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:
1. The District Court erred in denying the Government's petition
on the authority of
United States v. Swift & Co.,
supra, because there the defendants sought relief not to
achieve the purposes of the decree's provisions, but to escape
their impact. The request was the obverse of the Government's
allegation and request here. Pp.
391 U. S.
248-249.
2. The District Court should determine whether the relief in
this case has met the prescribed standards and, if not, should
modify the decree so as to achieve the required result. Pp.
391 U. S.
249-252.
Page 391 U. S. 245
(a) It is the trial court's duty to prescribe relief which will
terminate the illegal monopoly in violation of § 2 of the Sherman
Act and ensure that there remain no practices likely to result in
monopolization in the future. Pp.
391 U. S.
250-251.
(b) The specific provisions of the decree did not exhaust that
court's power to afford relief which "should put an end to the
combination . . . 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,
384 U. S. 577
(1966). Pp.
391 U. S.
251-252.
266 F.
Supp. 328, reversed and remanded.
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, economics 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
Page 391 U. S. 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." [
Footnote 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:
"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. If either party takes advantage of this paragraph by
filing a petition, each such petition shall be accompanied by
affidavits setting forth the then structure of the shoe machinery
market and defendant's power within that market. "
110 F. Supp. at 354.
Page 391 U. S. 247
Pursuant to this provision, the Government reported to the
District Court on January 1, 1965, that appellee continued to
dominate the shoe machinery market, that workable competition had
not been established in that market, and that additional relief was
accordingly necessary. The Government asked that appellee be
required to submit to the Court a plan, pursuant to which United's
business would be reconstituted so as to form two fully competing
companies in the shoe machinery market. It also requested "such
other and further relief as may be necessary to establish workable
competition in the shoe machinery market."
The District Court, after a hearing, denied the Government's
petition. [
Footnote 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.
From this decision, the Government appealed to this Court. We
noted probable jurisdiction. 389 U.S. 967 (1967). We reverse.
Page 391 U. S. 248
I
The District Court misconceived the thrust of this Court's
decision in
Swift. That case in no way restricts the
District Court's power to grant the relief requested by the
Government in the present case. In
Swift, a consent decree
had been entered in 1920 ordering a measure of divestiture by and
imposing a variety of restraints upon the defendant meat packers.
In 1930, after various unsuccessful attempts to secure modification
or vacation of the decree, the packers filed a petition "to modify
the consent decree and to adapt its restraints to the needs of a
new day," as Justice Cardozo phrased it. 286 U.S. at
286 U. S. 113.
The lower court granted a measure of relief, and the United States
appealed. This Court reversed. It emphasized the power of a court
of equity "to modify an injunction in adaptation to changed
conditions though it was entered by consent."
Id. at
286 U. S. 114.
The question, it held, is "whether enough has been shown to justify
its exercise."
Id. at
286 U. S. 115.
After reviewing the evidence, the Court concluded that the danger
of monopoly and of the elimination of competition which led to the
initial government complaint and the decree had not been removed
and that, although, in some respects, the decree had been
effectuated, there was still a danger of unlawful restraints of
trade. The Court's language, quoted and relied on by the trial
court here, to the effect that "nothing less than a clear showing
of grievous wrong evoked by new and unforeseen conditions should
lead us to change,"
id. at
286 U. S. 119,
the decree, must, of course, be read in light of this context.
Swift teaches that a decree may be changed upon an
appropriate showing, and it holds that it may
not be
changed in the interests of the defendants if the purposes of the
litigation as incorporated in the decree (the elimination of
monopoly and restrictive practices) have not been fully
achieved.
Page 391 U. S. 249
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,
286 U. S.
119." 266 F. Supp. at 334.
II
Decision as to the Government's petition to modify the decree in
the present case must be based upon the specific facts and
circumstances that are presented. In urging affirmance of the 1953
decision, the Government advised this Court that, in framing the
decree, the District Court had
"proceeded on the premise that relatively mild remedies should
be tried as a first resort, and that the possibility of more
drastic measures should be held in abeyance."
Brief of the United States, No. 394, 1953 Term, 155. Paragraph
18 of the decree appeared to be in confirmation of this statement,
since it expressly required a report after 10 years of experience
under the decree and contemplated that petitions for modification
might be filed "in view of [the decree's] effect in establishing
workable competition." Paragraph 18 then specifically provided that
any such petition would have to be accompanied by "affidavits
setting forth the then
Page 391 U. S. 250
structure of the shoe machinery market and defendant's power
within that market." [
Footnote
3]
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:
"Where a defendant has monopolized commerce in violation of § 2,
the principal objects of the decrees are to extirpate practices
that have caused or may hereafter cause monopolization, and to
restore workable competition in the market."
110 F. Supp. at 346-347.
It is, of course, established that, in a § 2 case, upon
appropriate findings of violation, it is the duty of the court to
prescribe relief which will terminate the illegal monopoly, deny to
the defendant the fruits of its statutory violation, and ensure
that there remain no practices likely to result in monopolization
in the future.
See, e.g., United States v. Grinnell Corp.,
384 U. S. 563,
384 U. S. 577
(1966);
Schine Theatres v. United States, 334 U.
S. 110,
334 U. S.
128-129 (1948). The trial court is charged with
inescapable responsibility to achieve this objective, although it
may, if circumstances warrant, accept a formula for achieving the
result by means less drastic than
Page 391 U. S. 251
immediate dissolution or divestiture. The decree in the present
case was carefully devised within the limits of this principle.
Measures short of divestiture were prescribed with provisions for
review and possible revision after 10 years. [
Footnote 4]
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
Page 391 U. S. 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. [
Footnote 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,
384 U. S. 577
(1966).
See also United States v. United States Gypsum
Co., 340 U. S. 76,
340 U. S. 88-90
(1950);
United States v E. I. du Pont de Nemours &
Co., 366 U. S. 316,
366 U. S. 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.
It is so ordered.
MR. JUSTICE MARSHALL took no part in the consideration or
decision of this case.
[
Footnote 1]
Some of the major provisions of the decree were as follows:
United was enjoined from further monopolization; it was ordered to
offer for sale all types of machines (previously only leased) at
"such terms . . . as do not make it substantially more advantageous
for a shoe factory to lease, rather than to buy a machine"; if
United continued leasing, it was required to lease for no more than
five-year terms under certain specified conditions; it was not to
refuse a prospective customer's request to lease or buy a machine
"except for good cause"; it was to submit a plan for disposing of
certain sectors of its business; it was to grant to any applicant,
except a deliberate infringer, a nonexclusive license under any or
all patents held by it on reasonable nondiscriminatory royalty
terms; it was not to acquire any patents or patent applications
except those acquired by reason of
bona fide employment of
the inventor, nor was it to acquire patents or patent applications
under exclusive license; it was not to acquire any second-hand shoe
machinery or any shoe machinery manufacturer or a manufacturer or
distributor of supplies for shoe factories.
[
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.