Document: 384 U.S. 563 86 S.Ct. 1698 16 L.Ed.2d 778 UNITED STATES, Appellant,v.GRINNELL CORPORATION et al. GRINNELL CORPORATION, Appellant, v. STATES. AMERICAN DISTRICT TELEGRAPH CO., HOLMES ELECTRIC PROTECTIVE AUTOMATIC FIRE ALARM Nos. 73—77. Argued March 28 and 29, 1966. Decided June 13, [Syllabus from pages 563-565 intentionally omitted] Daniel M. Friedman, Washington, D.C., for appellant in No. 73 appellee 74—77. John F. Sonnett, New York City, 74 appellees 73. Macdonald Flinn, 75 W. Drye, Jr., 76 J. Francis Hayden, 77. Mr. Justice DOUGLAS delivered the opinion of Court. 1 This case presents an important question under § 2 Sherman Act,1 which makes it offense any person to 'monopolize * part trade or commerce among several States.' is a civil suit brought by United States against Grinnell Corporation (Grinnell), American District Telegraph Co. (ADT), Holmes Electric Protective (Holmes) Automatic Fire Alarm Delaware (AFA). The Court held Government entered decree. All parties appeal,2 because deems relief inadequate defendants both on merits ground that denied them fair trial. We noted probable jurisdiction. 381 910, 85 1538, 14 432. manufactures plumbing supplies fire sprinkler systems. It also owns 76% stock ADT, 89% AFA, 100% Holmes.3 ADT provides burglary protection services; services alone; AFA only service. Each offers central station service hazard-detecting devices installed protected premises automatically transmit electric signal station.4 manned 24 hours day. Upon receipt signal, station, where appropriate, dispatches guards notifies police department direct. There are other forms protective services. But record shows subscribers accredited (i.e., approved insurance underwriters) receive reductions their premiums substantially greater than reduction received users kinds In 1961 companies business grossed $65,000,000. Holmes, three largest terms revenue: (with 121 stations 115 cities) has 73% business; 12 large 12.5%; 2%. Thus controls have over 87% business. 3 Over years purchased assets 27 engaged providing burglar alarm acquired City using station. Of these 30, officials seven agreed not engage area periods ranging five permanently. After control defendants, latter continued attempts acquire companies—offers being made at least eight between 1955 1961, including four nondefendant When present was filed, each those had outstanding offer purchase one companies. 4 1906, prior affiliation they written agreement whereby transferred its major Middle Atlantic refrain forever engaging area, while watch limit activities night financial institutions. While this modified times terminated 1947, still restricted operated areas been allocated 1906 agreement. Similarly, supplying earlier Holmes. 5 1907 into series agreements with defendant Protection following effect: 6 exclusive right provide supervisory waterflow automatic Boston Philadelphia, cities elsewhere States. 7 obtained everywhere else except right, 8 render nightwatch throughout (Under ADT's however, could given do so.) furnish anywhere country Philadelphia (the AFA). connect systems Automatic. 9 install all actuating used would install, otherwise 10 25% revenue produced provided respective territories; 50% 25%, respectively, resulted such were continue until February 1954. 11 remained unchanged 1949 when Co.'s rights $13,500,000. expired 1954, honor division new contract sharing revenues same basis as before.5 1954 renewed Rhode Island company within prices no lower use certain equipment supplied share informal competing 'that we solicit other's accounts.' reduced minimum basic rates meet competition contracts increased monopoly threatened retaliation firms contemplated inaugurating And indicates that, contemplating opening frequently stressed action deter competitors area. 13 found committed per se violations Act well 236 F.Supp. 244. I. two elements: (1) possession power relevant market (2) willful acquisition maintenance distinguished growth development consequence superior product, acumen, historic accident. shall see second ingredient problem here, what done building empire plainly explicitly single purpose. E. du Pont De Nemours & Co., 351 377, 391, 994, 1005, 100 L.Ed. 1264, defined 'the exclude competition.' existence ordinarily may be inferred predominant market. Tobacco States, 328 781, 797, 66 1125, 1133, 90 1575, said 'over two-thirds entire domestic field cigarettes, 80% comparable cigarettes' constituted 'a substantial monopoly.' Aluminum America, Cir., 148 F.2d 416, 429, 90% power. case, leaves doubt congeries power—power which, our discussion indicates, did hesitate wield—if remaining therefore is, market? 