settled rule. In Yellow Cab, the affiliation of the defendants was irrelevant because the original acquisitions were themselves illegal.5 An affiliation “flowing from an illegal conspiracy” would not avert sanctions. Common ownership and control were irrelevant because restraint of trade was “the primary object of the combination,” which was created in a “‘delib*762erate, calculated’ ” manner. Other language in the opinion is to the same effect.6
The Court’s opinion relies on Appalachian Coals, Inc. v. United States, 288 U. S. 344 (1933); however, examination of that case reveals that it gives very little support for the broad doctrine Yellow Cab has been thought to announce. On the contrary, the language of Chief Justice Hughes speaking for the Court in Appalachian Coals supports a contrary conclusion. After observing that “[t]he restrictions the Act imposes are not mechanical or artificial,” 288 U. S., at 360, he went on to state:
*763“The argument that integration may be considered a normal expansion of business, while a combination of independent producers in a common selling agency should be treated as abnormal — that one is a legitimate enterprise and the other is not — makes but an artificial distinction. The Anti-Trust Act aims at substance.” Id., at 377.7
As we shall see, infra, at 771-774, it is the intra-enterprise conspiracy doctrine itself that “makes but an artificial distinction” at the expense of substance.
The ambiguity of the Yellow Cab holding yielded the one case giving support to the intra-enterprise conspiracy doctrine.8 In Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211 (1951), the Court held that two wholly owned subsidiaries of a liquor distiller were guilty under § 1 of the Sherman Act for jointly refusing to supply a wholesaler who declined to abide by a maximum resale pricing scheme. The Court offhandedly dismissed the defendants’ argument *764that “their status as ‘mere instrumentalities of a single manufacturing-merchandizing unit’ makes it impossible for them to have conspired in a manner forbidden by the Sherman Act.” Id., at 215. With only a citation to Yellow Cab and no further analysis, the Court stated that the
“suggestion runs counter to our past decisions that common ownership and control does not liberate corporations from the impact of the antitrust laws”
and stated that this rule was “especially applicable” when defendants “hold themselves out as competitors.” 340 U. S., at 215.
Unlike the Yellow Cab passage, this language does not pertain to corporations whose initial affiliation was itself unlawful. In straying beyond Yellow Cab, the Kiefer-Stewart Court failed to confront the anomalies an intra-enterprise doctrine entails. It is relevant nonetheless that, were the ease decided today, the same result probably could be justified on the ground that the subsidiaries conspired with wholesalers other than the plaintiff.9 An intra-enterprise conspiracy doctrine thus would no longer be necessary to a finding of liability on the facts of Kiefer-Stewart.
Later cases invoking the intra-enterprise conspiracy doctrine do little more than cite Yellow Cab or Kiefer-Stewart, and in none of the cases was the doctrine necessary to the result reached. Timken Roller Bearing Co. v. United States, 341 U. S. 593 (1951), involved restrictive horizontal agree*765ments between an American corporation and two foreign corporations in which it owned 30 and 50 percent interests respectively. The Timken Court cited Kiefer Stewart to show that “[t]he fact that there is common ownership or control of the contracting corporations does not liberate them from the impact of the antitrust laws.” 341 U. S., at 598. But the relevance of this statement is unclear. The American defendant in Timken did not own a majority interest in either of the foreign corporate conspirators and, as the District Court found, it did not control them.10 Moreover, as in Yellow Cab, there was evidence that the stock acquisitions were themselves designed to effectuate restrictive practices.11 The Court’s reliance on the intra-enterprise conspiracy doctrine was in no way necessary to the result.
The same is true of Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134 (1968), which involved a conspiracy among a parent corporation and three subsidiaries to impose various illegal restrictions on plaintiff franchisees. The Court did suggest that, because the defendants
“availed themselves of the privilege of doing business through separate corporations, the fact of common own*766ership could not save them from any of the obligations that the law imposes on separate entities [citing Yellow Cab and Timken].” Id., at 141-142.
But the Court noted immediately thereafter that “[i]n any event” each plaintiff could “clearly” charge a combination between itself and the defendants or between the defendants and other franchise dealers. Ibid. Thus, for the same reason that a finding of liability in Kiefer-Stewart could today be justified without reference to the intra-enterprise conspiracy doctrine, see n. 9, supra, the doctrine was at most only an alternative holding in Perma Life Mufflers.
