SUPREME COURT OF THE UNITED STATES
UNITED STATES v. COLUMBIA STEEL CO. ET AL.
334 U.S. 495
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF DELAWARE.
Argued April 29-30, 1948 -- Decided June 7, 1948
The United States brought a suit under § 4 of the Sherman Act to enjoin, as a violation of §§ 1 and 2 of the Act, the acquisition of the Consolidated Steel Corporation by the United States Steel Corporation. After a hearing on the merits, the District Court denied the relief prayed in the complaint. 74 F.Supp. 671. A direct appeal was taken to this Court under the Expediting Act. Affirmed, p. 534.
1. The United States sued under § 4 of the Sherman Act to enjoin the acquisition by United States Steel Corporation of the assets of Consolidated Steel Corporation, largest independent steel fabricator on the West Coast, as a violation of §§ 1 and 2 of the Act. The gist of the complaint was (1) that the acquisition would be in restraint of trade, because all manufacturers other than United States Steel would be excluded from the business of supplying Consolidated's requirements of rolled steel products, and because existing competition between Consolidated and United States Steel in the sale of structural fabricated products and pipe would be eliminated; and (2) that the proposed acquisition, in the light of previous acquisitions by United States Steel, was an attempt to monopolize the production and sale of fabricated steel products in the Consolidated market area. Held:
The proposed acquisition would not violate § 1 or § 2 of the Sherman Act. Pp. 507-508, 519-534.
(a) The acquisition does not unreasonably restrict the opportunities of competitor producers of rolled steel to market their product. Pp. 519-527.
(b) There was no specific intent in this case to accomplish an unreasonable restraint of interstate commerce. United States v. Yellow Cab Co., 332 U.S. 218, distinguished. Pp. 520-527.
(c) It is not proved in this case that the elimination of competition between Consolidated and the structural fabricating subsidiaries of United States Steel constitutes an unreasonable restraint of trade. P. 529.
(d) The elimination of competition between Consolidated and National Tube (a United States Steel subsidiary) does not constitute an unreasonable restraint of trade in pipe, in view inter alia of the limited extent of the competition between them in this field. Pp. 530-531.
(e) In the light of previous acquisitions by United States Steel, including that of the government-owned plant at Geneva, Utah, the acquisition of Consolidated does not demonstrate the existence of a specific intent to monopolize, but reflects rather a normal business purpose. Pp. 531-533.
(f) Considering the various objections in the aggregate and in the light of the charge of intent to monopolize, the acquisition does not violate the public policy manifested in the Sherman Act. Pp. 533-534.
2. The Sherman Act is not limited to eliminating restraints whose effects are nation-wide; but, where the relevant competitive market covers a lesser area, the Act may be invoked to prevent unreasonable restraints in that area. P. 519.
3. Withdrawal of Consolidated as a consumer of rolled steel products made by other producers does not constitute an unreasonable restraint. Pp. 520-523.
4. Vertical integration is not illegal per se. Its legality is to be determined by, inter alia, (1) characterizing the nature of the market to be served and the leverage on the market which the particular vertical integration creates, and (2) the purpose or intent with which the combination was conceived. United States v. Paramount Pictures, 334 U.S. 131, and United States v. Griffith, 334 U.S. 100, followed. Pp. 524-527.
5. There is no declared public policy which forbids, per se, an expansion of facilities of an existing company to meet the needs of new markets of a community, whether that community is nation-wide or smaller in area. P. 526.
6. The same tests which measure the legality of vertical integration by acquisition are applicable to the acquisition of competitors in identical or similar lines of merchandise. It is first necessary to delimit the market in which the concerns compete and then determine the extent to which the concerns are in competition in that market. If such acquisition results in or is aimed at unreasonable restraint, then the purchase is forbidden by the Sherman Act. P. 527.
7. In determining what constitutes unreasonable restraint, dollar volume in itself is not of compelling significance. Consideration must also be given to the percentage of business controlled, the strength of the remaining competition, whether the action springs from business requirements or purpose to monopolize, the probable development of the industry, consumer demands, and other characteristics of the market. The relative effect of percentage command of a market varies with the setting in which that factor is placed. Pp. 527-528.
8. Even though a restraint of trade be reasonable and not unlawful under § 1 of the Sherman Act, it may nevertheless constitute an attempt to monopolize in violation of § 2 if a specific intent to monopolize be shown. Pp. 531-532.
74 F.Supp. 671, affirmed.
Mr. Justice Reed delivered the opinion of the Court.
Mr. Justice Douglas, with whom Mr. Justice Black, Mr. Justice Murphy, and Mr. Justice Rutledge concur, dissenting.