United States v. Pabst Brewing Company

PETITIONER: United States
RESPONDENT: Pabst Brewing Company
LOCATION: General Petroleum Corporation

DOCKET NO.: 404
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 384 US 546 (1966)
ARGUED: Apr 27, 1966
DECIDED: Jun 13, 1966

Facts of the case

Question

Media for United States v. Pabst Brewing Company

Audio Transcription for Oral Argument - April 27, 1966 in United States v. Pabst Brewing Company

Earl Warren:

United States, Appellant, versus Pabst Brewing Company, et al.

Edwin M. Zimmerman:

Mr. Chief Justice --

Earl Warren:

Mr. Zimmerman.

Edwin M. Zimmerman:

-- and may it please the Court.

The United States is here on direct appeal under the Expediting Act from a final judgment of the District Court of the Eastern District of Wisconsin.

In this case, the United had sued under Section 7 of the Clayton Act to set aside the acquisition by the Pabst Brewing Company of the assets and business of the Blatz Brewing Company.

After the Government had put its evidence into the record and before the defendant submitted any evidence or attempted a rebuttal, the District Court granted defendant's motion for dismissal upon the ground that the plaintiff had shown no right to relief upon the facts and upon the law.

The United States had alleged that the merger of these two substantial competing beer companies violated Section 7 because of probable anticompetitive effects in three markets, the sale of beer in Wisconsin; the sale of beer in the three-state region consisting of Wisconsin, Illinois and Michigan; and the sale of beer in the United States as a whole.

The District Court held that the evidence submitted by the United States had not established that either Wisconsin or the three-state region constituted valid geographic markets.

The Court, therefore, confined its consideration of probable anticompetitive effects to the national market.

But in making that evaluation, it refused to consider the fact that the merger occurred in an industry that was experiencing a pronounced trend toward concentration.

It refused to consider this fact because a showing had not been made that that concentration trend had resulted from mergers.

The District Court therefore concluded that by itself, evidence of the combined share of the national market held by Pabst and Blatz did not suffice to make the acquisition unlawful and the District Court dismissed the case with prejudice.

We believe that the District Court used an erroneous standard for the determination of a geographic market.

Under a proper standard, we believe that the Government's unrebutted evidence compelled the conclusion that valid regional markets existed in Wisconsin and in the three-state region.

Where you --

Do you -- are you seeking the defendant's case from the premise assuming that the United States is the relevant market?

Edwin M. Zimmerman:

We also believe that the United States is a relevant market Mr. Justice Harlan.

But we believe that Wisconsin and the three-state areas are also relevant markets and perhaps more accurately reflect the impact of this merger.

Well, assuming that the country as a whole is a relevant market, what do you say about the dismissal?

Edwin M. Zimmerman:

The dismissal is inaccurate in that case too, Mr. Justice, because the judge refused to consider the fact that the merger took place in the context of a dramatically accelerating trend toward concentration.

And therefore, we believe, that had he taken that fact into consideration as we believe he is required to, the merger would be unlawful even though measured on a national basis.

We believe that where these errors corrected, the errors of market definition and the errors of consideration of concentration trends, that the unrebutted case submitted by the Government, establishes a violation of Section 7.

Accordingly, we propose that the case should be remanded to the District Court with instructions to that court to hear the defendant's evidence to determine whether the Government's showing has been rebutted.

I should like first to turn to the question of geographic market definition --

Byron R. White:

Excuse me, Mr. Zimmerman.

Edwin M. Zimmerman:

Yes, Mr. Justice.

Byron R. White:

Perhaps you've already covered this with the district judge.

In examining what the judge said about this below or we -- is this the question clearly erroneous or not?

Edwin M. Zimmerman:

There is one finding which we submit is clearly erroneous but we believe in a major --