Circuit Court of Appeals, Ninth Circuit.
*96 *97 Sullivan & Sullivan, Theo. J. Roche, and Edward I. Barry, all of San Francisco, Cal., and Frank L. Horton, of Chicago, Ill., for petitioner.
W. H. Fuller, Chief Counsel Federal Trade Commission, and James M. Brinson, Attorney Federal Trade Commission, both of Washington, D. C., for respondent.
Before GILBERT, ROSS, and HUNT, Circuit Judges.
ROSS, Circuit Judge (after stating the facts as above).
The findings of the Commission are clear-cut and, if sustained by the evidence, establish without doubt, in our opinion, that the acquisition and continued control and ownership of the capital stock of the Nevada Packing Company by the petitioner constituted a very clear violation of section 7 of the Act of October 15, 1914, generally known as the Clayton Act, even if it could be properly held that the acts of the petitioner did not violate that of September *98 26, 1914, generally known as the Federal Trade Commission Act, for the Clayton Act was enacted by Congress for the purpose, among other purposes, as expressly declared in its title, to supplement the then existing laws against unlawful restraints and monopolies; section 7 being, so far as pertinent, as follows: "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 commerce in any section or community, or tend to create a monopoly of any line of commerce. * * *"
That language is too plain, we think, to admit of any sort of doubt that three things are thereby expressly condemned and prohibited, namely, the acquiring by any corporation engaged in commerce, 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 was 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.
If the evidence sufficiently sustained the findings of fact made by the Commission, we are also of the opinion that the conclusion of the Commission, that the acts committed by the petitioner also constituted a violation of section 5 of the Federal Trade Commission Act, was also proper. See Standard Oil Co. v. United States, 221 U.S. 1, 31 Sup. Ct. 502, 55 L. Ed. 619, 34 L. R. A. (N. S.) 834, Ann. Cas. 1912D, 734; United States v. American Tobacco Co., 221 U.S. 179, 31 Sup. Ct. 632, 55 L. Ed. 663, and the numerous cases there cited.
It remains to consider the petitioner's contention that the evidence was insufficient to justify or to sustain the findings of fact made by the respondent Commission. Regarding that matter, the case, in our opinion, is equally clear.
It is contended on the part of the petitioner that the packing company (which was a corporation of Nevada, all of the stock of which, except 1,000 shares, was owned by one U. M. Slater, who had control of its property) operated a small meat packing plant at Reno in that state, in connection with which it purchased live stock and sold meat and meat products, conducting its operations almost entirely within the state of Nevada; that at the same time he (Slater) conducted a wholesale meat business at Oakland, Cal., under the name of U. M. Slater, Inc.; that on account of the bad condition of his health he was desirous of selling the Nevada Packing Company property, to which end he, three years before the sale in question was made, approached the petitioner's representative, Mr. Washburn, but without success; that subsequently, Slater being still willing to sell, the matter was again taken up with the petitioner and the purchase in question consummated the petitioner contending that the acquirement of the physical assets of the company and its appurtenances being the sole inducing cause of its purchase.
We think that contention wholly inconsistent with the evidence which, in our opinion, abundantly supports the findings of fact made by the Trade Commission. It is unnecessary to review the evidence in detail, but we will briefly refer to some of it and to a few of the pertinent circumstances.
Not only does the evidence of the witnesses McCullouch, Westfall, Christensen, Moffat, Dorris, Fee, Beccas, Nichols, and Cornmayer show that there was, prior to and at the time of the purchase in question, active and substantial competition between the Nevada Packing Company and the petitioner, Western Meat Company, in the purchase of live stock particularly in the state of Nevada, but in the sale of the products of such stock, and which competition was carried on not only in the state of Nevada but in other states. And that it was substantial, the evidence shows that in the year 1916 the packing company slaughtered 10,777 cattle, 977 calves, 13,425 hogs, and 22,478 sheep, and that its gross sales for the fiscal year 1915-16 amounted to approximately $1,277,954. Indeed, it appears from one of the exhibits introduced in evidence that upon the consummation of the purchase in question the following was published in the Reno Evening Gazette:
"The Western Meat Company, which took over the plant of the Nevada Packing Company the first of the year, is now planning for greater co-operation with the ranchers and consumers of this state. To that end the company is now outlining plans calling for the outlay of a large sum of money to enlarge the plant and improve the equipment.
"`In acquiring the Nevada Packing Company,' said F. L. Washburn, president of the *99 concern, `we hope still further to increase the possibilities of the company which has become one of the big business houses of the state under the management of Mr. Slater.
"`The line susceptible of the greatest development at present is the pork packing end of the business. Nevada ranchers are now producing hogs of good quality, but there is still room for improvement. Many light weight hogs are being shipped in which should remain on the ranch until they have weight enough to make desirable packer hogs. We require an average weight of 175 to 250 pounds and animals of this weight are easily worth a cent more per pound at all seasons of the year than the lighter stock.
"`To increase the hog-raising industry of this state and develop it to the fullest capacity, we must have the continued support of all Nevada consumers, as the success of this industry, as well as that of our own plant, lies in the demand that we can create in the community for hams, bacon, lard and fresh meats.
"`The Nevada Packing Company also has a steadily increasing business in nearby points in California, and it is our aim to still further improve the quality of our products so that no products shipped in from the east will have any preference.
"`Every consumer,' continued Mr. Washburn, `by asking for our products can assist in developing a business that will eventually be of the greatest value to the purchasers of live stock, poultry and foodstuffs in Nevada. As soon as is possible we shall enlarge the present plant so that we may handle all the products that our ranchers in this state can produce.'"
The record shows that at the time of the purchase in question, Louis F. Swift was president of the meat packing firm of Swift & Co., and that he and other stockholders of that company owned approximately 45 per cent. of the stock of the petitioner, Western Meat Company, and that officers of Armour & Co., Morris & Co., and Cudahy Packing Company, all meat packing concerns, owned in the aggregate about 30 per cent. of the stock of the Western Meat Company, and that Louis F. Swift was instrumental in causing the purchase in question, having theretofore obtained assurance of no objection thereto on the part of Armour & Co.
Surely nothing more is needed to show that the true purpose of the purchase by the Western Meat Company of the stock of the Nevada Packing Company was the elimination of the competition of the latter company and the expansion of that business by the Western Meat Company, thereby strengthening its hold, than the letters of Mr. Swift to E. B. Shugert, treasurer of the Western Meat Company, and to F. L. Washburn, president of that company, that are set out in the findings of the Trade Commission.
That the direct result of the transaction was the complete elimination of the theretofore competition existing on the part of the Nevada Packing Company and the strengthening of the hold of the Western Meat Company on the meat packing business of Nevada and adjoining states is, in our opinion, further shown by other evidence not necessary to detail.
The petition is denied.
