UNITED STATES v. ARMOUR & CO. ET AL.
No. 759
Supreme Court of the United States
Argued April 19, 1971—Decided June 1, 1971
402 U.S. 673
Deputy Solicitor General Springer argued the cause for the United States. With him on the brief were Solicitor General Griswold, Deputy Assistant Attorney General Comegys, and Howard E. Shapiro.
Edward L. Foote argued the cause for appellee Greyhound Corp. With him on the brief was Robert J. Bernard.
MR. JUSTICE MARSHALL delivered the opinion of the Court.
Here as in United States v. Armour & Co., 398 U. S. 268, we have been asked to determine if the Meat Packers Cоnsent Decree of 1920, which prohibits Armour & Co. from dealing directly or indirectly in certain specified commodities, prohibits a corporation that may deal in some of those specified commodities from acquiring a controlling interest in Armour. When this decree was
The Government then proceeded against Greyhound as it had against General Host and filed a petition in the District Court alleging that Greyhound‘s engagement in businesses forbidden to Armour or any firm in which Armour has a direct or indirect interest, and that Greyhound‘s ownership of Armour create a relationship forbidden by the 1920 Consent Decree. The District Court, as it had when General Host‘s ownership of Armour was at issue, held that the Consent Decree did not prohibit such acquisitions. The Government appealed.
This case does not involve the question whether the acquisition of a majority of Armour stock by Greyhound is illegal under the antitrust laws. If the Government had wished to test that proposition, it could have brought an action to enjoin the acquisition under § 7 of the Clayton Act,
On February 27, 1920, the United States filed a bill in equity against the Nation‘s five largest meatpackers, including Armour, and against their subsidiary corporations and controlling stockholders, charging conspiratorial and individual attempts to monopolize a substantial part of the Nation‘s food supply. The bill alleged that the packers, from their initial position of power in the slaughtering and packing business, had acquired control of the Nation‘s stockyards, stockyard terminal rail lines, refrigerated rolling stock, and cold storage facilities, and that they had used predatory practices to eliminate competition in the food business.
The bill further alleged that the packers, having gained monopoly power in the meat business, were attempting to destroy competition in products which might be substituted for meat. That objective was being pursued through the acquisition of nonmeat food companies and by means of exclusive output contracts with suppliers. The prayer for relief sought, along with other prohibitions against the defendants’ attempts to monopolize, the divestiture of most of their nonpacking operations and the permanent exclusion of them from the substitute food business.
Paragraph Eighteenth of the decree provided that the court should retain jurisdiction of the case “for the purpose of taking such other action or adding to the foot of this decree such other relief, if any, as may become necessary or appropriate for the carrying out and enforcement of this decree.”
Since 1920, the decree has withstood a motion to vacate it in its entirety, Swift & Co. v. United States, 276 U. S. 311 (1928), and two attempts on the part of the defendants to have it modified in light of alleged changed circumstances. United States v. Swift & Co., 286 U. S. 106 (1932); United States v. Swift & Co., 189 F. Supp. 885, 892 (ND Ill. 1960), aff‘d, 367 U. S. 909 (1961). Thus the decree stood at the time this case arose, and still stands, as originally written.
The Government does not contend that Greyhound‘s acquisition of controlling interest in Armour subjects
The contention is that the acquisition violates the decree since it causes Armour to be engaged in activities prohibited by the decree. The claim is that Greyhound is engaged in businesses that the decree prohibits Armour from being engaged in and the decree‘s purported purpose of separating the meatpackers from the retail food business is thus circumvented.
