more state banks and one or more national banks domiciled in this State may, with the approval of the Commissioner and the written consent of the owners of record of two-thirds of the capital of each of said banks, be merged. . . .' Standards

Article 342-308 reads in part:

"The Banking Commissioner shall thereupon investigate the condition of the merging banks and if he finds that the state bank which will result from the merger (hereafter called the 'resulting bank') will be solvent and its capital unimpaired; that it will have adequate capital structure; that such merger is to the best interest of the depositors, creditors and stockholders of the merging banks and of the public in general; that the distribution of the stock of the resulting bank is to be upon an equitable basis; and that the resulting bank has in all respects complied with the laws of this State relative to the incorporation of State banks, he may approve such merger, . . ."

Delegation

UTAH

(1 Utah Code Annotated, 1953, Title 7, Ch. 6)

Section 7-6-4A. and B. read:

"After approval by the board of directors of each constituent bank, the merger agreement shall be submitted to the state bank commissioner for approval, together with certified copies of the authorizing resolutions of the several boards of directors showing approval by a majority of the entire board and evidence of proper action by the board of directors of any constituent national bank.

"Without approval by the state bank commissioner no asset shall be carried on the books of the resulting bank at a valuation higher than that on the books of the constituent bank at the time of the last examination by a state or national bank examiner before the effective date of the merger."

Standards

Section 7-6-4C. reads:

"Within thirty days after receipt by the state bank commissioner of the papers specified in subsection A, the state bank commissioner shall approve or disapprove the merger agreement. The state bank commissioner shall approve the agreement if it appears that—

"(1) the resulting state bank meets all the requirements of state law as to the formation of a new state bank.

"(2) the agreement provides an adequate capital structure including surplus in relation to the deposit liabilities of the resulting state bank and its other activities which are to continue or are to be undertaken.

"(3) the agreement is fair.

66

(4) the merger is not contrary to the public interest. If the state bank commissioner disapproves an agreement, he shall state his objections and give an opportunity to the constituent banks to amend the merger agreement to obviate such objections."

Sections 1 and 2 of the Sherman Antitrust Act and section 7 of the Clayton Act were ordered inserted in the record, see page 124.

SECTIONS 1 AND 2 OF SHERMAN ANTITRUST ACT OF 1890

(15 U.S. Code, 1952 Ed. Supp. V, secs. 1 and 2)

Sec. 1. Trusts, etc., in restraint of trade illegal; exception of resale price agreements; penalty.

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal: Provided, That nothing contained in sections 1-7 of this title shall render illegal, contracts or agreements prescribing minimum prices for the resale of a commodity which bears, or the label or container of which bears, the trademark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general class produced or distributed by others, when contracts

..

or agreements of that description are lawful as applied to intrastate transactions, under any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia in which such resale is to be made, or to which the commodity is to be transported for such resale, and the making of such contracts or agreements shall not be an unfair method of competition under section 45 of this title: Provided further, That the preceding proviso shall not make lawful any contract or agreement, providing for the establishment or maintenance of minimum resale prices on any commodity herein involved, between manufacturers, or between producers, or between wholesalers, or between brokers, or between factors, or between retailers, or between persons, firms, or corporations in competition with each other. Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1-7 of this title to be illegal shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding fifty thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. (As amended July 7, 1955, ch. 281, 69 Stat. 282.) Sec. 2. Monopolizing trade a misdemeanor; penalty.

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding fifty thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. (As amended July 7, 1955, ch. 281, 69 Stat. 282.)

SECTION 7 OF THE CLAYTON ACT

(15 U.S. Code, 1952 Ed. sec. 18)

Sec. 18. Acquisition by one corporation of stock of another.

No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of one or more corporations engaged in commerce, where in any line of commerce in any section of the country, the effect of such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of proxies or otherwise, may be substantially to lessen competition, or to tend to create a monopoly.

This section shall not apply to corporations purchasing such stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful business, or the natural and legitimate branches or extensions thereof, or from owning and holding all or a part of the stock of such subsidiary corporations, when the effect of such formation is not to substantially lessen competition.

Nor shall anything herein contained be construed to prohibit any common carrier subject to the laws to regulate commerce from aiding in the construction of branches or short lines so located as to become feeders to the main line of the company so aiding in such construction or from acquiring or owning all or any part of the stock of such branch lines, nor to prevent any such common carrier from acquiring and owning all or any part of the stock of a branch or short line constructed by an independent company where there is no substantial competition between the company owning the branch line so constructed and the company owning the main line acquiring the property or an interest therein, nor to prevent such common carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any other common carrier where there is no substantial competition between the company extending its lines and the company whose stock, property, or an interest therein is so acquired.

Nothing contained in this section shall be held to affect or impair any right heretofore legally acquired: Provided, That nothing in this section shall be held or construed to authorize or make lawful anything heretofore prohibited or made illegal by the antitrust laws, nor to exempt any person from the penal provisions thereof or the civil remedies therein provided.

