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United States v. E.I. Du Pont De Nemours & Co., 353 U.S. 586 (1957)

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American Government Topics:  DuPont ?php include ("../5.inc"); ?> United States v. E.I. Du Pont De Nemours & Co., 353 U.S. 586 (1957)
United States Supreme Court

From the U.S. Government Printing Office via GPO Access
 
Case:   UNITED STATES V. E.I. DU PONT DE NEMOURS & CO. 

Case #: 353US586


NO. 3.  ARGUED NOVEMBER 14-15, 1956 - DECIDED JUNE 3, 1957 - 126 F.
SUPP. 235, REVERSED AND REMANDED. 


THIS IS A CIVIL ACTION BROUGHT BY THE GOVERNMENT IN 1949 UNDER SEC. 15
OF THE CLAYTON ACT TO ENJOIN VIOLATIONS OF SEC. 7 OF THAT ACT RESULTING
FROM THE PURCHASE BY DU PONT IN 1917-1919 OF A 23% STOCK INTEREST IN
GENERAL MOTORS.  THE ESSENCE OF THE CHARGE WAS THAT, BY MEANS OF THE
CLOSE RELATIONSHIP OF THE TWO COMPANIES, DU PONT HAD OBTAINED AN
ILLEGAL PREFERENCE OVER COMPETITORS IN THE SALE OF AUTOMOTIVE FINISHES
AND FABRICS TO GENERAL MOTORS, THUS TENDING TO "CREATE A MONOPOLY" IN A
"LINE OF COMMERCE."  AFTER TRIAL, THE DISTRICT COURT DISMISSED THE
COMPLAINT ON THE GROUND THAT THE GOVERNMENT HAD FAILED TO PROVE ITS
CASE, AND THE GOVERNMENT APPEALED DIRECTLY TO THIS COURT.  HELD:  THE
GOVERNMENT PROVED A VIOLATION OF SEC. 7; THE JUDGMENT IS REVERSED AND
THE CAUSE IS REMANDED TO THE DISTRICT COURT FOR A DETERMINATION, AFTER
FURTHER HEARING, OF THE EQUITABLE RELIEF NECESSARY AND APPROPRIATE IN
THE PUBLIC INTEREST TO ELIMINATE THE EFFECTS OF THE STOCK ACQUISITION
OFFENSIVE TO THE STATUTE.  PP. 588-608. 

(A)  ANY ACQUISITION OF ONE CORPORATION OF ALL OR ANY PART OF THE
STOCK OF ANOTHER CORPORATION, COMPETITOR OR NOT, WAS WITHIN THE REACH
OF SEC. 7 BEFORE ITS AMENDMENT IN 1950 WHENEVER THERE WAS REASONABLE
LIKELIHOOD THAT THE ACQUISITION WOULD RESULT IN A RESTRAINT OF COMMERCE
OR IN THE CREATION OF A MONOPOLY OF ANY "LINE OF COMMERCE" - I.E., IT
APPLIED TO VERTICAL AS WELL AS HORIZONTAL STOCK ACQUISITIONS.  PP. 590
593. 

(B)  FAILURE OF THE FEDERAL TRADE COMMISSION TO INVOKE SEC. 7 AGAINST
VERTICAL STOCK ACQUISITIONS IS NOT A BINDING ADMINISTRATIVE
INTERPRETATION THAT CONGRESS DID NOT INTEND VERTICAL ACQUISITIONS TO
COME WITHIN THE PURVIEW OF THE ACT.  P. 590. 

(C) THE RECORD SHOWS THAT AUTOMOTIVE FINISHES AND FABRICS HAVE
SUFFICIENT PECULIAR CHARACTERISTICS AND USES TO CONSTITUTE THEM
PRODUCTS SUFFICIENTLY DISTINCT FROM ALL OTHER FINISHES AND FABRICS TO
MAKE THEM A "LINE OF COMMERCE" WITHIN THE MEANING OF THE CLAYTON ACT. 
THEREFORE, THE BOUNDS OF THE RELEVANT MARKET FOR THE PURPOSES OF THIS
CASE ARE NOT COEXTENSIVE WITH THE TOTAL MARKET FOR FINISHES AND
FABRICS, BUT ARE COEXTENSIVE WITH THE AUTOMOBILE INDUSTRY, THE RELEVANT
MARKET FOR AUTOMOTIVE FINISHES AND FABRICS.  PP. 593-595. 

(D)  THE RECORD SHOWS THAT QUANTITATIVELY AND PERCENTAGEWISE DU PONT
SUPPLIES THE LARGEST PART OF GENERAL MOTORS' REQUIREMENTS OF FINISHES
AND FABRICS.  THEREFORE, DU PONT HAS A SUBSTANTIAL SHARE OF THE
RELEVANT MARKET.  PP. 595-596. 

(E)  THE TEST OF A VIOLATION IS WHETHER, AT THE TIME OF SUIT, THERE
IS A REASONABLE PROBABILITY THAT THE STOCK ACQUISITION MAY LEAD TO A
RESTRAINT OF COMMERCE OR TEND TO CREATE A MONOPOLY OF A LINE OF
COMMERCE.  THEREFORE, THE GOVERNMENT MAY MAINTAIN THIS SUIT, BROUGHT IN
1949, BASED UPON AN ACQUISITION OF STOCK WHICH OCCURRED IN 1917-1919. 
PP. 596-607. 

(F)  EVEN WHEN A PURCHASE OF STOCK IS SOLELY FOR INVESTMENT, THE
PLAIN LANGUAGE OF SEC. 7 CONTEMPLATES AN ACTION AT ANY TIME THE STOCK
IS USED TO BRING ABOUT, OR IN ATTEMPTING TO BRING ABOUT, A SUBSTANTIAL
LESSENING OF COMPETITION.  PP. 597-598. 

(G) ON THE RECORD IN THIS CASE, THE BACKGROUND OF THE ACQUISITION AND
THE PLAIN IMPLICATIONS OF THE CONTEMPORANEOUS DOCUMENTS ELIMINATE ANY
BASIS FOR A CONCLUSION THAT THE PURCHASE WAS MADE "SOLELY FOR
INVESTMENT."  PP. 598-602. 

(H)  THE BULK OF DU PONT'S PRODUCTION OF AUTOMOTIVE FINISHES AND
FABRICS HAS ALWAYS SUPPLIED THE LARGEST PART OF THE REQUIREMENTS OF
GENERAL MOTORS, THE ONE CUSTOMER IN THE AUTOMOBILE INDUSTRY CONNECTED
TO DU PONT BY A STOCK INTEREST; AND THERE IS AN OVERWHELMING INFERENCE
THAT DU PONT'S COMMANDING POSITION WAS PROMOTED BY ITS STOCK INTEREST
AND WAS NOT GAINED SOLELY ON COMPETITIVE MERIT.  PP. 600-605. 

(I)  IT IS NOT REQUISITE TO THE PROOF OF A VIOLATION OF SEC. 7 TO
SHOW THAT RESTRAINT OR MONOPOLY WAS INTENDED.  P. 607. 

UNITED STATES V. E.I. DU PONT DE NEMOURS & CO. ET AL. 

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS. 

MR. JUSTICE BRENNAN DELIVERED THE OPINION OF THE COURT. 

THIS IS A DIRECT APPEAL UNDER SEC. 2 OF THE EXPEDITING ACT (FN1) FROM
A JUDGMENT OF THE DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS,
(FN2) DISMISSING THE GOVERNMENT'S ACTION BROUGHT IN 1949 UNDER SEC. 15
OF THE CLAYTON ACT.  (FN3)  THE COMPLAINT ALLEGED A VIOLATION OF SEC. 7
OF THE ACT (FN4) RESULTING FROM THE PURCHASE BY E.I. DU PONT DE NEMOURS
AND COMPANY IN 1917-1919 OF A 23% STOCK INTEREST IN GENERAL MOTORS
CORPORATION.  THIS APPEAL IS FROM THE DISMISSAL OF THE ACTION AS TO DU
PONT, GENERAL MOTORS AND THE CORPORATE HOLDERS OF LARGE AMOUNTS OF DU
PONT STOCK, CHRISTIANA SECURITIES CORPORATION AND DELAWARE REALTY &
INVESTMENT COMPANY.  (FN5) 

THE PRIMARY ISSUE IS WHETHER DU PONT'S COMMANDING POSITION AS GENERAL
MOTORS' SUPPLIER OF AUTOMOTIVE FINISHES AND FABRICS WAS ACHIEVED ON
COMPETITIVE MERIT ALONE, OR BECAUSE ITS ACQUISITION OF THE GENERAL
MOTORS' STOCK, AND THE CONSEQUENT CLOSE INTERCOMPANY RELATIONSHIP, LED
TO THE INSULATION OF MOST OF THE GENERAL MOTORS' MARKET FROM FREE
COMPETITION, WITH THE RESULTANT LIKELIHOOD, AT THE TIME OF THE SUIT, OF
THE CREATION OF A MONOPOLY OF A LINE OF COMMERCE. 

THE FIRST PARAGRAPH OF SEC. 7, PERTINENT HERE, PROVIDES: 

"THAT NO CORPORATION ENGAGED IN COMMERCE SHALL ACQUIRE, DIRECTLY OR
INDIRECTLY, THE WHOLE OR ANY PART OF THE STOCK OR OTHER SHARE CAPITAL
OF ANOTHER CORPORATION ENGAGED ALSO IN COMMERCE, WHERE THE EFFECT OF
SUCH ACQUISITION MAY BE TO SUBSTANTIALLY LESSEN COMPETITION BETWEEN THE
CORPORATION WHOSE STOCK IS SO ACQUIRED AND THE CORPORATION MAKING THE
ACQUISITION, OR TO RESTRAIN SUCH COMMERCE IN ANY SECTION OR COMMUNITY,
OR TEND TO CREATE A MONOPOLY OF ANY LINE OF COMMERCE."  (FN6) 

SUBSTANTIAL LESSENING OF COMPETITION FROM THE ACQUISITION BY ONE
CORPORATION OF THE WHOLE OR ANY PART OF THE STOCK OF A COMPETING
CORPORATION, BUT ALSO TO ARREST IN THEIR INCIPIENCY RESTRAINTS OR
MONOPOLIES IN A RELEVANT MARKET WHICH, AS A REASONABLE PROBABILITY,
APPEAR AT THE TIME OF SUIT LIKELY TO RESULT FROM THE ACQUISITION BY ONE
CORPORATION OF ALL OR ANY PART OF THE STOCK OF ANY OTHER CORPORATION. 
THE SECTION IS VIOLATED WHETHER OR NOT ACTUAL RESTRAINTS OR MONOPOLIES,
OR THE SUBSTANTIAL LESSENING OF COMPETITION, HAVE OCCURRED OR ARE
INTENDED.  ACQUISITIONS SOLELY FOR INVESTMENT ARE EXPECTED, BUT ONLY
IF, AND SO LONG AS, THE STOCK IS NOT USED BY VOTING OR OTHERWISE TO
BRING ABOUT, OR IN ATTEMPTING TO BRING ABOUT, THE SUBSTANTIAL LESSENING
OF COMPETITION. 

WE ARE MET AT THE THRESHOLD WITH THE ARGUMENT THAT SEC. 7, BEFORE ITS
AMENDMENT IN 1950, APPLIED ONLY TO AN ACQUISITION OF THE STOCK OF A
COMPETING CORPORATION, AND NOT TO AN ACQUISITION BY A SUPPLIER
CORPORATION OF THE STOCK OF A CUSTOMER CORPORATION - IN OTHER WORDS,
THAT THE STATUTE APPLIED ONLY TO HORIZONTAL AND NOT TO VERTICAL
ACQUISITIONS.  THIS IS THE FIRST CASE PRESENTING THE QUESTION IN THIS
COURT.  INTERNATIONAL SHOE CO. V. FEDERAL TRADE COMM'N, 280 U.S. 291,
AND THATCHER MFG. CO. V. FEDERAL TRADE COMM'N, 272 U.S. 554, INVOLVED
CORPORATE ACQUISITIONS OF STOCK OF COMPETITORS. 

DURING THE 35 YEARS BEFORE THIS ACTION WAS BROUGHT, THE GOVERNMENT
DID NOT INVOKE SEC. 7 AGAINST VERTICAL ACQUISITIONS.  THE FEDERAL TRADE
COMMISSION HAS SAID THAT THE SECTION DID NOT APPLY TO VERTICAL
ACQUISITIONS.  SEE F.T.C., REPORT ON CORPORATE MERGERS AND
ACQUISITIONS, 168 (1955), H.R. DOC. NO. 169, 84TH CONG., 1ST SESS.
ALSO, THE HOUSE COMMITTEE CONSIDERING THE 1950 REVISION OF SEC. 7
STATED THAT "  ..  ITT HAS BEEN THOUGHT BY SOME THAT THIS LEGISLATION
(THE 1914 ACT) APPLIES ONLY TO THE SO-CALLED HORIZONTAL MERGERS  ..
."   H.R. REP. NO. 1191, 81ST CONG., 1ST SESS. 11.  THE HOUSE REPORT
ADDS, HOWEVER, THAT THE 1950 AMENDMENT WAS PURPOSED "  ..  TOO MAKE IT
CLEAR THAT THE BILL APPLIES TO ALL TYPES OF MERGERS AND ACQUISITIONS,
VERTICAL AND CONGLOMERATE AS WELL AS HORIZONTAL  ..  ."" 

THIS COURT HAS THE DUTY TO RECONCILE ADMINISTRATIVE INTERPRETATIONS
WITH THE BROAD ANTITRUST POLICIES LAID DOWN BY CONGRESS.  CF. AUTOMATIC
CANTEEN CO. V. FEDERAL TRADE COMM'N, 346 U.S. 61, 74.   THE FAILURE OF
THE COMMISSION TO ACT IS NOT A BINDING ADMINISTRATIVE INTERPRETATION
THAT CONGRESS DID NOT INTEND VERTICAL ACQUISITIONS TO COME WITHIN THE
PURVIEW OF THE ACT.  ACCORD, BALTIMORE & OHIO R. CO. V. JACKSON, 353
U.S. 325, 331. 

THE FIRST PARAGRAPH OF SEC. 7, WRITTEN IN THE DISJUNCTIVE, PLAINLY IS
FRAMED TO REACH NOT ONLY THE CORPORATE ACQUISITION OF STOCK OF A
COMPETING CORPORATION, WHERE THE EFFECT MAY BE SUBSTANTIALLY TO LESSEN
COMPETITION BETWEEN THEM, BUT ALSO THE CORPORATE ACQUISITION OF STOCK
OF ANY CORPORATION, COMPETITOR OR NOT, WHERE THE EFFECT MAY BE EITHER
(1) TO RESTRAIN COMMERCE IN ANY SECTION OR COMMUNITY, OR (2) TEND TO
CREATE A MONOPOLY OF ANY LINE OF COMMERCE.  THE AMENDED COMPLAINT DOES
NOT ALLEGE THAT THE EFFECT OF DU PONT'S ACQUISITION MAY BE TO RESTRAIN
COMMERCE IN ANY SECTION OR COMMUNITY BUT ALLEGES THAT THE EFFECT WAS "
..  TOO TEND TO CREATE A MONOPOLY IN PARTICULAR LINES OF COMMERCE  ..
."  

COMPANY'S ACQUISITION OF STOCK IN TWO OR MORE CORPORATIONS.  (FN7)
MUCH OF THE LEGISLATIVE HISTORY OF THE SECTION DEALS WITH THE ALLEGED
HOLDING COMPANY EVIL.  (FN8)  THIS HISTORY DOES NOT AID IN
INTERPRETATION BECAUSE OUR CONCERN HERE IS WITH THE FIRST PARAGRAPH OF
THE SECTION.  THERE IS, HOWEVER, PERTINENT LEGISLATIVE HISTORY WHICH
DOES AID AND SUPPORT OUR CONSTRUCTION. 

SENATOR CHILTON, ONE OF THE SENATE MANAGERS OF THE BILL, EXPLAINED
THAT THE HOUSE CONFEREES INSISTED THAT TO PROHIBIT JUST THE
ACQUISITIONS WHERE THE EFFECT WAS "SUBSTANTIALLY" TO LESSEN COMPETITION
WOULD NOT ACCOMPLISH THE DESIGNED AIM OF THE STATUTE, BECAUSE "A
CORPORATION MIGHT ACQUIRE THE STOCK OF ANOTHER CORPORATION, AND THERE
WOULD BE NO LESSENING OF COMPETITION, BUT THE TENDENCY MIGHT BE TO
CREATE MONOPOLY OR TO RESTRAIN TRADE OR COMMERCE."  "THEREFORE," SAID
SENATOR CHILTON, "THERE WAS ADDED  ..  THHE FOLLOWING: 'OR TO RESTRAIN
SUCH COMMERCE IN ANY SECTION OR COMMUNITY OR TEND TO CREATE A MONOPOLY
OF ANY LINE OF COMMERCE.'"  (FN9)  THIS CONSTRUCTION OF THE SECTION, AS
EMBRACING THREE SEPARATE AND DISTINCT EFFECTS OF A STOCK ACQUISITION,
HAS ALSO BEEN RECOGNIZED BY A NUMBER OF FEDERAL COURTS.  (FN10) 

WE HOLD THAT ANY ACQUISITION BY ONE CORPORATION OF ALL OR ANY PART OF
THE STOCK OF ANOTHER CORPORATION, COMPETITOR OR NOT, IS WITHIN THE
REACH OF THE SECTION WHENEVER THE REASONABLE LIKELIHOOD APPEARS THAT
THE ACQUISITION WILL RESULT IN A RESTRAINT OF COMMERCE OR IN THE
CREATION OF A MONOPOLY OF ANY LINE OF COMMERCE.  THUS, ALTHOUGH DU PONT
AND GENERAL MOTORS ARE NOT COMPETITORS, A VIOLATION OF THE SECTION HAS
OCCURRED IF, AS A RESULT OF THE ACQUISITION, THERE WAS AT THE TIME OF
SUIT A REASONABLE LIKELIHOOD OF A MONOPOLY OF ANY LINE OF COMMERCE. 
JUDGE MARIS CORRECTLY STATED IN TRANSAMERICA CORP. V. BOARD OF
GOVERNORS, 206 F.2D 163, 169: 

"A MONOPOLY INVOLVES THE POWER TO  ..  EXXCLUDE COMPETITION WHEN THE
MONOPOLIST DESIRES TO DO SO. OBVIOUSLY, UNDER SECTION 7 IT WAS NOT
NECESSARY  ..  TOO FIND THAT  ..  (TTHE DEFENDANT) HAS ACTUALLY
ACHIEVED MONOPOLY POWER BUT MERELY THAT THE STOCK ACQUISITIONS UNDER
ATTACK HAVE BROUGHT IT MEASURABLY CLOSER TO THAT END.  FOR IT IS THE
PURPOSE OF THE CLAYTON ACT TO NIP MONOPOLY IN THE BUD.   SINCE BY
DEFINITION MONOPOLY INVOLVES THE POWER TO ELIMINATE COMPETITION A
LESSENING OF COMPETITION IS CLEARLY RELEVANT IN THE DETERMINATION OF
THE EXISTENCE OF A TENDENCY TO MONOPOLIZE.  ACCORDINGLY IN ORDER TO
DETERMINE THE EXISTENCE OF A TENDENCY TO MONOPOLY IN  ..  ANNY  ..
LINNE OF BUSINESS THE AREA OR AREAS OF EXISTING EFFECTIVE COMPETITION IN
WHICH MONOPOLY POWER MIGHT BE EXERCISED MUST FIRST BE DETERMINED  ..
."  

APPELLEES ARGUE THAT THERE EXISTS NO BASIS FOR A FINDING OF A
PROBABLE RESTRAINT OR MONOPOLY WITHIN THE MEANING OF SEC. 7 BECAUSE THE
TOTAL GENERAL MOTORS MARKET FOR FINISHES AND FABRICS CONSTITUTED ONLY A
NEGLIGIBLE PERCENTAGE OF THE TOTAL MARKET FOR THESE MATERIALS FOR ALL
USES, INCLUDING AUTOMOTIVE USES.  IT IS STATED IN THE GENERAL MOTORS
BRIEF THAT IN 1947 DU PONT'S FINISH SALES TO GENERAL MOTORS CONSTITUTED
3.5% OF ALL SALES OF FINISHES TO INDUSTRIAL USERS, AND THAT ITS FABRIC
SALES TO GENERAL MOTORS COMPRISED 1.6% OF THE TOTAL MARKET FOR THE TYPE
OF FABRIC USED BY THE AUTOMOBILE INDUSTRY. 

DETERMINATION OF THE RELEVANT MARKET IS A NECESSARY PREDICATE TO A
FINDING OF A VIOLATION OF THE CLAYTON ACT BECAUSE THE THREATENED
MONOPOLY MUST BE ONE WHICH WILL SUBSTANTIALLY LESSEN COMPETITION
"WITHIN THE AREA OF EFFECTIVE COMPETITION."  (FN11)  SUBSTANTIALITY CAN
BE DETERMINED ONLY IN TERMS OF THE MARKET AFFECTED.  THE RECORD SHOWS
THAT AUTOMOTIVE FINISHES AND FABRICS HAVE SUFFICIENT PECULIAR
CHARACTERISTICS AND USES TO CONSTITUTE THEM PRODUCTS SUFFICIENTLY
DISTINCT FROM ALL OTHER FINISHES AND FABRICS (FN12) TO MAKE THEM A
"LINE OF COMMERCE" WITHIN THE MEANING OF THE CLAYTON ACT.   CF. VAN
CAMP & SONS CO. V. AMERICAN CAN CO., 278 U.S. 245.  (FN13)  THUS, THE
BOUNDS OF THE RELEVANT MARKET FOR THE PURPOSES OF THIS CASE ARE NOT
COEXTENSIVE WITH THE TOTAL MARKET FOR FINISHES AND FABRICS, BUT ARE
COEXTENSIVE WITH THE AUTOMOBILE INDUSTRY, THE RELEVANT MARKET FOR
AUTOMOTIVE FINISHES AND FABRICS.  (FN14) 

THE MARKET AFFECTED MUST BE SUBSTANTIAL.  STANDARD FASHION CO. V.
MAGRANE-HOUSTON CO., 258 U.S. 346, 357.  MOREOVER, IN ORDER TO
ESTABLISH A VIOLATION OF SEC. 7 THE GOVERNMENT MUST PROVE A LIKELIHOOD
THAT COMPETITION MAY BE "FORECLOSED IN A SUBSTANTIAL SHARE OF  ..
(THHAT MARKET)."  (FN15)  BOTH REQUIREMENTS ARE SATISFIED IN THIS CASE. 
THE SUBSTANTIALITY OF A RELEVANT MARKET COMPRISING THE AUTOMOBILE
INDUSTRY IS UNDISPUTED.  THE SUBSTANTIALITY OF GENERAL MOTORS' SHARE OF
THAT MARKET IS FULLY ESTABLISHED IN THE EVIDENCE. 

GENERAL MOTORS IS THE COLOSSUS OF THE GIANT AUTOMOBILE INDUSTRY.  IT
ACCOUNTS ANNUALLY FOR UPWARDS OF TWO-FIFTHS OF THE TOTAL SALES OF
AUTOMOTIVE VEHICLES IN THE NATION.  (FN16)  IN 1955 GENERAL MOTORS
RANKED FIRST IN SALES AND SECOND IN ASSETS AMONG ALL UNITED STATES
INDUSTRIAL CORPORATIONS (FN17) AND BECAME THE FIRST CORPORATION TO EARN
OVER A BILLION DOLLARS IN ANNUAL NET INCOME.  (FN18)  IN 1947 GENERAL
MOTORS' TOTAL PURCHASES OF ALL PRODUCTS FROM DU PONT WERE $26,628,274,
OF WHICH $18,938,229 (71%) REPRESENTED PURCHASES FROM DU PONT'S
FINISHES DIVISION.  OF THE LATTER AMOUNT PURCHASES OF "DUCO" (FN19) AND
THE THINNER USED TO APPLY "DUCO" TOTALED $12,224,798 (65%), AND "DULUX"
(FN20) PURCHASES TOTALED $3,179,225.  PURCHASES BY GENERAL MOTORS OF DU
PONT FABRICS IN 1948 AMOUNTED TO $3,700,000, MAKING IT THE LARGEST
ACCOUNT OF DU PONT'S FABRICS DIVISION.  EXPRESSED IN PERCENTAGES, DU
PONT SUPPLIED 67% OF GENERAL MOTORS' REQUIREMENTS FOR FINISHES IN 1946
AND 68% IN 1947.  (FN21)  IN FABRICS DU PONT SUPPLIED 52.3% OF
REQUIREMENTS IN 1946, AND 38.5% IN 1947.  (FN22)  BECAUSE GENERAL
MOTORS ACCOUNTS FOR ALMOST ONE-HALF OF THE AUTOMOBILE INDUSTRY'S ANNUAL
SALES, ITS REQUIREMENTS FOR AUTOMOTIVE FINISHES AND FABRICS MUST
REPRESENT APPROXIMATELY ONE-HALF OF THE RELEVANT MARKET FOR THESE
MATERIALS.  BECAUSE THE RECORD CLEARLY SHOWS THAT QUANTITATIVELY AND
PERCENTAGEWISE DU PONT SUPPLIES THE LARGEST PART OF GENERAL MOTORS'
REQUIREMENTS, WE MUST CONCLUDE THAT DU PONT HAS A SUBSTANTIAL SHARE OF
THE RELEVANT MARKET. 

THE APPELLEES ARGUE THAT THE GOVERNMENT COULD NOT MAINTAIN THIS
ACTION IN 1949 BECAUSE SEC. 7 IS APPLICABLE ONLY TO THE ACQUISITION OF
STOCK AND NOT TO THE HOLDING OR SUBSEQUENT USE OF THE STOCK.  THIS
ARGUMENT MISCONCEIVES THE OBJECTIVE TOWARD WHICH SEC. 7 IS DIRECTED. 
THE CLAYTON ACT WAS INTENDED TO SUPPLEMENT THE SHERMAN ACT.  (FN23)
ITS AIM WAS PRIMARILY TO ARREST APPREHENDED CONSEQUENCES OF
INTERCORPORATE RELATIONSHIPS BEFORE THOSE RELATIONSHIPS COULD WORK
THEIR EVIL, WHICH MAY BE AT OR ANY TIME AFTER THE ACQUISITION,
DEPENDING UPON THE CIRCUMSTANCES OF THE PARTICULAR CASE.  THE SENATE
DECLARED THE OBJECTIVE OF THE CLAYTON ACT TO BE AS FOLLOWS: 

"  ..  BRROADLY STATED, THE BILL, IN ITS TREATMENT OF UNLAWFUL
RESTRAINTS AND MONOPOLIES, SEEKS TO PROHIBIT AND MAKE UNLAWFUL CERTAIN
TRADE PRACTICES WHICH, AS A RULE, SINGLY AND IN THEMSELVES, ARE NOT
COVERED BY THE ACT OF JULY 2, 1890 (THE SHERMAN ACT), OR OTHER EXISTING
ANTITRUST ACTS, AND THUS, BY MAKING THESE PRACTICES ILLEGAL, TO ARREST
THE CREATION OF TRUSTS, CONSPIRACIES, AND MONOPOLIES IN THEIR
INCIPIENCY AND BEFORE CONSUMMATION  ..  .""  S. REP. NO. 698, 63D
CONG., 2D SESS. 1. 

"INCIPIENCY" IN THIS CONTEXT DENOTES NOT THE TIME THE STOCK WAS
ACQUIRED, BUT ANY TIME WHEN THE ACQUISITION THREATENS TO RIPEN INTO A
PROHIBITED EFFECT.  SEE TRANSAMERICA CORP. V. BOARD OF GOVERNORS, 206
F.2D 163, 166.  TO ACCOMPLISH THE CONGRESSIONAL AIM, THE GOVERNMENT MAY
PROCEED AT ANY TIME THAT AN ACQUISITION MAY BE SAID WITH REASONABLE
PROBABILITY TO CONTAIN A THREAT THAT IT MAY LEAD TO A RESTRAINT OF
COMMERCE OR TEND TO CREATE A MONOPOLY OF A LINE OF COMMERCE.  (FN24)
EVEN WHEN THE PURCHASE IS SOLELY FOR INVESTMENT, THE PLAIN LANGUAGE OF
SEC. 7 CONTEMPLATES AN ACTION AT ANY TIME THE STOCK IS USED TO BRING
ABOUT, OR IN ATTEMPTING TO BRING ABOUT, THE SUBSTANTIAL LESSENING OF
COMPETITION.  (FN25)    PRIOR CASES UNDER SEC. 7 WERE BROUGHT AT OR
NEAR THE TIME OF ACQUISITION.  SEE, E.G., INTERNATIONAL SHOE CO. V.
FEDERAL TRADE COMM'N, 280 U.S. 291; V. VIVAUDOU, INC. V. FEDERAL TRADE
COMM'N, 54 F.2D 273; FEDERAL TRADE COMM'N V. THATCHER MFG. CO., 5 F.2D
615, REV'D IN PART ON ANOTHER GROUND, 272 U.S. 554; UNITED STATES V.
REPUBLIC STEEL CORP., 11 F. SUPP.  117; IN RE VANADIUM-ALLOYS STEEL
CO., 18 F.T.C. 194.  NONE OF THESE CASES HOLDS, OR EVEN SUGGESTS, THAT
THE GOVERNMENT IS FORECLOSED FROM BRINGING THE ACTION AT ANY TIME WHEN
A THREAT OF THE PROHIBITED EFFECTS IS EVIDENT. 

