United States v. Paramount Pictures, Inc.

PICTURES, v. UNITED STATES PARAMOUNT INC. et al.

NO. 79.

Argued February 9-11, 1948. May 3, 1948. Decided

COCD Attorney Attorney General Clark and Assistant Gen- argued eral Sonnett the cause for the United States 79, Wright No. and L. Robert for the United States Perlman, Sonnett, Nos. Solicitor Mr. 80-86. General Kimble, Wright, L. Stanley Silverberg Mr. Kenneth M. and Philip Marcus were on the briefs. argued Incorpo-

John W. the cause for Davis Loew’s rated, appellant No. 80. With him the brief were on Rubin, J. Robert S. Hazard Jr. Gillespie, Benjamin and Melniker. argued

William J. Donovan the cause for the Radio- Keith-Orpheum Corp. al., et appellants in No. 80. With Leisure, him on brief George were S. Ralstone R. Irvine, Youngman Roy Gordon E. and W. McDonald. M.

Joseph argued Proskauer the cause for Warner Bros. Pictures, al., appellants Inc. et him No. 80. With on the brief were Robert W. Perkins Harold Berkowitz. Byrnes

James F. argued cause for the Twentieth Film Century-Fox Corp. appellants et al., in No. 80. Koegel, E. John F. Cas- him brief were Otto With on the W. Pride. key and Frederick R. Para- Seymour argued the cause for

Whitney North With al., appellants et No. 81. Pictures, Inc. mount and Albert C. Phillips were Louis him on the brief Bickford. Pic- the cause for Columbia argued

Louis D. Frohlich him on appellants in No. 82. With Corp. al., tures et Arthur Schwartz. the brief was H. for the United

George Raftery argued A. cause him on the in No. 83. With Corp., appellant Artists Arthur F. Driscoll. Raftery C. brief were Edward T. was also of counsel. Newman Lawler for Universal argued Turner Cooke cause

Thomas With him al., appellants in No. 84. Co., Pictures Inc. et Frank W. Ford. Adolph on the brief were Schimel and the American argued Thurman Arnold the cause for al., appellants et No. 85. Association, Theatres Inc. Milton W. him on the Paul Williams and With brief were Freeman. Barton, argued Jr.

John G. Jackson and Robert T. them al., appellants in No. 86. With cause for Allred et George B. Brooks. on the brief the United States supporting

Briefs of amici curiae the Conference Myers filed Abram F. for No. 79 were Ernst, L. Associations; Morris Independent Exhibitors’ Society of Loyd Wright and M. for the James Barnes M. Producers; Herman Independent Motion Picture Levy independent for members of the Motion Picture Sherman, and Harold J. America; Theatre Owners of Fly and C. Dickerman Berge, Wendell James Lawrence American Civil Liberties Union. Williams 140 Douglas opinion

Mr. delivered Justice Court. judgment appeal1 are here on from

These cases three-judge Court2 that the defendants holding District 209, Act, 2 26 Stat. had violated of the Sherman § § and amended, 1, 2, granting and 693, 50 Stat. S. C. §§ U. 70 F. Supp. 323; 66 F. injunction and other relief. Supp. 53. under §

The suit was instituted the United States prevent violations of of the Sherman Act to restrain and Para- groups: (1) The fall into it. defendants three Pictures, Inc., Incorporated, mount Radio-Keith- Loew’s, Corporation, Pictures, Warner Bros. Orpheum Inc., Century-Fox produce Film which Corporation, Twentieth af- respective pictures, motion and their subsidiaries and exhibit films. These are filiates which distribute major known as the five defendants or exhibitor-defend- (2) Corporation ants. Columbia Pictures and Universal produce and their Corporation, pictures, motion (3) subsidiaries which distribute films. United Artists only in distribution Corporation, engaged which is pictures. majors, through of motion The five their sub- theatres; affiliates, sidiaries or own or control other do not. defendants complaint producer defendants charged

The monopolized and had attempted monopolize had production pictures. of motion The District Court found and that contrary finding challenged to the here. defendants, that all complaint charged as dis- tributors, conspired monopolize had to restrain 823, February 11, 1903, Expediting 2 of the Act of 32 Stat.

1 Sec. Code, amended, 29, as 15 S. C. and 238 of the Judicial as U. § § 938, February 13, 1925, 936, 28 by the Act of 43 Stat. amended U. C. 345. S. § 2 pursuant provisions of the Act The court was convened 198, April 6, 1942, 199, 15 56 Stat. U. S. C. 28.§ in the interstate trade monopolized and had restrained specific practices and distribution exhibition films five charged It that the shortly we will also which relate. restrain conspiracy in a major engaged had defendants monopolized, had restrained and and and monopolize, pictures of motion in the exhibition interstate trade that country. charged It larger cities of the of the most and distributing, producing, vertical combination major de- of the five pictures by motion each exhibiting that charged 1 and of the Act. § violated § fendants con- had into various entered distributor-defendant each restrained unreasonably with exhibitors tracts was had.3 joined; and trial trade. Issue Fixing. Price (1) First. Restraint of Trade — in the distribution film sold to an exhibitor No copy- under to exhibit pictures. right of motion Court found The District right is licensed. minimum fixed issued they in the licenses

defendants charge, agreed prices which the exhibitors admission amount a flat film was of the whether the rental It found substan- receipts. percentage or had been established prices minimum tially uniform prices Minimum were all defendants. the licenses which were franchises or agreements in master established as distributors various defendants made between joint operat- exhibitors various defendants with other majors each by the five agreements made ing undertaken. settlement were trial, negotiations for a Before major defendants against the five result, decree a consent As a no contained 20, consent decree 1940. The November was entered law, adjudicated issue of fact no of law and of violation admission re The decree of action. complaint stated a cause except that the three-year trial right the end of a at to the United States served complaint. After prayed for in the amended the relief period to seek for trial moved three-year period the United States end of the against the defendants. all opera- covering owners theatre independent with mini- later contracts By these theatres.4

tion of certain for dozens often fixed prices were mum admission in a area given particular a defendant by theatres owned fixed prices Minimum were States. United The other major defendants. of the five of each licenses in licenses requirement the same made three defendants stop do not We to the exhibitor-defendants. granted adequately findings. They on these to elaborate opinion. in its See 66 F. the District Court detailed 33^339. Supp. con- price-fixing two Court found

The District all de- horizontal one between spiracies existed —a a between each distributor-defend- ; fendants vertical one express on The latter was based ant and its licensees. former was plainly was established. The agreements and price-fixing disclosed pattern from the inferred for it adequate think foundation We there record. express necessary agreement to find too. It is a conspiracy. enough find a concert order to contemplated and that the defendants conformed action is States, Interstate Circuit United v. arrangement. to the Corp., United States v. Masonite 226-227; 208, 306 U. S. That 265, S. 275. was shown here. U. phase of the case the main attack is on the On this enjoins the defendants and their affili- which decree agreement licensing agreement is a or “blanket deal” A master usually theatres, covering of features a number of the exhibition . comprising a circuit. agree- licensing agreement, licensing or series of

A franchise transaction, for ments, part of the same in effect entered into as picture covering one season and the exhibition more than motion during period of the one distributor the entire features released agreement. distributor, producer, independent in these cases means a

An as used exhibitor, requires, is not defendant in the as the context subsidiary action, or affiliate of a defendant. or a ates from granting any license, except to their own theatres, prices which minimum admission to theatre are fixed in any by any manner or means.

argument runs as follows: United v. General Elec- States Co., tric 272 476, U. S. held that an a patent owner of could, without violating Act, the Sherman grant license vend, manufacture and and fix price could at the the patented licensee could sell the pointed article. It is out that defendants do exhibitors, not sell the films only but license them and Copyright (35 that the Act 1075, 1088, Stat. 17 1), patent U. S. C. the § like stat- utes, grants the owner exclusive And it is rights.5 argued patentee that if the fix price can the at which his patented article, licensee sell may the the owner of the copyright should be allowed the privilege. same that maintained such privilege protect is essential the value of copyrighted films.

