Brown Shoe Co. v. United States

370 U.S. 294 (1962)

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Nature of the Case

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Facts

Brown (D) was the third-largest shoe seller in the U.S. Kinney (D) was the eight-largest. Kinney and Brown thought a merger was a grand idea. Both manufactured and sold shoes and operated or controlled their own retail outlets. The United States (P) filed a civil action alleging that the contemplated merger would violate §7 of the Clayton Act. P sought injunctive relief to restrain consummation of the merger. P contended that the effect of the merger may be substantially to lessen competition or to tend to create a monopoly by eliminating actual or potential competition in the production of shoes for the national wholesale shoe market and in the sale of shoes at retail in the Nation, by foreclosing competition. Brown (D) contended that the merger would be shown not to endanger competition if the 'lines of commerce' and the 'sections of the country' were properly determined. D urged that not only were the age and sex of the intended customers to be considered in determining the relevant line of commerce, but that differences in grade of material, quality of workmanship, price, and customer use of shoes resulted in establishing different lines of commerce. D agreed with P that, with regard to manufacturing, the relevant geographic market for assessing the effect of the merger upon competition is the country as a whole. D contended that with regard to retailing, the market must vary with economic reality from the central business district of a large city to a 'standard metropolitan area' for a smaller community. Ds contended that, both at the manufacturing level and at the retail level, the shoe industry enjoyed healthy competition and that the vigor of this competition would not, in any event, be diminished by the proposed merger because Kinney (D) manufactured less than 0.5% and retailed less than 2% of the Nation's shoes. The District Court found that 'there is one group of classifications which is understood and recognized by the entire industry and the public -- the classification into 'men's,' 'women's' and 'children's' shoes separately and independently.' On the other hand, 'to classify shoes as a whole could be unfair and unjust; to classify them further would be impractical, unwarranted and unrealistic.' The District Court found that 'when determined by economic reality, for retailing, a 'section of the country' is a city of 10,000 or more population and its immediate and contiguous surrounding area, regardless of name designation, and in which a store operated. The District Court rejected P's contention that the combined manufacturing facilities of both would substantially lessen competition. It found that the likely foreclosure of other manufacturers from the market represented by Kinney's (D) retail outlets may substantially lessen competition. The District Court also found that the merger may substantially lessen competition in retailing alone in 'men's,' 'women's,' and 'children's' shoes. Ds appealed.