United States v. Swift & Company

• Decision Date: 12 December 1960
• Docket Number: Civ. A. No. 58 C 613.
• Citation: 189 F. Supp. 885
• Parties: UNITED STATES of America, Plaintiff, v. SWIFT & COMPANY, Armour and Company, The Cudahy Packing Company, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

189 F. Supp. 885

UNITED STATES of America, Plaintiff, v. SWIFT & COMPANY, Armour and Company, The Cudahy Packing Company, et al., Defendants.

Civ. A. No. 58 C 613.

United States District Court N. D. Illinois, E. D.

December 12, 1960.

COPYRIGHT MATERIAL OMITTED

Earl A. Jinkinson, Willis L. Hotchkiss, Ned Robertson, Chicago, Ill., for plaintiff.

John T. Chadwell, Theodore A. Groenke, James A. Rahl, John W. Thomas, Arthur C. O'Meara, John C. Berghoff, Arthur R. Curtis, Chicago, Ill., for Swift defendants; Snyder, Chadwell, Keck, Kayser & Ruggles, Chicago, Ill., of counsel.

Weymouth Kirkland, E. Houston Harsha, William R. Jentes, George E. Leonard, Jr., John P. Doyle, Chicago, Ill., for defendant Armour & Co.; Kirkland, Ellis, Hodson, Chaffetz & Masters, Chicago, Ill., of counsel.

E. H. McDermott, Walker Smith, Hamilton Smith, James O. Smith, John H. McDermott, Frank E. Babb, Chicago, Ill., Frederick T. Barrett, Omaha, Neb., for defendants the Cudahy Packing Co. and E. A. Cudahy, Jr.; McDermott, Will & Emery, Chicago, Ill., of counsel.

Howard J. Trienens, H. Blair White, Clarence F. Wittenstrom, Jr., Chicago, Ill., amici curiae; Sidley, Austin, Burgess & Smith, Chicago, Ill., of counsel.

JULIUS J. HOFFMAN, District Judge.

The petitioners, defendants in this historic litigation, have sought modification of the antitrust decree entered with their consent forty years ago. The government has vigorously opposed the petitions.

Following extensive discovery proceedings and the disposition of preliminary motions, the parties were afforded the plenary hearing required upon such a petition. Hughes v. United States, 1942, 342 U.S. 353, 72 S.Ct. 306, 96 L.Ed. 394. Oral testimony occupied some three and one-half months, producing a transcript in excess of eight thousand pages. Nearly one thousand exhibits have been received, containing an even greater volume of pages. As the record indicates, the court had grave doubt of the admissibility of portions of the petitioners' evidence, both oral and documentary. Much of it was remote and of tenuous relevancy, or entailed matters of general opinion. It was the position of the court, however, throughout the lengthy hearing, that the equitable nature of the proceeding warranted giving the petitioners every opportunity to support their request.

The court has been aided by detailed and exhaustive briefs, running to another thousand pages, and by full oral presentation of the parties' positions. The court also has before it the complete record of the prior proceedings in the case. The quality of representation on all sides has been exceptional.

The Original Decree.

The antitrust history of the defendants goes back to the turn of the century. In 1902 the government filed a civil suit against the defendants which eventuated in a general injunction. Swift & Co. v. United States, 1905, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518. Subsequent criminal prosecutions failed. In 1917, at the direction of President Wilson, the Federal Trade Commission commenced a broad investigation of the meat packing industry. The report of this investigation, submitted in 1919, led to the commencement of the litigation in which this proceeding constitutes the latest chapter.

The Parties.

The suit was begun on February 27, 1920, in what was then called the Supreme Court of the District of Columbia. The principal defendants were the so-called Big Five of the meat packing industry: Swift & Company, Armour and Company, The Cudahy Packing Company, Wilson & Co., Inc., and Morris & Company. Eighty other corporations, comprising those subsidiaries of the principal defendants which were engaged in slaughtering, packing, or selling meats, were also joined as defendants. Fifty of the officers, directors, and stockholders of the corporate defendants were named and joined individually as defendants. Of these one hundred and thirty-five original defendants, only six are now before the court as petitioners. One of the five principal defendants, Morris & Company, was absorbed by Armour and Company in 1923. Another, Wilson & Co., Inc., has not petitioned for modification or entered its appearance in this proceeding. The remaining three principal defendants, appearing here as petitioners, will be called Swift, Armour, and Cudahy. All of their subsidiaries which were joined as parties originally have since been dissolved with the exception of two Swift subsidiaries, Swift and Company, Inc., and Derby Foods, Inc., which will be included in the designation Swift. The sole survivor of the officers, directors, and stockholders of these corporate defendants who had been joined individually as parties who has petitioned here is E. A. Cudahy, Jr. The petitioners are, therefore, Swift, including its two subsidiaries, Armour, Cudahy, and E. A. Cudahy, Jr.

