United States v. Aluminum Company of America

PETITIONER: United States
RESPONDENT: Aluminum Company of America
LOCATION: U.S. District Court for the Southern District of New York

DOCKET NO.: 204
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 377 US 271 (1964)
ARGUED: Apr 23, 1964
DECIDED: Jun 01, 1964

Facts of the case

Question

Media for United States v. Aluminum Company of America

Audio Transcription for Oral Argument - April 23, 1964 in United States v. Aluminum Company of America

Earl Warren:

Number 204, United States versus Aluminum Company of America et al.

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, may it please the Court.

This case is here on appeal by the United States from a judgment of the District Court in the Northern District of New York or the Western District perhaps, dismissing the complaint in an action under Section 7 of the Sherman Act.

The case is one of unusual importance because of a trend that seems to us to have developed in the metals industries in recent years, for the large basic integrated companies to acquire smaller independent fabricators in an effort to expand into other related and sometimes competitive basis of the industry.

We have a number of cases pending at that time in an effort to arrest the trend, thinking that it violates Section 7.

Here, the acquiring company is the Aluminum Company of America, the giant of the aluminum industry.

The acquired company was Rome Cable Corporation, a strong independent manufacturer of chiefly insulated wire and cable, both aluminum and copper, for use by electric light and power companies in the transmission and distribution of electricity.

The essential facts, the questions being the same as in all in Section 7 cases, the essential facts may be summarized as follows.

Alcoa, as I say, is the giant of the aluminum industry until World War II, of course, it acquired -- it had a monopoly.

After the war, the United States disposed of the aluminum facilities that it had constructed in such a way that Kaiser and Reynolds entered the field as fully integrated producers of aluminum and aluminum products.

Since 1950, three somewhat smaller producers have entered the field but this is still an industry of few concerns with great economic power.

The big three have 90% of the ingot capacity, Alcoa with 38% of the ingot capacity, is almost 50% bigger than any other.

In addition, as the Court I'm sure knows, Alcoa owns and operates mining locations, railroads, steamship lines, basic aluminum plants, rolling mills, many facilities for producing fabricated aluminum down to the --

Potter Stewart:

What's -- what does that got to do with (Voice Overlap) --

Archibald Cox:

Well, it seems to me that one must envisage this case not simply as the market for conducting but its relation to the overall aluminum industry that you can't forget the industry as a whole.

I would think that was while background, one of the dominating facts and that's just only importance but a very great importance, I think, in the overall picture of the power of the acquiring company.

Potter Stewart:

Well, the fact that it owns railroads might be relevant in the event that it purchased another railroad but I don't see under Section 7 why the fact that it owns railroads --

Archibald Cox:

Well, we would submit --

Potter Stewart:

-- (Voice Overlap) to do with the electrical conductor field?

Archibald Cox:

-- we would submit that the -- but I'd -- we would submit that the economic power of the acquiring company in closely related fields has a bearing on its power in any particular market and that when while he must appraise the particular --

Potter Stewart:

So the --

Archibald Cox:

-- market cannot wholly forget the fact of the background in which the question arises and now, the immediate facts, the decisive facts, of course, have to do with the conductor field.

One of the major end uses of aluminum is in wire and cable for conducting electricity.

It's about 7% of the ingot capacity goes into that area.

Originally, of course, copper was the favorite conductor of electricity.

And for many purposes, copper today has such a marked advantage, technological advantage that aluminum cannot compete with it.

Aluminum, as I will explain later in more detail, has a very marked economic advantage in use for overhead wire and cable, except in coastal areas where the problems of corrosion.

And as a result, aluminum has rapidly displaced copper for overhead use.

Today, nearly 95% of the installations of bare transmission line are of aluminum.