Document: 377 U.S. 271 84 S.Ct. 1283 12 L.Ed.2d 314 UNITED STATES, Appellant,v.ALUMINUM COMPANY OF AMERICA et al. No. 204. Argued April 23, 1964. Decided June 1, Rehearing Denied 22, See 1903. [Syllabus from pages 271-272 intentionally omitted] Sol. Gen. Archibald Cox, for appellant. Herbert Bergson, Washington, D.C., appellees. Mr. Justice DOUGLAS delivered the opinion of Court. 1 The question is whether 1959 acquisition by Aluminum Company America (Alcoa) stock and assets Rome Cable Corporation (Rome) 'may be substantially to lessen competition, or tend create a monopoly' in production sale various wire cable products accessories within meaning § 7 Clayton Act.1 United States, claiming that had been violated, instituted this civil suit prayed divestiture. District Court, after trial, held there was no violation dismissed complaint. 214 F.Supp. 501. case here on appeal, 15 U.S.C. 29; we noted probable jurisdiction. 375 808, 57, 11 46. I. 2 initial concerns identification 'line commerce,' as term used 7. 3 (aluminum conductor) composite bare aluminum (bare insulated covered (insulated conductor). These are designed almost exclusively use electric utilities carrying power generating plants consumers throughout country. Copper conductor (copper only other product utilized commercially same general purpose. produced both copper conductor. In 1958—the year prior merger—it 0.3% total industry conductor, 4.7% 1.3% broader line. 4 Alcoa 1958 it 32.5% 11.6% 27.8% 5 products, noted, most often operating electrical utilities. Transmission distribution lines2 usually strung above ground, except heavily congested areas, such city centers, where they run underground. Overhe d, lines not insulated, has virtually displaced copper, seacoast shown following table: 6 Percent Conductor Gross Additions Overhead Utility Lines. 1950 1955 Lines (All Bare Conductor) 74.4% 91.0% 94.4% Distribution Lines: Conductor...... 35.5 . 64.4 79.0 Insulated Conductor. 6.5 51.6 77.2 8 Total, 25.0 60.9 80.1 9 Underground, must used. sum, while dominates overhead field, remains unrivaled all applications. 10 parties agree, Court found, separate line commerce. however, denied status because found an appropriate commerce distinct its counterpart. court said broad group cannot result commerce, since composed two aprts, one which independently qualifies does not. Admittedly, competition between counterpart, found. Thus comprised 22.8% gross additions lines. This enough justify grouping conductors together single market. Yet conclude, contrary degree competitiveness preclude their division purposes into submarkets, just existence markets Brown Shoe Co. v. 370 294, 82 1502, 510, did lesser submarkets.3 so intrinsically inferior applications little consumer acceptance. But field enjoys decisive advantages—its share annual installations increasing 6.5% 77.2% 1959. rapidly decreasing. As record shows, utilizing high-cost metal, fabricators powerless eliminate price disadvantage under labor thus can do make competitive, unless enter field. indeed 50% 65% counterparts; comparative installed costs also generally less. prices respond another. 13 Separation placing another submarket is, therefore, proper. It inseparable equ valent though class customers same. choice turn quality respective each job equally well. vital factors economic considerations. said, should put aside Shoe, supra, cited authority. There contention delineated too broadly relevant submarkets—men's shoes, women's children's shoes—and have subdivided them further. argued example, men's shoes selling below $8.99 were different market those $9. We declined price, particularly small differentials, determinative factor A purchaser buys with eye his budget, style, well price. here, pricewise stands distinctly apart, ignore determining single, important, practical business. 14 combination seems us proper.4 Both types purpose conducting electricity sold customers, While compete developed distinctive end uses underground indoor wiring, aluminum's brittleness larger size render impractical. And, seen, differential further sets apart. Thus, conclude (1) separable analyzing competitive effect merger (2) insulated) therefore commerce.' II. 16 Taking commerce' violated 17 leader highly concentrated. Prior World War II sole producer primary fabricator 1945 monopolized Sherman Act. States Co., Cir., 148 F.2d 416. Relief deferred disposed wartime facilities congressional mandate establish domestic industry.5 policy federal financing assistance, five additional companies entered 1960 producers showed capacity: 18 Ingot Capacity Existing Under Construction at End 1960. 19 (SHORT TONS) 20 % U. S. 21 America. 1,025,250 38.6 Reynolds Metals Company. 701,000. 26.4 22 Kaiser & Chemical Corp. 609,500 23.0 Ormet, Inc......... 180,000. 6.8 Harvey Aluminum..... 75,000. 2.8 Anaconda 65,000. 2.4 total. 2,655,750. 100.0 23 merger—Alcoa leading market; led industry, 32.5%. plus controlled and, three competitors, more than 76%. Only nine (including 1.3%) accounted 95.7% output narrower third eighth 4.7%. Five 65.4% four smaller ones, including Rome, added 22.8%. 24 words, concentrated markets, dominated few but served small, diminishing,6 independents. Such decentralization occurred resulted establishment new through intervention, normal, decentralizing forces. 25 proposition present turns stated Philadelphia National Bank, 374 321, 365, n. 42, 83 1715, 1742, 915, follows: 26 'It answer that, among presently largest firms (First Pennsylvania, PNB, Girard), will increase concentration. If argument valid, then once become unduly concentrated, concentration would legally privileged. On contrary, if already great, importance preventing even slight increases preserving possibility eventual deconcentration correspondingly great.' Committee Reports show, respects Celler-Kefauver amendments 1950, objective prevent accretions 'are individually minute difficult Act test against them.' S.Rep. 1775, 81st Cong., 2d Sess., p. 5; U.S.Code Congressional Service 4297. And see H.R.Rep. 1191, 1st 3. 323, 1522, 510: 27 'Congress words competition' (emphasis supplied), indicate concern probabilities, certainties. Statutes existed dealing clear-cut menaces competition; statute sought ephemeral possibilities. Mergers anticompetitive proscribed Act.' 28 U.S., 362, S.Ct., 1740, El Paso Natural Gas 376 651, 658, 1044, 1048, 12. 