In this divestiture action under § 7 of the Celler-Kefauver
Antimerger Act, the Government challenged the acquisition by
appellant, Ford, the second largest automobile manufacturer, of
certain assets of Electric Autolite Co. (Autolite), an independent
manufacturer of spark plugs and other automotive parts. The
acquisition included the Autolite trade name, Autolite's only
domestic spark plug plant, and extensive rights to its nationwide
distribution organization for spark plugs and batteries. The brand
used in the spark plug replacement market (aftermarket) has
historically been the same as the original equipment (OE) brand.
Autolite and other independents had furnished manufacturers with OE
plugs at or below cost, seeking to recoup their losses by
profitable aftermarket sales. Ford, which previously had bought all
its spark plugs from independents and was the largest purchaser
from that source, made the Autolite acquisition in 1961 for the
purpose of participating in the aftermarket. At about that time,
General Motors (GM) had about 30% of the domestic spark plug
market. Autolite had 15%, and Champion, the only other major
independent, had 50% (which declined to 40% in 1964, and 33% in
1966). The District Court found that the industry's oligopolistic
structure encouraged maintenance of the OE tie, and that spark plug
manufacturers, to the extent that they are not owned by auto
makers, will compete more vigorously for private brand sales in the
aftermarket. The court held that the acquisition of Autolite
violated § 7, since its effect "may be substantially to lessen
competition" in automotive spark plugs because: (1) "as both a
prime candidate to manufacture and the major customer of the
dominant member of the oligopoly," Ford's pre-acquisition position
was a moderating influence on the independent companies, and (2)
the acquisition significantly foreclosed to independent spark plug
manufacturers access to the purchaser of a substantial share of the
total industry output. After hearings, the court ordered the
divestiture of the Autolite plant and trade name because of the
industry's oligopolistic structure, which encouraged
Page 405 U. S. 563
maintenance of the OE tie. The court stressed that it was in the
self-interest of the OE spark plug manufacturers to discourage
private brand sales, but noted that changes in marketing methods
indicated a substantial growth in the private brand sector of the
spark plug market, which, if allowed to develop without unlawful
restraint, may account for 17% of the total aftermarket by 1980.
Additionally, the court enjoined Ford for 10 years from
manufacturing spark plugs; ordered it for five years to buy
one-half its annual requirements from the divested plant under the
"Autolite" name, during which time it was prohibited from using its
own name on spark plugs; and, for 10 years, ordered it to continue
its policy of selling to its dealers at prices no less than its
prevailing minimum suggested jobbers' selling price. In contesting
divestiture, Ford argued that under its ownership Autolite became a
more effective competitor against Champion and GM than it had been
as an independent, and that other benefits resulted from the
1. The District Court correctly held that the effect of Ford's
acquisition of the Autolite spark plug assets and trade name may be
substantially to lessen competition in the spark plug business, and
thus to violate § 7 of the Celler-Kefauver Antimerger Act; and that
the alleged beneficial effects of the merger did not save it from
illegality under that provision, United States v. Philadelphia
National Bank, 374 U. S. 321
405 U. S.
2. The relief ordered by the District Court was proper. Pp.
405 U. S.
(a) Divestiture is necessary to restore the pre-acquisition
market structure, in which Ford was the leading purchaser from
independent sources, and in which a substantial segment of the
market was open to competitive selling. After the divestiture, with
Ford again as a purchaser of spark plugs, competitive pressures for
its business will be generated and the anti-competitive
consequences of its entry as a manufacturer will be eliminated. Pp.
405 U. S.
(b) The ancillary injunctive provisions are necessary to give
the divested plant an opportunity to reestablish its competitive
position and to nurture the competitive forces at work in the
marketplace. Pp. 405 U. S.
, 315 F.
DOUGLAS, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, and MARSHALL, JJ., joined and in which (as to Part
Page 405 U. S. 564
and part of Part II) BLACKMUN, J., joined. STEWART, J., filed an
opinion concurring in the result, post,
p. 405 U. S. 579
BURGER, C.J., post,
p. 405 U. S. 582
and BLACKMUN, J., post,
p. 405 U. S. 595
filed opinions concurring in part and dissenting in part. POWELL
and REHNQUIST, JJ., took no part in the consideration or decision
of the case.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This is a direct appeal under § 2 of the Expediting Act, 32
Stat. 823, as amended, 15 U.S.C. § 29, from a judgment of the
District Court (286 F.
, 315 F.Supp. 372), holding that Ford Motor Co. (Ford)
violated § 7 Of the Celler-Kefauver Antimerger Act [Footnote 1
] by acquiring certain assets from
Electric Autolite Co. (Autolite). The assets included the Autolite
trade name, Autolite's only
Page 405 U. S. 565
spark plug plant in this country (located at New Fostoria,
Ohio), a battery plant, and extensive rights to its nationwide
distribution organization for spark plugs and batteries. The
present appeal [Footnote 2
limited to that portion of the judgment relating to spark plugs and
ordering Ford to divest the Autolite name and the spark plug plant.
The ancillary injunctive provisions are also here for review.
Ford, the second-leading producer of automobiles, General
Motors, and Chrysler together account for 90% of the automobile
production in this country. Though Ford makes a substantial portion
of its parts, prior to its acquisition of the assets of Autolite,
it did not make spark plugs or batteries, but purchased those parts
from independent companies.
The original equipment of new cars, insofar as spark plugs are
concerned, is conveniently referred to as the OE tie. The
replacement market is referred to as the aftermarket. The
independents, including Autolite, furnished the auto manufacturers
with OE plugs at cost or less, about six cents a plug, and they
continued to sell at that price even when their costs increased
threefold. The independents sought to recover their losses on OE
sales by profitable sales in the aftermarket, where the requirement
of each vehicle during its lifetime is about five replacement plug
sets. By custom and practice among mechanics, the aftermarket plug
is usually the same brand as the OE plug. See generally
Hansen & Smith, The Champion Case: What Is Competition?, 29
Harv.Bus.Rev. 89 (1961).
Ford was anxious to participate in this aftermarket, and, after
various efforts not relevant to the present case, concluded that
its effective participation in the aftermarket
Page 405 U. S. 566
"an established distribution system with a recognized brand
name, a full line of high volume service parts, engineering
experience in replacement designs, low volume production facilities
and experience, and the opportunity to capitalize on an established
Ford concluded it could develop such a division of its own, but
decided that course would take from five to eight years and be more
costly than an acquisition. To make a long story short, it acquired
certain assets of Autolite in 1961.
General Motors had previously entered the spark plug
manufacturing field, making the AC brand. The two other major
domestic producers were independents -- Autolite and Champion. When
Ford acquired Autolite, whose share of the domestic spark plug
market was about 15%, only one major independent was left and that
was Champion, whose share of the domestic market declined from just
under 50% in 1960 to just under 40% in 1964 and to about 33% in
1966. At the time of the acquisition, General Motors' market share
was about 30%. There were other small manufacturers of spark plugs,
but they had no important share of the market. [Footnote 3
The District Court held that the acquisition of Autolite
violated § 7 of the Celler-Kefauver Antimerger Act
Page 405 U. S. 567
because its effect "may be substantially to lessen competition."