15 product character substitute products must considered, customers turn if there slight increase price main product. That teaching (supra, 395, 404, 1007, 1012), viz., commodities reasonably interchangeable make up 'part' protects treated think justified so doing. Defendants argue different offered diverse cannot lumped together For example, They further urge requires variety included definition. 17 here use, i.e., property, through receives signals. service, accredited, unique competes property protection. barrier combining number combination reflects commercial realities. To repeat, service—the station—that compared 18 cases Act, Clayton (Brown Shoe 370 294, 325, 82 1502, 1523, 510) submarkets separate economic entities. pursue here. First, deal services, products; second, conclude type domination out meaning Act. fragmentizing types lesser units. 19 Burglar sense service; alarms; on. unrealistic break down various available. Central recognize compete effectively, nearly service.6 office utilize combination. Nat. Bank, 374 321, 356, 83 1715, 1737, 915, cluster' donoted term 'commercial banking' distinct line commerce.' view, cluster bank arose whether effect merger 'in commerce' 'substantially lessen reason differentiate 'line' context purposes See First Bank Trust 376 665, 667—668, 84 1033, 1034, 1. national just mentioned, mercantile sense, involved. view lumping appropriate case. 20 are, sure, substitutes none appears operate level interchangeability test Nonautomatic local appear marked differences, low degree differentiation required articles. 21 Watchman far more costly less reliable. Systems set off audible site cheaper but often inoperable without anyone's knowing it. Moreover, risk ringing will attract needed attention help. Proprietary customer purchases operates available; can very government realistic alternatives most concerns. connected directly municipal department. permit direct, private businesses. These alternate differ, told, utility, efficiency, reliability, responsiveness, continuity, sustains position. And, noted, generally allow 22 earnestly despite face modes seem us seriously overstate competition, (as found) 'do unfettered due fringe watchmen services.' F.Supp., 254. What overlook high means many customers, do. Though some willing accept higher favor protection, others able serious interruption businesses, even though covered insurance, thus unwilling consider anything 23 nonaccredited commerce. Virtually status yet standards rating bureau. ones indeed achieved, eyes underwriters, superiorities have. located design, emergency lighting system sources, constantly operators, direct headquarters and, possible, station; equipped devices, circuits meeting requirements underwriters. carriers require condition writing insurance. evidence unaccredited inferior. agree geographic national. individual serves, ordinarily, radius 25 miles. amply supports conclusion level. planning. discussed inspection, certification rate-making largely insurers. schedule prices, rates, terms, varied conditions. deals multistate businesses nationwide contracts. manufacturing interstate. fact does save it, parcel combine presided controlled Grinnell. As found, determining serve, broader reality way built conduct 26 enough about great hold percentage justify finding monopoly. facts already related indicate, achieved unlawful exclusionary practices. restrictive pre-empted segment free device. Pricing practices contained another. acquisitions long faced ADT. Prior settlement dispute controversy prepared go By acquiring 1953, eliminated alternative. Its possibility outbreak might occurred terminated. perfected fix prices.7 II. final decree enjoins general restraining attempting conspiring restrain particular market, monopolizing, monopolize. court ordered file Department standard lists every quotation deviated enjoined stock, assets, enterprise file, later April 1, 1966, plan divestiture option either sell distribute stockholders vary methods.8 employing capacity President Chairman Board Grinnell, James D. Fleming. Both challenge aspects start premise adequate monopolization should put end deprive benefits illegal conduct, impotent violation cases, notably Schine Chain Theatres 334 110, 128 129, 68 947, 957, 92 1245. 