Document: 378 U.S. 441 84 S.Ct. 1738 12 L.Ed.2d 953 UNITED STATES, Appellant,v.CONTINENTAL CAN COMPANY et al. No. 367. Argued April 28, 1964. Decided June 22, [Syllabus from pages 441-443 intentionally omitted] Ralph S. Spritzer, Washington, D.C., for appellant. Helmer R. Johnson, New York City, appellees. Mr. Justice WHITE delivered the opinion of Court. 1 In 1956, Continental Can Company, Nation's second largest producer metal containers, acquired all assets, business and good will Hazel-Atlas Glass third glass in exchange 999,140 shares Continental's common stock assumption by liabilities Hazel-Atlas. The Government brought this action seeking a judgment that acquisition violated § 7 Clayton Act1 requesting an appropriate divestiture order. Trying case without jury, District Court found had failed to prove reasonable probability anticompetitive effect any line commerce, accordingly dismissed complaint at close Government's case. United States v. Co., 217 F.Supp. 761 (D.C.S.D.N.Y.). We noted probable jurisdiction consider specialized problems incident application interindustry mergers acquisitions.2 375 893, 173, 11 123. reverse decision I. 2 industries with which is principally concerned are, as trial court, can industry, container industry plastic each producing one basic type made metal, glass, plastic, respectively. 3 corporation organized 1913 acquire assets three manufacturers. Since has 21 domestic companies well numerous others engaged packaging business, including producers flexible packaging; manufacturer polyethylene bottles similar containers; 14 paper containers paperboard; four making closures Hazel-Atlas—producing containers. 1955, year prior present merger, Continental, $382 million, was company field, shipping approximately 33% such sold States. It producer, American accounted 71% shipments. National largest, shipped 5%, remaining 24% market being divided among 75 90 other firms.3 4 During not only Company but also Robert Gair Inc.—a leading paperboard products—and White Cap Company—a vacuum-type food so rose million 1955 more than $633 its net sales operating revenues during time increased $666 $1 billion. 5 West Virginia excess $79 $37 million. Prior absorption into pattern dominance few firms prevailed field. Hazel-Atlas, 9.6% shipments third. Owens-Illinois 34.2% Anchor-Hocking 11.6%, 44.6% least 39 firms.4 6 After initial attempt prevent merger under 1950 consent decree failed, terms held inapplicable proposed acquisition, moved preliminary injunction against consummation sought temporary restraining order pending determination motion. denied, on same day accomplished. then withdrew motion continued divestiture. At conclusion case, dismissal complaint. granted Rule 41(b) Federal Rules Civil Procedure before formal filed handed down Brown Shoe Co. States, 370 294, 82 1502, 8 510; additional briefs directed applicability were filed. judge guidelines laid established right relief Act. This appeal followed. II. deal first relevant market. disputed here, held, geographical entire As product market, court found, conceded parties, lines commerce. Beyond these two markets, however, urged recognition various some them defined end uses tin substantial competition. These end-use claims beer soft drink canning toiletry cosmetic medicine health household chemical industry. F.Supp., 778-779. 9 dealing claims, recognized there competition findings extent nature: 10 '(T)here vigorous inter-industry between products they manufactured. Metal can, manufacturers enlarge their thousands packers hundreds varieties food, chemical, industrial products, ranging ripe olives fruit juices tuna fish smoked tongue; maple syrup pet coffee; embalming fluid floor wax nail polish aspirin veterinary supplies, take examples random. 'Each within it improve would new customers or hold old ones.' F.Sup ., 780—781. Furthermore that: 'Hazel-Atlas part overall pattern, separate distinct favor users products.' Id., 781. 13 nevertheless, exception—containers beer—rejected claim existing resulted markets Government: 'The fact inter-product determinative metes bounds market.' Ibid. court's view, make 'appropriate distinctions * commodity interchangeability use cross-elasticity demand Act significance.' 