The opinion of the court was delivered by: MISHLER
The Government instituted this proceeding on May 28, 1958, pursuant to Section 4 of the Sherman Act (15 U.S.C. § 4), to prevent and restrain violations of Section 2 of the Sherman Act (15 U.S.C. § 2)
and Section 3 of the Clayton Act (15 U.S.C. § 14).
The Section 2 violation charges defendant with the monopolization and attempted monopolization of citric acid, in its use as an acidulant in foods and beverages and in effervescent alkalizing powders and tablets. The Section 3 violation charges that defendant engaged in specific business practices, i.e., the making of certain contracts, which had the effect of substantially lessening competition.
Citric Acid - Defendant's Production, Supply and Distribution
Defendant commenced production of citric acid in or about 1880 from citrate of lime or concentrated lemon or lime juice. By 1923, defendant devised a process of producing citric acid through surface fermentation of molasses. Further development of that process made it commercially useful in or about 1935. Defendant's process is a trade secret.
During the complaint period (from 1946 to May 28, 1958 - the date of filing the complaint), defendant completely dominated the production, sale and distribution of citric acid in the United States. Defendant's position is dramatically expressed in the Government's analysis of the facts stipulated between the parties, which is appended to this opinion.During the period 1950 to 1958, defendant produced no less than 88% of all the domestic citric acid (1956); during 1950, the high, it produced 96.8%. During the same period, it accounted for 92.3% of the total domestic sales in 1951; and sales reached 97.2% in 1957. The rest of production and sales was divided among four competitors - Hawaiian Pineapple Company, Exchange Lemon Products Company, Stauffer Chemical Company and Miles Chemical Company, a division of Miles Laboratories, Inc.
Control of Production, Sale and Distribution of Citric Acid
The Government's theory of statutory liability is that such dominance of production, sale and distribution of citric acid is a monopolization or attempted monopolization of a "part of the trade or commerce among the several States." Alternatively, the Government argues that citric acid constituted the largest share of the acidulant market and monopolization of citric acid "must constitute monopolization or an attempt to monopolize the food, beverage and pharmaceutical acidulant market." (Post-trial brief p. 15).
Dominance over Production, Sale and Distribution of Citric Acid
cThe Government cites United States v. Aluminum Co., 1945, 2d Cir., 148 F.2d 416 as authority for its charge of monopolization of the citric acid market. There, the Court sustained a charge of a Section 2 violation upon finding that the relevant market was virgin aluminum, and the further finding that Alcoa occupied 90% of that market. The Court said: "that percentage is enough to constitute monopoly . . . ." (Id. at 424).
Alcoa did not define the control of production, sales and distribution of a product, ipso facto, as a Section 2 violation. Rather, the Court found no available substitute. In the absence of competitive products, the use of virgin aluminum was, for the purposes of that case, the relevant market. The statute does not proscribe control of a product, but rather the monopolization or attempted monopolization of a part of trade or commerce. In United States v. E.I. du Pont De Nemours & Co., 1956, 351 U.S. 377, 394, 76 S. Ct. 994, 100 L. Ed. 1264, the Court said:
"When a product is controlled by one interest, without substitutes available in the market, there is monopoly power."
The Court pointed to the use, rather than the product, in determining the relevant market. du Pont p. 396 (S. Ct. at p. 1008).
The Government charges monopolistic power over citric acid in its use "as an acidulant in foods and beverages and in effervescent alkalizing ...