William J. Brennan, Jr.

“ Thus, in this case, the adverse tax and market consequences which the District Court found would be concomitants of complete divestiture cannot save the remedy of partial divestiture through the 'pass through' of voting rights if, though less harsh, partial divestiture is not an effective remedy. We do not think that the 'pass through' is an effective remedy and believe that the Government is entitled to a decree directing complete divestiture. ”

“ The proper disposition of antitrust cases is obviously of great public importance, and their remedial phase, more often than not, is crucial. For the suit has been a futile exercise if the Government proves a violation but fails to secure a remedy adequate to redress it. 'A public interest served by such civil suits is that they effectively pry open to competition a market that has been closed by defendants' illegal restraints. If this decree accomplishes less than that, the Government has won a lawsuit and lost a cause.' International Salt Co. ”

“ The burden is not on the Government to show de novo that a 'pass through' of the General Motors vote, like du Pont's ownership of General Motors stock, would violate § 7. United States v. Aluminum Co. of America, D.C.S.D.N.Y.1950, 91 F.Supp. 333, 346. It need only appear that the decree entered leaves a substantial likelihood that the tendency towards monopoly of the acquisition condemned by § 7 has not been satisfactorily eliminated. We are not required to assume, contrary to all human experience, that du Pont's shareholders will not vote in their own self-interest. ”

“ If the Court concludes that other measures will not be effective to redress a violation, and that complete divestiture is a necessary element of effective relief, the Government cannot be denied the latter remedy because economic hardship, however severe, may result. Economic hardship can influence choice only as among two or more effective remedies. If the remedy chosen is not effective, it will not be saved because an effective remedy would entail harsh consequences. ”

“ The measure, for federal income tax purposes, of the dividend to individual stockholders would be the fair market value of the shares at the time of each annual distribution. In the case of taxpaying corporate stockholders, the measure would be the lesser of the fair market value of the shares or du Pont's tax basis for them, which is approximately $2.09 per share. The forced sale of the General Motors stock owned by or allocable to Christiana, Delaware, and the stockholders of Delaware, and deposited with the trustee, would result in a tax to those parties at the capital gains rate. ”

“ Christiana and Delaware would, in turn, be required to pass on the voting rights to the General Motors shares allocable to them to their own stockholders. Du Pont would be enjoined from having as a director, officer, or employee anyone who was simultaneously an officer or employee of General Motors, and no director, officer, or employee of du Pont could serve as a director of General Motors without court approval. Du Pont would be denied the right to acquire any additional General Motors stock except through General Motors' distributions of stock or subscription rights to its stockholders. ”

“ The Court notes in this connection that Section 7 of the Clayton Act expressly excludes from its operation 'corporations purchasing such stock solely for investment and not using the same by voting or otherwise' to bring about anti-competitive effects. There would thus appear to be a recognition on the part of Congress that the holding of stock does not in all instances carry with it the power to bring about consequences offensive to the statute. The Court recognizes that the Supreme Court has held that in the past du Pont has not held its stock in General Motors solely for investment. ”

“ If the suggestion is permanent loss of the vote, it would create a large and permanent separation of corporate ownership from control, which would not only run directly counter to accepted principles of corporate democracy, but also reduce substantially the number of voting General Motors shares, thereby making it easier for the owner of a block of shares far below an absolute majority to obtain working control, perhaps creating new antitrust problems for both General Motors and the Department of Justice in the future. ”

“ We think the public is entitled to the surer, cleaner remedy of divestiture. The same result would follow even if we were in doubt. For it is well settled that once the Government has successfully borne the considerable burden of establishing a violation of law, all doubts as to the remedy are to be resolved in its favor. ”

“ When a district judge has failed to accord parties an adequate hearing or has been otherwise wanting in the administration of fair procedure, there is the best of reasons for this Court to secure for them the full measure of judicial consideration which they are owed but failed to receive. ”

“ In any event it requires prophetic confidence to conclude that that decree is so obviously inadequate as to require reversal before it can be tried in practice. Neither the record when the case was first here nor the facts adduced at the hearing on molding the decree give warrant for this Court to set aside the trial court's finding on the improbability of future restraint of trade in view of the safeguarding terms of the decree. ”

“ The Fisher Body division, long controlled by the Fisher brothers under a voting trust even though General Motors owned a majority of its stock, followed an independent course for many years, but by 1947 and 1948 'resistance had collapsed' and its purchases from du Pont 'compared favorably' with purchases by other General Motors divisions. Competitors came to receive higher percentages of General Motors business in later years, but it is 'likely' that this trend stemmed 'at least in part' from the needs of General Motors outstripping du Pont's capacity. ”

