United States v. Continental Can Company

PETITIONER:United States
RESPONDENT:Continental Can Company
LOCATION:Alabama State Capitol

DOCKET NO.: 367
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 378 US 441 (1964)
ARGUED: Apr 28, 1964
DECIDED: Jun 22, 1964

Facts of the case

Question

  • Oral Argument – April 28, 1964 (Part 1)
  • Audio Transcription for Oral Argument – April 28, 1964 (Part 1) in United States v. Continental Can Company

    Audio Transcription for Oral Argument – April 28, 1964 (Part 2) in United States v. Continental Can Company

    Earl Warren:

    Mr. Johnson, you may continue your argument.

    Helmer R. Johnson:

    Thank you, if the Court please.

    Before the recess, Mr. Justice Harlan asked me about El Paso and Lexington Bank except that these cases reemphasized a necessity of market determination and measuring the effects of the merger in those markets.

    I don’t think they have any clear relation to the case before the Court here.

    El Paso dealt with a market which where the market was clear, Natural Gas.

    Now, there was a direct elimination of a competitor or of a potential competitor in a well-defined market.

    Lexington Bank, also the — at least one of the lines of commerce there, the commercial banking was obvious.

    The market was defined quite closely and there was an elimination of direct competition and of course the percentages there were high.

    I have no reason to believe that the District Court would have decided this case any differently than he did in the light of those cases.

    Byron R. White:

    Even on the — even assuming that the Commerce Clause (Inaudible).

    Helmer R. Johnson:

    Yes, sir.

    The record here, as I was saying is, there’s — there is nothing in this record to indicate any anticompetitive effect whatsoever, notwithstanding as the District Court considered everything he could think off and all the arguments that were raised that indicated any likelihood, reasonable likelihood of anticompetitive effects.

    He went down the line, prior acquisitions, the intention of the parties, likelihood of suppression of products lines, elimination of competition, weakening of the companies in their respective lines, advantages resulting from the acquisition, concentration, change in market position, effects on competitors, ease of entry, tendency of the word monopoly.

    He found nothing.

    He indicated any reasonably probable anticompetitive effect, and the Government here points to nothing that would indicate a reasonable probability of anticompetitive effects.

    They argue that this should be assumed.

    But why should they be assumed?

    Reasonable probability is subject to proof perhaps not as precisely as past events but enough to guide our lives.

    We know quite a bit about the cause and effect and in trying to evaluate the probability of anticompetitive effects without any facts to go off, I guess it’s completely useless.

    The Government in its brief and its arguments has mentioned concentration and dominance.

    They don’t say what they mean by this or how they should be used in the application of Section 7.

    Surely, in the light of the legislative history of Section 7, from the rulings of this Court, they cannot be serious about an automatic application of the statute simply to something that is big.

    When I say just their word about statistics, the Government here admittedly has had difficulty with its statistics but they keep on using.

    They apologize for them — in their brief.

    They still keep on using them.

    They’d tried here to add statistics that couldn’t be added.

    Metal Working Industry, the can industry, reports to the Bureau of Census in terms of based boxes of steel used, they don’t report in terms of the number of containers made.

    The glass container industry reports to the Bureau of Census in units.

    No one has ever seen fit to combine the statistics, so far apart of the industries.

    The Government here tried to do it.

    Helmer R. Johnson:

    The Government clerk knowing nothing about the industries whatsoever, made certain assumptions.

    He assumed that all cans were the same size.

    He assumed that all cans were the same product mix.

    How wrong he was?

    The record shows for example that approximately 14,000 evaporated milk cans can be made up from this ton of steel.

    Approximately 2800 lard cans can be made from a ton of steel.

    He ignored all products.

    He tried to add the two together and came up with some figures which have no relation whatsoever to reality.

    The Government mentioned some figure of Continental having 23%, Hazel-Atlas, 3% of something.

    The figures could be varied by as much as you like depending on the hypothesis used.

    The District Court considered this very carefully and concluded that he states in his opinion that the combinations were predicated on implausible hypothesis, not supported by the record.

    Their figures are worthless.

    Your Honors here, we have a case that was carefully tried by the District Court.

    There was careful pretrial, careful analysis of the evidence down to minute details, or carefully prepared findings and opinions.

    I submit, this decision of the District Court should be affirmed.

    Earl Warren:

    Mr. Spritzer.

