Subscribe to Cases that cite 420 U. S. 223

U.S. Supreme Court

United States v. ITT Continental Baking Co., 420 U.S. 223 (1975)

United States v. ITT Continental Baking Co.

No. 73-1290

Argued November 13, 1974

Decided February 19, 1975

420 U.S. 223


The civil penalty provisions of the Clayton Act, 15 U.S.C. § 21(l), and the Federal Trade Commission Act, 15 U.S.C. § 45(l), similarly provide in part that each separate violation of a Federal Trade Commission (FTC) cease and desist order issued under the respective Acts shall be a separate offense, except that, in the case of a violation through "continuing failure or neglect to obey" a final order of the FTC each day of continuance of such failure shall be deemed a separate offense. After the FTC had charged the Continental Baking Co. (Continental), a bakery which later merged with respondent, with violations of § 7 of the Clayton Act and § 5 of the Federal Trade Commission Act by various acquisitions of other bakeries, the parties agreed to a consent order prohibiting Continental from "acquiring" other bakeries. Thereafter, alleging that Continental had acquired assets in other companies in violation of this order, the Government brought suit for civil penalties to be imposed daily from the date of the contract of acquisition to the date of filing of the complaint. The District Court, while holding that the order had been violated, declined to order daily penalties, finding that the order proscribed only the initial act of acquisition, that the violations did not constitute "a continuing failure or neglect to obey" within the meaning of §§ 21(l) and 45(l), and that, therefore, only a single penalty might be imposed. The Court of Appeals affirmed that holding.

Held: "Acquiring" as used in the consent order means both the initial transaction and the maintaining of the rights obtained without resale, and therefore violation of the order is a "continuing failure or neglect to obey" an FTC order within the meaning of §§ 21(l) and 45(l) and thus subject to daily penalties thereunder. Pp. 420 U. S. 230-243.

(a) The purpose of the "continuing failure or neglect to obey" provisions of §§ 21(l) and 45(l), as shown by their legislative

Page 420 U. S. 224

histories, to assure that the penalty provisions would meaningfully deter violations whose effect is continuing and whose detrimental effect could be terminated or minimized by the violator at some time after initiating the violation, would be undermined and the penalty would be converted into a minor tax if violation of an order prohibiting "acquiring" assets were treated as a single violation. Pp. 420 U. S. 230-233.

(b) Since the consent order "as it is written" supports an interpretation that the act of acquisition continues until the assets are disgorged (see (c), infra), there is no need to determine whether §§ 21(l) and 45(l) would permit the imposition of daily penalties even if the consent order must be read, as respondent claims, to proscribe only the initial act of acquisition. Pp. 420 U. S. 233-238.

(c) Under the consent order "as it is written," "acquiring" must mean both the act of first obtaining assets and the retention and use of those assets, since to conclude otherwise would be to ignore the flexibility of the English language, as well as the circumstances surrounding the order and the context in which the parties were operating. That conclusion is supported by both the "appendix" to the parties' agreement of which the order is a part and the complaint, as proper aids for construing the order which is to be construed basically as a contract. But even without the aid of these documents, "acquiring," as used in an antitrust decree or order, continues until the assets are disgorged, since "acquiring" and related words, as used in the antitrust context, encompass the continuing act of obtaining certain rights and treating them as one's own. Pp. 420 U. S. 238-243.

485 F.2d 16, reversed and remanded.

BRENNAN, J., delivered the opinion of the Court, in which DOUGLAS, MARSHALL, WHITE, and BLACKMUN, JJ., joined. STEWART, J., filed a dissenting opinion, in which BURGER, C.J.,and POWELL and REHNQUIST, JJ., joined, post, p. 420 U. S. 243.

Page 420 U. S. 225

ChanRobles Legal Resources:

ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review :

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line :