29 Government's views aspect presently country. keystone defendants' mere dissolution interests reach root evil. stations. Perhaps support one. recognized trial can; urged 48 cities. seems clear; details determined matter resolved record. 30 Two maintained requirement sign five-year retention title subscriber's premises. On constitute barriers appropriate. pros cons argued considerable vehemence here.9 Again, resolve explored suitable provisions coercive apparently towards creating 31 proposed sell, nondiscriminatory manufactured furnishing clear effectively existing expire, assured replacement parts maintain systems.10 32 urges visitation rights, requiring reports, examining documents, interviewing personnel, commonly granted purpose complied antitrust Gypsum 340 76, 95, 71 160, 172, 95 89. gave explanation refusal grant relief.11 customary provision reconsider 33 concedes barring Fleming employment unduly harsh quite unnecessary kind predatory conspicuous, 34 objects, broad generalized order. properly point out, emphasized supra, 125—126, 955—956, precise violated specifically enjoined. remand suggest course taken. 35 object divest itself holdings wholly justified. Dissolution essential indicated starting Standard Oil Jersey 221 78, 502, 523, 55 619. portion bars since methods method together, injunction repetition practice fully warranted. report deviation list prices. comment extensive changes necessary decree, deem fashioning words, leave open, rest finally discretion III. 36 contend Judge Wyzanski, who tried personally biased prejudiced disqualified sitting he merit. 37 complaint filed answers July 1961. Shortly thereafter taking depositions began. January 1963 directed taken after September 1963. response inquiry sides suggested 1964. 38 At pretrial conference December 1963, counsel told trying consent apart asked how like handle presentation event reached. Grinnell's lawyer next procedure relief—a suggestion construed invitation discuss merits. objected. then brief side setting forth prevailed court's statement 'as I understand you want find likely government's stood virtually uncontradicted,' replied: 'That mind, your Honor, yes.' 39 Thereupon day hearing. stated 'if Honor indicate help come better understanding.' Then colloquy occurred: 40 'THE COURT. don't much. 41 'MR. MCINERNEY. Well, plaintiff know really stake 42 assure helped say. You get rather run say seen. Let me that. *' 43 15, sought further, stated: 'There discussing me. read decide seen position stage it.' 44 3, 1964, postponement trial, saying time. motion. issues limited raised pleadings eliminate considered extraneous Government. 45 'I can't frankly why realize forced look documents dislike doing advance invited me, therefore, regard as, undesirable situation. beginning. look, my extreme government; am Findings Conclusions third-party suits make, size industry, people involved electrical cases.' 46 motion12 disqualification Wyzanski grounds personal bias prejudice.13 47 alleged prejudice disqualifying stem extrajudicial source result judge learned his participation Berger 255 22, 31, 230, 232, 65 481. Any adverse attitudes evinced toward based study briefs requested him make. reflected alleged, stringent called for. During repeatedly mind ruled irrelevant persisted offering said, 'Maybe persuade somebody else. so, right. ceremonial act, concerned.' manifesting closed merely terse repeating previously ruling irrelevant. 49 examined claims claim out. Our critical respects, too lenient now charge prejudice. 50 judgment below affirmed hearings nature consistent expressed herein. ordered. 51 Affirmed remanded. 52 HARLAN, dissenting 53 adequately proved. immediate takes place communities, themselves natural monopolies. enterprises long-term impact vulnerable own plane laws. good (CSPS). developed warrant restricting CSPS. 54 Because ultimate issue effective always include 'reasonably interchangeable' monopolist. 