We start, course, premise from the so far Sherman Act is concerned, a price-fixing combination is illegal Co., per Socony-Vacuum se. United States v. Oil 150; U. S. United States v. Corporation, Masonite supra. We recently Co., held Gypsum United States v. 364, 400, 333 U. S. patentees that even regiment could not industry by entire containing licenses price-fixing agreements. What was said adequate there is to bar defendants, through their conspiracy, horizontal fix- from ing prices for the exhibition of films the movie industry. Certainly rights of the copyright greater owner are no patentee. than those of the

Nor can result be different when we come to the conspiracy vertical between each distributor-defendant and his licensees. The District Court stated in find- its ings:

“In agreeing stipulated to maintain a minimum price, admission thereby each exhibitor consents to 12, See note infra. compete price level which it will minimum at same distributor other licensees against not. on the same run or they whether exhibit be- through separate contracts effect is that total price and struc- the distributor licensees tween its ability regulates licensees’ ture is erected which prices.” compete another in admission against one We us to be incontestable. consequence That seems to Co., p. Gypsum supra, 401, States v. stated United patentee his flow to the licensees “The rewards which suppression competition regula- through from the reasonably normally industry tion of an are not patentee’s adapted pecuniary to secure reward copy- The same true of the rewards of the monopoly.” present For their in the case. right owners and licensees part general plan but a here too the licenses are competition. The where a distributor suppress to case a charged by single independ- fixes prices admission in being other exhibitor, ent no or exhibitors licensees Dis- wholly academic, to be as the contemplation, seems plain pointed is, therefore, trict out. that Court Co., applied v. Electric supra, United States General patent cases, in the affords no haven the defendants copyright may in this For a no more be used than case. competition patent deter between rivals ex- a v. ploitation of their licenses. See Interstate Circuit States, supra, p. United 230.

(2) and Clearances Runs. designed protect particular a

Clearances are run filma a The District against subsequent run.6 Court time, stipulated period usually A is in license con clearance tracts, elapse which must runs within a between of the same feature particular specified area theatres. area, given

Runs successive exhibitions of a first- feature a being being area, next run the first exhibition in that second-run used clearance the distributor-defendants that all of found different in several were stated they that provisions be- period given in terms of a in combinations: ways or prices of admission runs; in terms designated tween period given a theatres; in terms of by competing charged in terms of theatres; named specifically over of clearance towns; areas or specified over days’ clearance many so other distributors. as fixed of clearances or in terms that below maintained of Justice Department Act. per se under the Sherman are unlawful clearances for the consider, not we need question that is But that conclusion ruled otherwise Court District was justification In its view their here. challenged not exhibitor that they give assurance in the found film to show the competitor will not license distributor that so soon thereafter same time or at the either greatly the run will be from expected income exhibitor’s in- protect when used to A clearance diminished. reasonable, the view the exhibitor terest of court, to area or dura- unduly extended as not when although clearances Thus the court concluded tion. fix prices, they do admission indirectly affect might trade restraints of reasonable they may be them and that Act. under the Sherman whether determining held that

The District Court rele- factors are following unreasonable, clearance vant: involved, theatres prices of the

(1) The admission exhibitors; by the as set in- of the theatres and location

(2) The character ap- entertainment, type of including size, volved, facilities, etc.; transit pointments, in different on, exhibitions include successive subsequent, and so owner- may a common though be under theatres, such theatres even management. ship or in- operation theatres

(3) policy The features, showing gift as the of double volved, such lotter- premiums, tickets, cut-rate nights, give-aways, ies, etc.; paid by rental

(4) The terms and license fees by the involved and the revenues derived theatres theatres; distributor-defendant from such involved (5) The extent to which theatres patronage; with each other for compete is affiliated The fact that a involved (6) theatre independent with with defendant-distributor or disregarded; and circuit of theatres should be theatres (7) There should be no clearance between competition. not in substantial light the evidence these standards reviewed many granted the clearances concluded stop unreasonable. We do to retrace defendants were Dis- ample show, those The as steps. evidence Supp. pp. see 66 343- plainly demonstrated, trict Court F. competi- no relation to the 346, many clearances had The justify tive which alone could them.7 factors had, indeed, acquired were in vogue clearances which applicable and were made fixed and uniform character special regard without to the circumstances situations re- necessary to them reasonable which are sustain ample support The straints trade. evidence 7Thus the District Court found: granted sell to all

“Some licenses clearance to theatres which control, might own, lease, party exhibitor to the contract thereafter vicinity manage, against operate all theatres the immediate opened. purpose theatre thereafter erected or exhibitor’s agreements to fix the type of this of clearance run and clearance any opened ap- status of theatre thereafter not on the basis of its location, normally size, competitive pointments, and other features upon entering determination, into such but rather the sole basis operated by party agreement.” whether were the exhibitor it either Court that the defendants finding of the District system in uniform clearances participated evolving this its That in it and so furthered existence. acquiesced or phase of price-fixing like the evidence on the evidence, support finding to case, adequate is therefore unreasonable conspiracy by imposing to restrain trade clearances. and their affili- enjoined

The District Court defendants any with or with exhibitors agreeing ates from each other clearances, or from system distributors to maintain a or theatres not in substantial any clearance between granting any granting enforcing or from clearance competition, competition with the the- theatres substantial against what for exhibition excess of receiving atre the license in the run protect the licensee reasonably necessary is plainly relief was findings In view of this granted. warranted. provision ask this

Some the defendants modified) to allow licensors (or, necessary, if construed what take into consideration clearances to granting a fair return the licensor. reasonably necessary for allowed, If that were then reject suggestion. We easy have an method of would the exhibitor-defendants consequences alive at least some of keeping they they launched. For conspiracy which effective by other distributors justify granted then clearances could competitive in terms of the in favor of their theatres and at the same time theatres, of those requirements independents in impose upon they restrictions justify the film rental as necessity protecting their terms of the weapon leave in the potent That too licensor. unlawful has proclivity whose conduct hands of those long so plainly should not be allowed so marked. been theatres. For its bald- own as the exhibitor-defendants defendants no less than in the hands of the est terms it is way competition others to restrict power this them. In the of by setting deemed most desirable by of of a clearance only measure reasonableness case the special needs of the licensee Sherman Act standards is the competitive it affords. advantages the applicable be same restrictions would to Whether the party conspiracy a had not a such a producer who been to not question a we do reach. provision part to further of Objection is made this stating any pro decree that “Whenever clearance the provisions as not under the legal vision attacked this upon shall the distributor decree, the burden to sustain provision justi think legality the thereof.” We that price along fixing have been used with fied. Clearances the suppress competition to with theatres exhibitor- favored exhibitors. The Dis defendants and with other Court have eliminated trict could therefore clearances period time, even completely though, for a substantial they illegal per equity not se. For thought, as it were uproot parts illegal power has the all scheme — rid as as the invalid —in the trade the valid well order conspiracy. States or of all taint of the United commerce Co., 707, v. & Lomb S. 724. The court Bausch U. certainly step making then the lesser them could take prima jade invalid. we do not rest on that alone. But said, justification have the for clearances only As we special in terms the needs setting of this case is competitive advantages they afford. of the licensee for showing on distributor the burden of their place To party best place is to it on one reasonableness competitive their who position to evaluate effects. Those proclivity a marked for unlawful con have shown such complain they position carry that duct are no showing their future clearances come burden Cf. States v. Crescent Amuse within law. United Co., 173, 188. S. ment U. Pooling

