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SUPREME COURT OF THE UNITED STATES

Syllabus

BROWN SHOE CO., INC., v. UNITED STATES

370 U.S. 294

No. 4. Argued December 6, 1961 -- Decided June 25, 1962

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI.

The Government brought suit to enjoin consummation of a merger of two corporations, on the ground that its effect might be substantially to lessen competition or to tend to create a monopoly in the production, distribution and sale of shoes, in violation of 7 of the Clayton Act, as amended in 1950. The District Court found that the merger would increase concentration in the shoe industry, both in manufacturing and retailing, eliminate one of the corporations as a substantial competitor in the retail field, and establish a manufacturer- retailer relationship which would deprive all but the top firms in the industry of a fair opportunity to compete, and that, therefore, it probably would result in a further substantial lessening of competition and an increased tendency toward monopoly. It enjoined appellant from having or acquiring any further interest in the business, stock, or assets of the other corporation, required full divestiture by appellant of the other corporation's stock and assets, and ordered appellant to propose in the immediate future a plan for carrying into effect the Court's order of divestiture.

Held:

The judgment is affirmed. Pp. 296-346.

1. The District Court's judgment was a "final" judgment within the meaning of 2 of the Expediting Act, and this Court has jurisdiction of this direct appeal under that Act. Pp. 304-311.

2. The legislative history of the 1950 amendments to 7 of the Clayton Act indicates that Congress provided no definite quantitative or qualitative tests by which enforcement agencies were to gauge the effects of a given merger, but rather that Congress intended that a variety of economic and other factors be considered in determining whether the merger was consistent with maintaining competition in the industry in which the merging companies operated. Pp. 311-323.

3. The record supports the District Court's findings and its conclusion that the shoe industry is being subjected to a cumulative series of vertical mergers which, if left unchecked, may substantially lessen competition, within the meaning of 7, as amended. Pp. 323-334.

(a) The record in this case supports the District Court's finding that the relevant lines of commerce are men's, women's and children's shoes. Pp. 325-326.

(b) The District Court properly found that the predominantly medium-priced shoes which appellant manufactures do not occupy a product market different from the predominantly low-priced shoes which the other corporation sells. P. 326.

(c) In defining the product market, the District Court was not required to employ finer "price/quality" or "age/sex" distinctions than those recognized by its classifications of "men's," "women's" and "children's" shoes. Pp. 326-328.

(d) Insofar as the vertical aspect of this merger is concerned, the relevant geographic market is the entire Nation, and the anticompetitive effects of the merger are to be measured within that range of distribution. P. 328.

(e) The trend toward vertical integration in the shoe industry, when combined with appellant's avowed policy of forcing its own shoes upon its retail subsidiaries, seems likely to foreclose competition from a substantial share of the markets for men's, women's and children's shoes, without producing any countervailing competitive, economic or social advantages. Pp. 328-334.

4. The District Court was correct in concluding that this merger may tend to lessen competition substantially in the retail sale of men's, women's and children's shoes in the overwhelming majority of the cities and their environs in which both corporations sell through owned or controlled outlets. Pp. 334-346.

(a) The District Court correctly defined men's, women's and children's shoes as the relevant lines of commerce in which to analyze the horizontal aspects of the merger. P. 336.

(b) The District Court properly defined the relevant geographic markets in which to analyze the horizontal aspects of this merger as those cities with populations exceeding 10,000 and their environs in which both corporations retailed shoes through their own or controlled outlets. Pp. 336-339.

(c) The evidence is adequate to support the finding of the District Court that, as a result of the merger, competition in the retailing of men's, women's and children's shoes may be lessened substantially in those cities. Pp. 339-346.

179 F.Supp. 721, affirmed.

Mr. Chief Justice Warren delivered the opinion of the Court.

Mr. Justice Frankfurter took no part in the decision of this case.

Mr. Justice White took no part in the consideration or decision of this case.

Mr. Justice Clark, concurring.

Mr. Justice Harlan, dissenting in part and concurring in part.


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