1264. instance, CSPS measure hazard protection: watchmen, alarms, proprietary systems, telephone-connected CSPS, direct-connected (to stations) forth. question, then, extent rivals. majority differences cost, reliability discounts disqualify form customer. expensive alarms unanswered neighborhoods. feasible alternative much foreclosed him, nor choices. From record, competitive segments sum rarely 56 defense standpoint, showing feel pressure present. concrete behavior rank inference proof heavily relied Government—physical self-advertising represent varying discounts. Given burden rests upon Government, misgivings validity Court's findings score law demands before sundered. 57 time close one, ready conclusions supportable. things join Brothers Fortas Stewart voting proceedings light Expediting U.S.C. (1964 ed.), benefit intermediate appellate sifting disposition propose, questions 58 FORTAS, whom STEWART joins, 59 remanded, reshaping believe definition sustained, reverse determination issue, subject proper standards. 60 proscribe combinations restraint trade, monopolies judicial task difficult state: Does show attempt monopolize? If characteristics, scope effect? finally, remedy equity decree? 61 inquires depends referents: geographical restrained monopolized, little difficulty delineates 'market' sufficient clarity usual injunctive cases. See, e.g., Griffith, 100, 941, 1236. essence monopolization, attempted, divestiture. purposes, essence, cases1 kindred 'line fundamental. define allegedly engrossed determine engrossment; shaped consequences monopoly, restore produce competition. Cellophane Case), 389—396, 1003—1008, 1264; 416 (C.A.2d Cir. 1945). 62 search market' undertaken pursued relentless clarity. uses law. Unless done, results distorted contain. 63 markets industry concerned. tailored precisely fit concluded waterflow, etc., together. location. business, viewed nationally, 'insurance (CSPS)—that fire, furnished fits neatly defined. fact, comes filling defined.2 Procrustean 64 nationwide. need intensely local—more far, 357—362, 1738—1740, 915.3 travel. fixed locations. are. spot. personnel bring scene minutes. Even 25-mile radius. Where tenants locally ownership, interlocking management corporate direction, selling financing, advertising, purchasing equipment, like,4 affirms conclusion. non sequitur. permissible seize operation bootstrap this. potential buyer rationally goods seeks. test, structure supplier-customer relations,' 357, 1738, quoting Kaysen Turner, Antitrust Policy 102 (1959). Clark Tampa Nashville Coal 365 320, 327, 81 623, 628, 580, 'CAREFUL SELECTION OF THE MARKET AREA IN seller operates, purchaser practicably supplies.'5 suppliers service—what has, or, absence have, real choice facilities? place, account factors distance feasibly furnished, consistently cost functional efficiency. 67 incidental outcome inquiry. sellers meet. ascertainment legal answered: 'monopolized' 'restrained' trade; prevent obstruct entries services? issues; 'relevant nothing studied failure assess exists, exist, economically areas—in world. Here, correct local. local: locally. If, areas, markets, features condemned practices, fashioned. hand, gross leads gross, address realities place. happened here: logically led situation, parent nexus, instead areas—the situations. directs 'some (unspecified) divestiture' recognition plain direction 'market-by-market' analysis breaking wherever directing, implies command: reconsidered improper markets. 69 'product' dramatically demonstrates Procrustean—that dimensions defendants. recognizes seeking sources. 'watchmen, watchdogs, confined site, (often, always), (central services), CSPS.' finds city 'exercise option' differently choose locations 70 isolates engage. eliminates sources conscientious enumeration them. 'central station' 'accredited' pretense peculiar basis. relies solely quality, tend give 'noticeably larger' policyholders approves strange red-haired, bearded, one-eyed man-with-a-limp classification. 