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Brown Shoe Co. v. United States

Supreme Court of the United States

December 6, 1961, Argued ; June 25, 1962, Decided

No. 4

Opinion

 [*296]  [***519]  [**1508]    MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.

This suit was initiated in November 1955 when the Government filed a civil action in the United States District Court for the Eastern District of Missouri alleging that a contemplated merger between the G. R. Kinney Company, Inc. (Kinney), and the Brown Shoe Company, Inc. (Brown), through an exchange of Kinney for Brown stock, would violate § 7 of the Clayton Act, 15 U. S. C. § 18. The Act, as amended, provides in pertinent part:

] "No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital . . . of another corporation engaged [****6]  also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly."

The complaint sought injunctive relief under § 15 of the Clayton Act, 15 U. S. C. § 25, to restrain consummation of the merger.

A motion by the Government for a preliminary injunction pendente lite was denied, and the companies were permitted to merge provided, however, that their businesses be operated separately and that their assets be kept separately identifiable. The merger was then effected on May 1, 1956.

 [*297]  In the District Court, the Government contended that the effect of the merger of Brown -- the third largest seller of shoes by dollar volume in the United States, a leading manufacturer of men's, women's, and children's shoes, and a retailer with over 1,230 owned, operated or controlled retail outlets 1 -- and Kinney -- the eighth largest company, by dollar volume, among those primarily engaged  [**1509]  in selling shoes, itself a large manufacturer of shoes, and a retailer with over 350 retail outlets -- "may be substantially to lessen [****7]  competition or to tend to create a monopoly" by eliminating actual or potential competition in the production of shoes for the national wholesale shoe market and in the sale of shoes at retail in the Nation, by foreclosing competition from "a market represented by Kinney's retail outlets whose annual sales exceed $ 42,000,000," and by enhancing Brown's competitive advantage over other producers, distributors and sellers of shoes. The Government argued that the "line of commerce" affected by this merger is "footwear," or alternatively, that the "line[s]" are "men's," "women's," and "children's" shoes, separately considered, and that the "section of the country," within which the anticompetitive effect of the merger is to be judged, is the Nation as a  [***520]  whole, or alternatively, each separate city or city and its  [*298]  immediate surrounding area in which the parties sell shoes at retail.

 [****8]  In the District Court, Brown contended that the merger would be shown not to endanger competition if the "line[s] of commerce" and the "section[s] of the country" were properly determined. Brown urged that not only were the age and sex of the intended customers to be considered in determining the relevant line of commerce, but that differences in grade of material, quality of workmanship, price, and customer use of shoes resulted in establishing different lines of commerce. While agreeing with the Government that, with regard to manufacturing, the relevant geographic market for assessing the effect of the merger upon competition is the country as a whole, Brown contended that with regard to retailing, the market must vary with economic reality from the central business district of a large city to a "standard metropolitan area" 2 for a smaller community. Brown further contended that, both at the manufacturing level and at the retail level, the shoe industry enjoyed healthy competition and that the vigor of this competition would not, in any event, be diminished by the proposed merger because Kinney manufactured less than 0.5% and retailed less than 2% of the Nation's shoes. [****9]  

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370 U.S. 294 *; 82 S. Ct. 1502 **; 8 L. Ed. 2d 510 ***; 1962 U.S. LEXIS 2290 ****; 1962 Trade Cas. (CCH) P70,366

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

Prior History:  [****1]  APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI.

Disposition:  179 F.Supp. 721, affirmed.

CORE TERMS

shoes, merger, retail, manufacturers, outlets, lessen, commerce, acquisition, divestiture, vertical, decree, Expediting, geographic, antitrust, monopoly, largest, stock, anticompetitive, competitors, chain, pairs, concentration, foreclosed, horizontal, foreclosure, suppliers, plants, customer, exceeded, volume

Antitrust & Trade Law, Clayton Act, General Overview, Civil Procedure, Other Jurisdiction, Direct Appeals & Three Judge Courts, Subject Matter Jurisdiction, Jurisdiction Over Actions, Price Fixing & Restraints of Trade, Vertical Restraints, Mergers & Acquisitions Law, Antitrust, Vertical Acquisitions, Market Definition, Relevant Market, Geographic Market Definition, Product Market Definition, Regulated Practices, Relevant Market, Scope, Antitrust Statutes, Clayton Act, Market Definition, Sherman Act, Tying Arrangements, International Trade Law, Exclusive & Reciprocal Dealing, Requirements Contracts, Scope, Monopolies & Monopolization, Attempts to Monopolize, Sherman Act, Cartels & Horizontal Restraints, Horizontal Market Allocation, Horizontal Mergers, Merger Guidelines, Constitutional Law, Congressional Duties & Powers, Census