Legal Document

334 U.S. 495 68 Supreme Court Reporter 1107 92 L.Ed. 1533 UNITED STATESv.COLUMBIA STEEL CO. et al. Number 461. Argued April 29, 30, 1948. Decided June 7, Rehearing Denied 21, [Syllabus from pages 495-497 intentionally omitted] Mr. Philip baron Perlman, Sol. Gen., of Washington, D.C., for appellant. Nathan L. Miller, New York City, appellees Columbia Steel company and others. Alfred Wright, Los Angeles, Cal., appellee Consolidated steel corp. Justice REED delivered the opinion Court. 1 The United States brings this suit under § 4 Sherman Act to enjoin Corporation its subsidiaries purchasing assets largest independent fabricator on West Coast ground that such acquisition would violate §§ 2 Act.1 complaint, filed February 24, 1947, charged if contract sale between were carried out, competition in rolled products fabricated be restrained, indicated an effort part attempt monopolize market products. After a trial before single judge district court, judgment was entered favor defendants, government brought case here by direct appeal. 32 Statutes-at-Large 823, 15 Code KF62 Annotated KF65 U5 29. underlying facts are set forth findings with few exceptions those not disputed government. We rely chiefly indicate nature commerce question extent which affected challenged contract. 3 production involved may spoken as being divided into two stages: their fabrication finished Rolled consist plates, shapes, sheets, bars, other unfinished turn made ingots means rolling mills. herein also structural plate fabrication. Fabricated building framework, bridges, transmission towers, similar permanent structures, primarily although plates employed. hand, pressure vessels, tanks, welded pipe, principally shapes bars occasionally used. Both specifications particular purpose; do include standard repetitive processes manufacture general merchandise wire, nails, bolts, window frames. standardized is case. facilities required quite different fabrication; former require equipment shearing, punching, drilling, assembling, riveting or welding where latter bending, rolling, cutting, forming go product. complaint lists four defendants: Company, Corporation, Delaware. engage business producing fabrication, but no work. Steel, whose seeks enjoin, engaged only producer States, total investment more than billion half dollars. During ten-year period 1937 1946 produced almost exactly third all average sales nearly In five-year 1937—1941, little over Consolidated, contrast, had plants depreciated value less ten million twenty dollars, committee negotiated terms purchase estimated Consolidated's future run twenty-two dollars annually agreed price slightly excess eight war worth ships furnished facilities. longer possesses any ships.2 5 wholly-owned subsidiary has been Pacific area since 1930, Utah California, served selling agent American Bridge Company at Pittsburgh Virginia Roanoke, Virginia, though neither it nor kind. National Tube another subsidiary, sells pipe tubing. fabricating nea Angeles Orange, Texas, California Arizona. sold during past years eleven states, referred hereafter market: Arizona, Idaho, Louisiana, Montana, Nevada, Mexico, Oregon, Washington. It views significant determining Consolidated. usual Mountain groups employed Census.3 Delaware renders technical assistance production. 6 have traditionally basing point system.4 Prior World War II computed basis eastern points, even both Bethlehem California. Fabricators thus did get full benefit proximity western market. competitive disadvantages fabricators worked illustrated fact seller market, area. ending 1946, 100 concerns bid successfully market; 50 located outside Steel's principal competitor measured national basis, does however, prior prepared plans erection necessary postpone plans. This use points makes figures producers unreliable effective now uses Geneva point. 