RELATED TO THIS ARGUMENT IS THE DISTRICT COURT'S CONCLUSION THAT 30
YEARS OF NONRESTRAINT NEGATED "ANY REASONABLE PROBABILITY OF SUCH A
RESTRAINT" AT THE TIME OF THE SUIT.  (FN26)  WHILE IT IS, OF COURSE,
TRUE THAT PROOF OF A MERE POSSIBILITY OF A PROHIBITED RESTRAINT OR
TENDENCY TO MONOPOLY WILL NOT ESTABLISH THE STATUTORY REQUIREMENT THAT
THE EFFECT OF AN ACQUISITION "MAY BE" SUCH RESTRAINT OR TENDENCY,
(FN27) THE BASIC FACTS FOUND BY THE DISTRICT COURT DEMONSTRATE THE
ERROR OF ITS CONCLUSION.  (FN28) 

THE DU PONT COMPANY'S COMMANDING POSITION AS A GENERAL MOTORS
SUPPLIER WAS NOT ACHIEVED UNTIL SHORTLY AFTER ITS PURCHASE OF A SIZABLE
BLOCK OF GENERAL MOTORS STOCK IN 1917.  (FN29)  AT THAT TIME ITS
PRODUCTION FOR THE AUTOMOBILE INDUSTRY AND ITS SALES TO GENERAL MOTORS
WERE RELATIVELY INSIGNIFICANT.  GENERAL MOTORS THEN PRODUCED ONLY ABOUT
11% OF THE TOTAL AUTOMOBILE PRODUCTION AND ITS REQUIREMENTS, WHILE
RELATIVELY SUBSTANTIAL, WERE FAR SHORT OF THE PROPORTIONS THEY ASSUMED
AS IT FORGED AHEAD TO ITS PRESENT PLACE IN THE INDUSTRY. 

AT LEAST 10 YEARS BEFORE THE STOCK ACQUISITION, THE DU PONT COMPANY,
FOR OVER A CENTURY THE MANUFACTURER OF MILITARY AND COMMERCIAL
EXPLOSIVES, HAD DECIDED TO EXPAND ITS BUSINESS INTO OTHER FIELDS.  IT
FORESAW THE LOSS OF ITS MARKET FOR EXPLOSIVES AFTER THE UNITED STATES
ARMY AND NAVY DECIDED IN 1908 TO CONSTRUCT AND OPERATE THEIR OWN
PLANTS.  NITROCELLULOSE, A NITRATED COTTON, WAS THE PRINCIPAL RAW
MATERIAL USED IN DU PONT'S MANUFACTURE OF SMOKELESS POWDER.  A SEARCH
FOR OUTLETS FOR THIS RAW MATERIAL UNCOVERED REQUIREMENTS IN THE
MANUFACTURE OF LACQUERS, CELLULOID, ARTIFICIAL LEATHER AND ARTIFICIAL
SILK.  THE FIRST STEP TAKEN WAS THE DU PONT PURCHASE IN 1910 OF THE
FABRIKOID COMPANY, THEN THE LARGEST MANUFACTURER OF ARTIFICIAL LEATHER,
RECONSTITUTED AS THE DU PONT FABRIKOID COMPANY IN 1913. 

THE EXPANSION PROGRAM WAS BARELY STARTED, HOWEVER, WHEN WORLD WAR I
INTERVENED.  THE DU PONT COMPANY SUDDENLY FOUND ITSELF ENGULFED WITH
ORDERS FOR MILITARY EXPLOSIVES FROM FOREIGN NATIONS LATER TO BE ALLIES
OF THE UNITED STATES IN THE WAR, AND IT HAD TO INCREASE ITS CAPACITY
AND PLANT FACILITIES FROM 700,000 TO 37,000,000 POUNDS PER MONTH AT A
COST EXCEEDING $200,000,000.  PROFITS ACCUMULATED AND ULTIMATELY
AMOUNTED TO $232,000,000.  THE NEED TO FIND POSTWAR USES FOR ITS
EXPANDED FACILITIES AND ORGANIZATION NOW BEING GREATER THAN EVER, DU
PONT CONTINUED ITS EXPANSION PROGRAM DURING THE WAR YEARS, SETTING
ASIDE $90,000,000 FOR THE PURPOSE.  IN SEPTEMBER 1915, DU PONT BOUGHT
THE ARLINGTON WORKS, ONE OF THE NATION'S TWO LARGEST CELLULOID
COMPANIES.  IN JUNE 1916, THE FAIRFIELD RUBBER COMPANY, PRODUCERS OF
RUBBER-COATED FABRICS FOR AUTOMOBILE AND CARRIAGE TOPS, WAS TAKEN OVER
BY DU PONT FABRIKOID.  IN MARCH 1917, PURCHASE WAS MADE OF HARRISON
BROTHERS AND COMPANY, MANUFACTURERS OF PAINT, VARNISH, ACIDS AND
CERTAIN INORGANIC CHEMICALS USED IN PAINT MANUFACTURE.  SHORTLY
AFTERWARDS, HARRISON ABSORBED BECKTON CHEMICAL COMPANY, A COLOR
MANUFACTURER, AND, ALSO IN 1917, THE BRIDGEPORT WOOD FINISHING COMPANY,
A VARNISH MANUFACTURER. 

THUS, BEFORE THE FIRST BLOCK OF GENERAL MOTORS STOCK WAS ACQUIRED, DU
PONT WAS SEEKING MARKETS NOT ONLY FOR ITS NITROCELLULOSE, BUT ALSO FOR
THE ARTIFICIAL LEATHER, CELLULOID, RUBBER-COATED GOODS, AND PAINTS AND
VARNISHES IN DEMAND BY AUTOMOBILE COMPANIES.  IN THAT CONNECTION, THE
TRIAL COURT EXPRESSLY FOUND THAT "  ..  REEPORTS AND OTHER DOCUMENTS
WRITTEN AT OR NEAR THE TIME OF THE INVESTMENT SHOW THAT DU PONT'S
REPRESENTATIVES WERE WELL AWARE THAT GENERAL MOTORS WAS A LARGE
CONSUMER OF PRODUCTS OF THE KIND OFFERED BY DU PONT," AND THAT JOHN J.
RASKOB, DU PONT'S TREASURER AND THE PRINCIPAL PROMOTER OF THE
INVESTMENT, "FOR ONE, THOUGHT THAT DU PONT WOULD ULTIMATELY GET ALL
THAT BUSINESS  ..  .""  (FN30) 

THE COMPANY'S INTEREST IN BUYING INTO GENERAL MOTORS WAS STIMULATED
BY RASKOB AND PIERRE S. DU PONT, THEN DU PONT'S PRESIDENT, WHO ACQUIRED
PERSONAL HOLDINGS OF GENERAL MOTORS STOCK IN 1914.  GENERAL MOTORS WAS
ORGANIZED SIX YEARS EARLIER BY WILLIAM C. DURANT TO ACQUIRE PREVIOUSLY
INDEPENDENT AUTOMOBILE MANUFACTURING COMPANIES - BUICK, CADILLAC,
OAKLAND AND OLDSMOBILE.  DURANT LATER BROUGHT IN CHEVROLET, ORGANIZED
BY HIM WHEN HE WAS TEMPORARILY OUT OF POWER, DURING 1910-1915, AND A
BANKERS' GROUP CONTROLLED GENERAL MOTORS.  IN 1915, WHEN DURANT AND THE
BANKERS DEADLOCKED ON THE CHOICE OF A BOARD OF DIRECTORS, THEY RESOLVED
THE DEADLOCK BY AN AGREEMENT UNDER WHICH PIERRE S. DU PONT WAS NAMED
CHAIRMAN OF THE GENERAL MOTORS BOARD, AND PIERRE S. DU PONT, RASKOB AND
TWO NOMINEES OF MR. DU PONT WERE NAMED NEUTRAL DIRECTORS.  BY 1916,
DURANT SETTLED HIS DIFFERENCES WITH THE BANKERS AND RESUMED THE
PRESIDENCY AND HIS CONTROLLING POSITION IN GENERAL MOTORS.  HE
PREVAILED UPON PIERRE S. DU PONT AND RASKOB TO CONTINUE THEIR INTEREST
IN GENERAL MOTORS' AFFAIRS, WHICH BOTH DID AS MEMBERS OF THE FINANCE
COMMITTEE, WORKING CLOSELY WITH DURANT IN MATTERS OF FINANCES AND
OPERATIONS AND PLANS FOR FUTURE EXPANSION.  DURANT PERSISTENTLY URGED
BOTH MEN AND THE "WILMINGTON PEOPLE, AS HE CALLED IT," (FN31) TO BUY
MORE STOCK IN GENERAL MOTORS. 

FINALLY, RASKOB BROACHED TO PIERRE S. DU PONT THE PROPOSAL THAT PART
OF THE FUND EARMARKED FOR DU PONT EXPANSION BE USED IN THE PURCHASE OF
GENERAL MOTORS STOCK.  AT THIS TIME ABOUT $50,000,000 OF THE
$90,000,000 FUND WAS STILL IN HAND.  RASKOB FORESAW THE SUCCESS OF THE
AUTOMOBILE INDUSTRY AND THE OPPORTUNITY FOR GREAT PROFIT IN A
SUBSTANTIAL PURCHASE OF GENERAL MOTORS STOCK.  ON DECEMBER 19, 1917,
RASKOB SUBMITTED A TREASURER'S REPORT TO THE DU PONT FINANCE COMMITTEE
RECOMMENDING A PURCHASE OF GENERAL MOTORS STOCK IN THE AMOUNT OF
$25,000,000.  THAT REPORT MAKES CLEAR THAT MORE THAN JUST A PROFITABLE
INVESTMENT WAS CONTEMPLATED.  A MAJOR CONSIDERATION WAS THAT AN
EXPANDING GENERAL MOTORS WOULD PROVIDE A SUBSTANTIAL MARKET NEEDED BY
THE BURGEONING DU PONT ORGANIZATION.  RASKOB'S SUMMARY OF REASONS IN
SUPPORT OF THE PURCHASE INCLUDES THIS STATEMENT:  "OUR INTEREST IN THE
GENERAL MOTORS COMPANY WILL UNDOUBTEDLY SECURE FOR US THE ENTIRE
FABRIKOID, PYRALIN (CELLULOID), PAINT AND VARNISH BUSINESS OF THOSE
COMPANIES, WHICH IS A SUBSTANTIAL FACTOR."  (FN32) 

THIS THOUGHT, THAT THE PURCHASE WOULD RESULT IN DU PONT'S OBTAINING A
NEW AND SUBSTANTIAL MARKET, WAS ECHOED IN THE COMPANY'S 1917 AND 1918
ANNUAL REPORTS TO STOCKHOLDERS.  IN THE 1917 REPORT APPEARS:  "THOUGH
THIS IS A NEW LINE OF ACTIVITY, IT IS ONE OF GREAT PROMISE AND ONE THAT
SEEMS TO BE WELL SUITED TO THE CHARACTER OF OUR ORGANIZATION.  THE
MOTOR COMPANIES ARE VERY LARGE CONSUMERS OF OUR FABRIKOID AND PYRALIN
AS WELL AS PAINTS AND VARNISHES."  THE 1918 REPORT SAYS:  "THE
CONSUMPTION OF PAINTS, VARNISHES AND FABRIKOID IN THE MANUFACTURE OF
AUTOMOBILES GIVES ANOTHER COMMON INTEREST." 

THIS BACKGROUND OF THE ACQUISITION, PARTICULARLY THE PLAIN
IMPLICATIONS OF THE CONTEMPORANEOUS DOCUMENTS, DESTROYS ANY BASIS FOR A
CONCLUSION THAT THE PURCHASE WAS MADE "SOLELY FOR INVESTMENT." 
MOREOVER, IMMEDIATELY AFTER THE ACQUISITION, DU PONT'S INFLUENCE
GROWING OUT OF IT WAS BROUGHT TO BEAR WITHIN GENERAL MOTORS TO ACHIEVE
PRIMACY FOR DU PONT AS GENERAL MOTORS' SUPPLIER OF AUTOMOTIVE FABRICS
AND FINISHES. 

TWO YEARS WERE TO PASS BEFORE DU PONT'S TOTAL PURCHASES OF GENERAL
MOTORS STOCK BROUGHT ITS PERCENTAGE TO 23% OF THE OUTSTANDING STOCK AND
ITS AGGREGATE OUTLAY TO $49,000,000.  DURING THAT PERIOD, DU PONT AND
DURANT WORKED UNDER AN ARRANGEMENT GIVING DU PONT PRIMARY
RESPONSIBILITY FOR FINANCES AND DURANT THE RESPONSIBILITY FOR
OPERATIONS.  BUT J.A. HASKELL, DU PONT'S FORMER SALES MANAGER AND VICE
PRESIDENT, BECAME THE GENERAL MOTORS VICE-PRESIDENT IN CHARGE OF THE
OPERATIONS COMMITTEE.  THE TRIAL JUDGE SAID THAT HASKELL "  ..  WAAS
WILLING TO UNDERTAKE THE RESPONSIBILITY OF KEEPING DU PONT INFORMED OF
GENERAL MOTORS AFFAIRS DURING DURANT'S REGIME  ..  .""  (FN33) 

HASKELL FRANKLY AND OPENLY SET ABOUT GAINING THE MAXIMUM SHARE OF THE
GENERAL MOTORS MARKET FOR DU PONT.  IN A CONTEMPORANEOUS 1918 DOCUMENT,
HE REVEALS HIS INTENTION TO "PAVE THE WAY FOR PERHAPS A MORE GENERAL
ADOPTION OF OUR MATERIAL," AND THAT HE WAS THINKING "HOW BEST TO GET
COOPERATION (FROM THE SEVERAL GENERAL MOTORS DIVISIONS) WHEREBY MAKERS
OF SUCH OF THE LOW PRICED CARS AS IT WOULD SEEM POSSIBLE AND WISE TO
GET TRANSFERRED WILL BE PUT IN THE FRAME OF MIND NECESSARY FOR ITS
ADOPTION (DU PONT'S ARTIFICIAL LEATHER)." 

HASKELL SET UP LINES OF COMMUNICATION WITHIN GENERAL MOTORS TO BE IN
A POSITION TO KNOW AT ALL TIMES WHAT DU PONT PRODUCTS AND WHAT PRODUCTS
OF DU PONT COMPETITORS WERE BEING USED.  IT IS NOT PURE IMAGINATION TO
SUPPOSE THAT SUCH SURVEILLANCE FROM THAT SOURCE MADE AN IMPRESSIVE
IMPACT UPON PURCHASING OFFICIALS.  IT WOULD BE UNDERSTANDABLY DIFFICULT
FOR THEM NOT TO INTERPRET IT AS MEANING THAT A PREFERENCE WAS TO BE
GIVEN TO DU PONT PRODUCTS.  HASKELL ALSO ACTIVELY PUSHED THE PROGRAM TO
SUBSTITUTE FABRIKOID ARTIFICIAL LEATHERS FOR GENUINE LEATHER AND
SPONSORED USE OF DU PONT'S PYRALIN SHEETING THROUGH A LIAISON
ARRANGEMENT SET UP BETWEEN HIMSELF AND THE DU PONT SALES ORGANIZATION. 

THUS SPRUNG FROM THE BARRIER, DU PONT QUICKLY SWEPT INTO A COMMANDING
LEAD OVER ITS COMPETITORS, WHO WERE NEVER AFTERWARDS IN SERIOUS
CONTENTION.  INDEED, GENERAL MOTORS' THEN PRINCIPAL PAINT SUPPLIER,
FLINT VARNISH AND CHEMICAL WORKS, EARLY IN 1918 SAW THE HANDWRITING ON
THE WALL.  THE FLINT PRESIDENT CAME TO DURANT ASKING TO BE BOUGHT OUT,
TELLING DURANT, AS THE TRIAL JUDGE FOUND, THAT HE "KNEW DU PONT HAD
BOUGHT A SUBSTANTIAL INTEREST IN GENERAL MOTORS AND WAS INTERESTED IN
THE PAINT INDUSTRY; THAT  ..  (HHE) FELT HE WOULD LOSE A VALUABLE
CUSTOMER, GENERAL MOTORS."  (FN34) THE DU PONT COMPANY BOUGHT THE FLINT
WORKS AND LATER DISSOLVED IT. 

IN LESS THAN FOUR YEARS, BY AUGUST 1921, LAMMOT DU PONT, THEN A DU
PONT VICE-PRESIDENT AND LATER CHAIRMAN OF THE BOARD OF GENERAL MOTORS,
IN RESPONSE TO A QUERY FROM PIERRE S. DU PONT, THEN CHAIRMAN OF THE
BOARD OF BOTH DU PONT AND GENERAL MOTORS, "WHETHER GENEAL MOTORS WAS
TAKING ITS ENTIRE REQUIREMENTS OF DU PONT PRODUCTS FROM DU PONT, " WAS
ABLE TO REPLY THAT FOUR OF GENERAL MOTORS' EIGHT OPERATING DIVISIONS
BOUGHT FROM DU PONT THEIR ENTIRE REQUIREMENTS OF PAINTS AND VARNISHES,
FIVE THEIR ENTIRE REQUIREMENTS OF FABRIKOID, FOUR THEIR ENTIRE
REQUIREMENTS OF RUBBER CLOTH, AND SEVEN THEIR ENTIRE REQUIREMENTS OF
PYRALIN AND CELLULOID.  LAMMOT DU PONT QUOTED DU PONT'S SALES
DEPARTMENT AS FEELING THAT "THE CONDITION IS IMPROVING AND THAT
EVENTUALLY SATISFACTORY CONDITIONS WILL BE ESTABLISHED IN EVERY BRANCH,
BUT THEY WOULDN'T MIND SEEING THINGS GOING A LITTLE FASTER."  PIERRE S.
DU PONT RESPONDED THAT "WITH THE CHANGE IN MANAGEMENT AT CADILLAC,
OAKLAND AND OLDS (CADILLAC WAS TAKING VERY LITTLE PAINTS AND VARNISHES,
AND OAKLAND BUT 50%; OLDS WAS TAKING ONLY PART OF ITS REQUIREMENTS FOR
FABRIKOID), I BELIEVE THAT YOU SHOULD BE ABLE TO SELL SUBSTANTIALLY ALL
OF THE PAINT, VARNISH AND FABRIKOID PRODUCTS NEEDED."  HE ALSO
SUGGESTED THAT "A DRIVE SHOULD BE MADE FOR THE FISHER BODY BUSINESS. 
IS THERE ANY REASON WHY THEY HAVE NOT DEALT WITH US?" 

FISHER BODY WAS STUBBORNLY RESISTANT TO DU PONT SALES PRESSURE. 
GENERAL MOTORS, IN 1920, DURING DURANT'S TIME, ACQUIRED 60% STOCK
CONTROL OF FISHER BODY COMPANY.  HOWEVER, A VOTING TRUST WAS
ESTABLISHED GIVING THE FISHER BROTHERS BROAD POWERS OF MANAGEMENT. 
THEY INSISTED ON RUNNING THEIR OWN SHOW AND FOR YEARS WITHSTOOD EFFORTS
OF HIGH-RANKING DU PONT AND GENERAL MOTORS EXECUTIVES TO GET THEM TO
SWITCH TO DU PONT FROM THEIR ACCUSTOMED SOURCES OF SUPPLY.  EVEN AFTER
GENERAL MOTORS OBTAINED 100% STOCK CONTROL IN 1926, THE FISHER BROTHERS
RETAINED SUFFICIENT POWER TO HOLD OUT.  BY 1947 AND 1948, HOWEVER,
FISHER RESISTANCE HAD COLLAPSED, AND THE PROPORTIONS OF ITS
REQUIREMENTS SUPPLIED BY DU PONT COMPARED FAVORABLY WITH THE PURCHASES
BY OTHER GENERAL MOTORS DIVISIONS. 

IN 1926, THE DU PONT OFFICIALS FELT THAT TOO MUCH GENERAL MOTORS
BUSINESS WAS GOING TO ITS COMPETITORS.  WHEN PIERRE S. DU PONT AND
RASKOB EXPRESSED SURPRISE, LAMMOT DU PONT GAVE THEM A BREAKDOWN, BY
DOLLAR AMOUNTS, OF THE PURCHASES MADE FROM DU PONT'S COMPETITORS.  THIS
BREAKDOWN SHOWED, HOWEVER, THAT ONLY FISHER BODY OF THE GENERAL MOTORS
DIVISIONS WAS OBTAINING ANY SUBSTANTIAL PROPORTION OF ITS REQUIREMENTS
FROM DU PONT'S COMPETITORS. 

COMPETITORS DID OBTAIN HIGHER PERCENTAGES OF THE GENERAL MOTORS
BUSINESS IN LATER YEARS, ALTHOUGH NEVER HIGH ENOUGH AT ANY TIME
SUBSTANTIALLY TO AFFECT THE DOLLAR AMOUNT OF DU PONT'S SALES.  INDEED,
IT APPEARS LIKELY THAT GENERAL MOTORS PROBABLY TURNED TO OUTSIDE
SOURCES OF SUPPLY AT LEAST IN PART BECAUSE ITS REQUIREMENTS OUTSTRIPPED
DU PONT'S PRODUCTION, WHEN GENERAL MOTORS' PROPORTION OF TOTAL
AUTOMOBILE SALES GREW GREATER AND THE COMPANY TOOK ITS PLACE AS THE
SALES LEADER OF THE AUTOMOBILE INDUSTRY.  FOR EXAMPLE, AN UNDISPUTED
GOVERNMENT EXHIBIT SHOWS THAT GENERAL MOTORS TOOK 93% OF DU PONT'S
AUTOMOBILE DUCO PRODUCTION IN 1941 AND 83% IN 1947.    THE FACT THAT
STICKS OUT IN THIS VOLUMINOUS RECORD IS THAT THE BULK OF DU PONT'S
PRODUCTION HAS ALWAYS SUPPLIED THE LARGEST PART OF THE REQUIREMENTS OF
THE ONE CUSTOMER IN THE AUTOMOBILE INDUSTRY CONNECTED TO DU PONT BY A
STOCK INTEREST.  THE INFERENCE IS OVERWHELMING THAT DU PONT'S
COMMANDING POSITION WAS PROMOTED BY ITS STOCK INTEREST AND WAS NOT
GAINED SOLELY ON COMPETITIVE MERIT. 

WE AGREE WITH THE TRIAL COURT THAT CONSIDERATIONS OF PRICE, QUALITY
AND SERVICE WERE NOT OVERLOOKED BY EITHER DU PONT OR GENERAL MOTORS. 
PRIDE IN ITS PRODUCTS AND ITS HIGH FINANCIAL STAKE IN GENERAL MOTORS'
SUCCESS WOULD NATURALLY LEAD DU PONT TO TRY TO SUPPLY THE BEST.  BUT
THE WISDOM OF THIS BUSINESS JUDGMENT CANNOT OBSCURE THE FACT, PLAINLY
REVEALED BY THE RECORD, THAT DU PONT PURPOSELY EMPLOYED ITS STOCK TO
PRY OPEN THE GENERAL MOTORS MARKET TO ENTRENCH ITSELF AS THE PRIMARY
SUPPLIER OF GENERAL MOTORS' REQUIREMENTS FOR AUTOMOTIVE FINISHES AND
FABRICS.  (FN35) 

SIMILARLY, THE FACT THAT ALL CONCERNED IN HIGH EXECUTIVE POSTS IN
BOTH COMPANIES ACTED HONORABLY AND FAIRLY, EACH IN THE HONEST
CONVICTION THAT HIS ACTIONS WERE IN THE BEST INTERESTS OF HIS OWN
COMPANY AND WITHOUT ANY DESIGN TO OVERREACH ANYONE, INCLUDING DU PONT'S
COMPETITORS, DOES NOT DEFEAT THE GOVERNMENT'S RIGHT TO RELIEF.  IT IS
NOT REQUISITE TO THE PROOF OF A VIOLATION OF SEC. 7 TO SHOW THAT
RESTRAINT OR MONOPOLY WAS INTENDED. 

THE STATUTORY POLICY OF FOSTERING FREE COMPETITION IS OBVIOUSLY
FURTHERED WHEN NO SUPPLIER HAS AN ADVANTAGE OVER HIS COMPETITORS FROM
AN ACQUISITION OF HIS CUSTOMER'S STOCK LIKELY TO HAVE THE EFFECTS
CONDEMNED BY THE STATUTE.  WE REPEAT, THAT THE TEST OF A VIOLATION OF
SEC. 7 IS WHETHER, AT THE TIME OF SUIT, THERE IS A REASONABLE
PROBABILITY THAT THE ACQUISITION IS LIKELY TO RESULT IN THE CONDEMNED
RESTRAINTS.  THE CONCLUSION UPON THIS RECORD IS INESCAPABLE THAT SUCH
LIKELIHOOD WAS PROVED AS TO THIS ACQUISITION.  THE FIRE THAT WAS
KINDLED IN 1917 CONTINUES TO SMOLDER.  IT BURNED BRISKLY TO FORGE THE
TIES THAT BIND THE GENERAL MOTORS MARKET TO DU PONT, AND IF IT HAS
QUIETED DOWN, IT REMAINS HOT, AND, FROM PAST PERFORMANCE, IS LIKELY AT
ANY TIME TO BLAZE AND MAKE THE FUSION COMPLETE.  (FN36) 

THE JUDGMENT MUST THEREFORE BE REVERSED AND THE CAUSE REMANDED TO THE
DISTRICT COURT FOR A DETERMINATION, AFTER FURTHER HEARING, OF THE
EQUITABLE RELIEF NECESSARY AND APPROPRIATE IN THE PUBLIC INTEREST TO
ELIMINATE THE EFFECTS OF THE ACQUISITION OFFENSIVE TO THE STATUTE.  THE
DISTRICT COURTS, IN THE FRAMING OF EQUITABLE DECREES, ARE CLOTHED "WITH
LARGE DISCRETION TO MODEL THEIR JUDGMENTS TO FIT THE EXIGENCIES OF THE
PARTICULAR CASE."  INTERNATIONAL SALT CO. V. UNITED STATES, 332 U.S.
392, 400-401. 

THE MOTION OF THE APPELLEES CHRISTIANA SECURITIES COMPANY AND
DELAWARE REALTY AND INVESTMENT COMPANY FOR DISMISSAL OF THE APPEAL AS
TO THEM IS DENIED.  IT SEEMS APPROPRIATE THAT THEY BE RETAINED AS
PARTIES PENDING DETERMINATION BY THE DISTRICT COURT OF THE RELIEF TO BE
GRANTED.  IT IS SO ORDERED. 

FN1  32 STAT. 823, AS AMENDED, 15 U.S.C. SEC. 29.  THE COURT NOTED
PROBABLE JURISDICTION.  350 U.S. 815. 

FN2  126 F. SUPP. 235. 

FN3  38 STAT. 736, 15 U.S.C. (1946 ED.)  SEC.  25. 

FN4  THIS ACTION IS GOVERNED BY THE CLAYTON ACT AS IT WAS BEFORE THE
1950 AMENDMENTS, WHICH BY THEIR TERMS ARE INAPPLICABLE TO ACQUISITIONS
PRIOR TO 1950.  64 STAT. 1125, 15 U.S.C. SEC. 18. 

FN5  THE AMENDED COMPLAINT ALSO ALLEGED VIOLATION OF SECS. 1 AND 2 OF
THE SHERMAN ACT.  26 STAT. 209, AS AMENDED, 50 STAT. 693, 15 U.S.C.
SECS. 1, 2.  IN VIEW OF OUR DETERMINATION OF THE CASE, WE ARE NOT
DECIDING THE GOVERNMENT'S APPEAL FROM THE DISMISSAL OF THE ACTION UNDER
THE SHERMAN ACT. 

FN6  38 STAT. 731, 15 U.S.C. (1946 ED.)  SEC.  18. 

