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One very important case held that even where the acquiring company secured control of about 70 per cent of the business in the particular industry no violation of the Sherman law resulted. This was the case of the United States v. Quaker Oats Company (232 Fed. 499). The Government alleged that the acquisition by the Quaker Oats Co., which had, roughly speaking, 55 per cent of the rolled-oats business of the United States, 'of certain property of the Western Cereal Co., which had about 15 or 20 per cent of the rolled-oats business, was contrary to the law. A decision adverse to the Government was rendered in April, 1916, and an appeal to the Supreme Court was dismissed upon motion of the Government on May 1, 1920, which was subsequent to the decision of the Supreme Court in the Steel case. There are very marked points of similarity between the business carried on by the Quaker Oats ('o. and the business of the companies here under consideration. As was pointed out in the decision, the supply of raw material from which the rolled oats is manufactured is produced by farmers throughout the country in immense quantities, and this same thing is true of the production of the raw material, namely, the live stock, in the packing industry. It was also pointed out that there was country-wide competition and that anyone with stnall capital could engage in the business; that there were no contruling patents in the industry, and in fact that there was nothing to prevent anyone engaging in the business who wished to do so. This same situation exists in the packing industry.

One very important fact in the Quaker Oats case, which is dis-
similar to the situation in the case we are now considering, is that
Frule by the consolidation proposed in the Quaker Oats case the
acquiring company secured about 20 per cent of the rolled oats
Fisiness of the country, the two companies here under consideration
1270 handled less than 25 per cent of the business. Judge Mack,
D rendering his opinion in the Quaker Oats case, made certain com-
Dents which we think are very pertinent to the matter here under
consideration, as follows:
Every purchase between two people in the same business, one buying out the other,

acessarily a lessening of competition; but as long as the property is such that the Elest opportunity for country-wide competition exists, the field being open to everyair with but small capital, there being no patent rights, there being no other hinare to the freest development of individual enterprise, I fail to see anything undue, Estaing unreasonable, in the restriction of competition that results, although it be Le largest of the several competing firms that buys out the second largest.

We have already described in a general way, the nature of the packing-house business by showing how live stock comes into the Warious market centers, is purchased by the different packers and Obers operating upon those markets, is converted into the finished products, which are distributed to the retail dealers, and in turn by

en to the consumers. It is not our purpose to describe again that process of converting the live animal into the finished products and

ibuting them throughout the country, but we do wish to point
here certain important facts in the packing business which show
It is one which does not easily lend itself to control. In the first

the packer has no control over the production of the live
. Which is the raw material. This is produced by hundreds of
ands of farmers and stock raisers scattered over the entire
. The packer has no control over the demand for the fin-

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TEGER OF ished product. This is determined by the requirements of the population of the country. The demand of the consumer varies depend

na br both ing upon many different facts ond circumstances, such as industrial

2Tas an op conditions, weather conditions, prices, etc. On the other hand, the

attro exel receipts at the various markets vary from day to day. The live stock *ho our producer must ship his live stock to the market when it is ready for

dacob D slaughter. He can not profitably hold it after it has reached maturity, and on the other hand the packer must obtain his supplies when the live stock is available, and it is the practice of the packers to clean I descri up the market every day so that very little, if any, live stock is ever held over on the market from day to day, thus assuring the live stock Slangi producer a ready market for his product, for which he receives cash on the day of delivery. Once the packer has obtained his supplies sicer he must market the same within a short time thereafter, regardless of LITU demand, because the product is highly perishable and can not be kept indefinitely; in fact, fresh beef must be marketed within a few daten days after it is slaughtered.

From these facts, it appears that the packer is in the nature of a Letal An middleman, standing between the producer on the one hand and the Path consumer on the other, and by reason of the nature of the business Intels he can not control the flow of live stock into the market centers or the fi the distribution, so far as time is concerned, of the finished product. 27311 Therefore, the supply of live stock on the one hand and the demand of the consumer on the other control the situation, making it abso- Wi peal lutely impossible for the packer to influence it to any appreciable bibine extent, certainly not to the extent necessary to create a monopoly of ch of the business.