7 urgent wartime demand prompted construct new West. these erected Geneva, Utah, cost $200,000,000, designed, constructed, operated account plant annual capacity 1,200,000 tons ingots, could make 700,000 250,000 shapes. Another large Fontana, through arrangements private parties January 1945 considered plant, because speculative venture attacks people within without government, decided submit notified Defense Plant effect August 8, 1945. Shortly thereafter Surplus Property Administrator wrote Benjamin Federal KF105 F3 Fairless, President advising him welcomed. On May, 1, submitted $47,500,000. provided spend $18,000,000 own funds erect additional $25,000,000 cold-reduction mill Pittsburg, consume 386,000 hot coils Geneva.5 sufficient found absorb ranging 456,000 600,000 tons. stipulated offer possibilities reduction purchasers customers. variation depended consumption users Pittsburg plant. noted consuming manufacturing might provide Apart silent 8 May 23, Assets Administration announced accepted. An accompanying memorandum discussed detail six bids received, concluded most advantageous. unacceptable number reasons; either bidder assurance his financial responsibility ability operate offered too low, requested lend sums expense.6 successful 'foster development enterprise' encouraging location steel-consuming states. 9 17, Attorney General advised proposed constitute violation antitrust laws, consummated days thereafter. accordance 20 1944, 58 765, 775, U.S.C.A.Appendix 1629, requires procedure when costing $1,000,000 sold. That section provides nothing 'shall impair, amend, modify laws limit prevent application persons' who buy property Act. ingot declined 35.3% 1939 31.4% acquired, percentage increased 32.7%. Considering said, increase 17.3% 39%. 51% construed light versus Aluminum America, Cir., 148 Reporter, 2nd Series 416, Tobacco 328 781, 66 1125, 90 1575, sale, such, laws. letter added expressed legality acts practices future. See comparable situation 251 417, 446, 40 293, 297, 64 343, Law Reports 1121. 10 Alden G. Roach, approached Fairless he like sell Roach conversations representatives Kaiser regard same end. mentioned subject again March replied restudying decision want discuss until issue decided. effected June, spoke arranged investigation August. reported $14,000,000 take three equivalent owned properties $9,800,000. further negotiations approximately $8,250,000 agreement executed December 14 according physical subsidiaries. testified witness stand purpose assure withdraw stockholders' equity cyclical fluctuations time favorable realized. I. 11 theory bringing constitutes illegal restraint interstate manufacturers except will excluded supplying requirements products, existing eliminated. addition, alleges viewed previous series acquisitions contend amount eliminated so insignificant reasonable t tempt prohibited Act.7 record us agreemend court we conclude failed prove contention unreasonably lessen respects charged, therefore forbidden hold 2. 12 first charge excluding Over purchased including abnormally high requirements. Whatever supplied insofar possible lose prospective customer. 13 sharp dispute size compared. argue scale, major entire should regarded Viewed standpoint, fraction 1/2 1%. argues must narrowly drawn, relevant elevenstate considering established. If considered, purchases represent 3% 60 figure appreciably fiv-year 1937—41 alone used measuring periods.8 narrowly, restricted 13% total. Data uncertain furnish reliable guide.9 realizes force appellees' argument attempts demonstrate non-war 80% Coast; resorts data 26% area.10 Whether accept government's figures, they future, construction Fontana creation presumably give far larger share war. difficulty furnishes indication propriety distinct can easily then removal against alone, suggests, conclusively indicate, interchangeably measure potential injury rather compare marketing 16 read showing Consolia ted area, eleven-state represented 'a small part' 'substantial market' injure elsewhere. recognize laying down rule what areas competitive, one another. circumstances strongly product consideration. 17 analyzing resulting withdrawal purchaser step vertical integration Steel. Regarded horizontal well, broaden determine companies said compete. agree pipe. bending whereas Tube, seamless process fall heading 18 field As steel, claim fabricators. index position shown bookings 1942, Institute Construction. country 10,000,000 tons, 84,533 reference limited six-year 1,665,698, 17% 5%. claims become important factor period, among fabricators, each 11%. next 9%, 6% total.11 Although challenge accuracy them findings, sufficiently our present purpose. relies least conducted scale. Five out having perform operations Purchasers fabi cated able secure throughout country, statistics prescribed probative ascertaining consumers injured elimination companies. 