FN7  THIS PARAGRAPH PROVIDES: 

"NO CORPORATION SHALL ACQUIRE, DIRECTLY OR INDIRECTLY, THE WHOLE OR
ANY PART OF THE STOCK OR OTHER SHARE CAPITAL OF TWO OR MORE
CORPORATIONS ENGAGED IN COMMERCE WHERE THE EFFECT OF SUCH ACQUISITION,
OR THE USE OF SUCH STOCK BY THE VOTING OR GRANTING OF PROXIES OR
OTHERWISE, MAY BE TO SUBSTANTIALLY LESSEN COMPETITION BETWEEN SUCH
CORPORATIONS, OR ANY OF THEM, WHOSE STOCK OR OTHER SHARE CAPITAL IS SO
ACQUIRED, OR TO RESTRAIN SUCH COMMERCE IN ANY SECTION OR COMMUNITY, OR
TEND TO CREATE A MONOPOLY OF ANY LINE OF COMMERCE."  38 STAT. 731, 15
U.S.C. (1946 ED.)  SEC.  18. 

FN8  SEE, E.G., S. REP. NO. 698, 63D CONG., 2D SESS. 13; H.R. REP.
NO. 627, 63D CONG., 2D SESS. 17. 

FN9  51 CONG. REC. 16002. 

FN10  ALUMINUM CO. OF AMERICA V. FEDERAL TRADE COMM'N, 284 F. 401;
RONALD FABRICS CO. V. VERNEY BRUNSWICK MILLS, INC., CCH TRADE CASES
PARA. 57,514 (D.C.S.D.N.Y. 1946); UNITED STATES V. NEW ENGLAND FISH
EXCHANGE, 258 F. 732; CF. TRANSAMERICA CORP. V. BOARD OF GOVERNORS, 206
F.2D 163; SIDNEY MORRIS & CO. V. NATIONAL ASSN. OF STATIONERS, 40 F.2D
620, 625. 

FN11  STANDARD OIL CO. OF CALIFORNIA V. UNITED STATES, 337 U.S. 293,
299, N. 5.  SECTION 3 OF THE ACT, WITH WHICH THE COURT WAS CONCERNED IN
STANDARD OIL, MAKES UNLAWFUL CERTAIN AGREEMENTS "  .. WHEERE THE EFFECT
..  MAAY BE TO SUBSTANTIALLY LESSEN COMPETITION OR TEND TO CREATE A
MONOPOLY IN ANY LINE OF COMMERCE."  38 STAT. 731, 15 U.S.C. (1946 ED.) 
SEC.  14. 

FN12  FOR EXAMPLE, THE FOLLOWING IS SAID AS TO FINISHES IN THE DU
PONT BRIEF: 

"THE LARGEST SINGLE FINISH ITEM WHICH DU PONT SELLS TO GENERAL MOTORS
IS A LOW-VISCOSITY NITROCELLULOSE LACQUER, DISCOVERED AND PATENTED BY
DU PONT AND FOR WHICH ITS TRADEMARK IS 'DUCO' ..  .  

     *         *         *     *         * 

"THE INVENTION AND DEVELOPMENT OF 'DUCO' REPRESENTED A TRULY
SIGNIFICANT ADVANCE IN THE ART OF PAINT MAKING AND IN THE PRODUCTION OF
AUTOMOBILES; WITHOUT 'DUCO' MASS PRODUCTION OF AUTOMOBILES WOULD NOT
HAVE BEEN POSSIBLE. 

"BY THE EARLY 1920'S THE NEED FOR BETTER FINISHING MATERIALS FOR
AUTOMOBILES HAD BECOME URGENT ..  .   THE VARNISH METHOD THEN USED IN
FINISHING AUTOMOBILES WAS DESCRIBED IN DETAIL AT THE TRIAL BY
AUTOMOBILE PIONEERS  ..  .   FINISHING AN AUTOMOBILE WITH VARNISH
REQUIRED AN INTOLERABLY LONG TIME - UP TO 3 OR 4 WEEKS - TO APPLY THE
NUMEROUS COATS NEEDED.  WHEN THE FINISH WAS COMPLETE, ITS LONGEST LIFE
EXPECTANCY WAS LESS THAN A YEAR, AND OFTEN IT BEGAN TO PEEL OFF BEFORE
THE CAR WAS DELIVERED  ..  ."" 

DU PONT'S DIRECTOR OF SALES SINCE 1944, NICKOWITZ, TESTIFIED AS TO
FABRICS SOLD TO AUTOMOBILE MANUFACTURERS AS FOLLOWS: 

"Q.  NOW, OVER THE YEARS, ISN'T IT TRUE THAT SPEAKING GENERALLY DU
PONT HAS FOLLOWED THE POLICY IN SELLING ITS FABRICS TO THE AUTOMOBILE
FIELD OF UNDERCUTTING ITS COMPETITORS IN PRICE?  YOU DON'T TRY TO SELL
IT ON A LOWER PRICE THAN THAT QUOTED BY ANY OTHER COMPETITOR, DO YOU? 

"A.  WELL, WE DON'T KNOW.  WE GO IN AND WE BID BASED ON OUR COSTS. 
NOW, IN THE AUTOMOTIVE INDUSTRY, WE HAVE A DIFFERENT SITUATION THAN YOU
DO IN THE FURNITURE TRADE, FOR EXAMPLE, WHERE YOU HAVE AN ESTABLISHED
PRICE. 

"YOU SEE, IN THE AUTOMOBILE INDUSTRY, EACH MANUFACTURER USES A
DIFFERENT CONSTRUCTION.  THEY ALL HAVE THEIR OWN PECULIAR IDEAS OF WHAT
THEY WANT ABOUT THESE FABRICS.  SOME WANT DYED BACKS, AND SOME WANT
DIFFERENT FINISHES, SO YOU DON'T HAVE ANY STANDARD PRICES IN THE
AUTOMOBILE INDUSTRY." 

AND SEE EXTENDED DISCUSSIONS IN THE OPINION OF THE TRIAL COURT, AS TO
FINISHES, 126 F. SUPP., AT 288-292, AS TO FABRICS, ID., AT 296-300. 

FN13  "THE PHRASE 'IN ANY LINE OF COMMERCE' IS COMPREHENSIVE AND
MEANS THAT IF THE FORBIDDEN EFFECT OR TENDENCY IS PRODUCED IN ONE OUT
OF ALL THE VARIOUS LINES OF COMMERCE, THE WORDS 'IN ANY LINE OF
COMMERCE' LITERALLY ARE SATISFIED."  278 U.S., AT 253. 

FN14  THE GENERAL MOTORS BRIEF STATES: 

"IF THE MARKET FOR THESE PRODUCTS WERE SOLELY OR MAINLY THE GENERAL
MOTORS CORPORATION, OR THE AUTOMOBILE INDUSTRY AS A WHOLE, GENERAL
MOTORS' VOLUME AND PRESENT SHARE OF THE AUTOMOBILE INDUSTRY MIGHT
CONSTITUTE A MARKET LARGE ENOUGH FOR THE GOVERNMENT TO RELY ON." 

FN15  STANDARD OIL CO. OF CALIFORNIA V. UNITED STATES, 337 U.S. 293,
AT 314. 

FN16  MOODY'S INDUSTRIALS LISTS GENERAL MOTORS' PROPORTION OF THE
INDUSTRY:

                PERCENT 

1938              42) 

1939              42) 

1940     45.6 

1941              45.3 

1942              W.W. II 

1943              W.W. II 

1944              W.W. II 

1945              W.W. II 

1946              36.3 

1947              38.5 

1948              38.8 

1949        42.7 

1950              45.6 

1951              41.8 

1952              40.3 

1953              44.7 

1954              49.9 

1955              48.8 

FN17  FORTUNE DIRECTORY OF THE 500 LARGEST U.S. INDUSTRIAL
CORPORATIONS, JULY 1956, P. 2. 

FN18  N.Y. TIMES, FEB. 3, 1956, P. 1, COL. 3. 

FN19  A FINISH DEVELOPED SPECIALLY BY DU PONT AND GENERAL MOTORS FOR
USE AS AN AUTOMOTIVE FINISH. 

FN20  A SYNTHETIC ENAMEL DEVELOPED BY DU PONT WHICH IS USED ON
REFRIGERATORS, ALSO MANUFACTURED BY GENERAL MOTORS. 

FN21  126 F. SUPP., AT 295. 

FN22  ID., AT 300-301. 

FN23  STANDARD FASHION CO. V. MAGRANE-HOUSTON CO., 258 U.S. 346. 

FN24  CF. CORN PRODUCTS REFINING CO. V. FEDERAL TRADE COMM'N, 324
U.S. 726, 738. 

FN25  SECTION 7 PROVIDES, IN PERTINENT PART: 

"THIS SECTION SHALL NOT APPLY TO CORPORATIONS PURCHASING SUCH STOCK
SOLELY FOR INVESTMENT AND NOT USING THE SAME BY VOTING OR OTHERWISE TO
BRING ABOUT, OR IN ATTEMPTING TO BRING ABOUT, THE SUBSTANTIAL LESSENING
OF COMPETITION  ..  .""  38 STAT. 731, 15 U.S.C. (1946 ED.)  SEC.  18. 

FN26  126 F. SUPP., AT 335. 

FN27  STANDARD FASHION CO. V. MAGRANE-HOUSTON CO., 258 U.S. 346, AT
356-357. 

FN28  THERE IS NO SIGNIFICANT DISPUTE AS TO THE BASIC FACTS PERTINENT
TO THE DECISION.  WE ARE THUS NOT CONFRONTED HERE WITH THE PROVISION OF
FED. RULES CIV. PROC., 52(A), THAT FINDINGS OF FACT SHALL NOT BE SET
ASIDE UNLESS CLEARLY ERRONEOUS. 

FN29  BEFORE 1917, DU PONT SUPPLIED GENERAL MOTORS WITH COATED
FABRICS.  126 F. SUPP., AT 297. 

FN30  126 F. SUPP., AT 243. 

FN31  126 F. SUPP., AT 241. 

FN32  126 F. SUPP., AT 241. 

FN33  126 F. SUPP., AT 245. 

FN34  126 F. SUPP., AT 267. 

FN35  THE DU PONT POLICY IS WELL EPITOMIZED IN A 1926 LETTER WRITTEN
BY A FORMER DU PONT EMPLOYEE, J.L. PRATT, WHEN A GENERAL MOTORS VICE
PRESIDENT AND MEMBER OF THE EXECUTIVE COMMITTEE, TO THE GENERAL MANAGER
OF A GENERAL MOTORS DIVISION: 

"I AM GLAD TO KNOW THAT YOUR MANUFACTURING, CHEMICAL AND PURCHASING
DIVISIONS FEEL THEY WOULD BE IN BETTER HANDS POSSIBLY BY DEALING WITH
DUPONT THAN WITH LOCAL COMPANIES.  FROM A BUSINESS STANDPOINT NO DOUBT
YOUR ORGANIZATION WOULD BE INFLUENCED TO GIVE THE BUSINESS, UNDER EQUAL
CONDITIONS, TO THE LOCAL CONCERNS.  HOWEVER, I THINK WHEN GENERAL
MOTORS DIVISIONS RECOGNIZE THE SACRIFICE THAT THE DUPONT COMPANY MADE
IN 1920 AND 1921, TO KEEP GENERAL MOTORS CORPORATION FROM BEING PUT IN
A VERY BAD LIGHT PUBLICLY - THE DUPONT COMPANY GOING TO THE EXTENT OF
BORROWING $35,000,000 ON ITS NOTES WHEN THE COMPANY WAS ENTIRELY FREE
OF DEBT, IN ORDER TO PREVENT A LARGE AMOUNT OF GENERAL MOTORS STOCK
BEING THROWN ON THE OPEN MARKET - THEY SHOULD GIVE WEIGHT TO THIS WHICH
IN MY MIND MORE THAN OVER-BALANCES CONSIDERATION OF LOCAL CONDITIONS. 
IN OTHER WORDS, I FEEL THAT WHERE CONDITIONS ARE EQUAL FROM THE
STANDPOINT OF QUALITY, SERVICE AND PRICE, THE DUPONT COMPANY SHOULD
HAVE THE MAJOR SHARE OF GENERAL MOTORS DIVISIONS' BUSINESS ON THOSE
ITEMS THAT THE DUPONT COMPANY CAN TAKE ON THE BASIS OF QUALITY, SERVICE
AND PRICE.  IF IT IS POSSIBLE TO USE THE PRODUCT FROM MORE THAN ONE
COMPANY I DO NOT THINK IT ADVISABLE TO GIVE ANY ONE COMPANY ALL OF THE
BUSINESS, AS I THINK IT IS DESIRABLE TO ALWAYS KEEP A COMPETITIVE
SITUATION, OTHERWISE ANY SUPPLIER IS LIABLE TO GROW SLACK IN SEEING
THAT YOU HAVE THE BEST SERVICE AND PRICE POSSIBLE. 

"I HAVE EXPRESSED MY OWN PERSONAL SENTIMENTS IN THIS LETTER TO YOU IN
ORDER THAT YOU MIGHT HAVE MY POINT OF VIEW, BUT I DO NOT WISH TO
INFLUENCE YOUR ORGANIZATION IN ANY WAY THAT WOULD BE AGAINST YOUR OWN
GOOD JUDGMENT, KEEPING IN MIND THAT ABOVE ALL THE PRIME CONSIDERATION
IS TO DO THE BEST THING FOR DELCO-LIGHT COMPANY, AND THAT
CONSIDERATIONS IN REGARD TO THE DUPONT COMPANY OR OTHER CONCERNS ARE
SECONDARY, AND I AM SURE THIS IS YOUR FEELING." 

FN36  THE POTENCY OF THE INFLUENCE OF DU PONT'S 23% STOCK INTEREST IS
GREATER TODAY BECAUSE OF THE DIFFUSION OF THE REMAINING SHARES WHICH,
IN 1947, WERE HELD BY 436,510 STOCKHOLDERS; 92% OWNED NO MORE THAN 100
SHARES EACH, AND 60% OWNED NO MORE THAN 25 SHARES EACH.  126 F. SUPP.,
AT 244. 

MR. JUSTICE CLARK, MR. JUSTICE HARLAN AND MR. JUSTICE WHITTAKER TOOK
NO PART IN THE CONSIDERATION OR DECISION OF THIS CASE. 

MR. JUSTICE BURTON, WHOM MR. JUSTICE FRANKFURTER JOINS, DISSENTING. 

IN JUNE 1949, THE UNITED STATES BROUGHT THIS CIVIL ACTION IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
UNDER SEC. 4 OF THE SHERMAN ACT AND SEC. 15 OF THE CLAYTON ACT TO
ENJOIN ALLEGED VIOLATIONS OF SECS. 1 AND 2 OF THE SHERMAN ACT, AND SEC.
7 OF THE CLAYTON ACT.  THE AMENDED COMPLAINT, INSOFAR AS PERTINENT TO
THE ISSUES HERE, ALLEGED THAT DU PONT AND GENERAL MOTORS HAVE BEEN
ENGAGED, SINCE 1915, IN A COMBINATION AND CONSPIRACY TO RESTRAIN AND
MONOPOLIZE INTERSTATE TRADE, AND THAT DU PONT'S ACQUISITION OF GENERAL
MOTORS' STOCK HAD THE EFFECT OF RESTRAINING TRADE AND TENDING TO CREATE
A MONOPOLY.  IN BRIEF IT WAS ALLEGED THAT, BY MEANS OF THE RELATIONSHIP
BETWEEN DU PONT AND GENERAL MOTORS, DU PONT INTENDED TO OBTAIN, AND DID
OBTAIN, AN ILLEGAL PREFERENCE OVER ITS COMPETITORS IN THE SALE TO
GENERAL MOTORS OF ITS PRODUCTS, AND A FURTHER ILLEGAL PREFERENCE IN THE
DEVELOPMENT OF CHEMICAL DISCOVERIES MADE BY GENERAL MOTORS.  APPELLEES
DENIED THE CHARGES.    THE TRIAL OF THESE ISSUES TOOK NEARLY SEVEN
MONTHS.  THE DISTRICT COURT HEARD 52 WITNESSES, INCLUDING MOST OF THE
PRINCIPAL ACTORS, AND RECEIVED OVER 2,000 EXHIBITS.  THE EVIDENCE
CONTAINED IN THE 8,283-PAGE TRANSCRIPT OF RECORD COVERS IN MINUTE AND
INTIMATE DETAIL THE FACTS BEARING ON THE GOVERNMENT'S CHARGE THAT DU
PONT, BY COERCION, AGREEMENT, CONTROL OR INFLUENCE, HAD INTERFERED
UNLAWFULLY WITH GENERAL MOTORS' PURCHASING AND MANUFACTURING POLICIES. 
ON THE BASIS OF THIS EVIDENCE, THE DISTRICT COURT FOUND THAT THE
GOVERNMENT HAD FAILED TO PROVE ITS CASE AND, SPECIFICALLY, THAT (A) DU
PONT DID NOT CONTROL GENERAL MOTORS, (B) THERE HAD BEEN "NO LIMITATION
OR RESTRAINT UPON GENERAL MOTORS' FREEDOM TO DEAL FREELY AND FULLY WITH
COMPETITORS OF DU PONT" OR UPON ITS "FREEDOM  ..  TOO DEAL WITH ITS
CHEMICAL DISCOVERIES," AND (C) AFTER 30 YEARS IN WHICH NO SUCH
RESTRAINT HAD RESULTED, THERE WAS NO "BASIS FOR A FINDING THAT THERE IS
OR HAS BEEN ANY REASONABLE PROBABILITY OF SUCH A RESTRAINT WITHIN THE
MEANING OF THE CLAYTON ACT."  126 F. SUPP. 235, 335. 

THE GOVERNMENT'S BASIC CONTENTION IN THIS COURT IS THAT DU PONT
VIOLATED SECS. 1 AND 2 OF THE SHERMAN ACT IN THAT, BY MEANS OF ITS
ALLEGED CONTROL OF GENERAL MOTORS, IT OBTAINED AN UNLAWFUL PREFERENCE
WITH RESPECT TO GENERAL MOTORS' PURCHASES OF MATERIALS.  IN THE CLOSING
PAGES OF ITS BRIEF, AND FOR A FEW MINUTES IN ITS ORAL ARGUMENT, THE
GOVERNMENT ADDED THE ASSERTION THAT DU PONT HAD VIOLATED SEC. 7 OF THE
CLAYTON ACT IN THAT ITS STOCK INTEREST IN GENERAL MOTORS "HAS BEEN USED
TO CHANNEL GENERAL MOTORS' PURCHASES TO DU PONT." 

THIS COURT, IGNORING THE SHERMAN ACT ISSUES WHICH HAVE BEEN THE FOCAL
POINT OF EIGHT YEARS OF LITIGATION, NOW HOLDS THAT DU PONT'S
ACQUISITION OF A 23% STOCK INTEREST IN GENERAL MOTORS DURING THE YEARS
1917-1919 VIOLATES SEC. 7 OF THE CLAYTON ACT BECAUSE "AT THE TIME OF
SUIT (IN 1949) THERE (WAS) A REASONABLE PROBABILITY THAT THE
ACQUISITION (WAS) LIKELY TO RESULT IN THE CONDEMNED RESTRAINTS."  ANTE,
P. 607.  IN REACHING THIS CONCLUSION, THE COURT HOLDS (1) THAT SEC. 7
OF THE CLAYTON ACT APPLIES TO VERTICAL AS WELL AS HORIZONTAL STOCK
ACQUISITIONS; (2) THAT IN DETERMINING WHETHER THE EFFECT OF THE STOCK
ACQUISITION IS SUCH AS TO CONSTITUTE A RESTRAINT WITHIN SEC. 7, THE
TIME CHOSEN BY THE GOVERNMENT IN BRINGING THE ACTION IS CONTROLLING
RATHER THAN THE TIME OF THE ACQUISITION ITSELF; AND (3) THAT SEC. 7 IS
VIOLATED WHEN, AT THE TIME OF SUIT, THERE IS A REASONABLE PROBABILITY
THAT THE STOCK ACQUISITION IS LIKELY TO RESULT IN THE FORECLOSURE OF
COMPETITORS OF THE ACQUIRING CORPORATION FROM A SUBSTANTIAL SHARE OF
THE RELEVANT MARKET. 

IN APPLYING THESE PRINCIPLES TO THIS CASE, THE COURT PURPORTS TO
ACCEPT THE CAREFULLY DOCUMENTED FINDINGS OF FACT OF THE DISTRICT
COURT.  ACTUALLY, IT OVERTURNS NUMEROUS WELL-SUPPORTED FINDINGS OF THE
DISTRICT COURT BY NOW CONCLUDING THAT DU PONT DID NOT PURCHASE GENERAL
MOTORS' STOCK SOLELY FOR INVESTMENT; THAT DU PONT'S STOCK INTEREST
RESULTED IN PRACTICAL OR WORKING CONTROL OF GENERAL MOTORS; THAT DU
PONT HAS USED OR MIGHT USE THIS "CONTROL" TO SECURE PREFERENCES IN
SUPPLYING GENERAL MOTORS WITH AUTOMOBILE FINISHES AND FABRICS; THAT THE
RELEVANT MARKET INCLUDES ONLY AUTOMOBILE FINISHES AND FABRICS; AND THAT
THERE WAS, EVEN AT THE TIME OF SUIT IN 1949, A REASONABLE PROBABILITY
THAT DU PONT'S COMPETITORS MIGHT BE FORECLOSED FROM A SUBSTANTIAL SHARE
OF THIS RELEVANT MARKET. 

THE COURT'S DECISION IS FAR REACHING.  ALTHOUGH SEC. 7 OF THE CLAYTON
ACT WAS ENACTED IN 1914 - OVER 40 YEARS AGO - THIS IS THE FIRST CASE IN
WHICH THE UNITED STATES OR THE FEDERAL TRADE COMMISSION HAS SOUGHT TO
APPLY IT TO A VERTICAL INTEGRATION.  (FN1)  LIKEWISE, THIS APPEARS TO
BE THE FIRST CASE IN WHICH IT EVER HAS BEEN ARGUED THAT SEC. 7 IS
APPLICABLE TO A STOCK ACQUISITION WHICH TOOK PLACE MANY YEARS BEFORE. 
(FN2)  THE COURT, IN ACCEPTING BOTH OF THESE CONTENTIONS, DISREGARDS
THE LANGUAGE AND PURPOSE OF THE STATUTE, 40 YEARS OF ADMINISTRATIVE
PRACTICE, AND ALL THE PRECEDENTS EXCEPT ONE DISTRICT COURT DECISION. 
THE SWEEPING CHARACTER OF THE COURT'S PRONOUNCEMENT IS FURTHER EVIDENT
FROM THE FACT THAT TO MAKE ITS CASE THE COURT REQUIRES NO SHOWING OF
ANY MISUSE OF A STOCK INTEREST - EITHER AT THE TIME OF ACQUISITION OR
SUBSEQUENTLY - TO GAIN PREFERENTIAL TREATMENT FROM THE ACQUIRED
CORPORATION.  ALL THAT IS REQUIRED, IF THIS CASE IS TO BE OUR GUIDE, IS
THAT SOME COURT IN SOME FUTURE YEAR BE PERSUADED THAT A "REASONABLE
PROBABILITY" THEN EXISTS THAT AN ADVANTAGE OVER COMPETITORS IN A
NARROWLY CONSTRUED MARKET MAY BE OBTAINED AS A RESULT OF THE STOCK
INTEREST.  THUS, OVER 40 YEARS AFTER THE ENACTMENT OF THE CLAYTON ACT,
IT NOW BECOMES APPARENT FOR THE FIRST TIME THAT SEC. 7 HAS BEEN A
SLEEPING GIANT ALL ALONG.  EVERY CORPORATION WHICH HAS ACQUIRED A STOCK
INTEREST IN ANOTHER CORPORATION AFTER THE ENACTMENT OF THE CLAYTON ACT
IN 1914, AND WHICH HAS HAD BUSINESS DEALINGS WITH THAT CORPORATION IS
EXPOSED, RETROACTIVELY, TO THE BITE OF THE NEWLY DISCOVERED TEETH OF
SEC. 7. 

FOR THE REASONS GIVEN BELOW, I BELIEVE THAT THE COURT HAS ERRED IN
(1) APPLYING SEC. 7 TO A VERTICAL ACQUISITION; (2) HOLDING THAT THE
TIME CHOSEN BY THE GOVERNMENT IN BRINGING THE ACTION IS CONTROLLING
RATHER THAN THE TIME OF THE STOCK ACQUISITION ITSELF; AND (3)
CONCLUDING, IN DISREGARD OF THE FINDINGS OF FACT OF THE TRIAL COURT,
THAT THE FACTS OF THIS CASE FALL WITHIN ITS THEORY OF ILLEGALITY. 

                 I. 

PP. 655-656, DOES NOT MAKE UNLAWFUL ALL INTERCORPORATE ACQUISITIONS AND
MERGERS.  (FN3)  IT DOES NOT APPLY TO ACQUISITIONS OF PHYSICAL ASSETS. 
(FN4)  IT APPLIES ONLY TO CERTAIN ACQUISITIONS OF STOCK, AND EVEN THEN
WITH IMPORTANT EXCEPTIONS.  THE FIRST PARAGRAPH OF SEC. 7, WHICH IS THE
STATUTORY PROVISION PRIMARILY INVOLVED IN THIS CASE, PROVIDES: 

"THAT NO CORPORATION ENGAGED IN COMMERCE SHALL ACQUIRE, DIRECTLY OR
INDIRECTLY, THE WHOLE OR ANY PART OF THE STOCK OR OTHER SHARE CAPITAL
OF ANOTHER CORPORATION ENGAGED ALSO IN COMMERCE, WHERE THE EFFECT OF
SUCH ACQUISITION MAY BE TO SUBSTANTIALLY LESSEN COMPETITION BETWEEN THE
CORPORATION WHOSE STOCK IS SO ACQUIRED AND THE CORPORATION MAKING THE
ACQUISITION, OR TO RESTRAIN SUCH COMMERCE IN ANY SECTION OR COMMUNITY,
OR TEND TO CREATE A MONOPOLY OF ANY LINE OF COMMERCE."  38 STAT. 731
732, 15 U.S.C. (1946 ED.)  SEC.  18. 

THIS PARAGRAPH MAKES UNLAWFUL ONLY THOSE INTERCORPORATE STOCK
ACQUISITIONS WHICH MAY RESULT IN ANY OF THREE EFFECTS:  (1)
SUBSTANTIALLY LESSEN COMPETITION BETWEEN THE ACQUIRING AND THE ACQUIRED
CORPORATIONS; (2) RESTRAIN COMMERCE IN ANY SECTION OR COMMUNITY; OR (3)
TEND TO CREATE A MONOPOLY OF ANY LINE OF COMMERCE.  THE GOVERNMENT
CONCEDES THAT GENERAL MOTORS AND DU PONT HAVE NEVER BEEN IN COMPETITION
WITH EACH OTHER.  SINCE THE SUBSTANTIALLY LESSEN COMPETITION CLAUSE
APPLIES ONLY TO ACQUISITIONS INVOLVING COMPETING CORPORATIONS
(GENERALLY REFERRED TO AS HORIZONTAL ACQUISITIONS), THAT CLAUSE
CONCEDEDLY IS NOT APPLICABLE TO THIS CASE.  THE QUESTIONS BEFORE US ARE
WHETHER THE OTHER UNLAWFUL EFFECTS, NAMELY, RESTRAINT OF COMMERCE IN
ANY SECTION OR COMMUNITY AND TENDENCY TO CREATE A MONOPOLY OF ANY LINE
OF COMMERCE, ARE APPLICABLE TO THIS CASE, AND, IF SO, WHETHER THE 1917
1919 ACQUISITION OF GENERAL MOTORS' STOCK BY DU PONT RESULTED OR MAY
RESULT IN EITHER OF THOSE UNLAWFUL EFFECTS. 

THE ACQUISITION OF STOCK IN A CORPORATION THAT IS NOT ENGAGED IN THE
SAME LINE OF BUSINESS AS THE ACQUIRING CORPORATION.  ALTHOUGH THE
LANGUAGE OF THE ACT IS AMBIGUOUS, THE RELEVANT LEGISLATIVE HISTORY,
ADMINISTRATIVE PRACTICE, AND JUDICIAL INTERPRETATION SUPPORT THE
CONCLUSION THAT SEC. 7 DOES NOT APPLY TO VERTICAL ACQUISITIONS. 