(3) Agreements; Ownership. Joint had The District Court found the exhibitor-defendants agreements with each other and their affiliates of two or them, normally competitive, theatres more of operated unit, managed by joint were or committee exhibitors, profits being one of the ac- shared cording prearranged percentages. agree- Some of these provided parties might acquire other ments inclu- competitive offering theatres without first them for result pool. in the The court concluded that sion pro agreements competition of was to eliminate these features,8 and in of tanto both in exhibition distribution naturally would direct the films to the parties since the were interested. earnings they in whose theatres Court found that the exhibitor- The District also independent agreements defendants had like with certain of had, view, exhibitors. Those alliances its effect and of competition between the theatres nullifying allied competition group more effective the making pool. The court theatres not members of the against were operating agreements in some found that cases being the rentals through theatres, leases of achieved profits earned the theatres by percentage measured the dissolution required The District Court pool. enjoined any future agreements and existing pooling of that character. arrangement prac- will stand. The provisions of the decree

These compe- monopoly were efforts to substitute tices bald exhibitor-defend- and to the hold strengthen tition on their competitors by alignment industry ants on the imagine. difficult to of trade are Clearer restraints side. arrangement type another of business There was as the have the same effect Court found to District 8 length topic, picture, regardless of any motion A feature is 4,000 feet. of film of which is excess

150 Many are just mentioned. theatres pooling agreements byor jointly by two or more exhibitor-defendants owned an The result independent.9 an exhibitor-defendant is, Court, District that the theatres according competitively.” than And operated rather “collectively, an joint exhibitor-defendant where the owners are is, to the District independent according the effect elimination the exhibitor-defendant Court, joint other “putative competition itself and the between position operate owner, who otherwise would be in found independently.” The District Court these theatres restraints joint ownerships of theatres be unreasonable meaning of the Sherman Act. within the trade Court ordered the exhibitor-defendants The District of the- by terminating joint ownership their disaffiliate 9 independents: jointly Theatres owned with 993

Paramount. 20 Warner. Fox .

RKO .

Loew’s. 1287 Total. jointly by owned Theatres two defendants: Paramount-Fox.

Paramount-Loew’s .

Paramount-Warner .

Paramount-RKO .

Loew’s-RKO .

Loew’s-Warner .

Fox-RKO .

Warner-RKO. 214

Total. jointly independents, owned with 209 would be Of by ownership affected since one of the interests is less than decree as de cent, per an amount which the District Court treated minimis. enjoined acquisitions and it

atres; future such interests. buy One is authorized to the other if it shows out satisfaction of the District Court and that court finds first acquisition unduly competi- that such “will not restrain in pictures.” tion the exhibition of feature motion This prohibition joint ownership dissolution and between as was plainly exhibitor-defendants warranted. To the ex- they tent that have in joint interests the outlets for their practical films grants priority each effect the other a for the exhibition of its in this situation, films. For jointly managed, as the case where theatres are the nat- ural of films gravitation is to the theatres in whose earn- an ings ownership have interest. Joint distributors between exhibitor-defendants then becomes device strengthening competitive position their by as exhibitors an An forming express alliance as distributors. agree- grant preference ment each other the would most be weapon competition. A ar- working effective stifle or rangement necessary business device has that con- sequence gathers immunity no subtlety. because of its Each is restraint of trade condemned the Sherman Act.

The District Court also ordered disaffiliation those instances where theatres were owned jointly ex- an independent, hibitor-defendant where interest of “greater the exhibitor-defendant was than five per cent ninety-five per unless such interest shall cent more,” or an independent being part for this defined “any former, present putative decree motion picture operator theatre which is not owned or controlled by the defendant holding question.” the interest exhibitor-defendants to acquire existing are authorized independents they interests these theatres if establish, finds, and if the District Court first that the acquisition “will unduly competition restrain in the All ac- other pictures.” motion of feature

exhibition joint enjoined. were of such interests quisitions We attacked. phase strenuously of the This decree it. findings support it for of to asked to eliminate lack are no than findings is that the show more argument by exhibitor- joint of of theatres ownership existence by the independents. The statement defendants joint ownership “puta- that District Court eliminates without competition” mere conclusion tive is said to be it of the support. For said that the facts evidentiary ownership joint many that of instances of record show wholly of independent interest devoid with are cases mo- or or history relationship to restraints trade any rather fortui- nopolistic practices. Some said be said to be bankruptcies; others are tous results who no outside interests have results investments theatres, on. capacity operate or and so desire inquiry It is conceded the District Court made no particular under which a interest into circumstances in- relationships alike, been It treated all acquired. had provision of is con- sofar as the disaffiliation the decree it In this we think cerned. erred. far enough into the con- gone

We have record be acquisitions that at least ex- fident some these of the unlawful products hibitor-defendants were in- have inflicted on the practices which the defendants dustry. acquisitions To the extent these were practices trade, they monopolistic fruits restraints buy And no out permission should be divested. defendant. United States given owner should be other Co., supra, p. 189; v. Crescent Amusement Chain Schine Theatres, States, ante, Inc. United Moreover, v. 110. p. lawfully acquired, they may if been utilized even have conspiracy suppress competi- to eliminate or part of the conspiracy. In that tion furtherance of ends United justified. divestiture would event likewise Co., pp. supra, Amusement 189-190. v. Crescent States the interest of acquire permission In that situation permitting the unlawful effect independent would have eliminate him. complete plan their the defendants to an with Furthermore, joint ownership if is alliance joint for the own- operator who or but one would be is affilia- though the divorce be decreed even ership, should joint ownership acquired. innocently was For tion perpetuate of the opportunity afford effects would have which the exhibitor-defendants of trade restraints industry. on the inflicted joint seems, however, that some of the cases own- categories have any do not fall into we

ership than innocent involve no more apparently listed. Some potential by who are not actual investments those If acquisition cases the operators. such re- conspiracy, of the its improperly used furtherance a finding justified would be absent by defendants tention per- And in those instances monopoly that no resulted. acquire the might given mission defendants showing by of the on a them independents interests nor monopoly unrea- finding by a that neither court would films restraint of trade the exhibition sonable a ban on this short, place In no reason to result. we see ownership so long at least theatre type ownership, prohibited. The majors is not results the five by await we indicated must along the lines have inquiry District Court on remand findings of the further cause. and Franchises. Deals, Agreements, Master

(4) Formula with a circuit licensing agreement deal a A formula given a feature license fee of which the of theatres agreement, measured, for theatres covered gross. national feature’s specified percentage RKO Paramount found that The District Court independent had made formula with deals and affili- ated circuits. The circuit was allowed playing to allocate time and film rentals among the various theatres as it saw fit. The inclusion of theatres of circuit into single agreement gives no opportunity other theatre owners to bid for the in respective feature their areas and, in Court, the view of the District therefore un- reasonable restraint of trade. The District Court found some agreements10 open master objection. to the same agreements Those are the master that cover exhibition particular two or more theatres in a circuit and allow the exhibitor to allocate the film paid rental among the theatres as it sees fit and to exhibit upon features such playing best, time as it deems and leaves other terms to the discretion of the circuit. The District Court en- joined performance making further any of formula type of deal described above. enjoined also making performance or further of agreement master any covering the exhibition of in a features number of theatres. findings