] It gave two
reasons for its decision.
First, prior to 1961, when Ford acquired Autolite it had a
"pervasive impact on the aftermarket," 315 F. Supp. at 375, in that
it was a moderating influence on Champion and on other companies
derivatively. It explained that reason as follows:
"An interested firm on the outside has a twofold significance.
It may someday go in and set the stage for noticeable
deconcentration. While it merely stays near the edge, it is a
deterrent to current competitors. United States v. Penn-Olin
Chemical Co., 378 U. S. 158
. . . (1964). This
was Ford uniquely, as both a prime candidate to manufacture and the
major customer of the dominant member of the oligopoly. Given the
chance that Autolite would have been doomed to oblivion by
defendant's grass-roots entry, which also would have destroyed
Ford's soothing influence over replacement prices, Ford may well
have been more useful as a potential than it
Page 405 U. S. 568
would have been as a real producer, regardless how it began
fabrication. Had Ford taken the internal expansion route, there
would have been no illegality; not, however, because the result
necessarily would have been commendable, but simply because that
course has not been proscribed."
286 F. Supp. at 441. See also FTC v. Procter & Gamble
Co., 386 U. S. 568
United States v. Penn-Olin Chemical Co., 378 U.
. Second, the District Court found that the
acquisition marked "the foreclosure of Ford as a purchaser of about
ten per cent of total industry output." 315 F. Supp. at 375. The
District Court added:
"In short, Ford's entry into the spark plug market by means of
the acquisition of the factory in Fostoria and the trade name
'Autolite' had the effect of raising the barriers to entry into
that market, as well as removing one of the existing restraints
upon the actions of those in the business of manufacturing spark
"It will also be noted that the number of competitors in the
spark plug manufacturing industry closely parallels the number of
competitors in the automobile manufacturing industry, and the
barriers to entry into the auto industry are virtually
insurmountable at present, and will remain so for the foreseeable
future. Ford's acquisition of the Autolite assets, particularly
when viewed in the context of the original equipment (OE) tie and
of GM's ownership of AC, has the result of transmitting the
rigidity of the oligopolistic structure of the automobile industry
to the spark plug industry, thus reducing the chances of future
deconcentration of the spark plug market by forces at work within
Page 405 U. S. 569
See also FTC v. Consolidated Food Corp., 380 U.
; Brown Shoe Co. v. United States,
370 U. S. 294
United States v. Du Pont & Co., 353 U.
We see no answer to that conclusion if the letter and spirit of
the Celler-Kefauver Antimerger Act [Footnote 5
] are to be honored. See United States v.
Philadelphia National Bank, 374 U. S. 321
374 U. S.
-363; United States v. Penn-Olin Chemical
378 U.S. at 378 U. S.
-171; Brown Shoe Co. v. United States,
U.S. at 370 U. S.
It is argued, however, that the acquisition had some beneficial
effect in making Autolite a more vigorous and
Page 405 U. S. 570
effective competitor against Champion and General Motors than
Autolite had been as an independent. But what we said in United
States v. Philadelphia National Bank, supra,
disposes of that
argument. A merger is not saved from illegality under § 7, we
"because, on some ultimate reckoning of social or economic
debits and credits, it may be deemed beneficial. A value choice of
such magnitude is beyond the ordinary limits of judicial
competence, and, in any event, has been made for us already by
Congress when it enacted the amended § 7. Congress determined to
preserve our traditionally competitive economy. It therefore
proscribed anticompetitive mergers, the benign and the malignant
alike, fully aware, we must assume, that some price might have to
374 U.S. at 374 U. S.
Ford argues that the acquisition left the marketplace with a
greater number of competitors. To be sure, after Autolite sold its
New Fostoria plant to Ford, it constructed another in Decatur,
Alabama, which, by 1964, had 1.6% of the domestic business. Prior
to the acquisition, however, there were only two major independent
producers and only two significant purchasers of original equipment
spark plugs. The acquisition thus aggravated an already
As we indicated in Brown Shoe Co. v. United States,
U.S. at 370 U. S.
"The primary vice of a vertical merger or other arrangement
tying a customer to a supplier is that, by foreclosing the
competitors of either party from a segment of the market otherwise
open to them, the arrangement may act as a 'clog on competition,'
Standard Oil Co. of California v. United States,
337 U. S.
, 337 U. S. 314
'deprive[s] . . . rivals of a fair opportunity to compete.'
H.R.Rep. No. 1191,
Page 405 U. S. 571
81st Cong., 1st Sess. 8. Every extended vertical arrangement, by
its very nature, for at least a time, denies to competitors of the
supplier the opportunity to compete for part or all of the trade of
the customer-party to the vertical arrangement."
Moreover, Ford made the acquisition in order to obtain a
foothold in the aftermarket. Once established, it would have every
incentive to perpetuate the OE tie, and thus maintain the virtually
insurmountable barriers to entry to the aftermarket.
The main controversy here has been over the nature and degree of
the relief to be afforded.
During the year following the District Court's finding of a § 7
violation, the parties were unable to agree upon appropriate
relief. The District Court then held nine days of hearings on the
remedy and, after full consideration, concluded that divestiture
and other relief were necessary.
The OE tie, it held, was in many respects the key to the
solution, since the propensity of the mechanic in a service station
or independent garage is to select as a replacement the spark plug
brand that the manufacturer installed in the car. The oligopolistic
structure of the spark plug manufacturing industry encourages the
continuance of that system. Neither GM nor Autolite sells private
label plugs. It is obviously in the self-interest of OE plug
manufacturers to discourage private brand sales and to encourage
the OE tie. There are findings that the private brand sector of the
spark plug market will grow substantially in the next decade
because mass merchandisers are entering this market in force. They
not only sell all brands over the counter, but also have service
bays where many carry only spark plugs of their own proprietary
brand. It is anticipated that, by 1980,
Page 405 U. S. 572
the total private brand portion of the spark plug market may
then represent 17% of the total aftermarket. The District Court
"To the extent that the spark [plug] manufacturers are not owned
by the auto makers, it seems clear that they will be more favorably
disposed toward private brand sales and will compete more
vigorously for such sales. Also, the potential entrant continues to
have the chance to sell not only the private brand customer, but
the auto maker as well."
