The Government brought this civil antitrust action against
appellee, one of the largest suppliers of janitorial services in
the country, with 56 branches serving more than 500 communities in
the United States and Canada, and providing about 10% of such
service sales in Southern California, contending that appellee's
acquisition of two Southern California janitorial service firms
(the Benton companies), which supplied about 7% of such services in
Southern California, violated § 7 of the Clayton Act. That section
provides that
"[n]o corporation engaged in commerce shall acquire . . . the
stock or other share capital and no corporation subject to the
jurisdiction of the Federal Trade Commission shall acquire . . .
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."
The Benton companies, some of whose customers engaged in
interstate operations, performed all their services within
California, locally recruited labor (which accounted for their
major expenses) and locally purchased incidental equipment and
supplies. The District Court granted appellee's motion for summary
judgment, holding that there had been no § 7 violation. The
Government contends that "engaged in commerce." as used in § 7.
encompasses corporations like the Benton companies engaged in
intrastate activities that substantially affect interstate
commerce, and that, in any event, the Benton companies' activities
were sufficiently interstate to come within § 7.
Held:
1. The phrase "engaged in commerce," as used in § 7 of the
Clayton Act, means engaged in the flow of interstate commerce, and
was not intended to reach all corporations engaged in activities
subject to the federal commerce power; hence, the phrase does not
encompass corporations engaged in intrastate activities
substantially affecting interstate commerce, and § 7 can be
applicable only when both the acquiring corporation and the
acquired
Page 422 U. S. 272
corporation are engaged in interstate commerce. Pp.
422 U. S.
275-283.
(a) The jurisdictional requirements of § 7 cannot be satisfied
merely by showing that allegedly anticompetitive acquisitions and
activities affect commerce.
Gulf Oil Corp. v. Copp Paving
CO., 419 U. S. 186;
FTC v. Bunte Bros., 312 U. S. 349. Pp.
422 U. S.
276-277.
(b) The precise "in commerce" language of § 7 is not coextensive
with the reach of power under the Commerce Clause, and is thus not
to be equated with § 1 of the Sherman Act, which reaches the impact
of intrastate conduct on interstate commerce. Pp.
422 U. S.
277-279.
(c) When Congress reenacted § 7 in 1950 with the same "engaged
in commerce" limitation, the phrase had long since become a term of
art, indicating a limited assertion of federal jurisdiction, and,
prior to that time, Congress had frequently distinguished between
activities "in commerce" and broader activities "affecting
commerce." Pp.
422 U. S.
279-281.
(d) Limiting § 7 to its plain meaning comports with the
enforcement policies that the FTC and the Justice Department have
consistently pursued. Pp.
422 U. S.
281-282.
2. Since the Benton companies did not participate directly in
the sale, purchase, or distribution of goods or services in
interstate commerce, they were not "engaged in commerce" within the
meaning of § 7. And neither supplying local services to
corporations engaged in interstate commerce nor using locally
bought supplies manufactured outside California sufficed to satisfy
§ 7's "in commerce" requirement. Pp.
422 U. S.
283-286.
401 F. Supp. 1005, affirmed.
STEWART, J., delivered the opinion of the Court, in which
BURGER, C.J., and MARSHALL, POWELL, and REHNQUIST, JJ., joined, and
in all but Part III of which WHITE, J., joined. WHITE, J., filed a
concurring opinion,
post, p.
422 U. S. 286.
DOUGLAS, J., filed a dissenting opinion, in which BRENNAN, J.,
joined,
post, p.
422 U. S. 286.
BLACKMUN, J., filed a dissenting opinion,
post, p.
422 U. S.
287.
Page 422 U. S. 273
MR. JUSTICE STEWART delivered the opinion of the Court.
The Government commenced this civil antitrust action in the
United States District Court for the Central District of
California, contending that the appellee, American Building
Maintenance Industries, had violated § 7 of the Clayton Act, 38
Stat. 731, as amended, 15 U.S.C. § 18, by acquiring the stock of J.
