United States v. Container Corporation of America

PETITIONER: United States
RESPONDENT: Container Corporation of America
LOCATION: Union Free School District No. 15

DOCKET NO.: 27
DECIDED BY: Warren Court (1967-1969)
LOWER COURT:

CITATION: 393 US 333 (1969)
ARGUED: Nov 18, 1968
DECIDED: Jan 14, 1969

Facts of the case

Question

Media for United States v. Container Corporation of America

Audio Transcription for Oral Argument - November 18, 1968 in United States v. Container Corporation of America

Earl Warren:

Number 27, United States versus petitioner or appellate versus Container Corporation of America.

Mr. Zimmerman.

Edwin M. Zimmerman:

Mr. Chief Justice, may it please the Court.

This case is on appeal from the United States District Court to the middle district of North Carolina.

In 1963, the United States filed a civil complaint under Section 1 of the Sherman Act alleging that at least since 1955, the defendant companies engaged in the business of selling corrugated containers in the Southeastern United States unlawfully combined to exchange among themselves information as to prices they charge are quoted “specific customers,” for the purpose and with the effect of restricting price competition.

The case was submitted to the District Court for decision on the basis of proposed findings, many of which were agreed to as well as on the basis of extensive depositions taken by the plaintiff of various offices of the defendant, and of exhibits introduced by both parties.

The United States asserted the evidence as to defendants course of conduct over the eight year period, compelled the conclusion that a combination existed whereby defendants finished to one another upon request information as to the most recent prize or current quotes, any member of the group was offering to a specific customer.

The United States also asserted that under the facts of this case, such combination was unlawful because it had the purpose and necessary effect of restricting prize competition.

The District Court handed down its decision on August 31, 1967.

It dismissed the Government's complaint with prejudice and we accordingly appealed to this Court.

In brief, the District Court concluded that no combination for the furnishing of specific prize information was proven.

It further found that even where there such a combination, it was not unlawful since there was no further agreement among the defendants to use the exchange price information to maintain prices or minimize price reductions.

We believe the District Court was wrong as a matter of law and not finding that a combination existed and that it also applied an erroneous legal standard to the question of legality of the combination.

They agreed upon facts described this market, the corrugated container industry in the southeastern part of the United States does over $100 million worth of business each year.

There are some 10,000 purchasers of corrugated containers in this region.

The group of 18 defendants in this case account for 90% of the shipments.

As defendant's brief points out, the four largest defendants account for 45% of the business.

It is also the fact that the six largest defendants account for almost 60% of the business.

The number of sellers interested in any given purchase was also limited by such considerations as the geographic proximity of the buyer to the seller's plant, the suitability of the seller's equipment, the attractiveness of the order and the particular product mixed than being manufactured.

The business is essentially accustomed order one with each purchaser indicating the particular specifications of its box requirements.

The buyers do not carry inventories and they must buy for immediate needs.

Price is the consideration which determines to whom a buyer gives its business.

Since, there were no quality differences among the products offered by the sellers, a box made to particular specification is identical to any other seller's box.

The industry throughout the period was characterized by chronic overcapacity.

The Court found that as to each defendant, that when it considered it necessary to ascertain from a defendant competitor, the most recent price to a specific customer or when to ascertain the accuracy of a customer's report of another competitor's price, that information was usually requested from the competitor then supplying the customer.

The Court also found as to each defendant, that when such a request for information as to the most recent price to a specific customer was received, that information usually was furnished and it was accurate.

After receipt of the information, each company was free to do with it, what it wished.

Although the findings again show, and is say it finding 28th, that “in the majority of instances, the recipient quoted or charged substantially the same price as the price given by it's competitor in response to its request.”

This interchange was engaged in throughout the eight year period except when for brief periods for defendants went as one witness put it off the air.

In such cases, the defendants would neither give nor request the price information.