United States v. American Can Co.

230 F. 859 (D. Md. 1916)

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Nature of the Case

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Facts

In the fall of 1899, there were somewhere from 100 to 175 can makers who sold some or all of the cans they made. Among the big producers, there were gentlemen’s agreements from time to time to fix prices in markets. Even so, actual competition in large parts of the country was always operative, and in all sections and at all times there were the potential possibilities of a competition which in a few hours might become real and intense. Five men decided to form D. Norton, a can maker, did practically all the work of persuading, inducing, or coercing the can makers to sell out. He and his brothers had been for a number of years the largest and doubtless the most generally known manufacturers of cans in the country. Moore and his partner and brother were associated, Reid and Leeds. They formed D and then ran around the country making offers to other manufacturers to sell out to D. The modus operandi was to offer sums well above the value of the acquired assets. D also had a tin-plate provider in its pocket and many who sold feared that a refusal to sell meant being forced out of the business because of the inability to acquire tin-plate. D also cut off competitors from the best machines to make cans. Ds paid in cash and options in D. All the purchase options contained covenants not to compete. D began to shut up plants so soon as it got possession of them. It kept on shutting them up until by April 21, 1903, it was operating only 36 can factories, and 3 machine shops, and it then proposed to close 5 more of the former and 1 or 2 of the latter. Ds were so successful that sometimes they were referred to as the hundred percent, trust. D then raised prices on tin cans. Prices were put up to a point which made it apparently profitable for outsiders to start making cans with any antiquated or crude machinery they could find in old lumber rooms or which they could have made for them in a hurry, or even to resume can making by hand. D denies that in its formation or early conduct there was any purpose to restrain competition or to secure a monopoly. P sued D seeking its dissolution.