*1 v. ITT CONTINENTAL UNITED STATES BAKING CO. Argued November 73-1290.
No. February 19, 1975 Decided *2 Deputy Solicitor General Friedman argued the cause for the United States. On the briefs were Solicitor Gen- Bork, eral Assistant Attorney Kauper, General Howard E. Shapiro, George Edelstein.
John H. argued the cause respondent. for Schafer With him on the brief was Michael Boudin.
225 of the opinion delivered Brennan Justice Mr. Court. viola is whether by this case presented question Trade Commission of a Federal prohibition
tions of
com
other
“acquiring”
against
order
(FTC) consent
meaning
single violations within
panies constituted
.as
734,
penalty statutes,
civil
Stat.
applicable
amended,
(?);
§
15 U. S. C.
Stat.
amended,
con
violations
whether such
(?),
15 U.
C.
or
§
obey”
within
neglect
“continuing
failure
stituted
imposition
authorizing
meaning
statutes,
of those
Court
District
daily penalties. The United States
interpreted the consent
District of Colorado
held that
acquisition and
proscribe only the initial act of
might
imposed.
single penalty
therefore
*3
1971).
(Aug.
73,993, p. 92,127
2,
CCH Trade Cases ¶
the Tenth Circuit affirmed
Appeals
for
The Court
A
(1973).
F. 2d 16
extent,
that
485
District Court to
Appeals
for
of the Court
subsequent decision
Beatrice
in
United States v.
conflict,
Circuit
Eighth
73-
Co.,
pending
cert.
No.
(1974),
F. 2d 1259
Foods
perti
in
order worded
its
interpreting
In
a consent
1798.
Ap
the Court of
similarly
case,
to that in this
nent terms
is a
acquisition
held that
peals
Circuit
Eighth
for the
undone, noting
until
it is
continuing offense
rather than con
“acquiring”
single
as a
construction
acquisi
of an
the crucial effects
tinuing
“ignores
violation
virtually
nonacquisition orders
would render
tion and
Id.,
1270.
meaningless.”
this
in order
resolve
granted
certiorari
We
proper
Appeals concerning the
between Courts
conflict
of 15
“continuing” violation clauses
of the
application
employed in a
wording
(?)
(?)
and 45
§§
U.
C.S.
inter-
Since we
of FTC consent orders.1
number
large
According
Certiorari 18A-22A
Petition for Writ of
to the
pret “acquiring” used
the consent order in this case
to mean both the initial transaction and the maintaining
of the rights obtained without resale,
hold
we
that viola-
tion of the consent order is a continuing violation subject
to daily penalties, and reverse.2
Brief for United States 12
12n.
case,
there were in all as of
18, 1974,
June
67 FTC orders, of which most are
orders
consent
but
litigated
some are
orders,
acquisitions
which bar
in language similar to
language
of the order in this case. All of these
bar
orders
future
acquisitions
expressly
but do not
“holding”
bar the
or “retention” of
stock or
acquired
assets
in violation of their terms.
2The Petition for Certiorari of the United
presented
States
single question whether
prayer
its
daily penalties
properly
Respondent
denied.
did
cross-petition,
not
yet seeks to raise several
presented
issues
not
petition.
Respondent contends that
(1) the three
penalties
transactions for which
have been or are to
imposed
did not violate the
order;
consent
(2) the consent order
binding upon
not
ITT Continental as
after
successor
Continental
exist,
ceased to
so
daily penalties
could not accrue for the
period after
merger;
(3) daily
penalties
imposed
could not be
because the FTC had
respondent
not advised
alleged
of the
prior
violations
filing
to the
complaint.
We do not address
any of these
deciding
issues in
this case.
Respondent recognizes that,
having
cross-petitioned, it can-
judgment
not attack the
insofar as it
findings
sustained the
imposed penalties
violations and
for such violations. United States
v.
Railway Express
American
Co.,
265 U.
(1924).
Morley
Cf.
Maryland
Construction Co. v.
Casualty Co.,
227
I
Baking
1960 that Continental
alleged
The FTC
bread and
major producer
a
(Continental),3
Co.
Clay
7
§
had violated
bakery products,
other
18,
U. C. §
15
S.
1125,
731, 64 Stat.
38 Stat.
Act,
ton
45,
15 U. C.
Act,
§
Commission
Trade
the Federal
5 of
§
the effect
“may have
which
by
acquisitions
various
create a
tending to
lessening competition
substantially
case,
in the
any decision
Before
monopoly
.
.
.
ap
which was
order
proposed consent
to a
agreed
among
order,
May 1962.
FTC in
by the
proved
(1931).
see
Green,
531,
But
Langnes v.
