The CHAIRMAN. But you are making certain recommendations and giving advice to the Department of Justice? Mr. HONEYWELL. No, sir. The CHAIRMAN. What do you do? Mr. HONEYWELL. We are inquiring of the Department of Justice of their point of view. The CHAIRMAN. Read that again. This is the statement of whom? Mr. WALDEN. This is a report from the Director of the Division to Mr. McCoy. Mr. HONEYWELL. That is correct. The CHAIRMAN. Read it again. Mr. WALDEN. It says: Worked with the Department of Justice on determining advisability and legality of consolidation of shoe manufacturing and retailing, thus protecting industry from embarrassment and unfavorable publicity. The CHAIRMAN. I take it from that that there was an opinion rendered by your industry group to the Department of Justice as to the legality of certain combinations. Mr. KEATING. I don't think that at all. Mr. HONEYWELL. Not necessarily. We are making an inquiry from the Department of Justice as to their point of view. The CHAIRMAN. I don't see that, maybe you better change the language of your pronouncement, then. I can't conceive it other than you worked with the Department of Justice as to the Department of Justice's opinion on the legality of a combination that might be in restraint of trade. Mr. KEATING. Of a proposed combination. That is done every day. They go to the Department of Justice and ask that whether a proposed combination will violate the antitrust laws. The CHAIRMAN. That may be. That is when individuals do that. Individuals may get advice from the Department of Justice, but I question whether the organization under inquiry has a right to do it. There is no authorization for that under the statutes. Mr. HONEYWELL. It is our understanding that the Department of Justice welcomes such inquiries from industry channeled through BDSA where they have headquarters to turn to. The CHAIRMAN. I direct counsel to make an inquiry of the Department of Justice as to what its practice has been with reference to Business Defense and Services Administration concerning combination of industry groups that may or may not be in violation of the antitrust laws. Mr. HARKINS. I would like to introduce in the record at this time a Department of Justice press release, announcing the case against the General Shoe Corp., of Nashville, Tenn., charging violation of section 7 of the Clayton Act and the complaint in that case. The CHAIRMAN. They will be accepted. (The documents referred to are as follows:) [For immediate release, Tuesday, March 29, 1955] DEPARTMENT OF JUSTICE Attorney General Herbert Brownell, Jr., announced the filing today of a civil antitrust suit charging General Shoe Corp. of Nashville, Tenn., with violation of section 7 of the Clayton Act. The suit, filed in the Federal district court in Nashville, charged that General's recent acquisition of Delman, Inc., of New York, N. Y., a firm engaged in manufacture, distribution, and sale of shoes, is part of a series of acquisitions in violation of the section. According to the complaint General, in a series of transactions beginning in June of 1950, has acquired some 18 different corporations, each of which was engaged in the manufacture, distribution, or sale of shoes. The acquired corporations are alleged to include the following in addition to Delman: W. L. Douglas Co., Nisley Co., Johnston & Murphy, Innes Shoe Co., Guarantee Shoe Co., Foot Caress Shoes, Inc., Ted Saval, Klevens Shoe Sales Co., Joseph A. Schumackher, Inc., Whitehouse & Hardy, Inc., Armishaw's Shoes, Lazarus Bros., Inc., Berland Shoe Stores, Inc., Jacoway Shoe Co., Inc., Fleisher Shoe Co., I. Miller & Sons, Inc., and Sommer & Kaufmann. The Government asked the court to order such divestiture as may be necessary to dissipate the effects of the unlawful activities alleged; to enjoin the defendant from acquiring stocks or assets of any company engaged in manufacture, distribution, and sale of shoes, and such other relief as may be just and proper. Based on annual sales for each acquired corporation during the year immediately preceding its acquisition, the total annual sales of the acquired corporations are alleged to exceed $67 million. It is charged that competition between General and the acquired corporations has been eliminated, that competitive manufactures may be foreclosed from a market represented by the acquired outlets and that concentration of production, distribution, and sale of shoes in a few companies has been increased. According to the complaint, General has been engaged in the manufacture, distribution, and sale of men's, women's, and children's shoes since 1925 and is one of the five leading manufacturers in the United States. In the fiscal year ended October 31, 1954, General is said to have sold more than 25 million pairs of shoes having a dollar value of approximately $135 million. General is alleged to manufacture and sell shoes of every important style in every price bracket under various trade names. In announcing the filing of this suit, Attorney General Brownell said: "This complaint charges that the defendant, by a series of acquisitions, has violated section 7 of the Clayton Act, which is sometimes referred to as the antimerger statute. One of the purposes of this statute is to permit intervention in a series of acquisitions where the effect may be a significant reduction in the vigor of competition, even though this effect may not be so far-reaching as to amount to a combination in restraint of trade or create a monopoly." Assistant Attorney General Stanley N. Barnes, head of the Antitrust Division, commented: "This case was instituted as part of the Antitrust Division's program of utilizing the Clayton Act to the fullest extent for the purpose of halting monopolistic tendencies well before they have produced effects which would justify a Sherman Act