United States v. ITT Continental Baking Co.

Background

The dispute involves the Federal Trade Commission and Continental Baking Company (later merged into ITT Continental). In 1962 the parties agreed to a consent order barring Continental from “acquiring” certain bakeries for ten years. The Government later sued, alleging Continental acquired three companies in violation of that order and sought daily civil penalties. The trial court found two violations but refused daily fines; the Tenth Circuit agreed. The Government asked this Court to resolve a conflict among appeals courts about whether such acquisitions are single acts or continuing violations.

Reasoning

The Court addressed whether the word “acquiring” in the consent order covers only the initial purchase or also the continued holding of acquired assets. It looked at the order and the documents the parties incorporated into it (the complaint and an appendix), the statutory language in the Clayton and FTC Acts allowing divestiture, and legislative history about daily penalties. The majority concluded that “acquiring” reasonably includes both obtaining and retaining assets, so keeping unlawfully acquired bakeries is a continuing failure to obey and can trigger daily penalties. The Court reversed the denial of daily penalties and remanded for further proceedings.

Real world impact

This interpretation affects companies subject to many similar FTC consent orders; the Court noted dozens of existing orders with comparable wording. Firms that retain assets bought in breach of an FTC order now risk daily fines until they divest. The decision changes how enforcement and settlement terms may be enforced and calculated.

Dissents or concurrances

A dissent argued the order’s plain words bar only the initial acquisition and warned that reading in retention undermines the certainty of negotiated consent orders and may discourage settlements.