E. Benton Management Corp., and by merging Benton Maintenance Co.
into one of the appellee's wholly owned subsidiaries. Following
discovery proceedings and the submission of memoranda and
affidavits by both parties, the District Court granted the
appellee's motion for summary judgment, holding that there had been
no violation of § 7 of the Clayton Act. The Government brought an
appeal to this Court, and we noted probable jurisdiction. 419 U.S.
1104. [
Footnote 1]
I
The appellee, American Building Maintenance Industries, is one
of the largest suppliers of janitorial services in the country,
with 56 branches serving more than 500 communities in the United
States and Canada. It is also the single largest supplier of
janitorial services in southern California (the area comprising Los
Angeles, Orange, San Bernardino, Riverside, Santa Barbara, and
Ventura Counties), providing approximately 10% of the sales of such
services in that area.
Page 422 U. S. 274
Both of. the acquired companies, J. E. Benton Management Corp.
and Benton Maintenance Co., also supplied janitorial services in
Southern California. [
Footnote
2] Together, their sales constituted approximately 70% of the
total janitorial sales in that area. Although both Benton companies
serviced customers engaged in interstate operations, all of their
janitorial and maintenance contracts with those customers were
performed entirely within California. Neither of the Benton
companies advertised nationally, and their use of interstate
communications facilities to conduct business was negligible.
[
Footnote 3]
The major expense of providing janitorial services is the cost
of the labor necessary to perform the work. The Benton companies
recruited the unskilled workers needed to supply janitorial
services entirely from the local labor market in Southern
California. The incidental equipment and supplies utilized in
providing those janitorial services, except in concededly
insignificant amounts, were purchased from local distributors.
[
Footnote 4]
Page 422 U. S. 275
It is unquestioned that the appellee, American Building
Maintenance Industries, was and is actively engaged in interstate
commerce. But on the basis of the above facts, the District Court
concluded that, at the time of the challenged acquisition and
merger, neither Benton Management Corp. nor Benton Maintenance Co.
was "engaged in commerce" within the meaning of § 7 of the Clayton
Act. Accordingly, the District Court held that there had been no
violation of that law.
The Government's appeal raises two questions: first, does the
phrase "engaged in commerce," as used in § 7 of the Clayton Act,
encompass corporations engaged in intrastate activities that
substantially affect interstate commerce? Second, if the language
of § 7 requires proof of actual engagement in the flow of
interstate commerce, were the Benton companies' activities
sufficient to satisfy that standard?
II
Section 7 of the Clayton Act, 15 U.S.C. § 18, provides in
pertinent 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."
Under the explicit reach of § 7, therefore, not only must the
acquiring corporation be "engaged in commerce," but
Page 422 U. S. 276
the corporation or corporations whose stock or assets are
acquired must be "engaged also in commerce." [
Footnote 5]
The distinct "in commerce" language of § 7, the Court observed
earlier this Term,
"appears to denote only persons or activities within the flow of
interstate commerce -- the practical, economic continuity in the
generation of goods and services for interstate markets and their
transport and distribution to the consumer. If this is so, the
jurisdictional requirements of [§ 7] cannot be satisfied merely by
showing that allegedly anticompetitive acquisitions and activities
affect commerce."
Gulf Oil Corp. v. Copp Paving Co., 419 U.
S. 186,
419 U. S. 195.
But even more unambiguous support for this construction of the
narrow "in commerce" language enacted by Congress in § 7 of the
Clayton Act is to be found in an earlier decision of this Court,
FTC v. Bunte Bros., 312 U. S. 349.