315 F. Supp. at 378.
Accordingly, the decree
(1) enjoined Ford for 10 years from manufacturing spark
(2) ordered Ford for five years to purchase one-half of its
total annual requirement of spark plugs from the divested plant
under the "Autolite" name,
(3) prohibited Ford for the same period from using its own trade
names on plugs,
(4) protected New Fostoria, the town where the Autolite plant is
located, by requiring Ford to continue for 10 years its policy of
selling spark plugs to its dealers at prices no less than its
prevailing minimum suggested jobbers' selling price, [Footnote 6
(5) protected employees of the New Fostoria plant by ordering
Ford to condition its divestiture sale on the purchaser's assuming
the existing wage and pension obligations and to offer employment
to any employee displaced by a transfer of nonplug operations from
the divested plant. [Footnote
Page 405 U. S. 573
The relief in an antitrust case must be "effective to redress
the violations" and "to restore competition." [Footnote 8
] United States v. Du Pont &
Co., 366 U. S. 316
366 U. S. 326
The District Court is clothed with "large discretion" to fit the
decree to the special needs of the individual case.
International Salt Co. v. United States, 332 U.
, 332 U. S. 401
United States v. Du Pont & Co.,
353 U.S. at
353 U. S. 608
United States v. Crescent Amusement Co., 323 U.
, 323 U. S.
Complete divestiture is particularly appropriate where asset or
stock acquisitions violate the antitrust laws. United States v.
Du Pont & Co., supra,
at 366 U. S.
-335; United States v. Crescent Amusement Co.,
at 323 U. S. 189
Schine Chain Theatres v. United States, 334 U.
, 334 U. S. 128
United States v. El Paso Gas Co., 376 U.
Divestiture is a start toward restoring the pre-acquisition
situation. Ford once again will then stand as a large industry
customer at the edge of the market with
Page 405 U. S. 574
a renewed interest in securing favorable terms for its
substantial plug purchases. Since Ford will again be a purchaser,
it is expected that the competitive pressures that existed among
other spark plug producers to sell to Ford will be re-created. The
divestiture should also eliminate the anticompetitive consequences
in the aftermarket flowing from the second largest automobile
manufacturer's entry through acquisition into the spark plug
The divested plant is given an incentive to provide Ford with
terms which will not only satisfy the 50% requirement provided for
five years by the decree, but which, even after that period, may
keep at least me of Ford's ongoing purchases. The divested plant is
awarded at least a foothold in the lucrative aftermarket, and is
provided an incentive to compete aggressively for that market.
As a result of the acquisition of Autolite, the structure of the
spark plug industry changed drastically, as already noted. Ford,
which, before the acquisition, was the largest purchaser of spark
plugs from the independent manufacturers, became a major
manufacturer. The result was to foreclose to the remaining
independent spark plug manufacturers the substantial segment of the
market previously open to competitive selling, and to remove the
significant procompetitive effects in the concentrated spark plug
market that resulted from Ford's position on the edge of the market
as a potential entrant.
To permit Ford to retain the Autolite plant and name and to
continue manufacturing spark plugs would perpetuate the
anticompetitive effects of the acquisition. [Footnote 9
Page 405 U. S. 575
The District Court rightly concluded that only divestiture would
correct the condition caused by the unlawful acquisition.
A word should be said about the other injunctive provisions.
They are designed to give the divested plant an opportunity to
establish its competitive position. The divested company needs time
so it can obtain a foothold in the industry. The relief ordered
should "cure the ill effects of the illegal conduct, and assure the
public freedom from its continuance," United States v. United
States Gypsum Co., 340 U. S. 76
340 U. S. 88
and it necessarily must "fit the exigencies of the particular
case." International Salt Co. v. United States,
at 332 U. S. 401
"it is well settled that, once the Government has successfully
borne the considerable burden of establishing a violation of law,
all doubts as to the remedy are to be resolved in its favor."
United States v. Du Pont & Co.,
366 U.S. at
366 U. S.
Ford concedes that,
"[i]f New Fostoria is to survive, it must for the foreseeable
future become and remain the OE supplier to Ford and secure and
retain the benefits of such OE status in sales of replacement
The ancillary measures ordered by the District Court are
designed to allow Autolite to reestablish itself in the OE and
replacement markets and to maintain it as a viable competitor until
such time as forces already at work within the marketplace weaken
the OE tie. Thus, Ford is prohibited for 10 years from
manufacturing its own plugs. [Footnote 10
] But, in five years, it can buy its plugs
from any source and use its name on OE plugs.
Page 405 U. S. 576
But, prior to that time, Ford cannot use or market plugs bearing
the Ford trade name. In view of the importance of the OE tie, if
Ford were permitted to use its own brand name during the initial
five-year period, there would be a tendency to impose the
oligopolistic structure of the automotive industry on the
replacement parts market, and the divested enterprise might well be
unable to become a strong competitor. Ford argues that any
prohibition against the use of its name is permissible only where
the name deceives or confuses the public. [Footnote 11
] But this is not an unfair
competition case. The temporary ban on the use of the Ford name is
designed to restore the pre-acquisition competitive structure of
The requirement that, for five years, Ford purchase at
Page 405 U. S. 577
least half of its spark plug requirements from the divested
company under the Autolite label is to give the divested enterprise
an assured customer while it struggles to be reestablished as an
effective, independent competitor.
It is suggested, however, that
"the District Court's orders assured that Ford could not begin
to have brand name success in the replacement market for at least
10 to 13 years."
at 405 U. S. 591
This conclusion distorts the effect of the District Court decree
and the nature of the spark plug industry. Ford's own studies
indicate that it would take five to eight years for it to develop a
spark plug division internally. A major portion of this period
would be devoted to the development of a viable position in the
aftermarket. The five-year prohibition on the use of its own name
and the 10-year limitation on its own manufacturing mesh neatly to
allow Ford to establish itself in the aftermarket prior to becoming
a manufacturer while, at the same time, giving Autolite the
opportunity to reestablish itself by providing a market for its
production. Thus, the District Court's decree delays for only two
to five years the date on which Ford may become a manufacturer with
an established share of the aftermarket. Given the normal
five-to-eight-year lead time on entry through internal expansion,
the District Court's decree does not significantly lessen Ford's
moderating influence as a potential entrant on the edge of the
market. Moreover, in light of the interim benefits this ancillary
relief will have on the reestablishment of Autolite as a viable
competitor and of Ford as a major purchaser, we cannot agree with
the characterization of the relief as "harshly restrictive,"
at 405 U. S. 595
or the assertion that the decree, in any practical and significant
sense, "prohibit[s] Ford from entering the market through internal
at 405 U. S.
Antitrust relief should unfetter a market from anticompetitive
conduct and "pry open to competition a
Page 405 U. S. 578
market that has been closed by defendants' illegal restraints."
International Salt Co. v. United States,
332 U.S. at
332 U. S. 401
The temporary elimination of Ford as a manufacturer of spark plugs
lowers a major barrier to entry to this industry. See
Kaysen & D. Turner, Antitrust Policy -- An Economic and Legal
Analysis 116 (1959). Forces now at work in the marketplace may
bring about a deconcentrated market structure, and may weaken the
onerous OE tie. The District Court concluded that the forces of
competition must be nurtured to correct for Ford's illegal
acquisition. We view its decree as a means to that end. [Footnote 12
The thorough and thoughtful way the District Court considered
all aspects of this case, including the nature of the relief, is
commendable. The drafting of such a decree involves predictions and
assumptions concerning future economic and business events. Both
public and private interests are involved, and we conclude that the
District Court, with a single eye to the requirements of § 7 and
the violation that was clearly established, made a reasonable
judgment on the means needed to restore and encourage the
competition adversely affected by the acquisition.