In short, while this Court has previously seemed to acquiesce in the intra-enterprise conspiracy doctrine, it has never explored or analyzed in detail the justifications for such a rule; the doctrine has played only a relatively minor role in the Court’s Sherman Act holdings.
III
Petitioners, joined by the United States as amicus curiae, urge us to repudiate the intra-enterprise conspiracy doctrine. 12 The central criticism is that the doctrine gives undue significance to the fact that a subsidiary is separately incorporated and thereby treats as the concerted activity of two *767entities what is really unilateral behavior flowing from decisions of a single enterprise.
We limit our inquiry to the narrow issue squarely presented: whether a parent and its wholly owned subsidiary are capable of conspiring in violation of § 1 of the Sherman Act. We do not consider under what circumstances, if any, a parent may be liable for conspiring with an affiliated corporation it does not completely own.
A
The Sherman Act contains a “basic distinction between concerted and independent action.” Monsanto Co. v. Spray-Rite Service Corp., 465 U. S. 752, 761 (1984). The conduct of a single firm is governed by § 2 alone and is unlawful only when it threatens actual monopolization.13 It is not enough that a single firm appears to “restrain trade” unreasonably, for even a vigorous competitor may leave that impression. For instance, an efficient firm may capture unsatisfied customers from an inefficient rival, whose own ability to compete may suffer as a result. This is the rule of the marketplace and is precisely the sort of competition that promotes the consumer interests that the Sherman Act aims to foster.14 In part because it is sometimes difficult to *768distinguish robust competition from conduct with long-run anticompetitive effects, Congress authorized Sherman Act scrutiny of single firms only when they pose a danger of monopolization. Judging unilateral conduct in this manner reduces the risk that the antitrust laws will dampen the competitive zeal of a single aggressive entrepreneur.
Section 1 of the Sherman Act, in contrast, reaches unreasonable restraints of trade effected by a "contract, combination ... or conspiracy” between separate entities. It does not reach conduct that is “wholly unilateral.” Albrecht v. Herald Co., 390 U. S. 145, 149 (1968); accord, Monsanto Co. v. Spray-Rite Corp., supra, at 761. Concerted activity subject to § 1 is judged more sternly than unilateral activity under §2. Certain agreements, such as horizontal price fixing and market allocation, are thought so inherently anti-competitive that each is illegal per se without inquiry into the harm it has actually caused. See generally Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958). Other combinations, such as mergers, joint ventures, and various vertical agreements, hold the promise of increasing a firm’s efficiency and enabling it to compete more effectively. Accordingly, such combinations are judged under a rule of reason, an inquiry into market power and market structure designed to assess the combination’s actual effect. See, e. g., Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36 (1977); Chicago Board of Trade v. United States, 246 U. S. 231 (1918). Whatever form the inquiry takes, however, it is not necessary to prove that concerted activity threatens monopolization.
The reason Congress treated concerted behavior more strictly than unilateral behavior is readily appreciated. Concerted activity inherently is fraught with anticompetitive *769risk. It deprives the marketplace of the independent centers of decisionmaking that competition assumes and demands. In any conspiracy, two or more entities that previously pursued their own interests separately are combining to act as one for their common benefit. This not only reduces the diverse directions in which economic power is aimed but suddenly increases the economic power moving in one particular direction. Of course, such mergings of resources may well lead to efficiencies that benefit consumers, but their anticompetitive potential is sufficient to warrant scrutiny even in the absence of incipient monopoly.
