United States v. United Shoe Machinery Corp., 391 U.S. 244 (1968)

United States v. United Shoe Machinery Corp.

No. 597

Argued April 1, 1968
Decided May 20, 1968
391 U.S. 244

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

Syllabus

In 1953, the District Court for the District of Massachusetts held that appellee had monopolized the manufacture of shoe machinery in violation of § 2 of the Sherman Act. The court refused the Government’s request that appellee be divided into three separate companies, and instead imposed certain restrictions and conditions designed "to recreate a competitive market." The District Court’s decision was affirmed by this Court. The District Court’s decree provided in paragraph 18 that:

On [January 1, 1965] both parties shall report to this court the effect of this decree, and may then petition for its modification, in view of its effect in establishing workable competition.

Pursuant to this provision the Government reported on January 1, 1965, that appellee continued to dominate the market, that workable competition had not been established, and that further relief was needed. The Government asked that appellee be divided into two competing companies. The District Court held that United States v. Swift & Co., 286 U.S. 106 (1932), limited its power to modify the decree to cases involving "(1) a clear showing of (2) grievous wrong (3) evoked by new and unforeseen circumstances," and since the object of the decree was "not to restore workable competition but to move toward establishing it" and the "decree has operated in the manner and with the effect intended," the Government’s petition was denied.

Held:

1. The District Court erred in denying the Government’s petition on the authority of United States v. Swift & Co., supra, because there the defendants sought relief not to achieve the purposes of the decree’s provisions, but to escape their impact. The request was the obverse of the Government’s allegation and request here. Pp. 248-249.

2. The District Court should determine whether the relief in this case has met the prescribed standards and, if not, should modify the decree so as to achieve the required result. Pp. 249-252.

(a) It is the trial court’s duty to prescribe relief which will terminate the illegal monopoly in violation of § 2 of the Sherman Act and ensure that there remain no practices likely to result in monopolization in the future. Pp. 250-251.

(b) The specific provisions of the decree did not exhaust that court’s power to afford relief which "should put an end to the combination . . . and break up or render impotent the monopoly power found to be in violation of the Act." United States v. Grinnell Corp., 384 U.S. 563, 577 (1966). Pp. 251-252.

266 F.Supp. 328, reversed and remanded.