538
282 U. S.
(1941). Cf.
rule of
that
Scofield,
(1940).
follow
We
The District Court It order. of the consent in violation in fact actions were that finding daily penalties, to order declined, however, only act proscribe order the consent “the terms of of the consent violations and acquisition or 'continuing a failure . . did constitute . order (i)] said obey' §§21(l), U. S. C. neglect [15 offense, except separate a shall be such order violation neglect through continuing failure or case of violation in the a day each of continu- or board obey final of the commission a order separate neglect, offense.” be deemed or shall failure ance of such (l) provides: U. S. C. 45 Title 15 § corporation an order who violates “Any partnership, or person, final, and it has become and after to cease desist of the Commission pay to United States effect, shall forfeit order is while such violation, which shall $5,000 for each more than penalty of not a civil may action be recovered in a civil States accrue to United such an separate violation United States. Each brought offense, except that in the of a violation case separate be a shall obey a final order continuing neglect failure or through neglect shall day of such failure or of continuance each Commission separate offense.” be deemed (l) C. 45 penalty under 15 U. S. for each violation The maximum § 93-153, $5,000 $10,000. Pub. L. increased from has since been (c), 591. 87 Stat. § violation, day $1,000 per per requested Although the Government penalty, District Court prescribe minimum and the no the statutes penalty for each the amount of the determine has discretion to single as are transactions construed whether the violation totaling penalty Thus, as a series continuing while violations. single could raise sub- as a violation daily rather than violations statutory assessed, scheme does not stantially penalty the total pre- judge’s determination result, the trial require an abuse of discretion. absence of vail in the order. . . . Once these two acquisitions accom- were plished, the violations were complete.” 1972 CCH Trade Cases, at 92,129. The District Court therefore entered a judgment against ITT Continental for $5,000 for each of the two violations found.7
The Court of Appeals reversed the District Court insofar as it had held one of the three transactions not in violation of the consent order. It affirmed on the matter of daily penalties, holding that “whether the order was directed to acquisition or to the acquisition and retention of assets or interests ... an interpretation [is] of the consent order, and the result is in accordance with *7 the prevailing standards.” F. 485 2d, at 21. Remand to the District Court was ordered for imposition of a penalty for the third violation.
II The basic question before us is whether there has been a “continuing failure or neglect to obey” an FTC order within the meaning of 15 U. C. 21 §§ 45 (l) (l). The “continuing failure or neglect to obey” provision 7 complaint requested also permanent injunction commanding compliance future with the consent order. The District Court found that it empowered in a civil penalty proceeding on based an FTC grant equitable relief, it injunction issued an in the exact words of the FTC injunction order. This expired, as did the order, consent May on 15, 1972. 4, supra. n. See Since the Appeals Court of in decision case, this Congress has amended 15 U. (l) S. C. 45 expressly empower § district in penalty courts civil proceedings grant equitable relief. Pub. L. 93-153, (c), §408 87 Stat. 591. Although the complaint did request order, divestiture requested Government later divestiture, and request this was em- bodied in the District pretrial Court’s App. order. 27. However, the District Court declined to order relief, 1972 CCH Cases, Trade 92,129, and the Appeals Court of affirmed this denial as within the discretion of the trial court. 485 16, F. 2d (CA10 1973). to the Federal Trade Commission (i) of 45 was added § Clay- of 21 to the 1950, provision § Act in and the like (l) history of these Although legislative ton Act 1959. examples of behavior intended provisions is some sparse, provisions violation do “continuing” to be covered history. These include continu- appear in the legislative main- prices to fix or control ing conspiracies production, prohibiting of an order tenance of a billboard defiance an unlawful merger, false failure to dissolve advertising, interlocking failure an directorate. See to eliminate Fulbright, Counsel to letter from FTC General Senator R. 432, on H. (1950); Hearings Rec. 3026-3027 Cong. before the Antitrust 2977, H. R. H. R. and S. 726 6049, Judiciary, on the of the House Committee Subcommittee Rep. H. R. No. 86th Sess., (1959); 86th 1st Cong., share two Sess., (1959). These violations Cong., 1st effect to the characteristics: the detrimental discernible the violator continue and public advantage and the could and the violator period time, increase over a if it were motivated eliminate the effects of the violation characteris- begun. to do after it had Without these so, probably daily penalties for such violations tics, penalty and single deterrent effect than a greater have no be unfair. daily penalties would therefore accumulating *8 history Congress legislative also makes clear that avoiding a situation in which the was concerned with regarded by potential viola- statutory penalty would be nothing acceptable as more than an of FTC orders tors than as a deterrence to violation. violation, rather cost Aiken, proponent chief of the 1950 example, For Senator daily penalties if for certain vio- said that amendment, Commission Act Federal Trade were lations amount to a license in the fine would “the permitted, misrepresentation, which would be $5,000 amount Cong. Rec. 3025 fine, (1950). indeed.” very cheap a Similarly, the House Representatives Judiciary Com- mittee said in report its on the 1959 amendments:
“Although the maximum penalty may be severe, in certain cases it would be appropriate. In the absence of the maximum penalty for a continuing offense, for example, commission and board orders with respect to mergers and interlocking director- ships would be ineffective. In such cases, unless the maximum penalty applied and day each contin- uing violation considered a separate offense, an order dissolving an unlawful merger could ignored after the mere payment of a $5,000 fine.” H. R. Rep. No. 580, 86th Cong., 1st Sess., (1959).