B
The distinction between unilateral and concerted conduct is necessary for a proper understanding of the terms “contract, combination ... or conspiracy” in § 1. Nothing in the literal meaning of those terms excludes coordinated conduct among officers or employees of the same company. But it is perfectly plain that an internal “agreement” to implement a single, unitary firm’s policies does not raise the antitrust dangers that § 1 was designed to police. The officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals. Coordination within a firm is as likely to result from an effort to compete as from an effort to stifle competition. In the marketplace, such coordination may be necessary if a business enterprise is to compete effectively. For these reasons, officers or employees of the same firm do not provide the plurality of actors imperative for a §1 conspiracy.16
*770There is also general agreement that § 1 is not violated by the internally coordinated conduct of a corporation and one of its unincorporated divisions.16 Although this Court has not previously addressed the question,17 there can be little doubt that the operations of a corporate enterprise organized into divisions must be judged as the conduct of a single actor. The existence of an unincorporated division reflects no more than a firm’s decision to adopt an organizational division of labor. A division within a corporate structure pursues the common interests of the whole rather than interests separate from those of the corporation itself; a business enterprise establishes divisions to further its own interests in the most efficient manner. Because coordination between a corporation *771and its division does not represent a sudden joining of two independent sources of economic power previously pursuing separate interests, it is not an activity that warrants § 1 scrutiny.
Indeed, a rule that punished coordinated conduct simply because a corporation delegated certain responsibilities to autonomous units might well discourage corporations from creating divisions with their presumed benefits. This would serve no useful antitrust purpose but could well deprive consumers of the efficiencies that decentralized management may bring.
C
For similar reasons, the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act. A parent and its wholly owned subsidiary have a complete unity of interest. Their objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one. They are not unlike a multiple team of horses drawing a vehicle under the control of a single driver. With or without a formal “agreement,” the subsidiary acts for the benefit of the parent, its sole shareholder. If a parent and a wholly owned subsidiary do “agree” to a course of action, there is no sudden joining of economic resources that had previously served different interests, and there is no justification for § 1 scrutiny.
Indeed, the very notion of an “agreement” in Sherman Act terms between a parent and a wholly owned subsidiary lacks meaning. A § 1 agreement may be found when “the conspirators had a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement.” American Tobacco Co. v. United States, 328 U. S. 781, 810 (1946). But in reality a parent and a wholly owned subsidiary always have a “unity of purpose or a common design.” They share a common purpose whether or not the parent keeps a tight rein over the subsidiary; the parent may assert *772full control at any moment if the subsidiary fails to act in the parent’s best interests.18
The intra-enterprise conspiracy doctrine looks to the form of an enterprise’s structure and ignores the reality. Antitrust liability should not depend on whether a corporate subunit is organized as an unincorporated division or a wholly owned subsidiary. A corporation has complete power to maintain a wholly owned subsidiary in either form. The economic, legal, or other considerations that lead corporate management to choose one structure over the other are not relevant to whether the enterprise’s conduct seriously threatens competition.19 Rather, a corporation may adopt the subsidiary form of organization for valid management and related purposes. Separate incorporation may im*773prove management, avoid special tax problems arising from multistate operations, or serve other legitimate interests.20 Especially in view of the increasing complexity of corporate operations, a business enterprise should be free to structure itself in ways that serve efficiency of control, economy of operations, and other factors dictated by business judgment without increasing its exposure to antitrust liability. Because there is nothing inherently anticompetitive about a corporation’s decision to create a subsidiary, the intra-enterprise conspiracy doctrine “impose[s] grave legal consequences upon organizational distinctions that are of de minimis meaning and effect.” Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U. S. 19, 29 (1962).21
If antitrust liability turned on the garb in which a corporate subunit was clothed, parent corporations would be encouraged to convert subsidiaries into unincorporated divisions. Indeed, this is precisely what the Seagram company did after this Court’s decision in Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211 (1951).22 Such an *774incentive serves no valid antitrust goals but merely deprives consumers and producers of the benefits that the subsidiary form may yield.