72 unreality best illustrated example. Consider situation retail merchant Pittsburgh wishes protect store burglary. Company, subsidiary Pittsburgh. gerrymandered today totally excludes consideration availability somewhat reliable (although expense discounts) watchman duplicates Instead, name realities,' instructed market'—which available alternatives—requires serve places Honolulu.6 assume curious configuration 'fringe competition' cities, 'loss' total 'market'—namely, 'accredited odd abundant switch another, approach justification economics, supportable buyers—or substantial, identifiable trade—look neither type, quality 77 definition, accepted court, distortion inevitably superficial hands highly skilled judge. Brown Shoe, 'reasonable cross-elasticity demand,' determines boundaries U.S., S.Ct., 1523. Case, 380, 998. language, availability, rivalry practical users—although possibly user user. arbitrarily excluded 78 wide disparities appeal never affect follows create categories buyers sellers. standard. fall short justifying narrowing practiced refer exclusion non-accredited stations, seeks reference differentials relative consumer But, eliminating category 'can turn' supplies,7 exclusion. sort supposedly not-quite-so-attractive activity measured, entirely unjustified record.8 79 importance truncated vividly say, held, fraction 'predominant' share, rebuttable presumption follows. denominator 'market') numerator volume). Clearly, 'presumption' unwarranted unless competitors. contrary supported decisions (General Motors), 353 586, 872, 1057. purposes: automobile fabrics finishes. embraces range options products. contrary, findings, candidly read, imply, exist Those options, assessment 80 today, argument 'broken down' service: etc. rejects evaluate 'cluster' such. points approach. Brennan's carefully distinctive characteristics banking services: (e.g., checking accounts) institutions, characteristics. 356—357, 1737—1738. 668, (per Douglas, J.). Paramount Pictures, 131, 1260, International Boxing Club N.Y. 358 242, 249—252, 245, 249—251, 270, 'first-run' moving pictures championship boxing matches sufficiently demand distinctiveness exists discussed, separable evident. None unique, discussed. Nor common One Another, furnishes Only full 'cluster.' mean prove defining isolation, ought specified impelled circumstances account. intend foregoing drastic necessarily unjustified. possible monopolize found—and perhaps force—in Relief pervasive, system-wide, follow, decreed situations, impossible, submit, judgments incorrect unreal market.' Now, mandate, market-by-market begin foundation judgment, superimposed should—in opinion, must—take situation—all certainly services' sanctions Since courts entitled reappraisal liability sound purposes. Stat. 209, amended, ed.). 2, 823, ed.); Loew's, Inc., 371 38, 97, 11. figures. increased. Counsel advised holds AFA. Among following: (3) (any malfunctions system—e.g., water pressure, dangerously temperatures, etc.—are reported station); (4) (night operating key-triggered device premises, making rounds well; alerts something amiss). 1959, complained AFA's excessive. replied, letter president (which AFA), compensation observance territorial restrictions: '(T)he restrictions placed plus confine exclusively, presumably future, definitely retarded expansion past growth. (AFA's) contribution big.' (Emphasis added.) Thus, alarm; supervision; watchman's reporting manual alarm. firms, six panoply lacked above-described Appellant assertion 'very few flatly contradicted clearly consciously acquired, once shown dominance skill, like. Although originally permitted shareholders, abandoned Specifically, disagreement are: disadvantage vis-a -vis firms; responds law, subjected borne others. Bausch Lomb Optical 321 707, 723—724, 805, 813—814, 88 1024. Some wish contracts; remand. whether, retain installs, accredit system. This, too, prevail violations. 'settlement talk,' concession factor take provision, gained acceptance. n. 10, supra. 144 ed.) part: 'Whenever party proceeding district files timely affidavit pending party, proceed therein, another assigned hear proceeding.' referred Chief Woodbury Appeals Circuit hearing oral 144. Continental Can 378 441, 447 458, 1741—1747, 953; Alcoa, 377 271, 273—277, 1283, 1285—1287, 314; 915; 324, 510. alone, 73%. J.); Crystal Sugar Cuban-American 152 387, 398 (D.C.S.D.N.Y.1957), aff'd, 259 524 1958). danger ante, 575-576, overstating implication basis, multi-state significant degree, insurers inspect certify 336—337, Company Holmes' fire. 627. example illuminating disturbing. narrow says diference 'could compared' difference compact six-cylinder car chauffeur-driven sedan. probably true luxury automobiles compacts slight, clear-cut suggest. careful issues. hand manufacturer maker cars, inconceivable overlap

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