In
Bunte Bros., the Court was required to determine the
scope of § 5 of the Federal Trade Commission Act, 38 Stat. 719, as
amended, 15 U.S.C. § 45, which authorized the Commission to proceed
only against "unfair methods of competition in commerce." The Court
squarely held that the Commission's § 5 jurisdiction was limited to
unfair methods of competition occurring in the flow of interstate
commerce. The contention that "in commerce" should be read as if it
meant "affecting interstate commerce" was emphatically
rejected:
"The construction of § 5 urged by the Commission would thus give
a federal agency pervasive control over myriads of local businesses
in matters heretofore traditionally left to local custom or local
law. . . . An inroad upon local
Page 422 U. S. 277
conditions and local standards of such far-reaching import as is
involved here, ought to await a clearer mandate from Congress."
312 U.S. at
312 U. S.
354-355. [
Footnote
6]
The phrase "in commerce" does not, of course, necessarily have a
uniform meaning whenever used by Congress.
See, e.g.,
Kirschbaum Co. v. Walling, 316 U. S. 517,
316 U. S.
520-521. But the
Bunte Bros. construction of §
5 of the Federal Trade Commission Act is particularly relevant to a
proper interpretation of the "in commerce" language in § 7 of the
Clayton Act, since both sections were enacted by the 63d Congress,
and both were designed to deal with closely related aspects of the
same problem -- the protection of free and fair competition in the
Nation's marketplaces.
See FTC v. Raladam Co.,
283 U. S. 643,
283 U. S.
647-648.
The Government argues, however, that, despite its basic identity
to § 5 of the Federal Trade Commission Act, the phrase "engaged in
commerce" in § 7 of the Clayton Act should be interpreted to mean
engaged in any activity that is subject to the constitutional power
of Congress over interstate commerce. The legislative history of
the Clayton Act, the Government contends, demonstrates that the "in
commerce" language of § 7 was intended to be coextensive with the
reach of congressional power under the Commerce Clause. Moreover,
the argument continues, § 7 was designed to supplement the
Page 422 U. S. 278
Sherman Act and to arrest the creation of trusts or monopolies
in their incipiency,
United States v. E. I. du Pont de Nemours
& Co., 353 U. S. 586,
353 U. S. 589,
and it would be anomalous, in light of this history and purpose, to
hold that the Clayton Act's jurisdictional scope is more restricted
than that of the Sherman Act.
It is certainly true that the Court has held that, in the
Sherman Act, "Congress wanted to go to the utmost extent of its
Constitutional power in restraining trust and monopoly agreements.
. . ."
United States v. South-Eastern Underwriters Assn.,
322 U. S. 533,
322 U. S. 558.
Accordingly, the Sherman Act has been applied to local activities
which, although not themselves within the flow of interstate
commerce, substantially affect interstate commerce.
See, e.g.,
Mandeville Island Farms, Inc. v. American Crystal Sugar Co.,
334 U. S. 219;
United States v. Employing Plasterers Assn., 347 U.
S. 186. But the Government's argument that § 7 should
likewise be read to reach intrastate corporations affecting
interstate commerce is not persuasive.
Unlike § 7, with its precise "in commerce" language, § 1 of the
Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1, prohibits
every contract, combination, or conspiracy "in restraint of trade
or commerce among the several States. . . ." "The jurisdictional
reach of § 1 thus is keyed directly to effects on interstate
markets and the interstate flow of goods."
Gulf Oil Corp. v.
Copp Paving Co., 419 U.S. at
419 U. S. 194.
No similar concern for the impact of intrastate conduct on
interstate commerce is evident in § 7's "engaged in commerce"
requirements.
The Government's contention that it would be anomalous for
Congress to have strengthened the antitrust laws by curing
perceived deficiencies in the Sherman Act and at the same time to
have limited the jurisdictional scope of those remedial provisions
founders also on the express
Page 422 U. S. 279
language of § 7. Thus, although the Sherman Act proscribes
every contract, combination, or conspiracy in restraint of
trade or commerce, whether entered into by a natural person,
partnership, corporation, or other form of business organization, §
7 of the Clayton Act is explicitly limited to corporate
acquisitions. Yet it surely could not be seriously argued that this
"anomaly" must be ignored, and § 7 extended to reach an allegedly
anticompetitive acquisition of partnership assets. [
Footnote 7] There is no more justification
for concluding that the equally explicit "in commerce" limitation
on § 7's reach should be disregarded.