THE REPORT OF THE HOUSE COMMITTEE ON THE JUDICIARY, PRESENTED BY
REPRESENTATIVE CLAYTON, STATED EMPHATICALLY THAT THE PROVISIONS
RELATING TO STOCK ACQUISITIONS BY CORPORATIONS, WHICH ORIGINALLY
APPEARED AS SEC. 8 OF THE BILL, WERE INTENDED TO ELIMINATE THE EVILS OF
HOLDING COMPANIES.  H.R. REP. NO. 627, 63D CONG., 2D SESS. 17. 
ALTHOUGH A "HOLDING COMPANY" WAS DEFINED AS "A COMPANY THAT HOLDS THE
STOCK OF ANOTHER COMPANY OR COMPANIES," THE ONE "EVIL" REFERRED TO WAS
THAT A HOLDING COMPANY "IS A MEANS OF HOLDING UNDER ONE CONTROL THE
COMPETING COMPANIES WHOSE STOCKS IT HAS THUS ACQUIRED."  IBID.  TWO
MINORITY STATEMENTS APPENDED TO THE HOUSE REPORT EVIDENCE A SIMILAR
UNDERSTANDING THAT THE PROVISIONS OF THE BILL WERE LIMITED TO COMPETING
CORPORATIONS.  ID., PT. 2, P. 6; PT. 3, P. 8.  THE SUBSTANCE OF THE
HOUSE REPORT WAS ADOPTED BY THE SENATE COMMITTEE ON THE JUDICIARY IN
ITS REPORT ON THE BILL.  S. REP.  NO. 698, 63D CONG., 2D SESS. 13, 43,
46. 

THE EXTENSIVE DEBATES ON THE BILL IN EACH HOUSE OF CONGRESS CONTAIN
MANY DETAILED DISCUSSIONS OF THE PROVISIONS RELATING TO INTERCORPORATE
STOCK ACQUISITIONS.  THESE DISCUSSIONS ARE DEVOID OF ANY SUGGESTION
THAT THE PROVISIONS WERE TO APPLY TO VERTICAL ACQUISITIONS.  (FN5)  ON
THE CONTRARY, THESE PROVISIONS OF THE BILL WERE REPEATEDLY DESCRIBED AS
PROHIBITING THE ACQUISITION OF STOCK OF COMPETING COMPANIES.  (FN6)
THE ONE SPECIFIC REFERENCE TO A VERTICAL ACQUISITION DURING THE ENTIRE
DEBATE ON THESE PROVISIONS ENDED WITH A FLAT STATEMENT BY SENATOR REED
TO THE EFFECT THAT THE BILL AS THEN WRITTEN (CONTAINING THE TENDENCY
TOWARD MONOPOLY CLAUSE BUT NOT THE RESTRAINT OF COMMERCE CLAUSE) WOULD
NOT PREVENT A STEEL MANUFACTURING CORPORATION FROM ACQUIRING STOCK IN
AN ORE PRODUCING CORPORATION, A CLASSIC TYPE OF VERTICAL INTEGRATION. 
(FN7)  A READING OF THE LEGISLATIVE HISTORY OF THE BILL LEAVES THE
DISTINCT IMPRESSION THAT INTERCORPORATE RELATIONSHIPS BETWEEN BUYERS
AND SELLERS WHICH RESULTED IN NONCOMPETITIVE PREFERENCES WERE INTENDED
TO BE DEALT WITH EXCLUSIVELY BY THE PROVISION FORBIDDING INTERLOCKING
DIRECTORATES (SEC. 8 OF THE CLAYTON ACT), IF NOT COVERED BY THE
SPECIFIC PROHIBITIONS OF CERTAIN PRICE DISCRIMINATIONS (SEC. 2), AND OF
CERTAIN EXCLUSIVE SELLING OR LEASING CONTRACTS (SEC. 3).  (FN8) 

FORTY YEARS OF ADMINISTRATIVE PRACTICE PROVIDES ADDITIONAL SUPPORT
FOR THIS VIEW.  NEITHER THE DEPARTMENT OF JUSTICE NOR THE FEDERAL TRADE
COMMISSION, THE TWO PRINCIPAL ENFORCING AGENCIES, HAS BROUGHT ANY
ACTION UNDER OLD SEC. 7 (OTHER THAN THE INSTANT CASE) THAT HAS NOT
INVOLVED A STOCK ACQUISITION IN ALLEGEDLY COMPETING CORPORATIONS.  THE
FEDERAL TRADE COMMISSION REPEATEDLY HAS DECLARED ITS UNDERSTANDING THAT
SEC. 7, PRIOR TO ITS AMENDMENT IN 1950, APPLIED ONLY TO COMPETING
CORPORATIONS.  (FN9)  IN A RECENT REPORT IT STATED WITHOUT
QUALIFICATION: 

"WHILE THE 1914 ACT APPLIED SOLELY TO HORIZONTAL MERGERS, THE 1950
ACT APPLIES NOT ONLY TO HORIZONTAL ACQUISITIONS BUT TO VERTICAL AND
CONGLOMERATE ACQUISITIONS WHICH MIGHT SUBSTANTIALLY LESSEN COMPETITION
OR TEND TO CREATE A MONOPOLY."  F.T.C., REPORT ON CORPORATE MERGERS AND
ACQUISITIONS (MAY 1955), 168, H.R. DOC. NO. 169, 84TH CONG., 1ST SESS. 

BEGINNING IN 1927, THE FEDERAL TRADE COMMISSION INCLUDED IN ITS
ANNUAL RECOMMENDATIONS TO CONGRESS A REQUEST THAT SEC. 7 BE AMENDED TO
REMEDY ITS INADEQUACIES.  THIS RESULT WAS ACHIEVED IN 1950.  64 STAT.
1125, 15 U.S.C. SEC. 18.  AS THE COURT RECOGNIZES IN ITS OPINION, ANTE,
P. 590, ONE OF THE REASONS FOR AMENDING SEC. 7 IN 1950 WAS, IN THE
WORDS OF THE HOUSE REPORT ON THE AMENDMENTS, "TO MAKE IT CLEAR THAT THE
BILL APPLIES TO ALL TYPES OF MERGERS AND ACQUISITIONS, VERTICAL AND
CONGLOMERATE AS WELL AS HORIZONTAL  ..  .""  H.R. REP. NO. 1191, 81ST
CONG., 1ST SESS. 11.  FORTY YEARS OF ESTABLISHED ADMINISTRATIVE
PRACTICE, ACQUIESCED IN AND RECOGNIZED BY CONGRESS, IS PERSUASIVE
EVIDENCE OF THE PROPER SCOPE OF SEC. 7.  FEDERAL TRADE COMMISSION V.
BUNTE BROS., INC., 312 U.S. 349, 351-352. 

THE CASES CITED BY THE COURT, WITH THE ONE EXCEPTION OF RONALD
FABRICS CO. V. VERNEY BRUNSWICK MILLS, INC., CCH TRADE CASES PARA.
57,514 (D.C.S.D.N.Y. 1946), (FN10) DO NOT SUPPORT THE COURT'S
CONCLUSION THAT SEC. 7 APPLIES TO A VERTICAL ACQUISITION.  IN ALUMINUM
CO. OF AMERICA V. FEDERAL TRADE COMMISSION, 284 F. 401 (C.A. 3D CIR.
1922), THE ALUMINUM COMPANY, WHICH PREVIOUSLY HAD HAD A MONOPOLY OF ALL
SHEET ALUMINUM PRODUCED IN THE UNITED STATES, ACQUIRED CONTROL THROUGH
AN INTERMEDIARY CORPORATION OF A COMPETING SHEET ALUMINUM COMPANY
ESTABLISHED IN 1916.  A DIVESTITURE ORDER OF THE FEDERAL TRADE
COMMISSION WAS UPHELD, THE COURT HOLDING THAT THE STOCK ACQUISITION
SUBSTANTIALLY LESSENED COMPETITION AND TENDED TO CREATE A MONOPOLY OF
THE SHEET ALUMINUM BUSINESS.  IN UNITED STATES V. NEW ENGLAND FISH
EXCHANGE, 258 F. 732 (D.C. MASS. 1919), TWO HOLDING COMPANIES WHICH HAD
ACQUIRED THE STOCK OF VIRTUALLY ALL THE WHOLESALE FISH DEALERS TRADING
ON THE NEW ENGLAND FISH EXCHANGE, WHICH HANDLED ABOUT 95% OF ALL THE
GROUND FISH SOLD IN INTERSTATE COMMERCE IN THE UNITED STATES, WERE HELD
TO HAVE VIOLATED THE PROVISIONS OF SEC. 7.  EACH OF THESE CASES WAS
CONCERNED WITH THE ACQUISITION OF DIRECTLY COMPETING CORPORATIONS - NOT
VERTICAL ACQUISITIONS.  STATEMENTS IN THE OPINIONS, NOT ESSENTIAL TO
THE DECISIONS, MERELY STAND FOR THE PROPOSITION THAT THE RESTRAINT AND
MONOPOLY CLAUSES OF SEC. 7 ARE NOT ENTIRELY SYNONYMOUS WITH THE
SUBSTANTIALLY LESSEN COMPETITION CLAUSE. 

ASSUMING THAT THE THREE UNLAWFUL EFFECTS MENTIONED IN SEC. 7 ARE NOT
ENTIRELY SYNONYMOUS WITH EACH OTHER, (FN11) SUCH AN ASSUMPTION DOES NOT
REQUIRE THE CONCLUSION THAT SEC. 7 WAS INTENDED TO APPLY TO VERTICAL
ACQUISITIONS AS WELL AS TO HORIZONTAL ACQUISITIONS.  CORPORATIONS
ENGAGED IN THE SAME BUSINESS ACTIVITY IN DIFFERENT AREAS DO NOT
NECESSARILY "COMPETE" WITH EACH OTHER SO THAT THEIR COMBINATION WOULD
SUBSTANTIALLY LESSEN COMPETITION BETWEEN THEM, EVEN THOUGH THEIR
COMBINATION MIGHT RESULT IN A RESTRAINT OF COMMERCE OR A TENDENCY
TOWARD MONOPOLY VIOLATIVE OF SEC. 7.  SUCH A POSSIBILITY WAS PRESENTED
IN TRANSAMERICA CORP. V. BOARD OF GOVERNORS, 206 F.2D 163 (C.A. 3D CIR.
1953), WHERE A BANKING CORPORATION THROUGH A SERIES OF TRANSACTIONS
ACQUIRED STOCK IN 48 LOCAL BANKING CORPORATIONS, MOST OF WHICH WERE
LOCATED IN COMMUNITIES IN WHICH NO OTHER BANK WAS ACQUIRED.   A
DIVESTITURE ORDER OF THE BOARD WAS REVERSED ON THE GROUND THAT THE
BOARD HAD NOT PROVED THAT THE ACQUISITIONS OF THESE BANKS IN FIVE
WESTERN STATES EITHER SUBSTANTIALLY LESSENED COMPETITION OR TENDED TO
CREATE A MONOPOLY.    FINALLY, THIS COURT HAS TWICE CONSTRUED OLD SEC.
7 AS APPLYING ONLY TO STOCK ACQUISITIONS INVOLVING COMPETING
CORPORATIONS.  IN INTERNATIONAL SHOE CO. V. FEDERAL TRADE COMMISSION,
280 U.S. 291 (1930), THE COURT HELD THAT THE ACQUISITION OF THE FIFTH
LARGEST SHOE MANUFACTURING COMPANY BY THE LARGEST SHOE MANUFACTURER DID
NOT VIOLATE EITHER THE SUBSTANTIALLY LESSEN COMPETITION CLAUSE OR THE
RESTRAINT OF COMMERCE CLAUSE OF SEC. 7 BECAUSE THE PRE-EXISTING
COMPETITION BETWEEN THE TWO CORPORATIONS WAS INSUBSTANTIAL, AND BECAUSE
THE ACQUIRED CORPORATION WAS IN A PRECARIOUS FINANCIAL CONDITION. 
SUBSTANTIAL PRE-EXISTING COMPETITION WAS SAID TO BE A REQUISITE FOR
VIOLATION OF EITHER CLAUSE OF SEC. 7.  280 U.S., AT 298, 303.  AN EVEN
MORE DIRECT HOLDING IS FOUND IN THATCHER MFG. CO. V. FEDERAL TRADE
COMMISSION, 272 U.S. 554 (1926), WHERE THIS COURT AFFIRMED THAT PORTION
OF THE LOWER COURT'S DECREE WHICH HAD ALLOWED THATCHER, A MILK BOTTLE
MANUFACTURER, TO RETAIN THE ASSETS OF WOODBURY, A BOTTLE MANUFACTURER
SPECIALIZING IN CONDIMENT AND WHISKEY BOTTLES, ON THE GROUND THAT THE
ACQUISITION DID NOT VIOLATE ANY OF THE THREE CLAUSES OF SEC. 7 SINCE
THATCHER WAS NOT IN COMPETITION WITH WOODBURY.  272 U.S., AT 560,
AFFIRMING IN PART AND REVERSING IN PART FEDERAL TRADE COMMISSION V.
THATCHER MFG. CO., 5 F.2D 615 (C.A. 3D CIR. 1925).  THESE HOLDINGS
APPARENTLY WILL BE OVERRULED SUB SILENTIO BY TODAY'S DECISION. 

THE LEGISLATIVE HISTORY, ADMINISTRATIVE PRACTICE, AND JUDICIAL
INTERPRETATION OF SEC. 7 PROVIDE THE PERSPECTIVE IN WHICH THE
GOVERNMENT'S PRESENT ASSERTION THAT SEC. 7 APPLIES TO VERTICAL
ACQUISITIONS SHOULD BE VIEWED.  SEEN AS A WHOLE, THEY OFFER CONVINCING
EVIDENCE THAT SEC. 7, PROPERLY CONSTRUED, HAS REFERENCE ONLY TO
HORIZONTAL ACQUISITIONS.  I WOULD SO HOLD.  HOWEVER, EVEN IF THE
OPPOSITE VIEW BE ACCEPTED, THE FOREGOING VIEWS OF THE ENFORCING
AGENCIES AND THE COURTS ARE MATERIAL TO A PROPER CONSIDERATION OF THE
OTHER ISSUES WHICH MUST THEN BE REACHED. 

            II. 

IN THIS CASE THE GOVERNMENT IS CHALLENGING, IN 1949, A STOCK
ACQUISITION THAT TOOK PLACE IN 1917-1919.  THE COURT, WITHOUT ADVANCING
REASONS TO SUPPORT ITS CONCLUSION, HOLDS THAT IN DETERMINING WHETHER
THE EFFECT OF THE STOCK ACQUISITION IS SUCH AS TO VIOLATE SEC. 7, THE
TIME CHOSEN BY THE GOVERNMENT IN BRINGING ITS SUIT IS CONTROLLING
RATHER THAN THE TIME OF THE ACQUISITION OF THE STOCK.  THIS SEEMS TO ME
TO IGNORE THE LANGUAGE AND STRUCTURE OF SEC. 7, THE PURPOSE OF THE
CLAYTON ACT, AND ALL EXISTING ADMINISTRATIVE AND JUDICIAL PRECEDENTS. 

THE FIRST PARAGRAPH OF SEC. 7 PROVIDES THAT "NO CORPORATION  ..
SHAALL ACQUIRE  ..  THHE STOCK ..  OFF ANOTHER CORPORATION  ..  WHHERE
THE EFFECT OF SUCH ACQUISITION MAY BE  ..  .""  YET THE COURT CONSTRUES
THIS PROVISION AS IF IT READ "NO CORPORATION  ..  SHHALL ACQUIRE OR
CONTINUE TO HOLD  .. THEE STOCK  ..  OFF ANOTHER CORPORATION  ..
WHEENEVER IT SHALL APPEAR THAT THE EFFECT OF SUCH ACQUISITION OR
CONTINUED HOLDING MAY BE  ..  .""  CONTINUED HOLDING, TO BE SURE, IS A
PREREQUISITE TO ANY ACTION UNDER SEC. 7 BECAUSE, IF THE STOCK IS NO
LONGER HELD, THE VIOLATION HAS BEEN PURGED AND THERE IS NOTHING TO
DIVEST.  (FN12)  BUT THE FACT OF CONTINUED HOLDING DOES NOT ALLOW THE
GOVERNMENT TO DISPENSE WITH THE NECESSITY OF PROVING THAT THE STOCK WAS
UNLAWFULLY ACQUIRED.  THE OFFENSE DESCRIBED BY SEC. 7 IS THE
ACQUISITION, NOT THE HOLDING OR THE USE, OF STOCK.  WHEN THE
ACQUISITION HAS BEEN MADE, THE OFFENSE, IF ANY, IS COMPLETE.  THE
STATUTORY LANGUAGE IS UNEQUIVOCAL.   IT MAKES THE TEST THE PROBABLE
EFFECT OF THE ACQUISITION AT THE TIME OF THE ACTUAL ACQUISITION, AND
NOT AT SOME LATER DATE TO BE ARBITRARILY CHOSEN BY THE GOVERNMENT IN
BRINGING SUIT. 

THE DISTINCTION CAREFULLY MADE IN THE SEVERAL PARAGRAPHS OF SEC. 7
BETWEEN AN UNLAWFUL ACQUISITION AND AN UNLAWFUL USE OF STOCK REINFORCES
THIS CONCLUSION.  THE FIRST PARAGRAPH OF SEC. 7, WHICH SPEAKS ONLY IN
TERMS OF ACQUISITION OF STOCK, IS CONCERNED SOLELY WITH THE PURCHASE OF
STOCK IN "ANOTHER CORPORATION."  IT IS THE ONLY PROVISION THAT IS
APPLICABLE IN THIS CASE.  THE SECOND PARAGRAPH, WHICH EXPRESSLY
PROHIBITS BOTH ACQUISITION AND USE, IS CONCERNED WITH STOCK PURCHASES
IN "TWO OR MORE CORPORATIONS."  CONCEDEDLY, IT IS NOT APPLICABLE HERE. 
WHEN CONGRESS CHOSE TO MAKE UNLAWFUL THE USE OF STOCK SUBSEQUENT TO ITS
ACQUISITION, IT DID SO IN SPECIFIC TERMS.  THE OMISSION OF THE PHRASE
"OR THE USE OF SUCH STOCK BY THE VOTING OR GRANTING OF PROXIES OR
OTHERWISE," CONTAINED IN THE SECOND PARAGRAPH OF SEC. 7, FROM THE FIRST
PARAGRAPH OF THE SECTION WAS NOT INADVERTENT.  THE PHRASE THEREFORE
CANNOT BE READ INTO THE FIRST PARAGRAPH OF SEC. 7.  (FN13) 

THE CLAYTON ACT WAS NOT INTENDED TO REPLACE THE SHERMAN ACT IN
REMEDYING ACTUAL RESTRAINTS AND MONOPOLIES.  ITS PURPOSE WAS TO
SUPPLEMENT THE SHERMAN ACT BY CHECKING ANTICOMPETITIVE TENDENCIES IN
THEIR INCIPIENCY, BEFORE THEY REACHED THE POINT AT WHICH THE SHERMAN
ACT COMES INTO PLAY.  THIS PURPOSE WAS WELL STATED IN THE SENATE REPORT
ON THE BILL: 

"BROADLY STATED, THE BILL, IN ITS TREATMENT OF UNLAWFUL RESTRAINTS
AND MONOPOLIES, SEEKS TO PROHIBIT AND MAKE UNLAWFUL CERTAIN TRADE
PRACTICES WHICH, AS A RULE, SINGLY AND IN THEMSELVES, ARE NOT COVERED
BY THE ACT OF JULY 2, 1890, OR OTHER EXISTING ANTITRUST ACTS, AND THUS,
BY MAKING THESE PRACTICES ILLEGAL, TO ARREST THE CREATION OF TRUSTS,
CONSPIRACIES, AND MONOPOLIES IN THEIR INCIPIENCY AND BEFORE
CONSUMMATION."  S. REP. NO. 698, 63D CONG., 2D SESS. 1. 

THIS PURPOSE PLACES EMPHASIS ON THE PROBABLE ANTICOMPETITIVE EFFECTS
OF TRANSACTIONS OR OCCURRENCES VIEWED AS OF THE DATE OF THEIR
OCCURRENCE.  THE DETERMINATION REQUIRED BY THE ACT IS ONE OF PREDICTING
THE PROBABLE OUTCOME OF A PARTICULAR TRANSACTION, HERE AN ACQUISITION
OF STOCK IN ANOTHER CORPORATION.  IF, AT THE TIME OF THE STOCK
ACQUISITION, A POTENTIAL THREAT TO COMPETITION IS APPARENT, THE
ACQUISITION IS UNLAWFUL UNDER SEC. 7.  IF, ON THE OTHER HAND, A
POTENTIAL THREAT TO COMPETITION IS NOT THEN APPARENT, AN ANTITRUST
VIOLATION IS NOT INVOLVED UNLESS SUBSEQUENT USE OF THE STOCK
CONSTITUTES A RESTRAINT OF TRADE PROHIBITED BY THE SHERMAN ACT. 
(FN14) 

THE COURT IGNORES THE ALL-IMPORTANT LAWFULNESS OR UNLAWFULNESS OF THE
STOCK ACQUISITION AT OR ABOUT THE TIME IT OCCURRED, AND LIMITS ITS
ATTENTION TO THE PROBABLE ANTICOMPETITIVE EFFECTS OF THE CONTINUED
HOLDING OF THE STOCK AT THE TIME OF SUIT, SOME 30 YEARS LATER.  THE
RESULT IS TO SUBJECT A GOOD-FAITH STOCK ACQUISITION, LAWFUL WHEN MADE,
TO THE HAZARD THAT THE CONTINUED HOLDING OF THE STOCK MAY MAKE THE
ACQUISITION ILLEGAL THROUGH UNFORESEEN DEVELOPMENTS.  SUCH A VIEW IS
NOT SUPPORTED BY THE STATUTORY LANGUAGE AND VIOLATES ELEMENTARY
PRINCIPLES OF FAIRNESS.  SUITS BROUGHT UNDER THE CLAYTON ACT ARE NOT
SUBJECT TO ANY STATUTE OF LIMITATIONS, AND IT IS DOUBTFUL WHETHER THE
DOCTRINE OF LACHES APPLIES AS AGAINST THE GOVERNMENT.  THE RESULT IS
THAT UNEXPECTED AND UNFORESEEABLE DEVELOPMENTS OCCURRING LONG AFTER A
STOCK ACQUISITION CAN BE USED TO CHALLENGE THE LEGALITY OF CONTINUED
HOLDING OF THE STOCK.  IN SUCH AN ACTION, THE GOVERNMENT NEED ONLY
PROVE THAT PROBABLE RATHER THAN ACTUAL ANTICOMPETITIVE EFFECTS EXIST AS
OF THE TIME OF SUIT.  THE GOVERNMENT MAY THUS SET ASIDE A TRANSACTION
WHICH WAS ENTIRELY LAWFUL WHEN MADE, MERELY BY SHOWING THAT IT WOULD
HAVE BEEN UNLAWFUL HAD IT OCCURRED AT THE TIME OF SUIT, MANY YEARS
LATER.  THE GROWTH OF THE ACQUIRED CORPORATION, A FORTUITOUS DECLINE IN
THE NUMBER OF ITS COMPETITORS, OR THE ACHIEVEMENT OF CONTROL BY AN
ACCIDENTAL DIFFUSION OF OTHER STOCK MAY RESULT, UNDER THIS TEST, IN
RENDERING THE ORIGINALLY LAWFUL ACQUISITION UNLAWFUL AB INITIO. 
STRIKINGLY ENOUGH, ALL OF THESE FACTORS ARE INVOLVED IN THIS CASE. 
(FN15) 

THE COURT'S HOLDING IS UNFAIR TO THE INDIVIDUALS WHO ENTERED INTO
TRANSACTIONS ON THE ASSUMPTION, JUSTIFIED BY THE LANGUAGE OF SEC. 7,
THAT THEIR ACTIONS WOULD BE JUDGED BY THE FACTS AVAILABLE TO THEM AT
THE TIME THEY MADE THEIR DECISION. 

"THE PROHIBITION (OF SEC. 7) IS ADDRESSED TO PARTIES WHO CONTEMPLATE
ENGAGING IN MERGER TRANSACTIONS AND IS MEANT, IN THE FIRST INSTANCE, TO
GUIDE THEM IN DECIDING UPON A COURSE OF ACTION.   THE ONLY STANDARD
THEY ARE CAPABLE OF APPLYING IS ONE ADDRESSED TO THE CIRCUMSTANCES
VIEWED AS OF THE DATE OF THE PROPOSED TRANSACTION.  SINCE THIS IS THE
STANDARD WHICH THE PARTIES MUST APPLY IN DECIDING WHETHER TO UNDERTAKE
A TRANSACTION, IT SEEMS REASONABLE TO CONCLUDE THAT IT IS THE STANDARD
WHICH ENFORCEMENT AGENCIES SHOULD APPLY IN DECIDING WHETHER THE
TRANSACTION VIOLATES THE STATUTE."  NEAL, THE CLAYTON ACT AND THE
TRANSAMERICA CASE, 5 STAN.  L. REV. 179, 220-221. 

THE COURT CITES NO AUTHORITY IN SUPPORT OF ITS NEW INTERPRETATION OF
THIS 40-YEAR-OLD STATUTE.  ON THE OTHER HAND, EXAMINATION OF THE DOZEN
OR MORE CASES BROUGHT UNDER SEC. 7 REVEALS THAT IN EVERY CASE THE
INQUIRY HERETOFORE HAS CENTERED ON THE PROBABLE ANTICOMPETITIVE EFFECTS
OF THE STOCK ACQUISITION AT OR NEAR THE TIME IT WAS MADE.  (FN16)  SEE,
E.G., INTERNATIONAL SHOE CO. V. FEDERAL TRADE COMMISSION, 280 U.S. 291
(1930); TRANSAMERICA CORP. V. BOARD OF GOVERNORS, 206 F.2D 163 (C.A. 3D
CIR. 1953); V. VIVAUDOU, INC. V. FEDERAL TRADE COMMISSION, 54 F.2D 273
(C.A.2D CIR. 1931); FEDERAL TRADE COMMISSION V. THATCHER MFG. CO., 5
F.2D 615 (C.A. 3D CIR. 1925), REV'D IN PART ON ANOTHER GROUND, 272 U.S.
554; UNITED STATES V. REPUBLIC STEEL CORP., 11 F. SUPP. 117 (D.C.N.D.
OHIO 1935); IN RE VANADIUM-ALLOYS STEEL CO., 18 F.T.C. 194 (1934).  THE
CONCLUSION THUS SEEMS INESCAPABLE THAT THE UNLAWFULNESS OF A STOCK
ACQUISITION UNDER THE FIRST PARAGRAPH OF SEC. 7 PROPERLY TURNS ON THE
POTENTIAL THREAT TO COMPETITION CREATED BY THE ACQUISITION OF THE STOCK
AT THE TIME OF ITS ACQUISITION AND NOT BY ITS SUBSEQUENT USE. 

THAT THE TIME OF ACQUISITION IS CONTROLLING DOES NOT MEAN THAT THE
GOVERNMENT IS UNABLE TO BRING AN ACTION IF IT FAILS TO PROCEED WITHIN A
FEW YEARS OF THE STOCK ACQUISITION.  IT MEANS ONLY THAT IF THE
GOVERNMENT CHOOSES TO BRING ITS ACTION MANY YEARS LATER, IT MUST PROVE
WHAT SEC. 7 PLAINLY REQUIRES - THAT THE ACQUISITION THREATENED
COMPETITION WHEN MADE. 

NOR DOES IT MEAN THAT EVIDENCE OF SUBSEQUENT EVENTS IS NECESSARILY
IRRELEVANT.  EVIDENCE THAT ANTICOMPETITIVE EFFECTS HAVE OCCURRED SINCE
THE ACQUISITION, AND THAT THESE EFFECTS ARE TRACEABLE TO THE ORIGINAL
ACQUISITION RATHER THAN TO OTHER FACTORS, MAY SUPPORT AN INFERENCE THAT
SUCH EFFECTS WERE "REASONABLY PROBABLE" AT THE TIME OF ACQUISITION. 
THE ELEMENT OF CAUSATION IS THE NECESSARY LINK WITH THE PAST.  HOWEVER,
IF EVENTS SUBSEQUENT TO THE ACQUISITION INDICATE THAT NO
ANTICOMPETITIVE EFFECTS HAVE OCCURRED, THAT EVIDENCE MAY SUPPORT AN
INFERENCE THAT AN UNLAWFUL POTENTIAL DID NOT EXIST AT THE TIME OF
ACQUISITION.  EVIDENCE AS TO WHAT HAPPENED AFTER THE ACQUISITION IS
RELEVANT TO THE EXTENT THAT IT BEARS ON THE CENTRAL QUESTION WHETHER,
AT THE TIME OF THE ACQUISITION, THERE WAS A REASONABLE PROBABILITY OF A
THREAT TO COMPETITION. 

