United States v. Grinnell Corp., 384 U.S. 563 (1966)
United States v. Grinnell Corp.
No. 73
Argued March 28-29, 1966
Decided June 13, 1966 *
384 U.S. 563
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
Syllabus
The Government brought a civil action against Grinnell Corporation and three affiliated companies, which it controlled through preponderant stock ownership, alleging violations of §§1 and 2 of the Sherman Act. Grinnell manufactures plumbing supplies and fire sprinkler systems, and its affiliates supply subscribers with fire and burglar alarm services from central stations through automatic alarm systems installed on subscribers’ premises. The affiliates, which had participated in market allocation agreements, discriminatory price manipulation to forestall competition, and the acquisition of competitors, had acquired 87% of the country’s insurance company accredited central station protective service market. One affiliated company, American District Telegraph Co. (ADT), itself controls 73% of the national market. The District Court treated the accredited central station service business as a single "market," and held that the geographic market is national. It found that the four companies had violated §§ 1 and 2 of the Sherman Act and entered a decree enjoining them from restraining trade or monopolizing the market, ordering the filing of price information, enjoining them from acquiring any other enterprise in that market, requiring divestiture by Grinnell of its affiliates, and enjoining them from employing the president of Grinnell. All parties challenged the decree.
Held:
1. The existence of monopoly power may be inferred from the predominant share of the market, and where Grinnell and its affiliates have 87% of the accredited central station service business, there is no doubt they have monopoly power, which they achieved in part by unlawful and exclusionary practices. Pp. 570-571, 576.
2. The District Court was justified in treating the accredited central station service business as a single market. Pp. 571-575.
(a) There is no barrier to combining in a single market a number of different products or services where the combination reflects commercial realities. Here, there is a single basic service, the protection of property through use of a central station, that must be compared with all other forms of property protection. P. 572.
(b) Just as, under § 7 of the Clayton Act’s "line of commerce," a "cluster of services" marks the appropriate market for "part" of commerce within the meaning of § 2 of the Sherman Act. Pp. 572-573.
(c) Accredited, as distinguished from nonaccredited, central station service is a relevant part of commerce, with specific requirements, recognition and approval by insurance companies, and distinct customer needs and demands. P. 575.
3. The geographic market for the accredited central station service, as the District Court found, is a national one. While the main activities of an individual central station may be local, the business of providing such service is operated on a national level, with national planning and agreements covering activities in many States. Pp. 575-576.
4. Adequate relief in a monopolization case should terminate the combination and eliminate the illegal conduct, and render impotent the monopoly power found to be in violation of the Act. Schine Theatres v. United States, 334 U.S. 110, 128-129. Pp. 577-580.
(a) The mere dissolution of the combination by Grinnell’s divestiture of its affiliates will not reach the root of the evil; there must be some divestiture on the part of ADT, with 73% of the market, to be determined by the District Court. Pp. 577-578.
(b) On the record it appears that ADT’s requirements of five-year contracts and retention of title to equipment installed on subscribers’ premises constitute substantial barriers to competition and relief against them by the District Court is appropriate. P. 578.
(c) A provision that the companies be required to sell devices manufactured by them for use in furnishing central station service is inadequate unless purchasers are assured of replacement parts to maintain those systems. P. 579.
(d) The District Court should reconsider its denial of the Government’s request for "visitation rights," that is, requiring report, examining documents and interviewing company personnel, relief commonly granted to determine compliance ith an antitrust decree. P. 579.
(e) While the barring of Grinnell’s president from emploment might have been appropriate in a case where predatory conduct was conspicuous, such is not the situation here. P. 579.
(f) On remand, the general terms of the restraining order should be recast so that the precise practices in violation of the Act are specifically enjoined. Pp. 579-580.
(g) The dissolution of the combination and the proscription against acquiring firms in the acredited central station business are fully warranted. P. 580.
5. The claim of bias and prejudice against the District Judge who tried the case below is not made out. Pp. 580-583.
236 F. Supp. 244, affirmed and remanded.