United States v. Armour & Company

PETITIONER: United States
RESPONDENT: Armour & Company
LOCATION: Gwinnett County Courthouse

DOCKET NO.: 103
DECIDED BY: Burger Court (1969-1970)
LOWER COURT:

CITATION: 398 US 268 (1970)
ARGUED: Mar 05, 1970
DECIDED: Jun 01, 1970

Facts of the case

Question

Media for United States v. Armour & Company

Audio Transcription for Oral Argument - March 05, 1970 in United States v. Armour & Company

Warren E. Burger:

Number 103, United States against Armour & Company.

Mr. Springer, you may proceed whenever you're ready.

James Van R. Springer:

Mr. Chief Justice may it please the Court.

This case brings to this Court for the fifth time, questions under the Great Meatpackers antitrust decree of 1920.

That decree was entered on consent without a trial on the basis of a bill in equity that the Government had brought against the nation’s five largest meatpackers, Swift, Wilson, Cudahy, Armour which is involved in this case and Morris which Armour subsequently acquired.

The complaint in general charged that the packers had violated Sections 1 and 2 of the Sherman Act by obtaining control of a very great proportion of the food supply of the nation, both meat and other foods, and by abusing that control so as to restrict competition among themselves and to eliminate their other competitors.

The consent decree that the parties agreed upon in 1920 and that the Court adopted imposed sweeping and perpetual restraints both upon the future activities of the packers and upon the business relationships that the packers would be allowed to have with enterprises engaged in the production and sale of foods other than meat.

And despite the efforts of the defendants over the years to relax these restrictions, they remain in effect and this Court most recently in 1961 rejected an attempt by the packers to relax the restrictions upon them.

The decree is complex and I will take the time here only to discuss the particular paragraphs that are in issue in this case, that’s principally paragraph fourth of the decree which begins on page 30 of the appendix.

That paragraph provides that the meatpacker corporations, including of course Armour, are perpetually enjoined and restrained from either directly or indirectly by themselves or through their officers, directors, agents, or servants engaging in or carrying on the manufacturing, jobbing, selling, transporting except this common carriers, distributing or otherwise dealing in some 114 listed food products, including bakery products, most of it groceries, vegetables and fruits.

Paragraph four goes on to provide that the corporation defendants are hereby further perpetually enjoined and restrained from owning either directly or indirectly severally or jointly by themselves or through their officers, directors, agents, or servants from owning any capital stock or other interest whatsoever in any corporation, firm or association except common carriers which is in the same business as what I mentioned, of manufacturing, jobbing, selling, transporting, distributing or otherwise dealing in any of the above described products or commodities.

Paragraph six of the decree further perpetually enjoins the defendants from operating retail meat markets and paragraph eight enjoins the packers from dealing directly or indirectly in fresh milk and cream.

In short, the meatpacker's decree perpetually excludes Armour from having any direct or indirect interest whatsoever in any firm in the baking or general grocery business and it prohibits Armour from otherwise dealing directly or indirectly in the enumerated products.

The decree as what is commonly referred to as the structural decree that is rather than simply enjoining the defendants from particular anti competitive acts.

It establishes a prophylactic separation between the defendants' business, excluding them from other businesses where it's felt that they're involvement and might create a danger competition.

General Host, which is the appellee in this case is the company that's widely involved in the baking business and the general grocery and restaurant businesses.

It was known until a couple of years ago as General Baking Company and under the brand name Bun Baking Company and others that manufactures and sells throughout the country a complete line of bread and other bakery products.

It also has a division called Little General Stores which has some 380 convenience retail food markets in various parts of the south and it also has subsidiaries that operate restaurants and other tourist facilities throughout the country.

It's plain and undisputed in this case that General Host's business is such that under the 1920 decree Armour could not have acquired any direct or indirect ownership interest whatsoever in General Host.

This litigation began about a year ago when General Host decided to do the reverse of that.

It would take over Armour by acquisition techniques that have become familiar in recent years.

Over the opposition of Armour's management, General Host made a tender offer to Armour's stockholders in which had sought to acquire a majority of Armour stock in return for package of the debentures and the stock warrants in General Host.

The tender offer was expressly conditioned upon the tender by shareholders of enough stock to give General Host an absolute majority of Armour stock and it provided that it will called off if that amount of stock were not tendered.

When the tender offer was made, the Government immediately sought to block this takeover on the theory that a corporate alliance between Armour's meatpacking business and General Host's bakery and retail grocery businesses would be just as inconsistent with the meatpacker's decree if initiated by General Host as it would have been if initiated by Armour.

It was plain of course that General Host's acquisition of Armour would not be directly punishable under the decree since the active party, General Host, was not a party to that decree.

Accordingly, the Government went to the District Court in Chicago which has had continuing jurisdiction at least in the recent years over the meatpacker's decree and there the Government requested a supplemental order to prohibit the takeover by General Host.

It did this consistent with paragraph 18 of the decree which like most decrees expressly retains jurisdiction for the purpose of taking such other action or adding to the foot of this decree such other relief if any as it may become necessary or appropriate for the carrying out in enforcement of this decree.

Byron R. White:

Did the Government's request to the District Court subsume a request to amend the decree?

James Van R. Springer:

Not in terms and of course this is the -- I think the semantic problem that is at the heart of this case.

Of course, we'll going back and back --