    Ralph S. Spritzer:

    Just a few brief points, Your Honor.

    Mr. Johnson asked how I was able to state to the Court that the record shows a narrow differential or relatively narrow differential in the price as between tin cans and glass containers.

    Apart from the numerous statements in memorandum of companies like the Continental Can and Hazel-Atlas Company which discussed the danger of shift in business if price is altered.

    There are other exhibits which indicate that the range of differential is relatively narrow.

    I would like to refer the Court to a study made of can versus glass by Owens-Illinois which is in the record at 2458.

    That gives in graphic form relative prices for beer, detergents, polish, vegetables, baby food, coffee and aerosol, a wide range of the general categories of product for which the containers are used.

    The prices which appear on that graph give the figures the price per gross, per 144.

    For example, in vegetables in the 26 ounce size down in the right hand corner, it would appear that the price is roughly judging by that graph about $8 of gross for the can and about $9 of gross for the glass.

    Now, Mr. Johnson stated to the Court that he find has no difficulty in observing the existence of direct competition as between milk bottles and the plastic containers in which milk is sold.

    But the competition which he finds typical of that between glass and metal cans is said to be tangential or indirect.

    I find this astonishing because one can go to the supermarket shelves as to the investigators in this case and list dozens and dozens and dozens of items which appeared side-by-side in glass and in metal cans, but I go further than that.

    One can find the same manufacturer putting the self same item in both so as to get the customers who like it in glass and the customers who like it in can.

    We had in this record the testimony of one such packer, a fairly large company which packs various types of apple products known as the Muscle Man Company.

    Their purchasing agent testified.

    Ralph S. Spritzer:

    He said that his company puts the following items in both cans and glasses, the self same item.

    Apple sauce, spiced apple rings, apple based jellies, apple butter, apple juice and the sorted pie fillings.

    Byron R. White:

    Where is that?

    Ralph S. Spritzer:

    That testimony appears at record 479 and following the witnesses name Brown.

    Mr. Johnson asks how we know that for most uses, as I put it in my opening argument, glass and metal alone are practicable.

    Well, it was testified and without contradiction by a food expert that for purposes of food canning, these are the only containers that can be used.

    There is also a testimony which is uncontradicted that for beverages, carbonated beverages and beer.

    The only containers which can be used are glass and metal.

    Those two items standing alone, soft drinks and beer on the one hand and all cans for food canning on the other, total over 33 billion items out of a combined total production of 60 billion cans and glass containers.

    So without going any further and discuss —

    Byron R. White:

    (Voice Overlap) Hazel-Atlas?

    Ralph S. Spritzer:

    Hazel-Atlas’ production was small.

    What I’ve been trying to show —

    Byron R. White:

    Beer.

    Ralph S. Spritzer:

    Yes.

    In beer it was, though it could have — it had the capacity next year or the year after to expand that if it chose.

    We don’t know.

    I’ve been attending to show from the inter-industry’s standpoint that is to the entire range of commodities involved, there is the opportunity and ability on the part of each major company to compete with the others in the — in the other line.

    Hugo L. Black:

    We have the breakdown of beers (Inaudible)

    Ralph S. Spritzer:

    Well, my recollection is (Inaudible) that the can had something like 40% at the time this record was closed.

    I would have to check that to be sure of my figure.

    Hugo L. Black:

    (Inaudible)

    Ralph S. Spritzer:

    I think it went in, in more time.

    The figures and I won’t stop to try to examine them, are set out on beer at 2970 of the record, Your Honor.

    Now, we’re told also by Mr. Johnson that the price is no factor so far as the glass makers and the can makers are concerned and he relies on the fact that on the stand, glass manufacturers when asked on cross-examination whether they competed, said that they stoutly competed.

    I’ve earlier mentioned numerous exhibits — just take one moment to finish this please Your Honor if I may.

    I’ve earlier mentioned numerous exhibits which show that Continental Can itself regarded price as a factor and I would like in closing to refer to one more such exhibit which appears at record 2544 in the third volume.

    This is an internal memorandum of Continental Can said — said, “Serious consideration should be given to sales department recommendations for reducing the quoted price on number 5 round single friction cans from the present price of $67.38 per thousand to a price in the neighborhood of $60 in order to reduce a potentially dangerous spread in favor of glass jars.”

    Thank you.