## Facts

- The United States filed a civil action under Clayton Act § 15 alleging a violation of Clayton Act § 7 based on E. I. du Pont de Nemours & Co.’s 1917–1919 acquisition of roughly 23% of General Motors’ common stock.
- du Pont became GM’s largest single shareholder and obtained substantial influence over GM’s purchasing of automotive finishes and fabrics.
- In the market for automotive finishes and fabrics sold to automobile manufacturers, du Pont supplied the largest share of GM’s requirements and held a substantial share of the relevant market.
- The Government alleged that du Pont’s ownership position and resulting relationship with GM created an insulated preference for du Pont as a supplier, tending to create a monopoly in a line of commerce.
- The federal district court dismissed the complaint for failure of proof, and the United States appealed directly to the Supreme Court under the Expediting Act.

## Issues

1. Whether pre-1950 Clayton Act § 7 applied to vertical stock acquisitions (acquisition of a customer’s stock) when there was a reasonable likelihood of restraint of commerce or creation of a monopoly.
2. Whether “automotive finishes and fabrics” constituted a distinct “line of commerce” under § 7 rather than part of a broader finishes-and-fabrics market.
3. Whether du Pont’s GM stock acquisition and the resulting relationship tended to create a monopoly or otherwise produced the effects prohibited by § 7.

## Decision

- The Supreme Court reversed the district court.
- The Court held that pre-1950 § 7 reaches stock acquisitions involving noncompetitors when the acquisition is reasonably likely to result in a restraint of commerce or creation of monopoly in a line of commerce.
- The Court held that automotive finishes and fabrics were a distinct line of commerce because of their particular characteristics and uses within the automobile industry.
- The Court found the acquisition created an insulated, preferential market for du Pont at GM and a reasonable probability of monopoly in the relevant line of commerce.
- The case was remanded for further proceedings to determine equitable relief necessary to eliminate the anticompetitive effects of the acquisition.

## Legal Principles

- Clayton Act § 7 is preventive and is violated upon a showing of a reasonable probability that an acquisition may lead to restraint of commerce or creation of monopoly; actual restraint, monopolization, or intent need not be proved.
- Pre-1950 § 7 applies to vertical as well as horizontal stock acquisitions; the target corporation need not be a competitor.
- Administrative inaction by an enforcement agency does not narrow the statutory reach of § 7.
- A “line of commerce” may be defined by functional product distinctions, including specialized characteristics and uses and a defined customer industry, rather than by broad product categories.
- Remedies in § 7 cases are equitable and must be sufficient to eliminate the effects of the unlawful acquisition in the public interest.

## Conclusion

The Court held that du Pont’s substantial stock interest in GM violated Clayton Act § 7 because it created an insulated preferential supply relationship and a reasonable probability of monopoly power in the distinct line of commerce for automotive finishes and fabrics, and it remanded for appropriate equitable relief.


United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586 (1957)