More importantly, whether or not Congress, in enacting the
Clayton Act in 1914, intended to exercise fully its power to
regulate commerce, and, whatever the understanding of the 63d
Congress may have been as to the extent of its Commerce Clause
power, the fact is that,
Page 422 U. S. 280
when § 7 was reenacted in 1950, the phrase "engaged in commerce"
had long since become a term of art, indicating a limited assertion
of federal jurisdiction. In
Schechter Corp. v. United
States, 295 U. S. 495, for
example, the Court had drawn a sharp distinction between activities
in the flow of interstate commerce and intrastate activities that
affect interstate commerce.
Id. at
295 U. S.
542-544. Similarly, the Court's opinion in
NLRB v.
Jones & Laughlin Steel Corp., 301 U. S.
1, two years later, had emphasized that congressional
authority to regulate commerce was not limited to activities
actually "in commerce," but extended as well to conduct that
substantially affected interstate commerce. And the
Bunte
Bros. decision in 1941 had stressed the distinction between
unfair methods of competition "in commerce" and those that
"affected commerce," in limiting the scope of the Commission's
authority under the "in commerce" language of § 5 of the Federal
Trade Commission Act.
Congress, as well, in the years prior to 1950, had repeatedly
acknowledged its recognition of the distinction between legislation
limited to activities "in commerce," and an assertion of its full
Commerce Clause power so as to cover all activity substantially
affecting interstate commerce. Section 10(a) of the National Labor
Relations Act, 49 Stat. 453, as amended, 29 U.S.C. § 160(a), for
example, empowered the National Labor Relations Board to prevent
any person from engaging in an unfair labor practice "affecting
commerce." Section 2(7) of the Act, 49 Stat. 450, as amended, 29
U.S.C. § 152(7), in turn, defined "affecting commerce" to mean "in
commerce, or burdening or obstructing commerce or the free flow of
commerce. . . ." Similarly, the Bituminous Coal Act of 1937, c.
127, 60 Stat. 72, providing for the fixing of prices for bituminous
coal, the proscription of unfair trade practices, and the
establishment of marketing procedures,
Page 422 U. S. 281
applied to sales and transactions "in or directly affecting
interstate commerce in bituminous coal." 50 Stat. 76.
In marked contrast to the broad "affecting commerce"
jurisdictional language utilized in those statutes, however,
Congress retained the narrower "in commerce" formulation when it
amended and reenacted § 7 of the Clayton Act in 1950. The 1950
amendments were designed in large part to "plug the loophole" that
existed in § 7 as initially enacted in 1914 by expanding its
coverage to include acquisitions of assets, as well as acquisition
of stock. In addition, other language in § 7 was amended to make
plain the full reach of the section's prohibitions.
See Brown
Shoe Co. v. United States, 370 U. S. 294,
370 U. S.
311-323. Yet, despite the sweeping changes made to
effectuate those purposes, and despite decisions of this Court,
such as
Bunte Bros., that had limited the reach of the
phrase "in commerce" in similar regulatory legislation, Congress
preserved the requirements that both the acquiring and the acquired
companies be "engage in commerce."
This congressional action cannot be disregarded, as the
Government would have it, as simply a result of congressional
inattention, for Congress was fully aware in enacting the 1950
amendments that both the original and the newly amended versions of
§ 7 were limited to corporations "engaged in commerce."
See,
e.g., H.R.Rep. No. 1191, 81st Cong., 1st Sess., 5-6. Rather,
the decision to reenact § 7 with the same "in commerce" limitation
can be rationally explained only in terms of a legislative intent,
at least in 1950, not to apply the rather drastic prohibitions of §
7 of the Clayton Act to the full range of corporations potentially
subject to the commerce power.
