United States v. United Shoe Machinery Corporation
Decision Date | 20 May 1968 |
Docket Number | No. 597,597 |
Citation | 391 U.S. 244,20 L.Ed.2d 562,88 S.Ct. 1496 |
Parties | UNITED STATES, Appellant, v. UNITED SHOE MACHINERY CORPORATION |
Court | U.S. Supreme Court |
Donald F. Turner, Washington, D.C., for appellant.
Ralph M. Carson, New York City, for appellee.
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, economies 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 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, 74 S.Ct. 699, 98 L.Ed. 910 (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:
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 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, 52 S.Ct. 460, 76 L.Ed. 999 (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 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, 88 S.Ct. 469, 19 L.Ed.2d 458 (1967). We reverse.
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 order-in a measure of divestitute 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, 52 S.Ct. at 462. 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, 52 S.Ct., at 462. The question, it held, is 'whether enough has been shown to justify its exercise.' Id., at 115, 52 S.Ct., at 462. After reviewing the evidence, the Court concluded that the danger of monopoly and of the elimination of competition which led to the initial government complaint and the decree had not been removed and that, although in some respects the decree had been effectuated, there was still a danger of unlawful restraints of trade. The Court's language, quoted and relied on by the trial court here, to the effect that 'nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change,' id., at 119, the decree, must, of course, be read in light of this context. Swift teaches that a decree may be changed upon an appropriate showing, and it holds that it may not be changed in the interests of the defendants if the purposes of the litigation as incorporated in the decree (the elimination of monopoly and restrictive practices) have not been fully achieved.
The present case is the obverse of the situation in Swift if the Government's allegations are proved. Here, the Government claims that the provisions of the decree were specifically designed to achieve the establishment of 'workable competition' by various means and that the decree has failed to accomplish this result. Because time and experience have demonstrated this fact, according to the Government, it seeks modification of the decree. Nothing in Swift precludes this. In Swift, the defendants sought relief not to achieve the purposes of the provisions of the decree, but to escape their impact. Accordingly, we conclude that the District Court erred in denying the Government's petition 'on the authority of United States v. Swift & Co., 286 U.S. 106, 119, 52 S.Ct. 460 (76 L.Ed. 999).' 266 F.Supp., at 334.
Decision as to the Government's petition to modify the decree in the present case must be based upon the specific facts and circumstances that are presented. In urging affirmance of the 1953 decision, the Government advised this Court that, in framing the decree, the District Court had 'proceeded on the premise that relatively mild remedies should be tried as a first resort, and that the possibility of more drastic measures should be held in abeyance.' Brief of the United States, No. 394, 1953 Term, 155. Paragraph 18 of the decree appeared to be in confirmation of this statement since it expressly required a report after 10 years of experience under the decree and contemplated that petitions for modification might be filed 'in view of (the decree's) effect in establishing workable competition.' Paragraph 18 then specifically provided that any such petition would have to be accompanied by 'affidavits setting forth the then structure of the shoe machinery market and defendant's power within that market.'3
These specifications were peculiarly apt because this is a monopoly case under § 2 of the Sherman Act and because the decree was shaped in response to findings of monopolization of the shoe machinery market. That the purpose of the 1953 decree was to eliminate this unlawful market domination was made clear beyond question by the District Court's statement at the beginning of the section of its opinion dealing with relief. This read as follows:
'Where a defendant has monopolized commerce in violation of § 2, the principal objects of the decrees are to extirpate practices that have caused or may hereafter cause monopolization, and to restore workable competition in the market.' 110 F.Supp., at 346—347.
It is of course established that, in a § 2 case, upon appropriate findings of violation, it is the duty of the court to prescribe relief which will terminate the illegal monopoly, deny to the defendant the fruits of its statutory violation, and ensure that there remain no practices likely to result in monopolization in the future. See, e.g., United States v. Grinnell Corp., ...
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