U.S. Supreme Court United States v. Paramount Pictures,
Inc., 334
U.S. 131 (1948) United States v. Paramount Pictures,
Inc. No. 79 Argued February 9-11,
1948 Decided May 3, 1948 334
U.S. 131 ast|>* 334
U.S. 131 APPEAL FROM THE DISTRICT COURT OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK Syllabus The United States sued to restrain violations of §§ 1 and 2 of
the Sherman Act by (1) five corporations which produce motion
pictures and their respective subsidiaries or affiliates which
distribute and exhibit films and own or control theaters, (2) two
corporations which produce motion pictures and their subsidiaries
which distribute films, and (3) one corporation engaged only in the
distribution of motion pictures. The complaint charged that the
first group of defendants conspired to and did restrain and
monopolize interstate trade in the exhibition of motion pictures in
most of the larger cities of the country and that their combination
of producing, distributing and exhibiting motion pictures violated
§§ 1 and 2 of the Act. It also charged that all of the defendants,
as distributors, conspired to and did restrain and monopolize
interstate trade in the distribution and exhibition of films. After
a trial, the District Court granted an injunction and other
relief. Held: 1. The District Court's finding that price-fixing conspiracies
existed between all defendants and between each distributor
defendant and its licensees which resulted in exhibitors' being
required to charge substantially uniform minimum admission prices,
is sustained. Pp. 334 U. S.
141 -142.

															2. Its injunction against defendants or their affiliates
granting any license (except to their own theaters) in which
minimum prices for admission to a theater are fixed, is sustained.
Pp. 334 U. S.
142 -144. Page 334 U. S. 132 (a) The fact that defendants owned copyrights to their films and
merely licensed their use by exhibitors did not entitle them to
conspire with each other to fix uniform prices of admission to be
charged by exhibitors. P. 334 U. S.
143 .

															(b) Nor did it justify the conspiracy between each distributor
defendant and its licensees to fix and maintain uniform minimum
admission prices which had the effect of suppressing price
competition between exhibitors. Pp. 334 U. S.
143 -144.

															(c) A copyright may no more be used than a patent to deter
competition between rivals in the exploitation of their licenses.
P. 334 U. S.
144 .

															3. The District Court's finding that there was a conspiracy to
restrain trade by imposing unreasonable "clearances" is sustained.
Pp. 334 U. S.
144 -147.

															4. Its injunction against defendants' and their affiliates'
agreeing with each other or with any exhibitors or distributors to
maintain a system of "clearances," or granting any "clearance"
between theaters not in substantial competition, or granting or
enforcing any "clearance" against theaters in substantial
competition with the theater receiving the license for exhibition
in excess of what is reasonably necessary to protect the licensee,
is sustained. Pp. 334 U. S.
147 -148.

															(a) A request that it be construed or modified so as to allow
licensors in granting "clearances" to take into consideration what
is reasonably necessary for a fair return to the licensor is
rejected. Pp. 334 U. S.
147 -148.

															(b) In the setting of this case, the only measure of
reasonableness of a clearance by Sherman Act standards is the
special needs of the licensee for the competitive advantages it
affords. P. 334 U. S.
148 .

															5. A provision of the decree that, "Whenever any clearance
provision is attacked as not legal . . . , the burden shall be upon
the distributor to sustain the legality thereof," is sustained. P. 334 U. S.
148 .

															6. The District Court's finding that the exhibitor defendants
had "pooling agreements" whereby normally competitive theaters were
operated as a unit, or managed by a joint committee or by one of
the exhibitors, the profits being shared according to prearranged
percentages, and that these agreements resulted in the elimination
of competition pro tanto both in exhibition and in
distribution of feature pictures, is sustained. P. 334 U. S.
149 . Page 334 U. S. 133 7. Its requirement that existing "pooling agreements" be
dissolved and its injunction against any future arrangement of that
character are sustained. P. 334 U. S.
149 .

															8. Its findings as to the restraint of trade by means of
arrangements under which many theaters are owned jointly by two or
more exhibitor defendants, its requirement that the exhibitor
defendants terminate such joint ownership of theaters, and its
injunction against future acquisitions of such interests, are
sustained. Pp. 334 U. S.
149 -151.

															9. Its order that certain other relationships involving joint
ownership of theaters by an exhibitor defendant and an independent
be dissolved, and its injunction against future acquisitions of
such joint interests, must be revised after further inquiries and
findings upon remand of the cases. Pp. 334 U. S.
151 -153.

															(a) It erred in failing to inquire into the circumstances under
which each particular interest had been acquired and in treating
all relationships alike in this portion of the decree. P. 334 U. S.
152 .

															(b) To the extent that these acquisitions were the fruits of
monopolistic practices or restraints of trade, they should be
divested, and no permission to buy out the other owner should be
given a defendant. P. 334 U. S.
152 .

															(c) Even if lawfully acquired, divestiture of such interests
would be justified if they have been utilized as part of the
conspiracy to eliminate or suppress competition. P. 334 U. S.
152 .

															(d) If the joint ownership is an alliance with one who is or
would be an operator but for the joint ownership, divorce should be
decreed, even though the affiliation was innocently acquired. P. 334 U. S.
153 .

															(e) In those instances where joint ownership involves no more
than innocent investments by those who are not actual or potential
operators, and it was not used in furtherance of the conspiracy and
did not result in a monopoly, its retention by defendants would be
justified, and they might be given permission to acquire the
interests of the independents on a showing by them and a finding by
the Court that neither monopoly nor unreasonable restraint of trade
in the exhibition of films would result. P. 334 U. S.
153 .

															10. The District Court's findings that certain "formula deals"
covering the exhibition of feature pictures in entire circuits of
theaters and certain "master agreements" covering their exhibition
in two or more theaters in a particular circuit unlawfully
restrain Page 334 U. S. 134 trade, and its injunction against the making or further
performance of such arrangements, are sustained. Pp. 334 U. S.
153 -155.

															(a) Such arrangements are devices or stifling competition and
diverting the cream of the business to the large operators. P. 334 U. S.
154 .

															(b) The pooling of the purchasing power of an entire circuit in
bidding for films is a misuse of monopoly power insofar as it
combines theaters having no competitors with those having
competitors. United States v. Griffith, ante p. 334 U. S. 100 ; Schine Chain Theaters v. United States, ante p. 334 U. S. 110 . Pp. 334 U. S.
154 -155.

															(c) Distributors who join in such arrangements by exhibitors are
active participants in effectuating a restraint of trade and a
monopolistic practice. P. 334 U. S.
155 .

															11. The findings of the District Court with reference to
"franchises" whereby exhibitors obtain all feature pictures
released by a distributor over a period of more than a motion
picture season are set aside so that the court may examine the
problem in the light of the elimination from the decree of the
provision for competitive bidding. Pp. 334 U. S.
155 -156.

															12. On the record in this case, it cannot be said that
"franchises" are illegal per se when extended to any
theater or circuit, no matter how small. P. 334 U. S.
156 .

															13. The findings of the District Court as to "block-booking" and
its injunction against defendants performing or entering into any
license in which the right to exhibit one feature is conditioned
upon the licensee's taking one or more other features, are
sustained. Pp. 334 U. S.
156 -159.

															(a) The result of this practice is to add to the monopoly of the
copyright, in violation of the principle of the patent cases
involving tying clauses. P. 334 U. S.
158 .

															(b) Transparent-Wrap Machine Corp. v. Stokes & Smith
Co., 329 U. S. 637 ,
distinguished. P. 334 U. S.
159 .

															(c) The selling of films in blocks or groups when there is no
requirement, express or implied, for the purchase of more than one
film is not illegal, but it is illegal to refuse to license one or
more copyrights unless another copyright is accepted. P. 334 U. S.
159 .

															14. The provision of the decree regulating the practice of
"blind-selling," whereby a distributor licenses a feature picture
before the exhibitor is afforded an opportunity to view it, is
sustained. P. 157, n 11.

															15. The District Court's findings that defendants had
unreasonably discriminated against small independent exhibitors and
in Page 334 U. S. 135 favor of large affiliated and unaffiliated circuits through
various kinds of contract provisions, and that these discriminators
resulted in restraints of trade in violation of the Sherman Act,
are sustained. Pp. 334 U. S.
159 -160.

															16. On remand of these cases, the District Court should provide
effective relief against continuance of these discriminatory
practices, in the light of the elimination from the decree of the
provision for competitive bidding. P. 334 U. S.
161 .

															17. That large exhibitors with whom defendants dealt fathered
the illegal practices and forced them onto defendants is no excuse,
if true, since acquiescence in an illegal scheme is as much a
violation of the Sherman Act as the creation and promotion of one.
P. 334 U. S.
161 .

															18. The requirement of the decree that films be licensed on a
competitive bidding basis should be eliminated, because it would
involve the judiciary too deeply in the daily operation of this
nationwide business, and would uproot business arrangements and
established relationships without opening up to competition the
markets which defendants' unlawful restraints have dominated. Pp. 334 U. S.
161 -166.

															19. On remand of these cases, the freedom of the District Court
to reconsider the adequacy of the decree in the light of the
elimination of the provision for competitive bidding is not limited
to those parts specifically indicated. P. 334 U. S.
166 .

															20. Motion pictures, like newspapers and radio, are included in
the press whose freedom is guaranteed by the First Amendment; but
the problem involved in these cases bears only remotely, if at all,
on any question of freedom of the press, save only as timeliness of
release may be a factor of importance in specific situations. Pp. 334 U. S.
166 -167.

