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Keywords

trustmergers and acquisitionsantitrust

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Brown Shoe Co. v. U.S., 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510

Facts

The Government filed a civil antitrust action against the merger of G. R. Kinney Company and Brown Shoe Company, alleging it violated Section 7 of the Clayton Act. The merger involved the third largest and eighth largest shoe manufacturers in the U.S., which the Government argued would substantially lessen competition in the retail sale of shoes. The District Court found that the merger could foreclose competition in the relevant markets of men's, women's, and children's shoes across various cities. The court ordered Brown to divest itself of its interests in Kinney.

Issue

Did the merger between G. R. Kinney Company and Brown Shoe Company violate Section 7 of the Clayton Act?

Did the merger between G. R. Kinney Company and Brown Shoe Company violate Section 7 of the Clayton Act?

Rule

Section 7 of the Clayton Act prohibits mergers and acquisitions that may substantially lessen competition or tend to create a monopoly in any line of commerce. The Act is concerned with the probabilities of anticompetitive effects rather than certainties, and it requires a functional view of mergers in the context of their specific industry.

Analysis

The court analyzed the merger's potential effects on competition by examining the market shares of both companies and the overall structure of the shoe industry. It found that the merger would likely foreclose competition in the retail market for shoes, particularly in cities where both companies operated. The court emphasized the importance of considering the merger's impact on various submarkets and the trend toward concentration in the industry.

Conclusion

The court held that the merger was proscribed by the Clayton Act and ordered Brown to divest itself of all interests in Kinney.

Who won?

The Government prevailed in this case as the court ruled in favor of its antitrust action against the merger. The court's decision was based on the finding that the merger would substantially lessen competition in the shoe market, which was a primary concern of the Clayton Act. The ruling emphasized the need to maintain competitive markets to protect consumer choice and prevent monopolistic practices.

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