Document: 495 U.S. 271 110 S.Ct. 1853 109 L.Ed.2d 240 CALIFORNIA, Petitionerv.AMERICAN STORES COMPANY et al. No. 89-258. Argued Jan. 16, 1990. Decided April 30, Syllabus Shortly after respondent American Stores Co., the fourth largest supermarket chain in California, acquired all of outstanding stock chain, State filed suit District Court alleging, inter alia, that merger constituted an anticompetitive acquisition violative § 7 Clayton Act and would harm consumers throughout State. The court granted a preliminary injunction requiring to operate stores separately pending resolution suit. Although agreeing had proved likelihood success on merits probability irreparable harm, Appeals set aside ground relief exceeded Court's authority under 16 order "injunctive relief." relied earlier decision which it concluded basis its reading excerpts from subcommittee hearings 16's draftsmen did not intend authorize remedies "dissolution" or "divestiture" private litigants' actions. Thus, held court, "indirect divestiture" effected by was impermissible. Held: Divestiture is form relief" authorized 16. Pp. 278-296. (a) plain text 16—which entitles "[a]ny person . have injunctive against threatened loss damage when same conditions principles as conduct will cause courts equity"—authorizes divestiture decrees remedy violations. On face, simple grant "have seem encompass just plainly comparable language 15 Act, authorizes district "prevent restrain violations" antitrust actions brought United States, preferred for illegal mergers. Moreover, states no restrictions exceptions forms plaintiff may seek order, but, rather, evidences Congress' intent traditional equitable govern such relief. section's "threatened damage" phrase does negate court's power divestiture. Assuming, lower courts, question violated laws, merged enterprise threatens economic consumers, prohibit causing harm. Nor limit granting "conduct," opposed "structural relief," issuance prohibitory, rather than mandatory, injunctions. That simply part general reference standards should be applied fashioning Section construed remedy, fits well statutory scheme favors enforcement, subjects mergers searching scrutiny, regards best suited redress ills merger. 278-285. (b) legislative history require narrowly. American's reliance hearing cited Graves v. Cambria Steel 298 F. 761 (1924)—each contains statements indicating suits dissolution do lie 16—is misplaced. At time Act's framing, vague ill-defined concept encompassed drastic corporate termination fact Congress excluded more severe sanction imply formulation cannot permit Since inferences draws are confirmed anything else contemporaneous judicial interpretation, must taken at word endorses "conditions principles" governing equity courts. There being nothing section restricts courts' jurisdiction, provision generously flexibly enable chancellor impose most effective, usual, straightforward rescind unlawful purchase. 285-295. (c) Simply because has appropriate cases mean so every situation Government entitled 15. A litigant establish standing proving his own interests, barred defenses laches "unclean hands." 295-296. 872 F.2d 837, (CA 9 1989), reversed remanded. STEVENS, J., delivered opinion unanimous Court. KENNEDY, concurring opinion, post, p. 296. H. Chester Horn, Jr., petitioner. Rex E. Lee, Washington, D.C., respondents. [Amicus Curiae Information pages 273-274 intentionally omitted] Justice STEVENS 1 By merging with major competitor, Co. (American) doubled number supermarkets owns California. sued, claiming violates federal laws 62 California cities. complaint prayed until case decided, then divest itself assets located preventing integrating operations two companies. Ninth Circuit agreed conclusion made adequate showing probable merits, but 38 Stat. 737, amended, U.S.C. 26. In view, divestiture, therefore 837 (1989). We certiorari resolve conflict Circuits over whether within meaning 493 916, 275, 107 256 conclude is. 2 * operates 1,500 retail grocery 40 States. Prior merger, 252 Lucky Stores, Inc. (Lucky), operated seven Western Midwestern largest, 340 stores. second third Von's Companies Safeway were December 1987. 697 F.Supp. 1125, 1127 (CD Cal.1988); Pet. Cert. 3. 3 March 21, 1988, notified Federal Trade Commission (FTC) intended acquire Lucky's price $2.5 billion.1 FTC conducted investigation negotiated settlement American. May 31, simultaneously both alleging proposed consent disposing charges subject certain conditions. Among those requirement comply "Hold Separate Agreement" companies' divested several designated supermarkets.2 accepted terms FTC's order. early June, paid consummated Delaware "short merger." F.2d, 840; Brief Respondents 2. matter legal into single entity June 9, practical their business yet been combined. 