United States v. United Shoe MacHinery Corp.
391 U.S. 244, 20 L. Ed. 2d 562, 1968 U.S. LEXIS 3169 (1968)
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Rule of Law:
A court has a duty to modify an antitrust decree when, after a reasonable period, its terms have proven inadequate to terminate the illegal monopoly and restore workable competition. The strict modification standard from United States v. Swift & Co., requiring a "clear showing of grievous wrong evoked by new and unforeseen conditions," applies only when a defendant seeks relief from a decree's restrictions, not when the government seeks modification to achieve the decree's original objectives.
Facts:
- United Shoe Machinery Corp. (United) was found to have monopolized the shoe machinery manufacturing market.
- United's overwhelming market strength excluded potential competitors and limited actual competition.
- This market dominance was not attributable solely to United's superior skill, research, or other legitimate business advantages.
- A decade after a court-ordered remedy was imposed to create 'workable competition,' United continued to dominate the shoe machinery market.
- The remedies implemented in the original decree had failed to establish a competitive market structure.
Procedural Posture:
- In 1953, the U.S. District Court for the District of Massachusetts found United Shoe Machinery Corp. had violated § 2 of the Sherman Act by monopolizing the shoe machinery market.
- The District Court issued a decree with various restrictions but declined to order divestiture, instead including a provision for the parties to report on the decree's effects after ten years.
- The Supreme Court affirmed the District Court's decree in 1954.
- In 1965, the United States petitioned the District Court for modification of the decree, arguing it had failed to create workable competition and requesting that United be broken up.
- The District Court denied the government's petition, holding that the strict standard for modification from United States v. Swift & Co. had not been met.
- The United States (appellant) appealed the denial of its petition directly to the Supreme Court, with United Shoe Machinery Corp. as the appellee.
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Issue:
Does the strict standard for modifying a consent decree from United States v. Swift & Co., requiring a 'clear showing of grievous wrong evoked by new and unforeseen conditions,' apply when the government seeks to modify an antitrust decree on the grounds that its remedies have proven ineffective at restoring workable competition?
Opinions:
Majority - Mr. Justice Fortas
No, the strict standard for modifying a decree from United States v. Swift & Co. does not apply in this context. The lower court misconstrued Swift, which involved defendants seeking to escape the burdens of a decree. In that situation, a high standard is appropriate to prevent defendants from undoing the decree's purpose. Here, the government is seeking modification not to escape the decree, but to achieve its original purpose: the elimination of an illegal monopoly. The court has an affirmative and continuing duty to prescribe relief that will terminate the illegal monopoly. The original 1953 decree, with its 10-year review provision, explicitly contemplated that further action might be necessary if workable competition was not restored. After a decade of failure, the court must modify the decree to prescribe other, and if necessary more definitive, means to achieve the required result.
Analysis:
This decision significantly clarifies the standards for modifying antitrust decrees, establishing a crucial distinction based on which party seeks the modification and for what purpose. It empowers the government and courts to strengthen remedies that prove ineffective, ensuring that the substantive goal of restoring competition is not defeated by an overly rigid adherence to procedural finality. The ruling effectively puts initial, less drastic remedies on a probationary basis; if they fail to dismantle a monopoly within a reasonable time, courts have a duty to impose more stringent measures, such as divestiture. This ensures that antitrust enforcement is result-oriented rather than a one-time event.
