Source: https://www.legalcrystal.com/case/94468/ftc-vs-western-meat-co
Timestamp: 2017-01-19 20:00:35
Document Index: 465413057

Matched Legal Cases: ['§ 7', '§ 7', '§ 11', '§ 11', '§ 4', '§ 7', '§ 7', '§ 11']

Ftc Vs Western Meat Co - Citation 94468 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Ftc Vs. Western Meat Co. - Court Judgment	LegalCrystal Citationlegalcrystal.com/94468CourtUS Supreme CourtDecided OnNov-23-1926Case Number272 U.S. 554AppellantFtcRespondentWestern Meat Co.Excerpt:.....corporation found violating it to "cease and desist from such violations, and divest itself of the stock held," etc.
1. when a corporation has unlawfully acquired all the stock of a competitor, but not its plant or other property, the order properly directs it to divest itself of the stock ownership in such wise as will restore competition, and not leave the corporation in control of the competitor's property, as would happen if it first used the stock to secure such control and then divested itself of the stock by dissolving the other corporation. p.
2. but where a corporation unlawfully buys its competitor's stock and through it acquires the competitor's property, before the commission takes action, the commission is not empowered by the..... Judgment:
FTC v. Western Meat Co. - 272 U.S. 554 (1926)
2. But where a corporation unlawfully buys its competitor's stock and through it acquires the competitor's property, before the Commission takes action, the Commission is not empowered by the statute to order the corporation to divest itself of the property,
but the remedy, if an unlawful status has resulted, is in the courts under the Sherman Act. Pp.
272 U. S. 560
No. 231 was a petition by Swift & Company to review a similar order. The decree of the court below sustaining the order is here reversed.
The Western Meat Company, a California corporation, and the Nevada Packing Company, of Nevada, were interstate competitors engaged in manufacturing, selling and distributing meat products. December 30, 1916, the former purchased all stock of the latter, and has continued to hold it. In a proceeding begun November 24, 1919, the Commission found such purchase and continued
Respondent maintains that the Commission's authority is strictly limited by the statute, and that, where there has been an unlawful purchase of stock, it can do no more than enter "an order requiring such person to cease and
desist from such violations and divest itself of the stock held;" also, that the Commission has no power to prevent or annul the purchase of a competitor's plant and business, as distinguished from stock therein.
Federal Trade Commission v. Beech-Nut Packing Co.,
Federal Trade Commission v. Sinclair Refining Co.,
261 U. S. 463
261 U. S. 475
, are relied upon.
Although the respondent held all the capital stock, the plant and other property of the Nevada Packing Company had not been acquired. The Commission directed that it so divest itself of all this stock as to include in such divestment the packing company's plant and property necessary to the operation thereof, etc. Taken literally,
The Commission entered complaint against the petitioner March 1, 1921, and charged that the latter, contrary to § 7 of the Clayton Act, first acquired the stock of four competing corporations -- Lockport Glass Company, Essex Glass Company, Travis Glass Company, and Woodbury Glass Company-and thereafter took transfers of all the business and assets of the first three and caused their dissolution, October 20, 1920, December 18, 1920, and January 13, 1921, respectively. Having found the facts concerning a rather complicated series of transactions, the Commission ruled that the acquisitions of all these stocks were unlawful and ordered the petitioner to cease and desist from ownership, operation, management and control of the assets, properties, rights, etc., of the Lockport, Essex, and Travis Glass Companies secured through such stock ownership, and to divest itself of the assets, properties, rights, etc., formerly held by them; also, that it should divest itself of the stock of the Woodbury Glass Company.
The court further ruled, in effect, that, as the stocks of the remaining three companies were unlawfully obtained, and ownership of the assets came through them, the Commission properly ordered the holder so to dispossess itself of the properties as to restore prior lawful conditions. With this we cannot agree. When the Commission institutes a proceeding based upon the holding of stock contrary to § 7 of the Clayton Act, its power is limited by § 11 to an order requiring the guilty person to cease and desist from such violation, effectually to divest itself of the stock, and to make no further use of it. The Act has no application to ownership of a competitor's property and business obtained prior to any action by the Commission, even though this was brought about through stock unlawfully held. The purpose of the Act was to prevent continued holding of stock and the peculiar evils incident thereto. If purchase of property has produced an unlawful status, a remedy is provided through the courts. Sherman Act, c. 647, 26 Stat. 209; Act to Create a Federal Trade Commission, c. 311, § 11, 38 Stat. 717, 724,; Clayton Act, c. 323, §§ 4, 15, 16, 38 Stat. 730, 731, 736, 737;
. The Commission is without authority under such circumstances.
A complaint against petitioner, filed November 24, 1919, charged that, in 1917 and 1918, it had unlawfully obtained stock in two competing companies -- Moultrie Packing Company and Andalusia Packing Company -- and thereafter, through the use of this, obtained title to their business and physical property. The findings support the charge. The Commission ordered --
In my opinion, the purpose of § 7 of the Clayton Act was not, as stated by the Court, merely "to prevent continued holding of the stock and the peculiar evils incident thereto." It was also to prevent the peculiar evils resulting therefrom. The institution of a proceeding before the Commission under § 7 does not operate, like an injunction, to restrain a company from acquiring the assets of the controlled corporation by means of the stock held in violation of that section. If, in spite of the commencement of such a proceeding, the company took a transfer of the assets, the Commission could, I assume, require a retransfer of the assets, so as to render effective the order of divestiture of the stock. I see no reason why it should not, likewise, do this although the company succeeded in securing the assets of the controlled corporation before
the Commission instituted a proceeding. Support for this conclusion may be found in § 11, which provides for action by the Commission whenever it "shall have reason to believe that any person is violating
or has violated
any of the provisions" of the earlier sections. (Italics ours.)