On this day in 1957, the U.S. Supreme Court ordered E. I. du Pont de Nemours and Co., a major chemical company, to divest itself of its 23 percent stock holding in General Motors Co. on the grounds that the shares it held interfered with the free flow of commerce.
Between 1917 and 1919, DuPont invested $50 million in GM, becoming the automaker’s largest stockholder. Pierre S. du Pont, the chemical firm’s president, served as GM’s president from 1920 to 1923 and as chairman of GM’s board from 1923 to 1929. By that time, GM had surpassed Ford Motor Co. as the largest car manufacturer in the United States.
In crafting the majority decision, Justice William Brennan wrote: “The test of a [monopolistic] violation is whether, at the time of suit, there is a reasonable probability that the stock acquisition may lead to a restraint of commerce or tend to create a monopoly of a line of commerce. Therefore, the government may maintain this suit, brought in 1949, based upon an acquisition of stock which occurred in 1917-1919.”
Brennan added: “On the record in this case, the background of the acquisition and the plain implications of the contemporaneous documents eliminate any basis for a conclusion that the purchase was made ‘solely for investment,’” as du Pont had argued.
Chief Justice Earl Warren and Justices Hugo Black and William Douglas concurred. Justices Harold Burton and Felix Frankfurter dissented, while Justices Tom Clark and John Marshall Harlan disqualified themselves from the case: Clark because he had been attorney general in 1949, when the Justice Department had brought the case; Harlan because he had previously represented du Pont.
The ruling reversed the dismissal of the government’s suit by U.S. District Judge Walter J. LaBuy in Chicago, where the case had dragged on for five years.
SOURCE: United States v. E. I. du Pont de Nemours & Co. — 353 U.S. 586 (1957)