Nothing contained in this section shall apply to transactions duly consummated pursuant to authority given by the Civil Aeronautics Board, Federal Communications Commission, Federal Power Commission, Interstate Commerce Commission, the Securities and Exchange Commission in the exercise of its jurisdiction under section 79 of this title, the United States Maritime Commission, or the Secretary of Agriculture under any statutory provision vesting such power in such Commission, Secretary, or Board. (Oct. 15, 1914, ch. 323, sec. 7, 38 Stat. 731; Dec. 29, 1950, 12:50 a.m., ch. 1184, 64 Stat. 1125.)

The following opinions were ordered inserted in the record. Reference will be found on page 124.

INTERNATIONAL SHOE COMPANY V. FEDERAL TRADE COMMISSION (280 U.S. 291)

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIRST CIRCUIT

No. 42. Argued December 2, 3, 1929. Decided January 6, 1930.

Section 7 of the Clayton Act forbids one corporation to acquire stock of another corporation (both being engaged in interstate commerce), where the effect of such acquisition may be to substantially lessen competition between them or to restrain such commerce in any section or community, and declares that it shall not apply to corporations purchasing such stock solely for investment and not using the same to bring about the substantial lessening of competition. Held:

(1) In a suit to enforce an order of the Federal Trade Commission requiring one corporation to divest itself of the stock of another alleged to have been acquired by the former in violation of this section, findings of the Commission that substantial competition existed between the two corporations at the time of such acquisition and that the effect of such acquisition was substantially to lessen such competition and to restrain interstate commerce, cannot be accepted if not supported by the evidence. P. 297. [292] (2) The section forbids only such stock acquisitions as probably will result in lessening competition to a substantial degree, i.e., to such a degree as will injuriously affect the public, and is inapplicable where there was no preexisting substantial competition to be affected. P. 297. (3) In the present case, it is plain that the products of the two shoe-manufacturing companies in question, because of the difference in appearance and workmanship, appealed to the tastes of entirely different classes of consumers; that while a portion of the product of each company went into the same States, in the main the product of each was in fact sold to a different class of dealers and found its way into distinctly separate markets, so that, in respect of 95 percent of the business, there was no competition in fact and no contest, or observed tendency to contest, in the market for the same purchasers; and when this is eliminated, what remains is of such slight consequence as to deprive the finding that there was any substantial competition between the two corporations of any real support in the evidence. Pp. 296, 298.

(4) The existence of competition is a fact to be disclosed by observation rather than by the processes of logic; and the testimony of the officers of the corporation proceeded against that there was no real competition between it and the other in respect of the products in question, is to be weighed like other testimony to matters of fact, and, in the absence of contrary testimony or reason for doubting the accuracy of observation or the credibility of the witnesses, should be accepted. P. 299.

(5) In the case of a corporation with resources so depleted, and the prospect of rehabilitation so remote, that it faces the grave probability of a business failure with resulting loss to its stockholders and injury to the communities where its plants are operated, the purchase of its capital stock by a competitor (there being no other propective purchaser), not with a purpose to lessen competition, but to facilitate the accumulated business of the purchaser and with the effect of mitigating seriously injurious con

sequences otherwise probable, is not in contemplation of law prejudicial to the public and does not substantially lessen competition or restrain commerce within the intent of the Clayton Act. P. 301.

29 F. (2d) 518, reversed.

CERTIORARI, 279 U.S. 832, to review a judgment of the Circuit Court of Appeals reaffirming on appeal an order of the Federal Trade Commission.

[293] Mr. Charles Nagel, with whom Messrs. Frank Y. Gladney, R. E. Blake, and J. D. Williamson were on the brief, for petitioner.

Assistant to the Attorney General O'Brian, with whom Solicitor General Hughes and Messrs. Charles H. Weston, Special Assistant to the Attorney General, Robert E. Healy, Chief Counsel, Federal Trade Commission, and Baldwin B. Bane, Special Attorney, were on the brief, for respondent.

Mr. JUSTICE SUTHERLAND delivered the opinion of the Court.

This was a proceeding instituted by complaint of the Federal Trade Commission against petitioner charging a violation of § 7 of the Clayton Act, c. 323, 38 Stat. 730, 731 (U.S.C., Title 15, § 18), which provides:

"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.

*

"This section shall not apply to corporations purchasing such stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition."

The complaint charges that in May 1921, while petitioner and the W. H. McElwain Company were engaged in commerce in competition with each other, petitioner acquired all, or substantially all, of the capital stock of the McElwain Company and still owns and controls the [294] same; that the effect of such acquisition was to substantially lessen competition between the two companies; to restrain commerce in the shoe business in the localities where both were engaged in business in interstate commerce; and to tend to create a monopoly in interstate commerce in such business. The last named charge has not been pressed and may be put aside. Upon a hearing before the commission evidence was introduced from which the commission found, (a) that the capital stock of the McElwain Company had been acquired by the petitioner at the time charged in the complaint, (b) that the two companies were at the time in substantial competition with one another, and (c) that the effect of the acquisition was to substantially lessen competition between them and to restrain commerce. Thereupon the commision put down an order directing petitioner to divest itself of all capital stock of the McElwain Company then held or owned, directly or indirectly, by petitioner, and to cease and desist from the ownership, operation, management and control of all assets acquired from the McElwain Company subsequent to the acquisition of the capital stock, etc., and to divest itself of all such assets, etc. Upon appeal by petitioner to the court below the order of the commission was affirmed. 29 Fed. (2d) 518.