19 developments prewar relevance. urge reasons why disadvantage availability lower price, commercial freight rates abolition land grant rates. profitable West, shipments agencies existed bridge urge, exist much lesser future.12 Consequently, correct claiming proper significance. geographical significance types view jobs individual difficult output medium heavy support elaborate statistical analysis Those show project very instances.13 Such conclusive lack competition; suggests knowledge party discourage others bidding. introduced evidence, proportion fell category miscellaneous work there whatsoever. 16% 70% summarized, substantial. 21 scope competition, compete nation-wide scale diameter oil gas pipelines. Other apparently contest assertion appellees.14 specialized comparatively walled low purposes, irrigation water transmission, purposes industry. substantially cheaper produce. show, last pipelines occasions requirements.15 field, witnesses 90% Trans-Arabian pipeline $30,000,000. seek minimize importance pointing 30 31 inches diameter, Tube. barreno n comparative competitors, companies, connected proceeding, pipe.16 normal $30 ton inability orders. reply reduce costs volume orders obtained, evidence adduced conclusion. 22 summarized outlined above, substantial pipe; went further, stating 'do compete' 23 attempted 2, every restraint. 'for sound reasons' intent stel II. 24 violates Act, urges legal conclusions erroneous. argued percentages just arrangement, claimed, excludes per se reason inapplicable. Or, phrasing differently, seems controlled invalid pointed eliminate note bring 25 Atlantic lay side objection eliminating restraints effects cover States; consistently held covers invoked unreasonable Yellow Cab Co., 332 218, 67 1560, 91 2010, sustained validity alleged defendants monopolized cab operating cities.17 affect important. Griffith, 100, 941, trade chain motion picture exhibitors covering discussion difficulties accepting together common control 26 heavily supra, consumer goods plan, intent, business, operation cities, acquiring interests therein; tying requiring cabs manufacturer above prevailing There allegation rival produced, concludes stands proposition preempt 'appreciable' involved.18 27 construe holding outlet consideration opportunities steel.19 discussing case, conspirators integrated insulate act, corporate violated act. combined conspired monopolizing certain dismiss accepted true. Where charges immaterial whether charged. A otherwise accompanied specific accomplish falls class se. For example, fixing,20 concertedly refused deal non-members association,21 licensed patented device condition unpatented materials conjunction device,22 Nothing supports exclusive dealing 28 probability parent furnish. fact, invalid. When elements violations present, relationship material determination restrain exists. teaching following quotation: 'And ownership various impotent liberate combination conspiracy impact primary object combination. borrow language Reading 253 26, 57, 425, 432, 760, 'dominating power' 'was obtained expansion meet demands growing result superior enterprising management, deliberate, calculated control.' borne coupled proof undue trade, plain occurred.' 227, 228, page 1565, 2010. accord decisions Court.23 29 depends merely upon acquired many factors. Exclusive dealings about otherwise, illegal, rate restrict ofc ompetitors Paramount Pictures, 131, 915, presented producer-distributors three-quarters first-run theaters cities population 100,000 itself remanded findings. outlining factors integration, emphasized characterizing served, leverage creates possible. second test conceived. actual results restraint, inferred; achieved, nevertheless finding render actor liable Compare 941.24 clear more, cannot violative indefinite term explicit meaning. Even iron industry line drawn—at end mining ore, pig-iron completed, order some stage merchandise? No answer permissible governed, violations, cases. Technological advances basic expand semi-finished produce desired articles greater expense. courts course Nation's economic development. Economists recommend, legislative executive branches chart courses forces ad higher living available all. evils dangers monopoly grow efforts markets, small, caused Congress Executive regulate respects. But direction appeared public policy forbids, se, needs markets community, community county-wide. given wide powers regulation. broadness placed apply avoid aimed. industries, exceptions, approach America cartelized form. businesses entering stages come Congress, courts. 