The of the District Court respects these supported by facts, its conclusion that the formula deals and agreements master constitute restraint of trade is valid, proper. and the relief is The formula deals and agreements master are unlawful restraints trade in two In respects. first place, they eliminate possibility bidding for films theatre In by theatre. way they eliminate the opportunity for the small competitor to obtain the runs, put choice first and a premium on the size of the circuit. They are, therefore, for stifling competition devices and diverting the cream operators. the business to the large In the second place, pooling of the purchasing power of an entire circuit in bidding films is a power misuse of monopoly 4, supra. See note with in closed towns insofar as it combines the theatres have stated The been competitive reasons situations. ante, p. Schine Chain Griffith,

United States v. 100, States, Theatres, ante, p. Inc. United and need not 110, v. necessary add dis- hardly It is repeated here. arrangements by exhibitors are join tributors who such of trade and a restraint participants effectuating active v. Crescent See United States monopolistic practice. Co.,supra, p. Amusement 183. enjoined making or further District Court

The also A contract performance any franchise. franchise is of more period with an which extends over exhibitor the exhibition picture than a motion season and covers period during the of features released the distributor a fran- District Court held that agreement. period because a chise a restraint trade constituted inclusion of long season was too more than one competitors. At least disadvantageous all features findings. way that is the we read its object outlawry and United Artists to the

Universal the points out that agreements. Universal franchise re- in these cases was charge illegality franchises by major owned the to franchises with theatres stricted in theatres defendants and to with circuits or franchises complaint the as a circuit, defined in being circuit the same group of more than five theatres controlled which com- person group or a of more than five theatres agent licensing films. through bine a common to other therefore, legality that the of franchises seems, practice to which (except block-booking, as to exhibitors litigation. in the advert) we later was not in issue will the Moreover, findings on franchises clouded the opinion that fran- statement of District Court in the “necessarily plan licensing each chises contravene As highest to the bidder.” picture, by theatre, theatre will the decree hereafter, be seen we eliminate from But for inclu- competitive bidding. for provision its might well competitive bidding District Court

sion of differently. problem have treated the of franchises used how if franchises were allowed to be We can see able to might each between the exhibitor-defendants position in the exhibition field and strengthen strategic its conspiracy ill the decree continue the effects of have dissipate. agreements may designed Franchise some employed against as devices to discriminate been know from rec- independents favor of others. We discrimina- agreements ord franchise often contained only in favor of theatres owned tory operating clauses But large but circuits. by the defendants also say illegal this record that franchises are we cannot on any theatre or circuit no matter per se when extended findings how small. The do not deal with the issue doubtlessly any system due to the fact that of franchises necessarily system competitive conflict with the would adopted by the Court. we set bidding District Hence findings may on so that aside franchises court problem light examine the of the elimination from competitive bidding. the decree of formula We do not take course the case of deals for agreements, findings and master these instances and apparently seem to stand on their own bottom have necessary dependency provision competitive no on the bidding.

(5) Block-Booking.

Block-booking practice licensing, offering is the or license, group for one or on feature features condition the exhibitor will or also license another feature group by a during features released the distributors in given period. they The are licensed blocks before films actually produced. defendants, except are All the United in engaged practice. have Artists, Block-booking pre- the competitors from for bidding single vents features on their for illegal it individual merits. The District Court held monop- the the it “adds to that reason and for reason that copy- that of another single copyrighted picture of a oly which must be taken and exhibited righted picture of the enlargement order to the That secure first.” below in reli- copyright condemned monopoly a patent forbids owner of principle ance which on or purchase patented or use of to condition its use on Corporation unpatented Ethyl materials. See Gasoline v. States, 436, Morton Salt 459; Co. v. United U. S. Co., v. Mid- 488, 491; Corp. S. Mercoid Suppiger 314 U. Co., 661, 320 U. S. 665. The court Continent Investment entering any performing from or into enjoined defendants to right exhibit one feature license which taking or upon the licensee’s one more other conditioned features.11

11Blind-selling whereby practice distributor licenses feature is a remedy opportunity it. To exhibitor is afforded an to view before the problems by practice District included the created Court following provision in its decree:

“To any the extent that of the features have not been trade shown single feature, granting for prior, of the license more than a given right reject twenty per shall be the licensor the licensee prior granting of the shown to the cent such features trade right license, rejection order of release such exercised days opportunity afforded to the there has been an within ten after inspect the feature.” licensee to following this as reason for inclusion of its court advanced

provision: inherently restrictive

“Blind-selling appear to be as does not capable although of some abuse. competition block-booking, it is good quality promise picture of By practice a distributor could this might poor to be of produced prove type which when or of a certain being type competing meanwhile distributor quality another —a losing its outlets product the end market its unable to trade-shows, are indicates that pictures. The evidence future poorly attended prevent blind-selling, designed such their films obtain Accordingly, exhibitors who choose to exhibitors. against burdensome protected to be quantities, need for exhibition 158 approve copyright

We that restriction. The like law, patent statutes, reward to the the makes owner sec- Doyal, Film Corp. Fox ondary In consideration. v. 123, U. 127, Hughes spoke S. Chief Justice as follows monopoly the respecting copyright granted by Congress, primary “The interest of the United and the sole States object conferring the monopoly general lie public benefits derived from labors of authors.” It is said that reward author or artist serves to public products induce release to the of the of his cre- genius. ative But public the reward does not serve its purpose if is not quality it related to the copy- right. high quality Where a film greatly desired is only licensed if an taken, inferior one is the latter borrows quality from the and strengthens former its monopoly by drawing on the practice other. The tends equalize rather than differentiate the reward for the individual copyrights. Even where all the films included in the package are equal quality, requirement that all if taken one is desired increases the market for some. Each stands not on its own but in footing whole or in part appeal on the film may another As have.. said, District Court the result is to add to monop- oly copyright in violation of the principle of the patent cases involving tying clauses.12 agreements by being given option reject percentage a certain pictures of their blind-licensed they within a reasonable time after shall have inspection.” become available for approve provision We this of the decree. right granted by Copyright Act, exclusive 1075, 35 Stat. 1, 17 U. S. C. privilege. includes no such provides, so § far as here, material as follows: any person thereto,

“That upon complying entitled provi- with the Act, sions of this right: shall have the exclusive “(d) perform represent To copyrighted or publicly work if it or, be a drama if it be reproduced a dramatic work and copies sale, any to vend manuscript any thereof; record whatsoever Corp. v. Transparent-Wrap Machine argued It that is Co., Stokes & Smith contrary to a re- 637, points S. U. patent in a license That case held that the sult. inclusion assign improve- to requiring of a condition the licensee per se patents decision, not But that illegal. ment was influenced improvement patents, greatly confined to governing assignments patents. of by the federal statute controlling significance has no here. therefore an that en- argument Columbia makes earnest Pictures block-booking as to will be restriction forcement disadvantageous impair to will its very greatly it and policy of the anti- operate profitably. to But the ability conven- is not or conditioned qualified trust laws can a regulated. conduct is Nor ience those whose in practice policy vested interest contravenes judicial receive sanction. the anti-trust laws blocks may do not sold in suggest We that films be im- express or requirement, or when there no groups, is hold than one film. All we plied, purchase for the more copyrights or more illegal refusal to license one accepted. copyright another unless (6) Discrimination. had discrim-

