UNITED STATES v. UNITED SHOE MACHINERY CORP.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MASSACHUSETTS. No. 597.
Argued April 1, 1968.
Decided May 20, 1968.
In 1953 the District Court for the District of Massachusetts held that appellee had monopolized the manufacture of shoe machinery in violation of 2 of the Sherman Act. The court refused the Government's request that appellee be divided into three separate companies and instead imposed certain restrictions and conditions designed "to recreate a competitive market." The District Court's decision was affirmed by this Court. The District Court's decree provided in paragraph 18 that: "On [January 1, 1965] both parties shall report to this court the effect of this decree, and may then petition for its modification, in view of its effect in establishing workable competition." Pursuant to this provision the Government reported on January 1, 1965, that appellee continued to dominate the market, that workable competition had not been established, and that further relief was needed. The Government asked that appellee be divided into two competing companies. The District Court held that United States v. Swift & Co., 286 U.S. 106 (1932), limited its power to modify the decree to cases involving "(1) a clear showing of (2) grievous wrong (3) evoked by new and unforeseen circumstances," and since the object of the decree was "not to restore workable competition but to move toward establishing it" and the "decree has operated in the manner and with the effect intended," the Government's petition was denied. Held:
Assistant Attorney General Turner argued the cause for the United States. With him on the briefs were Solicitor General Griswold, Francis X. Beytagh, Jr., Howard E. Shapiro, Thomas R. Asher, and Margaret H. Brass.
Ralph M. Carson argued the cause for appellee. With him on the brief were Conrad W. Oberdorfer, Robert D. Salinger, Lloyd N. Cutler, Taggart Whipple, and Louis L. Stanton, Jr.
James F. Rill, John R. Hally, and Thomas F. Shannon filed a brief for the National Footwear Manufacturers Association, Inc., et al., as amici curiae, urging affirmance.
MR. JUSTICE FORTAS delivered the opinion of the Court.
In 1953, in a civil suit brought by the United States, the District Court for the District of Massachusetts held that appellee had violated 2 of the Sherman Antitrust Act by monopolizing the manufacture of shoe machinery. The court found that "(1) defendant has, and exercises, such overwhelming strength in the shoe machinery market that it controls that market, (2) this strength excludes some potential, and limits some actual, competition, and (3) this strength is not attributable solely to defendant's ability, economies of scale, research, natural advantages, and adaptation to inevitable economic laws." United States v. United Shoe Machinery Corp., 110 F. Supp. 295, 343 (1953). The court did [391 U.S. 244, 246] not order the relief requested by the Government - that appellee be dissolved into three separate shoe machinery manufacturing companies. Rather, the court imposed a variety of restrictions and conditions designed "to recreate a competitive market." 1 Appellee appealed to this Court, which affirmed the decision of the District Court. United Shoe Machinery Corp. v. United States, 347 U.S. 521 (1954).
The decree of the District Court, entered on February 18, 1953, and subsequently modified on July 12 and September 17, 1954, provided in paragraph 18 that:
The District Court, after a hearing, denied the Government's petition. 2 It held that under United States v. Swift & Co., 286 U.S. 106 (1932), its power to modify the original decree was limited to cases involving "(1) a clear showing of (2) grievous wrong (3) evoked by new and unforeseen conditions." United States v. United Shoe Machinery Corp., 266 F. Supp. 328, 330 (1967). Analyzing its 1953 decree, as amended, the court said that the object of the decree was "not to restore so-called workable competition but to move toward establishing it," and that "the 1953 decree has operated in the manner and with the effect intended. It has put in motion forces which, aided by new technology, have eroded United's power and already dissipated much of the effect of United's monopolization." 266 F. Supp., at 330, 334. Accordingly, in view of the stringent requirements of Swift as the court construed that decision, the District Court denied the Government's petition.