Finally, the Government's contention that a limitation of the
scope of § 7 to its plain meaning would undermine
Page 422 U. S. 282
the section's remedial purpose is belied by the past enforcement
policy of the Federal Trade Commission and the Department of
Justice -- the two governmental agencies charged with enforcing the
section's prohibitions. Clayton Act §§ 11, 15, 15 U.S.C. §§ 21(a),
25. The Federal Trade Commission has repeatedly held that § 7
applies only to an acquisition in which both the acquired and the
acquiring companies are engaged directly in interstate commerce.
E.g., Foremost Dairies, Inc., 60 F.T.C. 944, 1068-1069;
Beatrice Foods Co., 67 F.T.C. 473, 730-731;
Mississippi Rive Fuel Corp., 75 F.T.C. 813, 918. And while
the Government explains that it has never taken a formal position
that § 7 does not apply to intrastate firms affecting interstate
commerce, it does concede that previous § 7 cases brought by the
Department of Justice have invariably involved firms clearly
engaged in the flow of interstate commerce. [
Footnote 8] In light of this consistent
enforcement practice, it is difficult to credit the argument that §
7's remedial purpose would be frustrated by construing literally §
7's twice-enacted "in commerce" requirement.
Page 422 U. S. 283
In sum, neither the legislative history nor the remedial purpose
of § 7 of the Clayton Act, as amended and reenacted in 1950,
supports an expansion of the scope of § 7 beyond that defined by
its express language. Accordingly, we hold that the phrase "engaged
in commerce," as used in § 7 of the Clayton Act, means engaged in
the flow of interstate commerce, and was not intended to reach all
corporations engaged in activities subject to the federal commerce
power.
III
The Government alternatively argues that, even if § 7 applies
only to corporations engaged in the flow of interstate commerce,
the Benton companies' activities at the time of the acquisition and
merger placed them in that flow. To support this contention, the
Government relies primarily on the fact that the Benton companies
performed a substantial portion of their janitorial services for
enterprises which were themselves clearly engaged in selling
products in interstate and international markets and in providing
interstate communication facilities. [
Footnote 9] But simply supplying localized services to a
corporation engaged in interstate commerce does not satisfy the "in
commerce" requirement of § 7.
To be engaged "in commerce" within the meaning of § 7, a
corporation must itself be directly engaged in the production,
distribution, or acquisition of goods or services in interstate
commerce.
See Gulf Oil Corp. v. Copp Paving Co., 419 U.S.
at
419 U. S. 195.
At the time of the acquisition and merger, however, the Benton
companies were completely insulated from any direct
participation
Page 422 U. S. 284
in interstate markets or the interstate flow of goods or
services. The firms' activities were limited to providing
janitorial services within Southern California to corporations that
made wholly independent pricing decisions concerning their own
products. Consequently, whether or not their effect on interstate
commerce was sufficiently substantial to come within the ambit of
the constitutional power of Congress under the Commerce Clause, in
providing janitorial services the Benton companies were not
themselves "engaged in commerce" within the meaning of § 7.
Cf.
Mandeville Island Farms, Inc. v. American Crystal Sugar Co.,
334 U.S. at
334 U. S.
227-235. [
Footnote
10]
Page 422 U. S. 285
Similarly, although the Benton companies used janitorial
equipment and supplies manufactured in large part outside of
California, they did not purchase them directly from suppliers
located in other States.
Cf. Foremost Dairies, Inc., 60
F.T.C. at 1068-1069. Rather, those products were purchased in
intrastate transactions from local distributors. Once again,
therefore, the Benton companies were separated from direct
participation in interstate commerce by the pricing and other
marketing decisions of independent intermediaries. By the time the
Benton companies purchased their janitorial supplies, the flow of
commerce had ceased.