I AGREE WITH THE COURT THAT SEC. 7 DOES NOT REQUIRE FINDINGS AND
CONCLUSIONS OF ACTUAL ANTICOMPETITIVE EFFECTS.  UNLIKE THE SHERMAN ACT,
SEC. 7 MERELY REQUIRES PROOF OF A REASONABLE PROBABILITY OF A
SUBSTANTIAL LESSENING OF COMPETITION, RESTRAINT OF COMMERCE, OR
TENDENCY TOWARD MONOPOLY.  INTERNATIONAL SHOE CO. V. FEDERAL TRADE
COMMISSION, 280 U.S. 291; TRANSAMERICA CORP. V. BOARD OF GOVERNORS, 206
F.2D 163.  WHEN A VERTICAL ACQUISITION IS INVOLVED, ITS LEGALITY THUS
TURNS ON WHETHER THERE IS A REASONABLE PROBABILITY THAT IT WILL
FORECLOSE COMPETITION FROM A SUBSTANTIAL SHARE OF THE MARKET, EITHER BY
SIGNIFICANTLY RESTRICTING ACCESS TO NEEDED SUPPLIES OR BY SIGNIFICANTLY
LIMITING THE MARKET FOR ANY PRODUCT.  SEE REPORT OF THE ATTORNEY
GENERAL'S NATIONAL COMMITTEE TO STUDY THE ANTITRUST LAWS (1955) 122
127.  THE DETERMINATION OF SUCH PROBABLE ECONOMIC CONSEQUENCES REQUIRES
STUDY OF THE MARKETS AFFECTED, OF THE COMPANIES INVOLVED IN RELATION TO
THOSE MARKETS, AND OF THE PROBABLE IMMEDIATE AND FUTURE EFFECTS ON
COMPETITION.  A MERE SHOWING THAT A SUBSTANTIAL DOLLAR VOLUME OF SALES
IS INVOLVED CANNOT SUFFICE.  AS THE COURT SAYS, "THE MARKET AFFECTED
MUST BE SUBSTANTIAL," ANTE, P. 595, AND "SUBSTANTIALITY CAN BE
DETERMINED ONLY IN TERMS OF THE MARKET AFFECTED," ANTE, P. 593. 
ECONOMIC FACTORS. 

HOWEVER, WHEN, AS HERE, THE GOVERNMENT BRINGS A PROCEEDING NEARLY 30
YEARS AFTER A STOCK PURCHASE, IT MUST PROVE THAT THE ACQUISITION WAS
UNLAWFUL WHEN MADE (I.E., THAT THERE WAS A REASONABLE PROBABILITY AT
THAT TIME THAT DU PONT'S COMPETITORS WOULD BE FORECLOSED FROM A
SUBSTANTIAL SHARE OF THE RELEVANT MARKET), AND ALSO THAT THE EFFECT OF
THE ACQUISITION CONTINUED TO BE HARMFUL TO COMPETITION AT THE TIME SUIT
WAS BROUGHT.  ILLEGALITY AT THE TIME OF ACQUISITION IS REQUIRED BY THE
FIRST PARAGRAPH OF SEC. 7; CONTINUING ILLEGALITY IS A PREREQUISITE FOR
OBTAINING EQUITABLE RELIEF.  SEE UNITED STATES V. W.T. GRANT CO., 345
U.S. 629; UNITED STATES V. OREGON MEDICAL SOCIETY, 343 U.S. 326, 333;
UNITED STATES V. SOUTH BUFFALO R. CO., 333 U.S. 771, 774.  THIS IS
PARTICULARLY TRUE UNDER SEC. 7 SINCE IT IS A PROPHYLACTIC MEASURE
DESIGNED TO PREVENT STOCK ACQUISITIONS WHICH PROBABLY WILL HAVE A
DELETERIOUS EFFECT ON COMPETITION.  PROOF THAT COMPETITION HAS NOT IN
FACT BEEN HARMED DURING A LONG PERIOD FOLLOWING A STOCK ACQUISITION
ITSELF INDICATES THAT A RESTRAINT IN THE FUTURE IS UNLIKELY.  IN SUCH A
CASE, THE ACTUAL EFFECT OF THE ACQUISITION LARGELY SUPPLANTS THE
CONJECTURE AS TO ITS PROBABLE EFFECTS WHICH OTHERWISE MUST BE RELIED
UPON.    IN THIS CASE, THE DISTRICT COURT FOUND THAT THE CHALLENGED
ACQUISITION, WHICH TOOK PLACE "OVER THIRTY YEARS AGO," HAD NOT RESULTED
IN ANY RESTRAINT OF TRADE "IN THOSE MANY INTERVENING YEARS  .. ."   THE
DISTRICT COURT PROPERLY CONCLUDED THAT, WHEN THERE HAD BEEN NO
RESTRAINT FOR 30 YEARS, "THERE IS NOT  ..  ANNY BASIS FOR A FINDING
THAT THERE IS  ..  ANNY REASONABLE PROBABILITY OF SUCH A RESTRAINT
WITHIN THE MEANING OF THE CLAYTON ACT."  126 F. SUPP., AT 335.  IF THE
EVIDENCE SUPPORTS THE DISTRICT COURT'S CONCLUSION THAT THERE HAS BEEN
NO RESTRAINT FOR 30 YEARS, THE JUDGMENT BELOW MUST BE AFFIRMED. 

                    III. 

THE REMAINING ISSUES ARE FACTUAL:  (1) WHETHER THE RECORD ESTABLISHES
THE EXISTENCE OF A REASONABLE PROBABILITY THAT DU PONT'S COMPETITORS
WILL BE FORECLOSED FROM SECURING GENERAL MOTORS' TRADE, AND (2) WHETHER
THE RECORD ESTABLISHES THAT SUCH FORECLOSURE, IF PROBABLE, INVOLVES A
SUBSTANTIAL SHARE OF THE RELEVANT MARKET AND SIGNIFICANTLY LIMITS THE
COMPETITIVE OPPORTUNITIES OF OTHERS TRADING IN THAT MARKET.  IN
DISCUSSING THESE FACTUAL ISSUES, I MEET THE COURT ON ITS OWN GROUND,
THAT IS, I ASSUME THAT THE OLD SEC. 7 APPLIES TO VERTICAL ACQUISITIONS,
AND THAT THE POTENTIAL THREAT AT THE TIME OF SUIT IS CONTROLLING.  EVEN
ON THAT BASIS THE RECORD DOES NOT SUPPORT THE COURT'S CONCLUSION THAT
SEC. 7 WAS VIOLATED BY THIS 1917-1919 STOCK ACQUISITION. 

A. FORECLOSURE OF COMPETITORS. 

THIS IS NOT A CASE WHERE A SUPPLIER CORPORATION HAS MERGED WITH ITS
CUSTOMER CORPORATION WITH THE RESULT THAT THE SUPPLIER'S COMPETITORS
ARE AUTOMATICALLY AND COMPLETELY FORECLOSED FROM THE CUSTOMER'S TRADE. 
(FN17) IN THIS CASE, THE ONLY CONNECTION BETWEEN DU PONT, THE SUPPLIER,
AND GENERAL MOTORS, THE CUSTOMER, IS DU PONT'S 23% STOCK INTEREST IN
GENERAL MOTORS.  A CONCLUSION THAT SUCH A STOCK INTEREST AUTOMATICALLY
FORECLOSES DU PONT'S COMPETITORS FROM SELLING TO GENERAL MOTORS WOULD
BE WITHOUT JUSTIFICATION.  WHETHER A FORECLOSURE HAS OCCURRED IN THE
PAST OR IS PROBABLE IN THE FUTURE IS A QUESTION OF FACT TURNING ON THE
EVIDENCE IN THE RECORD. 

THE COURT, AT THE OUTSET OF ITS OPINION, STATES THAT THE PRIMARY
ISSUE IS WHETHER DU PONT'S POSITION AS A SUBSTANTIAL SUPPLIER TO
GENERAL MOTORS "WAS ACHIEVED ON COMPETITIVE MERIT ALONE," OR RESULTED
FROM DU PONT'S STOCK INTEREST IN GENERAL MOTORS.  ANTE, PP. 588-589. 
IN RESOLVING THIS ISSUE, THE COURT STATES THAT THE "BASIC FACTS" ARE
NOT IN DISPUTE AND HENCE THAT IT IS UNNECESSARY TO SET ASIDE THE
FINDINGS OF FACT OF THE DISTRICT COURT AS CLEARLY ERRONEOUS.  SEE FED.
RULES CIV. PROC., 52(A).  THE BASIC FACTS ARE SAID TO BE THAT DU PONT
HAD NO STANDING AS A GENERAL MOTORS' SUPPLIER BEFORE THE STOCK
PURCHASES OF 1917-1919, THAT IT GAINED A "COMMANDING POSITION" AFTER
THE STOCK PURCHASES, AND THAT CERTAIN ITEMS OF EVIDENCE IN THIS
GIGANTIC RECORD TEND TO INDICATE THAT DU PONT HOPED TO GET AND ACTUALLY
DID GET A PREFERENCE IN GENERAL MOTORS' TRADE.  FROM THESE ALLEGED
FACTS THE COURT DRAWS THE CONCLUSION THAT DU PONT HAS MISUSED ITS 23%
STOCK INTEREST IN GENERAL MOTORS "TO ENTRENCH ITSELF AS THE PRIMARY
SUPPLIER OF GENERAL MOTORS' REQUIREMENTS FOR AUTOMOTIVE FINISHES AND
FABRICS."  ANTE, P. 606.  "THE INFERENCE IS OVERWHELMING," THE COURT
CONCLUDES, "THAT DU PONT'S COMMANDING POSITION WAS PROMOTED BY ITS
STOCK INTEREST AND WAS NOT GAINED SOLELY ON COMPETITIVE MERIT."  ANTE,
P. 605.  WITH THESE WORDS, THE COURT OVERTURNS THE DISTRICT COURT'S
UNEQUIVOCAL FINDINGS TO THE EFFECT THAT DU PONT WAS A PRINCIPAL
SUPPLIER TO GENERAL MOTORS PRIOR TO THE 1917-1919 STOCK PURCHASES, THAT
DU PONT MAINTAINED THIS POSITION IN THE YEARS FOLLOWING THE STOCK
PURCHASES, AND THAT FOR THE ENTIRE 30-YEAR PERIOD PRECEDING THE SUIT,
GENERAL MOTORS' PURCHASES OF DU PONT'S PRODUCTS WERE BASED SOLELY ON
THE COMPETITIVE MERITS OF THOSE PRODUCTS.  THE EVIDENCE SUPPORTING
THESE FINDINGS OF THE DISTRICT COURT MAY BE SUMMARIZED AS FOLLOWS: 

DU PONT IS PRIMARILY A MANUFACTURER OF CHEMICALS AND CHEMICAL
PRODUCTS.  THOUSANDS OF ITS PRODUCTS COULD BE USED BY GENERAL MOTORS IN
MANUFACTURING AUTOMOBILES, APPLIANCES AND MACHINERY.  DESPITE DU PONT'S
SALES EFFORTS OVER A PERIOD OF 40 YEARS, GENERAL MOTORS BUYS MANY OF
THE COMMODITIES PRODUCED BY DU PONT FROM DU PONT'S COMPETITORS.  (FN18)
THE COURT, IGNORING THE MANY PRODUCTS WHICH GENERAL MOTORS DECLINES TO
BUY FROM DU PONT OR WHICH IT BUYS ONLY IN SMALL QUANTITIES,
CONCENTRATES ON THE FEW PRODUCTS WHICH DU PONT HAS SOLD IN LARGE VOLUME
TO GENERAL MOTORS FOR MANY YEARS - PAINTS AND FABRICS.  BEFORE
EXAMINING THE HISTORY OF THOSE LARGE-VOLUME PURCHASES, IT IS ESSENTIAL
TO UNDERSTAND WHERE AND BY WHOM PURCHASING DECISIONS WITHIN GENERAL
MOTORS HAVE BEEN MADE. 

FOR MANY YEARS, GENERAL MOTORS HAS BEEN ORGANIZED INTO SOME 30
OPERATING DIVISIONS, EACH OF WHICH HAS FINAL AUTHORITY TO MAKE, AND
DOES MAKE, ITS OWN PURCHASING DECISIONS.  THIS DECENTRALIZED MANAGEMENT
SYSTEM PLACES FULL RESPONSIBILITY FOR PURCHASING DECISIONS ON THE
OFFICERS OF THE RESPECTIVE DIVISIONS.  TO SPEAK OF "SELLING TO GENERAL
MOTORS" IS, THEREFORE, MISLEADING.  A PROSPECTIVE SUPPLIER, INSTEAD OF
SELLING TO GENERAL MOTORS, SELLS TO CHEVROLET, OR FRIGIDAIRE, OR
TERNSTEDT, OR DELCO LIGHT, AS DIVISIONS.  MOREOVER, WHEN THERE ARE
SEVERAL PLANTS WITHIN A DIVISION, EACH PLANT FREQUENTLY HAS ITS OWN
PURCHASING AGENT AND PRESENTS A SEPARATE SELLING JOB. 

THE RECORD DISCLOSES THAT EACH DIVISION BUYS INDEPENDENTLY, THAT THE
PATTERN OF BUYING VARIES GREATLY FROM ONE DIVISION TO ANOTHER, AND THAT
WITHIN EACH DIVISION PURCHASES FROM DU PONT HAVE FLUCTUATED GREATLY IN
RESPONSE TO PRICE, QUALITY, SERVICE AND OTHER COMPETITIVE
CONSIDERATIONS.  FOR EXAMPLE, OLDSMOBILE IS THE ONLY DIVISION WHICH
BUYS ANTIFREEZE FROM DU PONT AND ONE OF THE TWO CAR DIVISIONS WHICH
DOES NOT FINISH ITS CARS WITH DUCO.  BUICK ALONE BUYS DU PONT MOTOR
ENAMEL, AND CADILLAC ALONE USES DU PONT'S COPPER ELECTROPLATING
EXCLUSIVELY.  THUS THE ALLEGED NEFARIOUS INFLUENCE ARISING FROM DU
PONT'S STOCK INTEREST APPARENTLY AFFECTS THE OLDSMOBILE ANTIFREEZE
BUYER, BUT NOT THE OLDSMOBILE PAINT BUYER; THE PAINT BUYERS AT
CHEVROLET, BUICK AND PONTIAC, BUT NOT THE ANTIFREEZE OR ELECTROPLATING
BUYERS; AND THE ELECTROPLATING BUYER AT CADILLAC, BUT NOT THE CADILLAC
PAINT BUYER. 

1.  PAINTS.  - DU PONT, FOR MANY YEARS, HAS HAD MARKED SUCCESS IN THE
MANUFACTURE AND SALE OF PAINTS, VARNISHES, LACQUERS AND RELATED
PRODUCTS.  (FN19)  IN 1939, IT PRODUCED 9.5% OF THE TOTAL DOLLAR VALUE
OF ALL FINISHES PRODUCED IN THE UNITED STATES AND, IN 1947, 8.1%.  IN
RECENT YEARS, APPROXIMATELY THREE-FOURTHS OF DU PONT'S TOTAL SALES TO
GENERAL MOTORS HAVE CONSISTED OF INDUSTRIAL FINISHES.  (FN20)  ALTHOUGH
DU PONT HAS BEEN GENERAL MOTORS' PRINCIPAL SUPPLIER OF PAINT FOR MANY
YEARS, GENERAL MOTORS CONTINUES TO BUY ABOUT 30% OF ITS PAINT
REQUIREMENTS FROM COMPETITORS OF DU PONT.  (FN21)  MOREOVER, THE SALES
OF PAINT FROM DU PONT TO GENERAL MOTORS DO NOT BULK LARGE IN THE
RESPECTIVE TOTAL SALES AND PURCHASES OF EITHER COMPANY.  IN 1948, DU
PONT'S FINISH SALES TO GENERAL WERE ONLY 3% OF ITS TOTAL SALES OF ALL
PRODUCTS; THEY WERE AN INFINITESIMAL PERCENTAGE OF GENERAL MOTORS'
TOTAL PURCHASES. 

TWO PRODUCTS ACCOUNT FOR A HIGH PROPORTION OF THESE FINISH SALES TO
GENERAL MOTORS: "DUCO," A NITROCELLULOSE LACQUER INVENTED AND PATENTED
BY DU PONT, AND "DULUX," A SYNTHETIC RESIN ENAMEL DEVELOPED BY DU
PONT.  (FN22)  HOWEVER, DUCO AND DULUX DID NOT COME INTO COMMERCIAL USE
UNTIL 1924 AND 1931, RESPECTIVELY, AND DU PONT'S POSITION AS A
PRINCIPAL MANUFACTURER OF FINISHES WAS ATTAINED MUCH EARLIER. 

DU PONT FIRST ASSUMED A LEADING POSITION IN THE AUTOMOTIVE FINISH
FIELD WITH ITS ACQUISITION, IN 1918, OF A MAJORITY OF STOCK OF THE
FLINT VARNISH & COLOR WORKS AT FLINT, MICHIGAN.  AT THAT TIME, AND FOR
SOME YEARS BEFORE, FLINT SUPPLIED THE FINISHES USED ON ALL GENERAL
MOTORS' CARS EXCEPT CADILLAC, AND ALSO FOR MANY OTHER AUTOMOBILE
COMPANIES.  DU PONT'S ACQUISITION OF GENERAL MOTORS' STOCK IN 1917-1919
DID NOT INFLUENCE THE GENERAL MOTORS' DIVISIONS IN PURCHASING FROM
FLINT.  IN 1921, FLINT LOST ONE-HALF OF THE OAKLAND BUSINESS AND, IN
1923, A SUBSTANTIAL PORTION OF THE BUSINESS AT BUICK, OAKLAND AND
OLDSMOBILE.  126 F. SUPP., AT 288. 

THE INVENTION AND DEVELOPMENT OF DUCO IN THE EARLY 1920'S REPRESENTED
A SIGNIFICANT TECHNOLOGICAL ADVANCE.  AUTOMOBILES PREVIOUSLY HAD BEEN
FINISHED BY APPLYING NUMEROUS COATS OF VARNISH.  THE FINISHING PROCESS
TOOK FROM 12 TO 33 DAYS, AND THE STORAGE SPACE AND WORKING CAPITAL TIED
UP IN OTHERWISE COMPLETED CARS WERE IMMENSE.  THE LIFE EXPECTANCY OF
VARNISH FINISHES WAS LESS THAN A YEAR.  IN DECEMBER 1921, GENERAL
MOTORS CREATED A PAINT AND ENAMEL COMMITTEE WHICH CONTACTED NUMEROUS
PAINT MANUFACTURERS IN AN ATTEMPT TO FIND A QUICKER DRYING AND MORE
DURABLE FINISH. 

MEANWHILE, DU PONT HAD BEEN DOING PIONEERING WORK IN NITROCELLULOSE
LACQUERS.  IN 1920, A DU PONT EMPLOYEE INVENTED A QUICK DRYING AND
DURABLE LACQUER WHICH CONTAINED A LARGE AMOUNT OF FILM-FORMING SOLIDS. 
THIS PATENTED FINISH, NAMED DUCO, WAS SUBMITTED TO THE GENERAL MOTORS
PAINT AND ENAMEL COMMITTEE IN 1922 TO BE TESTED ALONG WITH FINISHES OF
OTHER MANUFACTURERS.  AFTER TWO YEARS OF TESTING AND IMPROVEMENT, THE
PAINT AND ENAMEL COMMITTEE BECAME SATISFIED THAT DUCO WAS FAR SUPERIOR
TO ANY OTHER PRODUCT OR ANY OTHER METHOD OF FINISHING AUTOMOBILES THEN
AVAILABLE. 

THE GRADUAL ADOPTION OF DUCO BY SOME OF THE GENERAL MOTORS' CAR
DIVISIONS, VIEWED IN CONJUNCTION WITH ITS PROVED SUPERIORITY AS AN AUTO
FINISH, ILLUSTRATES THE INDEPENDENT BUYING OF EACH DIVISION AND
DEMONSTRATES THAT DUCO MADE ITS WAY ON ITS OWN MERITS.  OAKLAND (NOW
PONTIAC) FIRST ADOPTED DUCO FOR USE ON ITS OPEN CARS IN 1924.  THE NEW
FINISH WAS AN IMMENSE SUCCESS AND WAS USED ON ALL OAKLAND CARS THE
FOLLOWING YEAR.  BUICK AND CHEVROLET ADOPTED DUCO IN 1925, BUT
CADILLAC, WHICH HAD OFFERED IT AS AN OPTIONAL FINISH IN 1925, DID NOT
ABANDON VARNISH FOR DUCO UNTIL 1926.  (FN23) 

FROM THE BEGINNING, GENERAL MOTORS CONTINUED TO LOOK FOR COMPETITIVE
MATERIALS.  LETTERS WERE SENT TO OTHER MANUFACTURERS URGING THEM TO
SUBMIT SAMPLES OF THEIR PYROXYLIN PAINT FOR TESTING.  UNTIL 1927, NONE
OF THE COMPETING LACQUERS WAS COMPARABLE IN QUALITY TO DUCO.  BUT THE
STRENUOUS EFFORTS BY GENERAL MOTORS TO DEVELOP COMPETITIVE SOURCES OF
LACQUER EVENTUALLY WORKED A SUBSTANTIAL CHANGE IN THE DU PONT
POSITION.  OLDSMOBILE AND CADILLAC SWITCHED TO A COMPETITOR, RINSHED
MASON, IN 1927, AND HAVE CONTINUED TO BUY ALMOST EXCLUSIVELY FROM THAT
COMPANY EVER SINCE.  CHEVROLET, BUICK AND PONTIAC CONTINUED TO BUY
DUCO, PARTLY BECAUSE OF BETTER SERVICE FROM NEARBY DU PONT PLANTS, AND
PARTLY BECAUSE REPEATED TESTING FAILED TO DISCLOSE ANY LACQUER SUPERIOR
TO DUCO. 

FINALLY, THE SUCCESS OF DUCO HAS NEVER BEEN CONFINED TO THE GENERAL
MOTORS' CAR DIVISIONS.  IN 1924 AND 1925, NEARLY ALL CAR MANUFACTURERS
ABANDONED VARNISH FOR DUCO.  BY THE END OF 1925, ALL CARS, EXCEPT FORD
AND CADILLAC, WERE USING DUCO.  NASH, HUDSON, STUDEBAKER, PACKARD AND
WILLYS HAVE BOUGHT, AND STILL BUY, DUCO IN SUBSTANTIAL AMOUNTS FROM DU
PONT.  CHRYSLER BOUGHT DUCO IN LARGE VOLUME UNTIL THE EARLY 1930'S
WHEN, IN PURSUANCE OF A POLICY TO OBTAIN SUPPLIERS TO WHOM IT WOULD BE
THE MOST IMPORTANT CUSTOMER, IT CONCENTRATED ITS PURCHASES ON ONE
COMPANY, PITTSBURGH PLATE GLASS.  FORD HAS CHOSEN TO MAKE A LARGE PART
OF ITS OWN REQUIREMENTS.  DURING THE 1920'S, WHEN FORD WAS LOSING ITS
LEADERSHIP IN THE LOW-PRICED FIELD TO CHEVROLET, IT CONTINUED TO FINISH
ITS CARS IN BLACK JAPAN.  MR. FORD IS REPORTED TO HAVE SAID, "PAINT
THEM ANY COLOR, AS LONG AS THEY ARE BLACK."  FINALLY, IN THE 1930'S,
FORD WAS FORCED TO SHIFT TO A SYNTHETIC ENAMEL FINISH OF ITS OWN
MANUFACTURE.  DURING THIS TRANSITION PERIOD, DU PONT SOLD FORD A
SUBSTANTIAL AMOUNT OF FINISHES.  IN 1935, FORD WAS MAKING HALF AND
BUYING HALF FROM DU PONT; BY 1937, FORD WAS MAKING THREE-FOURTHS AND
BUYING ONE-FOURTH FROM DU PONT.  IN 1938, HENRY FORD "ISSUED
INSTRUCTIONS THAT THE FORD MOTOR COMPANY WAS NOT TO PURCHASE ANY MORE
MATERIAL FROM THE DU PONT COMPANY."  FROM THAT TIME UNTIL HENRY FORD II
BECAME ACTIVE IN FORD MANAGEMENT, PURCHASES FROM DU PONT PRACTICALLY
CEASED.  SINCE THEN, FORD HAS PURCHASED FINISHES FROM DU PONT IN VERY
SUBSTANTIAL AMOUNTS. 

GENERAL MOTORS HAS CONTINUED TO TEST PAINTS ON THOUSANDS OF CARS
ANNUALLY.  DU PONT HAS RETAINED ITS POSITION AS PRIMARY LACQUER
SUPPLIER TO SEVERAL GENERAL MOTORS' DIVISIONS BECAUSE THESE DIVISIONS
HAVE FELT THAT DUCO BEST FITS THEIR NEEDS.  KETTERING, WHO WAS A LEADER
IN GENERAL MOTORS' RESEARCH ACTIVITIES AND WHO HAD BEEN ACTIVE IN THE
TESTING AND DEVELOPMENT OF PYROXYLIN LACQUERS, TESTIFIED THAT "ONE OF
THE REASONS" WHY GENERAL MOTORS' CARS HAD A HIGHER RESALE VALUE THAN
COMPARABLE CARS "IN A USED CAR LOT" "IS THE PAINT." 

AS THE DISTRICT COURT FOUND, "IN VIEW OF ALL THE EVIDENCE OF RECORD,
THE ONLY REASONABLE CONCLUSION IS THAT DU PONT HAS CONTINUED TO SELL
DUCO IN SUBSTANTIAL QUANTITIES TO GENERAL MOTORS ONLY BECAUSE GENERAL
MOTORS BELIEVES SUCH PURCHASES BEST FIT ITS NEEDS."  126 F. SUPP., AT
296. 

THE SECOND LARGEST ITEM WHICH GENERAL MOTORS BUYS FROM DU PONT IS
DULUX, A SYNTHETIC ENAMEL FINISH USED ON REFRIGERATORS AND OTHER
APPLIANCES.  PRIOR TO THE DEVELOPMENT OF DULUX, DUCO WAS WIDELY USED AS
A FINISH FOR REFRIGERATORS.  HOWEVER, IN 1927, DUCO BEGAN TO BE
REPLACED BY PORCELAIN, PARTICULARLY AT FRIGIDAIRE, A GENERAL MOTORS'
APPLIANCE DIVISION.  IN 1930 AND 1931, IN COLLABORATION WITH GENERAL
ELECTRIC, DU PONT DEVELOPED DULUX, A GREATLY SUPERIOR AND CHEAPER
PRODUCT.  SINCE ITS DEVELOPMENT, DULUX HAS BEEN USED EXCLUSIVELY BY ALL
THE MAJOR MANUFACTURERS OF REFRIGERATORS AND OTHER APPLIANCES - GENERAL
ELECTRIC, WESTINGHOUSE, CROSLEY, AND MANY OTHERS - EXCEPT FRIGIDAIRE,
WHICH CONTINUES TO FINISH PART OF ITS REFRIGERATORS WITH PORCELAIN. 
DISINTERESTED WITNESSES TESTIFIED AS TO THE SUPERIOR QUALITY AND
SERVICE WHICH HAS LED THEM TO CONTINUE TO BUY DULUX.  (FN24) THE
DISTRICT COURT DID NOT ERR IN CONCLUDING THAT DULUX:    "IS APPARENTLY
AN IDEAL REFRIGERATOR FINISH AND IS WIDELY USED BY A NUMBER OF MAJOR
MANUFACTURERS OTHER THAN GENERAL MOTORS.  SEVERAL REPRESENTATIVES OF
COMPETITIVE REFRIGERATOR MANUFACTURERS TESTIFIED THAT THEY PURCHASED
100% OF THEIR REQUIREMENTS FROM DU PONT.  THERE IS NO EVIDENCE THAT
GENERAL MOTORS PURCHASED FROM DU PONT FOR ANY REASON OTHER THAN THOSE
THAT PROMPTED ITS COMPETITORS TO BUY DULUX FROM DU PONT - EXCELLENCE OF
PRODUCT, FAIR PRICE AND CONTINUING QUALITY OF SERVICE."  126 F. SUPP.,
AT 296. 