See also Hearings on H. R. 432, H. R. 2977, H. R. 6049, and S. 726, supra, at 30 (letter from FTC General Counsel).
Thus, the “continuing failure or neglect to obey” provi- sions of 15 U. S. C. 21§§ (l) and (J) were intended to assure that the penalty provisions provide meaningful against deterrence violations whose effect continuing and whose detrimental could be termi- effect nated or minimized by the violator at some time after initiating the violation. It apparent seems that acquisi- tion in violation of an FTC order banning “acquiring” certain assets could be such a Any violation. anticom- petitive effect of an acquisition continues long as the assets obtained are retained, and the violator could undo any minimize such effect disposing assets any time after the initial transaction. On the other hand, if violation of an order prohibiting “acquiring” assets were treated as a single violation, deterrent effect of the penalty provisions would be entirely under- mined, the penalty would be converted into a minor tax upon a violation which could reap large financial benefits to the perpetrator. As we have seen, Congress
233 continuing-penalty provisions precisely added the to avoid such a result.
Ill Respondent underlying that FTC insists, however, only order was a consent order initial act proscribing acquisition, imposition daily and that therefore the penalties which might otherwise be mandated cannot be permitted. argument Its “acquiring” is that in the unambiguously consent order refers to the initial transaction, and that read it to otherwise is to add the “holding” “retaining” words assets to the literal lan- guage of the order. This language addition to the ITT order, contends, prin- Continental violates the ciple of a line of culminating cases in United States v. Co., Armour & 402 U. that (1971), S. command of a consent decree or order must be found “within its id., four corners,” by and not reference any “purposes” parties of the or of the underlying stat- Co., utes. See United States v. Atlantic Refining (1959); Hughes States, U. v. United S. 342 U. (1952). Respondent asks us to conclude that the “ac- quirings” prohibited by capable the consent order are not persisting time, over and that therefore there can be “continuing neglect obey” no failure or the order. The on the Government, hand, other contends “acquiring” purchase meant to include both and reten- assets, unnecessary tion of therefore it is depart from the “four corners” rule of Armour to conclude there has been a continuing violation. Armour, it
In determined that first construc urged tion consent decree by of the the Government was express with the inconsistent terms consent decree seeking it was to enforce.8 The decree in involved might The Court Armour noted that the Government be able sought ways the relief other than obtain construction *10 Armour was the Meat Packers Consent Decree of in entered settlement an antitrust case filed in District Paragraph Court. fourth of the enjoined decree Armour from engaging in certain businesses. Greyhound The which Corporation, engaged was in some of those busi nesses, acquired control of The Armour. Government claimed that acquisition was violation in of the con sent decree, contending purpose that the decree the structurally separate the meatpackers from the retail food business entirely, and the relationship that between Armour Greyhound prohibited. was therefore
The Court noted that the language of the decree “taken its sense, natural bars active conduct on part the of the . . defendants. . decree does not [T]he speak in of relationships terms but, rather, general, prohibits certain behavior, and in doing prohibits so some but all economic interrelationship between Armour and the retail food business. In ... short, we do not find in the decree a structural separation such as the Government claims. ... decree gaps [T]he leaves in- consistent with complete so separation.” S.,U. at 678, 680. (Emphasis supplied.)