															21. The findings of the District Court on the subjects of
monopoly in exhibition and the need for divestiture are set aside
as being deficient in the light of the principles stated in this
opinion, in United States v. Griffith, ante, p. 334 U. S. 100 , and
in Schine Chain Theaters v. United States, ante, p. 334 U. S. 110 , and
because of the elimination from the decree of the provisions for
competitive bidding. The injunction against the five major
defendants' expanding their theater holdings in any manner is also
set aside in order that the District Court may make an entirely
fresh start on these phases of the problems. Pp. 334 U. S.
167 -175.

															(a) In determining the need for divestiture, it is not enough to
conclude, as the District Court did, that none of the
defendants Page 334 U. S. 136 was organized or has been maintained for the purpose of
achieving a "national monopoly," nor that the five major
defendants, through their present theater holdings "alone," do not
and cannot collectively or individually have a monopoly of
exhibition. P. 334 U. S.
171 .

															(b) When the starting point is a conspiracy to effect a monopoly
through restraints of trade, it is relevant to determine what the
results of the conspiracy were, even if they fell short of
monopoly. P. 334 U. S.
171 .

															(c) While a monopoly resulting from the ownership of the only
theater in a town usually does not constitute a violation of the
Sherman Act, even such an ownership is vulnerable in a suit under
the Sherman Act if the property was acquired, or its strategic
position maintained, as a result of practices which constitute
unreasonable restraints of trade. United States v. Griffith,
ante, p. 334 U. S. 100 . P. 334 U. S.
171 .

															(d) The problem of the District Court did not end with enjoining
continuance of the unlawful restraints, nor with dissolving the
combination which launched their conspiracy; its function includes
also undoing what the conspiracy achieved. P. 334 U. S.
171 .

															(e) The problem under the Sherman Act is not solved merely by
measuring monopoly in terms of size or extent of holdings, or by
concluding that single ownerships were not obtained "for the
purpose of achieving a national monopoly." P. 334 U. S.
172 .

															(f) It is the relationship of the unreasonable restraints of
trade to the position of the defendants in the exhibition field
(and, more particularly, in the first-run phase of that business)
that is of first importance on the divestiture phase of these
cases. P. 334 U. S.
172 .

															(g) The fruits of the conspiracy must be denied to the five
major defendants, as they were to the independents in Schine
Chain Theaters v. United States, ante p. 334 U. S. 110 . P. 334 U. S.
172 .

															(h) Section 1 of the Sherman Act outlaws unreasonable
restraints, irrespective of the amount of trade or commerce
involved, and § 2 condemns monopoly of any appreciable part of
trade or commerce. P. 334 U. S.
173 .

															(i) Specific intent is not a necessary element of a purpose or
intent to create a monopoly; the requisite purpose or intent is
present if monopoly results as a necessary consequence of what was
done. P. 334 U. S.
173 .

															(j) Monopoly power, whether lawfully or unlawfully acquired, may
violate § 2 of the Sherman Act though it remains unexercised; the
existence of the power to exclude competition when it is Page 334 U. S. 137 desired to do so is itself a violation of § 2 if it is coupled
with the purpose or intent to exercise that power. P. 334 U. S.
173 .

															(k) The setting aside of the provision of the decree enjoining
the five major defendants from further expanding their theater
holdings is not to be taken as intimating in any way that the
District Court erred in including this prohibition. P. 334 U. S.
175 .

															22. Vertical integration of producing, distributing, and
exhibiting motion pictures is not illegal per se; its
legality depends upon (1) the purpose or intent with which it was
conceived, or (2) the power it creates and the attendant purpose or
intent. Pp. 334 U. S.
173 -174.

															(a) It violates the Sherman Act if it was a calculated scheme to
gain control over an appreciable segment of the market and to
restrain or suppress competition, rather than an expansion to meet
legitimate business needs. P. 334 U. S.
174 .

															(b) A vertically integrated enterprise will constitute a
monopoly which, though unexercised, violates the Sherman Act if a
power to exclude competition is coupled with a purpose or intent to
do so. P. 334 U. S.
174 .

															(c) The fact that the power created by size was utilized in the
past to crush or prevent competition is potent evidence that the
requisite purpose or intent attends the presence of monopoly power.
P. 334 U. S.
174 .

															(d) Likewise bearing on the question whether monopoly power is
created by a vertical integration is the nature of the market to be
served and the leverage on the market which the particular vertical
integration creates or makes possible. P. 334 U.
S. 23. Whether an injunction against the licensing of films among
the five major defendants would, in the absence of competitive
bidding, serve as a short-range remedy in certain situations to
dissipate the effects of the conspiracy is a question for the
District Court. P. 334 U. S.
175 .

															24. The District Court has no power to force or require parties
to submit to arbitration in lieu of the remedies afforded by
Congress for enforcing the antitrust laws, but it may authorize the
maintenance of a voluntary system of arbitration by those parties
who consent, and it may provide the rules and procedure under which
such a system is to operate. P. 334 U. S.
176 .

															(a) The Government did not consent to a permanent system of
arbitration under the consent decree. P. 334 U. S.
176 .

															(b) Whether a voluntary system of arbitration should be
inaugurated is for the discretion of the District Court . P. 334 U. S.
176 . Page 334 U. S. 138 25. In view of the elimination from the decree of the provision
for competitive bidding, the District Court's denial of motions of
certain associations of exhibitors and a number of independent
exhibitors for leave to intervene in opposition to the system of
competitive bidding is affirmed, and their motions for leave to
intervene in this Court are denied. Pp. 334 U. S.
176 -178. 66 F. Supp.
323 ; 70 F. Supp.
53 , affirmed in part and reversed in part.

															In a suit by the United States to restrain violations of §§ 1
and 2 of the Sherman Act by major motion picture producers,
distributors, and exhibitors, the District Court granted an
injunction and other relief. 66 F. Supp.
323 ; 70 F. Supp.
53 . On appeal to this Court, affirmed in part, reversed in
part, and remanded, p. 334 U. S.
178 . Page 334 U. S. 140 MR. JUSTICE DOUGLAS delivered the opinion of the Court.

															These cases are here on appeal [ Footnote 1 ] from a judgment of a three-judge District
Court [ Footnote 2 ] holding that
the defendants had violated § 1 and § 2 of the Sherman Act, 26
Stat. 209, as amended, 50 Stat. 693, 15 U.S.C. §§ 1, 2, and
granting an injunction and other relief. 66 F.
Supp. 323 ; 70 F. Supp.
53 .

															The suit was instituted by the United States under § 4 of the
Sherman Act to prevent and restrain violations of it. The
defendants fall into three groups: (1) Paramount Pictures, Inc.,
Loew's, Incorporated, Radio-Keith-Orpheum Corporation, Warner Bros.
Pictures, Inc., Twentieth Century-Fox Film Corporation, which
produce motion pictures, and their respective subsidiaries or
affiliates which distribute and exhibit films. These are known as
the five major defendants, or exhibitor defendants. (2) Columbia
Pictures Corporation and Universal Corporation, which produce
motion pictures, and their subsidiaries which distribute films. (3)
United Artists Corporation, which is engaged only in the
distribution of motion pictures. The five majors, through their
subsidiaries or affiliates, own or control theaters; the other
defendants do not.

															The complaint charged that the producer defendants had attempted
to monopolize and had monopolized the production of motion
pictures. The District Court found to the contrary, and that
finding is not challenged here. The complaint charged that all the
defendants, as distributors, had conspired to restrain and
monopolize and Page 334 U. S. 141 had restrained and monopolized interstate trade in the
distribution and exhibition of films by specific practices which we
will shortly relate. It also charged that the five major defendants
had engaged in a conspiracy to restrain and monopolize, and had
restrained and monopolized, interstate trade in the exhibition of
motion pictures in most of the larger cities of the country. It
charged that the vertical combination of producing, distributing,
and exhibiting motion pictures by each of the five major defendants
violated § 1 and § 2 of the Act. It charged that each distributor
defendant had entered into various contracts with exhibitors which
unreasonably restrained trade. Issue was joined, and a trial was
had. [ Footnote 3 ] First. Restraint of Trade -- (1) Price-Fixing. No film is sold to an exhibitor in the distribution of motion
pictures. The right to exhibit under copyright is licensed. The
District Court found that the defendants, in the licenses they
issued, fixed minimum admission prices which the exhibitors agreed
to charge, whether the rental of the film was a flat amount or a
percentage of the receipts. It found that substantially uniform
minimum prices had been established in the licenses of all
defendants. Minimum prices were established in master agreements or
franchises which were made between various defendants as
distributors and various defendants as exhibitors, and in joint
operating agreements made by the five majors with each other Page 334 U. S. 142 and with independent theater owners covering the operation of
certain theaters. [ Footnote 4 ]
By these later contracts, minimum admission prices were often fixed
for dozens of theaters owned by a particular defendant in a given
area of the United States. Minimum prices were fixed in licenses of
each of the five major defendants. The other three defendants made
the same requirement in licenses granted to the exhibitor
defendants. We do not stop to elaborate on these findings. They are
adequately detailed by the District Court in its opinion. See 66 F. Supp. 334-339.

															The District Court found that two price-fixing conspiracies
existed -- a horizontal one between all the defendants, a vertical
one between each distributor defendant and its licensees. The
latter was based on express agreements, and was plainly
established. The former was inferred from the pattern of
price-fixing disclosed in the record. We think there was adequate
foundation for it, too. It is not necessary to find an express
agreement in order to find a conspiracy. It is enough that a
concert of action is contemplated, and that the defendants
conformed to the arrangement. Interstate Circuit v. United
States, 306 U. S. 208 , 306 U. S.
226 -227; United States v. Masonite Corp., 316 U. S. 265 , 316 U. S. 275 .
That was shown here.