33 Applying standards laid so-called area; accounted demand, expectations realized, expected Nor find III opinion. 34 C. significance, tests applicable competitors identical lines merchandise. delimit aimed think dollar compelling significance; look controlled, strength remaining action springs monopolize, probable industry, demands, characteristics undertake prescribe reasonableness corporation's enlargement activities competitor.25 relative command varies setting placed. 35 preclude Force adverted 500 512 U.S., 1110 1116 while does. By Consolidate produces mention, examples, boilers, smoke stacks, storage tanks barges. Attention called shipbuilding indicative potentialities competitor. noted, 498, 1109, financing. eliminates anyone acquire agree, too, presently non-competitive well possibility taken weighing trade.26 36 argument, takes highly situations. ship enterprise undertaken know lead branch peace-time risk. yards true shows articles. appears territory. What places pertinent here. Eastern Cheaper handicap Looking presented, unwilling interference serious enough justify declaring unlawful 37 doubtful assumption 11%, unusual conditions developed 511 516 1118 trade. To imply monopolistic. Notwithstanding differences respect character each, competitionbetween developing. making supplies becoming dependent suppliers. opinion, moreover, (see 501, 1111) out-of-the-area designs, permissible. 38 likewise (a subsidiary) Competition pipelines, see 518, 1119, broader contained suggestion, specification technological wider range sizes types. persuade unduly instances pipeline. contracts seller's trunkline relation statement expensive absence advantages compensate decline volume, seem 39 cites cases involving railroads small.27 cite laws.28 stop examine approve holdings. factual dissimilar guidance warrant injunctive relief government.29 III. applied narrow charge; shown.30 recites long history demonstrates existence monopolize. 192031 180 formerly indepn dent concerns, 1924 1943 41 acquisitions, latest acquisition—the government-owned Geneva. Consolidated.32 erecting finishing Geneva's production, weight conditioned lending money grants bidder. interposed cold objections raised build instead possessed involve condemned Granting firm portion reflect scheme circumvent law. despite sales, leading manufactures comparison early days. 1901 50.1%; 1911, 45.7%; 30.4%.33 1937—1946, 33.2%.34 Its impressive. Size appraisal impressive welcome westward extension abandon organizations. 42 dealt exclusion commerce. treat arguments separately isolate convince rise level proving need items aggregate view, persuaded stated 43 District affirmed. 44 Affirmed. 45 DOUGLAS, whom BLACK, MURPHY, RUTLEDGE, concur, dissenting. 46 years. reveals way growt power—the precise phenomenon Here pattern evolution great trusts. Little, units gobbled up bigger ones. At times driven wall surrenders. 'sound appear merger trust made.1 predatory disgorge. Schine Chain Theatres Incorporated 110, 947. economy built gentlemanly ways. 47 problem bigness. lesson burned memory Brandeis. Curse Bigness how menace—both industrial social. menace gross inequalities putative competitors. social menace— prices.2 Control prices i powerful economy. determines hundreds Our prosperity depression—an abundance scarcity. jealously watched.3 final analysis, power handful men utilized lightning speed. benign dangerous. philosophy exist. tends develop itself. Power controls hands elected people, oligarchy. Industrial decentralized. scattered fortunes whim caprice, political prejudices, emotional stability self-appointed men. vicious respectable minded irrelevant. founded hostility concentration it. 48 forgot 1121, International Harvester 274 693, 748, 71 1302. today forgets allows wrap tentacles tighter around 49 dressed (perhaps legitimately) management.4 strikes deeper. However rationalized, plain. control, wants left uncertainties engender. concedes. states insure off. never irrevocably buying customer competing. amounts $22,000,000 annually. $5,000,000 year. & N Dec. Immigration Nationality Decisions say immaterial. plainly de minimis. And brands affected. Montague Lowry, 193 38, 307, 608; Socony-Vacuum Oil 310 150, 225, n. 59, 811, 846, 84 1129; 1564, here, Salt 392, 396, 12, 15, restrained insubstantial. consider insignificant, aim well-conceived r oject insubstantial certainly struggling 51 unrealistic safeguarding protection smaller components thereof. allow outlets enterprises depend. outlets, statistically unimportant matter life death local enterprises. 