MR. JUSTICE POWELL and MR. JUSTICE REHNQUIST took no part in the
consideration or decision of this case.
Page 405 U. S. 579
Section 7 provides in part:
"No corporation engaged in commerce shall acquire, directly or
indirectly, the whole or any part of the stock or other share
capital and no corporation subject to the jurisdiction of the
Federal Trade Commission shall acquire the whole or any part of the
assets of another corporation engaged also in commerce, where in
any line of commerce in any section of the country, the effect of
such acquisition may be substantially to lessen competition, or to
tend to create a monopoly."
38 Stat. 731, as amended, 64 Stat. 1125, 15 U.S.C. § 18.
We noted probable jurisdiction June 7, 1971. 403 U.S. 903.
Autolite did not sell all of its assets to Ford, and changed the
name of the parts of its business that it retained to Eltra Corp.
which in 1962 began manufacturing spark plugs in Decatur, Alabama,
under the brand name Prestolite. But, in 1964, it had only 1.6% of
the domestic business. Others included Atlas, sponsored by Standard
Oil of New Jersey, with 1.4% of that business, and Riverside,
sponsored by Montgomery Ward, with O.6%. As further stated by the
"Most of the manufacturing for the private labels among these
marketers is done by ELTRA and General Battery and Ceramic
Corporation, the only producers of any stature at all after the Big
The words were suggested by the Federal Trade Commission which
told the Congress:
"Under the Sherman Act, an acquisition is unlawful if it creates
a monopoly or constitutes an attempt to monopolize. Imminent
monopoly may appear when one large concern acquires another, but it
is unlikely to be perceived in a small acquisition by a large
enterprise. As a large concern grows through a series of such small
acquisitions, its accretions of power are individually so minute as
to make it difficult to use the Sherman Act test against them. . .
S.Rep. No. 1775, 81st Cong., 2d Sess., 5.
The Committee defined the words "may be" as follows:
"The concept of reasonable probability conveyed by these words
is a necessary element in any statute which seeks to arrest
restraints of trade in their incipiency and before they develop
into full-fledged restraints violative of the Sherman Act. A
requirement of certainty and actuality of injury to competition is
incompatible with any effort to supplement the Sherman Act by
reaching incipient restraints."
Congressman Celler, in testifying for the Celler-Kefauver bill
that was the 1950 amendment to § 7 of the Clayton Act, said:
"[T]he worth of the individual is the worth of the Nation; no
more and no less. That which strengthens the individual bolsters
the Nation; that which dwarfs the individual belittles the
Hearing on H.R. 988 et seq.
before Subcommittee No. 3
of the House Committee on the Judiciary, 81st Cong., 1st Sess.,
ser. 10, pp. 14-15 (1949).
Senator Kefauver spoke in the same vein:
"[I]f our democracy is going to survive in this country, we must
keep competition, and we must see to it that the basic materials
and resources of the country are available to any little fellow who
want to go into business."
"Charts and statistics will show that every year there is more
and more concentration, with more and more corporations purchasing
out their competitors, so that, unless this trend is halted, we are
going to come to a place where the basic industries and business of
America are controlled by a very, very small group of a small
number of corporations."
"We have already reached that point in a great many of our basic
industries. The evil of that course is quite apparent. When people
lose their economic freedom, they lose their political
"When the destiny of people over the land is dependent upon the
decision of two or three people in a central office somewhere, then
the people are going to demand that the Government do something
"When it reaches that stage, it is going to result in statism of
one sort or another; and whichever sort it may be, one is equally
as bad as another, as I see it."
The District Court found this provision necessary in order to
assemble an adequate distribution system for the
Without it, service stations and independent
jobbers would be unable to compete with franchised car dealers for
the replacement business. Ford does not challenge this provision in
Ford does not challenge this ancillary portion of the District
Court decree protecting the employees of the New Fostoria
The suggestion that antitrust "violators may not be required to
do more than return the market to the status quo ante,
at 405 U. S. 590
is not a correct statement of the law. In United States v.
Paramount Pictures, Inc., 334 U. S. 131
sustained broad injunctions regulating motion picture licenses and
clearances which were not related to the status quo ante.
Reynolds Metals Co. v. FTC,
114 U.S.App.D.C. 2, 309 F.2d
223 (1962), concerned the enforcement powers of the Federal Trade
Commission, not the equitable powers of the District Court.
Section 4 of the Sherman Act, 15 U.S.C. § 4, and § 15 of the
Clayton Act, 15 U.S.C. § 25, empower "the Attorney General, to
institute proceedings in equity to prevent and restrain . . .
violations" of the antitrust laws. The relief which can be afforded
under these statutes is not limited to the restoration of the
status quo ante.
There is no power to turn back the clock.
Rather, the relief must be directed to that which is "necessary and
appropriate in the public interest to eliminate the
of the acquisition offensive to the statute,"
United States v. Du Pont & Co., 353 U.
, 353 U. S. 607
(emphasis added), or which will "cure the ill effects
the illegal conduct, and assure the public freedom from
its continuance." United States v. United States Gypsum
Co., 340 U. S. 76
340 U. S. 88
"[I]t would be a novel, not to say absurd, interpretation of the
Anti-Trust Act to hold that, after an unlawful combination is
formed and has acquired the power which it has no right to acquire,
namely, to restrain commerce by suppressing competition, and is
proceeding to use it and execute the purpose for which the
combination was formed, it must be left in possession of the power
that it has acquired, with full freedom to exercise it."
Northern Securities Co. v. United States, 193 U.
, 193 U. S.
Ford argues that the 10-year prohibition on its manufacture of
spark plugs will lessen competition because it will remove a
potential competitor from the marketplace. This prohibition,
however, is merely a step toward the restoration of the status
and is, moreover, necessary for Autolite to
Ford also argues that the right to its own trade name is a
constitutionally protected property right (cf. Howe Scale Co.
v. Wyckoff, Seamans & Benedict, 198 U.
; Brown Chemical Co. v. Meyer,
139 U. S. 540
United States v. Tropiano,
418 F.2d 1069, 1076 (CA2
1969)), and that the remedial provision of § 15 of the Clayton Act
should not be construed to limit the use of this right. Even on
that assumption, we could not accept the conclusion advanced by
Even constitutionally protected property rights such as patents
may not be used as levers for obtaining objectives proscribed by
the antitrust laws. E.g., Besser Mfg. Co. v. United
States, 343 U. S. 444
343 U. S.
-449; Morton Salt Co. v. Suppiger Co.,
314 U. S. 488
Here, the use by Ford of its trade name would perpetuate the OE
tie, and would have the prohibited effect of hindering the reentry
of Autolite to the spark plug market as a viable competitor.
