United States v. E. I. du Pont de Nemours & Co.,
353 U.S. 586 (1957)

Annotate this Case
  • Syllabus  | 
  • Case

U.S. Supreme Court

United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586 (1957)

United States v. E. I. du Pont de Nemours & Co.

No. 3

Argued November 14-15, 1956

Decided June 3, 1957

353 U.S. 586


This is a civil action brought by the Government in 1949 under § 15 of the Clayton Act to enjoin violations of § 7 of that Act resulting from the purchase by du Pont in 1917-1919 of a 23% stock interest in General Motors. The essence of the charge was that, by means of the close relationship of the two companies, du Pont had obtained an illegal preference over competitors in the sale of automotive finishes and fabrics to General Motors, thus tending to "create a monopoly" in a "line of commerce." After trial, the District Court dismissed the complaint on the ground that the Government had failed to prove its case, and the Government appealed directly to this Court.

Held: the Government proved a violation of § 7; the judgment is reversed, and the cause is remanded to the District Court for a determination, after further hearing, of the equitable relief necessary and appropriate in the public interest to eliminate the effects of the stock acquisition offensive to the statute. Pp. 353 U. S. 588-608.

(a) Any acquisition by one corporation of all or any part of the stock of another corporation, competitor or not, was within the reach of § 7 before its amendment in 1950 whenever there was reasonable likelihood that the acquisition would result in a restraint of commerce or in the creation of a monopoly of any "line of commerce" -- i.e., it applied to vertical, as well as horizontal, stock acquisitions. Pp. 353 U. S. 590-593.

(b) Failure of the Federal Trade Commission to invoke § 7 against vertical stock acquisitions is not a binding administrative interpretation that Congress did not intend vertical acquisitions to come within the purview of the Act. P. 353 U. S. 590.

(c) The record shows that automotive finishes and fabrics have sufficient peculiar characteristics and uses to constitute them products sufficiently distinct from all other finishes and fabrics to make them a "line of commerce" within the meaning of the Clayton Act. Therefore, the bounds of the relevant market for the purposes of this case are not coextensive with the total market for finishes and

Page 353 U. S. 587

fabrics, but are coextensive with the automobile industry, the relevant market for automotive finishes and fabrics. Pp. 353 U. S. 593-595.

(d) The record shows that, quantitatively and percentage-wise, du Pont supplies the largest part of General Motors' requirements of finishes and fabrics. Therefore, du Pont has a substantial share of the relevant market. Pp. 353 U. S. 595-596.

(e) The test of a violation is whether, at the time of suit, there is a reasonable probability that the stock acquisition may lead to a restraint of commerce or tend to create a monopoly of a line of commerce. Therefore, the Government may maintain this suit, brought in 1949, based upon an acquisition of stock which occurred in 1917-1919. Pp. 353 U. S. 596-607.

(f) Even when a purchase of stock is solely for investment, the plain language of § 7 contemplates an action at any time the stock is used to bring about, or in attempting to bring about, a substantial lessening of competition. Pp. 353 U. S. 597-598.

(g) On the record in this case, the background of the acquisition and the plain implications of the contemporaneous documents eliminate any basis for a conclusion that the purchase was made "solely for investment." Pp. 353 U. S. 598-602.

(h) The bulk of du Pont's production of automotive finishes and fabrics has always supplied the largest part of the requirements of General Motors, the one customer in the automobile industry connected to du Pont by a stock interest, and there is an overwhelming inference that du Pont's commanding position was promoted by its stock interest, and was not gained solely on competitive merit. Pp. 353 U. S. 600-605.

(i) It is not requisite to the proof of a violation of § 7 to show that restraint or monopoly was intended. P. 353 U. S. 607.

126 F. Supp. 235, reversed and remanded.

Page 353 U. S. 588

Disclaimer: Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.