52 actually reached absorbed. cent standard—United competitors—can deemed Yet viewpoint puts interest phase light. surer determined makes. predominantly shapes—76 1937—1941. rejected discounted probably convert forms deprived. resourceful recover strengthening giant markets. keeping spirit benefits doubts 53 is, course, achieve present. Patten, 226 525, 543, 141, 145, 57 333, L.R.A.,N.S., 325, requisite consequence done. strike accomplished avoided supra. 54 merging west coast developing operation. intensely practical plan put unit resources gaints Approval works precisely opposite direction. dim prospects free giants. owns Thi gives unquestioned domination protects growth independents region. condemn purchase. recalled one-third country.5 tremendous big enough.6 Sections 4, U.S.C., read, applicable, follows: 1. 'Every contract, form conspiracy, several foreign nations, hereby declared illegal: * Every person shall sections 1—7 title guilty misdemeanor, and, conviction thereof, punished fine exceeding $5,000, imprisonment year, punishments, discretion court.' combine conspire persons, 4. 'The invested jurisdiction title; duty attorneys respective districts, General, institute proceedings violations. *' uncontested brief: 'During years, acting Government sponsorship, constructed defense procurement field. confined ordnance facilities, abandoned. Shipyards, Inc., boat yard, disposed group real estate speculators. therefore, business.' Louisiana ar included listed census grouping, Colorado Wyoming, census, Sixteenth Census 1940, Areas Bureau Census, Page 3. 1924, Trade Commission Clayton 13, 45, 'Pittsburgh plus' method pricing, destination, regardless shipment. Matter Corp., F.T.C. ordered cease desist employing 1938 petition review Third Circuit Appeals admitting complied order. yet proceeding. Cold name temperatures degrees 240 Coils fed strip sheets quality sheets. Camp Francis, Making, Shaping Treating 5th Ed., Pages 1227—1245. Fuel Iron $47,935,000 sheet tin-plate mill. Pacific-American Riley $28,844,000 mill, tube additions stock competing company. 730, 731, 18; Comm. Western Meat 272 554, 175, 405. assumed, prohibitions restraints. Handler, Mergers Anti-Trust Laws, Col.L.Rev. 179, 266. 1941 Temporary Economic Committee amended approval Commission. Comment, Yale L.J. 613, description bills carry recommendations. table correct: Industry Estimated shipment Year 38,345,158 14,097,666 4,362,900 1,556,085 103,286 21,356,398 7,315,506 2,670,000 1,046,287 44,050 34,955,175 11,707,251 3,630,000 1,434,383 69,862 1940 45,965,971 15,013,749 4,337,990 1,686,129 117,644 60,942,979 20,416,604 6,008,757 2,441,840 163,428 1942 60,591,052 20,615,137 8,489,204 3,181,358 339,711 62,210,261 20,147,616 10,124,831 3,706,886 404,180 1944 63,250,519 21,052,179 9,587,503 3,495,231 390,532 56,602,322 18,410,264 7,232,590 2,378,112 225,273 48,993,777 15,181,719 6,000,000 1,810,982 178,669 --------------- ------------- ------------ Total 493,213,612 163,957,691 62,443,775 22,737,293 2,036,635 notes postwar seven 227,000 213,000 compares 107,128 43,770 devoted contracts. based activity considerably derives inconclusive. refers 'Purchases Producers' themselves agents producers. deliveries totaled 208,093 495,848 1946. Location Bookings Percent (net tons) All companies............. 336,717. 100.0 Corp.. Pittsburgh, Pa.. 44,083 12.9 Calif.. 36,142 10.6 Co...... Bethlehem, 36,047 Mosher Co......... Houston, Tex.. 29,814 8.7 Chicago Co.. Chicago, Ill.. 21,588 6.3 Isaacson Works..... Seattle, Wash.. 10,656 3.1 Kansas City Structural Kans. 10,051 2.9 Midwest Works Denver, Colo.. 9,306 2.7 Northwest Rolling Mills, Inc.. Wash. 9,000 2.6 Forge Lake 8,300 2.4 . -------- ------ companies....... 214,987. 63.0 Remaining 80 companies... 121,730. 37.0 quoted includes correction after exhibit introduced. equipped fabricate economically Since reduced $3 ton, previously differential Gary, Birmingham. Quarterly, Vol. 1948, 6. 2,409 839. 6,377 2,390. 