United States v. American Bldg. Maint. Indus., 422 U.S. 271 (1975)

United States v. American Building Maintenance Industries

No. 73-1689

Argued April 22, 1975
Decided June 24, 1975
422 U.S. 271

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Syllabus

The Government brought this civil antitrust action against appellee, one of the largest suppliers of janitorial services in the country, with 56 branches serving more than 500 communities in the United States and Canada, and providing about 10% of such service sales in Southern California, contending that appellee’s acquisition of two Southern California janitorial service firms (the Benton companies), which supplied about 7% of such services in Southern California, violated § 7 of the Clayton Act. That section provides that

[n]o corporation engaged in commerce shall acquire . . . the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire . . . 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.

The Benton companies, some of whose customers engaged in interstate operations, performed all their services within California, locally recruited labor (which accounted for their major expenses) and locally purchased incidental equipment and supplies. The District Court granted appellee’s motion for summary judgment, holding that there had been no § 7 violation. The Government contends that "engaged in commerce." as used in § 7. encompasses corporations like the Benton companies engaged in intrastate activities that substantially affect interstate commerce, and that, in any event, the Benton companies’ activities were sufficiently interstate to come within § 7.

Held:

1. The phrase "engaged in commerce," as used in § 7 of the Clayton Act, means engaged in the flow of interstate commerce, and was not intended to reach all corporations engaged in activities subject to the federal commerce power; hence, the phrase does not encompass corporations engaged in intrastate activities substantially affecting interstate commerce, and § 7 can be applicable only when both the acquiring corporation and the acquired corporation are engaged in interstate commerce. Pp. 275-283.

(a) The jurisdictional requirements of § 7 cannot be satisfied merely by showing that allegedly anticompetitive acquisitions and activities affect commerce. Gulf Oil Corp. v. Copp Paving CO., 419 U.S. 186; FTC v. Bunte Bros., 312 U.S. 349. Pp. 276-277.

(b) The precise "in commerce" language of § 7 is not coextensive with the reach of power under the Commerce Clause, and is thus not to be equated with § 1 of the Sherman Act, which reaches the impact of intrastate conduct on interstate commerce. Pp. 277-279.

(c) When Congress reenacted § 7 in 1950 with the same "engaged in commerce" limitation, the phrase had long since become a term of art, indicating a limited assertion of federal jurisdiction, and, prior to that time, Congress had frequently distinguished between activities "in commerce" and broader activities "affecting commerce." Pp. 279-281.

(d) Limiting § 7 to its plain meaning comports with the enforcement policies that the FTC and the Justice Department have consistently pursued. Pp. 281-282.

2. Since the Benton companies did not participate directly in the sale, purchase, or distribution of goods or services in interstate commerce, they were not "engaged in commerce" within the meaning of § 7. And neither supplying local services to corporations engaged in interstate commerce nor using locally bought supplies manufactured outside California sufficed to satisfy § 7’s "in commerce" requirement. Pp. 283-286.

401 F.Supp. 1005, affirmed.

STEWART, J., delivered the opinion of the Court, in which BURGER, C.J., and MARSHALL, POWELL, and REHNQUIST, JJ., joined, and in all but Part III of which WHITE, J., joined. WHITE, J., filed a concurring opinion, post, p. 286. DOUGLAS, J., filed a dissenting opinion, in which BRENNAN, J., joined, post, p. 286. BLACKMUN, J., filed a dissenting opinion, post, p. 287.