United States v. American Can Co.

Citation230 F. 859
PartiesUNITED STATES v. AMERICAN CAN CO. et al.
Decision Date23 February 1916
CourtU.S. Court of Appeals — Fourth Circuit

George Carroll Todd, Asst. Atty. Gen., Henry E. Colton and William T. Chantland, Special Asst. Attys. Gen., and Samuel K Dennis, U.S. Atty., of Baltimore, Md., for the United States.

John Barton Payne, of Chicago, Ill., George R. Willis, of Baltimore, Md., L. A. Welles, of New York City, and Frederick R. Williams, of Baltimore, Md., for defendants.

ROSE District Judge.

The United States, hereinafter called the 'government,' brings this proceeding under the fourth section of the Anti-Trust Act of July 2, 1890. It says that the American Can Company, a New Jersey corporation, was formed and has since been maintained in violation of the first and second sections of that statute. Originally, there were 9 other corporate and 27 individual defendants. By consent at the hearing the petition was dismissed as to 5 of the former and 8 of the latter. All of the defendants other than the American Can Company were brought into the case because the government thought they had taken part, either in its illegal organization, or in its subsequent unlawful acts. It will be referred to many times. The other defendants will be mentioned much less frequently. For brevity, it will be called the 'defendant.'

It has put 516 witnesses on the stand; the government 346. Between 1,500 and 1,600 exhibits have been filed. The record covers more than 8,700 printed pages. Nevertheless, an ordinary collision case on the admiralty side of the court, or a moderately contested proceeding in bankruptcy, would raise more issues of fact. The government proved one set of circumstances. By cross-examination the defendant sought to minimize their effect, but it offered no evidence in contradiction. When its turn came, it proved other things. The government attempted to show from defendant's witnesses that, either they were not as well informed as they supposed themselves to be, or that there were many things in economics undreamt of in their philosophy; but, as a rule, it did not undertake to show that they were wrong as to any actual fact of real materiality or importance.

What Has Been Proved.

What has been proved is: First, that the defendant was organized to monopolize interstate trade in cans, and to attain that object such trade was unlawfully restrained by it, and by those who formed it and directed its earlier activities, and that some of those individuals still participate in its management and control. Second, for some time before the filing of the petition in this case, it had done nothing of which any competitor or any consumer of cans complains, or anything which strikes a disinterested outsider as unfair or unethical.

Legal Contentions of the Parties.

The government says that certain restraints once illegally imposed by the defendant upon the trade are still in force in part at least. The defendant replies that, if in any sense so much is trËe, such restraints have long ago become theoretical rather than real, and, if the court thinks it worth while, the defendant has no objection to their being declared illegal, or even to an injunction forbidding their further enforcement.

The real controversy between the parties goes much deeper. The government says the defendant, by its size, its wealth, and its power, exerts a great influence upon the entire trade in cans, and that this influence, in some very important respects, notably as to the fixing of the price of packers' cans, is so great that it may, without straining words, be said to dominate the market.

The defendant answers its size is not a crime. The government replies, in substance:

'True, provided such size is the result of natural and legitimate growth, but not when it is the outcome of unlawful means used for the very purpose of securing a control of the market. In the latter case, so long as the control continues, the illegal purpose is still in process of execution, and, if nothing short of dissolving the defendant into a number of smaller companies will completely emancipate the trade, the court must decree such dissolution.'
'The combination among the once independent concerns might have been otherwise effected. They might have subjected themselves to control of a single will, while each still preserved its individual existence. In that event, it would be clear that the court could and should put an end to the agreement among them.'

Reference is made to those cases which hold that the way in which the combination is brought about is immaterial. If it seeks an end forbidden by the anti-trust acts, and that end is attained in whole or in part, the government has a right to demand that it be dissolved.

The defendant's answer may be thus summed up:

'With a very few exceptions, only one of which is of any real importance, all the units which have at any time come under its control are dead, beyond the hope of resurrection. The court cannot call back to life the many can-making concerns which died that the defendant might come into being, or which have since yielded up their lives to it. No order of court can make the dead breathe again.'
'The number of once independent concerns absorbed by it can, it is true, be ascertained. If the court is bound to come as near as it can to putting things back as they were, it must dissolve the defendant into a like number of parts. Everybody feels that it is under no such obligation. The government does not ask that the defendant shall be divided into more than about half a dozen separate corporations. Whey will it be content with a dissolution perhaps one-twentieth as drastic as would be required to restore the original status? Obviously, because it recognizes that a court of equity neither will, nor should, cause loss, destruction, or inconvenience, unless it has reasonable and probable grounds to believe that by so doing it will accomplish affirmative good. Its business is to prevent and remedy, not to punish. If it will not order a dissolution into 100 parts because nothing would be gained thereby, it will not decree a division into 6 or even into 2, unless it believes that good will follow. It must deal with facts as it finds them. If an illegal agreement is still in force, it must end it. If the agreement has long since been executed, and is itself at an end, the court may, if it can, put things back where there were before the agreement was made; but, if Humpty Dumpty cannot be set up again, the court must do the best it may with conditions as they are. The record shows that any dissolution will do more harm than good.'

To this the government replies that:

'Even if for the sake of the argument the soundness of defendant's statement of legal principles should be admitted, it remains true that defendant acquired its controlling position in the trade as the result of an unlawful combination; that such control, even when legitimately acquired, if not illegal, is at the best a danger; and that, by the dissolution asked for, it can and should be ended.'

Why the Facts Are Reviewed.

It is upon the answers which the law requires to be given to these contentions that the judgment of this court must turn. Any statement of facts, in addition to that already made, other than those which bear upon the present relation of the defendant to the can trade, and upon the probable effect of its dissolution, or of its remaining undissolved, upon the public interests, is therefore, strictly speaking, unnecessary. The case may not stop here. It is not probable that either side will accept the conclusions above stated as being at once both accurate and complete. The court of first instance should give the appellate tribunal the benefit of its examination of the evidence, whenever the facts are disputed, or the inferences which should be drawn from them are contested.

Moreover, the history of the formation of the defendant, and of its subsequent conduct, of its effect upon its competitors, actual or potential, and upon the first and upon the ultimate consumers of cans, may be of far-reaching social and economic interest. All the 18 volumes of the record have been carefully studied to make sure what were the real issues in this case. It will be worth while to summarize the story they tell.

Packers' Cans and General Line Cans.

The can-making trade has always made a distinction between cans for hermetically sealing food products, and cans for other purposes. They call the former packers', the latter general line, cans. Almost all packers' cans are now made of certain standard shapes and sizes, which are, or which are intended to be, the same, no matter from what shop they come. On the other hand, general line cans are of every variety, shape, and size, according to the use to which they are to be put, and the taste of him whose goods are to go in them.

There have therefore always been more customers for machinery for making packers' than for the manufacture of general line cans. The progress of invention in the former has accordingly, been more rapid. Modern machinery for the fashioning of packers' cans doubtless costs far more than that in use 16 or 17 years ago, but even now it can be installed at an expense which is small as compared with the outlay necessary to equip such a plant as is required in many other industries. The small manufacturer has much greater difficulty in so fitting himself for the manufacture of general line cans, as to enable him to compete in all their kinds on approximately equal terms with a powerful rival. He cannot afford to buy all the types of machines which might be more or less advantageously employed in making some sorts of general line cans, because he will have very little use for...

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