4 August gave final approval next day this action States Central alleged Sherman 1, 18, acquisition, "if consummated," considerable State: Competition potential competition "in many relevant geographic markets eliminated," App. 61, "the prices food non-food products might increased." Id., 62. prayer relief, sought, (1) "requiring hold businesses adjudication merits"; (2) "such including rescission necessary prevent effects" complaint; (3) "an California." 65, 66-67. 5 California's motion temporary restraining and, considering extensive statistical evidence, entered injunction. Without reaching claim, prima facie violation Act. found "that Californians irreparably harmed if completed," F.Supp., 1134, suffer enjoined "far outweighs" result 1135. also rejected argument requested foreclosed prior holding contended "tantamount since companies already completed, disagreed. It Hold Agreement still effect, transaction completed merger.3 6 interlocutory appeal pursuant 28 1292(a)(1). first abused discretion finding Nevertheless, International Telephone & Telegraph Corp. General Electronics Corp., 518 913 (1975) (ITT ), reasoned decisions established " 'divestiture available Act,' "section indirect is, face effect. IT T, 924." 844. rule issued legally Observing "these never all," "[s]uch requires divestiture." 845. Finally, added "compounded misapprehension law misunderstanding status Specifically, erred concluding "FTC's order" undid effect merger" "had place" according corporation law. Ibid. application, O'CONNOR stay continuing further review 492 1301, 106 616 between First Cia. Petrolera Caribe, Arco Caribbean, Inc., 754 404 (1985). now reverse. II 8 T term used ambiguous statute's determine includes Then, based colloquy during before Judiciary Committee House Representatives, bill litigants. 921-922. reasoning. instead fair text, buttressed recognized canons construction,4 required construction words broad enough doubted references referred "divestiture," consider evidence sufficiently probative, any event, justify restrictive seemed inconsistent basic policy. 415-428. analysis Circuit, places greater additional arguments. First, argues there significant difference applies other parties. former encourage whereas latter limited "conduct." Second, historical context, reflects well-accepted distinction prohibitory injunctions (which authorized) mandatory (which, argues, not). 10 directs us provisions natural place begin our analysis. grants jurisdiction "to violations Act" attorneys "institute proceedings through petitions "praying shall otherwise prohibited."5 person, firm, corporation, association sue equity."6 11 15, provides "shall prohibited," Indeed, acquisition. As we wrote Du Pont case: 12 "Divestiture traditionally whose heart intercorporate combination control, reasonable think immediately particularizes standard illegality, involved. Of very few litigated reported, decreed course. called important remedies. simple, relatively easy administer, sure. always forefront mind found." E.I. du de Nemours 366 316, 329-331, 81 1243, 1251-1253, 318 (1961) (footnotes omitted). 13 Certainly differs 15's violations," obviously follow one encompasses other.7 could plausibly argued expansive. however, correctly observed, "states seek, Rather, indicates intention 416. agree 14 rests contrary upon phrases arguably narrow scope. entitlement affords "against laws." right exists "when equity. ." case, unquestionably satisfied. allegations complaint, findings Court, assume even law, persists. If means surely relief.8 phrase, refers damage," drafted limitation equivalent directive stating prohibited structural mandated. Circuit's issue demonstrates, structure—or illusory kind. prohibiting parent company voting subsidiary treated differently divestiture.9 And "conduct" defendants. textual arguments—which rely prohibitive relief—do explain why appropriate.10 17 literal sufficient This interpretation consistent precedents, upheld regardless they character. See Zenith Radio Hazeltine Research, 395 100, 129-133, 89 1562, 1579-1581, 23 129 (1969) (reinstating defendants withdraw patent pools); see Silver New York Stock Exchange, 373 341, 345, 365, 83 1246, 1250, 1261, 389 (1963) judgment compel installation wire services). construing enacted "not merely provide serve high purpose enforcing U.S., 130-131, S.Ct., 1580. accordingly "with mind, knowledge affords, like remedies, flexible capable nice 'adjustment reconciliation public interest needs competing claims.' Ibid., quoting Hecht Bowles, 321 321, 329-330, 64 587, 591-592, 88 L.Ed. (1944). 