The error of treating a corporate division differently from a wholly owned subsidiary is readily seen from the facts of this case. Regal was operated as an unincorporated division of Lear Siegler for four years before it became a wholly owned subsidiary of Copperweld. Nothing in this record indicates any meaningful difference between Regal’s operations as a division and its later operations as a separate corporation. Certainly nothing suggests that Regal was a greater threat to competition as a subsidiary of Copperweld than as a division of Lear Siegler. Under either arrangement, Regal might have acted to bar a new competitor from entering the market. In one case it could have relied on economic power from other quarters of the Lear Siegler corporation; instead it drew on the strength of its separately incorporated parent, Copperweld. Prom the standpoint of the antitrust laws, there is no reason to treat one more harshly than the other. As Chief Justice Hughes cautioned, “[idealities must dominate the judgment.” Appalachian Coals, Inc. v. United States, 288 U. S., at 360.23
D
Any reading of the Sherman Act that remains true to the Act’s distinction between unilateral and concerted conduct will necessarily disappoint those who find that distinction arbitrary. It cannot be denied that § l’s focus on concerted *775behavior leaves a “gap” in the Act’s proscription against unreasonable restraints of trade. See post, at 789. An unreasonable restraint of trade may be effected not only by two independent firms acting in concert; a single firm may restrain trade to precisely the same extent if it alone possesses the combined market power of those same two firms. Because the Sherman Act does not prohibit unreasonable restraints of trade as such — but only restraints effected by a contract, combination, or conspiracy — it leaves untouched a single firm’s anticompetitive conduct (short of threatened monopolization) that may be indistinguishable in economic effect from the conduct of two firms subject to § 1 liability.
*774“It is the unlawful combination, tested by the rules of common law and human experience, that is aimed at by this bill, and not the lawful and useful combination.” 21 Cong. Rec. 2457 (1890).
*775We have already noted that Congress left this “gap” for eminently sound reasons. Subjecting a single firm’s every action to judicial scrutiny for reasonableness would threaten to discourage the competitive enthusiasm that the antitrust laws seek to promote. See supra, at 767-769. Moreover, whatever the wisdom of the distinction, the Act’s plain language leaves no doubt that Congress made a purposeful choice to accord different treatment to unilateral and concerted conduct. Had Congress intended to outlaw unreasonable restraints of trade as such, § l’s requirement of a contract, combination, or conspiracy would be superfluous, as would the entirety of §2.24 Indeed, this Court has recog*776nized that § 1 is limited to concerted conduct at least since the days of United States v. Colgate & Co., 250 U. S. 300 (1919). Accord, post, at 789.
The appropriate inquiry in this case, therefore, is not whether the coordinated conduct of a parent and its wholly owned subsidiary may ever have anticompetitive effects, as the dissent suggests. Nor is it whether the term “conspiracy” will bear a literal construction that includes parent corporations and their wholly owned subsidiaries. For if these were the proper inquiries, a single firm’s conduct would be subject to § 1 scrutiny whenever the coordination of two employees was involved. Such a rule would obliterate the Act’s distinction between unilateral and concerted conduct, contrary to the clear intent of Congress as interpreted by the weight of judicial authority. See n. 15, supra. Rather, the appropriate inquiry requires us to explain the logic underlying Congress’ decision to exempt unilateral conduct from § 1 scrutiny, and to assess whether that logic similarly excludes the conduct of a parent and its wholly owned subsidiary. Unless we second-guess the judgment of Congress to limit § 1 to concerted conduct, we can only conclude that the coordinated behavior of a parent and its wholly owned subsidiary falls outside the reach of that provision.
Although we recognize that any “gap” the Sherman Act leaves is the sensible result of a purposeful policy decision by Congress, we also note that the size of any such gap is open *777to serious question. Any anticompetitive activities of corporations and their wholly owned subsidiaries meriting antitrust remedies may be policed adequately without resort to an intra-enterprise conspiracy doctrine. A corporation’s initial acquisition of control will always be subject to scrutiny under § 1 of the Sherman Act and § 7 of the Clayton Act, 38 Stat. 731, 15 U. S. C. §18. Thereafter, the enterprise is fully subject to § 2 of the Sherman Act and § 5 of the Federal Trade Commission Act, 38 Stat. 719, 15 U. S. C. §45. That these statutes are adequate to control dangerous anticompet-itive conduct is suggested by the fact that not a single holding of antitrust liability by this Court would today be different in the absence of an intra-enterprise conspiracy doctrine. It is further suggested by the fact that the Federal Government, in its administration of the antitrust laws, no longer accepts the concept that a corporation and its wholly owned subsidiaries can “combine” or “conspire” under § l.25 Elimination of the intra-enterprise conspiracy doctrine with respect to corporations and their wholly owned subsidiaries will therefore not cripple antitrust enforcement. It will simply eliminate treble damages from private state tort suits masquerading as antitrust actions.
