United States v. United Shoe MacHinery Corp.
Headline: Antitrust enforcement strengthened as Court reverses lower court and allows the Government to seek breakup or stronger remedies when a decade-old decree fails to restore competition in a manufacturing market.
Holding: The Court reversed and held that a trial court may modify a ten-year antitrust decree and must order stronger remedies, including breakup if necessary, when the decree has not restored workable competition.
- Allows the Government to seek breakup or stronger remedies when decrees fail to restore competition.
- Requires trial courts to reassess long-standing antitrust decrees after prescribed review periods.
- Makes it easier for government to force structural changes in dominant firms.
Summary
Background
In 1953 the United States sued a dominant maker of shoe machinery and the District Court found the company had monopolized that market. Instead of ordering a breakup, the court imposed restrictions and required a ten-year report on whether the decree had produced “workable competition.” The Government reported on January 1, 1965, that the company still dominated the market and asked the court to require reconstitution into two competing companies or other relief. The District Court denied the Government’s petition, relying on an older decision it read to limit modification of consent decrees.
Reasoning
The Supreme Court reversed. It held that the earlier decision relied on by the trial court did not bar modifying a decree when the decree has failed to achieve its purpose. The Court said a court in an antitrust case must make specific factual findings about whether the relief ordered has actually removed the monopoly and restored competition. If the decree has not done so after a reasonable period, the court must change or strengthen the remedy, up to structural measures, to end the unlawful market domination.
Real world impact
The decision sends the case back to the trial court to determine whether the 1953 remedies have met the standards for ending the monopoly and to order stronger relief if they have not. This makes clear that long-standing antitrust decrees cannot be left in place if they prove ineffective and that governments can seek more decisive remedies to restore competition.
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