UNITED STATES SUPREME COURT DECISIONS ON-LINE

The United States brought this civil antitrust suit charging that the acquisition by Greater Buffalo Press (Buffalo) in 1955 of all the stock of International Color Printing Co. (International) violated § 7 of the Clayton Act, and that Buffalo, Hearst Corp., through its unincorporated division King Features Syndicate (King), Newspaper Enterprise Assn., and others had conspired to restrain the sale to newspapers of the printing of color comic supplements in violation of § 1 of the Sherman Act. Before trial, a consent decree was entered against Hearst. Buffalo, which does not control ownership of features or license them, prints the color supplements for newspapers and sells them. International prints color supplements only for King, which controls many popular comic features and is a licensor. International's owners wanted to sell, rather than raise capital for modernization and expansion. International paid dividends every year, and, in the year of sale, its profits increased. Only King and Buffalo were considered as prospective purchasers; no others were even approached. After acquiring International, Buffalo controlled about 75% of the independent color comic supplement business and, through International, it entered into a 10-year contract with King to supply King's printing. The District Court dismissed the complaint after trial. As to the Clayton Act claim, it found two distinct lines of commerce: (1) printing of color comic supplements for newspapers not printing their own, and (2) printing of color comic supplements for syndicates selling copyrighted features to newspapers. That court also found the acquisition to be within the "failing company" exception to § 7 of the Clayton Act. The United States appeals only from dismissal of the Clayton Act claim. The court did not reach the question of remedy.

Held:

1. The line of commerce here is the color comic supplement printing business, which includes the printing of the supplements and their sale, and the "area of effective competition" encompasses the business of Buffalo, International, and King. While there may be submarkets within this broad market, "submarkets are not a clubjuris

Page 402 U. S. 550

basis for the disregard of a broader line of commerce that has economic significance." Pp. 402 U. S. 552-554.

2. The test of § 7 of the Clayton Act, whether the effect of an acquisition "may be substantially to lessen competition," is met here by Buffalo's control of about 75% of the independent color comic supplement printing business. P. 402 U. S. 555.

3. The District Court erred in finding that the acquisition was within the "failing company" exception, as the two requirements, (a) that International's resources were "so depleted and the prospect of rehabilitation so remote that it faced the grave probability of a business failure," and (b) that there was no other prospective purchaser, were not satisfied. Pp. 402 U. S. 555-556.

4. The mere passage of time is no barrier to the divestiture of stock illegally acquired. P. 402 U. S. 556.

5. The case is remanded to the District Court, which has the initial responsibility of the drafting of a decree that will provide an appropriate and effective remedy. Pp. 402 U. S. 556-557.

327 F.Supp. 305, reversed and remanded.

DOUGLAS, J., delivered the opinion for a unanimous Court.