IV
We hold that Copperweld and its wholly owned subsidiary Regal are incapable of conspiring with each other for purposes of § 1 of the Sherman Act. To the extent that prior decisions of this Court are to the contrary, they are disapproved and overruled. Accordingly, the judgment of the Court of Appeals is reversed.
It is so ordered.
*778Justice White took no part in the consideration or decision of this case.The chairman of the board and chief executive officer of both Copperweld and Regal, Phillip H. Smith, was also named as a defendant. In addition, respondents originally charged petitioners and Smith with an attempt to monopolize the market for structural steel tubing in violation of § 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 2. Before *758trial respondent dismissed Smith as a defendant and dismissed its §2 monopolization count.
Petitioners counterclaimed on the ground that respondent and Grohne had used proprietary information belonging to Regal, had competed unfairly by hiring away key Regal personnel, and had interfered with prospective business relationships by filing the lawsuit on the eve of a large Copperweld debenture offering. At the close of the evidence, the court directed a verdict against petitioners on their counterclaims. The disposition of these claims is not at issue before this Court.
The jury was instructed to consider many different factors: for instance, whether Copperweld and Regal had separate management staffs, separate corporate officers, separate clients, separate records and bank accounts, separate corporate offices, autonomy in setting policy, and so on. The jury also was instructed to consider “any other facts that you find are relevant to a determination of whether or not Copperweld and Regal are separate and distinct companies.” App. to Pet. for Cert. B-9.
Section 1 of the Sherman Act provides in pertinent part:
“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony.” 26 Stat. 209, as amended, 15 U. S. C. § 1.
Under the arrangements condemned in Northern Securities Co. v. United States, 193 U. S. 197, 354 (1904) (plurality opinion), “all the stock [a railroad holding company] held or acquired in the constituent companies was acquired and held to be used in suppressing competition between those companies. It came into existence only for that purpose.” In Standard Oil Co. v. United States, 221 U. S. 1 (1911), and United States v. American Tobacco Co., 221 U. S. 106 (1911), the trust or holding company device brought together previously independent firms to lessen competition and achieve monopoly power. Although the Court in the latter case suggested that the contracts between affiliated companies, and not merely the original combination, could be viewed as the conspiracy, id., at 184, the Court left no doubt that “the combination in and of itself” was a restraint of trade and a monopolization, id., at 187.
Contrary to the dissent’s suggestion, post, at 779, 788, n. 18, our point is not that Yellow Cab found only the initial acquisition illegal; our point is that the illegality of the initial acquisition was a predicate for its holding that any postacquisition conduct violated the Act.
When discussing the fact that some of the affiliated Chicago operating companies did not compete to obtain exclusive transportation contracts held by another of the affiliated companies, the Court stated:
“[T]he fact that the competition restrained is that between affiliated corporations cannot serve to negative the statutory violation where, as here, the affiliation is assertedly one of the means of effectuating the illegal conspiracy not to compete.” 332 U. S., at 229 (emphasis added).
The passage quoted in text is soon followed by a cite to United States v. Crescent Amusement Co., 323 U. S. 173, 189 (1944). Crescent Amusement found violations of §§ 1 and 2 by film exhibitors affiliated (in most cases) by 50 percent ownership. The exhibitors used the monopoly power they possessed in certain towns to force film distributors to give them favorable terms in other towns. The Court found it unnecessary to view the distributors as part of the conspiracy, id., at 183, so the Court plainly viewed the affiliated entities themselves as the conspirators. The Crescent Amusement Court, however, in affirming an order of divestiture, noted that such a remedy was appropriate when “creation of the combination is itself the violation.” Id., at 189. This suggests that both Crescent Amusement and Yellow Cab, which cited the very page on which this passage appears, stand for a narrow rule based on the original illegality of the affiliation.
The dissent misconstrues a later passage in Crescent Amusement stating that divestiture need not be limited to those affiliates whose “acquisition was part of the fruits of the conspiracy,” 323 U. S., at 189. See post, at 780-781. This meant only that divestiture could apply to affiliates other than those who were driven out of business by the practices of the original conspirators and who were then acquired illegally to increase the combination’s monopoly power. See 323 U. S., at 181. It did not mean that affiliates acquired for lawful purposes were subject to divestiture.