															On this phase of the case, the main attack is on the decree,
which enjoins the defendants and their affiliates Page 334 U. S. 143 from granting any license, except to their own theaters, in
which minimum prices for admission to a theater are fixed in any
manner or by any means. The argument runs as follows: United
States v. General Electric Co., 272 U.
S. 476 , held that an owner of a patent could, without
violating the Sherman Act, grant a license to manufacture and vend,
and could fix the price at which the licensee could sell the
patented article. It is pointed out that defendants do not sell the
films to exhibitors, but only license them, and that the Copyright
Act (35 Stat. 1075, 1088, 17 U.S.C. § 1), like the patent statutes,
grants the owner exclusive rights. [ Footnote 5 ] And it is argued that, if the patentee can fix
the price at which his licensee may sell the patented article, the
owner of the copyright should be allowed the same privilege. It is
maintained that such a privilege is essential to protect the value
of the copyrighted films.

															We start, of course, from the premise that, so far as the
Sherman Act is concerned, a price-fixing combination is illegal per se. United States v. Socony-Vacuum Oil Co., 310 U. S. 150 ; United States v. Masonite Corporation, supra. We recently
held, in United States v. United States Gypsum Co., 333 U. S. 364 ,
that even patentees could not regiment an entire industry by
licenses containing price-fixing agreements. What was said there is
adequate to bar defendants, through their horizontal conspiracy,
from fixing prices for the exhibition of films in the movie
industry. Certainly the rights of the copyright owner are no
greater than those of the patentee.

															Nor can the result be different when we come to the vertical
conspiracy between each distributor defendant and his licensees.
The District Court stated in its findings:

															"In agreeing to maintain a stipulated minimum admission price,
each exhibitor thereby consents to Page 334 U. S. 144 the minimum price level at which it will compete against other
licensees of the same distributor, whether they exhibit on the same
run or not. The total effect is that, through the separate
contracts between the distributor and its licensees, a price
structure is erected which regulates the licensees' ability to
compete against one another in admission prices."

															That consequence seems to us to be incontestable. We stated in United States v. United States Gypsum Co., supra, at 333 U. S. 401 ,
that

															"The rewards which flow to the patentee and his licensees from
the suppression of competition through the regulation of an
industry are not reasonably and normally adapted to secure
pecuniary reward for the patentee's monopoly."

															The same is true of the rewards of the copyright owners and
their licensees in the present case. For here, too, the licenses
are but a part of the general plan to suppress competition. The
case where a distributor fixes admission prices to be charged by a
single independent exhibitor, no other licensees or exhibitors
being in contemplation, seems to be wholly academic, as the
District Court pointed out. It is therefore plain that United
States v. General Electric Co., supra, as applied in the
patent cases, affords no haven to the defendants in this case. For
a copyright may no more be used than a patent to deter competition
between rivals in the exploitation of their licenses. See
Interstate Circuit v. United States, supra, p. 306 U. S.
230 .

															(2) Clearances and Runs. Clearances are designed to protect a particular run of a film
against a subsequent run. [ Footnote
6 ] The District Court Page 334 U. S. 145 found that all of the distributor defendants used clearance
provisions, and that they were stated in several different ways or
in combinations: in terms of a given period between designated
runs; in terms of admission prices charged by competing theaters;
in terms of a given period of clearance over specifically named
theaters; in terms of so many days' clearance over specified areas
or towns; or in terms of clearances as fixed by other
distributors.

															The Department of Justice maintained below that clearances are
unlawful per se under the Sherman Act. But that is a
question we need not consider, for the District Court ruled
otherwise, and that conclusion is not challenged here. In its view,
their justification was found in the assurance they give the
exhibitor that the distributor will not license a competitor to
show the film either at the same time or so soon thereafter that
the exhibitor's expected income from the run will be greatly
diminished. A clearance, when used to protect that interest of the
exhibitor, was reasonable, in the view of the court, when not
unduly extended as to area or duration. Thus, the court concluded
that, although clearances might indirectly affect admission prices,
they do not fix them, and that they may be reasonable restraints of
trade under the Sherman Act.

															The District Court held that in determining whether a clearance
is unreasonable, the following factors are relevant:

															"(1) The admission prices of the theaters involved, as set by
the exhibitors;"

															"(2) The character and location of the theaters involved,
including size, type of entertainment, appointments, transit
facilities, etc.; " Page 334 U. S. 146 "(3) The policy of operation of the theaters involved, such as
the showing of double features, gift nights, give-aways, premiums,
cut-rate tickets, lotteries, etc.;"

															"(4) The rental terms and license fees paid by the theaters
involved and the revenues derived by the distributor defendant from
such theaters;"

															"(5) The extent to which the theaters involved compete with each
other for patronage;"

															"(6) The fact that a theater involved is affiliated with a
defendant distributor or with an independent circuit of theaters
should be disregarded; and"

															"(7) There should be no clearance between theaters not in
substantial competition."

															It reviewed the evidence in light of these standards, and
concluded that many of the clearances granted by the defendants
were unreasonable. We do not stop to retrace those steps. The
evidence is ample to show, as the District Court plainly
demonstrated, see 66 F.Supp. pp. 343-346, that many
clearances had no relation to the competitive factors which alone
could justify them. [ Footnote
7 ] The clearances which were in vogue had, indeed, acquired a
fixed and uniform character, and were made applicable to situations
without regard to the special circumstances which are necessary to
sustain them as reasonable restraints of trade. The evidence is
ample to support the Page 334 U. S. 147 finding of the District Court that the defendants either
participated in evolving this uniform system of clearances or
acquiesced in it, and so furthered its existence. That evidence,
like the evidence on the price-fixing phase of the case, is
therefore adequate to support the finding of a conspiracy to
restrain trade by imposing unreasonable clearances.

															The District Court enjoined defendants and their affiliates from
agreeing with each other or with any exhibitors or distributors to
maintain a system of clearances, or from granting any clearance
between theaters not in substantial competition, or from granting
or enforcing any clearance against theaters in substantial
competition with the theater receiving the license for exhibition
in excess of what is reasonably necessary to protect the licensee
in the run granted. In view of the findings, this relief was
plainly warranted.

															Some of the defendants ask that this provision be construed (or,
if necessary, modified) to allow licensors in granting clearances
to take into consideration what is reasonably necessary for a fair
return to the licensor. We reject that suggestion. If that were
allowed, then the exhibitor defendants would have an easy method of
keeping alive at least some of the consequences of the effective
conspiracy which they launched. For they could then justify
clearances granted by other distributors in favor of their theaters
in terms of the competitive requirements of those theaters, and at
the same time justify the restrictions they impose upon
independents in terms of the necessity of protecting their film
rental as licensor. That is too potent a weapon to leave in the
hands of those whose proclivity to unlawful conduct has been so
marked. It plainly should not be allowed so long as the exhibitor
defendants own theaters. For, in its baldest terms, it is in the
hands of the defendants no less than a power to restrict the
competition of others in the way Page 334 U. S. 148 deemed most desirable by them. In the setting of this case, the
only measure of reasonableness of a clearance by Sherman Act
standards is the special needs of the licensee for the competitive
advantages it affords.

															Whether the same restrictions would be applicable to a producer
who had not been a party to such a conspiracy is a question we do
not reach.

															Objection is made to a further provision of this part of the
decree stating that,

															"Whenever any clearance provision is attacked as not legal under
the provisions of this decree, the burden shall be upon the
distributor to sustain the legality thereof."

															We think that provision was justified. Clearances have been used
along with price-fixing to suppress competition with the theaters
of the exhibitor defendants and with other favored exhibitors. The
District Court could therefore have eliminated clearances
completely for a substantial period of time, even though, as it
thought, they were not illegal per se. For equity has the
power to uproot all parts of an illegal scheme -- the valid as well
as the invalid -- in order to rid the trade or commerce of all
taint of the conspiracy. United States v. Bausch & Lomb
Optical Co., 321 U. S. 707 , 321 U. S. 724 .
The court certainly then could take the lesser step of making them prima facie invalid. But we do not rest on that alone. As
we have said, the only justification for clearances in the setting
of this case is in terms of the special needs of the licensee for
the competitive advantages they afford. To place on the distributor
the burden of showing their reasonableness is to place it on the
one party in the best position to evaluate their competitive
effects. Those who have shown such a marked proclivity for unlawful
conduct are in no position to complain that they carry the burden
of showing that their future clearances come within the law. Cf. United States v. Crescent Amusement Co., 323 U.
S. 173 , 323 U. S.
188 . Page 334 U. S. 149 (3) Pooling Agreements; Joint Ownership. The District Court found the exhibitor defendants had agreements
with each other and their affiliates by which theaters of two or
more of them, normally competitive, were operated as a unit, or
managed by a joint committee or by one of the exhibitors, the
profits being shared according to prearranged percentages. Some of
these agreements provided that the parties might not acquire other
competitive theaters without first offering them for inclusion in
the pool. The court concluded that the result of these agreements
was to eliminate competition pro tanto both in exhibition
and in distribution of features, [ Footnote 8 ] since the parties would naturally direct the
films to the theaters in whose earnings they were interested.