The District Court found defendants favor and in against independent inated small exhibitors vari- through large affiliated and unaflfiliated circuits provisions. included sus- kinds of contract These ous if a theatre a contract circuit pension of the terms than with rein- eight for more remained closed weeks reopening; allowing large on liability statement without of films; and elimination privileges in selection making any transcription procure or or record to make may any which, part, or in manner thereof or from whole it produced, any exhibited, performed, represented, or byor method be exhibit, perform, repro- reproduced; represent, produce, ” any by any whatsoever; manner or method duce it in film if allowing deductions rentals double bills are grant- moveovers13 and extended granting runs; played; ing privileges;14 allowing overage road show and under- age; granting playing time; excluding unlimited for- eign pictures independent producers; and those of granting rights question the classification of features purposes. for rental The District Court found that competitive advantages provisions of these great were so their inclusion in contracts with the larger circuits and their exclusion from contracts with the small inde- pendents constituted unreasonable discrimination against discriminatory the latter. Each contract consti- conspiracy tuted a between licensor and licensee. Hence Court it unnecessary the District deemed to decide conspired whether the defendants had among themselves provision to make these discriminations. No of the de- enjoins specifically discriminatory practices cree these they thought impossible were to be because under the system competitive bidding adopted by the District Court. findings amply supported by

These are the evidence. in the discriminatory We concur conclusion that these practices among are included the restraints of trade which the Sherman Act condemns. See Interstate Circuit v. States, supra, p. 231; United United States v. Crescent Co., supra, pp. Amusement 182-183. It will be for the privilege given picture A moveover is the a licensee to move a from one to another theatre continuation the run at the licensee’sfirst theatre. public A road show is a exhibition of limited a feature theatres, general release, number of advance its at admission higher customarily prices charged in than those first-run theatres those areas. 15Underage overage practice using refer to film excess rental earned in one theatre to fulfill circuit a rental commitment defaulted another. provide effec- on remand of these cases Court

District continuance, as our elimination against tive relief their competitive phase this provision bidding leaves unguarded. of the cases on this as well as on other suggestion

There is some with whom de- phases large of the cases that exhibitors practices and forced illegal fendants dealt fathered the But District Court them onto defendants. as the help if true observed, that circumstance does not illegal For in an scheme is as acquiescence defendants. a violation of the Sherman Act as the creation much promotion of one. Competitive Bidding.

Second — compe- only way The District Court concluded that the system of existing tition could be introduced into the films prices, require fixed clearances and runs was to competitive are bidding be licensed on basis. Films competitive all area.16 to be offered to exhibitors each granted The license for the desired run is to be to the rejects highest responsible bidder, unless the distributor all be offered and taken the- offers. licenses picture by picture. Licenses to show atre theatre and directly films in theatres in which the licensor owns per or more are indirectly ninety-five an interest of cent requirement competitive bidding. from the for excluded majors only is the one of the five who Paramount opposes competitive bidding system. Columbia Pic- oppose it. The inter- tures, Universal, and United Artists it. And representing independents oppose certain venors bidding Competitive required only “competitive is area” said, where it is “desired the exhibitors.” As the District Court provides opportunity any in a “the decree to bid for exhibitor competitive may area who desire to do so.” bidding competitive system

The details of the will be found Supp. pp. 70 F. 73-74. Justice, proposed which Department apparently of here. system speaks strongly against it originally, system much

At first blush there is to commend the con- bidding. The trade victims of this competitive of independent small have been the spiracy large measure operators. They keenly the ones that have felt most are discriminatory practices predatory and activities have been freely indulged. They which have defendants power larger purchasing of the massed victims largely It is out industry. units in the ruins empires operators large the small that exhibitors appear great it have built. Thus would to be been open bidding private boon them to for the substitute large operators favors which have deals on and But have after reflection we concluded thrived. deeply in competitive bidding judiciary involves the so of this nation-wide and daily operation business promises benefits that it should not be such dubious undertaken. particular film is to on a run to “the be licensed

Each responsible bidder, size, a theatre of a highest having equipment adequate yield a reasonable location what run return to the licensor.” bid “shall state pay for willing such desires and what he exhibitor specify may rental, a flat feature, such which statement both, any other percentage gross receipts, or or or also what such rental, specify form and shall clearance when accept, days the time and willing exhibitor it, any to exhibit other offers such exhibitor desires make.” do not may exhibitor care to We such adopted system is competitive bidding if a doubt licensing For the provisions necessary. all these complicated quite obviously films auction is a more at wheat, tobacco, matter than the like sales cash of puts pertinent queries: these produce. other Columbia likely bid as to to make the same “No two exhibitors are dates, clearance, fixing rental, May method of bids etc. compared? be containing .readily such diverse factors May compared percentage a flat rental bid be with a bid? May the any percentage value of bid be determined price unless admission is fixed the license?” question as to who involves highest bidder is the incapable precise the use of of definition standards in- being compared because the bids contain different gredients. Determining responsible who is the most to a formula. The bidder likewise cannot be reduced integrity judgment distributor’s the character and a particular might acceptance result exhibitor prove lower bid than others offered. Yet shown be well-nigh impossible, favoritism was would in the were perhaps country unless all the exhibitors responsibility. If, indeed, classifications of given choice between bidders is to be entrusted to the uncon- of the some effort to stand- distributors, trolled discretion “a determining ardize the factors involved reasonable necessary. return the licensor” would seem merely We mention these matters to indicate the char- job supervising competitive bidding of the such a acter adminis- system. judiciary It would involve the governing priority, of intricate and detailed rules tration run, competitive areas, rea- period clearance, length apt would return, system sonable and the like. The require supervision as close continuous receivership, were be entrusted with vast unless the defendants affairs of business judiciary discretion. The is unsuited to power contempt management; through and control necessary clumsy lacking flexibility is crude and supervision to make continuous and detailed effective. system to the delegation management Yet of the genius of those who had the to conceive the discretion subtlety it with the present conspiracy and to execute only with the reveals, record could be done which this be At should not least such choices greatest reluctance. its great is system the unless need for faced the plain. benefits and estab- arrangements business system uproots

The to the with overall benefit relationships apparent no lished togo If must independent exhibitor. each feature small bidder, greatest with the highest responsible those the position. would to be in a favored purchasing power seem longest purse with the exhibitor-defendants Those —the in a preferred seem to stand large and the circuits —would through If position. they in fact were enabled the com- business, petitive the cream of the bidding system to take and thus independents, smaller increase eliminate the industry, they on the would strategic their own hold pro- of the court’s decree around them for have the cloak larger which advantage Hence the natural the tection. stronger seem to have financially exhibitors would If pause. premium placed us bidding gives in the system may be power, on the court-created purchasing increasing factor towards the concentration powerful industry cleansing than power of economic the rather For competitive system practices. of unwholesome system operation promises advantage where strongest is in financial position, exhibitor who apt an injunction against discrimination17 to hold In promise. connection it should noted empty this be that, though independents given competitive even competitive bidding, area do not want the exhibitor- system. can invoke the defendants competitive concerning system Our doubts bidding who are increased the fact that defendants own the- pre-empt They atres are allowed to their own features. inventory all thus start with other exhib- bidding competitive part provides: The of the decree "Each solely granted upon license shall the merits and without discrimi affiliates, old favor of customers others.” nation itors The latter prospect lack. have no of assured runs except what they get by competitive pro- bidding. posed system any way advantages does not offset by way which the exhibitor-defendants have of theatre ownership. It would seem in fact to increase them. For independents deprived stability which flows from established relationships. pro- business Under the posed system they only can if get they features are the highest responsible They longer depend bidders. can no private on their supply ingenuity sources of which their perhaps has sources, private created. Those built on relationships important representing good items of will, banned, though they any even are free of taint of illegality. system designed, was as some of the defendants