Appalachian Coals does state that the key question is whether there is an unreasonable restraint of trade or an attempt to monopolize. “If there is, the combination cannot escape because it has chosen corporate form; and, if there is not, it is not to be condemned because of the absence of corporate integration.” 288 U. S., at 377. Appalachian Coals, however, validated a cooperative selling arrangement among independent entities. The statement that intracorporate relationships would be subject to liability under § 1 is thus dictum. The statement may also envision merely the limited rule in Yellow Cab pertaining to acquisitions that are themselves anticompetitive.
In two cases decided soon after Yellow Cab on facts similar to Crescent Amusement, see n. 6, supra, affiliated film exhibitors were found to have conspired in violation of § 1. Schine Chain Theatres, Inc. v. United States, 334 U. S. 110 (1948); United States v. Griffith, 334 U. S. 100 (1948). Griffith simply assumed that the companies were capable of conspiring with each other; Schine cited Yellow Cab and Crescent Amusement for the proposition, 334 U. S., at 116. In both cases, however, an intra-enterprise conspiracy holding was unnecessary not only because the Court found a §2 violation, but also because the affiliated exhibitors had conspired with independent film distributors. See ibid.; Griffith, supra, at 103. n. 6. 109.
Although the plaintiff apparently never acquiesced in the resale price maintenance scheme, Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 182 F. 2d 228, 231 (CA7 1950), rev’d, 340 U. S. 211 (1951), one of the subsidiaries did gain the compliance of other wholesalers after once terminating them for refusing to abide by the pricing scheme. See 182 F. 2d, at 231; 340 U. S., at 213. A theory of combination between the subsidiaries and the wholesalers could now support § 1 relief, whether or not it could have when Kiefer-Stewart was decided. See Albrecht v. Herald Co., 390 U. S. 145, 149-150, and n. 6 (1968); United States v. Parke, Davis & Co., 362 U. S. 29 (1960).
See United States v. Timken Roller Bearing Co., 83 F. Supp. 284, 311-312 (ND Ohio 1949), aff’d as modified, 341 U. S. 593 (1951). The agreement of an individual named Dewar, who owned 24 and 50 percent of the foreign corporations respectively, was apparently required for the American defendant to have its way.
For almost 20 years before they became affiliated by stock ownership, two of the corporations had been party to the sort of restrictive agreements the Timken Court condemned. Three Justices upholding antitrust liability were of the view that Timken’s “interests in the [foreign] companies were obtained as part of a plan to promote the illegal trade restraints” and that the “intercorporate relationship” was “the core of the conspiracy.” Id., at 600-601. Because two Justices found no antitrust violation at all, see id., at 605 (Frankfurter, J., dissenting); id., at 606 (Jackson, J., dissenting), and two Justices did not take part, apparently only Chief Justice Vinson and Justice Reed were prepared to hold that there was a violation even if the initial acquisition itself was not illegal. See id., at 601-602 (Reed, J., joined by Vinson, C. J., concurring).
The doctrine has long been criticized. See, e. g., Areeda, Intra-enterprise Conspiracy in Decline, 97 Harv. L. Rev. 451 (1983); Handler & Smart, The Present Status of the Intracorporate Conspiracy Doctrine, 3 Cardozo L. Rev. 23 (1981); Kempf, Bathtub Conspiracies: Has Seagram Distilled a More Potent Brew?, 24 Bus. Law. 173 (1968); McQuade, Conspiracy, Multicorporate Enterprises, and Section 1 of the Sherman Act, 41 Va. L. Rev. 183 (1955); Rahl, Conspiracy and the Anti-Trust Laws, 44 Ill. L. Rev. 743 (1950); Sprunk, Intra-Enterprise Conspiracy, 9 ABA Antitrust Section Rep. 20 (1956); Stengel, Intra-Enterprise Conspiracy Under Section 1 of the Sherman Act, 35 Miss. L. J. 5 (1963); Willis & Pitofsky, Antitrust Consequences of Using Corporate Subsidiaries, 43 N. Y. U. L. Rev. 20 (1968); Note, “Conspiring Entities” Under Section 1 of the Sherman Act, 95 Harv. L. Rev. 661 (1982); Note, Intra-Enterprise Conspiracy Under Section 1 of the Sherman Act: A Suggested Standard, 75 Mich. L. Rev. 717 (1977).