															The District Court also found that the exhibitor defendants had
like agreements with certain independent exhibitors. Those
alliances had, in its view, the effect of nullifying competition
between the allied theaters and of making more effective the
competition of the group against theaters not members of the pool.
The court found that, in some cases, the operating agreements were
achieved through leases of theaters, the rentals being measured by
a percentage of profits earned by the theaters in the pool. The
District Court required the dissolution of existing pooling
agreements and enjoined any future arrangement of that
character.

															These provisions of the decree will stand. The practices were
bald efforts to substitute monopoly for competition and to
strengthen the hold of the exhibitor defendants on the industry by
alignment of competitors on their side. Clearer restraints of trade
are difficult to imagine.

															There was another type of business arrangement that the District
Court found to have the same effect as the Page 334 U. S. 150 pooling agreements just mentioned. Many theaters are owned
jointly by two or more exhibitor defendants or by an exhibitor
defendant and an independent. [ Footnote 9 ] The result is, according to the District
Court, that the theaters are operated "collectively, rather than
competitively." And where the joint owners are an exhibitor
defendant and an independent, the effect is, according to the
District Court, the elimination by the exhibitor defendant of

															"putative competition between itself and the other joint owner,
who otherwise would be in a position to operate theaters
independently."

															The District Court found these joint ownerships of theaters to
be unreasonable restraints of trade within the meaning of the
Sherman Act.

															The District Court ordered the exhibitor defendants to
disaffiliate by terminating their joint ownership of theatres, Page 334 U. S. 151 and it enjoined future acquisitions of such interests. One is
authorized to buy out the other if it shows to the satisfaction of
the District Court, and that court first finds, that such
acquisition "will not unduly restrain competition in the exhibition
of feature motion pictures." This dissolution and prohibition of
joint ownership as between exhibitor defendants was plainly
warranted. To the extent that they have joint interests in the
outlets for their films, each in practical effect grants the other
a priority for the exhibition of its films. For, in this situation,
as in the case where theaters are jointly managed, the natural
gravitation of films is to the theaters in whose earnings the
distributors have an interest. Joint ownership between exhibitor
defendants then becomes a device for strengthening their
competitive position as exhibitors by forming an alliance as
distributors. An express agreement to grant each other the
preference would be a most effective weapon to stifle competition.
A working arrangement or business device that has that necessary
consequence gathers no immunity because of its subtlety. Each is a
restraint of trade condemned by the Sherman Act.

															The District Court also ordered disaffiliation in those
instances where theaters were jointly owned by an exhibitor
defendant and an independent, and where the interest of the
exhibitor defendant was "greater than 5% unless such interest shall
be 95% or more," an independent being defined for this part of the
decree as

															"any former, present, or putative motion picture theater
operator which is not owned or controlled by the defendant holding
the interest in question."

															The exhibitor defendants are authorized to acquire existing
interests of the independents in these theaters if they establish,
and if the District Court first finds, that the acquisition "will
not unduly restrain competition in the Page 334 U. S. 152 exhibition of feature motion pictures." All other acquisitions
of such joint interests were enjoined.

															This phase of the decree is strenuously attacked. We are asked
to eliminate it for lack of findings to support it. The argument is
that the findings show no more than the existence of joint
ownership of theaters by exhibitor defendants and independents. The
statement by the District Court that the joint ownership eliminates
"putative competition" is said to be a mere conclusion, without
evidentiary support. For it is said that the facts of the record
show that many of the instances of joint ownership with an
independent interest are cases wholly devoid of any history of or
relationship to restraints of trade or monopolistic practices. Some
are said to be rather fortuitous results of bankruptcies; others
are said to be the results of investments by outside interests who
have no desire or capacity to operate theaters, and so on.

															It is conceded that the District Court made no inquiry into the
circumstances under which a particular interest had been acquired.
It treated all relationships alike insofar as the disaffiliation
provision of the decree is concerned. In this, we think it
erred.

															We have gone into the record far enough to be confident that at
least some of these acquisitions by the exhibitor defendants were
the products of the unlawful practices which the defendants have
inflicted on the industry. To the extent that these acquisitions
were the fruits of monopolistic practices or restraints of trade,
they should be divested. And no permission to buy out the other
owner should be given a defendant. United States v. Crescent
Amusement Co., supra, p. 323 U. S. 189 ; Schine Chain Theaters, Inc. v. United States, ante, p. 334 U. S. 110 .
Moreover, even if lawfully acquired, they may have been utilized as
part of the conspiracy to eliminate or suppress competition in
furtherance of the ends of the conspiracy. In that event,
divestiture would likewise be justified. United Page 334 U. S. 153 States v. Crescent Amusement Co., supra, at 323 U. S.
189 -190. In that situation permission to acquire the
interest of the independent would have the unlawful effect of
permitting the defendants to complete their plan to eliminate
him.

															Furthermore, if the joint ownership is an alliance with one who
is or would be an operator but for the join ownership, divorce
should be decreed even though the affiliation was innocently
acquired. For that joint ownership would afford opportunity to
perpetuate the effects of the restraints of trade which the
exhibitor defendants have inflicted on the industry.

															It seems, however, that some of the cases of joint ownership do
not fall into any of the categories we have listed. Some apparently
involve no more than innocent investments by those who are not
actual or potential operators. If, in such cases, the acquisition
was not improperly used in furtherance of the conspiracy, its
retention by defendants would be justified absent a finding that no
monopoly resulted. And, in those instances, permission might be
given the defendants to acquire the interests of the independents
on a showing by them and a finding by the court that neither
monopoly nor unreasonable restraint of trade in the exhibition of
films would result. In short, we see no reason to place a ban on
this type of ownership, at least so long as theater ownership by
the five majors is not prohibited. The results of inquiry along the
lines we have indicated must await further findings of the District
Court on remand of the cause.

															(4) Formula Deals, Master Agreements, and
Franchises. A formula deal is a licensing agreement with a circuit of
theaters in which the license fee of a given feature is measured,
for the theaters covered by the agreement, by a specified
percentage of the feature's national gross. The District Court
found that Paramount and RKO Page 334 U. S. 154 had made formula deals with independent and affiliated circuits.
The circuit was allowed to allocate playing time and film rentals
among the various theaters as it saw fit. The inclusion of theaters
of a circuit into a single agreement gives no opportunity for other
theater owners to bid for the feature in their respective areas
and, in the view of the District Court, is therefore an
unreasonable restraint of trade. The District Court found some
master agreements [ Footnote
10 ] open to the same objection. Those are the master agreements
that cover exhibition in two or more theaters in a particular
circuit and allow the exhibitor to allocate the film rental paid
among the theaters as it sees fit, and to exhibit the features upon
such playing time as it deems best, and leaves other terms to the
discretion of the circuit. The District Court enjoined the making
or further performance of any formula deal of the type described
above. It also enjoined the making or further performance of any
master agreement covering the exhibition of features in a number of
theaters.

															The findings of the District Court in these respects are
supported by facts, its conclusion that formula deals and master
agreements constitute restraint of trade is valid, and the relief
is proper. The formula deals and master agreements are unlawful
restraints of trade in two respects. In the first place, they
eliminate the possibility of bidding for films theater by theater.
In that way, they eliminate the opportunity for the small
competitor to obtain the choice first runs, and put a premium on
the size of the circuit. They are therefore devices for stifling
competition and diverting the cream of the business to the large
operators. In the second place, the pooling of the purchasing power
of an entire circuit in bidding for films is a misuse of monopoly
power Page 334 U. S. 155 insofar as it combines the theaters in closed towns with
competitive situations. The reasons have been stated in United
States v. Griffith, ante, p. 334 U. S. 100 , and Schine Chain Theaters, Inc. v. United States, ante, p. 334 U. S. 110 , and
need not be repeated here. It is hardly necessary to add that
distributors who join in such arrangements by exhibitors are active
participants in effectuating a restraint of trade and a
monopolistic practice. See United States v. Crescent Amusement
Co., supra, at 323 U. S.
183 .

															The District Court also enjoined the making or further
performance of any franchise. A franchise is a contract with an
exhibitor which extends over a period of more than a motion picture
season and covers the exhibition of features released by the
distributor during the period of the agreement. The District Court
held that a franchise constituted a restraint of trade because a
period of more than one season was too long, and the inclusion of
all features was disadvantageous to competitors. At least that is
the way we read its findings.

															Universal and United Artists object to the outlawry of franchise
agreements. Universal points out that the charge of illegality of
franchises in these cases was restricted to franchises with
theaters owned by the major defendants and to franchises with
circuits or theaters in a circuit, a circuit being defined in the
complaint as a group of more than five theaters controlled by the
same person or a group of more than five theaters which franchises
with circuits or theaters in a films. It seems, therefore, that the
legality of franchises to other exhibitors (except as to
block-booking, a practice to which we will later advert) was not in
issue in the litigation. Moreover, the findings on franchises are
clouded by the statement of the District Court in the opinion that
franchises "necessarily contravene the plan of licensing each
picture, theater by theater, to the highest bidder." As will be
seen hereafter, we eliminate from the decree Page 334 U. S. 156 the provision for competitive bidding. But for its inclusion of
competitive bidding, the District Court might well have treated the
problem of franchises differently.

															We can see how, if franchises were allowed to be used between
the exhibitor defendants, each might be able to strengthen its
strategic position in the exhibition field and continue the ill
effects of the conspiracy which the decree is designed to
dissipate. Franchise agreements may have been employed as devices
to discriminate against some independents in favor of others. We
know from the record that franchise agreements often contained
discriminatory clauses operating in favor not only of theaters
owned by the defendants, but also of the large circuits. But we
cannot say on this record that franchises are illegal per
se when extended to any theater or circuit, no matter how
small. The findings do not deal with the issue doubtlessly due to
the fact that any system of franchises would necessarily conflict
with the system of competitive bidding adopted by the District
Court. Hence, we set aside the findings on franchises so that the
court may examine the problem in the light of the elimination from
the decree of competitive bidding.

