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United States v. Grinnell Corp.

Supreme Court of the United States

March 28-29, 1966, Argued ; June 13, 1966, Decided 1

No. 73

Opinion

 [*566]   [***783]   [**1701]  MR. JUSTICE DOUGLAS delivered the opinion of the Court.

This case presents an important question under § 2 of the Sherman Act, 2 [****7]  which makes it an offense for any person to "monopolize . . . any part of the trade or commerce among the several States." This is a civil suit brought by the United States against Grinnell Corporation (Grinnell), American District Telegraph Co. (ADT), Holmes Electric Protective Co. (Holmes) and Automatic Fire Alarm Co. of Delaware (AFA).  The District Court held for the Government and entered a decree. All parties appeal, 3 the United States because it deems the relief inadequate and the defendants both on the merits and on the relief  [***784]  and on the ground that the District Court denied them a fair trial. We noted probable jurisdiction. 381 U.S. 910.

Grinnell manufactures plumbing supplies and fire sprinkler systems. It also owns 76% of the stock of ADT, 89% of the stock of AFA, and 100% of the stock of Holmes. 4 ADT provides both burglary and fire protection services; Holmes  [**1702]  provides burglary services alone; AFA supplies only fire protection service. Each offers a central station service under which hazard-detecting devices installed on the protected premises automatically  [*567]  transmit an electric signal to a central station. 5 The central station is manned 24 hours a day. Upon receipt of a signal, the central station, where appropriate, dispatches guards to the protected premises and notifies the police or fire department direct. There are other forms of protective services. But the record shows that subscribers to accredited central station service (i. e., that approved by the insurance underwriters) receive reductions in their insurance [****8]  premiums that are substantially greater than the reduction received by the users of other kinds of protection service. In 1961 accredited companies in the central station service business grossed $ 65,000,000. ADT, Holmes, and AFA are the three largest companies in the business in terms of revenue: ADT (with 121 central stations in 115 cities) has 73% of the business; Holmes (with 12 central stations in three large cities) has 12.5%; AFA (with three central stations in three large cities) has 2%. Thus the three companies that Grinnell controls have over 87% of the business.

 [****9]  Over the years ADT purchased the stock or assets of 27 companies engaged in the business of providing burglar or fire alarm services. Holmes acquired the stock or assets of three burglar alarm companies in New York City using a central station. Of these 30, the officials  [*568]  of seven agreed not to engage in the protective service business in the area for periods ranging from five years to permanently. After Grinnell acquired control of the other defendants, the latter continued in their attempts to acquire central station companies -- offers being made to at least eight companies between the years 1955 and 1961, including four of the five largest nondefendant companies in the business. When the present suit was filed, each of those defendants had outstanding an offer to purchase one of the four largest nondefendant companies.

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384 U.S. 563 *; 86 S. Ct. 1698 **; 16 L. Ed. 2d 778 ***; 1966 U.S. LEXIS 2988 ****; 1966 Trade Cas. (CCH) P71,459; 1966 Trade Cas. (CCH) P71,789

UNITED STATES v. GRINNELL CORP. ET AL.

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

Disposition:  236 F.Supp. 244, affirmed and remanded.

CORE TERMS

central station, accredited, protective services, decree, alarm, relevant market, customers, monopoly, geographical, Automatic, burglar alarm, monopolize, commerce, defendants', terms, monopoly power, trial court, burglary, cases, stock, Sherman Act, competitors, divestiture, waterflow, products, supplies, furnish, prices, nationwide, practices

Antitrust & Trade Law, Sherman Act, General Overview, Monopolies & Monopolization, Actual Monopolization, Regulated Practices, Market Definition, Regulated Industries, Financial Institutions, Bank Mergers, Mergers & Acquisitions Law, Antitrust, Antitrust Statutes, Clayton Act, Attempts to Monopolize, Civil Procedure, Inability to Proceed, Disqualification & Recusal, Federal Judges, Judicial Officers, Judges