## Facts

- Brown Shoe Company was a major shoe manufacturer and the third-largest shoe seller in the United States, operating or controlling more than 1,230 retail outlets.
- G.R. Kinney Company was a substantial shoe retailer with more than 350 outlets and some manufacturing operations.
- The United States sued in 1955 to enjoin Brown’s acquisition of Kinney under § 7 of the Clayton Act, alleging the merger’s effect “may be substantially to lessen competition, or to tend to create a monopoly.”
- The district court denied a preliminary injunction; the companies merged in 1956 under conditions requiring separate operation and separately identifiable assets pending final judgment.
- After trial, the district court found the merger would increase concentration in shoe manufacturing and retailing, eliminate a substantial retail competitor, and disadvantage smaller firms through manufacturer-retailer integration.
- The district court enjoined Brown from further interest in Kinney, ordered full divestiture, and required submission of a divestiture plan.

## Issues

1. Whether the district court decree ordering divestiture but requiring a later divestiture plan was a “final judgment” permitting direct appeal under the Expediting Act.
2. Whether the Brown–Kinney merger violated § 7 of the Clayton Act because its probable effect may be substantially to lessen competition or tend to create a monopoly in any line of commerce in any section of the country.

## Decision

- The Supreme Court held the decree was final for Expediting Act purposes because liability and remedy (divestiture) were decided; only implementation details remained.
- The Court affirmed the judgment that the merger violated Clayton Act § 7.
- The Court accepted relevant product markets that included men’s, women’s, and children’s shoes, with attention to differences in price and retail channels.
- The Court accepted geographic market analysis that considered both national wholesale competition and local retail competition.
- The Court upheld findings that the merger increased concentration, removed Kinney as an independent retail competitor, and threatened competitive conditions through vertical integration and foreclosure risks.
- The divestiture remedy was affirmed.

## Legal Principles

- Clayton Act § 7 addresses probable future competitive effects and is designed to stop anticompetitive tendencies in their early stages, not only completed monopolization.
- No single quantitative market-share threshold controls; § 7 requires a fact-specific assessment using multiple economic factors, including concentration, industry structure, and consolidation trends.
- Relevant product markets (“line of commerce”) may be defined by practical indicia and competitive realities, including distinctions by product category, price, and distribution channel.
- Relevant geographic markets (“section of the country”) are flexible and may be local or national depending on where effective competition occurs.
- Vertical or mixed vertical-horizontal effects may support § 7 liability where integration forecloses rivals’ access to outlets or materially disadvantages nonintegrated competitors.
- A decree ordering divestiture is final for appeal purposes when it conclusively determines rights and liabilities, even if a later plan must be submitted to carry out the remedy.

## Conclusion

The Court affirmed an order requiring Brown to divest Kinney, holding that § 7 permits blocking mergers whose likely effect is to reduce competition in properly defined product and geographic markets, assessed through a practical, multi-factor evaluation of market structure and consolidation trends.


Brown Shoe Co. v. United States, 370 U.S. 294 (1962)