United States v. Ingersoll-Rand Company

• Decision Date: 11 April 1963
• Docket Number: Civ. A. No. 63-124.
• Citation: 218 F. Supp. 530
• Parties: UNITED STATES of America, Plaintiff, v. INGERSOLL-RAND COMPANY, Goodman Manufacturing Company, Lee-Norse Company and Galis Electric and Machine Company, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

218 F. Supp. 530

UNITED STATES of America, Plaintiff, v. INGERSOLL-RAND COMPANY, Goodman Manufacturing Company, Lee-Norse Company and Galis Electric and Machine Company, Defendants.

Civ. A. No. 63-124.

United States District Court W. D. Pennsylvania.

April 11, 1963.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Donald F. Melchior, John M. O'Donnell, P. Jay Flocken, Department of Justice, Washington, D. C., for plaintiff.

Austin, Burns, Appell & Smith, Joseph Burns, New York City, for defendant Ingersoll-Rand Co.

Aaron, Aaron, Schimberg & Less, Chicago, Ill., for defendant Goodman Mfg. Co.

Kirkpatrick, Pomeroy, Lockhart & Johnson, Pittsburgh, Pa., for defendant Lee-Norse Co.

Haden & Haden, Morgantown, W. Va., for defendant Galis Electric & Machine Co.

ROSENBERG, District Judge.

INTRODUCTORY STATEMENT

Findings of fact, conclusions of law and this opinion are presented subsequent to and in support of the issuance of an order by this Court on the 6th day of March 1963, preliminarily restraining the defendants from consummating agreements contemplating specific corporate acquisitions in the underground coal mining machinery production as a line of commerce in the United States.

On March 4, 1963, a second order was issued denying a proposed modification of the Court's original order. A supplemental opinion relating to the second order will follow.

Ingersoll-Rand Company (Ingersoll-Rand) entered into three separate agreements, all dated January 16, 1963, with defendants, Goodman Manufacturing Company (Goodman), Lee-Norse Company (Lee-Norse) and Galis Electric and Machine Company (Galis).

The agreement with Goodman provides that Ingersoll-Rand will acquire certain of the assets of the mining and rock crushing machinery and industrial manufacturing business of Goodman for the consideration of 8 million dollars. The agreement further states that from the date of closing the Goodman name will not be used in any related type business and the closing date was stipulated to be March 1, 1963, unless properly extended.

The agreement with Lee-Norse provides that Ingersoll-Rand and Lee-Norse enter into a Plan and Agreement of Reorganization, wherein a wholly owned subsidiary of Ingersoll-Rand (to be known as the Goodman-Norse Company) will purchase all property of Lee-Norse in exchange for a quantity of Ingersoll-Rand voting stock. Within twelve months after closing, Lee-Norse will dissolve and distribute its remaining assets, comprising the Ingersoll-Rand voting stock, to its shareholders. The closing date of this agreement is also listed as March 1, 1963, unless properly extended.

The agreement with Galis provides that Ingersoll-Rand and Galis entered into a Plan of Reorganization pursuant to which Ingersoll-Rand will acquire all issued and outstanding shares of Galis stock in exchange for shares of common stock of Ingersoll-Rand, and that all officers and directors will resign. The closing date shall be March 1, 1963, unless properly extended.

When the United States Government received on or about December 5, 1962, a published report of the impending merger, the Anti-Trust Division of the Department of Justice made contact with Ingersoll-Rand by letter dated December 6, 1962. It inquired about the proposed merger and received in response a letter from counsel for Ingersoll-Rand dated December 12th, advising the Government that Ingersoll-Rand would assemble and forward the necessary information. On January 16, 1963, Ingersoll-Rand did provide some information concerning the proposed acquisition, including information that March 1, 1963, was to be the closing date of the Lee-Norse contract.

The Government then requested additional information and served upon the merging companies a Civil Investigative Demand returnable on February 25th. At this time, the Government also requested assurance from these companies that it would be advised in advance of any closing of a proposed acquisition, but the companies indicated their reluctance to become so bound. Thereupon, on February 14th, the United States, as plaintiff, filed its complaint and supporting affidavits charging that the defendants, Ingersoll-Rand, Goodman, Lee-Norse and Galis had entered into the various agreements for acquisition mergers which were in imminence of being consummated, and if consummated, would violate Section 7¹ of the Act of Congress of October 15, 1914, c. 323, 38 Stat. 736, as amended by the Act of Congress of December 29, 1950, c. 1184, 64 Stat. 1125, 15 U.S.C.A. § 18, commonly known as the Clayton Act.