781—782. competition, concededly present, did remove category conglomerate combination, 'in combined another purpose establishing diversified 782. cannot accept conclusion. Court's having existence containers—the issue erred whether admitted quality deserving protection therefore basis defining resolving we are instructed hand '(f)or every product, substitutes exist. But meaningfully encompass infinite range.' Times-Picayune 345 594, 612, n. 31, 73 872, 882, 97 L.Ed. 1277. On improper 'to require be fungible considered E. du Pont De Nemours & 351 377, 394, 76 994, 1006, 100 1264. terminal extremes, must recognize meaningful where Though 'outer boundaries determined itself it,' may 'within broad well-defined submarkets which, themselves, constitute antitrust purposes.' Inc. 325, 1524. Concededly offer no precise formula necessitate, rather avoid, careful consideration based upon record. 15 quite true have different characteristics disqualify other, form, particular use; machinery necessary pack employed when cans used; user does shift back forth price factors might desirable; themselves companies. important considerations sufficient obscure competitive relationships record compellingly reveals. 16 Baby packed entirely cans. played significant role inducing dominant designing 'what become typica baby jar.' According estimate, 80% now moves been satisfied contemporary intensive efforts increase share expense glass. 1954, years Director Market Research Promotion Container Manufacturers Institute concluded, largely secure 'the beginning fight aggressively field losing ground glass.' cooperation carried out what called Food Depth Survey Los Angeles discover specific reasons preference glass-packed food. Largely response in-depth surveys, advertising campaigns conducted designed overcome mothers' prejudices containers.5 17 been, is, predominantly territory, '(a)fter considerable difficulty developed strong enough resist pressures generated carbonated beverages' 'made strenuous promote beverages bottles.' 798. major factor rivalry. studied results tests determine could 'penetrate tremendous market,' centered around advantages over emphasizing features convenience stacking storing, freedom breakage lower distribution costs resulting lighter weight 18 '(a)lthough almost packaged bottles, relatively short period great headway container.' 795. Regardless upper given moment, intense battle behalf bottle waged both trade associations individual manufacturers, principal protagonists Continental. Technological development weapon battle. A growth appears no-return feature. responded cheaper one-way bottle. 19 canning, cosmetic, health, below. supplanted packing instances types 'glass container, lines, attempting develop ones wider customer appeal,' 804, result 'manufacturers another.' 805. 20 light findings, think unduly narrow construction 'competition' protected 'reasonable interchange-ability demand' judging facts reject below insofar holds used statute intended limit identical kind exists, example, those another, several Certainly, here involved 'inter-industry competition' distinctive automatically reach 7. Interchangeability 'recognize where, fact, exists.' U.S., 326, S.Ct., our view general confrontation insistent, continuous, effective quantitywise very substantial. replaced uses; purposes; trying expand other;6 preempt physically suitable, even though traditionally regarded exclusive domain competing industry.7 differing degrees opposing formulating own pricing policy.8 Thus, complete immediate most intraindustry mergers, long run innovation stimuli brings 7's competition-preserving proscriptions. 22 Moreover, user's choice other. That differentials particularly immediately responsive changes matters issue. Whether packager depend package equally considerations. consumer, begin prefer find his problem housewife packer cans.9 nevertheless interchangeable 23 conclude area far broader beer. identify particularity exists nonexistent, too remote, ephemeral warrant application. Nor furnish exact quantitative enjoyed participating '(t)he 'market,' concepts law economics, measured bounds. Obviously magic inheres numbers.' 611-612, 881, 'Industrial activities confined trim categories.' 395, 1007, claimed deficiencies sweep aside large makers know rivalry pervasive overlap position merger's impact embraces merging firms' respective industries. 