But while structural separation of this kind may have been the Government‘s overall aim, the decree itself, carefully worked out bеtween the parties in exchange for their right to litigate the issues, does not effect a complete separation, but, rather, prohibits particular actions
But the decree does not speak in terms of relationships in general, but, rather, prohibits certain behavior, and in doing so prohibits some but not all economic interrelationship between Armour and the retail food business. Armour may not carry on or engage in that business, nor may it acquire any interest in any firm
If the parties had agreed to prohibit the kind of transaction here involved, that end could also have been accomplished through the provision of the decree running against the stockholders of the defendant meatpackers. Many of the controlling stockholders were defendants in the 1920 action, and the decree prohibits certain conduct on their part in Paragraph Fifth.8 That paragraph prohibits the individual defendants from own-
Perhaps more important, the prohibitions of Paragraph Fifth run only against the named stockholders and not against their successors and assigns. If a “successors and assigns” clause had been included, the Government could argue with some persuasiveness that ownership of a meatpacker by a controlling interest in a retаil food firm was prohibited. And the parties were able to use the words “successors and assigns” when they wanted to. Paragraph Third, which prohibits the corporate defendants from using their distribution facilities to handle the commodities named in Paragraph Fourth, expressly runs against the corporations and their “successors and assigns.”
In short, we do not find in the decree a structural separation such as the Government claims. On the one hand, the decree leaves gaps inconsistent with so complete a separation; on thе other, language that would have been apt either to create a complete separation or to bar with particularity the sort of transaction involved here was not used.
Stepping back from this analysis of the terms of the 1920 decree, we are confronted with the Government‘s argument that to allow Greyhound to take over Armour would allow the same kind of anticompetitive evils that the 1920 suit was brought to prevent. In its 1920 suit,
This argument would have great force if addressed to a court that had the responsibility for formulating original relief in this case, after the factual and legal issues raised by the pleadings had been litigated. It might be a persuasive argument for modifying the original decree, after full litigation, on a claim that unforeseen circumstances now made additional relief desirable to prevent the evils aimed at by the original complaint.9 Here, however, where we deal with the construction of an existing consent decree, such an argument is out of place.
Consent decrees are entered into by parties to a case after careful negotiation has produced agreement on their precise terms. The parties waive their right to litigate the issues involved in the case and thus save themselves the time, expense, and inevitable risk of litigation. Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the decree itself cannot be said to have a purpose; rather the parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill
This Court has recognized these principles before. In Hughes v. United States, 342 U. S. 353 (1952), the Government sought to construe a consent decree that gave the defendant the option of selling his stock or putting it in a voting trust as requiring him to sell the stock within a reasonable time even though he chose the voting trust alternative, because the pro-competitive purpose of the decree would otherwise be frustrated. The Court responded:
“It may be true as the Government now contends that Hughes’ large block of ownership in both types of companies endangers the independence of each. Evidence might show that a sale by Hughes is indispensable if competition is to be preserved. However, in section V the parties and the District Court provided their own detailed plan to neutralize the evils from such ownership. Whatever justification there may be now or hereafter for new tеrms that require a sale of Hughes’ stock, we think there is no fair support for reading that requirement into the language of section V.” 342 U. S., at 357.
In United States v. Atlantic Refining Co., 360 U. S. 19 (1959), the Government sought an order limiting the
“The Government contends that the interpretation it now offers would more nearly effectuate ‘the basic purpose of the Elkins and Interstate Commerce Acts that carriers are to treat all shippers alike.’ This may be true. But it does not warrant our substantially changing the terms of a decree to which the parties consented without any adjudication of the issues.” Id., at 23.
And here too, although the relief the Government seeks may be in keeping with the purposes of the antitrust laws, we do not believe that it is supported by the terms of the consent decree under which it is sought.
Affirmed.
MR. JUSTICE BLACK and MR. JUSTICE BLACKMUN took no part in thе consideration or the decision of this case.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BRENNAN and MR. JUSTICE WHITE concur, dissenting.
The antitrust decree before us last Term in United States v. Armour & Co., 398 U. S. 268, is here again in a new posture. Under the original decree of 1920 the defendants were required to abandon their interests in a wide variety of food and nonfood lines. They were required to divest themselves of any interest in the businesses of “manufacturing, jobbing, selling, transporting . . . distributing, or otherwise dealing in” some 114 specified food products and some 30 other products.
Armour, one of the parties to the decree, is now the second largest meatpacker in the United States with total assets of almost $700 million and total sales in 1967 of approximately $2,150,000,000. In addition to meatpacking, Armour manufactures, processes, and sells various nonprohibited products. In early 1969 the Government filed a petition in Federal District Court to make General Host Corp., a company engaged in the manufacture and sale of numerous food products, a party to the decree and forbid it from acquiring control of Armour. The District Court held that the decree prohibited Armour from holding any interest in a company handling any of the prohibited products but did not prohibit such a company from acquiring Armour. The Government appealed the decision arguing that acquisition by General Host of a majority of Armour‘s stock would be in violation of the decree and General Host should have been made a party to the decree so that an injunction could issue. We noted probable jurisdiction. 396 U. S. 811.