put it, remedy any to difficulty the theatre to break change existing system into or the of runs and clearances. how, practical operation, pro- But we do not see in the open posed system competitive bidding likely to up competition defendants’ unlaw- to the markets which danger ful have dominated. Rather real seems restraints opportunities system in the the affords the us lie large operators and the exhibitor-defendants other in industry. their hold We are reluctant strengthen agreement to alter decrees in these cases where there is on the nature of the violations. with the District Court Co., supra, p. 185; v. Amusement United States Crescent States, 392, International Salt United 332 U. S. Co. v. in provisions competitive bidding 400. But the these in real promise way against little of relief cases implicate judiciary conspiracy. They evils of the management super- details if heavily of business They powerful vision is to be effective. vest control if competitors the exhibitor-defendants their close over In supervision by light the court is not undertaken. competitive these considerations we conclude that so decree be eliminated provisions of the should bidding may be fashioned. that a more effective decree parts of this already preceding indicated We have hiatus opinion that alteration the decree leaves this will have to filled on remand of the cases. or two which problem phase of the will indicate hereafter another We in view Court also reconsider which the District should But out an abundance of this alteration in the decree. competi- this word. The of caution we add additional arch system perhaps the central bidding tive District Court. Its elimination designed by the decree we ways than may the cases other those affect Hence on cases mention. remand expressly adequacy the District Court reconsider freedom of parts specifically we not limited to those have of decree is indicated. Di- Monopoly, Expansion Holdings,

Third. Theatre vestiture. is a that the hold the defendants suggestion

There industry great problem have the is so that under on is raised. Cf. Associated Press v. the First Amendment States, have United U. S. 1. We no doubt 326 newspapers radio, moving pictures, like included First is the press guaranteed in the whose freedom if we Amendment. That issue would be focused here monopoly production in the any question concerning had in pictures. monopoly production But moving have cases, as an issue in these we noted. eliminated in terms of phrased at the bar is argument The chief exhibition, the exhibition, restraints on monopoly of narrower than that. Actually, like. the issue even exhibition The main contest over cream By defining the business —that the first-run theatres. impor- do its narrowly issue so we not intend to belittle is not shows, however, question here tance. 167 public what the public will see or will permitted if to see certain features. It is clear that existing under the system public will be denied If access none.

public cannot see features on first-run, may it do so on second, third, fourth, or later run. The central problem presented by these cases is get which exhibitors the highly profitable first-run business. problem That important has aspects under the Sherman Act. But it only remotely, bears if all, at on any question of freedom press, only save as timeliness of may release be a factor of importance specific situations.

The controversy over monopoly relates to monopoly in exhibition and particularly more monopoly the first- phase run of the exhibition business.

The five majors 1945 had interests in somewhat per over 17 cent of the theatres the United States— 3,137 out 18,076.18 paid per Those theatres 45 cent of the total film domestic rental received all eight defendants.

In the 92 country cities of the with populations over 100,000 per at least 70 cent of all the first-run theatres are affiliated with one or more of the five In majors. 4 of majors those cities the five have no theatres. In 38 of those cities there are independent no first-run theatres. In none of the remaining cities did 50 less majors The theatres which each of the independently five owned 1,395 the others per cent; were: Paramount or 7.72 Warner 501 per cent; or 2.77 per cent; Loew’s 135 per or .74 Fox or 3.52 cent; per RKO 109 or .60 cent. There were in addition 361 theatres per majors about joint cent which two or more of the five had figures through interests. film-buying These exclude connections or management through corporations contracts or in which a defendant minority owns an indirect stock interest.

These theatres are located in 922 in towns 48 States and the Dis- trict of description Columbia. For further of the distribution of Bertrand, Evans, Blanchard, theatres see The Motion Picture In- dustry (TNEC 1941). Monograph 43, Pattern of 15-16 Control —A

168 license their of the distributor-defendants

than three In 19 majors. the on first run to theatres of five product less the distributor-defend- of the 50 cities than three of independent on first run to product their ants licensed greater In a 50 the share majority cities theatres. first- of defendants licensed for of all of features were majors. in five run the theatres of the exhibition per having populations In about 60 cent of 92 cities compete 100,000, independent theatres with those of over In 91 majors in first-run exhibition. about of the five competition there is between per cent of the cities majors independent theatres and the theatres of five majors between of the five themselves or theatres always In exhibition. all 92 cities there is first-run compe- is no competition in some run even where there in tition first runs. 25,000 100,000 populations

In cities between majors of a total of first- five have interests In ad- per run or about 60 cent. about 300 theatres under affiliated towns, mostly operator ditional 25,000, majors five all of with one of the has theatres town. majors held the five

The District Court that could collectively be treated so as to establish claims not found none monopolization exhibition. general maintained “for the organized them was or had been monopoly” a national exhibition. purpose achieving majors by present their theatre It found that five one- (which a little more than holdings aggregate “alone” States), in the United “do sixth of all the theatres a individually, monopoly collectively have and cannot also The District found that where of exhibition.” Court all first-run theatres single defendant owns proof is no sufficient town, acquisition there monopoly. It found purpose creating was for the resulted from the inertness consequence rather that such

169 ability to build of financial their lack competitors, of majors, five or those of the comparable theatres theatres. best-equipped for the public preference of the any market which features on the percentage And the theatres was found play in its own majors five could approximate and in nowise relatively small to be filmof exhibition.19 monopoly jointly owned or jointly respect theatres

Even in- with other or with each operated the defendants monopoly or no District Court found dependents, own- joint agreements Those attempt monopolize. restraints only to be unreasonable found ership were monopoly indeed, found no Court, The District trade. attempt although it did find cases, any phase on un- fixing prices, granting monopolize 19 during season the 1943-44 films released The number of feature follows: largest distributors is as by the eleven

Percentages Total With With Films No. of “Westerns” 'Westerns’’ excluded included 9.85 8.31 33 Fox . 9.85 33 8.31 Loew’s. 9.25 7. 81 31 ... Paramount 11.34 9. 57 38 RKO. 5.67 4.79 19 Warner. 12.24 10.32 .... 41 Columbia 4. 78 4.04 16 Artists United 63 12. 34 14. 49 .... Universal 8. 66 features 14.86 Republic. -29 “Westerns” -30 7.76 10.58

Monogram features -26 n -16 “Westerns” 5. 97 9.07 -20 features PRC “Westerns” -16 100.00

Totals 100. 335 without “Westerns” ^[792588] — 0 48-16 unlaw- block-booking and the other clearances,

reasonable already have discussed. ful of trade we restraints Court, District according to the difficulties,” “root of the in unlawful but those ownership in lay not theatre practices. majors five however, enjoin the did, Court

The District any in holdings present their theatre expanding from Depart- the request the grant It refused to manner.20 majors the five for total divestiture ment of Justice that divestiture It found total holdings. their theatre majors and to injurious damaging to the five would be latter score was that thought Its on the public. the place take owners who would the the new set of theatre years for some to majors unlikely would be of the five they supplanted as public good as service those give the experience and skill the latter’s demonstrated “in view of the regarded general must be as operating what was, it theatres.” Divestiture equipped and best largest remedy a was available too harsh where there thought, bidding. accordingly It competitive alternative of the until unnecessary “at least that divestiture was concluded system been tried and found efficiency of that has the wanting.” clear, majors concerned, far as the five that

It is so i. e. it was conspiracy aim of exclusionary, hold on the exhibition field. designed strengthen their words, conspiracy In had exhibition monopoly other Price, as the District Court held. goals, for one of its clearance, interdependent. and run are The clearance playing the relative provisions and run of the licenses fixed a area; all certain the minimum positions of theatres playing position were on first- price provisions based —the being required charge highest prices, run theatres prohibition acquisition Excepted from this was the of interests jointly owned, preceding a matter we in a in theatres have discussed portion opinion. of this on. As highest, the next

the second-run theatres so effect, distributor, by “In found, Court the District attempts prices, give fixing of minimum admission patronage monopoly near prior-run exhibitors as possible.” the need is, therefore, enough determining with Court the District for divestiture conclude main- been organized or has defendants was none monop- achieving “national purpose tained for the present majors through nor their oly,” five collectively and cannot holdings “alone” do not theatre For when monopoly exhibition. individually have a monopoly conspiracy to effect starting point is a it relevant determine trade, of is through restraints they were if fell conspiracy the even what results the monopoly. short of pop In the problem.