"The trade mark may become a determinental weapon if it is used
to serve a harmful or injurious purpose. If it becomes a tool to
circumvent free enterprise and unbridled competition, public policy
dictates that the rights enjoyed by its ownership be kept within
their proper bounds. If a trade mark may be the legal basis for
allocating world markets, fixing of prices, restricting
competition, the unfailing device has been found to destroy every
vestige of inhibition set up by the Sherman Act."
United States v. Timken Roller Bearing
Co., 83 F. Supp.
, 316 (ND Ohio 1949), aff'd, 341 U.
The District Court decree thus implements the congressional
judgment in favor of atomized markets reflected in the
Celler-Kefauver Antimerger Act:
"But we cannot fail to recognize Congress' desire to promote
competition through the protection of viable, small, locally owned
business. Congress appreciated that occasional higher cost and
prices might result from the maintenance of fragmented industries
and markets. It resolved these competing considerations in favor of
decentralization. We must give effect to that decision."
Brown Shoe Co. v. United States, 370 U.
, 370 U. S.
MR. JUSTICE STEWART, concurring in the result.
The spark plug industry, as it stood prior to Ford's acquisition
of Autolite, was hardly characterized by vigorous competition. For
25 years, the industry had consisted of AC, owned by and supplying
original equipment (OE) plugs to General Motors; Champion,
independent and supplying Ford; Autolite, independent and supplying
Chrysler; and a number of small producers who had no OE sales and
only a minuscule share of the aftermarket. [Footnote 2/1
] The habit among mechanics of installing
replacement plugs carrying the same brand as the automobile's
original plugs, reinforced by the unwillingness of service stations
to stock more than two or three brands, [Footnote 2/2
] made possible the "OE tie," which rendered
any large-scale entry into the aftermarket virtually impossible
without first obtaining a large OE customer. Moreover, price
competition was minimal, both in the OE market (where any reduction
in the six-cent price would immediately be matched by rivals), and
in the aftermarket (where spark plugs accounted for such a small
percentage of the normal tune-up charge that price differentials
did not have a significant impact upon consumer choice).
The District Court found that the acquisition of Autolite's
spark plug assets by Ford further lessened competition in the
industry in two ways: it foreclosed Ford as a potential purchaser
of spark plugs from independent producers, and it eliminated what
the District Court found to have been Ford's "moderating effect"
upon Champion's pricing policies in the aftermarket. These
Page 405 U. S. 580
findings, standing alone, might provide a basis for concluding
that the acquisition violated § 7, but, as THE CHIEF JUSTICE
demonstrates in his dissenting opinion, post
405 U. S.
-592, the remedy ordered will not restore the
preacquisition market forces upon which the District Court focused.
For, under the court's injunctions, Ford will be neither a
potential market entrant nor a potential purchaser of half its OE
requirements from producers other than Autolite for a substantial
period of time after the divestiture takes place.
In my judgment, both the finding of a § 7 violation and the
remedy ordered may be better rationalized in terms of probable
future trends in the spark plug market, visible at the time of the
acquisition. The District Court observed that "a court cannot shut
its eyes to contemporary or predictable factors conducive to change
in the competitive structure." 286 F.
, 442. This was a proper inquiry because we have held
that § 7
"requires not merely an appraisal of the immediate impact of the
merger upon competition, but a prediction of its impact upon
competitive conditions in the future."
United States v. Philadelphia National Bank,
374 U. S. 321
374 U. S. 362
Page 405 U. S. 581
The District Court found that the growth of service centers
operated by mass merchandisers carrying private label brands might
eventually loosen the OE tie and the tight oligopoly in the spark
plug market that it had fostered. Had Ford entered the market
through internal expansion, either Champion or Autolite would have
been left without an OE entry, but would nevertheless have owned an
established brand name with an existing distribution system,
together with a large production capacity. Even the threat of being
so stranded, not to mention its realization, would have given both
Champion and Autolite an incentive to compete as suppliers to
private label sellers, as these sellers began to represent a
significant share of the market and to undermine the OE tie. Ford's
acquisition of Autolite did more than foreclose it as a potential
OE customer, or eliminate its "moderating effect" upon Champion's
pricing policies: it eliminated one of the only two independent
producers with a sufficient share of the aftermarket to give it a
chance to compete effectively without an OE tie. Thus, the
acquisition had the probable effect of indefinitely postponing the
day when existing market forces could produce a measurable
deconcentration in the market.
While the District Court did not justify the divestiture in
precisely these terms, I think its prediction of future trends in
the spark plug industry is an adequate basis to support the remedy
ordered. THE CHIEF JUSTICE's opinion, post
at 405 U. S.
-592, is correct in its assertion that the ancillary
injunctions are anticompetitive in the short run, and that the
District Court took extraordinary measures to mother the divested
producer for the next decade. But I cannot say that these
injunctions are not reasonably calculated to establish the new
Autolite producer as a viable firm, and thus to restore the
pre-acquisition market structure, insofar as it is now possible to
do so. A divestiture decree
Page 405 U. S. 582
without ancillary injunctions would not automatically restore
the status quo ante,
as THE CHIEF JUSTICE's opinion seems
to assume. The Electric Autolite Company, from which Ford acquired
the assets in question here, will not be recreated by the
divestiture, and it is reasonable to assume that a new owner of the
Autolite trade name and the New Fostoria plant will require a
period of time to become as effective a competitor as was Electric
Autolite prior to the acquisition.
Though the economics of the market are such that the divestiture
cannot be assured of success, it does, at least, have a chance of
bringing increased competition to the spark plug industry. And
while divestiture remedies in § 7 cases have not enjoyed
spectacular success in the past, remedies short of divestiture have
been uniformly unsuccessful in meeting the goals of the Act.
Elzinga, The Antimerger Law: Pyrrhic Victories, 12
J.Law & Econ. 43 (1969).
Both Champion and Autolite supplied OE plugs to American Motors,
which, in 1961, had roughly 5% of the domestic automobile
According to a 1966 survey, only 11% of all metropolitan area
service stations stocked any brand of spark plug other than
Champion, AC, or Autolite, and only 30% stocked all three of the
Ford argues that the acquisition allowed Autolite to compete
more effectively against the two larger brands, Champion and AC.
