Ftc v. Consolidated Foods Corp., 380 U.S. 592 (1965)

Federal Trade Commission v. Consolidated Foods Corp.

No. 422

Argued March 10-11, 1965
Decided April 28, 1965
380 U.S. 592

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

Respondent, a large, diversified company, which owns food processing plants and a network of wholesale and retail food stores, in 1951 acquired Gentry, Inc., a manufacturer of dehydrated onion and garlic. Gentry, before the merger, had about 32% of the sales of those products, and, with its chief competitor, accounted for about 90% of the total industry sales. By 1958, in an expanding market, Gentry had 35% of the sales, and the combined share with its principal competitor remained about 90%. After the merger, respondent attempted to induce reciprocal buying of Gentry’s products by respondent’s suppliers. The Federal Trade Commission held that the acquisition violated § 7 of the Clayton Act, as the opportunity for reciprocal buying in this oligopolistic industry created a probability of a substantial lessening of competition and ordered divestiture. The Court of Appeals reversed, finding no substantial impact on the market in the light of ten years of post-acquisition experience.

Held:

1. Post-acquisition evidence of the effect of the merger upon competition is entitled to consideration in determining whether a merger violates § 7, but it must not be given conclusive weight or allowed to override all probabilities. P. 598.

2. The finding by the Commission of the probability of reciprocal buying’s leading to a lessening of competition in the instant case was supported by substantial evidence. P. 600.

3. Reciprocal buying is an anticompetitive device condemned by § 7 of the Clayton Act. Pp. 594-595.

329 F.2d 623 reversed.