See Schechter Corp. v. United States,
295 U.S. at
295 U. S.
542-543. [
Footnote
11]
In short, since the Benton companies did not participate
directly in the sale, purchase, or distribution of goods or
services in interstate commerce, they were not "engaged in
commerce" within the meaning of § 7 of the Clayton Act. [
Footnote 12] The District Court,
therefore, properly
Page 422 U. S. 286
concluded that the acquisition and merger in this case were not
within the coverage of § 7 of the Clayton Act. The judgment of the
District Court is affirmed.
It is so ordered.
[
Footnote 1]
The Government appealed directly to this Court pursuant to § 2
of the Expediting Act, 32 Stat. 823, as amended, 15 U.S.C. § 29.
The Government's notice of appeal was filed on February 7, 1974,
before the effective date of the recent amendments to the Act.
See Antitrust Procedures and Penalties Act, Pub.L. 93-528,
§ 7, 88 Stat. 1710.
[
Footnote 2]
At the time of the acquisition and merger, Jess E. Benton, Jr.,
owned all the stock of J. E. Benton Management Corp., and 86% of
the stock of Benton Maintenance Co. In addition to supplying
janitorial services, Benton Management conducted some real estate
business and provided building management services entirely within
the Southern California area. Benton Maintenance was engaged
exclusively in providing janitorial services. The Government has
made no claim that the nonjanitorial activities of Benton
Management Corp. have any bearing on the issues presented by this
case.
[
Footnote 3]
The District Court found that the Benton companies made only 10
out-of-state telephone calls related to business activities during
the 18-month period prior to the challenged acquisition and merger.
The charges for those calls were $19.78. During the same period,
the Benton companies sent or received only some 200 interstate
letters, a number of which were either directed to or received from
governmental agencies such as the Internal Revenue Service.
[
Footnote 4]
Although many of the janitorial supplies were manufactured
outside of California, the District Court found that Benton's
direct interstate purchases for the 16-month period prior to the
challenged acquisition and merger amounted to a total of less than
$140.
[
Footnote 5]
"Commerce," as defined by § 1 of the Clayton Act, 15 U.S.C. §
12, means "trade or commerce among the several States and with
foreign nations. . . ." The phrase "engaged in commerce" is not
defined by the Act.
[
Footnote 6]
Congress recently acted to provide such a "clearer mandate,"
amending the Federal Trade Commission Act by replacing the phrase
"in commerce" with "in or affecting commerce" in §§ 5, 6, and 12 of
the Act. Magnuson-Moss Warranty -- Federal Trade Commission
Improvement Act, § 201, 88 Stat. 2193, 15 U.S.C. § 45 (1970 ed.,
Supp. IV). The amendments were specifically designed to expand the
Commission's jurisdiction beyond the limits defined by
Bunte
Bros. and to make it coextensive with the constitutional power
of Congress under the Commerce Clause.
See H.R.Rep. No.
93-1107, pp. 29-31 (1974).
[
Footnote 7]
The Federal Trade Commission has held that such acquisitions may
be challenged under § 5 of the Federal Trade Commission Act, which
forbids unfair methods of competition on the part of persons and
partnerships, as well as corporations.
Beatrice Foods Co.,
67 F.T.C. 473, 724-727. It is, of course, well established that the
Commission has broad power to apply § 5 to reach transactions which
violate the standards of the Clayton Act, although technically not
subject to the Act's prohibitions.
See, e.g., FTC v. Brown Shoe
Co., 384 U. S. 316,
384 U. S.
320-321;
cf. FTC v. Sperry & Hutchinson
Co., 405 U. S. 233. We
have no occasion in the case now before us to decide whether
application of § 5 to assets acquisitions by or from noncorporate
business entities constitutes an appropriate exercise of that
power; nor need we consider whether the acquisition of the stock or
assets of an intrastate corporation that affected interstate
commerce could be challenged by the Commission under the recent
jurisdictional amendments to § 5.