THE COURT FAILS TO NOTE THAT DU PONT'S EFFORTS TO SELL PAINTS OTHER
THAN DUCO AND DULUX TO GENERAL MOTORS HAVE MET WITH CONSIDERABLY LESS
SUCCESS.  DU PONT DOES SELL SUBSTANTIAL AMOUNTS OF AUTOMOTIVE
UNDERCOATS TO CHEVROLET AND BUICK BUT IT HAS FAILED, DESPITE CONTINUED
SALES EFFORTS, TO CHANGE THE PREFERENCE OF FISHER BODY, THE LARGEST
PURCHASER OF UNDERCOATS, FOR A COMPETITOR'S UNDERCOAT.  THE SUCCESSES
AND FAILURE OF OTHER DU PONT FINISH PRODUCTS AT VARIOUS GENERAL MOTORS'
DIVISIONS EMPHASIZE THE INDEPENDENT BUYING OF EACH DIVISION AND NEGATE
THE NOTION THAT INFLUENCE OR COERCION IS RESPONSIBLE FOR WHAT PURCHASES
DO OCCUR.  FRIGIDAIRE USES LARGE QUANTITIES OF BLACK FINISHING AND
MACHINE VARNISH, BUT HAS NOT BOUGHT THESE PRODUCTS FROM DU PONT SINCE
1926.  AT AC SPARK PLUG DIVISION, LOCATED IN FLINT, MICHIGAN, WHERE DU
PONT HAS A FINISHES PLANT, DU PONT HAS BEEN CONSISTENTLY SUCCESSFUL IN
SELLING A SUBSTANTIAL VOLUME OF THE FINISHES USED BY THAT DIVISION. 
DELCO-REMY DIVISION, HOWEVER, PURCHASES MOST OF ITS REQUIREMENTS OF
INSULATING VARNISH FROM DU PONT'S COMPETITORS.  THE ELECTROMOTIVE
DIVISION PREFERS A COMPETITIVE LACQUER FOR THE INTERIOR FINISH OF ITS
LOCOMOTIVES, BUT USES DUCO ON THE EXTERIOR BECAUSE THE RAILROADS, MOST
OF WHICH USE DUCO FOR THE EXTERIOR OF THE BALANCE OF THE TRAIN, SPECIFY
THAT FINISH.  AT GUIDE LAMP DIVISION, DU PONT DEVELOPED AND STILL
SUPPLIES A FINISH FOR THE INSIDE OF HEADLIGHT REFLECTORS, BUT A
COMPETITOR DEVELOPED, AND HAS KEPT, THAT DIVISION'S SUBSTANTIAL PRIMER
BUSINESS.  AT THE INLAND DIVISION, WHICH PRODUCES STEERING WHEELS, DU
PONT HAD SOME OF THE BUSINESS AT ONE TIME, BUT HAS BEEN COMPLETELY
SUPPLANTED BY A COMPETITOR OFFERING BETTER SERVICE. 

THE DU PONT EXPERIENCE AT THE PACKARD ELECTRIC DIVISION, WHICH USES
LARGE QUANTITIES OF HIGH AND LOW TENSION CABLE LACQUER, IS
ILLUSTRATIVE.  UNTIL 1932, PACKARD ELECTRIC WAS A SEPARATE COMPANY
WHOLLY UNRELATED TO GENERAL MOTORS, AND DU PONT WAS A PRINCIPAL
SUPPLIER OF LOW TENSION LACQUER AND THE SOLE SUPPLIER OF BLACK HIGH
TENSION LACQUER.  NOW, AS A DIVISION OF GENERAL MOTORS, PACKARD
ELECTRIC PURCHASES ITS ENTIRE REQUIREMENTS OF HIGH TENSION LACQUER FROM
DU PONT COMPETITORS, AND PRODUCES ITS OWN LOW TENSION LACQUER FROM FILM
SCRAP BOUGHT FROM DU PONT COMPETITORS. 

THE DISTRICT COURT DID NOT ERR IN CONCLUDING, ON THE BASIS OF THIS
EVIDENCE, THAT DU PONT'S SUCCESS IN SELLING GENERAL MOTORS A
SUBSTANTIAL PORTION OF ITS PAINT REQUIREMENTS WAS DUE TO THE SUPERIOR
QUALITY OF DUCO AND DULUX AND TO DU PONT'S CONTINUING RESEARCH AND
OUTSTANDING SERVICE, AND THAT "DU PONT'S POSITION WAS AT ALL TIMES A
MATTER OF SALES EFFORT AND KEEPING GENERAL MOTORS SATISFIED.  THERE IS
NO EVIDENCE THAT GENERAL MOTORS OR ANY DIVISION OF GENERAL MOTORS WAS
EVER PREVENTED BY DU PONT FROM USING A FINISH MANUFACTURED BY ONE OF DU
PONT'S COMPETITORS; NOR IS THERE ANY EVIDENCE THAT GENERAL MOTORS HAS
SUFFERED COMPETITIVELY FROM ITS SUBSTANTIAL USE OF DUCO."  126 F.
SUPP., AT 296. 

2.  FABRICS.  - THE PRINCIPAL FABRICS WHICH DU PONT HAS SOLD TO
GENERAL MOTORS ARE IMITATION LEATHER (DU PONT'S "FABRIKOID" AND
"FABRILITE") AND TOP MATERIAL FOR OPEN CARS AND CONVERTIBLES (DU PONT'S
"PONTOP," "EVERBRIGHT" AND "TEAL").  (FN25)  ITS SALES OF THESE
MATERIALS TO GENERAL MOTORS IN 1947 TOTALED $3,369,000, OR ABOUT 38.5%
OF GENERAL MOTORS' TOTAL PURCHASES OF SUCH MATERIALS.  IN EARLIER
YEARS, BEFORE CLOSED CARS WITH ALL METAL TOPS CAME TO PREDOMINATE,
THESE MATERIALS CONSTITUTED A LARGER PROPORTION OF THE TOTAL FABRICS
USED IN AN AUTOMOBILE THAN THEY DO TODAY.  BY 1946 THEY AVERAGED, APART
FROM THE TOP MATERIAL FOR CONVERTIBLES, ONLY ABOUT 1.6 YARDS, COSTING
ABOUT $2.22 PER CAR.  THEY ARE USED PRINCIPALLY FOR SEAT TOPS AND
BACKS, KICK PADS, REAR SHELVES, ETC.  DU PONT DOES NOT MANUFACTURE THE
COTTON AND WOOL PRODUCTS OF WHICH MOST OF THE UPHOLSTERY IS COMPOSED. 

DU PONT ENTERED THE MANUFACTURE OF COATED FABRICS IN 1910, WHEN IT
PURCHASED THE FABRIKOID COMPANY OF NEWBURGH, NEW YORK.  "ARTIFICIAL
LEATHER," AS IT WAS THEN KNOWN, WAS OF POOR QUALITY AND HAD VERY
LIMITED AREAS OF ACCEPTANCE.  AS DU PONT SUCCEEDED IN IMPROVING BOTH
ITS QUALITY AND APPEARANCE, ITS USE RAPIDLY BROADENED.  BY MID-1913, DU
PON FABRIKOID, A PYROXYLIN-COATED FABRIC, HAD BEEN ACCEPTED BY THE
AUTOMOBILE INDUSTRY FOR UPHOLSTERY AND INTERIOR TRIM.  THREE YEARS
LATER, IN 1916, ALMOST EVERY AUTOMOBILE COMPANY WAS A PURCHASER OF
FABRIKOID, AND A CONTEMPORARY DU PONT ESTIMATE IN THAT YEAR STATED THAT
60% OF ALL CARS PRODUCED IN THE UNITED STATES WOULD BE EQUIPPED WITH
FABRIKOID.  IN THAT SAME YEAR, DU PONT ROUNDED OUT ITS LINE OF FABRICS
BY ACQUIRING THE FAIRFIELD RUBBER COMPANY, A MANUFACTURER OF RUBBER
COATED FABRICS.  DU PONT THUS HAD ACHIEVED, BEFORE IT PURCHASED ITS
GENERAL MOTORS' STOCK, A LEADING POSITION IN THE AUTOMOTIVE FABRIC
FIELD.  BEFORE 1917, IT WAS SUPPLYING SUBSTANTIALLY ALL OF THE COATED
FABRICS REQUIREMENTS AT CHEVROLET AND OLDSMOBILE, ABOUT HALF OF THE
REQUIREMENTS AT BUICK, AND ABOUT A THIRD OF THE REQUIREMENTS AT
OAKLAND.  AT THE CADILLAC DIVISION, DU PONT SUPPLIED ALL OF THE COATED
FABRICS FOR INTERIOR TRIM BUT NONE OF THE TOP MATERIAL.  126 F. SUPP.,
AT 296-297. 

ALTHOUGH THERE HAVE BEEN VARIATIONS FROM YEAR TO YEAR AND FROM ONE
CAR DIVISION TO ANOTHER IN RESPONSE TO COMPETITIVE CONSIDERATIONS, DU
PONT GENERALLY HAS MAINTAINED ITS PRE-1917 POSITION AS THE PRINCIPAL
SUPPLIER OF COATED AND COMBINED FABRICS TO GENERAL MOTORS.  IN 1926,
GENERAL MOTORS PURCHASED ABOUT 55.5% OF THESE FABRICS FROM DU PONT,
LARGELY BECAUSE CHEVROLET SWITCHED ENTIRELY TO DU PONT AFTER AN
UNFORTUNATE EXPERIENCE WITH COMPETITIVE PRODUCTS DURING THE PRECEDING
YEAR.  BY 1930, THE PROPORTION HAD DECLINED TO ABOUT 31.5%, AND DU PONT
WAS SELLING MORE FABRICS TO FORD THAN TO GENERAL MOTORS.  AT THE TIME
OF SUIT, DU PONT'S SAHRE HAD INCREASED TO 38.5%, THE REMAINDER BEING
SUPPLIED BY DU PONT'S COMPETITORS. 

IN ADDITION TO THE MASS OF EVIDENCE SUPPORTING THE DISTRICT COURT'S
FINDING THAT "SUCH PURCHASES OF FABRICS AS THE GENERAL MOTORS DIVISIONS
HAVE MADE FROM DU PONT FROM TIME TO TIME WERE BASED UPON EACH
DIVISION'S EXERCISE OF ITS BUSINESS JUDGMENT AND ARE NOT THE RESULT OF
DU PONT DOMINATION," 126 F. SUPP., AT 301, THE RECORD CLEARLY INDICATES
THAT DU PONT'S FABRICS CAN AND HAVE MADE THEIR WAY IN THE AUTOMOTIVE
INDUSTRY ON THEIR MERITS.  PRIOR TO THE EARLY 1920'S, DU PONT WAS THE
PRINCIPAL SUPPLIER OF COATED FABRICS TO ALL THREE OF THE THEN MAJOR
PRODUCERS - FORD, WILLYS-OVERLAND AND GENERAL MOTORS.  AFTER FORD AND
WILLYS BEGAN TO PRODUCE THEIR OWN COATED FABRICS THEY STILL TURNED TO
DU PONT FOR MUCH OF WHAT THEY COULD NOT PRODUCE.  CHRYSLER PURCHASED
SUBSTANTIAL AMOUNTS FROM DU PONT UNTIL, IN THE EARLY 1930'S, IT
EMBARKED ON ITS POLICY OF ONE PRINCIPAL SUPPLIER FOR EACH PRODUCT AND
CHOSE TEXTILEATHER, A DU PONT COMPETITOR.  DU PONT HAS CONTINUED TO BE
FORD'S LARGEST SUPPLIER FOR THE MATERIAL WHICH IT DOES NOT MANUFACTURE
FOR ITSELF.  DU PONT LIKEWISE HAS SUPPLIED, OVER THE YEARS, A
CONSIDERABLE PART OF THE COATED AND COMBINED FABRICS OF MOST OF THE
SMALLER AUTOMOBILE COMPANIES. 

THE DISTRICT COURT DID NOT ERR IN CONCLUDING THAT "DU PONT, THE
REDORD SHOWS, HAS MAINTAINED ITS POSITION AS THE PRINCIPAL FABRIC
SUPPLIER TO GENERAL MOTORS THROUGH ITS EARLY LEADERSHIP IN THE FIELD
AND BY CONCENTRATING UPON SATISFACTORILY MEETING GENERAL MOTORS'
CHANGING REQUIREMENTS AS TO QUALITY, SERVICE AND DELIVERY."  126 F.
SUPP., AT 301. 

3.  OTHER PRODUCTS.  - THE COURT CONCLUDES ONLY THAT DU PONT HAS BEEN
GIVEN AN UNLAWFUL PREFERENCE WITH RESPECT TO PAINTS AND FABRICS.  BY
LIMITING THE ISSUE TO THESE PRODUCTS, IT ELIMINATES FROM DESERVED
CONSIDERATION THOSE PRODUCTS WHICH GENERAL MOTORS DOES NOT BUY IN LARGE
QUANTITIES OR PROPORTIONS FROM DU PONT.  (FN26)  YET THE LOGIC OF THE
COURT'S ARGUMENT - THAT THE STOCK RELATIONSHIP BETWEEN DU PONT AND
GENERAL MOTORS INEVITABLY HAS OR WILL RESULT IN A PREFERENCE FOR DU
PONT PRODUCTS - REQUIRES CONSIDERATION OF THE TOTAL COMMERCIAL
RELATIONS BETWEEN THE TWO COMPANIES.  DU PONT "INFLUENCE," IF THERE
WERE ANY, WOULD BE EXPECTED TO APPLY TO ALL PRODUCTS WHICH DU PONT
MAKES AND WHICH GENERAL MOTORS BUYS. 

HOWEVER, THE EVIDENCE SHOWS THAT DU PONT HAS ATTEMPTED TO SELL TO THE
VARIOUS GENERAL MOTORS' DIVISIONS A WIDE RANGE OF PRODUCTS IN ADDITION
TO PAINT AND FABRICS, AND THAT IT HAS SUCCEEDED IN DOING SO ONLY WHEN
THESE DIVISIONS, EXERCISING THEIR OWN INDEPENDENT BUSINESS JUDGMENT,
HAVE DECIDED ON THE BASIS OF QUALITY, SERVICE AND PRICE THAT THEIR
ECONOMIC INTERESTS WOULD BEST BE SERVED BY PURCHASING FROM DU PONT. 
SIX SUCH GROUPS OF PRODUCTS WERE CONSIDERED IN DETAIL BY THE DISTRICT
COURT:  PLASTICS, BRAKE FLUID, CASEHARDENING MATERIALS, ELECTROPLATING
MATERIALS, SAFETY GLASS, AND SYNTHETIC RUBBER AND RUBBER CHEMICALS. 
126 F. SUPP., AT 319-324.  A FEW EXAMPLES DRAWN FROM THE FINDINGS WILL
SUFFICE. 

DU PONT'S SALES TO GENERAL MOTORS OF CELLULOID (DU PONT'S "PYRALIN"),
USED AS WINDOWS IN THE SIDE CURTAINS OF EARLY AUTOMOBILES, INITIALLY
DECLINED IN 1918 AFTER THE STOCK PURCHASE, AND ONLY REVIVED WHEN AN
IMPROVED PRODUCT WAS ADOPTED BY ALL THE LARGE AUTO MANUFACTURERS. 
INSTEAD OF PURCHASING BRAKE FLUID AND SAFETY GLASS FROM DU PONT,
GENERAL MOTORS EMBARKED, DURING THE 1930'S, ON ITS OWN PRODUCTION OF
THESE SUBSTANTIAL ITEMS.  WITH RESPECT TO CASEHARDENING MATERIALS,
GENERAL MOTORS HAS PURCHASED LESS THAN HALF OF ITS REQUIREMENTS FROM DU
PONT, WHILE OTHER AUTO MANUFACTURERS HAVE PURCHASED AMOUNTS LARGER IN
PROPORTION AND QUANTITY.  ALTHOUGH DU PONT'S NEW ELECTROPLATING
PROCESSES WERE WIDELY ADOPTED IN THE AUTOMOBILE AND OTHER INDUSTRIES IN
THE 1930'S ONLY CADILLAC HAS USED DU PONT'S PROCESSES EXCLUSIVELY,
OLDSMOBILE AND PONTIAC HAVE USED IT OCCASIONALLY, AND CHEVROLET AND
BUICK NEVER HAVE USED IT EXCEPT FOR BRIEF PERIODS.  NEOPRENE, A
SYNTHETIC RUBBER DEVELOPED BY DU PONT, HAS BEEN USED TO A MUCH GREATER
EXTENT BY CHRYSLER AND FORD THAN BY GENERAL MOTORS.  CHRYSLER ALSO
USES, AND HELPED DEVELOP, DU PONT'S SYNTHETIC RUBBER ADHESIVE FOR BRAKE
LININGS, BUT THE GENERAL MOTORS' DIVISIONS PREFER A MORE EXPENSIVE TYPE
OF SYNTHETIC RUBBER. 

THE RECORD SUPPORTS THE CONCLUSION OF THE DISTRICT COURT: 

"ALL OF THE EVIDENCE BEARING UPON DU PONT'S EFFORTS TO SELL THESE
VARIOUS MISCELLANEOUS PRODUCTS TO GENERAL MOTORS SUPPORTS A FINDING
THAT THE LATTER BOUGHT OR REFUSED TO BUY SOLELY IN ACCORDANCE WITH THE
DICTATES OF ITS OWN PURCHASING JUDGMENT.  THERE IS NO EVIDENCE THAT
GENERAL MOTORS WAS CONSTRAINED TO FAVOR, OR BUY, A PRODUCT SOLELY
BECAUSE IT WAS OFFERED BY DU PONT.  ON THE OTHER HAND, THE RECORD
DISCLOSES NUMEROUS INSTANCES IN WHICH GENERAL MOTORS REJECTED DU PONT'S
PRODUCTS IN FAVOR OF THOSE OF ONE OF ITS COMPETITORS.  THE VARIETY OF
SITUATIONS AND CIRCUMSTANCES IN WHICH SUCH REJECTIONS OCCURRED
SATISFIES THE COURT THAT THERE WAS NO LIMITATION WHATSOEVER UPON
GENERAL MOTORS' FREEDOM TO BUY OR TO REFUSE TO BUY FROM DU PONT AS IT
PLEASED."  126 F. SUPP., AT 324. 

EVIDENCE RELIED ON BY THE COURT.  - THE COURT, DISREGARDING THE MASS
OF EVIDENCE SUPPORTING THE DISTRICT COURT'S CONCLUSION THAT GENERAL
MOTORS PURCHASED DU PONT PAINT AND FABRICS SOLELY BECAUSE OF THEIR
COMPETITIVE MERIT, RELIES FOR ITS CONTRARY CONCLUSION ON PASSAGES DRAWN
FROM SEVERAL DOCUMENTS WRITTEN DURING THE YEARS 1918-1926, AND ON THE
LOGICAL FALLACY THAT BECAUSE DU PONT OVER A LONG PERIOD SUPPLIED A
SUBSTANTIAL PORTION OF GENERAL MOTORS' REQUIREMENTS OF PAINT AND
FABRICS, ITS POSITION MUST HAVE BEEN OBTAINED BY MISUSE OF ITS STOCK
INTEREST RATHER THAN COMPETITIVE CONSIDERATIONS. 

THE ISOLATED INSTANCES OF ALLEGED PRESSURE OR INTENT TO OBTAIN
NONCOMPETITIVE PREFERENCES ARE FOUR:  (1) THE RASKOB REPORT OF DECEMBER
1917; (2) SEVERAL LETTERS OF J.A. HASKELL, WRITTEN DURING 1918-1920;
(3) CERTAIN REPORTS AND LETTERS OF PIERRE AND LAMMOT DU PONT DURING
1921-1924; AND (4) A 1926 LETTER OF JOHN L. PRATT.  PASSAGES DRAWN FROM
THESE 1918-1926 DOCUMENTS DO NOT JUSTIFY THE CONCLUSION REACHED BY THE
COURT.  EACH OF THEM IS A MATTER OF DISPUTED SIGNIFICANCE WHICH CANNOT
BE EVALUATED WITHOUT PASSING ON THE MOTIVATION AND INTENT OF THE
AUTHOR.  EACH FAILED TO ACHIEVE ITS SPECIFIC OBJECT.  READ IN THE
CONTEXT OF THE SITUATIONS TO WHICH THEY WERE ADDRESSED, EACH IS
ENTIRELY CONSISTENT WITH THE FINDING OF THE DISTRICT COURT THAT,
ALTHOUGH DU PONT WAS TRYING TO GET AS MUCH GENERAL MOTORS' BUSINESS AS
IT COULD, THERE WAS NO RESTRICTION ON GENERAL MOTORS' FREEDOM TO BUY AS
IT CHOSE, AND THAT GENERAL MOTORS' BUYERS DID NOT REGARD THEMSELVES AS
IN ANY WAY LIMITED.  (FN27)  MOREOVER, EVEN IF ISOLATED PARAGRAPHS IN
THESE DOCUMENTS, TAKEN FROM THEIR CONTEXT, ARE GIVEN SOME SIGNIFICANCE,
AND THE OTHER EVIDENCE RELATING TO THE PERIOD FROM 1918 TO 1926 IS
ENTIRELY IGNORED, ALL OF THE EVIDENCE AFTER 1926 AFFIRMATIVELY
ESTABLISHES WITHOUT ESSENTIAL CONTRADICTION THAT DU PONT DID NOT USE
ITS STOCK INTEREST TO RECEIVE ANY PREFERENTIAL TREATMENT FROM GENERAL
MOTORS.    NOR CAN PRESENT ILLEGALITY BE PRESUMED FROM THE BARE FACT
THAT DU PONT HAS CONTINUED TO MAKE SUBSTANTIAL SALES OF SEVERAL
PRODUCTS TO GENERAL MOTORS.  (FN28)  IN THE FIRST PLACE, THE RECORD
AFFIRMATIVELY SHOWS THAT THE NEW PRODUCTS WHICH DU PONT HAS SOLD TO
GENERAL MOTORS SINCE 1926 HAVE MADE THEIR WAY, AT GENERAL MOTORS AS
ELSEWHERE, ON THEIR MERITS.  SALES OF DUCO, DULUX, FABRILITE AND TEAL
ARE NOT ATTRIBUTABLE IN ANY WAY TO DEALINGS IN THE EARLIER PERIOD. 
SECONDLY, THE COURT'S PRESUMPTION IS BASED ON THE FACT THAT DU PONT
DOES NOT SELL TO ALL OTHER AUTOMOBILE MANUFACTURERS IN THE SAME
PROPORTION AS IT DOES TO GENERAL MOTORS.  BUT THERE IS NO REASON WHY IT
SHOULD - THE GOVERNMENT HAS NOT SHOWN THAT SELLERS NORMALLY SELL TO ALL
MEMBERS OF AN INDUSTRY IN THE SAME PROPORTION.  IN ANY EVENT, THE
RECORD FULLY EXPLAINS THE DISPROPORTION.  SINCE 1930, DU PONT'S SALES
TO OTHER MEMBERS OF THE INDUSTRY HAVE PROPORTIONATELY DECLINED, LARGELY
BECAUSE FORD HAS CHOSEN TO MAKE THE MAJOR SHARE OF ITS REQUIREMENTS OF
PAINT AND FABRICS, AND BECAUSE CHRYSLER HAS FOLLOWED THE POLICY OF
SELECTING A SINGLE SUPPLIER TO WHOM IT CAN BE THE MOST IMPORTANT
CUSTOMER.  THE FACT IS THAT DU PONT HAS CONTINUED TO SELL IN
SUBSTANTIAL AMOUNTS TO THE SMALLER MEMBERS OF THE AUTOMOBILE INDUSTRY. 
THE GROWTH IN THE DOMINANCE OF GENERAL MOTORS, FORD AND CHRYSLER -
COMPANIES WHICH TOGETHER ACCOUNT FOR MORE THAN 85% OF AUTOMOBILE
PRODUCTION - WHEN COMBINED WITH THE POLICIES ADOPTED BY FORD AND
CHRYSLER, ADEQUATELY EXPLAINS WHY DU PONT SELLS A LARGER PROPORTION OF
PAINT AND FABRICS TO GENERAL MOTORS THAN IT DOES TO THE INDUSTRY AS A
WHOLE. 

IT IS TRUE THAT SEC. 7 OF THE CLAYTON ACT DOES NOT REQUIRE PROOF OF
ACTUAL ANTICOMPETITIVE EFFORTS OR PROOF OF AN INTENT TO RESTRAIN
TRADE.  BUT THESE MATTERS BECOME CRUCIAL WHEN THE COURT RESTS ITS
CONCLUSION THAT DU PONT'S STOCK INTEREST VIOLATES THE ACT ON EVIDENCE
RELATING SOLELY TO AN ALLEGED DU PONT INTENT TO OBTAIN A NONCOMPETITIVE
PREFERENCE FROM GENERAL MOTORS, AND ON A FINDING THAT SUCH A PREFERENCE
WAS ACTUALLY SECURED THROUGH THE UNLAWFUL USE OF DU PONT'S STOCK
INTEREST.  PREFERENCE AND INTENT ARE ALSO RELEVANT BECAUSE THE
GOVERNMENT HAS BROUGHT THIS CASE 30 YEARS AFTER THE EVENT.  IF NO
ACTUAL RESTRAINT HAS OCCURRED DURING THIS LONG PERIOD, THE PROBABILITY
OF A RESTRAINT IN THE FUTURE IS INDEED SLIGHT.  ESPECIALLY IS THIS SO
WHEN THE ONLY CHANGE IN RECENT YEARS HAS BEEN IN THE DIRECTION OF
DIMINISHING DU PONT'S PARTICIPATION IN GENERAL MOTORS' AFFAIRS. 

RULE 52(A) GOVERNS THIS CASE.  - THE FOREGOING SUMMARY OF THE
EVIDENCE RELATING TO GENERAL MOTORS' PURCHASES OF PAINT AND FABRICS
FROM DU PONT, COMPARATIVELY BRIEF AS IT IS, REVEALS THAT A MULTITUDE OF
FACTUAL ISSUES UNDERLIE THIS CASE.  THE OCCURRENCE OF EVENTS, THE
REASONS WHY THESE EVENTS TOOK PLACE, AND THE MOTIVES OF THE MEN WHO
PARTICIPATED IN THEM ARE DRAWN IN QUESTION.  THE ISSUE OF CREDIBILITY
IS OF GREAT IMPORTANCE.  THE DISTRICT JUDGE HAD THE OPPORTUNITY TO
OBSERVE THE DEMEANOR OF THE WITNESSES AND TO JUDGE THEIR CREDIBILITY AT
FIRST HAND.  THUS, THIS CASE IS A PROPER ONE FOR THE APPLICATION OF THE
PRINCIPLE EMBODIED IN RULE 52(A) OF THE FEDERAL RULES OF CIVIL
PROCEDURE, AS AMENDED, 329 U.S. 861:  "FINDINGS OF FACT SHALL NOT BE
SET ASIDE UNLESS CLEARLY ERRONEOUS, AND DUE REGARD SHALL BE GIVEN TO
THE OPPORTUNITY OF THE TRIAL COURT TO JUDGE OF THE CREDIBILITY OF THE
WITNESSES."  UNITED STATES V. OREGON MEDICAL SOCIETY, 343 U.S. 326, 330
332, 339; UNITED STATES V. YELLOW CAB CO., 338 U.S. 338, 341-342. 

THIS IS NOT A SITUATION IN WHICH ORAL TESTIMONY IS CONTRADICTED BY
CONTEMPORANEOUS DOCUMENTS.  SEE UNITED STATES V. UNITED STATES GYPSUM
CO., 333 U.S. 364.  IN THIS CASE, THE FINDINGS OF THE DISTRICT COURT
ARE SUPPORTED BOTH BY CONTEMPORANEOUS DOCUMENTS AND BY ORAL TESTIMONY. 
FOR EXAMPLE, GENERAL MOTORS' SEARCH FOR A BETTER AUTOMOTIVE FINISH, THE
SUPERIORITY OF THE PRODUCT DEVELOPED BY DU PONT, AND GENERAL MOTORS'
CONTINUOUS EFFORTS TO SECURE AN EQUALLY GOOD LACQUER FROM OTHER SOURCES
ARE ALL PROVED BY LETTERS AND REPORTS WRITTEN IN THE EARLY 1920'S AS
WELL AS BY THE ORAL TESTIMONY OF MANY WITNESSES.  SIMILARLY,
CONTEMPORANEOUS EXHIBITS PROVE THAT GENERAL MOTORS PURCHASED FABRICS
FROM DU PONT BECAUSE OF THE SUPERIORITY OF DU PONT PRODUCTS, AND THAT
ON OTHER OCCASIONS IT TURNED TO COMPETING SUPPLIERS EVEN THOUGH DU
PONT'S PRODUCT WAS JUST AS GOOD.  APPELLATE REVIEW OF DETAILED FINDINGS
BASED ON SUBSTANTIAL ORAL TESTIMONY AND CORROBORATIVE DOCUMENTS MUST BE
LIMITED TO SETTING ASIDE THOSE THAT ARE CLEARLY ERRONEOUS.  THE CAREFUL
AND DETAILED FINDINGS OF FACT OF THE DISTRICT COURT IN THIS CASE CANNOT
BE SO LABELED.  (FN29) 

B. RELEVANT MARKET. 

FINALLY, EVEN ASSUMING THE CORRECTNESS OF THE COURT'S CONCLUSION THAT
DU PONT'S COMPETITORS HAVE BEEN OR WILL BE FORECLOSED FROM GENERAL
MOTORS' PAINT AND FABRIC TRADE, IT IS STILL NECESSARY TO RESOLVE ONE
MORE ISSUE IN FAVOR OF THE GOVERNMENT IN ORDER TO REVERSE THE DISTRICT
COURT.  IT IS NECESSARY TO HOLD THAT THE GOVERNMENT PROVED THAT THIS
FORECLOSURE INVOLVES A SUBSTANTIAL SHARE OF THE RELEVANT MARKET AND
THAT IT SIGNIFICANTLY LIMITS THE COMPETITIVE OPPORTUNITIES OF OTHERS
TRADING IN THAT MARKET.  (FN30) 

THE RELEVANT MARKET IS THE "AREA OF EFFECTIVE COMPETITION" WITHIN
WHICH THE DEFENDANTS OPERATE.  STANDARD OIL CO. OF CALIFORNIA V. UNITED
STATES, 337 U.S. 293, 299-300, N. 5.  "THE PROBLEM OF DEFINING A MARKET
TURNS ON DISCOVERING PATTERNS OF TRADE WHICH ARE FOLLOWED IN
PRACTICE."  UNITED STATES V. UNITED SHOE MACHINERY CORP., 110 F. SUPP.
295, 303, AFF'D PER CURIAM, 347 U.S. 521.  "DETERMINATION OF THE
COMPETITIVE MARKET FOR COMMODITIES DEPENDS ON HOW DIFFERENT FROM ONE
ANOTHER ARE THE OFFERED COMMODITIES IN CHARACTER OR USE, HOW FAR BUYERS
WILL GO TO SUBSTITUTE ONE COMMODITY FOR ANOTHER."  UNITED STATES V.
E.I. DU PONT DE NEMOURS & CO., 351 U.S. 377, 393.  THIS DETERMINATION
IS PRIMARILY ONE OF FACT. 