Section 2 of the Sherman Act provides in pertinent part:
“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.” 26 Stat. 209, as amended, 15 U. S. C. §2. By making a conspiracy to monopolize unlawful, § 2 does reach both concerted and unilateral behavior. The point remains, however, that purely unilateral conduct is illegal only under § 2 and not under § 1. Monopolization without conspiracy is unlawful under § 2, but restraint of trade without a conspiracy or combination is not unlawful under § 1.
For example, the Court has declared that §2 does not forbid market power to be acquired “as a consequence of a superior product, [or] business acumen.” United States v. Grinnell Corp., 384 U. S. 563, 571 (1966). We have also made clear that the “antitrust laws . . . were enacted for ‘the protection of competition, not competitors.’ ” Brunswick Corp. v. Pueblo *768Bowl-O-Mat, Inc., 429 U. S. 477, 488 (1977) (damages for violation of Clayton Act § 7) (quoting Brown Shoe Co. v. United States, 370 U. S. 294, 320 (1962)).
See, e. g., Schwimmer v. Sony Corp. of America, 677 F. 2d 946, 953 (CA2), cert. denied, 459 U. S. 1007 (1982); Tose v. First Pennsylvania Bank, N. A., 648 F. 2d 879, 893-894 (CA3), cert. denied, 454 U. S. 893 (1981); Morton Buildings of Nebraska, Inc. v. Morton Buildings, Inc., 531 F. 2d 910, 916-917 (CA8 1976); Greenville Publishing Co. v. Daily Reflec*770tor, Inc., 496 F. 2d 391, 399 (CA4 1974) (dictum); Chapman v. Rudd Paint & Varnish Co., 409 F. 2d 635, 643, n. 9 (CA9 1969); Poller v. Columbia Broadcasting System, Inc., 109 U. S. App. D. C. 170, 174, 284 F. 2d 599, 603 (1960), rev’d on other grounds, 368 U. S. 464 (1962); Nelson Radio & Supply Co. v. Motorola, Inc., 200 F. 2d 911, 914 (CA5 1952), cert. denied, 345 U. S. 925 (1953). Accord, Report of the Attorney General’s National Committee to Study the Antitrust Laws 31 (1955). At the same time, many courts have created an exception for corporate officers acting on their own behalf. See, e. g., H & B Equipment Co. v. International Harvester Co., 577 F. 2d 239, 244 (CA5 1978) (dictum); Greenville Publishing, supra; Johnston v. Baker, 445 F. 2d 424, 427 (CA3 1971).
Nothing in the language of the Sherman Act is inconsistent with the view that corporations cannot conspire with their own officers. It is true that a "person" under the Act includes both an individual and a corporation. 15 U. S. C. § 7. But § 1 does not declare every combination between two “persons” to be illegal. Instead it makes liable every “person” engaging in a combination or conspiracy “hereby declared to be illegal.” As we note, the principles governing § 1 liability plainly exclude from unlawful combinations or conspiracies the activities of a single firm.
See 691 F. 2d 310, 316 (CA7 1982) (decision below); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F. 2d 203, 205-206 (CA5 1969); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F. 2d 71, 83-84 (CA9 1969), cert. denied, 396 U. S. 1062 (1970); Poller v. Columbia Broadcasting System, Inc., 109 U. S. App. D. C., at 174, 284 F. 2d, at 603.
The Court left this issue unresolved in Poller v. Columbia Broadcasting System, Inc., 368 U. S., at 469, n. 4.
As applied to a wholly owned subsidiary, the so-called “single entity” test is thus inadequate to preserve the Sherman Act’s distinction between unilateral and concerted conduct. Followed by the Seventh Circuit below as well as by other Courts of Appeals,- this test sets forth various criteria for evaluating whether a given parent and subsidiary are capable of conspiring with each other. See n. 2, supra; see generally Ogilvie v. Fotomat Corp., 641 F. 2d 581 (CA8 1981); Las Vegas Sun, Inc. v. Summa Corp., 610 F. 2d 614 (CA9 1979), cert. denied, 447 U. S. 906 (1980); Photovest Corp. v. Fotomat Corp., 606 F. 2d 704 (CA7 1979), cert. denied, 445 U. S. 917 (1980). These criteria measure the “separateness” of the subsidiary: whether it has separate control of its day-to-day operations, separate officers, separate corporate headquarters, and so forth. At least when a subsidiary is wholly owned, however, these factors are not sufficient to describe a separate economic entity for purposes of the Sherman Act. The factors simply describe the manner in which the parent chooses to structure a subunit of itself. They cannot overcome the basic fact that the ultimate interests of the subsidiary and the parent are identical, so the parent and the subsidiary must be viewed as a single economic unit.
