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An enterprise has monopolized in violation of the Sherman Act (Act), 15 U.S.C.S. § 1 et seq., if it has acquired or maintained a power to exclude others as a result of using an unreasonable restraint of trade in violation of the Act.
United Shoe Machinery Corporation (“United Shoe”) manufactured shoemaking machines and distributed the machines through leases containing partnership features. Through these leases, United Shoe maintained contacts with approximately 90 percent of the shoe factories and supplied more than 75 percent of the demand for shoe machinery. United Shoe’s substantial market power gave it effective control of the shoe machinery market. United Shoe’s market strength had also occurred through patents and purchases. The United States government commenced an action against United Shoe for violations of the Sherman Act, 15 U.S.C.S. § 1 et seq., seeking injunctions, cancellation of United Shoe’s leases, and divestiture of United Shoe’s ownership of certain assets. United Shoe denied all allegations.
Did United Shoe violate the Sherman Act, 15 U.S.C.S. § 1 et seq.?
The court held that even if United Shoe did not intend to be predatory, immoral, or discriminatory, it had created barriers to competition and controlled the market and, thus, violated Sherman Act, 15 U.S.C.S. § 1 et seq., as actions fell within main thrust of the doctrine as applied in previous United States Supreme Court cases. The court held that to reverse the effect of the monopolization, United Shoe had to offer the types of machines that it leased for sale, discontinue acting as a distributor of other companies' supplies, dispose of some branches and subsidiaries, and make the patents available upon payment of a reasonable royalty fee.