Since this argument is addressed to the effect of the acquisition
upon competition, the Court obviously provides no answer to the
argument when it quotes Philadelphia National Bank
proposition that arguments unrelated to the merger's effect upon
competition are irrelevant in a § 7 case. But Ford's arguments that
Autolite was a more effective competitor after the acquisition
rests principally on the fact that Autolite's market share
increased after 1961, while Champion's decreased. This development,
however, can be attributed, for the most part, to the fact that
Autolite now provides OE plugs to Ford, rather than to the smaller
Chrysler. Autolite's increased market share, therefore, is more
likely attributable to the OE tie than to any increase in its
MR. CHIEF JUSTICE BURGER, concurring in part and dissenting in
In addition to requiring divestiture of Autolite, the District
Court made ancillary injunctive provisions that go far beyond any
that have been cited to the Court. Ford is forbidden to manufacture
spark plugs for 10 years; Ford is ordered to purchase one-half of
its total annual requirement of spark plugs from the divested
company under the "Autolite" name, and Ford is forbidden for the
same period to use its own trade name on any spark plugs. These
provisions are directed to prevent Ford from making an independent
entry into the spark plug market and, in effect, to require it to
subsidize Autolite for a period of time. Despite the Draconian
quality of this restriction on Ford, I can find no justification in
the District Court's findings for this
Page 405 U. S. 583
remedy. I dissent from the broad sweep of the District Court's
remedial decree. I would remand for further consideration of the
remedial aspects of this case.
An understanding of the District Court's findings as to the
spark plug market shows three reasons why it was in error in
requiring Ford to support Autolite. First, the court did
find that the weakness of an independent Autolite's
competitive position resulted from Ford's acquisition. Rather, a
reading of its findings makes apparent that the precariousness of
Autolite's expected post-divestment position results from
preexisting forces in the market. Therefore, the drastic measures
employed to strengthen Autolite's position at Ford's expense cannot
be justified as a remedy for any wrong done by Ford. Second, the
remedy will perpetuate for a time the very evils upon which the
District Court based a finding of an antitrust violation. Third,
the court's own findings indicate that the remedy is not likely to
secure Autolite's competitive position beyond the termination of
the restrictions. Therefore, there is no assurance that the
judicial remedy will have the desired impact on long-run
competition in the spark plug market.
The Court makes two critical errors in order to avoid the effect
of this reasoning. It rejects the factfinding by the District Court
in order to uphold its remedial order, and it repeats that court's
error by discussing the assistance necessary to restore Autolite to
the status quo ante
without ever delineating that prior
state of affairs or indicating how Ford, by acquiring Autolite and
holding it for a number of years, had undermined its ability to
reassume its former independent competitive position.
The District Court made extensive findings on the nature of the
spark plug market. Some of these findings appear in the Court's
opinion, but some factors that
Page 405 U. S. 584
seem crucial to me are either omitted or not adequately set
forth. Therefore I will sketch these findings at some risk of
Beyond doubt, the spark plug market has been overwhelmingly
dominated by three manufacturers for a long period: AC, owned by
General Motors, which had about 30% of the market in 1961;
Champion, which had supplied Ford since 1910 and had approximately
50% of the market in 1961; and Autolite, which had supplied
Chrysler since 1941 and had 15% of the market in 1961. Together,
these three companies had over 95% of the total market in 1961.
The reason for the continued domination of the market by the
three big plug manufacturers is the pervasive feature of the plug
market known as the "OE (original equipment) tie." This denominates
the phenomenon that mechanics who replace spark plugs in a car
engine have tended, almost exclusively, to use the brand of plug
installed by the auto builder as original equipment. Though not
required by spark plug technology, mechanics have followed this
practice because of a strong desire to avoid any chance of injuring
an engine by putting a mismatched plug into it. Further, because
plugs are low-profit items, those who install them tend to carry an
inventory of a small number of brands. Most carry only two, and
some carry three brands, and they choose the brands installed by
the big auto manufacturers as original equipment. Thus, it takes a
position as supplier to a large auto maker to gain recognition in
the spark plug replacement market. The Government conceded in the
District Court, for instance, that American Motors, with 5% of the
auto market, would not be able to create market acceptance for an
independent brand of plug by installing it as original equipment in
Because of the competitive importance of having their plugs
installed as original equipment by one of the three
Page 405 U. S. 585
auto companies, plug manufacturers have over a long period been
willing to sell OE plugs for initial installation by auto
manufacturers at a price below their production cost. The
longstanding price for OE plugs, about 6 cents, is now
approximately one-third of the cost of producing these plugs. Such
below-cost selling is profitable for the plug companies because of
the foothold it gives them in competing for the normal five or six
sets of replacement plugs necessary in the lifespan of an
automobile. This pricing policy has been partially responsible for
the semi-permanent relations between the plug manufacturers and the
auto manufacturers: it is only those plug companies that profit
from the OE tie over the long run that can afford this below-cost
sale to the auto companies.
The strength of the OE tie is demonstrated by the inability of
well known auto supply manufacturers to gain a significant share of
the spark plug market in the absence of an OE tie. As the District
Court found, no company without the OE tie
"ever surpassed the 2% level. Several have come and gone.
Firestone Tire and Rubber Company merchandised 'Firestone'
replacements for 35 years before it gave up in 1964. Although it
owned some 800 accessory stores and successfully wholesaled other
items to more than 50,000 shops and filling stations, it could not
surmount the patent discrimination against brands not blessed with
Detroit's approbation. Goodyear Tire and Rubber Company quit in
only three years. Globe Union, a fabricator which had barely 1% of
the nation's shipments, withdrew in 1960."
, 434-435. Two small manufacturers survive, producing
plugs for private label brands. Thus, "Atlas" plugs, sponsored
Page 405 U. S. 586
the Standard Oil companies, has 1.4% of the replacement market;
"Prestolite" and Sears, Roebuck's "Allstate" each have 1.2%; and
Montgomery Ward's "Riverside" label has O.6% of the replacement
An independent entry into the plug market by Ford, with the
expected substitution of its own plugs as original equipment in its
cars, would have necessarily deprived one of the two significant
independent plug producers of its OE status. The District Court
found that, because of the importance of the OE tie, the plug
producer deprived of this support would most likely have lost any
significant position in the market. [Footnote 3/1
] Autolite, with only 15% of the market
before the acquisition, would certainly have lost any significant
position in the market if an independent entry by Ford had led
Chrysler to shift its patronage from Autolite to Champion. The
District Court asserted that a Champion without OE status would
have had some chance of maintaining a significant market position
because of its size, although it gave no reason for thinking
Champion's size immunized it from dependence on OE status. Before
1961, Champion had just under 50% of the market. As a result of
Champion's move to Chrysler in 1961, its position in the market
dropped to 33% by 1966. The District Court found no basis for
predicting which of the two big independents would have won such a
competition for continued OE status.
Thus, an independent entry by Ford would not likely have
increased the number of significant competitors in the spark plug
market. Rather, it would simply have substituted Ford for one of
the two significant independent manufacturers. The result of this
Page 405 U. S. 587
is that the District Court did not base its finding of
illegality on the ground typically present when a potential entrant
enters an oligopolistic market by acquisition, rather than internal
that such a move has deprived the market
of the pro-competitive effect of an increase in the number of
competitors. Here an independent entry would not have increased the
number of competitors, but simply would have exchanged one
competitor for another. In noting this paradoxical fact, the
District Court concluded that "Ford may well have been more useful
as a potential, than it would have been as a real, producer,
regardless how it began fabrication." [Footnote 3/2
] 286 F. Supp. at 441.