In reliance upon the plaintiff's complaint and affidavits, which has been set forth here in some detail, I granted a Temporary Restraining Order on the same day, Thursday, February 14th. Immediately after receiving notice, the defendants on Monday, February 18th, filed in this court a Motion to Vacate and Dissolve the Temporary Restraining Order. A hearing was ordered and had on Thursday, February 21st, to permit the defendants to present testimony in support of their motion, and at the same time to hear the plaintiff on its motion for production of documents by the defendants.

For this hearing, each side presented memorandum briefs. In their brief, the defendants at page 7 stated: "However, defendants will now show that even if notice had been given, no temporary order should have been issued." Accordingly, the defendants were allowed such opportunity as they desired to "show" that this statement could be supported, while the plaintiff was required to justify the issuance of the temporary restraining order. After a full day's hearing, I denied the motion to vacate the order and directed preparation by the parties for the preliminary hearing on the following Monday, February 25th.

The preliminary hearing proceeded as scheduled in the following week, during which time the parties presented many witnesses and documents to support their respective contentions. The hearing closed on the following Friday, and within a day or two, the parties submitted briefs, requests for findings of fact and conclusions of law. After careful examination of the parties' briefs and considerable research, within the time allotted by law, I issued the preliminary injunction order to maintain the status quo until a permanent decision might be had after a final hearing. Immediately after issuance of the preliminary injunction, the defendants filed a motion for a modification of the preliminary order, and after hearing all the parties, that motion was denied.

As already stated, the plaintiff contends that the acquiring by the defendant, Ingersoll-Rand, of the stock and assets of the other defendants, Goodman, Lee-Norse and Galis, would be an acquisition in a line of commerce in the United States, the effect of which may be to substantially lessen competition or to tend to create a monopoly, and that such is forbidden by Section 7 of the Clayton Act.

The defendants contest the validity of the plaintiff's case by attempting to show:

1. That the plaintiff did not support its case by proper evidence;

2. That the plaintiff's statistics are erroneous or improperly compiled;

3. That the action pursued by the Attorney General in this particular case is unjust;

4. That if the defendants are eventually proven to be in violation of the Clayton Act, divestiture would be a less harmful procedure than the issuance of a preliminary injunction;

5. That the plaintiff has shown no irreparable injury;

6. That, conversely, the defendants are being irreparably injured by this action;

7. That the defendants, Goodman and Lee-Norse are not competitive within the meaning of the Clayton Act;

8. That the production of underground coal mining machinery and equipment is not a line of commerce within the meaning of the Clayton Act; and

9. That the coal mining industry is in need of this merger.

In proceeding with the hearing for a preliminary injunction, it was incumbent upon the Court to bear in mind the pertinent language of Section 7 of the Clayton Act and to consider leading court decisions interpreting this section. Both sides introduced substantial evidence from which a basic determination could be made of whether or not Section 7 was seriously threatened with violation by the defendants, and if such violation was imminent, to determine whether or not a temporary injunction should issue in order to preserve the status quo until a permanent hearing on the full merits could be had.

Approximately 800 pages of testimony were compiled at the hearings and transcribed by two court reporters working day and night to make the record available on a day to day basis. All of the parties were given full opportunity and ample time in which to present all of the evidence they wished to submit, without hindrance or limitation. I was mindful of the fact that all parties should have such an opportunity. See Sims v. Greene, 3 Cir., 161 F.2d 87 (1947).

The evidence of the parties consisted of both testamentary and documentary proof. Originally, both sides introduced affidavits which were later modified or varied by oral evidence. On the Friday evening of the fifth day of trial, the parties agreed that they had fully presented their respective cases, and that they did not wish to continue into the next week.

Because of the abundance of testimony, it was necessary for me to sift and evaluate the evidence in the light of the provisions of the Clayton Act and leading judicial authority, including United States v. E. I. DuPont De Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318 (1960); United States v. Brown Shoe Co., Inc., 179 F. Supp. 721 (E.D.Mo.1959); affirmed 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 501 (1962). Because of the extended amount of evidence produced, an effort is here made to translate the material evidence into findings of fact, numerous as they may be. Again, it has not been my intention to consider that evidence as finalizing the case, but only in such...