166 jobs, bid. Forty awarded Reducing tonnage 499,605 1,273,152 578,847 157,997 122,353 38,920, 24,162, 59,271. customarily lighter work; 528 averaging 737 extract summarizes question: 'A. type electric weld known fusion arc 4-inch 30-inch. don't 26-inch gages lengths They overlap dimensions concerned. 'Q. You conveyance. Are penstocks? No, sir. Well, yes, penstocks, low-pressure penstocks penstock none you light-pressure pipe? that. high-pressure only.' filled Southern Counties line, date president contracted miles El Paso Natural Gas supply 230 miles, 400 miles. 24-inch Electric 1947 quantity November unfilled 'heavy pipe' $9,830,079, E.g., Republic O. Smith Youngstown Sheet 226, 2010: 'Likewise irrelevant States. concerned large, obstacles channels designed sweep away appreciable obstructions statutory effectively achieved. Indiana Farmer's Guide Prairie Farmer Pub. 293 268, 279, 55 182, 185, 79 356, provisions distributive distinguished whole classes things commerce.' follows defective failure allege CCM taxicabs manufactured restrain, segment sales. segmenth sufficient.' particularly excerpt, 'Nor doubted combinations conspiracies ban Limitations preventing CCM, deny opportunity free, thought sanction prohibiting restraints, StandardO il 221 502, 619, 834, Ann.Cas.1912D, 734. differs somewhat 717, seq. Morton 37, 822, 828, Standard Fashion Magrane-Houston 258 346, 360, 362, 653. 1129. Associated Press 326 65 1416, 89 2013; Retail Lumber Dealers' Association 234 600, 951, 1490, L.R.A.1915A, 788; W. 608. Originators' Guild Comm., 312 457, 61 703, 85 949. 12. 937: 'Exploration phases if, Department argues, producing, distributing exhibiting pictures majority view. turns (1) conceived, (2) attendant intent. First, runs afoul gain suppress legitimate needs.' contractual Bausch Lomb 321 707, 728, 729, 805, 816, 88 1024. Curtis Publishing 260 568, 210, 408. 945: 'Anyone operates theatre town, acquires right film, popular sense. usually unless maintained strategic position, sought monopoly, expanded cognizable conduct 61, 516, always Section contracts, combinations, crime So power, lawfully unlawfully evil remains unexercised. aimed, inter alia, retention control. 428, 429. Hence 'to exclude so' exercise power. 809, 814, 1125 (1138), 1139, 1140, 1141, 1575.' 424; tables, 245. Rostow, Act: Positive Instrument Progress, U. L.Rev. 567, 575—586. Pac. 259 214, 496, 907; 760. Union R. 53, 124; 760; Northern Securities 197, 436, 679. Shoe 280 291, 89, 74 431; 1121; Machinery 247 32, 473, 62 968; Jersey, 288; F.Supp. 117. 269—271. 24. 343. 1911 223 55, 67. unchallenged casting attributable reports saying irregular 60% 1/3%. frequent mergers waste promote efficiency, overhead, dilute advertising costs, spread risks, etc. Compare, Mergers, Motives, Business Week, Nov. 10, 1945, 68; Growth Units: Effect Shortages, News, 48. largely illusory recognized. See, e.g., Relative Efficiency Large, Mediumsized, Small (TNEC Monagraph 1941) 111, 128, 132, 398. forcefully exploded Brandeis Bigness: seriously advanced involves waste, prevents leads efficiency. essentially unsound. wastes negligible. economies superficial delusive. efficiency best temporary. 'Undoubtedly waste. human not? democracy greatest obvious wastes, compensations outweigh efficient absolutism. competition. relatively insignificant. develop, kill. These law eliminate, regulating 'It efficient. efficient, uncommon incident monopoly.' KF135 P2 105. '* attained alone. distribution enable solely superiority.' 114—15. Trust, coarser suppressing ore fabulous prices, controlling transportation systems.' 115. 'But monopolies, established, reap efficiency; experience teaches whenever trusts fruits absorbed wholly themselves. From gained nothing. instance: corporation reputed matters knowledge. accumulated shareholders paid dividends representing water, $650,000,000.' Pp. 120, 121. Medium-sized, Monograph 132. original instituted, already concerns. 162. 1930 Rockies. Court's 'United 'greater German combined. twice British French mills combined.' addition pig iron, semifinished 150 subsidiaries, 1937, 2,000 natural wells, mines, coal limestone, dolomite, cement rock, clay quarries, gypsum fluorspar zinc manganese mine Brazil, 5,000 coking ovens, water-supply systems reservoirs, filtration plants, pumping stations, ocean, lake river steamers, barges tugs, railroads, fire brick 12,000,000 barrels cement. virtue degree dominate field.' Wilcox, Monopoly 1940) 120.

Classification Label: 7