29 added, Alcoa's control setting reasonably likely produce substantial lessening basic premise law 'when many sellers, none any significant share.' 363, 1741. seem situation may oligopolistic. condition develops, greater likelihood parallel policies mutual advantage, emerge. That tendency thwarted presence competitors. Though percentagewise seemed merger, ranked ninth fourth independents respectively. Furthermore, market, dozen could account much 1% years (1955—1959) statistics appear record. Rome's substantial. shows aggressive competitor. pioneer insulation widely conductors. highquality addition business, special aptitude skill insulation, active efficient research sales organization. effectiveness marketing organization fact made distributor entire Preservation rather absorption giants, keep 'as important factor,' 3; Code 4295. prototype independent Congress aimed preserve 30 judgment reversed divestiture, remanded proceedings conformity opinion. 31 Reversed remanded. 32 STEWART, whom HARLAN GOLDBERG join, dissenting. 33 action, brought Act, amended, Government failed sustain burden proof issues. Because I think clearly prove claims, dissent today's reversal trial court's judgment. 34 four-week held—after months extensive pretrial discovery. hundred documentary exhibits received evidence, 50 witnesses heard. amounts 3,500 pages. district judge wrote long careful opinion, accompanied meticulous findings thoroughly reasoned conclusions law. involved conscientiously applied standards postulated 325, 1523, detailed fully supporting determinations. claimed these erroneous, nor today hold be. Nevertheless, reverses find understand Court's conclusion, impossible agree it. 35 '(d)etermination necessary predicate finding E. Du Pont De Nemours 353 586, 593, 77 872, 877, 1057. order horizontal 7, faced necessity showing percentages shares products.1 manufactured cable, chiefly cable. Over 90% de minimis (.3% share). (both copper), insufficient support requisite effect, F.Supp., 518—519—a conclusion here. More forthcoming, set apart rest manufacturing industry. Accordingly, asked general, particular, 36 finding, good reason. 'area effective competition,' determined accordance principles laid down our decisions. 'well-defined' 'economically significant' submarkets. 1523. attempt formulate rigid standard boundaries, indicated broad-ranging pragmatic evaluation realities required. courts admonished examine 'such indicia public recognition entity, product's peculiar characteristics uses, unique facilities, prices, sensitivity changes, specialized vendors.' Ibid. 'practical indicia' considered boundaries express terms concept defined close substitutability either (demand) (supply), ultimately limits exercise power, delimiting area acquisition's effects ascertained. 37 care, differentiate products; functionally interchangeable; vendors products. 509. not, implies, distinct. explicitly recognized fact, concluded closer examination difference foreclose 'actual competition.' Ibid making based indicia, established alleged generally—was sum conductors, it, too, constitute segment, elements improperly arbitrarily excluded. Id., 510 38 Distr ct thoughtful job. proper law, reasoning impeccable. overrules decision wave hand. basis assertions, 'fabricators competitive,' 'the business,' explicit summarily concludes 'for commerce." 39 neither entity. identified reported Bureau Census function type, 'not according metal manufacturers regard themselves simply insulators products.' Moreover, complete interchangeability aluminum, constantly review 'switch readily conditions.' result, feel himself he asserts, disadvantage. supply flexibility implies exerts profound restraint upon manufacturer's achieve sort advantage. 40 points nothing justifying second assertion 'price * business.' Whether matter evidence '(s)ince completely interchangeable performance standpoint, utility choose voerhead solely economics. requires numerous cost itself.' (Emphasis supplied.) amply supports finding. undisputed testimony some situations, final counterpart higher connectors copperaluminum becomes less complex required copper-aluminum always borne out judge, supported record, areas gained 'increasing use,' 'lively products'; aluminum-copper 'substantial quantities' version sold. 41 logic, lumping Even claim competitive; equipment engineering skills manufacture sale; 'recognized entity' submarket. says, 'a logical extension f ndings,'2 repudiation findings. adds note, does, conduct All customers. nonsequitur separation 42 short correctly described essentially company,' undertaken 'in face declining market,' obtaining insulating know-how diversification needed 'to overcome obtain captive competitor.' 512. am totally unable join ipse dixit transformation 'know-how' 43 affirm Section Stat. 731, amended Antimerger 64 1125, 18, provides part: 'No corporation engaged shall acquire, directly indirectly, whole part capital subject jurisdiction Federal Trade Commission acquire section country, monopoly.' 'wholesale' carry current high voltages substations. 'retail' substations consumers. Cf. commercial banking services, e.g., loans banks institutions. enjoy advantages range substitutes furnished institutions.' 356, 1737 Bethlehem Steel Corp., 168 576, 593; Comm'n, 114 U.S.App.D.C. 2, 309 223, 229; Corn Products Refining 234 F. 964, 976. criticizes overlooks Having interproduct exists, Surplus Property 1944, 58 765; 91 333; 153 132. Litigation terminated 28, 1957. Twelve days later, first Rome. acquisitions Olin Mathieson (a one-half owner Inc.) acquired Southern Electric Corporation, manufacturer, conductor; Bristol, Rhode Island, plant Rubber Company, top moves, threat thought pose, specifically influencing partly response Reynolds, 1961, John A. Roebling's Sons Division Colorado Fuel Iron fabricator. Finally, February 1963, late below, Aluminium, Ltd., Canada announced Central series mergers, now remain nonintegrated whose individual (based figures, latest record) amounted 1%. Nat. 915. note

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