See n 6,
supra. See generally
Oppenheim, Guides to Harmonizing Section 5 of the Federal Trade
Commission Act with the Sherman and Clayton Acts, 59 Mich.L.Rev.
821; Reeves, Toward a Coherent Antitrust Policy: The Role of
Section 5 of the Federal Trade Commission Act in Price
Discrimination Regulation, 16 B.C.Ind. & Com.L.Rev. 151,
167-171.
[
Footnote 8]
Despite this concession, the Government somewhat inconsistently
argues that the present case does not, in fact, involve a
substantial departure from the previous § 7 enforcement pattern. In
the past, the Government asserts, the United States has challenged
acquisitions of "essentially local businesses that affected
interstate commerce."
United States v. Von's Grocery Co.,
384 U. S. 270, is
cited as an example of such a challenge. But the District Court in
that case expressly found that both of the merging grocery chains
directly participated in the flow of interstate commerce, because
each purchased more than 51% of its supplies from outside of
California.
See 233 F.
Supp. 976, 978. And in
United States v. County National
Bank, 339 F. Supp.
85, the only other case cited by the Government to support its
contention that the case now before us does not involve a departure
from previous enforcement policy, the sole question was quite
different from that here in issue -- whether the "Bennington area"
was a "section of the country" within the meaning of § 7 of the
Clayton Act.
[
Footnote 9]
The Benton companies derived 80% to 90% of their revenues from
performance of janitorial service contracts for the Los Angeles
facilities of interstate and international corporations such as
Mobil Oil Corp., Rockwell International Corp., Teledyne, Inc., and
Pacific Telephone & Telegraph Co.
[
Footnote 10]
The Government notes that this Court has held that maintenance
workers servicing buildings in which goods are produced for
interstate markets are covered by Fair Labor Standards Act
provisions applicable to employees engaged in the production of
goods for commerce.
See, e.g., Kirschbaum Co. v. Walling,
316 U. S. 517;
Martino v. Michigan Window Cleaning Co., 327 U.
S. 173. In
Kirschbaum, the Court reasoned:
"Without light and heat and power, the tenants could not engage,
as they do, in the production of goods for interstate commerce. The
maintenance of a safe, habitable building is indispensable to that
activity."
316 U.S. at
316 U. S. 524.
Similarly, the Government argues, in the present case, the Benton
janitorial services were so essential to the interstate operations
of their customers that they, too, should be considered part of the
flow of commerce.
The Fair Labor Standards Act, however, is not confined, as is §
7 of the Clayton Act, to activities that are actually "in
commerce." At the time of the decisions relied upon by the
Government, the Act provided that
"an employee shall be deemed to have been engaged in the
production of goods [for interstate commerce] if such employee was
employed in producing, manufacturing, mining, handling,
transporting, or in any other manner working on such goods,
or
in any process or occupation necessary to the production
thereof. . . ."
Fair Labor Standards Act of 1938, § 3(j), 52 Stat. 1061, as
amended, 29 U.S.C. § 203(j) (1946 ed.) (emphasis added). Congress
thus expressly intended to reach not only those employees who
directly participated in the production of goods for interstate
markets, but also those employees outside the flow of commerce, but
nonetheless necessary to it. Although Congress, in 1950, could
constitutionally have extended § 7 of the Clayton Act to reach
comparable activity, it chose not to do so.
See supra at
422 U. S.
279-281.
[
Footnote 11]
The Government does not suggest that the purchase of janitorial
equipment and supplies from local distributors placed the Benton
companies in the flow of commerce, although it does argue that.
because of those purchases, the firms had a substantial effect on
interstate commerce -- an issue not relevant in light of our
construction of the reach of § 7 of the Clayton Act.