Similarly, in both Atlantic Refining Hughes Court first undertook to determine whether the language of the decree could support urged construction First, consent decree. brought it could have enjoin a new action to acquisition Clayton under 7 of the Second, Act. § “if the Gov- changed ernment believed that conditions warranted further relief against acquisition, sought it could have modification of the Meat Packers S., Decree itself.” 402 U. Respondent 674r-675 argues that present these alternatives are also case, in this and that it is unnecessary adopt therefore urged construction of the order by the However, possible Government. availability of other obtaining against means of sanctions acquisitions challenged preclude here cannot obtaining Government from whatever penalties may proper for violations of the consent order. In could not. it concluded the Government either Hughes provided decree Hughes, or commit corporation in a certain of his stock dispose “until trustee [he] to a of his stock voting rights n. U. atS., holdings of stock.” sold his shall have wording “A reading said: either/or Court Hughes was to believe persons most make would (cid:127) Hughes alternatives. different of two a choice have towas 'alternative’ first if the no choice have *11 was also 'alternative’ the second and sell the stock supplied.) Id., (Emphasis at 356. the stock.” sell could decree the consent concluded, the Court Therefore, require desired, to the Government as not be construed, his stock. Hughes to sell con- that the concluded Refining, the Court
In Atlantic con- was “strained Government urged by the struction the “nor- with S., 22, U. at inconsistent struction,” It language used. the id., at meaning,” mal meaning the had intended parties if that the commented of less hardly can think Government, “one urged by the Id., 22. at language.” appropriate concluding cases, it In three all these after the support fairly could read, language, that the the Court turned that construction Government’s inconsistent reading was restrictive contention antitrust laws and of the of the decree purposes with the the Court context that It was violated. assertedly normally compro- are consent decrees because that, noted might up something they give parties in which mises rights litigation, their and litigation waive have won of a “purpose” con- to search inappropriate it decree basis. it on “[T]he construe decree sent purpose; rather have a cannot said itself and the other, to each opposed purposes, generally have opposing much of those embodies as decree resultant purposes as the respective parties have the bargaining power and skill to . . . achieve. [T]he instrument must be construed as it is written, and not as it might have been written had plaintiff established his factual claims legal theories in litigation.” Armour, 402 U. S., at 681-682. Thus, the basic import Armour, Atlantic Refining, Hughes is that, since consent de- crees and orders have many of the attributes of ordinary contracts,10 they should be construed basically as con- 9 Hughes In v. States, United 342 U. S. (1952), the Court like rejected wise an invitation to further the “purposes” asserted of the by consent decree approving interpretation an “language cannot support.” Id., at 356. It noted that might evidence show that the requirement sale justified, regarded but it urged construction by the Government effecting “a substantial modification original Id., decree.” (Emphasis 357. supplied.) While it be lieved this modification could be had after a proper hearing proving the need for such applicable modification under standards, it would not sanction such guise modification in the construing a consent Id., decree. at 357-358. Similarly, in United States v. Refining Atlantic Co., 360 U. S. (1959), while the agreed Court the interpretation offered might Government better effectuate *12 purposes of the assertedly acts violated, this “does not warrant our substantially changing the terms of a decree parties to which the consented any adjudication without of the issues. agree And we with the District accepting Court that present Government's in terpretation just would do Id., that.” at (Emphasis 23. supplied.) Again, the Court noted might modification be appropriate, but disguised modification as construction was Liquid not. See also Car Corp. bonic v. States, United 350 U. S. (1955), 869 rev’g 123 Supp. (EDNY F. 653 1954); United States v. International Har Co., vester 274 (1927). U. 693 10Consent decrees and orders have both attributes of contracts judicial and of or, decrees in case, this administrative orders. While they by are arrived at negotiation parties between the and often admit no law, they violation of are motivated pend threatened or ing litigation and approved must be by the court or administrative agency. Compare United States v. Co.,& U. S. Swift the Govern- legislation to the reference tracts, without proved but enforce never sought originally ment litigation. through applicable Hughes, Armour, from differs case note that
We In respect. important a most Refining in Atlantic not of whether question cases of those each decision; question for violated decree consent committed to have was found respondent case in this manner us affects issue before and the violations, Thus, found. violation for each penalties assigning there is no penalty, to some subject is respondent Refining, and Armour, Atlantic was in as there possibility behavior penalized be for will respondent Hughes that four cor- order “within its by the all at prohibited not in the Nothing at 682. Armour, S., U. ners,” agreed although suggests order consent “acquiring,” they from refrain would that Continental other- would which penalties limit agreed to also from that refrain did not if Continental apply wise exceedingly be would agreement an Such behavior. were prohibitions whatever undermine it would odd, it supra, is II, Part seen, we have As imposed. (l) violation of (1) and 45 under §§ possible quite would “acquiring” against adjudicated an FTC Armour clear that It daily penalties. subject merely we are because result a different require parties reached order, since a consent with dealing applied in to be concerning penalties all at agreement no order. violation case supra, text, 235- Armour language cited (1932), with are treated as character, decrees consent this dual Because 236. Jinkinson, others. but not for See purposes for some contracts 673, 675-676 Decrees, 9 Bull. Antitrust of Consent Negotiation *13 Review, 72 Annual Antitrust Col. Twenty-fourth Handler, (1964); (1972). 1, 33-34 L. Rev.
We need not, however, determine whether 21 (l) §§ (l) permit imposition of daily penalties even if the consent order must be read respondent as main- tains proscribe only to the initial act of acquisition. For we agree with the Government the order “as it is written” does support an interpretation the act of acquisition continues until the assets acquired are disgorged.