Irrespective of the conditions which we have above outlined, the women extent of the competition in the packing business conclusively shows that no control of the industry will result from this acquisition. There are over 1,000 different concerns engaged in the packing business in the United States, a list of which we have shown in the appendix. They are located in every State in the Union. They buy their live stock on many markets where the companies here: under consideration do not make any purchases. Many of them buy on the same markets where these companies buy their live stock. Az The Fourteenth Census of the United States Manufacturers shows that in 1919 there were, to be exact, 1,304 packing-house establishments in the United States. The relative size of those establishments is shown by value of products, and the greatest increase appears in the con establishments having products worth $1,000,000 or over. In 1909 at the there were 166 of these establishments; in 1914, 206; and in 1919, 310; he showing clearly that this is a business over which there is no control with or monopoly exercised and one in which anyone can engage, the extent la mark of his operations depending entirely upon his own energy and the other dish capital which he is able to invest in the business. There is no fran- Feeds chise required by anyone to engage in this business; there are no de Mara controlling patents necessary for the operation of the business. The cliri field is open to all. The testimony of many small packers taken before weg the committees of Congress at the hearings upon the proposed packer legislation shows conclusively that the smaller packers thrive and all prosper. There was not a word of testimony from any of the smaller packers indicating any dominance or control over the packing business by any company or any group of companies. All of the testimony i

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in these hearings by both the small and the large packers was to the effect that this was an open competitive business in which there was no dominant control exercised by anyone.

In this connection our attention has just been called to an advertisement of the Jacob Dold Packing Co., appearing in the Chicago Daily Tribune, Monday, October 23, 1922, advertising an issue by that company of $5,000,000 worth of 20-year 6 per cent sinking-fund gold bonds, and in describing the company's business it is stated as

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The Jacob Dold Packing Co. conducts a business of meat packing in all of its various features and the manufacture of its by-products into many commodities. The company was established over 50 years ago and from a small beginning has steadily increased to its present output of approximately 1,250,000 head of live stock. Total fales of the company have increased from 197,000,000 pounds representing $21,000,000 in 1912, to 311,000,000 pounds, representing $50,000,000 in 1921. The business for the current fiscal year, based on actual results for nine months is at the rate of 325,400,000 pounds per annum. The export business of the company to Great Britain, the Continent, and Central America is substantial.

Here is a business which was started over 50 years ago and now handles approximately 1,250,000 head of live stock a year. The business has increased from 197,000,000 pounds, representing $21,000,000 in 1912, to 311,000,000 pounds, representing $50,000,000 in 1921.

The Jacob Dold Packing Co. is one of the so-called small packers and yet it does a business of $50,000,000 a year.

For the purpose of showing that live stock is slaughtered in large quantities at many points where Armour & Co. does not operate, | we have placed in the appendix a list of 53 points showing the daughter of hogs, sheep, and cattle. At only 13 of them does Armour & Co. conduct slaughtering establishments, while Morris & Co. daughters at a smaller number, and these 53 do not constitute all of the points in the United States where live stock is slaughtered. We have also shown in the appendix a list of 134 different points There hogs are slaughtered in the United States. At those points about 38,000,000 hogs were slaughtered in the year 1921 with a total slaughter in the United States everywhere of 62,000,000, uwing that there are many more places where the slaughter of hips is carried on.

In considering the competition on different markets, it is well to keep in mind that the competition in the purchase of live stock is countrywide and not confined to specific markets, as the various markets compete with each other, the producer not being compelled oship to any one market, but selects the market at which he thinks he will secure the highest price. Chicago is the largest live-stock market in the United States, and the competition for the purchase of are stock on that market is exceedingly keen. We have inserted a lable in the appendix showing a number of concerns purchasing live ock on the Chicago market and their percentage of purchases. In ution to those shown on the statement there are traders, specus, shippers, and butchers purchasing live stock on this market.

total hogs purchased on the Chicago market for the year 1920 our & Co. purchased 16.14 per cent and Morris & Co. 7.39 per or a total of 23.53 per cent. In 1921 Armour & Co. purchased per cent and Morris & Co. 7.69 per cent, or a total of 23.04 per Of the total cattle sold on the Chicago market for the year

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1920, Armour & Co. purchased 13.10 per cent and Morris & Co. 10.43

w mpanies per cent, or a total of 23.53 per cent, and during the year 1921 Armour til their & Co. purchased 12.55 per cent and Morris & Co. 9.38 per cent, or a total of 21.93 per cent. Thus it appears that when you consider not et compan only the total business of the country, but also specific market centers, that there will be no such control as will permit of a dominant control of the industry, either in the country as a whole or at the specific strat am market centers. A similar situation is shown from the statement in end of th the appendix to exist at other points where both Armour & Co. and at beca Morris & Co. have plants and purchase live stock.