“ If, indeed, equity's characteristic flexibility is deeply rooted in history, the administration of justice makes greater demands upon it now than ever before. As business transactions become increasingly complex, they multiply and complicate the issues presented to courts even in litigation of ordinary dimensions. ”

“ Du Pont replies, inter alia, that it would be willing for all of its General Motors stock to be disenfranchised, if that would satisfy the requirement for effective relief. This suggestion, not presented to the District Court, is distinctly an afterthought. If the suggestion is disenfranchisement only while du Pont retains the stock, it would not avoid the hazards inherent in du Pont's power to transfer the vote. ”

“ It serves several functions: (1) It puts an end to the combination or conspiracy when that is itself the violation. (2) It deprives the antitrust defendants of the benefits of their conspiracy. (3) It is designed to break up or render impotent the monopoly power which violates the Act * * *.' [30]
This tripartite formulation summarizes the considerations that have guided this Court's rulings on divestiture. In Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. ”

“ The effect of the acquisition which the Supreme Court found to be offensive to the statute was the 'reasonable probability' that the acquisition might result in restraint or monopolization of the market for automotive fabrics and finishes. ”

“ Bowles, 321 U.S. 321, 329-330, 64 S.Ct. 587, 591, 88 L.Ed. 754, express the principles that must guide the chancellor:
'We are dealing here with the requirements of equity practice with a background of several hundred years of history * * * The essence of equity jurisdiction has been the power of the Chancellor to do equity and to mould each decree to the necessities of the particular case. Flexibility rather than rigidity has distinguished it. ”

“ The du Pont shareholders will ipso facto also be General Motors voters. It will be in their interest to vote in such a way as to induce General Motors to favor du Pont, the very result which we found illegal on the first appeal. It may be true, as appellees insist, that these shareholders will not exercise as much influence on General Motors as did du Pont when it held and voted the shares as a block. ”

“ Appellees suggest that the Government is thus estopped from urging other modes of divestiture on this appeal. But plainly, under the rule of Continental Insurance, no stipulation by the Government could circumscribe this Court's power to see that its mandate is carried out.↑ Bills were introduced in the Eighty-sixth Congress to ameliorate the income-tax consequences of gain on disposition of stock pursuant to orders enforcing the antitrust laws. ”

“ Such argumentative power does not preclude restraints, by injunctive relief, that render it 'impotent,' to use the language of the Schine case. Nor is there in the record before us any basis in fact for the fears that have evoked the application of this principle in previous divestiture cases. There is no finding in this case, as there were in Crescent and Schine, of a deliberate conspiracy aimed at the destruction of competition. We cannot point in this case, as we have on occasion in the past, to any blatantly anticompetitive scheme. See, e.g., United States v. ”

“ It rested its decision solely on § 7, which reads in pertinent part:
' (N) o 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. ”

“ No harsh and oppressive consequences should be visited upon the stockholders unless it can be shown on the facts that these results are inescapable if a decree is to be framed that will comply with the mandate of the Supreme Court. The cases leave no doubt that these are considerations which the Court should weigh in the framing of its final judgment. United States v. ”

“ But courts are authorized, indeed required, to decree relief effective to redress the violations, whatever the adverse effect of such a decree on private interests. Divestiture is itself an equitable remedy designed to protect the public interest. In United States v. ”

“ United States v. Imperial Chemical Indus., Ltd., D.C.S.D.N.Y.1951, 100 F.Supp. 504, decree entered D.C.S.D.N.Y.1952, 105 F.Supp. 215.↑ Appellees rely on several Clayton Act consent decrees granting relief short of divestiture, but the circumstances surrounding such negotiated agreements are so different that they cannot be persuasively cited in a litigation context.↑ See, e.g., Maryland & Virginia Milk Producers Ass'n v. United States, 1960, 362 U.S. 458, 80 S.Ct. 847, 4 L.Ed.2d 880; Aluminum Co. of America v. ”

“ See 152 F.Supp. at pages 400-401 and note 16.↑ See Hale and Hale, op cit., supra, note 11, at 370.↑ For the significance of such long habit, see North American Co. v. Securities & Exchange Comm., 1946, 327 U.S. 686, 693, 66 S.Ct. 785, 790, 90 L.Ed. 945; Unt ed States v. Imperial Chemical Indus., Ltd., D.C.S.D.N.Y.1952, 105 F.Supp. ”