Federal Trade Commission v. Western Meat Co.

Background

These cases involve the Federal Trade Commission and several companies that bought competing firms. In one case a meat company bought all stock of a rival in 1916. In other matters a glass maker and a packing company acquired rival firms’ stock and later obtained their business assets and plants. The FTC found the stock purchases unlawful under the Clayton Act and ordered the companies to give up the stock and, in some orders, the rival firms’ plants and business assets.

Reasoning

The central question was whether the FTC can force a company to sell or give up actual plants and business property that it gained through earlier unlawful stock ownership. The Court ruled that the FTC can order a company to stop holding unlawfully acquired stock and to give up that stock, and may prevent use of stock to secure a competitor’s property. But the Court held the FTC lacks authority under §§7 and 11 of the Clayton Act to require sale or divestiture of physical plants or business assets that a company already acquired before the FTC began proceedings. When the assets were not yet actually taken, the FTC’s broader order was sustained; when title and possession came before the complaint, the Court reversed.

Real world impact

Going forward the FTC can undo unlawful stock control and block further use of that control to capture rivals’ assets. However, remedies for businesses and property already transferred before FTC action must be sought in the courts. The decision shapes how enforcement and merger challenges are pursued.

Dissents or concurrances

Justice Brandeis (joined by three others) dissented in part, arguing the FTC should be able to require retransfer of assets even if they were acquired before the Commission’s proceeding, to fully remedy the harm.