proceeding." UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE COMPLAINT The United States of America, plaintiff, by its attorneys, acting under the direction of the Attorney General of the United States, brings this Civil Action to obtain equitable relief against the above-named defendant and complains and alleges as follows: JURISDICTION AND VENUE 1. This complaint is filed and this action instituted against the defendant under Section 15 of the Act of Congress of October 15, 1914, c. 323, 38 Stat. 736, as amended, entitled "An Act to Supplement Existing Laws Against Unlawful Restraints and Monopolies and for other Purposes," commonly known as the Clayton Act, in order to prevent and restrain the violation by the defendant, as hereinafter alleged, of Section 7 of said Act. 2. General Shoe Corporation inhabits, transacts business, and is found within the Middle District of Tennessee. DEFENDANT 3. General Shoe Corporation, hereinafter referred to as "General," is made a defendant herein. General, a corporation organized and existing under the laws of the State of Tennessee, maintains its principal offices in Nashville, Tennessee. TRADE AND COMMERCE 4. General was incorporated in Tennessee, July 7, 1925, as Jarman Shoe Company and adopted its present title July 11, 1933. It has been engaged in the manufacture, distribution, and sale of men's, women's, and children's shoes since the date of its incorporation and is one of the five leading shoe manufacturers in the United States. 5. General operates 30 manufacturing plants of which 14 are located in Tennessee, three in Pennsylvania, three in Georgia, two in Kentucky, and one each in Michigan, New York, New Hampshire, Alabama, New Jersey, California, Mas sachusetts, and Mississippi. Shoes produced in these factories are sold and shipped to customers located throughout the United States. 6. General also owns or leases 500 or more retail shoe stores located throughout the United States. These stores are engaged in the business of selling shoes which have been produced by General or which have been purchased from other manufacturers for resale through General's retail stores. 7. In the fiscal year ended October 31, 1954, General sold more than twentyfive million pairs of shoes having a dollar value of approximately one hundred thirty-five million dollars. These sales consisted of 17,845,536 pairs of shoes which General sold at wholesale to franchised dealers, retail stores, and other independent outlets, and 7,273,117 pairs of shoes which General sold at retail through its own stores. Total dollar value of the sales at wholesale exceeded eighty-seven million dollars and the sales at retail amounted to more than forty-eight million dollars. 8. General manufactures and sells shoes of every important style in every price bracket under various trade names, including the following: "Jarman," "Flagg Brothers," "Hardy," "Douglas" "Holiday," "Nisley," "Bell Brothers," "Johnston & Murphy," "Ted Saval," "Klevens," "Fortune," "Fortunement," "Valentine," "Whitehouse & Hardy," "Fleisher," and "I. Miller." 9. In a series of transactions beginning in June of 1950, General has acquired stock or assets of corporations engaged in the manufacture, distribution, or sale of shoes. All the acquired corporations, in the regular course of business, either manufactured, shipped, and sold shoes throughout the United States, or purchased and received shipment of shoes from manufacturers located throughout the United States. Such acquisitions included the following: (a) In June of 1950 General acquired W. L. Douglas, which manufactured and sold shoes throughout the United States, including sales through the 64 retail outlets operated by Douglas. (b) In 1951 General acquired the Nisley Company which was engaged in the operation of 45 retail stores which purchased, shipped, and sold women's shoes throughout the United States. (c) In 1951 General acquired Johnston & Murphy, which manufactured and sold men's shoes throughout the United States. (d) In 1951 General purchased the Innes Shoe Company, which operated 11 retail shoe stores in the State of California. (e) In 1952 General acquired the Guarantee Shoe Company, which operated a retail shoe store in San Antonio, Texas. (f) In 1952 General acquired Foot Caress Shoe, Inc., which manufactured shoes in Ripley, Mississippi, for sale throughout the United States. (g) In 1952 General acquired Ted Saval, which manufactured and sold women's shoes throughout the United States. (h) In 1952 General acquired Klevens Shoe Sales Company, Inc., which manufactured and sold women's shoes throughout the United States. (i) In 1952 General acquired Joseph A. Schumacher, Inc., which operated a retail shoe store in the city of Milwaukee. (j) In 1953 General acquired Whitehouse & Hardy, Inc., which operated three shoe stores in the city of New York. (k) In 1953 General acquired Armishaw's Shoes, which operated a retail shoe store in Portland, Oregon. (1) In 1953 General acquired Lazarus Brothers, Inc., which operated five retail shoe outlets in Tulsa and Oklahoma City. (m) In 1953 General acquired Berland Shoe Stores, Inc., which operated 102 retail stores in several states and was engaged in the purchase and shipment of shoes from manufacturers located in various states for resale in Berland's retail establishments. (n) In 1953 General acquired Jacoway Shoe Company, Inc., which operated a retail store in Chattanooga, Tennessee. (0) In 1954 General acquired the Fleisher Shoe Company which manufactured shoes for sale throughout the United States. (p) In 1954 General acquired I. Miller & Sons, Inc., which manufactured and sold shoes throughout the United States including sales through its 14 retail outlets. (q) In 1954 General acquired Sommer & Kaufmann, which operated four retail shoe outlets in the State of California. 