Not finding that Ford's entry by acquisition had deprived the
spark plug market of any pro-competitive effect of an independent
entry, the District Court relied on two other grounds for finding a
violation of the antitrust laws. First, it concluded that, as a
potential entrant on the edge of the market which was also a major
purchaser in the market, Ford exercised a "moderating" influence on
the market; the second basis for determining the acquisition
illegal was the finding that the acquisition
Page 405 U. S. 588
"foreclosed" other companies from competing for the business of
supplying Ford with spark plugs.
With respect to Autolite itself, the District Court made several
relevant findings. First, it found that Autolite is a
fixed-production plant. In other words, it can be profitable only
turning out approximately the number of plugs it now manufactures.
It could not, for instance, reduce its production by half and sell
that at a profit. Second, it made extensive findings with respect
to Autolite's distribution system:
"Ford received six regional offices, personnel, and a list of
Electric Autolite's warehousers and jobbers. All of these have been
and still are at liberty to deal with anyone they wish. Each old
direct account had to be visited individually, and, if it
consented, be re-signed by defendant [Ford]. Within a few months,
52 did enter into new ignition contracts. However, 50 of these for
the previous year had also been . . . [distributors of other Ford
products]. By mid-1966, direct accounts totaled 156, of which 104
in 1960 had been pledged to neither Ford nor Autolite. The same
bloc of 50 had been committed to both. The net increase traceable
with any semblance of accuracy to the acquisition is two
first-layer middlemen. . . ."
286 F. Supp. at 422. As to difficulties that a divested Autolite
might have in establishing an independent distribution system, the
District Court mentioned only one: [Footnote 3/3
] if Ford were to offer its own plugs to its
car dealers at a fairly low price, one which independent jobbers
could not meet, Autolite
Page 405 U. S. 589
would have difficulty independently establishing its
distribution system. The jobbers would be less interested in
handling Autolite's line, since the Ford dealers would not want
Autolite at the jobbers' price and, with this demand cut out, the
jobbers would be less interested in pushing Autolite generally.
There is another set of relevant facts found by the District
Court. The District Judge found that "there is a rising wind of new
forces in the spark plug market which may profoundly change it."
, 377. On the basis of the testimony of an executive
of one of the producers of plugs for private labels, the court
found that the private brand sector would grow during the next 10
years. This highly speculative observation of the District Court
was based on a finding that the mass merchandisers are beginning to
enter the plug marketing field in force. Not only do the mass
merchandisers market private brand plugs over the counter, but they
are also building service bays. And, in these bays, many carry only
their own proprietary brand of spark plugs. This witness predicted
that the mass merchandisers would increase their share of the
aftermarket from 4.4% to 10% by 1980. He further predicted that oil
companies would enter the replacement market, resulting in a total
of 17% of the replacement market being supplied by private label
plugs by 1980. The court concluded that these forces
"may well lead to [the market's] eventual deconcentration by
increasing the number of potential customers for a new entrant into
the plug manufacturing business and reducing the need for original
315 F. Supp. at 378.
In its separate opinion on remedies, the District Court
correctly stated the relevant law; the purpose, and limit of
antitrust remedies, is to
"free these forces [within the market] from the unlawful
restraint imposed upon them so that they
Page 405 U. S. 590
may run their natural course."
315 F. Supp. at 377. The violators may not be required to do
more than return the market to the status quo ante.
See United States v. Paramount Pictures, Inc.,
334 U. S. 131
334 U. S.
-153 (1948); Reynolds Metals Co. v. FTC,
U.S.App.D.C. 2, 309 F.2d 223 (1962) (Burger, J.). Applying this
general provision to the instant situation, the District Court
"The court wishes to note here that, although it finds that
divestiture is the only effective remedy, it does not agree with
the Government that the remedy should be affirmatively designed to
'break the OE tie.' The remedy is designed to correct the
violations of Section 7 found by the court. The OE tie, as such,
does not violate Section 7."
315 F. Supp. at 378. The District Court then concluded that, in
addition to divestiture of the Autolite plant and trade name,
certain injunctive provisions were required "to give [Autolite] an
opportunity to establish its competitive position." Ibid.
It therefore ordered that Ford be prohibited from manufacturing
spark plugs for a period of 10 years. It further ordered that, for
a period of five years, Ford would be required to purchase one-half
of its total annual needs of spark plugs from Autolite, bearing the
Autolite label. For this five-year period, Ford was also ordered
not to use or market a spark plug under a trade name owned by or
licensed to it. The effect of these orders was twofold. They
assured Autolite of a purchaser for a large part of its production
for five years. And they prevented Ford from immediately entering
the competition for a share of the aftermarket with a plug under
its own name; it could not even label a plug under its own name for
five years, and could not manufacture its own plug for 10
Page 405 U. S. 591
Given the findings of the court that, even with the status of
supplier of original equipment (with the company's own brand name
on plugs) to a major auto manufacturer, it would take a new entrant
into the spark plug market five to eight years to establish a
position for its brand in the replacement market, the District
Court's orders assured that Ford could not begin to have brand-name
success in the replacement market for at least 10 to 13 years.
In my view, these drastic remedial provisions are not warranted
by the court's findings as to the grounds on which Ford's
acquisition violated the antitrust laws. Further, in light of the
District Court's own factfindings, these remedies will have short
run anticompetitive impact, and they give no assurance that they
will succeed in allowing Autolite to establish its competitive
The remedial provisions are unrelated to restoring the
status quo ante
with respect to the two violations found
by the District Court, the ending of Ford's status as a potential
entrant with a moderating influence on the market and the
foreclosure of a significant part of the plug market. Indeed, the
remedies may well be anticompetitive in both respects. First, the
District Court's order actually undercuts the moderating influence
of Ford's position on the edge of the market. It is the
Page 405 U. S. 592
possibility that a company on the sidelines will enter a market
through internal expansion that has a moderating influence on the
market. By prohibiting Ford from entering the market through
internal expansion, therefore, the remedy order wipes out, for the
duration of the restriction, the pro-competitive influence Ford had
on the market prior to its acquisition of Autolite. Second, the
Court's order does not fully undo the foreclosure effect of the
acquisition. Divestment alone would return the parties to the
status quo ante.
Ford would then be free to deal with
Autolite or another plug producer or to enter the market through
internal expansion. Yet the Court has ordered Ford to buy at least
half its requirements from Autolite for five years. Thus, the order
itself forecloses part of Ford's needs from the forces of
The above problems might be minor if the District Court's remedy
were justifiable in terms of returning Autolite to the status
by overcoming some harm to its ability to compete
accomplished by Ford's acquisition. But, on this issue, the
District Court opinion and the majority of this Court are confused.
