391 U.S. 244 (1968), 597, United States v. United Shoe Machinery Corp.

Docket Nº:No. 597
Citation:391 U.S. 244, 88 S.Ct. 1496, 20 L.Ed.2d 562
Party Name:United States v. United Shoe Machinery Corp.
Case Date:May 20, 1968
Court:United States Supreme Court

Page 244

391 U.S. 244 (1968)

88 S.Ct. 1496, 20 L.Ed.2d 562

United States

v.

United Shoe Machinery Corp.

No. 597

United States Supreme Court

May 20, 1968

Argued April 1, 1968

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

Syllabus

In 1953, the District Court for the District of Massachusetts held that appellee had monopolized the manufacture of shoe machinery in violation of § 2 of the Sherman Act. The court refused the Government's request that appellee be divided into three separate companies, and instead imposed certain restrictions and conditions designed "to recreate a competitive market." The District Court's decision was affirmed by this Court. The District Court's decree provided in paragraph 18 that:

On [January 1, 1965] both parties shall report to this court the effect of this decree, and may then petition for its modification, in view of its effect in establishing workable competition.

Pursuant to this provision the Government reported on January 1, 1965, that appellee continued to dominate the market, that workable competition had not been established, and that further relief was needed. The Government asked that appellee be divided into two competing companies. The District Court held that United States v. Swift & Co., 286 U.S. 106 (1932), limited its power to modify the decree to cases involving "(1) a clear showing of (2) grievous wrong (3) evoked by new and unforeseen circumstances," and since the object of the decree was "not to restore workable competition but to move toward establishing it" and the "decree has operated in the manner and with the effect intended," the Government's petition was denied.

Held:

1. The District Court erred in denying the Government's petition on the authority of United States v. Swift & Co., supra, because there the defendants sought relief not to achieve the purposes of the decree's provisions, but to escape their impact. The request was the obverse of the Government's allegation and request here. Pp. 248-249.

2. The District Court should determine whether the relief in this case has met the prescribed standards and, if not, should modify the decree so as to achieve the required result. Pp. 249-252.

Page 245

(a) It is the trial court's duty to prescribe relief which will terminate the illegal monopoly in violation of § 2 of the Sherman Act and ensure that there remain no practices likely to result in monopolization in the future. Pp. 250-251.

(b) The specific provisions of the decree did not exhaust that court's power to afford relief which "should put an end to the combination . . . and break up or render impotent the monopoly power found to be in violation of the Act." United States v. Grinnell Corp., 384 U.S. 563, 577 (1966). Pp. 251-252.

266 F.Supp. 328, reversed and remanded.

FORTAS, J., lead opinion

MR. JUSTICE FORTAS delivered the opinion of the Court.

In 1953, in a civil suit brought by the United States, the District Court for the District of Massachusetts held that appellee had violated § 2 of the Sherman Antitrust Act by monopolizing the manufacture of shoe machinery. The court found that

(1) defendant has, and exercises, such overwhelming strength in the shoe machinery market that it controls that market, (2) this strength excludes some potential, and limits some actual, competition, and (3) this strength is not attributable solely to defendant's ability, economics of scale, research, natural advantages, and adaptation to inevitable economic laws.

United States v. United Shoe Machinery Corp., 110 F.Supp. 295, 343 (1953). The court did

Page 246

not order the relief requested by the Government -- that appellee be dissolved into three separate shoe machinery manufacturing companies. Rather, the court-imposed a variety of restrictions and conditions designed "to recreate a competitive market."1 Appellee appealed to this Court, which affirmed the decision of the District Court. United Shoe Machinery Corp. v. United States, 347 U.S. 521 (1954).

The decree of the District Court, entered on February 18, 1953, and subsequently modified on July 12 and September 17, 1954, provided in paragraph 18 that:

On [January 1, 1965], both parties shall report to this Court the effect of this decree, and may then petition for its modification, in view of its effect in establishing workable competition. If either party takes advantage of this paragraph by filing a petition, each such petition shall be accompanied by affidavits setting forth the then structure of the shoe machinery market and defendant's power within that market.

110 F.Supp. at 354.

Page 247

Pursuant to this provision, the Government reported to the District Court on January 1, 1965, that appellee continued to dominate the shoe machinery market, that workable competition had not been established in that market, and that additional relief was accordingly necessary. The Government asked that appellee be required to submit to [88 S.Ct. 1499] the Court a plan, pursuant to which United's business would be reconstituted so as to form two fully competing companies in the shoe machinery market. It also requested "such other and further relief as may be necessary to establish workable competition in the shoe machinery market."

The District Court, after a hearing, denied the Government's petition.2 It held that, under United States v. Swift & Co., 286 U.S. 106 (1932), its power to modify the original decree was limited to cases involving "(1) a clear showing of (2) grievous wrong (3) evoked by new and unforeseen conditions." United States v. United Shoe Machinery Corp., 266 F.Supp. 328, 330 (1967). Analyzing its 1953 decree, as amended, the court said that the object of the decree was "not to restore so-called workable competition but to move toward establishing it," and that

the 1953 decree has operated in the manner and with the effect intended. It has put in motion forces which, aided by new technology, have eroded United's power and already dissipated much of the effect of United's monopolization.

266 F.Supp. at 330, 334. Accordingly, in view of the stringent requirements of Swift as the court construed that decision, the District Court denied the Government's petition.

From this decision, the Government appealed to this Court. We noted probable jurisdiction. 389 U.S. 967 (1967). We reverse.

Page 248

I

The District Court misconceived the thrust of this Court's decision in Swift. That case in no way restricts the District Court's power to grant the relief requested by the Government in the present case. In Swift, a consent decree had been entered in 1920 ordering a measure of divestiture by and imposing a variety of restraints upon the defendant meat packers. In 1930, after various unsuccessful attempts to secure modification or vacation of the decree, the packers filed a petition "to modify the consent decree and to adapt its restraints to the needs of a new day," as Justice Cardozo phrased it. 286 U.S. at 113. The lower court granted a measure of relief, and the United States appealed. This Court reversed. It emphasized the power of a court of equity "to modify an injunction in adaptation to changed conditions though it was entered by consent." Id. at 114. The question, it held, is "whether enough has been shown to justify its exercise." Id. at 115. After reviewing the evidence, the Court concluded that the danger of monopoly and of the elimination of competition which led...

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