THE COURT HOLDS THAT THE RELEVANT MARKET IN THIS CASE IS THE
AUTOMOTIVE MARKET FOR FINISHES AND FABRICS, AND NOT THE TOTAL
INDUSTRIAL MARKET FOR THESE PRODUCTS.  THE COURT REACHES THAT
CONCLUSION BECAUSE IN ITS VIEW "AUTOMOTIVE FINISHES AND FABRICS HAVE
SUFFICIENT PECULIAR CHARACTERISTICS AND USES TO CONSTITUTE THEM
PRODUCTS SUFFICIENTLY DISTINCT FROM ALL OTHER FINISHES AND FABRICS  ..
."   ANTE, PP. 593-594.  WE ARE NOT TOLD WHAT THESE "PECULIAR
CHARACTERISTICS" ARE.  NOTHING IS SAID ABOUT FINISHES OTHER THAN THAT
DUCO REPRESENTED AN IMPORTANT CONTRIBUTION TO THE PROCESS OF
MANUFACTURING AUTOMOBILES.  NOTHING IS SAID ABOUT FABRICS OTHER THAN
THAT SALES TO THE AUTOMOBILE INDUSTRY ARE MADE BY MEANS OF BIDS RATHER
THAN FIXED PRICE SCHEDULES.  DULUX IS INCLUDED IN THE "AUTOMOBILE"
MARKET EVEN THOUGH IT IS USED ON REFRIGERATORS AND OTHER APPLIANCES,
BUT NOT ON AUTOMOBILES.  SO ARE OTHER FINISHES AND FABRICS USED ON
DIESEL LOCOMOTIVES, ENGINES, PARTS, APPLIANCES AND OTHER PRODUCTS WHICH
GENERAL MOTORS MANUFACTURES.  ARBITRARY CONCLUSIONS ARE NOT AN ADEQUATE
SUBSTITUTE FOR ANALYSIS OF THE PERTINENT FACTS CONTAINED IN THE
RECORD. 

THE RECORD DOES NOT SHOW THAT THE FABRICS AND FINISHES USED IN THE
MANUFACTURE OF AUTOMOBILES HAVE PECULIAR CHARACTERISTICS
DIFFERENTIATING THEM FROM THE FINISHES AND FABRICS USED IN OTHER
INDUSTRIES.  WHAT EVIDENCE THERE IS IN THE RECORD AFFIRMATIVELY
INDICATES THE CONTRARY.  THE SALES OF THE FOUR PRODUCTS PRINCIPALLY
INVOLVED IN THIS CASE - DUCO, DULUX, IMITATION LEATHER, AND COATED
FABRICS - SUPPORT THIS CONCLUSION. 

DUCO WAS FIRST MARKETED NOT TO GENERAL MOTORS, BUT TO THE AUTO
REFINISHING TRADE AND TO MANUFACTURERS OF FURNITURE, BRUSH HANDLES AND
PENCILS.  IN 1927, 44% OF DU PONT'S SALES OF COLORED DUCO, AND 51.5% OF
ITS TOTAL SALES, WERE TO PURCHASERS OTHER THAN AUTO MANUFACTURERS. 
ALTHOUGH THE RECORD DOES NOT DISCLOSE EXACT FIGURES FOR ALL YEARS, IT
DOES SHOW THAT A SUBSTANTIAL PORTION OF DU PONT'S SALES OF DUCO HAVE
CONTINUED TO BE FOR NONAUTOMOTIVE USES.  (FN31) 

IT IS ALSO SIGNIFICANT THAT DUCO WAS A PATENTED PRODUCT.  PRIOR TO
THE EXPIRATION OF THE PATENT IN 1944, ONLY FIVE YEARS BEFORE THIS SUIT
WAS BROUGHT, DU PONT ISSUED OVER 250 LICENSES - TO ALL THAT APPLIED -
COVERING ITS PATENTED PROCESS.  IF DUCO IS TO BE TREATED AS A SEPARATE
MARKET SOLELY BECAUSE OF ITS INITIAL SUPERIORITY, DU PONT IS BEING
PENALIZED RATHER THAN REWARDED FOR CONTRIBUTING TO TECHNOLOGICAL
ADVANCE. 

DULUX HAS NEVER BEEN USED IN THE MANUFACTURE OF AUTOMOBILES.  IT
REPLACED DUCO AND OTHER LACQUERS AS A FINISH ON REFRIGERATORS, WASHERS,
DRYERS, AND OTHER APPLIANCES, AND CONTINUES TO HAVE WIDE USE ON
METALLIC OBJECTS REQUIRING A DURABLE FINISH.  YET THE COURT INCLUDES IT
AS A FINISH HAVING THE UNSPECIFIED BUT "PECULIAR CHARACTERISTICS"
DISTINCTIVE OF "AUTOMOTIVE FINISHES."  ANTE, P. 593. 

IN 1947, WHEN DU PONT'S SALES OF DUCO AND DULUX TO GENERAL MOTORS
TOTALED ABOUT $15,400,000, THE TOTAL NATIONAL MARKET FOR PAINTS AND
FINISHES WAS $1,248,000,000, OF WHICH ABOUT $552,000,000 WAS FOR
VARNISHES, LACQUERS, ENAMELS, JAPANS, THINNERS AND DOPES, THE KINDS OF
FINISHES SOLD PRIMARILY TO INDUSTRIAL USERS.  (FN32)  THERE IS NO
EVIDENCE IN THIS RECORD ESTABLISHING THAT THESE INDUSTRIAL FINISHES ARE
NOT COMPETITIVE WITH DUCO AND DULUX.  THERE IS CONSIDERABLE EVIDENCE
THAT MANY OF THEM ARE.  IT IS PROBABLE THAT DU PONT'S TOTAL SALES OF
FINISHES TO GENERAL MOTORS IN 1947 CONSTITUTED LESS THAN 3.5% OF ALL
SALES OF INDUSTRIAL FINISHES. 

THE RECORD ALSO SHOWS THAT THE TYPES OF FABRICS USED FOR AUTOMOBILE
TRIM AND CONVERTIBLE TOPS - IMITATION LEATHER AND COATED FABRICS - ARE
USED IN THE MANUFACTURE OF INNUMERABLE PRODUCTS, SUCH AS LUGGAGE,
FURNITURE, RAILROAD UPHOLSTERY, BOOKS, BRIEF CASES, BABY CARRIAGES,
HASSOCKS, BICYCLE SADDLES, SPORTING GOODS, FOOTWEAR, BELTS AND TABLE
MATS.  IN 1947, GENERAL MOTORS PURCHASED ABOUT $9,454,000 OF IMITATION
LEATHER AND COATED FABRICS.  OF THIS AMOUNT, $3,639,000 WAS PURCHASED
FROM DU PONT (38.5%) AND $5,815,000 FROM OVER 50 DU PONT COMPETITORS. 
SINCE DU PONT PRODUCED ABOUT 10% OF THE NATIONAL MARKET FOR THESE
PRODUCTS IN 1946, 1947 AND 1948, AND SINCE ONLY 20% OF ITS SALES WERE
TO THE AUTOMOBILE INDUSTRY, THE DU PONT SALES TO THE AUTOMOBILE
INDUSTRY CONSTITUTED ONLY ABOUT 2% OF THE TOTAL MARKET.  THE COURT
IGNORES THE RECORD BY TREATING THIS SMALL FRACTION OF THE TOTAL MARKET
AS A MARKET OF DISTINCT PRODUCTS. 

IT WILL NOT DO MERELY TO STRESS THE LARGE SIZE OF THESE TWO
CORPORATIONS.  THE FIGURES AS TO THEIR TOTAL SALES - $793,000,000 FOR
DU PONT AND $3,815,000,000 FOR GENERAL MOTORS IN 1947 - DO NOT FAIRLY
REFLECT THE VOLUME OF COMMERCE INVOLVED IN THIS CASE.  THE COMMERCE
INVOLVED HERE IS ABOUT $19,000,000 OF INDUSTRIAL FINISHES AND ABOUT
$3,700,000 OF CERTAIN INDUSTRIAL FABRICS - LESS THAN 3.5% OF THE
NATIONAL MARKET FOR INDUSTRIAL FINISHES, AND ONLY ABOUT 1.6% OF THE
NATIONAL MARKET FOR THESE FABRICS.  THE CLAYTON ACT IS NOT VIOLATED
UNLESS THE STOCK ACQUISITION SUBSTANTIALLY THREATENS THE COMPETITIVE
OPPORTUNITIES AVAILABLE TO OTHERS.  INTERNATIONAL SHOE CO. V. FEDERAL
TRADE COMMISSION, 280 U.S. 291; TRANSAMERICA CORP. V. BOARD OF
GOVERNORS, 206 F.2D 163; V. VIVAUDOU, INC. V. FEDERAL TRADE COMMISSION,
54 F.2D 273.  THE EFFECT ON THE MARKET FOR THE PRODUCT, NOT THAT ON THE
TRANSACTIONS OF THE ACQUIRED COMPANY, IS CONTROLLING.  FARGO GLASS &
PAINT CO. V. GLOBE AMERICAN CORP., 201 F.2D 534.  (FN33) 

THE COURT MIGHT BE JUSTIFIED IN HOLDING THAT PRODUCTS SOLD TO THE
AUTOMOTIVE INDUSTRY CONSTITUTE THE RELEVANT MARKET IN THE CASE OF
PRODUCTS SUCH AS CARBURETORS OR TIRES WHICH ARE SOLD PRIMARILY TO
AUTOMOBILE MANUFACTURERS.  BUT THE SALE OF DUCO, DULUX, IMITATION
LEATHER, AND COATED FABRICS IS NOT SO LIMITED. 

THE BURDEN WAS ON THE GOVERNMENT TO PROVE THAT A SUBSTANTIAL SHARE OF
THE RELEVANT MARKET WOULD, IN ALL PROBABILITY, BE AFFECTED BY DU PONT'S
23% STOCK INTEREST IN GENERAL MOTORS.  THE GOVERNMENT PROVED ONLY THAT
DU PONT'S SALES OF FINISHES AND FABRICS TO GENERAL MOTORS WERE LARGE IN
VOLUME, AND THAT GENERAL MOTORS WAS THE LEADING MANUFACTURER OF
AUTOMOBILES DURING THE LATER YEARS COVERED BY THE RECORD.  THE
GOVERNMENT DID NOT SHOW THAT THE IDENTICAL PRODUCTS WERE NOT USED ON A
LARGE SCALE FOR MANY OTHER PURPOSES IN MANY OTHER INDUSTRIES.  NOR DID
THE GOVERNMENT SHOW THAT THE AUTOMOBILE INDUSTRY IN GENERAL, OR GENERAL
MOTORS IN PARTICULAR, COMPRISED A LARGE OR SUBSTANTIAL SHARE OF THE
TOTAL MARKET.  WHAT EVIDENCE THERE IS IN THE RECORD AFFIRMATIVELY
INDICATES THAT THE PRODUCTS INVOLVED DO HAVE WIDE USE IN MANY
INDUSTRIES, AND THAT AN INSUBSTANTIAL PORTION OF THIS TOTAL MARKET
WOULD BE AFFECTED EVEN IF AN UNLAWFUL PREFERENCE EXISTED OR WERE
PROBABLE. 

FOR THE REASONS STATED, I CONCLUDE THAT SEC. 7 OF THE CLAYTON ACT,
PRIOR TO ITS AMENDMENT IN 1950, DID NOT APPLY TO VERTICAL ACQUISITIONS;
THAT THE GOVERNMENT FAILED TO PROVE THAT THERE WAS A REASONABLE
PROBABILITY AT THE TIME OF THE STOCK ACQUISITION (1917-1919) OF A
RESTRAINT OF COMMERCE OR A TENDENCY TOWARD MONOPOLY; AND THAT, IN ANY
EVENT, THE DISTRICT COURT WAS NOT CLEARLY IN ERROR IN CONCLUDING THAT
THE GOVERNMENT FAILED TO PROVE THAT DU PONT'S COMPETITORS HAVE BEEN OR
MAY BE FORECLOSED FROM A SUBSTANTIAL SHARE OF THE RELEVANT MARKET. 
ACCORDINGLY, I WOULD AFFIRM THE JUDGMENT OF THE DISTRICT COURT. 

FN1  RONALD FABRICS CO. V. VERNEY BRUNSWICK MILLS, INC., CCH TRADE
CASES PARA. 57,514 (D.C.S.D.N.Y. 1946), DISCUSSED INFRA, N. 10, WAS A
PRIVATE ACTION FOR TREBLE DAMAGES. 

FN2  TRANSAMERICA CORP. V. BOARD OF GOVERNORS, 206 F.2D 163 (C.A. 3D
CIR. 1953), INVOLVED A SERIES OF STOCK ACQUISITIONS OVER MANY YEARS,
SOME OF WHICH TOOK PLACE AT ABOUT THE TIME OF SUIT.    FN3  SECTION 7
OF THE CLAYTON ACT, 38 STAT. 731, 15 U.S.C. (1946 ED.)  SEC.  18, WAS
AMENDED IN 1950 SO AS TO BROADEN ITS APPLICATION, 64 STAT. 1125, 15
U.S.C. SEC. 18.  THE AMENDMENTS, BY THEIR TERMS, WERE INAPPLICABLE TO
ACQUISITIONS MADE BEFORE 1950.  THUS THIS CASE IS GOVERNED BY THE
ORIGINAL LANGUAGE OF SEC. 7 AND NOT BY SEC. 7, AS AMENDED. 

FN4  ONE OF THE EARLIEST RULINGS OF THE FEDERAL TRADE COMMISSION WAS
THAT SEC. 7 DID NOT PROHIBIT ASSET ACQUISITIONS.  1 F.T.C. 541-542. 
THE PRIMARY PURPOSE OF THE 1950 AMENDMENTS WAS TO BRING ASSET
ACQUISITIONS WITHIN SEC. 7.  PROPONENTS OF THE 1950 AMENDMENTS ASSERTED
ON SEVERAL OCCASIONS THAT THE OMISSION OF ASSET ACQUISITIONS IN THE
ORIGINAL CLAYTON ACT HAD BEEN INADVERTENT.  SEE, E.G., 96 CONG. REC.
16443.  HOWEVER, THE LEGISLATIVE HISTORY OF THE CLAYTON ACT
DEMONSTRATES THAT THE PURPOSE OF SEC. 7 WAS TO PREVENT THE FORMATION OF
HOLDING COMPANIES AND CERTAIN EVILS PECULIAR TO STOCK ACQUISITIONS,
PARTICULARLY THE SECRECY OF OWNERSHIP.  SEE 51 CONG. REC. 9073, 14254,
14316, 14420, 14456; H.R. REP. NO. 627, 63D CONG., 2D SESS. 17; S. REP.
NO. 698, 63D CONG., 2D SESS. 13. 

FN5  THE REMARKS OF SENATOR CHILTON RELIED ON BY THE MAJORITY, ANTE,
P. 591, DO NOT INDICATE THAT HE THOUGHT THAT SEC. 7 WAS APPLICABLE TO
VERTICAL ACQUISITIONS.  HIS STATEMENTS INDICATE MERELY THAT HE THOUGHT
THAT THE RESTRAINT AND MONOPOLY CLAUSES OF SEC. 7 WERE NOT ENTIRELY
SYNONYMOUS WITH THE SUBSTANTIALLY LESSEN COMPETITION CLAUSE. 

FN6  SEE, E.G., 51 CONG. REC. 9270-9271 (REPRESENTATIVE CARLIN); ID.,
AT 9554 (REPRESENTATIVE BARKLEY); ID., AT 14254-14255 (SENATOR
CUMMINS); ID., AT 14313 (SENATOR REED); ID., AT 15856-15861 (SENATOR
WALSH); ID., AT 15940 (SENATOR NELSON); ID., AT 16001 (SENATOR
CHILTON); ID., AT 16320 (REPRESENTATIVE FLOYD). 

FN7  51 CONG. REC. 14455.  SENATOR REED HAD OFFERED AN AMENDMENT TO
THE FIRST PARAGRAPH OF SEC. 7 WHICH WOULD HAVE PREVENTED A CORPORATION
FROM ACQUIRING STOCK IN ANOTHER CORPORATION ENGAGED IN THE SAME LINE OF
BUSINESS.  THIS WAS AN ATTEMPT TO STIFFEN THE BILL IN ORDER TO RELIEVE
THE GOVERNMENT FROM PROVING THAT COMPETITION HAD BEEN SUBSTANTIALLY
LESSENED BY THE ACQUISITION, AN ELEMENT OF PROOF WHICH HE, SENATOR
CUMMINS, AND OTHERS THOUGHT WOULD BE QUITE DIFFICULT.  SEE 51 CONG.
REC. 14254-14255, 14419-14420.  SENATOR CHILTON ASKED SENATOR REED
WHETHER HIS AMENDMENT WOULD PREVENT A CORPORATION ENGAGED IN THE
MANUFACTURE OF STEEL FROM ACQUIRING STOCK IN A CORPORATION ENGAGED IN
THE PRODUCTION OF IRON ORE.  SENATOR REED REPLIED THAT HIS AMENDMENT
WOULD NOT BAR SUCH AN ACQUISITION, BUT THAT NEITHER WOULD THE BILL AS
WRITTEN: 

"BUT I CALL THE SENATOR'S ATTENTION TO THE FACT THAT IF THE
ILLUSTRATION HE USES WOULD NOT BE COVERED BY THE LANGUAGE OF MY
AMENDMENT IT CERTAINLY WOULD NOT BE COVERED BY THE LANGUAGE I SEEK TO
AMEND.  HIS ARGUMENT WOULD GO AS MUCH AGAINST THAT, AND EVEN MORE THAN
AGAINST MY AMENDMENT.  I DO NOT CLAIM THAT THIS WILL STOP EVERYTHING. 
I CLAIM THAT IT WILL BE A LONG STEP IN THAT DIRECTION."  ID., AT
14455.  NO ONE DISPUTED SENATOR REED'S INTERPRETATION OF SEC. 7. 

FN8  SEE, E.G., THE STATEMENT BY REPRESENTATIVE CARLIN, ONE OF THE
MANAGERS OF THE BILL IN THE HOUSE, TO THE EFFECT THAT THE INTERLOCKING
DIRECTORATE PROVISION CONTAINED IN SEC. 8 WOULD PREVENT A DIRECTOR OF A
CORPORATION WHICH SUPPLIED RAILROADS WITH MATERIALS FROM BECOMING A
RAILROAD DIRECTOR AND, IN EFFECT, "BUYING SUPPLIES FROM HIMSELF."  51
CONG. REC. 9272. 

FN9  SEE, E.G., F.T.C., ANN. REP. FOR FISCAL YEAR 1929, 6-7, 60,
WHERE THE COMMISSION STATED THAT IT COULD TAKE NO CORRECTIVE ACTION
UNDER THE CLAYTON ACT AGAINST LARGE CONSOLIDATIONS IN THE FOOD INDUSTRY
"EVEN THOUGH THE CONSOLIDATION WAS EFFECTED THROUGH THE ACQUISITION OR
EXCHANGE OF CAPITAL STOCK," BECAUSE "MOST OF THESE CONSOLIDATIONS AND
ACQUISITIONS WERE OF CORPORATIONS ENGAGED IN THE DISTRIBUTION OF ALLIED
BUT NONCOMPETITIVE PRODUCTS."  SEE ALSO, F.T.C., ANN. REP. FOR FISCAL
YEAR 1927, 13-15; STATEMENT BY GENERAL COUNSEL KELLEY IN HEARINGS
BEFORE A SUBCOMMITTEE OF THE SENATE COMMITTEE ON THE JUDICIARY ON H.R.
2734, 81ST CONG., 1ST AND 2D SESS. 37; REPORT OF THE FEDERAL TRADE
COMMISSION ON INTERLOCKING DIRECTORATES, H.R. DOC. NO. 652, 81ST CONG.,
2D SESS. 1. 

FN10  IN THE RONALD FABRICS CASE, A RAYON CONVERTER ALLEGED THAT A
COMPETING CORPORATION HAD RESTRAINED COMMERCE BY ACQUIRING CONTROL OF A
SOURCE OF SUPPLY OF RAYON.  THE DISTRICT COURT HELD THAT THIS
ALLEGATION STATED A CAUSE OF ACTION UNDER SEC. 7 OF THE CLAYTON ACT. 

FN11  A MINORITY IN THE SENATE, LED BY SENATORS CUMMINS AND WALSH,
SOUGHT TO STRIKE OUT THE "TEND TO CREATE A MONOPOLY" LANGUAGE OF SEC.
7.  51 CONG. REC. 14314-14316, 14319, 14459-14461.  THEY ARGUED THAT
THIS LANGUAGE WAS SUPERFLUOUS BECAUSE THE CREATION OF A MONOPOLY ALWAYS
SUBSTANTIALLY LESSENED COMPETITION, AND BECAUSE THE SHERMAN ACT
CONTAINED SIMILAR LANGUAGE, AND THAT THERE WAS A DANGER THAT THE
LANGUAGE WOULD BE CONSIDERED AS AN IMPLIED REPEAL OF THE SHERMAN ACT. 
THE FAILURE OF THESE EFFORTS TO ELIMINATE THE TENDENCY TOWARD MONOPOLY
CLAUSE (THE RESTRAINT OF COMMERCE CLAUSE HAD NOT BEEN ADDED TO SEC. 7
AT THIS TIME) INDICATES THAT THE TENDENCY TOWARD MONOPOLY CLAUSE WAS
NOT INTENDED TO BE LIMITED TO SITUATIONS ALREADY ENCOMPASSED BY THE
SUBSTANTIALLY LESSEN COMPETITION CLAUSE.  SIMILARLY, THE REMARKS OF
SENATOR CHILTON, QUOTED BY THE COURT FROM 51 CONG. REC.  16002, ANTE,
PP. 591-592, INDICATE THAT HE THOUGHT THE TENDENCY TOWARD MONOPOLY AND
RESTRAINT OF COMMERCE CLAUSES ADDED SOMETHING.  BUT I FIND NO EVIDENCE
THAT WHAT THEY DID ADD INCLUDED VERTICAL ACQUISITIONS. 

FN12  FEDERAL TRADE COMMISSION V. WESTERN MEAT CO., 272 U.S. 554,
561. 

FN13  IT MIGHT BE ARGUED THAT THE MENTION OF SUBSEQUENT MISUSE IN THE
THIRD PARAGRAPH OF SEC. 7, THE INVESTMENT PROVISO, ENLARGES THE
SUBSTANTIVE CONTENT OF THE FIRST PARAGRAPH OF SEC. 7.  THIS PARAGRAPH
PROVIDES THAT "THIS SECTION SHALL NOT APPLY TO CORPORATIONS PURCHASING
SUCH STOCK SOLELY FOR INVESTMENT AND NOT USING THE SAME BY VOTING OR
OTHERWISE TO BRING ABOUT, OR IN ATTEMPTING TO BRING ABOUT, THE
SUBSTANTIAL LESSENING OF COMPETITION."  BUT THE MENTION OF USE IN THIS
PARAGRAPH HAS THE EFFECT OF LIMITING THE EXCEPTION IT CONTAINS, I.E.,
THE EXCEPTION FOR STOCK PURCHASED "SOLELY FOR INVESTMENT."  THIS
EXCEPTION IS LOST IF THE STOCK IS SUBSEQUENTLY MISUSED.  BUT THE
EXCEPTION CONTAINED IN THIS PARAGRAPH DOES NOT COME INTO PLAY UNLESS
THE ACQUISITION FIRST COMES WITHIN THE SUBSTANTIVE PROHIBITION OF THE
FIRST TWO PARAGRAPHS OF SEC. 7.  THIS LIMITATION ON THE EXCEPTION
CANNOT EXPAND THE SUBSTANTIVE PROHIBITION TO WHICH THE EXCEPTION
APPLIES. 

FN14  IT MAY BE THAT SEC. 7 IS INAPPLICABLE WHEN THE GOVERNMENT FAILS
TO BRING SUIT WITHIN A REASONABLE PERIOD AFTER THE CONSUMMATION OF THE
STOCK ACQUISITION.  IF SO, THE 30 YEARS HERE INVOLVED WOULD EXCEED A
REASONABLE PERIOD OF INCIPIENCY.  EVEN THOUGH SEC. 7 OF THE CLAYTON
ACT, UNDER THIS THEORY, WOULD BE INAPPLICABLE, ANY ALLEGED RESTRAINT
COULD BE DEALT WITH UNDER THE SHERMAN ACT. 

FN15  THE COURT APPARENTLY CONCEDES THAT DU PONT'S STOCK ACQUISITION
IN GENERAL MOTORS WAS LAWFUL WHEN MADE BECAUSE "ITS SALES TO GENERAL
MOTORS WERE RELATIVELY INSIGNIFICANT" AT THAT TIME AND BECAUSE "GENERAL
MOTORS THEN PRODUCED ONLY ABOUT 11% OF THE TOTAL AUTOMOBILE PRODUCTION
..  .""  ANTE, P. 599.  THROUGHOUT, THE COURT STRESSES THE GROWTH IN
SIZE OF GENERAL MOTORS.  ANTE, PP. 595-596, 599.  THE DECLINE IN THE
NUMBER OF AUTOMOBILE MANUFACTURERS IS NOT MENTIONED, BUT IS WELL
KNOWN.  AND THE COURT STATES THAT DIFFUSION OF GENERAL MOTORS' STOCK
THROUGH THE YEARS HAS INCREASED "THE POTENCY OF THE INFLUENCE OF DU
PONT'S 23% STOCK INTEREST  ..  .""  ANTE, P. 607, N. 36. 

FN16 EXCEPT IN THIS CASE, THE ENFORCING AGENCIES APPEAR NEVER TO HAVE
BROUGHT AN ACTION UNDER SEC. 7 MORE THAN FOUR YEARS AFTER THE DATE OF
THE ACQUISITION.  CONSEQUENTLY, THE PRECISE PROBLEM RAISED HERE HAS NOT
BEEN DIRECTLY ADJUDICATED.  NEVERTHELESS, THE CASES CITED IN THE TEXT
SPELL OUT THE PROOF REQUIRED FOR A VIOLATION OF SEC. 7, AND THUS HAVE
AN IMPORTANT BEARING ON THIS PROBLEM. 

FN17  CF. UNITED STATES V. COLUMBIA STEEL CO., 334 U.S. 495, HOLDING
THAT EVEN THE EXCLUSION OF COMPETITION RESULTING FROM COMPLETE VERTICAL
INTEGRATION DOES NOT VIOLATE THE SHERMAN ACT UNLESS COMPETITION IN A
SUBSTANTIAL PORTION OF A MARKET IS RESTRAINED. 

FN18  THE FOLLOWING TABLE COMPARES GENERAL MOTORS' PURCHASES, IN
1947, OF SEVERAL PRODUCTS FROM DU PONT WITH ITS PURCHASES OF THE SAME
PRODUCTS FROM COMPETITORS OF DU PONT. 

