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Section 7 of the Clayton Act, 15 U.S.C.S. § 18, as amended in 1950 by the Celler-Kefauver Anti-Merger Act, requires not merely an appraisal of the immediate impact of the merger upon competition, but a prediction of its impact upon competitive conditions in the future; this is what is meant when it is said that the amended § 7 was intended to arrest anticompetitive tendencies in their "incipiency."
Petitioner United States brought an action charging that the acquisition by respondent 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 15 U.S.C.S. § 18. Petitioner also argued that the acquisition by respondent tended to create a monopoly. The district court refused to grant petitioner's motion for a temporary restraining order, holding that the respondent did not violate § 7 of the Clayton Act, by the acquisition of its direct competitor. Respondent immediately proceeded with the proposed merger. Petitioner challenged the decision.
By acquiring its direct competitor, did respondent violate the federal antitrust laws?
The Court held that the merger violated § 7 of the Clayton Act 15 U.S.C.S. § 18, in view of the merging companies' share of the market, the substantial decrease of the number of single-store grocery firms in the market, both before and after the merger, and the concentration of the grocery business into the hands of fewer and fewer owners. The Court averred that the case presented the precise situation which Congress intended to proscribe, where two powerful companies merge to become more powerful in a market exhibiting a marked trend toward concentration. Accordingly, the case was reversed and remanded to the district court.