IV Since a consent decree or order is be construed for enforcement purposes basically as a contract, reliance upon certain aids construction proper, with any other contract. Such aids include the circumstances sur- rounding the formation of the consent order, any techni- cal meaning words may used have had to the parties, and any other documents expressly incorporated in the de- cree.11 Such reliance does not in any way depart from the “four corners” rule of Armour.
In this case, the consent part order was of an agree- ment between parties entitled “Agreement Contain- ing Consent Order to Divest and to Cease and Desist.” The agreement incorporates by reference an “appendix,” which sets forth at length background leading complaint and the proposed order. In addition, agreement provides that complaint may “[t]he be used in construing the terms of the order.” Since parties' themselves so provided, both appendix and the com- plaint are proper aids to the construction of the order and of the agreement part.12 of which it is 11“Assuming that a consent decree is to be interpreted aas contract, it would seem to follow that evidence events surrounding negotiation its tending ambiguous explain terms would admissible supra, n. Handler, evidence.” 23at n. 148. 12Respondent argues that even complaint if the appendix can be used as aids to construction, they show that could use language broader than in the order itself, making *14 pursued had that Continental alleged complaint The bakeries various acquiring of practice continuous “a supplied), (emphasis States” the United throughout com- independent as thereby “eliminated ... were which distribution sale and manufacture, in the factors petitive “acquiring” If the . .” . . rolls bread-type and of bread incorporated complaint the the order and which against transaction single the to limited were directed in were it com- another rights obtained Continental which by complaint which the the effect why see it hard to pany, is oc- necessarily would acquisitions from followed alleged acquired companies the had sold Continental For if cur. other, to completed were transactions initial as as the soon been have not bakeries the companies, independent factors.” competitive independent as ... “eliminated conclusion supports the also appendix to Reference ini- both means the order used in “acquiring” that an inde- rights Continental granting tial transaction rights of those maintaining bakery and pendent of “One notes: appendix resale. without tendency industry is baking in the problems principal of growth continuous and the concentration towards ac- acquisition. Such through companies baking major concentration tendency towards growth quisitional means companies large a few of hands in the places order is If this .... competition pattern set the controlling. significant and highly actually language used limited a strict approve reasoning to similar has used Appeals Court One collateral accompanied a decree which reading of consent Cory., F. 2d Rugby Fabrics Artvale, v. Inc. agreement. applied reasoning erroneous as However, 1962). (CA2 agreement include both in one Where this ease. pro- order, also explanation an order a consent order, it to construe be used complaint is to vide interpretations that, as to at least logical to conclude seems documents itself, the collateral by the words precluded the order. meaning the words give be used and should can adopted by the Commission, the respondent’s alleged con- practice tinuous of acquiring companies baking and sell- ing bread and bread-type rolls will be brought to halt. . . .” (Emphasis supplied.) It is apparent the “acquisitional growth” referred to in the appendix cannot be achieved merely by discrete transactions with- out reference to what is done with the assets obtained *15 after those transactions. If Continental were merely a speculator in baking companies, buying assets in them and selling them soon thereafter, it would not necessarily create “through acquisition” a “tendency towards con- centration” giving it the “means to set pattern the of com- petition.” Thus, “acquiring” in both the appendix and the order, parts of the same agreement, must mean ob- taining and retaining assets, not merely the former.
Even without the aid of these explanatory documents properly usable to construe this particular order, we would have to conclude that “acquiring” as used in an antitrust decree or order continues until the ob- assets tained are disgorged. As the foregoing analysis of the ancillary documents here illustrates, “acquiring” and related words do not, as respondent insists, unambigu- ously refer to a single transaction. Rather, aas matter of ordinary usage they can, and in the antitrust context they do, encompass the continuing act of obtaining cer- tain rights and treating them as one’s own. We must assume that here used the words with the specialized meaning they have in the antitrust field, since they were composing a legal document in settlement of an antitrust complaint.
We need not go beyond the Clayton Act itself to con- clude that “acquisition” as used in § 7 of the Act means holding as well as obtaining assets. The Act provides that the if FTC, it finds a violation of § 7, can require a party to “divest itself of the stock, or other share capital, or assets, held . .. contrary to provisions of [§ 7].”