An will the example illustrate the monopoly person if one owns there is a ular sense however, usually not, That does in town. only theatre as we But the Sherman Act. a violation of constitute ante, Griffith, and see States v. p. 100, United in noted ante, States, Theatres, p. 110, Inc. United v. Schine Chain the in ownership is vulnerable a suit even such an property Act if the under the Sherman United States as a result position maintained, acquired, strategic or its unreasonable restraints practices which constitute con reward the Otherwise, would be from trade. there prob its fruits. Hence the spiracy through retention enjoining not end with the District Court does lem of with dis nor the unlawful restraints continuance conspiracy. the which launched solving the combination conspiracy undoing includes what the Its function The Chain Schine we have discussed achieved. As atres, States, ante, p. 110, Inc. v. United requirement the they unlawfully ob restore what that defendants remedy more familiar punishment is tained no than be warranted after findings would of restitution. What know. present cases, we do not inquiry such do not cover this findings of the District Court For the objective of monopoly was an point beyond stating that condemned. several restraints of trade stand is not Moreover, problem under the Sherman Act monopoly in terms of size or merely by measuring solved ownerships single holdings by concluding extent of a national purpose achieving were not obtained “for the relationship of the unreasonable monopoly.” position of the defendants restraints of trade (and particularly exhibition field more the first-run phase business) importance of that that is of first on the phase position of these cases. That is the we divestiture Theatres, Inc. v. United have taken in Schine Chain States, ante, projection with p. 110, dealing of the same conspiracy through large Parity treat- certain circuits. requires ment of the unaffiliated and the affiliated circuits approach conspiracy the same here. For fruits independents denied must also be denied majors. the five In this is a suggestion connection there conspiracy that one result of the was a divi- geographical sion of territory among majors. the five We mention it not intimate that only it true but to indicate the appropriate inquiry concerning extent of the the effect of conspiracy ownership majors. theatre the five

The of findings the District Court are deficient on that and score obscure on another. The District Court in its findings speaks “purpose” part of the of a absence on the any majors of five monopoly” of the to achieve a “national pictures. in the First, exhibition of motion there is no presence finding monopoly as to the or absence of on the part majors of the five field for entire first-run country, largest field in the 92 of cities first-run country, in separate field localities. first-run field, Yet the constitutes cream the first-run

173 Sec present cases. is the core of the business, exhibition restraints unreasonable 1 Act outlaws of the Sherman tion involved trade or commerce of the amount of irrespective Co., 150, 310 U. S. Socony-Vacuum Oil States v. (United monopoly “any part” 59), n. and condemns 224, 225, § mean “Any part” is construed of trade or commerce. trade or com foreign interstate or part of appreciable Co., 218, 332 U. S. v. Yellow Cab United States merce. Griffith, v. States pointed out United Second, we 225. necessary to estab not ante, “specific intent” p. 100, that monopoly but to create “purpose or intent” lish monopoly if present or intent” is requisite “purpose was done. of what consequence a necessary as results of the cases phase Court on this District findings of the mean the absence take them to though we clear, not So con specific intent. “purpose” the absence they are any In event they are inconclusive. strued cases. remand of the be recast on and must ambiguous unlawfully lawfully or power, whether Third, monopoly though Act of the Sherman may violate acquired, § ante, Griffith, v. States (United it remains unexercised v. Co. Tobacco in American 100), for as we stated p. existence 811, the States, 781, 809, S. United U. to do so” when it is desired competition

power “to exclude coupled with the it is 2, provided itself a violation § The District power. or intent exercise purpose number with the concerned being primarily Court, not defendants, did holdings of theatre extent of the monopoly problem. phase this itself to address independents treatment as between also, parity of Here who were tied owners, majors theatre and the five considera conspiracy, necessitates general the same into question. of this tion would of the cases phases these

Exploration of argues, Department of Justice if, as necessary distributing exhibit- producing, integration vertical majority But the illegal se. pictures per motion is ing opinion In view. the does not take that of the Court under the integration of vertical legality the majority the intent with (1) purpose the or turns on Sherman Act and the (2) power or the it creates conceived, it was the it runs afoul of First, intent. purpose or attendant gain scheme to control if it was a calculated Sherman Act of market and restrain segment the appreciable over an expansion an to meet rather than suppress competition, or Co., Reading United States v. needs. legitimate business Co., Valley Lehigh R. 57; v. 26, U. S. United States vertically 255, Second, integrated 269-270. 254 U. S. of business units aggregations like other enterprise, America, 2d 148 F. v. Aluminum Co. (United States unexercised, monopoly which, though will 416), constitute power provided a to exclude Act violates Sherman coupled purpose with a or intent do so. competition is ante, 100, pointed Griffith, p. out in United States v. As we monopoly power. an earmark of 10, n. size is itself 107, opportunity with for And the For size carries it abuse. by power past size utilized fact created potent competition is evidence that prevent to crush or purpose presence intent attends the requisite Co., v. monopoly power. United States & See Swift America, v. Aluminum Co. 106, 116; S. United States U. p. supra, bearing question 430. Likewise on whether monopoly power integration, created the vertical (United served v. the nature of market be States America, p. supra, 430), Aluminum Co. lever on age particular integra the market which vertical possible. tion creates or makes These matters were not considered the District as the reason, Court. For that well others we have monopoly on mentioned, findings and divestiture part opinion which we have will this discussed an independent doing set aside. There is reason Court considered seen, the District As we have that. in an alternative competitive bidding divestiture of consideration it that further that concluded the sense bidding competitive had until should not be divestiture Since we eliminate wanting. tried and found had been bidding, competitive provisions decree the for from the on necessary findings the divestiture so it is set aside on may a of be made phase that new start on this the cases their remand. barring the provision that of the decree

It follows the like- majors expansion from should five further theatre monopoly For it too to the be eliminated. is related wise Court allowed question; the District should be problem. on of entirely an start the whole make fresh way intimate, however, in that the District Court no We five expansion by prohibiting erred further theatre majors. if total Department of Justice maintains that five among films denied, licensing

divestiture is it permanent requirement a As majors barred. should forcing an divesti- only way would seem to be indirect majors five could findings ture. For the reveal that full their on their own films.21 operate theatres time competitive bid- step would, absence Whether situations to short-range remedy serve as certain ding, (United v. conspiracy States dissipate effects of v. Co., 241, 254; S. United States Univis Lens 316 U. Co., p. States v. Cres- supra, 724; Lomb United Bausch & Co., p. question for the supra, 188) Amusement cent Court. District found, “Except very limited number The District Court largest cities,, 18,000 very in the and more theatres

of theatres one product more than distributor. in the States exhibit the United product only one operated theatres could not be on Such distributor.”