There appear in the appendix (pp. 50–153) statements, referred to the handled as “competitive sheets,” showing the branch houses of Armour & Co. Ereduce th and Morris & Co., together with others operating in the cities where

es to all both companies have locations, and it will appear from these state

of the fa ments that at no place throughout the country where both companies sucking by have branch distributing agencies will the acquisition result in a state the control of the distributing facilities.

In fact, the statements, on the contrary, will show that there is a shofrant great deal of competition at every such point with local packers, the interesin tre branch houses of other packers, local butchers who slaughter locally, brokers and salesmen of concerns located in other cities, who solicit omir business in the particular towns. They will also show that such towns are reached in many cases by the car routes of other packers.

The showing made by these statements is incontrovertible and conclusive upon the fact that this proposed acquisition will not unreasonably restrain trade in the distribution of fresh meat and instein packing-house products anywhere throughout the country. We suggest that this data be examined particularly and in detail, as we feel confident that it will support our statement in this respect and in that anyone examining it will be very much impressed with the very great amount of competition in this business which exists throughout the country,

We have shown in our statement of facts that the control which Armour & Co. will exercise over other products handled by these two companies is so small as to be unimportant in the consideration of this subject. Most of such products, with the exception of butter, eggs, cheese, dressed poultry, and fertilizer, are by-products of the packing industry. So far as butter, eggs, cheese, and dressed poultry are concerned, Armour & Co, handles only 3.93 per cent of the total production of the country and Morris & Co. handles considerably less, and so far as fertilizer is concerned, Morris & Co. handles less than 1 per cent of the production.

Attention is called in the statement of facts to the small profits both per dollar of investment and per animal slaughtered, and also to the very heavy losses suffered by the packing companies during the year 1921, and it is proper to say in this connection that this is a further illustration of the entire lack of control over production or prices in this industry.

This brings us to a consideration of the situation which has led to this proposed acquisition. During the war period, the Government stimulated very greatly the production of live stock in this country, and also urged, in fact demanded, that the packers enlarge their plants and increase their facilities in order to handle the increased production which was to be used to supply the armies in Europe. Lino

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As a result, these companies built new plants, enlarged their existing plants, and increased their facilities generally, with the result that when the war ended the demand fell off, the supply of live stock decreased, and these companies found themselves in the position of having investments in plants and facilities which were unnecessary for their normal business, and which resulted in an immense overhead expense, as a great amount of additional capital was required in the expansion period of the war. These facilities can not now be operated economically because they must of necessity be now operated to much less than their capacity. In order to increase the volume of business handled through certain of these plants and facilities and thus reduce the present immense overhead expense, Armour & Co. proposes to acquire the business of Morris & Co.

From this review of the facts relating to the business of the two companies and the packing business generally, the only conclusion that can be reached is that the proposed acquisition will not result in a violation of the Sherman law, because on account of the nature of the business and the lack of control it will not have power to monopolize the business or restrain trade by controlling prices or production in this industry.

There is another very important matter which should be taken into consideration in passing upon this question, and one which has never been present before in any case where the question of the violation of the Sherman antitrust law by combination of industrial companies has been discussed.

The point we have in mind is that the entire packing industry, from the time the live stock arrives at the market centers until the finished products are disposed of to the retail dealers, is under the supervision of the Secretary of Agriculture under the packers and stockyards act, 121. The Secretary of Agriculture has power to investigate the manner in which the business is conducted, examine books, subpæna Fitnesses, and require them to testify under oath. He can inquire into he way live stock is bought, handled, killed, and the meat marketed. Be can inquire into the charges by commission merchants and stockFards and determine whether these charges are fair and just. He can Bipline firms and individuals who do not conform to fair rules and regulations. He can refuse to permit unfair charges. He can stop L'air methods of doing business. Under paragraph E of section 112 of the act it is made unlawful for any packer to engage in any Course of business or do any act for the purpose or with the effect of manipulating or controlling prices in commerce or of creating a monopoly in the acquisition of, buying, selling, or dealing in any fucle in commerce or of restraining commerce. Power is given to de Secretary of Agriculture by section 203 of the act, whenever he nas reason to believe that any packer has violated any of the pro

asions of the act, including the one above cited, to investigate the Watter and enter a cease and desist order if he finds that a violation * the act has been committed. It thus appears that after this

qusition is effected, the company will be under the direct superBlon of the Federal Government through the Secretary of Agri

ure, and it is his duty to see that there is no undue restraint of e or monopoly effected in the packing industry. This is an absossurance that no monopoly or restraint of trade will result from

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