18 better able harmonize context. manifest clear vigorous litigation creates expansive definition liability: To show unlawful, need only prove "may substantially lessen competition." 7, 731, (emphasis supplied). Brown Shoe 370 294, 323, 82 1502, 1522, 510 (1962). addition, provided pendency action, statute limitations tolled. permitted plaintiffs use liability later civil Private enforcement sense afterthought; integral congressional plan protecting competition. Minnesota Mining Mfg. Jersey Wood Finishing 381 311, 318, 85 1473, 1477, 405 (1965). express view suitable violation: directed orders violator "cease desist violation," specifically, "divest held" Act.11 light principles, III 19 believe ambiguous, nonetheless persuaded understand history, perspective. 20 became century ago. matured some years later, when, administration Theodore Roosevelt, "was finally trusts dimension being, energy boast President using Big Stick." W. Letwin, Law Economic Policy America Two famous prosecutions 1911, endorsing "Rule Reason" principal guide language. Standard Oil 221 31 502, 55 619; Tobacco 106, 632, 663 (1911). consequence cases, wide-ranging separation "oil trust" "tobacco independent, significant, received mixed reviews. quarters, hailed great triumphs forces monopoly; others, regarded Pyrrhic victories.12 21 Concern about adequacy prohibition combinations restraint trade prompted Wilson make special address 1914 recommending strengthened. Democracy, Public Papers Woodrow 81-89 (R. Baker Dodd eds. 1926). Congressman Clayton, Chairman Committee, promptly appointed prepare legislation. contained eventually known reenacted new substantive procedural America, 272-273; A. Link, Wilson: Freedom 426 (1956). while filled gap authorizing acquisitions vulnerable, §§ advantages reform project social significance, obvious whole fairly characterized remedial 22 Some proponents reform, critical going further. example, proposals expressly individuals bring corporations adjudged appointment receivers wind up corporation's affairs.13 Samuel Untermyer, lawyer who urged give decrees, stated views John Floyd Committee. told Untermyer "We individual dissolve has," committeeMem bers discussed thoroughly. replied man nine times out ten doing specific act existence, thing injuring him." Hearings Trust Legislation Judiciary, 63d Cong., 2d Sess., 842-846 (1914) (House Hearings). weeks Louis Brandeis, testifying behalf committee, asked he favored proposal file these combinations, duty perform." Brandeis responded sound added: 24 "It seems me change [of combination], dissolution, ought exercised Government, although full grievances protection future wrongs enjoy. 25 "Now, procedure facilitate, far possible, aid, hand, individual. But fundamental principle correct, right, sole circumstances call trust." 649-650. 26 relies exchanges support slightly different suggests committee designed company's structure. Floyd's inference possibility thereby well, species dissolution. Neither suggestion persuasive. 27 suggested illusory. These excerpts, moreover, less categorical itself. flaw assumption submitted contemplated extreme Dissolution considerably awesome. ominously declared affirming decree North River Sugar Refining Company, "judgment death," "represent[ed] rigor law."14 evident Senate amendment proposing suits, receiver administer doomed assets.15 29 course, present-day understanding dissolution.16 pool, trust, combination, quite another atomize, revoke charter of, large corporation.17 century, organization arising pace outstripped vocabulary describe them.18 monopoly dominated domestic politics, people disagreed what things were, why, extent, good bad.19 Men McReynolds, Wilson's Attorney General, President's chief adviser policy, concur forceful legislation prosecution themselves parted—as battles clear—by vast gulf understandings theory marketplace ethics.20 Absent agreement debate, death sentence, something else.21 So long ambiguity persisted, considered peculiarly transgressions "material serious" "harm menace welfare" manner transcending "quarrels litigants."22 For viewed desirable moral penalty remedy,23 imprudent allow parties control weapon potentially lethal. nature conceive compatible policy championed,24 uncontroversial drafted.25 30 Once importance understood, becomes singularly unpersuasive. rejection terminate existence appoint supervise disposition purchase assets. too illdefined either incorporated such; sensibly avoided problematic spoke drawn party violation.26 understood framing excluding sanctions traveled name "dissolution." similar reasons, how much weight due (NY 1924), brief Judge Learned Hand heavily.27 appears dissatisfied shareholders target wished entity. sought remarked "is really pro tanto. I suppose argue Act." F., 762. Not Hand, Floyd, him, refer state overtones inchoate possible implicated 32 attention Reports, floor debates, Conference Report, interpretations.28 entire supports exactly says equity: CIA. 418-427. 