[
Footnote 12]
The Government contends that the sale of janitorial services
"necessarily" involves interstate communications, solicitations,
and negotiations, and that such interstate activity should be
viewed as part of the flow of interstate commerce. The merits of
that argument need not be considered, however, since the record
before the District Court does not support a finding that any of
the Benton janitorial service contracts were obtained through
interstate solicitation or negotiation.
MR. JUSTICE WHITE, concurring.
I concur in the judgment and in Parts I and II of the Court's
opinion. I do not join
422 U. S. for
I doubt that the interposition of a California wholesaler or
distributor between the Benton companies and out-of-state
manufacturers of janitorial supplies necessarily requires that the
Benton companies be found not to be "in commerce" merely because
they buy directly from out-of-state suppliers only a negligible
amount of their supplies. For the purposes of § 7 of the Clayton
Act, a remedial statute, the regular movement of goods from
out-of-state manufacturer to local wholesaler and then to retailer
or institutional consumer is at least arguably sufficient to place
the latter in the stream of commerce, particularly where it appears
that, when the complaint was filed,
cf. United States v.
Penn-Olin Co., 378 U. S. 158,
378 U. S. 168
(1964), the "local" distributor from which supplies were being
purchased was a wholly owned subsidiary of the acquiring company, a
national concern admittedly in commerce. In this case, however, the
United States makes no such contention, and appellee's motion for
summary judgment was not opposed by the Government on that theory.
It is therefore inappropriate to address the issue at this time,
and, on this record, I concur in the judgment that the Benton
companies were not in commerce.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BRENNAN joins,
dissenting.
For the reasons set forth in my dissenting opinion in
Gulf
Oil Corp. v. Copp Paving Co., 419 U.
S. 186,
419 U. S.
204-207
Page 422 U. S. 287
(1974), decided earlier this Term, I cannot agree that the "in
commerce" language of § 7 of the Clayton Act, 38 Stat. 731, as
amended, 15 U.S.C. § 18, was intended to give that statute a
narrower jurisdictional reach than the "affecting commerce"
standard which we have read into the Sherman Act, 26 Stat. 209, as
amended, 15 U.S.C. § 1
et seq. On the record in this case,
it is beyond question that the activities of the acquired firms
have a substantial effect on interstate commerce. I would therefore
reverse the summary judgment granted below and remand for further
proceedings in the District Court.
MR. JUSTICE BLACKMUN, dissenting.
I believe that the scope of the Clayton Act should be held to
extend to acquisitions and sales having a substantial effect on
interstate commerce. I therefore dissent. For me, the reach of § 7
of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 18, is as
broad as that of the Sherman Act, and should not be given the
narrow construction we properly have given, just this Term, to the
Robinson-Patman Act.
Gulf Oil Corp. v. Copp Paving Co.,
419 U. S. 186
(1974).
For more than a quarter of a century, the Court has held that
the Sherman Act should be construed broadly to reach the full
extent of the commerce power, and to proscribe those restraints
that substantially affect interstate commerce.
See, e.g.,
Mandeville Island Farms, Inc. v. American Crystal Sugar Co.,
334 U. S. 219,
334 U. S. 234
(1948);
United States v. South-Eastern Underwriters Assn.,
322 U. S. 533,
322 U. S. 558
(1944). The Clayton Act was enacted to supplement the Sherman Act,
and to "arrest in its incipiency" any restraint or substantial
lessening of competition.
United States v. E. I. du Pont de
Nemours & Co., 353 U. S. 586,
353 U. S. 589
(1957). To ascribe
Page 422 U. S. 288
to Congress the intent to exercise less than its full commerce
power in the Clayton Act, which has as its purpose the
supplementation of the protections afforded by the Sherman Act, is
both highly anomalous and, it seems to me, unwarranted. Section 7
should not be limited, as the Court limits it today, to
corporations engaged in interstate commerce, but should be held to
include those intrastate activities substantially affecting
interstate commerce.