                                                   PURCHASES
TOTAL       PERCENT OF

           PURCHASES      FROM           GENERAL     PURCHASES

                                    FROM           COMPETITORS
MOTORS'     FROM

      TYPE OF PRODUCT       DU PONT        OF DU PONT     PURCHASES
DU PONT 

FINISHES                             $18,724,000    $ 8,635,000
$27,359,000        68.4 

FABRICS (IMITATION LEATHER AND

COATED FABRICS)                      3,639,000      5,815,000
9,454,000        38.5 

ADHESIVES            12,000      3,056,000      3,068,000
.4 

CHEMICALS:

ANODES                                   2,000      1,206,000
1,208,000          .2

SOLVENTS                         439,000      3,183,000
3,622,000       12.1

                                   $22,816,000    $21,895,000
$44,711,000        51.0 

FN19  THE FOLLOWING TABLE COMPARES DU PONT'S TOTAL SALES OF
INDUSTRIAL FINISHES IN RECENT YEARS WITH ITS SALES OF THE SAME FINISHES
TO GENERAL MOTORS:

              SALES TO GENERAL MOTORS                 SALES TO
GENERAL

                        OTHER                    TOTAL FINISH
MOTORS AS PERCENT 

YEAR          DUCO       FINISHES     TOTAL        SALES      OF TOTAL
SALES 

1938      $ 4,569,604  $1,625,625  $ 6,195,229    $ 31,357,134
      19.8 

1939 6,312,005   2,448,844    8,760,849      38,514,763       22.7 

1940        8,876,970   2,850,091   11,727,061     44,974,778
     26.1 

1941        9,768,119   3,757,389   13,525,508      61,204,127
      22.1 

1946        6,911,596   3,518,256   10,429,852      75,117,079
      13.9 

1947       12,224,798   6,713,431   18,938,229     105,266,655
      18.0 

THE YEARS 1942 THROUGH 1945 ARE OMITTED FROM ALL TABLES BECAUSE OF
THE SUSPENSION OF AUTOMOBILE PRODUCTION DURING THE WAR. 

FN20  IN 1947, A TYPICAL YEAR, GENERAL MOTORS' TOTAL PURCHASES OF ALL
PRODUCTS FROM DU PONT WERE $26,628,274.  OF THIS AMOUNT, $18,938,229,
OR 71% OF THE TOTAL, WAS FINISHES. 

FN21  IN 1947, OVER 400 PAINT MANUFACTURERS OTHER THAN DU PONT SOLD
FINISHES TO GENERAL MOTORS.  THE TOTAL AMOUNT THEY SOLD WAS $8,635,000,
31.6% OF GENERAL MOTORS' REQUIREMENTS.  TWENTY-FIVE COMPANIES, OTHER
THAN DU PONT, EACH SOLD AMOUNTS OF FINISHES TO GENERAL MOTORS IN EXCESS
OF $30,000 IN THAT YEAR; ONE COMPANY SOLD AS MUCH AS $3,205,000. 

FN22  IN 1947, GENERAL MOTORS' PURCHASES OF INDUSTRIAL FINISHES FROM
DU PONT, BY TYPE OF FINISH, WERE AS FOLLOWS: 

DUCO              $12,224,798        65% 

DULUX               3,179,225        17 

ALL OTHERS          3,534,206        18

                $18,938,229       100% 

THUS, DUCO AND DULUX COMPRISED 82% OF DU PONT'S FINISH SALES TO
GENERAL MOTORS IN THAT YEAR. 

FN23  DU PONT INITIALLY SOLD MORE DUCO TO OTHER AUTO MANUFACTURERS
THAN IT DID TO GENERAL MOTORS.  IN 1926, DU PONT'S SALES OF COLORED
DUCO WERE DISTRIBUTED AS FOLLOWS: TO GENERAL MOTORS, 19%; TO OTHER AUTO
MANUFACTURERS, 33%; TO ALL OTHERS, 48%.  THE PRIMARY MARKET FOR CLEAR
DUCO HAS ALWAYS BEEN THE FURNITURE INDUSTRY. 

FN24  FOR EXAMPLE, VAN DERAU, A WESTINGHOUSE EXECUTIVE, TESTIFIED
THAT HIS COMPANY BOUGHT ITS ENTIRE REQUIREMENTS OF REFRIGERATOR
FINISHES FROM DU PONT BECAUSE OF DU PONT'S QUALITY AND SERVICE: 

"NOW, ANOTHER FACTOR - AND I THINK I CAN SAY THIS WITHOUT IT BEING
HARMFUL TO ANY OTHER SUPPLIERS - DU PONT HAS THE FINEST TRAINED
TECHNICAL GROUP AT THEIR BECK AND CALL, AT THE BECK AND CALL OF THE
USERS OF THE MATERIALS, OF ANYBODY IN THE BUSINESS AND WE HAVE HAD
SEVERAL TIMES, WHEN WE HAVE HAD A LITTLE PROBLEM, AND I AM THINKING OF
ONE IN PARTICULAR WHERE WE WERE GOING TO FIND IT VERY DIFFICULT TO KEEP
IN PRODUCTION UNTIL THE TROUBLE WOULD BE OVERCOME, WHICH I CALLED FROM
PITTSBURGH TO THE CHICAGO OFFICE, AND THE NEXT MORNING ONE OF THE MEN
OF DU PONT WAS ON THE JOB, AND WITHIN A VERY FEW HOURS THEY HAD
MATERIALS COMING IN FROM THEIR TOLEDO PLANT THAT KEPT US IN
PRODUCTION. 

"YOU CANNOT LAUGH OFF THAT KIND OF SERVICE.  THEY HAVE BEEN SIMPLY
EXCELLENT, AND I DON'T KNOW HOW YOU COULD SAY, ANY BETTER." 

FN25  THE FOLLOWING TABLE COMPARES DU PONT'S TOTAL SALES OF
INDUSTRIAL FABRICS, PRIMARILY IMITATION LEATHER AND COATED FABRICS, IN
SEVERAL RECENT YEARS, WITH THE SALES OF THOSE SAME PRODUCTS TO GENERAL
MOTORS:

           SALES TO      SALES TO                GM SALES AS
PERCENT 

YEAR         GM    OTHERS        TOTAL SALES      OF TOTAL SALES 

1938   $  446,357   $ 6,647,112     $ 7,093,469  6.6 

1939           803,854     7,775,778       8,579,632
9.4 

1940         1,285,280     7,780,105       9,065,385
14.2 

1941         1,773,079    13,093,469      14,866,548
11.9 

1946         2,083,166    14,170,639      16,253,805
12.8 

1947         3,639,316    16,723,610  20,362,926
17.9    FN26  THE FOLLOWING TABLE COMPARES THE DOLLAR AMOUNT, IN 1947,
OF DU PONT'S TOTAL SALES OF THE PRODUCTS OF ITS VARIOUS DEPARTMENTS
WITH THE AMOUNT SOLD BY IT TO GENERAL MOTORS:

            DU PONT SALES                           SALES TO
GENERAL

                    TO GENERAL          TOTAL DU PONT       MOTORS,
AS PERCENT

TYPE OF PRODUCT     MOTORS             SALES               OF TOTAL
SALES 

FINISHES            $18,938,229        $105,266,655  18.0 

FABRICS                  3,639,316          20,362,926
 17.9 

AMMONIA                  1,742,416          50,320,207
  3.5    GRASSELLI CHEMICALS      1,024,320          74,212,311
1.4 

ELECTROCHEMICALS         1,019,272          47,687,843
  2.1 

PLASTICS                   105,422          34,828,026
  0.3 

ORGANIC CHEMICALS           83,254          94,632,256        0.1 

RAYON                       45,616         250,467,514
  (*) 

EXPLOSIVES   26,032          58,875,482                       (*) 

PIGMENTS                     3,530          31,496,024           (*) 

PHOTO PRODUCTS                 867          25,699,756
  (*)

                     $26,628,274        $793,849,000
  3.4 

*LESS THAN 0.1%. 

FN27  BECAUSE THE COURT QUOTES FULLY FROM, AND APPEARS TO PLACE
SPECIAL WEIGHT ON, THE 1926 LETTER OF J.L. PRATT, A BRIEF DISCUSSION OF
IT IS APPROPRIATE BY WAY OF ILLUSTRATION.  ANTE, PP. 606-607, N. 35. 

THE LETTER ONLY PURPORTS TO BE AN EXPRESSION OF PRATT'S PERSONAL
VIEWS - HE MAKES IT CLEAR IN THE LAST PARAGRAPH THAT HE IS EXPRESSING
HIS OWN OPINIONS AND NOT GENERAL MOTORS' POLICY.  IT HAS, THEREFORE,
COMPARATIVELY LITTLE BEARING ON DU PONT'S INTENT.  MOREOVER, IT IS
SIGNIFICANT THAT PRATT'S ATTITUDE TOWARD DU PONT WAS BASED NOT ON THE
STOCK RELATIONSHIP, BUT ON THE FACT THAT DU PONT SAVED GENERAL MOTORS
FROM FINANCIAL DISASTER IN 1920.  HIS VIEWS, APPARENTLY, WOULD HAVE
BEEN THE SAME WHETHER OR NOT DU PONT OWNED STOCK IN GENERAL MOTORS.  IN
ANY EVENT, ALL THAT PRATT SAYS IS THAT, IN MAKING PURCHASES, GENERAL
MOTORS SHOULD "ALWAYS KEEP A COMPETITIVE SITUATION," AND "THE PRIME
CONSIDERATION IS TO DO THE BEST THING FOR DELCO-LIGHT COMPANY  ..  ."" 
(PRATT WAS WRITING TO THE GENERAL MANAGER OF DELCO, A GENERAL MOTORS'
DIVISION.) 

AN EXAMINATION OF THE CIRCUMSTANCES IN WHICH THIS LETTER WAS WRITTEN
DISPOSES OF ANY NOTION THAT IT EXPRESSED A POLICY THAT GENERAL MOTORS
SHOULD PREFER DU PONT'S PRODUCTS WHEN THEY WERE EQUAL IN QUALITY,
SERVICE AND PRICE.  THE CIRCUMSTANCES WERE THESE: DELCO LIGHT WAS
BUYING PAINT FROM A COMPETITOR OF DU PONT.  WHEN THE COMPETITOR FAILED
TO SOLVE A PAINT PROBLEM WHICH CONFRONTED DELCO, IT CALLED ON DU PONT
FOR HELP.  HOWEVER, ALTHOUGH DU PONT SOLVED THE PROBLEM AND OBTAINED
ONE ORDER FOR PAINT, DELCO ASKED DU PONT TO WITHHOLD DELIVERY SO THAT
THE COMPETITOR COULD BE GIVEN ANOTHER OPPORTUNITY TO RETAIN THE
BUSINESS.  UNDERSTANDINGLY, ELMS OF THE DU PONT PAINT DEPARTMENT WAS
SOMEWHAT PIQUED BY THIS, AND HE WROTE A PERSONAL LETTER TO HIS FRIED
PRATT ASKING FOR HIS ASSISTANCE.  PRATT'S LETTER TO THE GENERAL MANAGER
OF DELCO WAS THE RESULT. 

DESPITE THE FACT THAT THE DU PONT PRODUCT WAS OFFERED AT A LOWER
PRICE AND THE FACT THAT THE TECHNICAL STAFF AT DELCO THOUGHT THE DU
PONT PRODUCT SUPERIOR, DELCO NEVERTHELESS CONTINUED TO BUY FROM THE
COMPETITOR.  DU PONT NEVER DID RECEIVE THE BUSINESS TO WHICH THE
CORRESPONDENCE RELATED.  JUDGED BY EITHER ITS CONTENT OR ITS RESULT,
THE PRATT LETTER IS A POOR EXAMPLE OF AN ALLEGED DU PONT POLICY OF
"PURPOSELY EMPLOYING ITS STOCK TO PRY OPEN THE GENERAL MOTORS MARKET
..  .""  ANTE, P. 606. 

FN28  THE COURT, WITHOUT REFERRING TO ANY SUPPORTING EVIDENCE,
VENTURES THE CONJECTURE THAT "GENERAL MOTORS PROBABLY TURNED TO OUTSIDE
SOURCES OF SUPPLY AT LEAST IN PART BECAUSE ITS REQUIREMENTS OUTSTRIPPED
DU PONT'S PRODUCTION  ..  .""  ANTE, P. 605.  AS I READ THE RECORD, DU
PONT WAS ACTIVELY SOLICITING MORE BUSINESS FROM GENERAL MOTORS AND
OTHERS THROUGHOUT THE PERIOD COVERED IN THIS SUIT.  I FIND NO HINT THAT
DU PONT WAS SURFEITED WITH BUSINESS AND UNABLE TO FILL GENERAL MOTORS'
ORDERS. 

FN29  THE COURT ALSO OVERTURNS THE DISTRICT COURT'S EXPRESS FINDING
THAT DU PONT PURCHASED GENERAL MOTORS' STOCK SOLELY FOR INVESTMENT. 
THE COURT DOES THIS ON THE BASIS OF AN ALLEGED DU PONT PURPOSE TO
SECURE A NONCOMPETITIVE PREFERENCE WHICH THE COURT FINDS EXPRESSED IN
THE RASKOB LETTER AND IN CERTAIN STATEMENTS IN DU PONT'S 1917 AND 1918
REPORTS TO ITS STOCKHOLDERS.  THESE DOCUMENTS, HOWEVER, ARE NOT
INCONSISTENT WITH THE DISTRICT COURT'S FINDING OF AN INVESTMENT
PURPOSE.  THE DISTRICT COURT SAID: 

"RASKOB'S REPORT, THE TESTIMONY OF PIERRE S. AND IRENEE DU PONT AND
ALL THE CIRCUMSTANCES LEADING UP TO DU PONT'S ACQUISITION OF THIS
SUBSTANTIAL INTEREST IN GENERAL MOTORS, AS SHOWN BY THE RECORD,
ESTABLISH THAT THE ACQUISITION WAS ESSENTIALLY AN INVESTMENT.  ITS
MOTIVATION WAS THE PROFITABLE EMPLOYMENT OF A LARGE PART OF THE SURPLUS
WHICH DU PONT HAD AVAILABLE AND UNCOMMITTED TO EXPANSION OF ITS OWN
BUSINESS. 

     *         *         *         *         * 

"RASKOB'S REPORTS AND OTHER DOCUMENTS WRITTEN AT OR NEAR THE TIME OF
THE INVESTMENT SHOW THAT DU PONT'S REPRESENTATIVES WERE WELL AWARE THAT
GENERAL MOTORS WAS A LARGE CONSUMER OF PRODUCTS OF THE KIND OFFERED BY
DU PONT.  RASKOB, FOR ONE, THOUGHT THAT DU PONT WOULD ULTIMATELY GET
ALL THAT BUSINESS, BUT THERE IS NO EVIDENCE THAT RASKOB EXPECTED TO
SECURE GENERAL MOTORS TRADE BY IMPOSING ANY LIMITATION UPON ITS FREEDOM
TO BUY FROM SUPPLIERS OF ITS CHOICE.  OTHER DOCUMENTS ALSO ESTABLISH DU
PONT'S CONTINUED INTEREST IN SELLING TO GENERAL MOTORS - EVEN TO THE
EXTENT OF THE LATTER'S ENTIRE REQUIREMENTS - BUT THEY SIMILARLY MAKE NO
SUGGESTION THAT THE DESIRED RESULT WAS TO BE ACHIEVED BY LIMITING
GENERAL MOTORS PURCHASING FREEDOM.  ON THE CONTRARY, A NUMBER OF THEM
EXPLICITLY RECOGNIZED THAT GENERAL MOTORS TRADE COULD ONLY BE SECURED
ON A COMPETITIVE BASIS."  126 F. SUPP., AT 242, 243. 

WHETHER ANY STOCK PURCHASE IS AN INVESTMENT TURNS LARGELY ON THE
INTENT OF THE PURCHASER.  PENNSYLVANIA R. CO. V. INTERSTATE COMMERCE
COMMISSION, 66 F.2D 37, AFF'D BY AN EQUALLY DIVIDED COURT, 291 U.S.
651.  IN THIS CASE, SINCE THE DISTRICT COURT'S FINDING WITH REFERENCE
TO THAT INTENT IS UNEQUIVOCAL AND NOT CLEARLY ERRONEOUS, THE STOCK
ACQUISITION FALLS WITHIN THE PROVISO, STATED IN THE THIRD PARAGRAPH OF
SEC. 7, EXPRESSLY EXCEPTING ACQUISITIONS MADE "SOLELY FOR INVESTMENT." 

FN30  THE DISTRICT COURT DID NOT REACH THIS QUESTION SINCE IT FOUND
THAT THERE WAS NO REASONABLE PROBABILITY OF ANY FORECLOSURE OF DU
PONT'S COMPETITORS BY REASON OF DU PONT'S 23% STOCK INTEREST IN GENERAL
MOTORS.  CONSEQUENTLY, THERE ARE NO FINDINGS OF FACT DEALING WITH THE
RELEVANT MARKET.  ALSO, THE RECORD APPEARS DEFICIENT ON SUCH CRUCIAL
QUESTIONS AS THE CHARACTERISTICS OF THE PRODUCTS, THE USES TO WHICH
THEY ARE PUT, THE EXTENT TO WHICH THEY ARE INTERCHANGEABLE WITH
COMPETITORS' PRODUCTS, AND SO ON.  FOR THESE REASONS, I BELIEVE THE
COURT IN ANY EVENT SHOULD REMAND THE CASE TO THE DISTRICT COURT TO GIVE
THE DISTRICT JUDGE, WHO IS MORE FAMILIAR WITH THE RECORD THEN WE CAN
BE, AN OPPORTUNITY TO REVIEW THE RECORD, AND ENTERTAIN ARGUMENT WITH
RESPECT TO THE SUBSTANTIALITY OF THE SHARE OF THE RELEVANT MARKET
AFFECTED BY THE FORECLOSURE WHICH THE COURT FINDS TO EXIST.  BY
DECLINING TO REMAND, THE COURT NECESSITATES A SCRUTINY HERE OF THIS
HUGE RECORD FOR A DETERMINATION OF AN ESSENTIALLY FACTUAL QUESTION NOT
PASSED ON BY THE DISTRICT COURT, AND NOT THOROUGHLY BRIEFED OR ARGUED
BY THE PARTIES. 

FN31  THE COURT STATES THAT "GENERAL MOTORS TOOK 93% OF DU PONT'S
AUTOMOBILE DUCO PRODUCTION IN 1941 AND 83% IN 1947."  ANTE, P. 605. 
THESE FIGURES ARE OF LITTLE SIGNIFICANCE.  NOT ONLY DO THEY OMIT THE
CRUCIAL SALES - THOSE MADE OUTSIDE THE AUTOMOBILE INDUSTRY - BUT THEY
GIVE A MISLEADING IMPRESSION WITH RESPECT TO DU PONT'S SALES TO THE
AUTOMOBILE INDUSTRY.  AS PREVIOUSLY STATED, FORD CHOSE TO MAKE ITS OWN
REQUIREMENTS AFTER ABOUT 1935 AND CHRYSLER DESIRED TO CONCENTRATE ITS
PURCHASES ON ONE SUPPLIER.  UNDER THESE FIGURES, AFTER ELIMINATING FORD
AND CHRYSLER, AND DEDUCTING DU PONT'S SALES TO GENERAL MOTORS, DU PONT
MUST HAVE SUPPLIED NEARLY HALF OF THE ENTIRE REQUIREMENTS OF ALL
REMAINING AUTO MANUFACTURERS IN 1941 AND AN EVEN LARGER PORTION IN
1947. 

THE RECORD DOES NOT CONTAIN COMPLETE FIGURES ON THE AMOUNT OF DUCO
SOLD OUTSIDE THE AUTOMOBILE INDUSTRY.  HOWEVER, THERE ARE FIGURES FOR
SELECTED YEARS.  IN 1927, FOR EXAMPLE, 51.5% OF ALL DUCO SALES WERE TO
OTHER THAN AUTOMOBILE MANUFACTURERS (1,166,220 GALLONS, OUT OF A TOTAL
OF 2,263,000 GALLONS).  IN 1948, DU PONT'S GROSS SALES TO PURCHASERS
OTHER THAN GENERAL MOTORS OF THE SAME KINDS OF FINISHES BOUGHT BY
GENERAL MOTORS AMOUNTED TO ABOUT $97,000,000; ITS SALES TO GENERAL
MOTORS IN THE SAME YEAR WERE $21,000,000, OR 21.7% OF THE TOTAL.  THE
RECORD REVEALS THAT GENERAL MOTORS' PURCHASES OF FINISHES FROM DU PONT
HAVE RANGED, IN RECENT YEARS, FROM 14% TO 26% OF DU PONT'S SALES OF
SUCH FINISHES TO ALL CUSTOMERS.  THE CONCLUSION SEEMS CLEAR THAT DU
PONT'S FINISHES HAVE FOUND WIDE ACCEPTANCE IN INNUMERABLE INDUSTRIES
AND THAT DU PONT IS NOT DEPENDENT ON GENERAL MOTORS FOR A CAPTIVE PAINT
MARKET. 

FN32  U.S. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS, II CENSUS OF
MANUFACTURES: 1947, STATISTICS BY INDUSTRY, 414-415.  THERE WERE 1,291
ESTABLISHMENTS MANUFACTURING THESE PRODUCTS.  DU PONT'S TOTAL SALES
WERE 8.1% OF THE INDUSTRY. 

FN33  IN THE FARGO CASE, MAYTAG, AN APPLIANCE MANUFACTURER, ACQUIRED
A 40% STOCK INTEREST IN, AND CONTRACTED TO PURCHASE THE ENTIRE OUTPUT
OF, GLOBE, A GAS RANGE MANUFACTURER.  A GLOBE DEALER, WHO LOST HIS
SOURCE OF SUPPLY AS A RESULT OF THE TRANSACTION, BROUGHT A TREBLE
DAMAGE ACTION ALLEGING, INTER ALIA, THAT THE STOCK ACQUISITION VIOLATED
SEC. 7 OF THE CLAYTON ACT.  THE EVIDENCE SHOWED THAT THERE WERE ABOUT
70 MANUFACTURERS OF GAS RANGES, AND THAT GLOBE WAS ABOUT EIGHTEENTH IN
SIZE, SELLING A LITTLE LESS THAN 2% OF THE NATIONAL MARKET (ABOUT
$5,000,000 A YEAR).  THE COURT OF APPEALS FOR THE SEVENTH CIRCUIT HELD
THAT THE STOCK ACQUISITION DID NOT VIOLATE SEC. 7 BECAUSE THE PLAINTIFF
HAD OTHER READILY AVAILABLE SOURCES OF SUPPLY. 

THE ACQUISITION OF AN OUTLET IS GOVERNED BY SIMILAR PRINCIPLES.  IN
EITHER CASE, THE QUESTION IS WHETHER COMPETITORS MAY BE SUBSTANTIALLY
LIMITED IN THEIR COMPETITIVE OPPORTUNITIES.  ASSUMING THAT DU PONT HAD
PURCHASED GENERAL MOTORS OUTRIGHT, AND THUS COMMANDED AN OUTLET
CONSUMING ABOUT 4% OF THE NATIONAL MARKET FOR INDUSTRIAL FINISHES AND
ABOUT 2% OF THE NATIONAL MARKET FOR INDUSTRIAL FABRICS, IT SEEMS
UNLIKELY THAT DU PONT'S PAINT AND FABRIC COMPETITORS WOULD BE
SUBSTANTIALLY LIMITED IN SELLING THEIR PRODUCTS, WHEN 96% AND 98%,
RESPECTIVELY, OF THE NATIONAL MARKET WOULD REMAIN OPEN TO THEM. 

               APPENDIX TO MR. JUSTICE BURTON'S DISSENT. 

"SEC. 7.  THAT NO CORPORATION ENGAGED IN COMMERCE SHALL ACQUIRE,
DIRECTLY OR INDIRECTLY, THE WHOLE OR ANY PART OF THE STOCK OR OTHER
SHARE CAPITAL OF ANOTHER CORPORATION ENGAGED ALSO IN COMMERCE, WHERE
THE EFFECT OF SUCH ACQUISITION MAY BE TO SUBSTANTIALLY LESSEN
COMPETITION BETWEEN THE CORPORATION WHOSE STOCK IS SO ACQUIRED AND THE
CORPORATION MAKING THE ACQUISITION, OR TO RESTRAIN SUCH COMMMERCE IN
ANY SECTION OR COMMUNITY, OR TEND TO CREATE A MONOPOLY OF ANY LINE OF
COMMERCE. 

"NO CORPORATION SHALL ACQUIRE, DIRECTLY OR INDIRECTLY, THE WHOLE OR
ANY PART OF THE STOCK OR OTHER SHARE CAPITAL OF TWO OR MORE
CORPORATIONS ENGAGED IN COMMERCE WHERE THE EFFECT OF SUCH ACQUISITION,
OR THE USE OF SUCH STOCK BY THE VOTING OR GRANTING OF PROXIES OR
OTHERWISE, MAY BE TO SUBSTANTIALLY LESSEN COMPETITION BETWEEN SUCH
CORPORATIONS, OR ANY OF THEM, WHOSE STOCK OR OTHER SHARE CAPITAL IS SO
ACQUIRED, OR TO RESTRAIN SUCH COMMERCE IN ANY SECTION OR COMMUNITY, OR
TEND TO CREATE A MONOPOLY OF ANY LINE OF COMMERCE. 

"THIS SECTION SHALL NOT APPLY TO CORPORATIONS PURCHASING SUCH STOCK
SOLELY FOR INVESTMENT AND NOT USING THE SAME BY VOTING OR OTHERWISE TO
BRING ABOUT, OR IN ATTEMPTING TO BRING ABOUT, THE SUBSTANTIAL LESSENING
OF COMPETITION.  NOR SHALL ANYTHING CONTAINED IN THIS SECTION PREVENT A
CORPORATION ENGAGED IN COMMERCE FROM CAUSING THE FORMATION OF
SUBSIDIARY CORPORATIONS FOR THE ACTUAL CARRYING ON OF THEIR IMMEDIATE
LAWFUL BUSINESS, OR THE NATURAL AND LEGITIMATE BRANCHES OR EXTENSIONS
THEREOF, OR FROM OWNING AND HOLDING ALL OR A PART OF THE STOCK OF SUCH
SUBSIDIARY CORPORATIONS, WHEN THE EFFECT OF SUCH FORMATION IS NOT TO
SUBSTANTIALLY LESSEN COMPETITION. 

"NOR SHALL ANYTHING HEREIN CONTAINED BE CONSTRUED TO PROHIBIT ANY
COMMON CARRIER SUBJECT TO THE LAWS TO REGULATE COMMERCE FROM AIDING IN
THE CONSTRUCTION OF BRANCHES OR SHORT LINES SO LOCATED AS TO BECOME
FEEDERS TO THE MAIN LINE OF THE COMPANY SO AIDING IN SUCH CONSTRUCTION
OR FROM ACQUIRING OR OWNING ALL OR ANY PART OF THE STOCK OF SUCH BRANCH
LINES, NOR TO PREVENT ANY SUCH COMMON CARRIER FROM ACQUIRING AND OWNING
ALL OR ANY PART OF THE STOCK OF A BRANCH OR SHORT LINE CONSTRUCTED BY
AN INDEPENDENT COMPANY WHERE THERE IS NO SUBSTANTIAL COMPETITION
BETWEEN THE COMPANY OWNING THE BRANCH LINE SO CONSTRUCTED AND THE
COMPANY OWNING THE MAIN LINE ACQUIRING THE PROPERTY OR AN INTEREST
THEREIN, NOR TO PREVENT SUCH COMMON CARRIER FROM EXTENDING ANY OF ITS
LINES THROUGH THE MEDIUM OF THE ACQUISITION OF STOCK OR OTHERWISE OF
ANY OTHER SUCH COMMON CARRIER WHERE THERE IS NO SUBSTANTIAL COMPETITION
BETWEEN THE COMPANY EXTENDING ITS LINES AND THE COMPANY WHOSE STOCK,
PROPERTY, OR AN INTEREST THEREIN IS SO ACQUIRED.    "NOTHING CONTAINED
IN THIS SECTION SHALL BE HELD TO AFFECT OR IMPAIR ANY RIGHT HERETOFORE
LEGALLY ACQUIRED:  PROVIDED, THAT NOTHING IN THIS SECTION SHALL BE HELD
OR CONSTRUED TO AUTHORIZE OR MAKE LAWFUL ANYTHING HERETOFORE PROHIBITED
OR MADE ILLEGAL BY THE ANTITRUST LAWS, NOR TO EXEMPT ANY PERSON FROM
THE PENAL PROVISIONS THEREOF OR THE CIVIL REMEDIES THEREIN PROVIDED." 
38 STAT. 731-732, 15 U.S.C. (1946 ED.)  SEC.  18.



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