329, 592: 33 "The essence Chancellor mould each necessities particular case. Flexibility rigidity distinguished it." 34 More recently, Weinberger Romero-Barcelo, 456 305, 313, 102 1798, 1804, 72 91 (1982), observed endows acts aware longstanding tradition flexibility. 'Unless words, inescapable inference, equity, scope applied.' Porter Warner Holding 328 395, 398, 66 1086, 1089, 90 1332 (1946). usual typically familiar beyond normal reach chancellor. IV 35 Our not, proof injury warrant Pont, 319-321, 1246-1247; Virginian R. Railway Employees, 300 515, 552, 57 592, 601, 789 (1937) ("Courts may, frequently do, go farther withhold furtherance accustomed interests involved"); San Francisco, 310 30-31, 60 749, 756-757, 84 1050 (1940) (authorizing Government's request without balancing equities). litigant, standing—in obtain Cargill, Monfort Colorado, 479 104, 484, 93 427 (1986). laches, perhaps hands," protect transactions belated attacks late vindicate interest. 36 Such questions, presented confronted naked ownership forbidding exercise owner's integrate previously separate companies, sell Accordingly, reversed, remanded opinion. 37 ordered. concurring. 39 join write note respondents various interested labor unions, amici curiae, Hart-Scott-Rodino Antitrust Improvements 1976 (Clayton 7A, amended), 18a. 47-48; Food Commercial Union Amici 7-15. 7A controlling vital relevance determining enables violate occur. provision, brief, contemplating coverage information "whether consummated, 18a(d)(1). During waiting period follows submission information, 18a(b)(1), agency decide, negotiate eliminate CFR 2.31-2.34 disputes making easier unions predict consequences conform strategies accordance outcome. 41 respondents, amici, following approved FTC. They maintain reduce negotiating strength destroy predictability 7A. plausible, my allowing effects instances. identified contradicts indeed, contain position. See, e.g., 18a(i)(1). desire point enact strict FTC, done yet. 42 render compliance irrelevant instance, bear laches. establishing lend degree objectivity determination. Here respondents' filings mid-April Petitioner 3, formal notice parties' intentions completion elected time, seeks which, facts suggest, upset agreements matters influenced ways proceeding. considerations ultimate stated: 43 "California sued months attempted enjoin sale completed. chose so. accept choice." 846 44 With include bar decision. 18a (Hart-Scott-Rodino 1976). requirements, obligated books records acquisition; waste deterioration operation; refrain replacing executives; assure maintained viable competitor California; selling warehouse, distribution manufacturing facilities, preserve purchasing sales. 1134 Cal.1988). "this [American] Lucky, Agreement, performing numerous functions entities. retain names them respective identities." completing "linguistic triathalon" stopping 1134. observed: "Although way definitively passing remains least secure guidepost: uses generalized statute, contravened authoritative interpret effectuate goals." 404, 428 pertinent part: invested attorneys, districts, direction institute petition setting forth praying prohibited. When complained duly petition, proceed, soon be, determination case; decree, deemed premises. 25. "Any having parties, sections 13, 14, title, rules proceedings, execution proper bond damages improvidently danger immediate, issue. differ surprising all, largely copied 209, ch. 647, 4, incorporate limits actions—see (1986)—had counterpart import constrict availability begun occurred, expand harms unrealized. 130, n. 24, 1580, (1969). '[i]f strain terminology accomplish result, easily "negative injunction" activities economical choice corporation.' 