Because an “agreement” between a parent and its wholly owned subsidiary is no more likely to be anticompetitive than an agreement between two divisions of a single corporation, it does not matter that the parent “availed [itself] of the privilege of doing business through separate corporations,” Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134,141 (1968). The purposeful choice of a parent corporation to organize a subunit as a subsidiary is not itself a reason to heighten antitrust scrutiny, because it is not laden with anticompetitive risk.
For example, “[separate incorporation may reduce federal or state taxes or facilitate compliance with regulatory or reporting laws. Local incorporation may also improve local identification. Investors or lenders may prefer to specialize in a particular aspect of a conglomerate’s business. Different parts of the business may require different pension or profit-sharing plans or different accounting practices.” Areeda, 97 Harv. L. Rev., at 453.
Sunkist Growers provides strong support for the notion that separate incorporation does not necessarily imply a capacity to conspire. The defendants in that case were an agricultural cooperative, its wholly owned subsidiary, and a second cooperative comprising only members of the first. The Court refused to find a § 1 or § 2 conspiracy among them because they were “one ‘organization’ or ‘association’ even though they have formally organized themselves into three separate legal entities.” 370 U. S., at 29. Although this holding derived from statutory immunities granted to agricultural organizations, the reasoning of Sunkist Growers supports the broader principle that substance, not form, should determine whether a separately incorporated entity is capable of conspiring under § 1.
See Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F. 2d 71 (CA9 1969), cert. denied, 396 U. S. 1062 (1970).
The dissent argues that references in the legislative history to “trusts” suggest that Congress intended § 1 to govern the conduct of all affiliated corporations. See post, at 787-788. But those passages explicitly refer to combinations created for the very purpose of restraining trade. None of the cited debates refers to the postacquisition conduct of corporations whose initial affiliation was lawful. Indeed, Senator Sherman stated:
Even if common-law intracorporate conspiracies were firmly established when Congress passed the Sherman Act, the obvious incompatibility of an intracorporate conspiracy with § 1 is sufficient to refute the dissent’s suggestion that Congress intended to incorporate such a definition. See post, at 784-787. Moreover, it is far from clear that intracorporate conspiracies were recognized at common law in 1890. Even today courts disagree whether corporate employees can conspire with themselves or with the corporation for purposes of certain statutes, such as 42 U. S. C. §1985(3). Compare, e. g., Novotny v. Great Am. Fed. Sav. & Loan Assn., 584 F. 2d 1235 (CA3 1978) (en bane), vacated and remanded on other grounds, 442 U. S. 366 (1979), with Dombrowski v. Dowling, 459 F. 2d 190 (CA7 1972). And in 1890 it was disputed whether a corporation could itself be guilty of a crime that required criminal intent, such as *776conspiracy. Commentators appear to agree that courts began finding corporate liability for such crimes only around the turn of the century. See generally Edgerton, Corporate Criminal Responsibility, 36 Yale L. J. 827, 828, and n. 11 (1927); Miller, Corporate Criminal Liability: A Principle Extended to Its Limits, 38 Fed. Bar J. 49 (1979); Note, 60 Harv. L. Rev. 283, 284, and n. 9 (1946). Of course, Congress changed that common-law rule when it explicitly provided that a corporation could be guilty of a § 1 conspiracy. But the point remains that the Sherman Act 'did not import a pre-existing common-law tradition recognizing conspiracies between corporations and their own employees.
“[T]he [intra-enterprise conspiracy] doctrine has played a relatively minor role in government enforcement actions, and the government has not relied on the doctrine in recent years.” Brief for United States as Amicus Curiae 26, n. 42.