24 necessarily implied commerce embracing delineating provide adequate measuring effects contours must, nearly possible, conform reality. Where cuts across commerce; otherwise made. 25 Based evidence thus revealed treating compete. There do compete, need shown. Act's concept framework measure noncompetitive segments precludes treated 26 pressed However, since coextensive industries, composed largely, if entirely, particularized Government, see nothing preclude us reaching question prima facie stage 27 suggestion include paper, foil materials business. up negative cans, together, exist 1524, 510. III. 28 approach ultimate mind teachings Shoe, supplemented elaboration Philadelphia Bank, 374 321, 83 1715, 915; El Paso Natural Gas 376 651, 1044, 12. primary indicia power single qualitative test. viewed functionally context involved, structure, history future. size inherently suspect, elaborate proof behavior dispensed design undue concentration. deals includes sufficiently imminent. See supra. 29 occupied together about total. amounted billion total 40 $433 gross 31.4% industry's $1,380,000,000. 30 addition demonstrating highly concentrated clearly front obviously pushed wherever pushed. Its ran 43% 46% 1957. shipments, disregarding returnable factor, 36% 38% Although small percentage ranged 26% 1957 portion beverage 7.2% 5.4% 1956 6.2% (for figures Hazel-Atlas' share). covering nonfood 30% uses. 31 industries—prior undeniable. Of 59 (39 3/4 billion) (19 1/3 21.9%, dispersed compete.10 six ranked second. 32 When added significantly top controlled 55.4% 9.6%, 1,857,000,000 annual exceeded plants variously located shipped, sixth 3.1% 33 presented leads violation dominated 70.1% business.11 21.9% 3.1%, sixth. vast market—amounting $3 sales—a already belonged merger. By 14% 25%, reduced five competitors who threatened position. approaches presumptively bad Aluminum America, 377 271, 1283. incremental acquiring firm's considerably larger falls squarely principle 'history tendency toward concentration industry' tendencies further 'are curbed incipiency.' 345, 346, 1535. 'concentration great, importance preventing slight increases preserving possibility eventual deconcentration correspondingly great.' 365, 42, 1742; 34 insists, whatever nature general, produced hence argument ignores matters. 35 First: characteristic While negligible fields. wide-mouthed jars narrow-necked former latter. Both toiletries cosmetics, others, supplying needs indeed important. 8% widemouthed food; 10% 40% industry; 9% 28% cosmetics 6% 25% said, purposes. appeal. clear set off directly process carries foreclosing actual potential concerns. removed independent 36 placing heavy reliance management division after while pressure because government anti-trust suit. guide consistently interest contrariwise unwilling push exclusion strong. ability, know-how capacity satisfy customers' demands want longer lose solely consumer preference, perhaps triggered forces turn And normally look elsewhere he discovers jar answer pressing problems. 37 Second: developments representing acceptable effort diversify gain advantages, thereby strengthening declared laws promote. firm makes enhances vigor effectiveness wn efforts. 38 Third: gigantic intrinsic endanger much triggering said '(i)f achieving 5% control approved, required approve future Brown's shares.' 343—344, 1534. Fourth: self-evident lack current diminished adverse concluded effectively insulate presently directing possessing so. Two illustrate. drinks currently imaginative promotional preferences either comparatively little difficulty, judgments, capacity. diversion help diminish likelihood realizing competitor line. Our compels disagree 'likely cease innovator (the container) line.' 790. sense entity empire busily persuading public metal's superiority use, plans output use. certain actually enhance long-run lessen holding consonant arrest arrangements incipiency. Some offered packer. areas sensitivity packer's move competitor's inherent deterrents occur brands bottles. transfers acts deterrent attempts members reap possible benefits raising prices above level engaging comparable practices. today safely altered, past. From point static situation dynamic potential, discharged burden proving effect. Accordingly rever ed remanded proceedings consistent opinion. 41 Reversed. 42 GOLDBERG, concurring. 43 I fully agree '(s)ince reality.' Ante, p. 457. 'on record,' showing 'that (warrants) compete.' wish clear, that, read Court, purport finally decide 'dismissed case,' ante, 444, remand open defendants rebut inference compete matter 'competitive reality' 44 HARLAN, whom STEWART joins, dissenting. 