United States v. Blue Bell, Inc.

395 F. Supp. 538, 1975 U.S. Dist. LEXIS 13781
CourtDistrict Court, M.D. Tennessee
DecidedFebruary 19, 1975
DocketCiv. A. 7004
StatusPublished
Cited by6 cases

This text of 395 F. Supp. 538 (United States v. Blue Bell, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Blue Bell, Inc., 395 F. Supp. 538, 1975 U.S. Dist. LEXIS 13781 (M.D. Tenn. 1975).

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW

MORTON, District Judge.

I. THE COMPLAINT

On April 25, 1973, the United States filed this civil action under Section 15 of the Act of Congress of October 15, 1914, as amended (15 U.S.C. Sec. 25), commonly known as the Clayton Act, to prevent and restrain the violation by defendant Blue Bell, Inc. of Section 7 of the Clayton Act (15 U.S.C. See. 18). The violation charged was Blue Bell’s acquisition on or about July 21, 1972 of the assets of the Hayes Company Division of Genesco, Inc. Genesco was also made a defendant for purposes of relief. The Government contends in its complaint that the effect of the acquisition may be substantially to lessen competition or to tend to create a monopoly in interstate commerce in the manufacture and sale of industrial rental garments to unaffiliated industrial laundries.

II. PARTIES

A. Genesco, Inc.

Genesco, Inc. (hereinafter “Genesco”) is a corporation organized and existing under the laws of Tennessee with its main office in Nashville, Tennessee. It is an international manufacturer and retailer of apparel and footwear, with sales for the fiscal year ending July 31, 1972, of approximately $1,395 million.

In early 1971, Genesco merged two subsidiaries, Hayes Garment Co. and J. M. Wood Co., and continued their operations as the “Haywood” Division. As part of the Haywood operations, Genesco continued to operate the Hayes Company Division (hereinafter “Hayes”), which was a sales division of Haywood engaged primarily in the sale of work clothing and executive shirts and slacks to rental laundries. Genesco also continued to use former Hayes Garment Co. plants to make the work clothes sold by the Hayes Company, including two plants in Elkton and Tompkinsville, Ky. Work shirts and jackets sold by the Hayes Co. were made in the Elkton Plant and work pants at the Tompkins-ville plant.

In its last full year of operation prior to the acquisition, Hayes had total sales of approximately '$11 million, of which about $7.9 million were sales of work *541 shirts, work pants and work jackets, the remainder consisting primarily of dress shirts and slacks.

At the time of the acquisition Hayes had five warehouses serving as distribution points for delivery of its garments to rental laundries. The warehouses were located at Nashville, Tennessee; Hillside, New Jersey; San Leandro and Santa Fe Springs, California; and Houston, Texas.

B. Blue BeU, Inc.

Blue Bell, Inc. (hereinafter “Blue Bell”) is a Delaware corporation with its main office in Greensboro, North Carolina. It manufactures men’s, women’s and children’s clothing, with 1972 sales of approximately $334 million.

Blue Bell’s Red Kap Industries Division (hereinafter “Red Kap”), which is headquartered in Nashville, manufactures and sells a line of industrial uniforms sold primarily to rental laundries. Red Kap is among the largest United States manufacturers of work clothes and uniforms for rental laundries, with 1971 sales to rental laundries of about $26.1 million, of which approximately $24.3 million were sales of work shirts, work pants, work jackets, coveralls and shop coats, with the remainder consisting primarily of dress shirts and slacks.

At the time of the acquisition, Red Kap had four manufacturing plants, and maintained six warehouses for the distribution of its products. The warehouses were located in Nashville, Tennessee; Detroit, Michigan; Montebello, California; Rahway, New Jersey; Atlanta, Georgia; and Dallas, Texas.

Blue Bell and Genesco are and at all times relevant to this action have been, engaged in interstate commerce.

III. THE ACQUISITION

On July 21, 1972, Blue Bell acquired from Genesco substantially all of the assets used by Genesco in the operation of its industrial laundry business, i. e., the business of manufacturing and selling garments for rental laundries. The assets included the leases to the Elkton and Tompkinsville garment manufacturing plants, equipment, inventories of garments and piece goods, the accounts receivable, leases to the Hayes Company warehouses, and Hayes trademarks, tradenames, and logos, and other assets used by Genesco in connection with its industrial laundry business, the assets being sufficient to operate a going concern.

IV. GEOGRAPHIC MARKET

The relevant geographic market in which to measure the effect on competition of this acquisition (the “section of the country”) is the nation.

V. THE LINE OF COMMERCE

A. The Applicable Law

In Brown Shoe Company v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), the Supreme Court set forth indicia by which courts may determine what constitutes a product market under Section 7:

The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it. However, within this broad market, well-defined submarkets may exist which, in themselves, constitute product markets for antitrust purposes. United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 593-595 [77 S.Ct. 872, 877, 1 L.Ed.2d 1057] . . The boundaries of such a submarket may be determined by examining such practical indicia as industry or public recognition of the submarket as a separate economic entity, the product’s peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors.

Product markets do not have to meet all of these indicia in order to be a line of commerce under Section 7. What *542 must ultimately be determined is whether the product market is meaningful in terms of trade realities and forms an area of effective competition. Crown Zellerbach Corp. v. F. T. C., 296 F.2d 800, 811 (9th Cir. 1961), cert. den. 320 U.S. 937, 82 S.Ct. 1581, 8 L.Ed.2d 807 (1962); United States v. Pennzoil Co., 252 F.Supp. 962, 974 (W.D.Pa.1965). For example, in United States v. Aluminum Co. of America (Rome Cable), 377 U.S. 271, 276, 277, 84 S.Ct. 1283, 12 L.Ed.2d 314 (1964), the Supreme Court found aluminum conductor to be a product market on the basis of certain distinctive end uses and distinct prices. In Reynolds Metals Co. v. F. T. C., 114 U.S.App.D.C. 2, 309 F.2d 223

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395 F. Supp. 538, 1975 U.S. Dist. LEXIS 13781, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-blue-bell-inc-tnmd-1975.