Fourth. which system an arbitration

The consent decree created Court, useful had, proved the view the District ar- operation. thought its The court indeed clear- system problems bitration had with the dealt did not efficiency.” “with But it ances and runs rare system it power think had the to continue arbitration consent binding parties, would be on the since had not con- decree did not bind the who defendants acting the to government, pursuant to it and since sented moved for powers decree, the the consent reserved under complaint. in The District charged trial of issues the the recommended, however, system Court be some such in But it no such provision continued. included its decree. to a agree government

We the did not consent of under permanent system arbitration the consent decree power no force or and that the District Court has to parties in of require to submit to arbitration lieu the anti- by Congress enforcing afforded for the remedies power trust But Court laws. the District has the (cid:127) a by authorize system the maintenance of such those proce- and the and parties provide who consent rules system dure it is to The of operate. under which use the course, mandatory. merely not, would of be would be from auxiliary procedure, barring enforcement no one law use of other remedies the affords violations of Sherman of the of either Act or decree the court. system inaugu- arbitration should Whether of such discretion District rated is for the of the Court.

Fifth —Intervention. in- of

Certain associations a number exhibitors dependent exhibitors, appellant-intervenors Nos. 85 in 86, were District denied leave to intervene in the They appeal Court. from those They orders. also filed original motions for leave to intervene this Court. We postponed consideration of original motions and of jurisdiction our appeals to hear the until hearing on the merits of the cases. (a)

Rule 24 of the Rules of Civil pro- Procedure, vides for intervention right, part reads as follows: “Upon application timely anyone permitted shall be in an intervene action: (2) . . . when representation applicant’s interest existing parties bemay inadequate and applicant is or may be bound judgment the action.” complaint

The of the towards intervenors was directed system competitive bidding. Department The anti- representative public Justice is of the these protection trust So far public as the interest suits. in- competition concerned, free interests those adequately represented. intervenors, tervenors however, claim that system competitive bidding operated would Cf. prejudicially rights. have their Terminal, States v. St. Louis United 194, 199. U. S. argument plan competitive bidding Their is that under the control of defendants would be a concert If illegal of action that would be but for the decree. pursuant plan, to the defendants acted under that decree they gain liability from under the immunity any would they might anti-trust which otherwise have to the laws Thus, it would affect argued, intervenors. the decree binding repre- and on them. The legal rights their be Department of Justice of their sentation interests agency inadequate on that was said to be since that score in competitive bidding the idea of the District proposed Court. argument. of that need consider the

We merits in their if that the intervenors are correct Even we assume here the orders should be denied and position, intervention denying to intervene must District Court leave competitive bid- provisions Now that- the for affirmed. decree, is no from the there have been eliminated ding rights. legal their saying for the decree basis affects below, no other may have been Whatever situation this their appears why stage at intervention reason Any making parties for them justification warranted. disappeared. has part affirmed judgment in these cases is

The Dis- cases remanded to the part, and the reversed conformity with this proceedings trict Court opinion. ordered.

So part took no the consideration Mr. Justice Jackson decision these cases. Frankfurter, dissenting part. Mr. Justice place in Dis- framing should take “The of decrees Appellate They than in Courts. are invested trict rather judgments fit the large with discretion to model their this con- particular guiding case.” On exigencies sideration, the Court this Term sustained Sher- earlier decree, long man Law which was not outcome of involving and their complicated trial contested facts judgment formulation of a significance, summary but the v. pleadings. on bones of International Salt Co. the bare States, 392, in this United U. S. 400-401. record bespeaks compelling respect for the fash- case more decree judges put the District Court three an end ioned prevent Sherman Law and to violations recurrence, than that which Court to find led not this by single judge of discretion in the a abuse decree district Salt the International case. This Court has both the authority duty and to consider a whether decree well undo, calculated to far as is possible, the result of transactions forbidden by the Sher- man Law and to guard against repetition. their itBut not the function of Court, this ill it would discharge it, displace the district courts and write decrees de novo. are,We all, after an appellate tribunal even Sherman Law cases. It could not be fairly claimed this Court possesses greater experience, understanding and prophetic insight relation to industry, the movie and is therefore equipped better a formulate for the decree industry movie than was the District Court in case, this presided over it as was judges. one the wisest of

The terms of the litigation amount, decree this in effect, to the formulation of a regime for the future conduct of industry. movie a The terms of such within regime, scope of judicial oversight, are not to precedents be derived from law reports, nor, for that matter, from any other repository knowledge. available Inescapably the terms must be an derived from assess- conflicting ment of interests, not quantitatively measur- able, regarding workings prophecy of untried for dealing remedies with disclosed evils so as to advance comprehensive public most the interest. question

The crucial legal before us is not whether we would drawn have the decree as District Court drew it, whether, on but the basis of what came before the Dis- Court, say fashioning trict we can that in it did remedies fairly respond to disclosed violations and therefore discretion, abused a the fair exercise of which we should respect and not treat as abuse. Discretion means upon choice of available remedies. bearing ques- As this tion, it is most relevant to consider whether the District sympathetic Court niggling showed or mere awareness proper scope of the Law and range Sherman to likely not are Adequate its condemnation. remedies be to who not hostile to evils be those by fashioned remedied; a opinion stout The District Court’s manifests thorough- its part that court enforce purpose on the of of Sherman requirements the understanding of the going have before Law this Court. And so we as elucidated of thoroughly aware the us of a district court the decree determined manifestly Law and of the Sherman demands its rigors. it in all to enforce out the working go did District Court about

How now dis- of which this Court terms of the decree some 8, that court from October places? case was before The A 22, body 1947. vast the evidence 1945, January below, and must be.considered had to considered overturning decree, the lower court’s consisted here documents, A mere these documents. enumeration a required pamphlet of printed us, record before a pages for of exhibits pages. took 460 selection appropriate printing by for Government. deemed of 3,841 pages. in this Court consists printed The record It is of this mass on basis vast of evidence 11, opinion, on Court, 1946, District June filed its careful Thereafter, approved here, as to the issues. substantive argument it of the days for three to the terms heard as judgment. parties proposals then submitted their findings for fact and conclusions of law the District trial, opinion an on the long Court. After elaborate decree, merits, full as the terms of the more discussion gestation decree, for than two months terms finally were promulgated.

I bring myself product to conclude that cannot process painstaking adjudication as such complicated such a appropriate decree for situation discretion, this record discloses abuse of arrived absorption light at after due of all the as it was upon appropriate could be shed remedies future. all, After as to such remedies is no test, ultimately, there except wisdom men judged by events. I

Accordingly, except affirm would the decree as to particular, one that regarding system an arbitration for may controversies that arise under the decree. This pure raises a question law and not judgment a based upon facts and significance, their as are those features decree Court sets aside. District Court indicated “in view of its demonstrated useful- ness” such an system arbitration to aid in desirable the enforcement Court, of the decree. The District how- ever, deemed itself powerless to continue an arbitration system without parties. the consent of the I do not find power such want of the District Court to select this means of enforcing effectively, decree most with the least friction most fruitful A methods. decree complicated as detailed and as as necessary to fit a situation like the one bound, before us is even under the circumstances, best of to raise controversies involving conflicting claims meaning. facts and their A court certainly appoint could questions master to deal with under arising the decree. I not appreciate why do proved system arbitration, experience appropriate as has found it to appropriate be adjudicating number- less questions arise decree, under such not to purposes treated effect as a standing master for Peterson, this parte decree. See Ex I U. S. 300. would it therefore leave to the discretion of District Court a system whether such avail- determine is not able as of auxiliary instrument enforcement. With I exception affirm this would decree District Court.

Case Details

Case Name: United States v. Paramount Pictures, Inc.

Court Name: Supreme Court of the United States

Date Published: May 3, 1948

Citation: 334 U.S. 131

Docket Number: NO. 79

Court Abbreviation: SCOTUS