45 Measured yardsticks am familiar, conclusions say least, remarkable. Before subject manufactured containers.1 ample support record, wholly adversely affect Yet manages strike Act, because, anticompetitive.2 With respect, erroneous analysis, abrupt unwise departure law. 46 'we found,' 449, 'inter-industry' less 'intra-industry' mergers. has, effect, past cases, 'industry,' 'line commerce,' susceptible reduction formula. 1523, de 394 396, 1008, 1264; Publishing 611, would, therefore, artificial inconsistent protective 7, supra, 311—323, 1516—1522, 510, differentiate permitted prohibited merely asking 'industry' 'industries.' 47 Recognition thwarted limiting intramural strictly 'industries,' mean, commerce' serviceable. More precisely, not, majority seems think, entail 'meaningful found. declares 'whether 449. (Emphasis added.) similarly phrased: '* (W)e Quite obviously, simply reads element destroys usefulness aid analysis. 48 distortions evidenced Having 'interindustry containers' concludes industries' 'product market' measured. Applying premise, notes 'dominant position' 458, finds 'major 'relevant market—the industries,' 459. rank market—again, 460. 'evidence,' coupled market,3 violates 49 firms,' says, 'approaches 1715 (10 915).' 461. Bank banks plainly commerce,4 situation, involves bizarre percentages nonexistent enable dispense 'elaborate effects,' 458. shall show, 'dispensed with' heed, shows how completely fanciful market-share analysis is. 50 fairness should err failing relies. For suggest existed until got Court.5 seriously exists.6 truth form 51 accepts finding, 'deals manufacturing products': 780. 52 'Concededly 53 ones. 54 Only 'concerned,' 457, reason dips network establishes leaving account kinds containers: 'plastic, business,' ibid.7 relies travesty spoke 'well-defined submarkets' '(t) submarket' 'practical indicia,' 510.8 provides definition unrelated reality whatsoever, bootstrap. 55 wrong says 'employed 7' (is limited) products,' 452. contrary, expressly stated 'Section applicable warrant,' 783 (footnote omitted).9 difference lies next sentence: 'But application.' 56 If attention paid below, obvious led substitute meaningless figure—the merged companies' 'market'—for sound, factual found:10 57 (1) respect '(p)rior manufacture sell *.' 770. 58 (2) 'Continental through subsidiaries, (3) 60 fared better likely incentive introduced slackening sales. pointed out, object diversification, actively promoting intra-company lines. proportion scarcely seemed suffer 61 'Moreover, subsequent research promotion program realities, notion patently absurd.' 790 omitted). 62 (4) 63 'In advanced converse proposition concerning diversification course pursued slacken Indeed, planned little, any, producer.' 793. 64 foregoing dampen belief study proof, company) 65 Surely failure mock-statistical reflect demonstrates concedes,11 event thought obvious: attacked effected, shortcut 'market share' 362-365, 1740-1742, place. legality surely depend, inquiry involved. depends—or depend—on involved: industry.12 quoted plain, reference setting give full, artificial, scope. 66 spurious laying 'per se' rule related unlawful Had fail justified, understand lay behind decision. course, inappropriate prescribe per se rules problem, cf. Motor 372 253, 696, 738, let alone unsound. bases suggested casual glance direction. 67 event, tack. chooses instead invent one, imagined; businessmen economists vain; sprang took place undone. idea goes nor bar. Hitherto, validity tested examining identifiable, 'well-defined' (Brown 1523) markets. Hereafter, (or nonexistent) rest uneasy lest create dampens bits pieces real No fear unfounded, creative powers extensive recognizing exist.' imagining none 68 affirm Section Stat. 731, amended Celler-Kefauver Antimerger 1125, U.S.C. 18, part: 'No acquire, indirectly, whole capital Trade Commission com- merce section country, substantially tend monopoly.' parties refer word meaning. compete; roughly equivalent commerce.' interpretation businesses, hand, denote aggregate enterprises employing production marketing facilities markedly characteristics. many instances, economic endeavor embraced coextensive, employ sam often helpful referring similarity products. So viewed, becomes concept. raw material cost bearing tin-coated steel (tin plate). uncoated (blackplate) aluminum plate. Other soldering compounds, paints, varnishes, lithographic inks, cartons packaging. Cans rigid unbreakable, hermetically sealed impermeable gases. They heat-processed faster, chemically inert. Forty-nine association known maintains professional staff three. Acting committees, technical can. sand, lime, soda ash, determining labor. rigid, breakable, and, unlike easily resealed opened. recognizes wide mouth neck. Members hav association, Institute, employees standing promotion, research, specifications, standard testing procedures, freight rates, labor relations, liaison work government. recent decades expansion rapid than, realized of, World War II, increments served supply multiindustry picture relative newcomer, impressive debut mid-1940's. dollar volume compared counterparts, continues steady rapid. 