															We do not take that course in the case of formula deals and
master agreements, for the findings in these instances seem to
stand on their own bottom, and apparently have no necessary
dependency on the provision for competitive bidding.

															(5) Block-Booking. Block-booking is the practice of licensing, or offering for
license, one feature or group of features on condition that the
exhibitor will also license another feature or group of features
released by the distributors during a given period. The films are
licensed in blocks before they are actually produced. All the
defendants except United Artists have engaged in the practice.
Block-booking prevents competitors from bidding for single features
on their Page 334 U. S. 157 individual merits. The District Court held it illegal for that
reason, and for the reason that it

															"adds to the monopoly of a single copyrighted picture that of
another copyrighted picture which must be taken and exhibited in
order to secure the first."

															That enlargement of the monopoly of the copyright was condemned
below in reliance on the principle which forbids the owner of a
patent to condition its use on the purchase or use of patented or
unpatented materials. See Ethyl Gasoline Corporation v. United
States, 309 U. S. 436 , 309 U. S. 459 ; Morton Salt Co. v. Suppiger Co., 314 U.
S. 488 , 314 U. S. 491 ; Mercoid Corp. v. Mid-Continent Investment Co., 320 U. S. 661 , 320 U.S. 665 . The court
enjoined defendants from performing or entering into any license in
which the right to exhibit one feature is conditioned upon the
licensee's taking one or more other features. [ Footnote 11 ] Page 334 U. S. 158 We approve that restriction. The copyright law, like the patent
statutes, makes reward to the owner a secondary consideration. In Fox Film Corp. v. Doyal, 286 U. S. 123 , 286 U. S. 127 ,
Chief Justice Hughes spoke as follows respecting the copyright
monopoly granted by Congress:

															"The sole interest of the United States, and the primary object
in conferring the monopoly, lie in the general benefits derived by
the public from the labors of authors."

															It is said that reward to the author or artist serves to induce
release to the public of the products of his creative genius. But
the reward does not serve its public purpose if it is not related
to the quality of the copyright. Where a high quality film greatly
desired is licensed only if an inferior one is taken, the latter
borrows quality from the former and strengthens its monopoly by
drawing on the other. The practice tends to equalize, rather than
differentiate, the reward for the individual copyrights. Even where
all the films included in the package are of equal quality, the
requirements that all be taken if one is desired increases the
market for some. Each stands not on its own footing, but in whole
or in part on the appeal which another film may have. As the
District Court said, the result is to add to the monopoly of the
copyright in violation of the principle of the patent cases
involving tying clauses. [ Footnote 12 ] Page 334 U. S. 159 It is argued that Transparent-Wrap Machine Corp. v. Stokes
& Smith Co., 329 U. S. 637 ,
points to a contrary result. That case held that the inclusion in a
patent license of a condition requiring the licensee to assign
improvement patents was not per se illegal. But that
decision, confined to improvement patents, was greatly influenced
by the federal statute governing assignments of patents. It
therefore has no controlling significance here.

															Columbia Pictures makes an earnest argument that enforcement of
the restriction as to block-booking will be very disadvantageous to
it, and will greatly impair its ability to operate profitably. But
the policy of the antitrust laws is not qualified or conditioned by
the convenience of those whose conduct is regulated. Nor can a
vested interest in a practice which contravenes the policy of the
antitrust laws receive judicial sanction.

															We do not suggest that films may not be sold in blocks or groups
when there is no requirement, express or implied, for the purchase
of more than one film. All we hold to be illegal is a refusal to
license one or more copyrights unless another copyright is
accepted.

															(6) Discrimination. The District Court found that defendants had discriminated
against small independent exhibitors and in favor of large
affiliated and unaffiliated circuits through various kinds of
contract provisions. These included suspension of the terms of a
contract if a circuit theater remained closed for more than eight
weeks, with reinstatement without liability on reopening; allowing
large privileges in the selection and elimination of films; Page 334 U. S. 160 allowing deductions in film rentals if double bills are played;
granting moveovers [ Footnote
13 ] and extended runs; granting road show privileges; [ Footnote 14 ] allowing overage and
underage; [ Footnote 15 ]
granting unlimited playing time; excluding foreign pictures and
those of independent producers, and granting rights to question the
classification of features for rental purposes. The District Court
found that the competitive advantages of these provisions were so
great that their inclusion in contracts with the larger circuits
and their exclusion from contracts with the small independents
constituted an unreasonable discrimination against the latter. Each
discriminatory contract constituted a conspiracy between licensor
and licensee. Hence, the District Court deemed it unnecessary to
decide whether the defendants had conspired among themselves to
make these discriminations. No provision of the decree specifically
enjoins these discriminatory practices, because they were thought
to be impossible under the system of competitive bidding adopted by
the District Court.

															These findings are amply supported by the evidence. We concur in
the conclusion that these discriminatory practices are included
among the restraints of trade which the Sherman Act condemns. See Interstate Circuit v. United States, supra, p. 306 U. S. 231 ; United States v. Crescent Amusement Co., supra, p. 323 U. S.
182 -183. It will be for the Page 334 U. S. 161 District Court, on remand of these cases, to provide effective
relief against their continuance, as our elimination of the
provision for competitive bidding leaves this phase of the cases
unguarded.

															There is some suggestion on this as well as on other phases of
the cases that large exhibitors with whom defendants dealt fathered
the illegal practices and forced them onto the defendants. But, as
the District Court observed, that circumstance, if true, does not
help the defendants. For acquiescence in an illegal scheme is as
much a violation of the Sherman Act as the creation and promotion
of one. Second -- Competitive Bidding. The District Court concluded that the only way competition could
be introduced into the existing system of fixed prices, clearances,
and runs was to require that films be licensed on a competitive
bidding basis. Films are to be offered to all exhibitors in each
competitive area. [ Footnote
16 ] The license for the desired run is to be granted to the
highest responsible bidder unless the distributor rejects all
offers. The licenses are to be offered and taken theater by theater
and picture by picture. Licenses to show films in theaters in which
the licensor owns directly or indirectly an interest of ninety-five
percent or more are excluded from the requirement for competitive
bidding.

															Paramount is the only one of the five majors who opposes the
competitive bidding system. Columbia Pictures, Universal, and
United Artists oppose it. The intervenors representing certain
independents oppose it. And Page 334 U. S. 162 the Department of Justice, which apparently proposed the system
originally, speaks strongly against it here.

															At first blush, there is much to commend the system of
competitive bidding. The trade victims of this conspiracy have in
large measure been the small independent operators. They are the
ones that have felt most keenly the discriminatory practices and
predatory activities in which defendants have freely indulged. They
have been the victims of the massed purchasing power of the larger
units in the industry. It is largely out of the ruins of the small
operators that the large empires of exhibitors have been built.
Thus, it would appear to be a great boon to them to substitute open
bidding for the private deals and favors on which the large
operators have thrived. But, after reflection, we have concluded
that competitive bidding involves the judiciary so deeply in the
daily operation of this nationwide business, and promises such
dubious benefits, that it should not be undertaken.

															Each film is to be licensed on a particular run to "the highest
responsible bidder, having a theater of a size, location and
equipment adequate to yield a reasonable return to the licensor."
The bid

															"shall state what run such exhibitor desires and what he is
willing to pay for such feature, which statement may specify a flat
rental, or a percentage of gross receipts, or both, or any other
form of rental, and shall also specify what clearance such
exhibitor is willing to accept, the time and days when such
exhibitor desires to exhibit it, and any other offers which such
exhibitor may care to make."

															We do not doubt that, if a competitive bidding system is
adopted, all these provisions are necessary. For the licensing of
films at auction is quite obviously a more complicated matter than
the like sales for cash of tobacco, wheat, or other produce.
Columbia puts these pertinent queries:

															"No two exhibitors are likely to make the same bid as to Page 334 U. S. 163 dates, clearance, method of fixing rental, etc. May bids
containing such diverse factors be readily compared? May a flat
rental bid be compared with a percentage bid? May the value of any
percentage bid be determined unless the admission price is fixed by
the license?"

															The question as to who is the highest bidder involves the use of
standards incapable of precise definition, because the bids being
compared contain different ingredients. Determining who is the most
responsible bidder likewise cannot be reduced to a formula. The
distributor's judgment of the character and integrity of a
particular exhibitor might result in acceptance of a lower bid than
others offered. Yet, t o prove that favoritism was shown would be
well-nigh impossible, unless perhaps all the exhibitors in the
country were given classifications of responsibility. If, indeed,
the choice between bidders is not to be entrusted to the
uncontrolled discretion of the distributors, some effort to
standardize the factors involved in determining "a reasonable
return to the licensor" would seem necessary.

															We mention these matters merely to indicate the character of the
job of supervising such a competitive bidding system. It would
involve the judiciary in the administration of intricate and
detailed rules governing priority, period of clearance, length of
run, competitive areas, reasonable return, and the like. The system
would be apt to require as close a supervision as a continuous
receivership, unless the defendants were to be entrusted with vast
discretion. The judiciary is unsuited to affairs of business
management, and control through the power of contempt is crude and
clumsy, and lacking in the flexibility necessary to make continuous
and detailed supervision effective. Yet delegation of the
management of the system to the discretion of those who had the
genius to conceive the present conspiracy and to execute it with
the subtlety which this record reveals could be done only with
the Page 334 U. S. 164 greatest reluctance. At least such choices should not be faced
unless the need for the system is great, and its benefits
plain.

