RESPONDENT: United States
LOCATION: Brown Shoe Co.
DOCKET NO.: 4
DECIDED BY: Warren Court (1962)
CITATION: 370 US 294 (1962)
ARGUED: Dec 06, 1961
DECIDED: Jun 25, 1962
GRANTED: Jun 20, 1961
Archibald Cox - for the appellee
Arthur H. Dean - for the appellant
Facts of the case
When Brown Shoe Company bought Kinney Company Inc., the United States sued Brown for antitrust violations of the Clayton Act. The United States argued that the merger would substantially lessen competition in the shoe manufacturing and sales industries. The U.S. District Court for the Eastern District of Missouri ruled in favor of the United States. The court ordered Brown to divest itself of all Kinney stock and assets and to operate Kinney as separately as possible pending complete divestiture. The court gave Brown 90 days to come up with a plan for complete divestiture. The case reached the Supreme Court on direct appeal under the Expediting Act, which allows direct appeal of final district court judgments.
Does the Brown/Kinney merger violate the Clayton Act?
Media for Brown Shoe Company, Inc. v. United StatesAudio Transcription for Oral Argument - December 06, 1961 (Part 1) in Brown Shoe Company, Inc. v. United States
Audio Transcription for Oral Argument - December 06, 1961 (Part 2) in Brown Shoe Company, Inc. v. United States
Continue your argument.
Mr. Chief Justice, may it please the Court.
Before the recess, I attempted to describe the manufacturers in the industry and Brown’s position as one of the dominant form in an industry dominated by four concerns.
And then I began to go on to point out that even before acquiring Kinney, Brown had begun to tie up retail outlets because we think that’s a relevant circumstance in determining whether this tying-up more of it was a substantial factor in lessening competition.
I pointed out already that Brown had acquired Wohl, the largest operator of leased outlets and department stores.
It acquired Regal's 98 stores as well as the manufacturing facilities in 1954, where the Wetherby-Kayser's four Los Angeles stores and independents in four Texas cities and in Columbus, Ohio.
Wohl and Regal by your own definition were in different lines of commerce, weren't they?
Wohl made --
-- was primarily in ladies' shoes and Regal primarily in men's shoes, is that it?
Well, but, primarily yes.
But we wouldn't say that -- I think I would disagree with what seems to me be the implication that you take what someone is primarily in, then narrow to that and say that is the line of commerce.
Well, isn't it true that Regal's retail stores is only one -- sells one shoe, no?
Didn't they have an unsuccessful experience with women's shoes, or no?
Regal is a seller of men's shoes --
And the acquisition of Regal looked at vertically would simply tie up, a part of the market for men's shoes, not part of the market for manufacturer selling women's shoes.
And those are separate lines of commerce, you told us.
I was thinking of price --
I mean they are not competitive with each other.
They're not competitive with each other.
In addition to the owned outlets on through these firms that it acquired, Brown also had 584 franchise dealers at the time of the merger.
Firms which were received assistance from Brown in various forms and in return for which they committed themselves at one time not to purchase from other competing manufacturers.
On advice of counsel as the record puts in, that was eliminated from the written contract and was watered down to a commitment not to carry any conflicting lines.
And if a Brown franchise dealer were to carry a conflicting line, unless it was a casual incident, he would be cut off as a Brown franchise dealer.
There were a number of advantages in being a Brown franchise dealer.
One was that you were able to purchase rubber-soled canvass shoes at a discount from Goodrich and otherwise that you've got the benefits and certain advantages in the form of insurance, both group life insurance and also buyer casualty insurance.
Still another advantage as I understand it was that also some of the outlets might get occasional health and merchandising and inventory control in planning their stocks and architectural design.
There is testimony quoted in that brief to the effect that you got this far more regularly and successfully, if you are a Brown franchise dealer which carried with it, I emphasize, the obligation not to use -- not to -- to concentrate in Brown shoes and therefore to exclude conflicting lines.