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Supreme Court of the United States
March 22, 1966, Argued ; May 31, 1966, Decided
[*271] [***557] [**1479] MR. JUSTICE BLACK delivered the opinion of the Court.
On March 25, 1960, the United States brought this action charging that the acquisition by Von's Grocery Company of its direct competitor Shopping Bag Food Stores, both large retail grocery companies in Los Angeles, California, violated § 7 of the Clayton Act which, as amended in 1950 by the Celler-Kefauver Anti-Merger Act, provides in relevant part:
] "That no corporation engaged in commerce . . . shall acquire the whole or any part of the assets of another corporation engaged 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." 1
On March 28, 1960, three days later, the District Court refused to [****4] grant the Government's motion for a temporary restraining order and immediately Von's took over all of Shopping Bag's capital stock and assets including 36 grocery stores in the Los Angeles area. After [*272] hearing evidence on both sides, the District Court made findings of fact and concluded as a matter of law that there was "not a reasonable probability" that the merger would tend "substantially to lessen competition" or "create a monopoly" in violation of § 7. For this reason the District Court entered judgment for the defendants. 233 F.Supp. 976, 985. The Government appealed directly to this Court as authorized by § 2 of the Expediting Act. 2 The sole question here is whether the District Court properly concluded on the facts before it that the Government had failed to prove a violation of § 7.
[****5] The record shows the following facts relevant to our decision. The market involved here is the retail grocery market in the Los Angeles area. In 1958 Von's retail sales ranked third in the area and Shopping Bag's ranked sixth. In 1960 their sales together were 7.5% of the total two and one-half billion dollars of retail groceries sold in the Los Angeles market each year. For many years before the merger both [***558] companies had enjoyed great success as rapidly growing companies. From 1948 to 1958 the number of Von's stores in the Los Angeles area practically doubled from 14 to 27, while at the same time the number of Shopping Bag's stores jumped from 15 to 34. During that same decade, Von's sales increased fourfold and its share of the market almost doubled while Shopping Bag's sales multiplied seven times and its share of the market tripled. The merger of these two highly successful, expanding and aggressive competitors created the second largest grocery chain in Los Angeles with sales of almost $ 172,488,000 annually. In addition the findings of the District Court show that [*273] [****6] the number of owners operating single stores in the Los Angeles retail grocery market decreased from 5,365 in 1950 to 3,818 in 1961. By 1963, three years after the merger, the number of single-store owners had dropped still further to 3,590. 3 During roughly the same period, [**1480] from 1953 to 1962, the number of chains with two or more grocery stores increased from 96 to 150. While the grocery business was being concentrated into the hands of fewer and fewer owners, the small companies were continually being absorbed by the larger firms through mergers. According to an exhibit prepared by one of the Government's expert witnesses, in the period from 1949 to 1958 nine of the top 20 chains acquired 126 stores from their smaller competitors. 4 Figures of a principal defense witness, set out below, illustrate the many acquisitions and mergers in the Los Angeles grocery industry from 1954 through 1961 including acquisitions made by Food Giant, Alpha Beta, Fox, and [*274] Mayfair, all among the 10 leading chains in the area. 5 Moreover, a table prepared by the Federal Trade Commission appearing in the Government's reply brief, but not a part of the record here, shows that [****7] acquisitions and mergers in the Los Angeles retail grocery market have continued at a rapid rate since the merger. 6 These facts alone are enough to cause us to conclude contrary to the District Court that the Von's-Shopping Bag merger did violate § 7. Accordingly, we reverse.
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384 U.S. 270 *; 86 S. Ct. 1478 **; 16 L. Ed. 2d 555 ***; 1966 U.S. LEXIS 2823 ****; 1966 Trade Cas. (CCH) P71,780
UNITED STATES v. VON'S GROCERY CO. ET AL.
Prior History: [****1] APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA.
Disposition: 233 F.Supp. 976, reversed.
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Antitrust & Trade Law, Clayton Act, General Overview, Mergers & Acquisitions Law, Antitrust, Antitrust Statutes, Clayton Act