															The system uproots business arrangements and established
relationships with no apparent overall benefit to the small
independent exhibitor. If each feature must go to the highest
responsible bidder, those with the greatest purchasing power would
seem to be in a favored position. Those with the longest purse --
the exhibitor defendants and the large circuits -- would seem to
stand in a preferred position. If, in fact, they were enabled
through the competitive bidding system to take the cream of the
business, eliminate the smaller independents, and thus increase
their own strategic hold on the industry, they would have the cloak
of the court's decree around them for protection. Hence, the
natural advantage which the larger and financially stronger
exhibitors would seem to have in the bidding gives us pause. If a
premium is placed on purchasing power, the court-created system may
be a powerful factor towards increasing the concentration of
economic power in the industry, rather than cleansing the
competitive system of unwholesome practices. For, where the system
in operation promises the advantage to the exhibitor who is in the
strongest financial position, the injunction against discrimination
[ Footnote 17 ] is apt to hold
an empty promise. In this connection, it should be noted that, even
though the independents in a given competitive area do not want
competitive bidding, the exhibitor defendants can invoke the
system.

															Our doubts concerning the competitive bidding system are
increased by the fact that defendants who own theaters are allowed
to preempt their own features. They thus start with an inventory
which all other exhibitors Page 334 U. S. 165 lack. The latter have no prospect of assured runs except what
they get by competitive bidding. The proposed system does not
offset in any way the advantages which the exhibitor defendants
have by way of theater ownership. It would seem, in fact, to
increase them. For the independents are deprived of the stability
which flows from established business relationships. Under the
proposed system, they can get features only if they are the highest
responsible bidders. They can no longer depend on their private
sources of supply which their ingenuity has created. Those sources,
built perhaps on private relationships and representing important
items of goodwill, are banned even though they are free of any
taint of illegality.

															The system was designed, as some of the defendants put it, to
remedy the difficulty of any theater to break into or change the
existing system of runs and clearances. But we do not see how, in
practical operation, the proposed system of competitive bidding is
likely to open up to competition the markets which defendants'
unlawful restraints have dominated. Rather real danger seems to us
to lie in the opportunities the system affords the exhibitor
defendants and the other large operators to strengthen their hold
in the industry. We are reluctant to alter decrees in these cases
where there is agreement with the District Court on the nature of
the violations. United States v. Crescent Amusement Co.,
supra, p. 323 U. S. 185 ; International Salt Co. v. United States, 332 U.
S. 392 , 332 U. S. 400 .
But the provisions for competitive bidding in these cases promise
little in the way of relief against the real evils of the
conspiracy. They implicate the judiciary heavily in the details of
business management if supervision is to be effective. They vest
powerful control in the exhibitor defendants over their competitors
if close supervision by the court is not undertaken. In light of
these considerations, we conclude that the competitive Page 334 U. S. 166 bidding provisions of the decree should be eliminated so that a
more effective decree may be fashioned.

															We have already indicated in preceding parts of this opinion
that this alteration in the decree leaves a hiatus or two which
will have to be filled on remand of the cases. We will indicate
hereafter another phase of the problem which the District Court
should also reconsider in view of this alteration in the decree.
But, out of an abundance of caution, we add this additional word.
The competitive bidding system was perhaps the central arch of the
decree designed by the District Court. Its elimination may effect
the cases in ways other than those which we expressly mention.
Hence, on remand of the cases, the freedom of the District Court to
reconsider the adequacy of decree is not limited to those parts we
have specifically indicated. Third. Monopoly, Expansion of Theater Holdings,
Divestiture. There is a suggestion that the hold the defendants have on the
industry is so great that a problem under the First Amendment is
raised. Cf. Associated Press v. United States, 326 U. S. 1 . We have
no doubt that moving pictures, like newspapers and radio, are
included in the press whose freedom is guaranteed by the First
Amendment. That issue would be focused here if we had any question
concerning monopoly in the production of moving pictures. But
monopoly in production was eliminated as an issue in these cases,
as we have noted. The chief argument at the bar is phrased in terms
of monopoly of exhibition, restraints on exhibition, and the like.
Actually, the issue is even narrower than that. The main contest is
over the cream of the exhibition business -- that of the first-run
theaters. By defining the issue so narrowly, we do not intend to
belittle its importance. It shows, however, that the question here
is not Page 334 U. S. 167 what the public will see, or if the public will be permitted to
see certain features. It is clear that, under the existing system,
the public will be denied access to none. If the public cannot see
the features on the first-run, it may do so on the second, third,
fourth, or later run. The central problem presented by these cases
is which exhibitors get the highly profitable first-run business.
That problem has important aspects under the Sherman Act. But it
bears only remotely, if at all, on any question of freedom of the
press, save only as timeliness of release may be a factor of
importance in specific situations.

															The controversy over monopoly relates to monopoly in exhibition,
and, more particularly, monopoly in the first-run phase of the
exhibition business.

															The five majors, in 1945, had interests in somewhat over 17
percent of the theaters in the United States -- 3,137 out of
18,076. [ Footnote 18 ] Those
theaters paid 45 percent of the total domestic film rental received
by all eight defendants.

															In the 92 cities of the country with populations over 100,000,
at least 70 percent of all the first-run theaters are affiliated
with one or more of the five majors. In 4 of those cities, the five
majors have no theaters. In 38 of those cities, there are no
independent first-run theaters. In none of the remaining 50 cities
did less Page 334 U. S. 168 than three of the distributor defendants license their product
on first run to theaters of the five majors. In 19 of the 50
cities, less than three of the distributor defendants licensed
their product on first run to independent theaters. In a majority
of the 50 cities, the greater share of all of the features of
defendants were licensed for first-run exhibition in the theaters
of the five majors.

															In about 60 percent of the 92 cities having populations of over
100,000, independent theaters compete with those of the five majors
in first-run exhibition. In about 91 percent of the 92 cities,
there is competition between independent theaters and the theaters
of the five majors or between theaters of the five majors
themselves for first-run exhibition. In all of the 92 cities, there
is always competition in some run, even where there is no
competition in first runs.

															In cities between 25,000 and 100,000 populations, the five
majors have interests in 577 of a total of 978 first-run theaters,
or about 60 percent. In about 300 additional towns, mostly under
25,000, an operator affiliated with one of the five majors has all
of the theaters in the town.

															The District Court held that the five majors could not be
treated collectively so as to establish claims of general
monopolization in exhibition. It found that none of them was
organized or had been maintained "for the purpose of achieving a
national monopoly" in exhibition. It found that the five majors, by
their present theater holdings "alone" (which aggregate a little
more than one-sixth of all the theaters in the United States), "do
not and cannot collectively or individually have a monopoly of
exhibition." The District Court also found that, where a single
defendant owns all of the first-run theaters in a town, there is no
sufficient proof that the acquisition was for the purpose of
creating a monopoly. It found, rather, that such consequence
resulted from the inertness Page 334 U. S. 169 of competitors, their lack of financial ability to build
theaters comparable to those of the five majors, or the preference
of the public for the best equipped theaters. And the percentage of
features on the market which any of the five majors could play in
its own theaters was found to be relatively small, and in nowise to
approximate a monopoly of film exhibition. [ Footnote 19 ]

															Even in respect of the theaters jointly owned or jointly
operated by the defendants with each other or with independents,
the District Court found no monopoly or attempt to monopolize.
Those joint agreements or ownership were found only to be
unreasonable restraints of trade. The District Court, indeed, found
no monopoly on any phase of the cases, although it did find an
attempt to monopolize in the fixing of prices, the granting of
unreasonable Page 334 U. S. 170 clearances, block-booking, and the other unlawful restraints of
trade we have already discussed. The "root of the difficulties,"
according to the District Court, lay not in theater ownership, but
in those unlawful practices.

															The District Court did, however, enjoin the five majors from
expanding their present theater holdings in any manner. [ Footnote 20 ] It refused to grant the
request of the Department of Justice for total divestiture by the
five majors of their theater holdings. It found that total
divestiture would be injurious to the five majors and damaging to
the public. Its thought on the latter score was that the new set of
theater owners who would take the place of the five majors would be
unlikely for some years to give the public as good service as those
they supplanted

															"in view of the latter's demonstrated experience and skill in
operating what must be regarded as in general the largest and best
equipped theaters."

															Divestiture was, it thought, too harsh a remedy where there was
available the alternative of competitive bidding. It accordingly
concluded that divestiture was unnecessary "at least until the
efficiency of that system has been tried and found wanting."

															It is clear, so far as the five majors are concerned, that the
aim of the conspiracy was exclusionary, i.e., it was
designed to strengthen their hold on the exhibition field. In other
words, the conspiracy had monopoly in exhibition for one of its
goals, as the District Court held. Price, clearance, and run are
interdependent. The clearance and run provisions of the licenses
fixed the relative playing positions of all theaters in a certain
area; the minimum price provisions were based on playing position
-- the first-run theaters being required to charge the highest
prices, Page 334 U. S. 171 the second-run theaters the next highest, and so on. As the
District Court found,

															"In effect, the distributor, by the fixing of minimum admission
prices, attempts to give the prior-run exhibitors as near a
monopoly of the patronage as possible."

