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United States v. Penn-Olin Chemical Company

United States Supreme Court
378 U.S. 158 (1964)


Facts

Pennsalt Chemicals Company (Pennsalt) (defendant) accounted for approximately 9 percent of the sodium-chlorate market. In the late 1950s, there was an increased demand for sodium chlorate in the southeastern United States. Pennsalt and Olin Mathieson Chemical Corporation (Olin) (defendant) both considered expanding production to meet the southeastern demand. Instead of establishing their own plants, Pennsalt and Olin joined to form Penn-Olin Chemical Company (Penn-Olin) (defendant). Penn-Olin set up a plant in Kentucky. The United States (plaintiff) sued Penn-Olin, alleging the joint venture violated § 7 of the Clayton Act by substantially lessening competition in the southeastern market. The United States argued Pennsalt and Olin would have been competitors in the southeastern market for sodium chlorate. However, instead of competing, Pennsalt and Olin chose to form a joint venture. The district court found that Pennsalt and Olin both had the ability to establish separate plants. However, the district court also found there was no probability that both Pennsalt and Olin would have actually entered the market and competed with each other. Therefore, the district court held the joint venture did not substantially lessen competition. The United States appealed.

Rule of Law

Issue

Holding and Reasoning (Clark, J.)

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