United States v. Swift & Co. et al.
286 U.S. 106 (1932)
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Rule of Law:
A court of equity may modify a permanent injunction entered by consent, but only upon a clear showing of grievous wrong evoked by new and unforeseen conditions that turn the decree into an instrument of wrong.
Facts:
- Prior to 1920, the five largest meat-packing companies in the United States, including Swift & Co. and Armour & Co., acted in concert to suppress competition in the purchase of livestock and the sale of meat.
- The packers expanded their alleged monopoly into 'substitute foods' by setting about to control the supply of products like fish, vegetables, fruits, and other groceries.
- The packers used their extensive existing infrastructure, such as refrigerator cars and branch houses, to distribute these other food products with minimal increase in overhead costs.
- To eliminate smaller competitors, the packers engaged in predatory pricing, temporarily fixing prices on these other foods at levels too low for rivals to compete.
- This conduct was alleged to have created an unlawful monopoly over a large part of the nation's food supply.
Procedural Posture:
- In 1920, the United States filed a bill in equity against Swift & Co., Armour & Co., and other major meat-packers in the Supreme Court of the District of Columbia, seeking to dissolve an alleged monopoly under the Sherman Antitrust Act.
- The defendants consented to the entry of a decree on February 27, 1920, which enjoined them from continuing the monopoly and specifically prohibited them from manufacturing or selling numerous non-meat food products (groceries), among other restrictions.
- After the decree's validity was unsuccessfully challenged and ultimately affirmed by the U.S. Supreme Court in a separate action, Swift & Co. and Armour & Co. filed a petition in April 1930 in the Supreme Court of the District of Columbia to modify the 1920 decree.
- The petitioners argued that changed economic conditions justified lifting the prohibitions on dealing in groceries and other activities.
- On January 31, 1931, the Supreme Court of the District of Columbia granted the petition in part, modifying the decree to permit the defendants to deal in groceries at the wholesale level.
- The United States and intervening wholesale grocers' associations, the appellees, appealed the modifying decree directly to the United States Supreme Court.
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Issue:
Did the lower court err in modifying a 1920 consent decree to permit meat-packers to re-enter the wholesale grocery business, based on alleged changes in market conditions since the decree was entered?
Opinions:
Majority - Mr. Justice Cardozo
Yes, the lower court erred in modifying the consent decree. While a court of equity retains the power to modify a continuing injunction in response to changed conditions, such a modification requires more than a showing that the injunction is no longer convenient. The party seeking modification must make a 'clear showing of grievous wrong evoked by new and unforeseen conditions.' Here, the conditions that originally justified the injunction—the packers' immense size, their integrated distribution networks, and the potential for anti-competitive abuse—have not fundamentally changed. The rise of chain stores has not eradicated the danger; it may even create new opportunities for the packers to leverage their power. The original fears of monopolistic abuse are not 'attenuated to a shadow,' and therefore, the decree, which was entered with the defendants' consent, should not be altered.
Dissenting - Mr. Justice Butler
No, the lower court did not err in modifying the decree. The facts found by the lower court, which are supported by the evidence, demonstrate that conditions have significantly changed since 1920. The meat-packing monopoly is broken, and the defendants are now in active competition with each other and are struggling financially. The food industry has evolved, and allowing the packers to diversify into groceries aligns with legitimate business tendencies, increases efficiency, and would likely lower consumer prices. The fear of monopoly is no longer justified, and the interveners (wholesale grocers) should not be shielded from legitimate competition. The original decree was entered without any admission or adjudication of guilt, so the majority's reliance on past 'abuses' is unfounded.
Analysis:
This decision establishes a very high and influential standard for the modification of permanent injunctions and consent decrees, particularly in antitrust law. The 'grievous wrong' standard articulated by Justice Cardozo makes such decrees remarkably durable, preventing defendants from easily escaping long-term restrictions by citing general market evolution or the passage of time. The ruling solidifies the principle that the structural power and potential for abuse that led to an injunction are as important as the specific conduct, meaning the injunction can remain even if the original illegal behavior has ceased. This precedent significantly strengthens the government's hand in negotiating long-term settlements in antitrust cases.
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