															It is therefore not enough in determining the need for
divestiture to conclude with the District Court that none of the
defendants was organized or has been maintained for the purpose of
achieving a "national monopoly," nor that the five majors through
their present theater holdings "alone," do not and cannot
collectively or individually have a monopoly of exhibition. For
when the starting point is a conspiracy to effect a monopoly
through restraints of trade, it is relevant to determine what the
results of the conspiracy were, even if they fell short of
monopoly.

															An example will illustrate the problem. In the popular sense,
there is a monopoly if one person owns the only theater in town.
That usually does not, however, constitute a violation of the
Sherman Act. But as we noted in United States v. Griffith,
ante, p. 334 U. S. 100 , and see Schine Chain Theaters, Inc. v. United States,
ante, p. 334 U. S. 110 ,
even such an ownership is vulnerable in a suit by the United States
under the Sherman Act if the property was acquired, or its
strategic position maintained, as a result of practices which
constitute unreasonable restraints of trade. Otherwise, there would
be reward from the conspiracy through retention of its fruits.
Hence, the problem of the District Court does not end with
enjoining continuance of the unlawful restraints, nor with
dissolving the combination which launched the conspiracy. Its
function includes undoing what the conspiracy achieved. As we have
discussed in Schine Chain Theaters, Inc. v. United States,
ante, p. 334 U. S. 110 , the
requirement that the defendants restore what they unlawfully
obtained is no more punishment than the familiar remedy Page 334 U. S. 172 of restitution. What findings would be warranted after such an
inquiry in the present cases we do not know. For the findings of
the District Court do not cover this point beyond stating that
monopoly was an objective of the several restraints of trade that
stand condemned.

															Moreover, the problem under the Sherman Act is not solved merely
by measuring monopoly in terms of size or extent of holdings, or by
concluding that single ownerships were not obtained "for the
purpose of achieving a national monopoly." It is the relationship
of the unreasonable restraints of trade to the position of the
defendants in the exhibition field (and, more particularly, in the
first-run phase of that business) that is of first importance on
the divestiture phase of these cases. That is the position we have
taken in Schine Chain Theaters, Inc. v. United States,
ante, p. 334 U. S. 110 , in
dealing with a projection of the same conspiracy through certain
large circuits. Parity of treatment of the unaffiliated and the
affiliated circuits requires the same approach here. For the fruits
of the conspiracy which are denied the independents must also be
denied the five majors. In this connection, there is a suggestion
that one result of the conspiracy was a geographical division of
territory among the five majors. We mention it not to intimate that
it is true, but only to indicate the appropriate extent of the
inquiry concerning the effect of the conspiracy in theater
ownership by the five majors.

															The findings of the District Court are deficient on that score,
and obscure on another. The District Court, in its findings, speaks
of the absence of a "purpose" on the part of any of the five majors
to achieve a "national monopoly" in the exhibition of motion
pictures. First, there is no finding as to the presence or absence
of monopoly on the part of the five majors in the first-run field for the entire country, in the first-run field in the 92 largest cities of the country,
or in the first-run field in separate localities. Yet the first-run field, which constitutes the cream of the Page 334 U. S. 173 exhibition business, is the core of the present cases. Section 1
of the Sherman Act outlaws unreasonable restraints irrespective of
the amount of trade or commerce involved ( United States v.
Socony-Vacuum Oil Co., 310 U. S. 150 , 310 U. S.
224 -225, n. 59), and § 2 condemns monopoly of " any
part' of trade or commerce." "Any part" is construed to mean an
appreciable part of interstate or foreign trade or commerce. United States v. Yellow Cab Co., 332 U.
S. 218 , 332 U. S. 225 .
Second, we pointed out in United States v. Griffith, ante, p. 334 U. S. 100 ,
that "specific intent" is not necessary to establish a "purpose or
intent" to create a monopoly, but that the requisite "purpose or
intent" is present if monopoly results as a necessary consequence
of what was done. The findings of the District Court on this phase
of the cases are not clear, though we take them to mean by the
absence of "purpose" the absence of a specific intent. So
construed, they are inconclusive. In any event, they are ambiguous,
and must be recast on remand of the cases. Third, monopoly power,
whether lawfully or unlawfully acquired, may violate § 2 of the
Sherman Act though it remains unexercised ( United States v.
Griffith, ante, p. 334 U. S. 100 ),
for, as we stated in American Tobacco Co. v. United
States, 328 U. S. 781 , 328 U. S. 809 , 328 U. S. 811 ,
the existence of power "to exclude competition when it is desired
to do so" is itself a violation of § 2, provided it is coupled with
the purpose or intent to exercise that power. The District Court,
being primarily concerned with the number and extent of the theater
holdings of defendants, did not address itself to this phase of the
monopoly problem. Here also, parity of treatment as between
independents and the five majors as theater owners, who were tied
into the same general conspiracy, necessitates consideration of
this question. Exploration of these phases of the cases would not be necessary
if, as the Department of Justice argues, vertical integration of
producing, distributing and exhibiting Page 334 U. S. 174 motion pictures is illegal per se. But the majority of
the Court does not take that view. In the opinion of the majority,
the legality of vertical integration under the Sherman Act turns on
(1) the purpose or intent with which it was conceived, or (2) the
power it creates, and the attendant purpose or intent. First, it
runs afoul of the Sherman Act if it was a calculated scheme to gain
control over an appreciable segment of the market and to restrain
or suppress competition, rather than an expansion to meet
legitimate business needs. United States v. Reading Co., 253 U. S. 26 , 253 U. S. 57 ; United States v. Lehigh Valley R. Co., 254 U.
S. 255 , 254 U. S.
269 -270. Second, a vertically integrated enterprise,
like other aggregations of business units ( United States v.
Aluminum Co. of America, 148 F.2d 416), will constitute
monopoly which, though unexercised, violates the Sherman Act
provided a power to exclude competition is coupled with a purpose
or intent to do so. As we pointed out in United States v.
Griffith, ante, p. 334 U. S. 107 ,
n. 10, size is itself an earmark of monopoly power. For size
carries with it an opportunity for abuse. And the fact that the
power created by size was utilized in the past to crush or prevent
competition is potent evidence that the requisite purpose or intent
attends the presence of monopoly power. See United States v.
Swift & Co., 286 U. S. 106 , 286 U. S. 116 ; United States v. Aluminum Co. of America, supra, 148 F.2d
at 430. Likewise bearing on the question whether monopoly power is
created by the vertical integration is the nature of the market to
be served ( United States v. Aluminum Co. of America,
supra, 148 F.2d at 430), and the leverage on the market which
the particular vertical integration creates or makes possible.

															These matters were not considered by the District Court. For
that reason, as well as the others we have mentioned, the findings
on monopoly and divestiture which we have discussed in this part of
the opinion will be set aside. There is an independent reason for
doing Page 334 U. S. 175 that. As we have seen, the District Court considered competitive
bidding as an alternative to divestiture in the sense that it
concluded that further consideration of divestiture should not be
had until competitive bidding had been tried and found wanting.
Since we eliminate from the decree the provisions for competitive
bidding, it is necessary to set aside the findings on divestiture
so that a new start on this phase of the cases may be made on their
remand.

															It follows that the provision of the decree barring the five
majors from further theater expansion should likewise be
eliminated. For it too is related to the monopoly question, and the
District Court should be allowed to make an entirely fresh start on
the whole of the problem. We in no way intimate, however, that the
District Court erred in prohibiting further theater expansion by
the five majors.

															The Department of Justice maintains that, if total divestiture
is denied, licensing of films among the five majors should be
barred. As a permanent requirement, it would seem to be only an
indirect way of forcing divestiture. For the findings reveal that
the theaters of the five majors could not operate their theaters
full time on their own films. [ Footnote 21 ] Whether that step would, in absence of
competitive bidding, serve as a short range remedy in certain
situations to dissipate the effects of the conspiracy ( United
States v. Univis Lens Co., 316 U. S. 241 , 316 U. S. 254 ; United States v. Bausch & Lomb Co., supra, p. 321 U. S. 724 ; United States v. Crescent Amusement Co., supra, p. 323 U. S. 188 )
is a question for the District Court. Page 334 U. S. 176 Fourth. The consent decree created an arbitration system which had, in
the view of the District Court, proved useful in its operation. The
court indeed thought that the arbitration system had dealt with the
problems of clearances and runs "with rare efficiency." But it did
not think it had the power to continue an arbitration system which
would be binding on the parties, since the consent decree did not
bind the defendants who had not consented to it and since the
government, acting pursuant to the powers reserved under the
consent decree, moved for trial of the issues charged in the
complaint. The District Court recommended, however, that some such
system be continued. But it included no such provision in its
decree.

															We agree that the government did not consent to a permanent
system of arbitration under the consent decree. and that the
District Court has no power to force or require parties to submit
to arbitration in lieu of the remedies afforded by Congress for
enforcing the antitrust laws. But the District Court has the power
to authorize the maintenance of such a system by those parties who
consent, and to provide the rules and procedure under which it is
to operate. The use of the system would not, of course, be
mandatory. It would be merely an auxiliary enforcement procedure,
barring no one from the use of other remedies the law affords for
violations either of the Sherman Act or of the decree of the court.
Whether such a system of arbitration should be inaugurated is for
the discretion of the District Court. Fifth-Intervention. Certain associations of exhibitors and a number of independent
exhibitors, appellant-intervenors in Nos. 85 and 86, were denied
leave to intervene in the District Page 334 U. S. 177 Court. They appeal from those orders. They also filed original
motions for leave to intervene in this Court. We postponed
consideration of the original motions and of our jurisdiction to
hear the appeals until a hearing on the merits of the cases.

