Kinds of Leverage

How big is too big? In what the dissenting minority called "the most important antitrust case which has been before the court in years," the U.S. Supreme Court last week assayed the question. By a 5-to-4 vote it turned down the Justice Department Antitrust Division's attempt to prevent the sale of Los Angeles' Consolidated Steel Corp. to Columbia Steel Co., a subsidiary of U.S. Steel.

With six plants in California and one each in Arizona and Texas, Consolidated is the biggest independent steel fabricator west of the Rockies. Its sale (for $8,293,319) would give Big Steel, which already has well over 51% of Pacific Coast ingot capacity, the lion's share of the fabricating capacity as well. This, said Justice Stanley Reed, who wrote the majority opinion, would in no way violate the Sherman Antitrust Act. "Size has significance ... in an appraisal of alleged violations," he conceded, "but the steel industry .is also of impressive size, and the welcome westward extension of that industry requires that the existing companies go into production there, or abandon that market to other organizations."

The minority opinion, written by Justice William Douglas, wryly recalled that "U.S. Steel has one-third of the rolled-steel production of the entire country. The least I can say is that a company that has that tremendous leverage on our economy is big enough."

Nevertheless, most western industrialists, who had once felt that their prime need for cheap steel could be served only by plants owned by Westerners, were now willing to go along with the new setup. The expansion in Big Steel's western fabricating facilities was expected to spur its Geneva plant to produce at capacity (1,300,000 tons a year). Westerners hoped that the added volume would help bring down the price of western steel. ---

Another important Antitrust case went the other way last week. The case involved "exclusive dealer contracts" between Standard Oil Co. of California and some 7,000 independent gas stations, binding the dealers to sell only products made or sponsored by the oil company. The U.S.

District Court in Los Angeles agreed with the Antitrust Division that the contracts were in restraint of trade and should be canceled.

Since many U.S. oil companies have similar contracts, Antitrust predicted that the decision, if upheld by the U.S. Supreme Court, would force a reorganization of the oil industry's entire marketing setup.

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