1952 series advertisements following '5 why ideal foods:' '1. ECONOMICAL. usually priced low '2. STERILE. Processing sterilizes inside, light, dust germs can't get '3. EXTRA SAFETY. stay opens them. '4. SHATTERPROOF. Steel won't break, shatter chip. '5. SAFE FOR LEFT-OVERS. left just keep covered refrigeration.' Consumer regional traceable preferred container. successful Baltimore—due 'a motivated brewer'—but Detroit. 60% west Mississippi. Canadian official reported body pickles, preserves, jams Canada. Ford Sammis economists, surveys classifications. 1/4 answers questions asked 12,000 personal interviews, following: 'Every tends standardize standard, traditional host catsup, salad dressings, oil, instant coffee, prune juice, mayonnaise, peanut butter, syrup. standardized cans—regular evaporated milk, dog fruits, vegetables juices. ever Marketers apt try time, constant search ways 'When happens, stages.' 1. Stage 1, according report, occurs secondary brand. Thus '(a) potent force brand, promoted) Recognizing this, constantly incentive. ordinarily maintain status quo, willing gamble positions.' 2. comes manner: 'If brand introducing attributed marketer alike. Advertising, circumstantial points 'Leading prone sit idly cut cover competitors' bets offering customers. creates competition.' 3. available consumers' conflict preferences. want. Sales circumstances seek greatly exceeds type, (sic) eventually once again consumers prefer. marketers alternate outcome favorable chairman board testified takes beer, drinks, lesser degree cosmetics. assessing (the) '(a)ssuming merchandising received, acceptance price.' intercompany memorandum key estimation, pricing,' 'be field.' An described organization's dvertising three-pronged, packer, retailer, consumer. Determination somewhat difficult ordinary indices expressed differently, reporting Census Bureau tinplate consumed manufacture, units data supplied derived conversion relationship consumption manufactured, permitting comparison positions wit appear relied disclosed 33%, respectively, 773. objects scheme, arguing feature persuaded. systems statistical notation referential absolute prerequisite shares. Consistent declarations cases high relevance believe variations way inhere blind significance percentages. compilation statistics 'precision detail accuracy presented.' 342, 69, 1533. firms, are: Co.... 26.8% Co.. 11.2% 3.8% Co..... 3.3% Co.._3.1% Total............. purposes disregarded. description 761, 769—770. December 29, 1950, pertinent confesses pp. 459-460, 10. 'We (relevant services market) appraise appellees' cluster (various credit) (such checking accounts trust administration) denoted term 'commercial banking,' composes sum, commercial banking 'sufficiently inclusive realities.' C Zellerbach Corp. Comm'n, 296 F.2d 800, 811 (C.A.9th Cir. 1961).' 356-357, 1737, 915. 'lines industry,' 'metal closures' (not here), argued used, e.g., 'containers industry.' suggestion, accepts, appraised sale *' (Brief, 18), concedes artificiality doing, rejects adopted states test illegality involving 'omits regarding generally unavailable full consequences 22.) advocates 'can lessening (a) industries; (b) (c) approach, virtue facing logic, frankly disavows test, infra, 476, last appreciates this. discussed hereafter, adoption demonstate tell inappropriate. collectively 'other business' included commerce? apparently multilateral. indicia' specified were: 'industry submarket entity, product's peculiar uses, unique facilities, customers, prices, changes, vendors.' 1524 weigh speaks segregated observed neither abstractions conceptions.' 768. majority's opinion, district suppose, deemed erred. summary gave detailed contentions, pages. summarized statement: 'Viewing whole, apart theory, establish essential elements apparent discussion relating testimonial foundations d smissal entry defendants.' 787. note 6, 5, abandoned except 'all 'canning' food.' 799. reasons, supports, rejecting contention 799-802.

Category: 7