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United States v. E. I. du Pont de Nemours & Co.

Supreme Court of the United States

February 20-21, 1961, Argued ; May 22, 1961, Decided

No. 55

Opinion

 [*318]  [***320]  [**1246]    Mr. JUSTICE BRENNAN delivered the opinion of the Court.

The United States filed this action in 1949 in the District Court for the Northern District of Illinois. The complaint alleged that the [****6]  ownership and use by appellee E. I. du Pont de Nemours & Co. of approximately 23 percent of the voting common stock of appellee General Motors Corporation was a violation of sections 1 and 2 of the Sherman Act, 15 U. S. C. §§ 1, 2, and of section 7 of the Clayton Act, 15 U. S. C. § 18. After trial, the District Court dismissed the complaint. 126 F.Supp. 235 (D. C. N. D. Ill. 1954). On the Government's appeal, we reversed. We held that du Pont's acquisition of the 23 percent of General Motors stock had led to the  [***321]  insulation from free competition of  [*319]  most of the General Motors market in automobile finishes and fabrics, with the resultant likelihood, at the time of suit, of the creation of a monopoly of a line of commerce, and, accordingly, that du Pont had violated § 7 of the Clayton Act. United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586 (1957). 1 We did not, however, determine what equitable relief was necessary in the public interest. Instead, we observed that "the District Courts . . . are clothed 'with large discretion to model their judgments to fit the exigencies [****7]  of the particular case.' International Salt Co. v. United States, 332 U.S. 392, 400-401, " and remanded the cause to the District Court "for a determination, after further hearing, of the equitable relief necessary and appropriate in the public interest to eliminate the effects of the acquisition offensive to the statute." 353 U.S., at 607-608.

On remand, the District Court invited the Government to submit a plan of relief which in its opinion would be effective to remedy the violation. The court also appointed two amici curiae to represent the interests of General Motors and du Pont shareholders, respectively, most of whom, of course, had not been made parties to this litigation. The Government submitted a proposed plan of relief. That plan included diverse forms of [****8]  injunctive relief, but its principal feature was a requirement that within 10 years the du Pont company completely divest itself of its approximately 63 million General Motors shares. The Government proposed that about two-thirds of these shares be distributed pro rata to the generality of du Pont shareholders in the form of dividends over the 10-year period. The other one-third of du Pont's  [**1247]  General Motors holdings -- stock which  [*320]  would have gone to appellees Christiana Securities Company and Delaware Realty and Investment Company, holding companies long identified with the du Pont family itself -- were to go to a court-appointed trustee, to be sold gradually over the same 10-year period. Du Pont objected that the Government's plan of complete divestiture entailed harsh income-tax consequences for du Pont stockholders and, if adopted, would also threaten seriously to depress the market value of du Pont and General Motors stock. Du Pont therefore proposed its own plan designed to avoid these results. The salient feature of its plan was substitution for the Government's proposed complete divestiture of a plan for partial divestiture in the form of a so-called [****9]  "pass through" of voting rights, whereby du Pont would retain all attributes of ownership of the General Motors stock, including the right to receive dividends and a share of assets on liquidation, except the right to vote. The vote was to be "passed through" to du Pont's shareholders proportionally to their holdings of du Pont's own shares, except that Christiana and Delaware would "pass through" the votes allocable to them to their own shareholders. The amici curiae also proposed plans of compliance, substantially equivalent to the du Pont plan. The amicus representing the generality of du Pont shareholders proposed in addition a program of so-called  [***322]  "take-downs," by which du Pont shareholders would be allowed to exchange their du Pont common stock for a new class of du Pont "Special Common," plus their pro rata share of du Pont-held General Motors common stock.

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366 U.S. 316 *; 81 S. Ct. 1243 **; 6 L. Ed. 2d 318 ***; 1961 U.S. LEXIS 2146 ****

UNITED STATES v. E. I. du PONT de NEMOURS & CO. ET AL.

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

Disposition:  177 F.Supp. 1, affirmed in part, vacated in part, and remanded for further proceedings.

CORE TERMS

divestiture, decree, stock, acquisition, stockholders, shares, effective, provisions, antitrust, Courts, percent, voting, cases, shareholders, monopoly, parties, violations, fashioned, public interest, Clayton Act, monopolization, conspiracy, commerce, framing, anti trust law, pass through, Sherman Act, injunction, ownership, officers and directors

Civil Procedure, Jurisdiction on Certiorari, Considerations Governing Review, Federal Court Decisions, Antitrust & Trade Law, US Department of Justice Actions, Settlements, Consent Judgments, Criminal Law & Procedure, Acts & Mental States, Mens Rea, Knowledge, Sherman Act, Remedies, General Overview, Mergers & Acquisitions Law, Antitrust, Remedies, Clayton Act