10. In December 1954, General acquired the assets of Delman, Inc., a New York corporation, engaged in the manufacture, distribution and sale of shoes throughout the United States. Delman's sales in 1954 were approximately $2,500,000. It operated a manufacturing plant in New York and retail outlets in New York, Philadelphia, and Palm Beach, Florida. The retail outlets sold $1,454,000 worth of shoes in 1954 including shoes purchased from General and other manufacturers. In addition to sales through Delman outlets the manufacturing plant sold over one million dollars worth of shoes to retailers and other outlets for resale. 11. Based on the annual sales for each acquired corporation during the year immediately preceding its acquisition, the total annual sales of the acquired corporations exceeded $67,000,000. Over $34,000,000 of these sales were through the more than 250 retail outlets which General has acquired and the remaining sales were at wholesale to dealers, retail stores and other outlets. OFFENSE CHARGED 12. Defendant General Shoe Corporation has violated Section 7 of the Clayton Act, in that the acquisition of Delman, Inc. is part of a series of acquisitions, as heretofore described, and the cumulative effect of the entire series may be substantially to lessen competition or to tend to create a monopoly in the following ways among others: (a) Actual and potential competition between General and the acquired corporations in the production, distribution and sale of shoes has been eliminated. (b) Actual and potential competition generally in the production, distribution and sale of shoes may be substantially lessened. (c) General's competitive advantage over other producers, distributors and sellers of shoes may be enhanced to the detriment of actual and potential competition. (d) Competitive manufacturers may be foreclosed from a market represented by more than 250 retail outlets whose annual sales exceed $34,000,000. (e) Independent retailers who purchase shoes from General may be deprived of a fair opportunity to compete with General's own retail outlets. (f) Acquisition of the exclusive right to use additional valuable trade names may enable General to maintain or establish advantageous buyer and seller relationships to the detriment of competing manufacturers and retailers. (g) Industrywide concentration of the production, distribution and sale of shoes in a few companies has been increased. 13. The series of acquisitions in violation of Section 7 of the Clayton Act, alleged in this complaint, may continue unless the relief hereinafter prayed for is granted. 14. The effect of the violation alleged in this complaint is continuing and will continue unless the relief hereinafter prayed for is granted. WHEREFORE, The Plaintiff prays: PRAYER 1. That General Shoe Corporation be adjudged to have violated Section 7 of the Clayton Act. 2. That under the terms and conditions that this Court may prescribe the defendant General Shoe Corporation be required to divest itself of such stock or assets as may be necessary to dissipate the effects of the unlawful activities herein alleged. 3. That the defendant, its officers, directors, agents, and all other persons acting on its behalf be perpetually enjoined from acquiring the stock or assets of any corporation engaged in the manufacture, distribution or sale of shoes. 4. That the plaintiff have such other and further relief as may be just and proper. 5. That the plaintiff recover the costs of this suit. /s/ HERBERT BROWNELL, Jr., Attorney General. /s/ STANLEY N. BARNES, Assistant Attorney General. /s/ EPHRAIM JACOBS, Special Assistant to the Attorney General. /s/ FRED ELLEGE, Jr., United States Attorney. /s/ JAMES J. COYLE, Trial Attorneys. Mr. HARKINS. This is United States against General Shoe Corp., Civil No. 2001, filed March 29, 1955. They list in here a series of acquisitions by General Shoe which are under attack. I will only take the ones that occurred since the organization of BDSA and ask you if representatives of BDSA conferred with the Department. of Justice on these specific acquisitions. In 1953 General acquired Armishaw's Shoes which operated a retail show store in Portland, Oreg. Mr. HONEYWELL. I am not prepared to answer that question. I do not know. We will be happy to make inquiries. I do not know the details of any discussion that might have gone on. The CHAIRMAN. Would you care to have a copy of this complaint? Mr. HONEYWELL. I would like to have a copy. Mr. MALETZ. Would Mr. Ray be familiar with whether or not representatives of the Department of Commerce had discussions with the representatives of the Department of Justice concerning the filing of a complaint against the General Shoe Corp.? Mr. RAY. I am not familiar with that. I wasn't here at that time. Mr. HARKINS. I have another series of correspondence here that concerns the Soft Pine case of Justice, antitrust case, which was terminated in 1940. Specifically, this correspondence is with reference to an application by the association Mr. KEATING. Did you say 1940? Mr. HARKINS. The case was terminated in 1940 against the association. Now, they are making application for an opinion from the Department of Justice concerning publication of a molding book. It is a trade publication. The use of that publication was enjoined in the decree of 1940. They requested an opinion from Judge Barnes. In a letter dated November 23, 1953, signed by Stanley N. Barnes to the Crossett Lumber Co., he says: We regret to inform you that the plan which you have submitted raises such problems under the decree that we cannot grant you the desired clearance, nor can we join you in petitioning the court to modify the decree to permit the proposed action. Another letter is from Mr. Bahr, secretary of the National Lumber Manufacturers Association, to Mr. Bernard L. Orell, Director of the |