In the interim, General Host entered into an agreement to sell its controlling stock interest in Armour to Greyhound, a regulated motor carrier. The Interstate Commerce Commission approved the acquisition. Following
The Government then filed a new petition in the District Court alleging (as it had against General Host) that Greyhound is engaged in businesses forbidden to Armour, or any firm in which Armour has a direct or indirect interest, and therefore Greyhound‘s acquisition violates the decree. The petition prayed that Greyhound be brought before the Court under § 5 of the Sherman Act and that an order supplemental to the original decree be entered enjoining Greyhound from acquiring any additional stock or exercising control over or influencing the business affairs of Armour, and requiring Greyhound to divest itself of the Armour stock. The District Court dismissed the Government‘s complaint, ruling that since Greyhound was not a party to the original decree, Greyhound may not be enjoined from “committing any acts on the ground that they are prohibited by the decree.” The court also rejected the Government‘s argument that acquisition of the Armour stock placed the two cоmpanies in a “corporate relationship” which was prohibited by the decree. The court stated “the decree does not speak in terms of corporate relationships; it speaks in terms of the defendants dealing in the specified lines of commerce . . . .” The Government appealed.
The Sherman Act (
“Whenever it shall appear to the court before which any proceeding under section 4 of this title may be pending, that the ends of justice require that other parties should be brought before the court, the сourt may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.”
Greyhound may well have devised a plan which would render the original decree nugatory.
Under the decree, none of the meatpackers could own a chain of grocery stores. Yet under the interpretation of the District Court a chain of grocery stores could acquire a meatpacking company. I do not view the decree so narrowly. The evil at which the decree is aimed is combining meatpackers with companies in other food product areas.
The authorities support the proposition that judges who construe, interpret, and enforce consent decrees look at the evil which the decree was designed to rectify. See Note, Flexibility and Finality in Antitrust Consent Decrees, 80 Harv. L. Rev. 1303, 1315.* My interpretation of the evil at which this decree was aimed is the same as that of Mr. Justice Cardozo, writing for this Court in United States v. Swift & Co., 286 U. S. 106. As we stated in Chrysler Corp. v. United States, 316 U. S. 556, 562, the test for reviewing modifications is “whether the change served to effectuate or to thwart the basic purpose of the original consent decree.”
Neither Hughes v. United States, 342 U. S. 353, nor United States v. Atlantic Refining Co., 360 U. S. 19, relied on by the Court, is to the contrary. Hughes involved a Government attempt to require the trustee to sell stock in a voting trust where the consent decree expressly allowed Hughes a choice of selling the stock himself or placing the stock in a voting trust “until Howard R. Hughes shall have sold his holdings of stock.” Atlantic
The evil at which the present decree is aimed—combining meatpackers with companies in other food product areas—is present whether Armour purchases a company dealing in the various prohibited food lines or whether that company purchases Armour. When any company purchases Armour it acquires not only Armour‘s assets and liabilities, but also Armour‘s legal disabilities. And one of Armour‘s legal disabilities is that Armour cannot be combined with a company in the various food lines set out in the decree.
I read the decree to prohibit any combination of the meatpacking company defendants with companies dealing in various food lines.
In the District Court the Government offered an affidavit which showed that Greyhound deals in food products through its divisions and wholly owned subsidiaries, which provide industrial catering services, and operates restaurants, cafeterias, and other eating facilities. The affidavit states that in 1969 Greyhound had revenues of about $124 million from food operations which accounted for over 16% of Greyhound‘s total revenues that year. Greyhound has contended that it operates no grocery business and only buys raw foodstuffs and sells prepared meals. Thus, Greyhound argues, it can acquire Armour even if it is made a party to the decree bеcause the decree does not prohibit meatpackers from entering the restaurant business. I do not pass on this contention. Rather,