241 supplied.) Thus, (Emphasis (b). §21 C. U. “acquire” terms regard Act did framers banning unambiguously “acquisition” and they read rather, acquisition; transaction initial hold- against ban to include “acquisition” against ban assets. ing certain understanding. the same reflect opinions
This Court’s Co., U. S. Meat FTC v. Western example, For based order an FTC discussing Court, (1926), ques- here order “The said: 7, of § violation on a held actually respondent when entered tioned The Commission’s law. contrary to stock owned ac- continuance prevent duty unlawful there- desist it cease directing that tion an hold.” right no it had of what itself divest from Arrow- also See supplied.) (Emphasis Id., at 559. 596- FTC, U. S. Co. v. Elec. Hegeman Hart & (1934). *16 v. States United in opinion this Court’s Similarly, conclusion the upon rests (1957), Pont, 586 353 U. S. Du 7§of the context and in mean, can “acquisition” of purchase the both mean, Act does Clayton of those retention and company another in rights rights. based 1949 but in brought Pont, was a case §
In Du It was 1917-1919. Pont Du stock purchase aon this maintain not could Government “the argued acqui- applicable 7 is§ 1949 because action use subsequent or holding to the of stock sition was Du Pont Thus, at 596-597. U. S., of stock.” as 713 much in § used “acquire” interpret seeking Pont ease the Du time paragraph at of § The first provided: brought, directly acquire, shall engaged in commerce corporation “No share or other stock any part or indirectly, whole or respondent here seeks to read "acquiring” in the consent decree.
The Court in Du Pont rejected interpretation urged upon it. Instead, the Court held that there ais violation “any when the acquisition time ripen threatens to into prohibited effect. ... accomplish To congressional aim, the may Government proceed any at time that an acquisition may be said with reasonable probability to contain a threat may it lead ato restraint com- merce or tend to create a monopoly of a line of com- Id., merce.” Thus, 597. there can be a violation at some later time even if there clearly no violation— no realistic threat of restraint of commerce or creation of a monopoly the time of the initial acts of acquisi- —at tion. Clearly, can result obtain only because “acquisition” under 7§ is anot discrete transaction but a status which continues until the transaction is undone.14 capital of another corporation engaged also in commerce, where the effect of acquisition such may substantially be to competition lessen between corporation acquired whose stock is so corpora- making tion the acquisition, or to restrain such any commerce in section or community, or tend to create a monopoly any line of commerce.” (1946 15 U. S. C. ed.). § The statute was amended in provide: 1950 to corporation “No engaged in commerce acquire, shall directly or indirectly, the any whole or part of the stock other capital share corporation no subject jurisdiction to the of the Federal Trade acquire Commission shall any part whole or of the assets of another corporation engaged also in commerce, any where in line commerce in section of the country, the acquisi- effect of such may tion substantially to lessen competition, or to tend to create monopoly.” 15 U. C.S. 18.§ *17 change While the in wording the substantial, suggests no reason why itself the meaning “acquire” of “acquisition” and should differ in the two versions. Du Pont was years decided several after the and amendments makes not slightest the suggestion that the pertinent result here would not obtain under the new version. 14The in dissent Du Pont recognized that import this was the of “acquiring” written,” it is “as the order under Thus, the and assets obtaining of first act mean both the must otherwise conclude To those assets. of use and retention language, English the flexibility of the ignore tobe and the order surrounding circumstances as well And, operating. were in which the context and obtaining of act continuing bans the order since a “con- order is of a violation assets, certain retaining daily penalties obey” it, neglect failure tinuing (J). and 45 (J) 21§§C. 15 U. S. under imposed may be concluding that in erred Appeals Court Because we reverse imposed, not be could daily penalties opinion. with this consistent proceedings remand ordered. It is so Justice, Chief The with whom Stewart, Mr. Justice Rehwquist join, Justice Powell, and Mr. Mr. Justice dissenting. cor- made Continental, predecessor, respondent's
The consent a 1962 in violation acquisitions porate “ac- from Continental that, prohibited part, pertinent in Government companies. baking described quiring” (1957) 586, 619-621 disagreed. 353 U. S. holding, it which with dissenting). J., (Burton, the status recognized also have courts federal lower Some v. General Gottesman See proper one. acquisition is approach to acquisi very 1969): (CA2 “[T]he 956, 965 2d Corp., 414 F. Motors violative found which control potential position of tion and through 1961.... continued Du Pont] Clayton [in as of Act in General as stockholder status Pont’s was du unlawful [W]hat (Emphasis divestiture.” until continued Motors, that status 2d 555-556 Schine, F. v. States United also supplied.) See violation conditions maintenance 1958): is the (CA2 “[I]t things] which is among other acquisitions, [prohibiting the decree con Schine Therefore, court respondents.” against the charge prior occurred transactions initial irrelevant cluded, it was period. statutory limitations to the *18 sought to impose daily penalties upon Continental for the continued holding of those assets. The Government’s the- ory was that daily penalties were appropriate because Continental’s retention of the assets was a “continuing failure neglect to obey a final order,” within the mean- ing of the relevant penalties civil statutes, 15 U. S. C. §§ 21 (£), 45 (l).1 The issue in this case is whether the consent order can be so construed.2 The District Court and the Court of Appeals ruled that the consent order pro- hibited only the distinct acts of “acquiring” the bakeries, not the “retaining” or the “holding” of the assets after acquisition. The Court of Appeals indicated that an order to divest would have been an appropriate remedy for the unlawful acquisitions, but held that the retention of the assets was not in itself a continuing refusal to obey the consent order such as would support the sanction of daily penalties. I think that under our controlling precedents, the District Court and-the Court of Appeals were clearly correct.