The principal grounds upon which the order here is assailed are (1) that there never was substantial competition between the two corporations, and, therefore, no foundation for the charge of substantial lessening of competition; (2) that at the time of the acquisition the financial condition of the McElwain Company was such as to necessitate liquidation or sale, and, therefore, the prospect for future competition or restraint was entirely eliminated. Since, in our opinion, these grounds are determinative, we find it unnecessary to consider the challenge to the sufficiency of the complaint and other contentions.

[295] First. Prior to the acquisition of the capital stock in question the International Shoe Company was engaged in manufacturing leather shoes of various kinds. It had a large number of tanneries and factories and sales houses located in several states. Its business was extensive, and its products were shipped and sold to purchasers practically throughout the United States. The McElwain Company, a Massachusetts corporation with its principal office in Boston, also manufactured shoes and sold and distributed them in several states of the Union. Principally, it made and sold dress shoes for men and boys. The International made and sold a line of men's dress shoes of various styles, which, although comparable in price, and to some degree in quality, with the men's dress shoes produced by the McElwain Company, differed from them in

important particulars. Such competition as there was between the two companies related alone to men's dress shoes.

The findings of the commission that this competition between the two companies was substantial and, by the acquisition of the stock of the McElwain Company, had been substantially lessened, the Court of Appeals affirmed, holding that they were fully supported by the evidence. Upon a careful review of the record we think the evidence requires a contrary conclusion.

It is true that both companies were engaged in selling dress shoes to customers for resale within the limits of several of the same states; but the markets reached by the two companies within these states, with slight exceptions hereafter mentioned, were not the same. Certain substitutes for leather were used to some extent in the making of the McElwain dress shoes; and they were better finished, more attractive and modern in appearance, and appealed especially to city trade. The dress shoes of the International were made wholly of leather and were of a better wearing quality; but among the [296] retailers who catered to city or fashionable wear, the McElwain shoes were preferred. The trade policies of the two companies so differed that the McElwain Company generally secured the trade of wholesalers and large retailers; while the International obtained the trade of dealers in the small communities. When requested, the McElwain Company stamped the name of the customer (that is the dealer) upon the shoes, which the International refused to do; and this operated to aid the former company to get, as generally it did get, the trade of the retailers in the larger cities. As an important result of the foregoing circumstances, witnesses estimated that about 95 percent. of the McElwain sales were in towns and cities having a population of 10,000 or over; while about 95 percent. of the sales of the International were in towns having a population of 6,000 or less. The bulk of the trade of each company was in different sections of the country, that of the McElwain Company being north of the Ohio River and east of the State of Illinois, while that of the International was in the south and west. An analysis of the sales of the International for the twelve months preceding the acquisition of the McElwain capital stock, discloses that in 42 states no men's dress shoes were sold to customers of the McElwain Company; and that in the remaining six states during the same period a total of only 52-5/12 dozen pairs of such shoes had been sold to sixteen retailers and three wholesalers who were also customers of the McElwain Company. This amounted to less than one-fourth of the production of dress shoes by the International for a single day, the daily production being about 250 dozen pairs.

It is plain from the foregoing that the product of the two companies here in question, because of the difference in appearance and workmanship, appealed to the tastes of entirely different classes of consumers; that while a [297] portion of the product of both companies went into the same states, in the main the product of each was in fact sold to a different class of dealers and found its way into distinctly separate markets. Thus it appears that in respect of 95 percent. of the business there was no competition in fact and no contest, or observed tendency to contest, in the market for the same purchasers; and it is manifest that, when this is eliminated, what remains is of such slight conse quence as to deprive the finding that there was substantial competition between the two corporations, of any real support in the evidence. The rule to be followed is stated in Federal Trade Comm'n v. Curtis Co., 260 U.S. 568, 580:

"Manifestly, the court must inquire whether the Commission's findings of fact are supported by evidence. If so supported, they are conclusive. But as the statute grants jurisdiction to make and enter, upon the pleadings, testimony and proceedings, a decree affirming, modifying or setting aside an order, the court must also have power to examine the whole record and ascertain for itself the issues presented and whether there are material facts not reported by the Commission. If there be substantial evidence relating to such facts from which different conclusions reasonably may be drawn, the matter may be and ordinarily, we think, should be remanded to the Commission-the primary factfinding body-with direction to make additional findings, but if from all the circumstances it clearly appears that in the interest of justice the controversy should be decided without further delay the court has full power under the statute so to do. The language of the statute is broad and confers power of review not found in the Interstate Commerce Act."

Section 7 of the Clayton Act, as its terms and the nature of the remedy prescribed plainly suggest, was intended for the protection of the public against the evils [298] which were supposed to flow from the undue lessening of competition. In Standard Oil Co. v. Federal Trade Commission, 282 Fed. 81, 87, the