924. admitted force observation, 78, 523, 619 (1911), served example 'indirect' decre[e]." Notably, arguments advanced here. Had so, forced acknowledge direct context desist" orders, Court—speaking officer framed—had difficulty unlawfully Act: here questioned actually owned Commission's continuance directing cease therefrom hold. Further continued effectively prevented owner wholly thus once free play wrongfully suppressed." Meat 272 554, 559, 47 175, 177, 71 (1926). constitute "further violatio[n] cast doubt utility inclined distinction. reject distinction, have, pursue line inquiry Taft Administration warmly, provoked bitter criticism Democratic Party leadership. sharply debated 1912 Presidential campaign. 266, 269 Upon becoming shortly thereafter, James McReynolds promised deliver dissolutions "free defect plans adopted where parts divided left stockholders." Annual Report H.R.Doc. 460, (1913). An passed Senate, House, provided: "That whenever consolidate plants, franchises, property corporations, co-partnerships, individuals, trade, rendering end affairs sold persons will, restore fully completely said began formed. reserve satisfy restored assured." 51 Cong.Rec. 15863 (1914). People 121 N.Y. 582, 608, N.E. 834 (1890). attorney participation sugar relying theories: entering laws. ground, declined second. 626, N.E., 841. Finch, writing announcing: defendant death." 834. He "life indeed humblest citizen," "destruction life" "without abundant reason." ensuing bristles rhetoric condemnation; characterizing defense, Finch commented thought soul body, admitting sins adjudge pure." 615, 837. supra. Senator Reed, sponsor guarantee "we real burial, sod down grave monster created defiance activity. 15864 common core 20th-century divestiture: "As recent 'dissolution' dissolves terminates association—putting business, speak. 'Divestiture' situations dispossess specified physical securities, assets." Oppenheim, Remedy Under Laws, Geo.Wash.L.Rev. 119, 120 (1950). past four decades interchangeable 330, 11, 1252, (terms "large interchangeable"); Geo.Wash.L.Rev., (recognizing technical terms, treating nonetheless). put rarely mentioned treatise writers spoken exclusively Thornton, Treatise Anti-Trust 372 surprisingly, Yet recognize appropriateness cases: sectio[n] 735. violators Arrow-Hart Hegeman Electric 291 54 532, 78 1007 (1934); Use unsurprising, "dissolution," sought. 1944, Douglas close proximity, Crescent Amusement 323 173, 188-189, 65 254, 261-262, 160 (1944) (Sherman case), arguable usage preserved generally elided decade later. Cf. Swift 276 319, 48 312, 587 (1928) (referring "divestiture instrumentalities" raising claims). appear that, conception lost favor paradigmatic concepts collapsed another. discussion Hale, Dissolution: "Atomizing" Business Units Monopolistic Size, Colum.L.Rev. 615 (1940); Adams, Dissolution, Divorcement, Divestiture: Victories Antitrust, Ind.L.J. (1951). 417-423 Thorelli, 72-87 (1954). Thorelli observes "[n]o incorporation 1888 explicitly sanctioned stockholdings; forbade absence permission legislature. Common relationships corporations." 83. Perhaps rapid developments politically charged "trust" came embrace device creating combinations. 84-85. D. Martin, Mergers (1959). Policy, 108-163, 309-352. Freedom, 117, 419-422. N.Y., 609, 835. "[Brandeis] believed anti-trust constructive destructive: '. approach regulation restriction; industrial crime cause, effect—the bad system.' Mason, Brandeis: Free Man's Life 402 (1956) (footnote 326, ("divestiture" "most drastic, remedies," imposed "restore competition" "punitive"). Comment, Personification Corporation Law, U.Chi.L.Rev. 1441, 1478-1483 (1987) (discussing decline conceptions corporation). notion violating complete wrongdoer persists statutes foreign guilty Wis.Stat. 133.12 (1987-1988). could, stock" acquired. was, reason itemize prosecuted true cases. remarkable buttress position citations Fleitmann Welsbach 27, 233, 505 (1916); Duplex Printing Press Deering, 254 443, 172, 349 (1921); Investment Lake Shore M.S.R. 260 261, 287, 67 244 (1922); Continental Securities Michigan Cent. 378 (CA6 1926), cert. denied, 274 741, 1320 (1927); Venner Pennsylvania Jersey, 250 292 (NJ 1918). Several involve issues entirely distinct posed here, none precedents find casts announce today. Professors Areeda Turner criticized evaluate T. "fragment history" "cannot placed it, reports committees silent point, floor." "other indicated, correctly, challenging mergers," government plaintiff." P. Turner, 328b (1978) Other commentators likewise remedy. Peacock, Suits Tex.L.Rev. (1969); Note, Availability Litigation Violation 49 Minn.L.Rev. 267 (1964); Actions Brought Mich.L.Rev. 1579

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