The governing rule of construction, and its rationale,
were stated plainly and aptly by this Court
in United
States v. Armour & Co.,
right litigate the issues involved in the case and thus save themselves the time, expense, and in- evitable risk of litigation. Naturally, the agreement reached normally embodies a compromise; in ex- change for the saving of cost and elimination of risk, provisions These are set out in full in the Court's opinion, ante, at 228-229, nn. 6. 2For the reasons stated the Court, agree I the other issues that respondent seeks to raise in this case need not and should not be addressed. have might they something up give each Thus litigation. with proceeded they had
won *19 purpose; a have to said be cannot itself decree the opposed generally purposes, have parties the rather as embodies decree resultant the and other, each to respective the as purposes opposing those of much to skill power bargaining the have parties consent scope reasons, the For these of achieve. corners, and its within discerned be must four decree purposes satisfy the might what to not reference defendant the Because it. to the one of of the litigate right his waived decree, by the has, Due by the himto guaranteed right raised, issues he has which upon conditions the Clause, Process instru- the respected, be must waiver given and not as written, it is construed be must ment estab- plaintiff the had written been have might it litiga- theories legal claims factual his lished omitted.) footnote added; (Emphasis tion.” U. Co., 360 Refining Atlantic v. States United also See (1952). S. 353 States, 342 U. v. United Hughes (1959); the standard straightforward of application The order The task. a difficult hardly here order consent forbidden the of “acquiring” only the literally prohibits vio- consummated, the acquisition an Once assets. of retention the on A prohibition complete. lation order. provision any found cannot assets negotiated agreement compromise ais Because we are liability, antitrust adjudication without unambiguous construe Armour under liberty argument or conjecture light of in the “acquiring” term We parties. of decree “purposes” about Gov- Armour, conclude with not, consistent may aas prohibit order should intended ernment acquired unlawfully retention continuing offense assets, when the Government did not insist upon language objectively manifesting that intention. Nor may we conclude that Continental agreed to restrict its future business conduct or become subject penalties in any manner not clearly delineated in the order itself. The provisions of the order are something less than the Gov- ernment could have sought and might have obtained. rule construction of consent decrees, however, depends, not upon an expedient construct of what parties are thought to ha-ve intended, but upon the ex- plicit provisions to which the parties have agreed.
After giving a casual nod in the direction of the stand- ard of construction required by Armour, the Court em- barks upon a laborious search for “purposes” that are *20 “incorporated in” the consent order in order to change the meaning of the unambiguous term “acquiring.” We are led through the antecedent complaint, through an appendix to the consent order, through the intricacies of an opinion of this Court construing the term “acquisi- tion” in light of the policies underlying the Clayton Act, and through the legislative history of the statutory pro- visions that impose daily penalties for continuing refusals to obey Commission orders. Drawing upon these dis- parate sources, the Court determines that the consent order, despite its literal language, must be construed to prohibit not only the proscribed acquisitions but also the “retention” of unlawfully acquired assets.3 One is re- 3Upon this premise, the Court proceeds then to hold that conjured-up “continuing offense” of retaining these assets is a “con tinuing neglect failure or obey to a final order” within the meaning of the daily-penalty statutes. 15 U. S. C. (l) §§21 and (l). But even if the consent order could be correctly read prohibit to not only the acquisition of the described assets but also the retention of assets unlawfully acquired, it is far from crystal clear that the “continuing offense” retaining the assets would be a “continuing neglect failure or obey to a final order” within the meaning of the Grier by Mr. Justice made once an observation minded re- that it fact “[T]he context: different in a somewhat my argument an labored ingenious so quired . .. seems a construction such to vindicate brother learned construction evidence conclusive itself, me, to Bridge, 3 Binghamton The it.” given not be should opinion). (dissenting Wall. rule a new to proclaim is today does Court
What totally at decrees orders for consent of construction decisions: our previous odds with be construed is to or order decree consent “Since a reli- contract, basically as purposes enforcement proper, is construction aids to certain upon ance cir- include aids Such any other contract. with the consent formation surrounding the cumstances have may used words meaning any technical order, ex- documents other parties, had Ante, 238. decree.” in the incorporated pressly not cites the Court for which approach, This novel contrary directly precedent, supporting single into inquiry an For Armour. rule of “four corners” rule what precisely decree is consent of a purpose must decree aof consent scope “[T]he forecloses: by reference corners, four its within discerned of one purposes satisfy might to what indulges today thus Court at 682. 402 U. it.” S., *21 preclude: sought Armour that exercise the precisely in strictly con- must Penalty provisions statutes. daily-penalty give must provisions requires that such process strued, due extraordinary sanc- their invokes that conduct warning the fair legisla- The 399. Pennsylvania, 382 U. v. Giaccio tion. Cf. the Court’s in statutes, as recited daily-penalty history of the tive precisely sought remedied to be mischief that the opinion, shows “continuing language: a Congress addressed its to which mischief the example, the refusal order,” as, for obey final a neglect to failure been entered. has of divestiture specific a after to divest a wide-ranging search for a “purpose” in a decree that, as explained in Armour, cannot be said to have a purpose except to delineate explicitly the terms provisions the settlement parties that the negotiated.4