The present case is the obverse of the situation in Swift if the Government's allegations are proved. Here, the Government claims that the provisions of the decree were specifically designed to achieve the establishment of "workable competition" by various means and that the decree has failed to accomplish this result. Because time and experience have demonstrated this fact, according to the Government, it seeks modification of the decree. Nothing in Swift precludes this. In Swift, the defendants sought relief not to achieve the purposes of the provisions of the decree, but to escape their impact. Accordingly, we conclude that the District Court erred in denying the Government's petition "on the authority of United States v. Swift & Co., 286 U.S. 106, 119 ." 266 F. Supp., at 334.
These specifications were peculiarly apt because this is a monopoly case under 2 of the Sherman Act and because the decree was shaped in response to findings of monopolization of the shoe machinery market. That the purpose of the 1953 decree was to eliminate this unlawful market domination was made clear beyond question by the District Court's statement at the beginning of the section of its opinion dealing with relief. This read as follows:
The District Court has now denied the Government's petition for modification of the decree on the ground that the decree is "still working at its long-range task of freeing the market from all consequences of United's monopolization and keeping the door wide open for the arrival of an adequately provided challenger." 266 F. Supp., at 334. According to the court, this was the intended effect of the decree.
If the decree had not contained paragraph 18 - if it had been silent as to the time for submitting reports and, if necessary, petitions for modification - and if after 10 years it were shown that the decree had not achieved the adequate relief to which the Government is entitled in a 2 case, it would have been the duty of the court to modify the decree so as to assure the complete extirpation of the illegal monopoly. The court's power to do this is clear. See, e. g., United States v. Swift & Co., 286 U.S. 106 (1932); Chrysler Corp. v. United States, 316 U.S. 556 (1942). Its duty is implicit in the findings of violation of 2 and in the decisions of this Court as to the type of remedy which must be prescribed.
We find nothing in the 1953 decree, as amended, or in the District Court's opinion relating thereto which presents an obstacle or embarrassment to the application of this principle in the present case. If the decree has not, after 10 years, achieved its "principal objects," namely, "to extirpate practices that have caused or may [391 U.S. 244, 252] hereafter cause monopolization, and to restore workable competition in the market" - the time has come to prescribe other, and if necessary more definitive, means to achieve the result. A decade is enough. 5 Even if we should assume that paragraph 18, as the District Court now states, had only the limited purpose of calling for a 10-year report as to whether the decree was "gradually eroding United's 1953 power to monopolize the market," 266 F. Supp., at 330, its specific provisions did not exhaust the District Court's power. Relief in a Sherman Act case "should put an end to the combination and deprive the defendants of any of the benefits of the illegal conduct, and break up or render impotent the monopoly power found to be in violation of the Act." United States v. Grinnell Corp., 384 U.S. 563, 577 (1966). See also United States v. United States Gypsum Co., 340 U.S. 76, 88 -90 (1950); United States v. E. I. du Pont de Nemours & Co., 366 U.S. 316, 326 (1961). The District Court should proceed to determine whether the relief in this case has met the standards which this Court has prescribed. If it has not, the District Court should modify the decree so as to achieve the required result with all appropriate expedition.
[ Footnote 2 ] A petition by appellee, seeking to be relieved of certain restrictions contained in the original decree, was similarly denied. The judgment in this regard is not before us, since appellee has not appealed to this Court.
[ Footnote 3 ] In paragraph 23 of the original decree jurisdiction was expressly retained "for the purpose of enabling either of the parties to apply to this Court at any time for such further orders and directions as may be appropriate for the correction, construction, or carrying out of this Decree, and to set aside the Decree and take further proceedings if future developments justify that course in the appropriate enforcement of the Anti-Trust Act." 110 F. Supp., at 354.
[ Footnote 4 ] In rejecting the suggestion that United be forbidden to lease on any terms, the District Court stated specifically that it "agrees that it would be undesirable, at least until milder remedies have been tried, to direct United to abolish leasing forthwith." 110 F. Supp., at 349.
[ Footnote 5 ] We emphasize that there is no issue here regarding the timing of the Government's petition for modification. No claim is made that the Government has petitioned for modification before the running of a reasonable period during which the effects of the original decree have become clear. Moreover, the Government may claim, persuasively, that paragraph 18 of the original decree specifically contemplated that the Government would petition when it did. [391 U.S. 244, 253]