Although the District Court asserted that Autolite needed the aid
of its injunctive remedies to establish its competitive position,
the court made no findings in its remedy opinion as to the source
of Autolite's competitive weakness. Therefore it never reached the
issue whether the source of weakness had anything to do with the
violations attributed to Ford. Instead, the court's opinion
proceeded from the recognition of competitive problems immediately
to the prescription of a remedy.
In fact, a fair reading of the findings of the District Court
shows that the acquisition did not injure Autolite's competitive
position. Autolite's OE status was continued, and its share of the
aftermarket was increased from 12.5% to 19%. Thus, its trademark is
at least as strong now as when Ford acquired the company. Nor
Page 405 U. S. 593
did the acquisition and holding of Autolite injure its
distribution system. The District Court found that Autolite did not
own a distribution system. It merely had short-term contracts with
jobbers who distributed its plugs to those who install them in cars
or sell them to the public. Almost all of these jobbers had
concurrent distribution relations with Ford. In fact, between 1961
and 1966, Ford tripled the number of jobbers handling Autolite
plugs. From the opinion below, it appears that Ford has done
nothing that will prevent an independent Autolite from seeking to
maintain these distribution channels. The only possible finding of
injury to be squeezed out of the acquisition relates to the fact
that Autolite has been shorn of its status as OE supplier of
Chrysler. But this is inconclusive. Autolite had nothing more in
its position as OE supplier to Chrysler than it would if Ford
voluntarily chose to use Autolite plugs after the divestment: a
relationship based on short-term contracts the auto manufacturer
could refuse to renew at any time.
The findings of the District Court indicate that Autolite's
precarious position did not result from its acquisition by Ford.
Prior to the acquisition, both Champion and Autolite were in a
continually precarious position in that their continued large share
of the market was totally dependent on their positions as OE
suppliers to auto manufacturers. The very factor that assured that
they faced no serious competition in the short run also assured
that, in the long run, their own position was dependent on their
relationship with a large auto manufacturer. Thus, the threat to
Autolite posed by a simple divestiture is the same threat it had
lived with between 1941 and 1961 as an independent entity: it might
be left without any OE supply relationship with a major auto
manufacturer, and therefore its market position based on this
relationship might decline drastically.
Page 405 U. S. 594
Today's opinion errs when it states, ante
405 U. S. 571
that the District Judge found the OE tie the "key to the solution"
of this problem. Although the court indeed found this tie a
pervasive factor in the market, it also found that the phenomenon
was not created by Ford, and that it did not constitute a § 7
violation. Therefore the Court errs in justifying the ancillary
remedies as necessary to overcome the OE tie. Even if such a remedy
might overcome the OE tie, which I question, there is no
justification for burdening Ford with the restrictive order.
Further, the only conclusion to be drawn from the trial findings
is that the remedy is unlikely to result in a secure market
position for Autolite at the end of the restricted period. Once
again, it will be dependent for its survival on whether it can
maintain an OE supply status. The District Court's suggestion that
Autolite can find a niche supplying private brand labels is
unpersuasive. It cannot be predicted with any certainty that these
sales outlets will grow to the extent predicted by one person in
that line of the business. Further, even if they do, this is no
assurance of Autolite's survival. There are already several
companies in the business of producing plugs for private labels.
Autolite will have to compete with them. The results will not be
helpful. One possibility is that Autolite would completely
monopolize the private brand market to the extent of about 17% of
the replacement market. This is as uncompetitive as it is unlikely.
The more reasonable likelihood is that Autolite might be able to
gain a position producing, for instance, 50% of the replacement
market plugs. But this would be useless, because the District
Court's finding make clear that Autolite's fixed-production plant
cannot supply such a small share of the market at a profit.
In the final analysis, it appears to me that the District Court,
seeing the immediate precariousness of Autolite's
Page 405 U. S. 595
position as a divested entity, designed remedies to support
Autolite without contemplating whether it was equitable to restrict
Ford's freedom of action for these purposes or whether there was
any real chance of Autolite's eventual survival. I fear that this
is a situation where the form of preserving competition has taken
precedence over an understanding of the realities of the particular
market. Therefore, I dissent from today's affirmance of the
District Court's harshly restrictive remedial provisions. [Footnote 3/5
Of course, the decline would take a number of years, since it
would be spread over the life of the cars on the road bearing the
producer's plug a original equipment -- probably five to eight
MR. JUSTICE STEWART, concurring in the result, relies on factual
assumptions that seem to me directly contrary to findings made by
the District Court. While that court found future developments
might arise in the plug market that would enable an independent
Autolite without OE status to survive, it also found that an
independent entry by Ford in 1960, or even as of the date of the
projected divestiture, would have left Autolite doomed because the
market would not yet be ready to offer it an independent niche. By
slighting these findings, MR. JUSTICE STEWART is able to avoid the
question whether Ford should have to bear the burden of maintaining
Autolite's life until a time when market changes might support it
when it is clear that an earlier independent entry by Ford would
have left it moribund. He further overlooks the problems discussed
below as to the unlikelihood of Autolite's success, its fixed
production needs versus the small size of the market free of the OE
The District Court made no mention of whether a divested
Autolite would have the six regional offices and personnel that it
had in 1960. Given the District Court's solicitude for Autolite's
health, I can only assume that it expected Autolite to be sent out
with whatever it had brought in.
The majority opinion errs in its evaluation, ante
405 U. S. 577
of the effect of the restrictions on Ford's ability to establish
itself in the aftermarket. The District Court opinion makes clear
that gaining a position in the replacement market takes five to
eight years after the brand of plugs is first installed as original
equipment: 18 months to three years before the first cars need plug
replacements plus several annual car populations requiring this
brand before service centers would be motivated to stock it. Thus,
the prohibition against Ford's using its own name for five years
delays the beginning of an independent Ford entry and results in
assuring that Ford could not gain a position in the aftermarket for
10 to 13 years after the effective date of the divestiture.
This case illustrates the unsoundness of the direct appeal
permitted in cases of this kind under 15 U.S.C. § 29. In a
factually complicated case like this, we would be immeasurably
aided by the screening process provided by a Court of Appeals
review. Limited expediting of such cases, under the discretion of
this Court, would satisfy all needs justifying direct review in
MR. JUSTICE BLACKMUN, concurring in part and dissenting in
I concur in Part I of the Court's opinion and in that portion of
Part II that approves divestiture as part of the remedy. I cannot
agree, however, that prohibiting Ford from using its own name or
its trade name on any spark plugs for five years and enjoining it
entirely from manufacturing plugs for 10 years is just, equitable,
or necessary. Instead, the stringency of those remedial provisions
strikes me as confiscatory and punitive. The Court's opinion,
at 405 U. S. 566
recognizes that Ford could develop its own spark plug division
internally and place itself in the same position General Motors has
occupied for so long, but that this would take from five to eight
years. The restraint on Ford's entering the spark plug area is thus
for a period longer than it would take Ford to achieve a position
in the market through internal development. And to deny it the use
of its own name is to deny it a property right that has little to
do with this litigation.