Before straining pull the Government’s chestnuts fire, out of the the Court should count with greater care the costs of abandoning the rule in stated Armour. Until today, any consent decree could have confi- dence that its explicit terms alone would control judicial construction of its prohibitory language. Now, otherwise unambiguous terms aof consent decree may be construed in light such considerations as the ante- 4Whatever utility of extrinsic aids in construing typical a commercial contract, technique is singularly inappropriate in an area where certainty prohibition is necessary where, Armour clear, makes there can be found guiding no purpose under lying negotiated decree. Moreover, assuming, even arguendo, that such might aids be admissible to construe borderline issues of application example, particular —for whether a acquired company engaged production in the of "bread-type” rolls within the meaning of the consent order —such aids must not be impose used to wholly separate prohibitory requirement upon a company that consented to be bound only by plain language of the consent order. This is demonstrably not a caso of ambiguity or of border line construction. case, It is a instead, where the Court has used extrinsic aids to alter is, a term that on face, its wholly unambiguous. The Court upon relies the decision in United Pont, States v. Du U. S. proposition "acquire” term in a consent order is a term of art prohibits a “status which continues until the transaction is undone.” Ante, at 242. But the Court’s reliance on the policy considerations discussed the Du Pont opinion wholly inconsistent with the Armour rule. opinion The in United States v. Du not, Pont does event, render the term “acquiring” in a consent decree a term of art. That case addressed positive reach of Clayton Act under certain circumstances. explain Court fails to how opinion its there has served to trans- form plain “acquiring” term into a “term of art” that common understanding have meaning the Court today ascribes to it.
249 decisions, antitrust of “meaning” complaint, cedent provision statutory underlie to said policies and the reliance reasoned Certainty and daily penalties. non of the consent orders qua sine been the always have com- the antitrust of to about terminate 80% 70% But Department.5 by the Justice filed that are plaints certainty longer nowill of kind today’s decision after power on the limit apparent no bewill For there exist. an order of language plain to alter judiciary and order surrounding “circumstances light Ante, operating.” were in which the context fails to leave decree consent negotiated If a at 243. necessary result firmly settled, clearly dispute be violations will with antitrust charged those be that will to insist apt cases and more their settle inclined less Today’s costly litigation. time-consuming upon for the enforce- difficulties serious pose will also decision For, decrees. consent and all future existing all ment validity of a observed, “the once Jackson Mr. Justice 6 The it gores.” ox on whose depend does doctrine of construction techniques purpose-oriented same this consent order up expand serves today the Court to be availed expected can be its terms beyond who will seek orders of consent violators alleged language plain thereby to evade narrow prohibition. an that “if violation concludes
The Court single treated as assets were 'acquiring’ prohibiting provisions penalty effect of any deterrent violation, be penalty would undermined, and the entirely which could violation upon a minor tax into a converted Ante, perpetrator.” benefits large financial reap 5 (1973). Rev. Note, 73 Col. L. (dissenting Co., Abrasive U. S. v. Simonds Wells opinion).
at 232. This is not merely overstatement; it is incorrect. Both the parties agree, and the Court of Appeals held, that an order to divest unlawfully acquired assets is an appropriate remedy for violation of a consent order bar- ring acquisition. Moreover, the Armour rule of con- struction would not impair in any way the power of the Government, in future cases, to obtain through negotia- tions consent orders that contain a clear and explicit description of the conduct that prohibited.7
In my view, the Court’s departure from precedent threatens to retard significantly the effective use of con- sent decrees in the administration of the antitrust laws. I would adhere to the rule stated in Armour that “the scope of a consent decree must be discerned within its four corners, and not by might what reference satisfy the purposes one the parties to it.” 402 U. atS., 682 (emphasis added). Applying this I standard, would affirm the considered judgments of the District Court and the Court of Appeals. 7The Government informs us that May as of 1974 there were outstanding 54 consent orders with language prohibits acquiring certain assets but does expressly prohibit the retaining of these Court, assets. This need not assume flagrant violations of con sent orders will occur or that the remedies of divestiture and fine single offense of acquisition will not adequately deter
unlawful conduct.