The Complaint.

The equity bill which commenced this suit consists of some thirty pages. The stated object of the action was to put an end to monopolies achieved by the defendants affecting the food supply of the nation, and to prevent the extension of this domination into other fields.

The defendants' principal business, it was alleged, consisted of the purchase and slaughter of livestock, namely, cattle, hogs, sheep, and calves, the dressing of the carcasses, and the distribution and sale of the dressed meats. Domination of the purchase of livestock, it was charged, had been achieved, pursuant to a common purpose, plan, and design, by various means. First, the complaint recited, the defendants had acquired controlling interests in some twenty-two of the nation's stockyards, the public markets where livestock were bought and sold. Through the fees, charges, and services of the yards, they thereby gained power over the throat of the commerce involved. Through their interests in these yards, the defendants were also able to determine the number and location of packing plants in the desirable locations at and adjacent to the stockyards. Terminal railways, connecting the longhaul roads with the stockyards and the packing plants, had also fallen under the domination of the defendants according to the bill, giving them power to discriminate against other packers and independent buyers. Dominion over the other facilities required by traders and dealers at the yards was also achieved. Included was the allocation of office space, pens, and sites for stockyard banks, cattle loan companies, and rendering plants for the disposal of stock killed by accident or disease in the yards. According to the allegations of the government's complaint, the defendants had also gained control of the trade newspapers and market journals which cattle raisers must rely upon for accurate and unbiased reporting of demand. As a consequence, the defendants were furnished with a means of increasing or decreasing the flow of livestock to the yards in their own interests.

By wielding these powers, it was charged, the defendants had gradually forced out their competitors as dominating factors in the marketing of livestock. To eliminate competition among themselves, the government claimed, the defendants had entered into percentage purchase arrangements, apportioning the livestock offered at the several stockyards to the respective defendants in predetermined shares.

Concerning the marketing side of the defendants' businesses, the complaint alleged that the packers had developed a nationwide system for distributing and selling meats. A principal instrumentality in the system was called the branch house, a storage station with facilities for cooling and preserving fresh meats, from which sales were made to butchers, hotels, restaurants and other large consumers. The defendants maintained 1120 of these branch houses in various large towns and cities throughout the United States, according to the bill, while competing interstate slaughterers maintained only 139.

To supplement the branch houses, and to serve the smaller communities, the defendants employed refrigerated railroad cars traveling over specified routes and filling orders for smaller quantities. The route cars operated by the defendants, it was alleged, constituted 90% of the total number operated in the packing industry. As an adjunct, the defendants, and particularly Armour, employed motor trucks to serve purchasers not conveniently reached by rail, in a total of 20,836 towns throughout the United States. As a part of their distribution system, it was stated, the defendant packers owned for their private use a number of cold storage warehouses where fresh meat products might be stored, and had acquired control as well of public cold storage warehouses engaged in the general business of leasing space for products requiring refrigeration.

Having eliminated competition in meats, the defendants, according to the government, set out to control the substitute foods to which the consuming public might turn from high-priced meats. To accomplish this purpose, the defendants had begun to deal, directly and through subsidiaries, in fish, vegetables, fruits, cereals, milk, poultry, butter, eggs, cheese, and other so-called substitute foods as well as in meats. In addition, they acquired a large number of concerns manufacturing or selling these substitute foods, availing themselves of the financial resources amassed through their dominance in meats. Further control over other foods was achieved, it was alleged, through contracts for the defendants' purchase of the entire or exclusive output of many companies engaged in the production of these foods. In marketing these non-meat foods, the defendants availed themselves of their distribution systems and facilities designed principally for the handling of meats "with comparatively no increase of overhead." This advantage enabled the defendants to reach remote spots, it was alleged, and was employed temporarily to fix prices so low as to eliminate competition.

As the result of these activities, the complaint...