															Rule 24(a) of the Rules of Civil Procedure, which provides for
intervention as of right, reads in part as follows:

															"Upon timely application, anyone shall be permitted to intervene
in an action: . . . (2) when the representation of the applicant's
interest by existing parties is or may be inadequate and the
applicant is or may be bound by a judgment in the action."

															The complaint of the intervenors was directed towards the system
of competitive bidding. The Department of Justice is the
representative of the public in these antitrust suits. So far as
the protection of the public interest in free competition is
concerned, the interests of those intervenors was adequately
represented. The intervenors, however, claim that the system of
competitive bidding would have operated prejudicially to their
rights. Cf. United States v. Terminal R. Assn. of St.
Louis, 236 U. S. 194 , 236 U. S. 199 .
Their argument is that the plan of competitive bidding under the
control of the defendants would be a concert of action that would
be illegal but for the decree. If pursuant to the decree defendants
acted under that plan, they would gain immunity from any liability
under the antitrust laws which otherwise they might have to the
intervenors. Thus, it is argued, the decree would affect their
legal rights and be binding on them. The representation of their
interests by the Department of Justice on that score was said to be
inadequate since that agency proposed the idea of competitive
bidding in the District Court.

															We need not consider the merits of that argument. Even if we
assume that the intervenors are correct in their Page 334 U. S. 178 position, intervention should be denied here, and the orders of
the District Court denying leave to intervene must be affirmed. Now
that the provisions for competitive bidding have been eliminated
from the decree, there is no basis for saying that the decree
affects their legal rights. Whatever may have been the situation
below, no other reason appears why, at this stage, their
intervention is warranted. Any justification for making them
parties has disappeared.

															The judgment in these cases is affirmed in part and reversed in
part, and the cases are remanded to the District Court for
proceedings in conformity with this opinion. So ordered. MR. JUSTICE JACKSON took no part in the consideration or
decision of these cases.

															* Together with No. 80, Loew's, Incorporated et al. v.
United States; No. 81, Paramount Pictures, Inc. et al. v.
United States; No. 82, Columbia Pictures Corp. et al. v.
United States; No. 83, United Artists Corp. v. United
States; No. 84, Universal Corp. et al. v. United
States; No. 85, American Theaters Assn., Inc. et al. v.
United States et al., and No. 86, Allred et al. v. United
States et al., also on appeal from the same court.

															[ Footnote 1 ]

															Sec. 2 of the Expediting Act of February 11, 1903, 32 Stat. 823,
as amended, 15 U.S.C. § 29, and § 238 of the Judicial Code, as
amended by the Act of February 13, 1925, 43 Stat. 936, 938, 28
U.S.C. § 345.

															[ Footnote 2 ]

															The court was convened pursuant to the provisions of the Act of
April 6, 1942, 56 Stat. 198, 199, 15 U.S.C. § 28.

															[ Footnote 3 ]

															Before trial, negotiations for a settlement were undertaken. As
a result, a consent decree against the five major defendants was
entered November 20, 1940. The consent decree contained no
admission of violation of law and adjudicated no issue of fact or
law, except that the complaint stated a cause of action. The decree
reserved to the United States the right, at the end of a three-year
trial period, to seek the relief prayed for in the amended
complaint. After the end of the three-year period, the United
States moved for trial against all the defendants.

															[ Footnote 4 ]

															A master agreement is a licensing agreement or "blanket deal"
covering the exhibition of features in a number of theaters,
usually comprising a circuit.

															A franchise is a licensing agreement, or series of licensing
agreements, entered into as part of the same transaction, in effect
for more than one motion picture season and covering the exhibition
of features released by one distributor during the entire period of
the agreement.

															An independent, as used in these cases, means a producer,
distributor, or exhibitor, as the context requires, which is not a
defendant in the action or a subsidiary or affiliate of a
defendant.

															[ Footnote 5 ] See note 12 infra. [ Footnote 6 ]

															A clearance is the period of time, usually stipulated in license
contracts, which must elapse between runs of the same feature
within a particular area or in specified theaters.

															Runs are successive exhibitions of a feature in a given area,
first-run being the first exhibition in that area, second-run being
the next subsequent, and so on, and include successive exhibitions
in different theaters even though such theaters may be under a
common ownership or management.

															[ Footnote 7 ]

															Thus, the District Court found:

															"Some licenses granted clearance [to sell] to all theaters which
the exhibitor party to the contract might thereafter own, lease,
control, manage, or operate against all theaters in the immediate
vicinity of the exhibitor's theater thereafter erected or opened.
The purpose of this type of clearance agreements was to fix the run
and clearance status of any theater thereafter opened not on the
basis of its appointments, size, location, and other competitive
features normally entering into such determination, but rather upon
the sole basis of whether it were operated by the exhibitor party
to the agreement."

															[ Footnote 8 ]

															A feature is any motion picture, regardless of topic, the length
of film of which is in excess of 4,000 feet.

															[ Footnote 9 ] Theaters jointly owned with independents: Paramount 993

															Warner 20

															Fox 66

															RKO 187

															Loew's 21

															----

															Total 1287 Theaters jointly owned by two defendants: Paramount-Fox 6

															Paramount-Loew's 14

															Paramount-Warner 25

															Paramount-RKO 150

															Loew's-RKO 3

															Loew's-Warner 5

															Fox-RKO 1

															Warner-RKO 10

															----

															Total 214

															Of the 1287 jointly owned with independents, 209 would not be
affected by the decree, since one of the ownership interests is
less than 5 percent, an amount which the District Court treated as de minimis. [ Footnote 10 ] See note 4 supra. [ Footnote 11 ]

															Blind-selling is a practice whereby a distributor licenses a
feature before the exhibitor is afforded an opportunity to view it.
To remedy the problems created by that practice, the District Court
included the following provision in its decree:

															"To the extent that any of the features have not been
trade-shown prior to the granting of the license for more than a
single feature, the licensee shall be given by the licensor the
right to reject twenty percent of such features not trade-shown
prior to the granting of the license, such right of rejection to be
exercised in the order of release within ten days after there has
been an opportunity afforded to the licensee to inspect the
feature."

															The court advanced the following as its reason for inclusion of
this provision:

															"Blind-selling does not appear to be as inherently restrictive
of competition as block-booking, although it is capable of some
abuse. By this practice, a distributor could promise a picture of
good quality or of a certain type which, when produced, might prove
to be of poor quality or of another type -- a competing distributor
meanwhile being unable to market its product and, in the end,
losing its outlets for future pictures. The evidence indicates that
trade-shows, which are designated to prevent such blind-selling,
are poorly attended by exhibitors. Accordingly, exhibitors who
choose to obtain their films for exhibition in quantities, need to
be protected against burdensome agreements by being given an option
to reject a certain percentage of their blind-licensed pictures
within a reasonable time after they shall have become available for
inspection."

															We approve this provision of the decree.

															[ Footnote 12 ]

															The exclusive right granted by the Copyright Act, 35 Stat. 1075,
17 U.S.C. § 1, includes no such privilege. It provides, so far as
material here, as follows:

															"That any person entitled thereto, upon complying with the
provisions of this Act, shall have the exclusive right: . . ."

															" * * * *" "(d) To perform or represent the copyrighted work publicly if it
be a drama or, if it be a dramatic work and not reproduced in
copies for sale, to vend any manuscript or any record whatsoever
thereof; to make or to procure the making of any transcription or
record thereof by or from which, in whole or in part, it may in any
manner or by any method be exhibited, performed, represented,
produced, or reproduced, and to exhibit, perform, represent,
produce, or reproduce it in any manner or by any method whatsoever.
. . ."

															[ Footnote 13 ]

															A moveover is the privilege given a licensee to move a picture
from one theater to another as a continuation of the run at the
licensee's first theater.

															[ Footnote 14 ]

															A road show is a public exhibition of a feature in a limited
number of theaters, in advance of its general release, at admission
prices higher than those customarily charged in first-run theaters
in those areas.

															[ Footnote 15 ]

															Underage and overage refer to the practice of using excess film
rental earned in one circuit theater to fulfill a rental commitment
defaulted by another.

															[ Footnote 16 ]

															Competitive bidding is required only in a "competitive area"
where it is "desired by the exhibitors." As the District Court
said, "the decree provides an opportunity to bid for any exhibitor
in a competitive area who may desire to do so."

															The details of the competitive bidding system will be found in
70 F.Supp., pp. 73, 74.

															[ Footnote 17 ]

															The competitive bidding part of the decree provides: "Each
license shall be granted solely upon the merits and without
discrimination in favor of affiliates, old customers, or
others."

															[ Footnote 18 ]

															The theaters which each of the five majors owned independently
of the others were: Paramount 1,395 or 7.72 percent; Warner 501 or
2.77 percent; Loew's 135 or .74 percent; Fox 636 or 3.52 percent;
RKO 109 or .60 percent. There were in addition 361 theaters, or
about 2 percent, in which two or more of the five majors had joint
interests. These figures exclude connections through film buying,
or management contracts, or through corporations in which a
defendant owns an indirect minority stock interest.

															There theaters are located in 922 towns in 48 States and the
District of Columbia. For further description of the distribution
of theaters, see Bertrand, Evans, and Blanchard, The
Motion Picture Industry -- A Pattern of Control 15-16 (TNEC
Monograph 43, 1941).

															[ Footnote 19 ]

															The number of feature films released during the 1943-44 season
by the eleven largest distributors is as follows:

---------------------------------------------------------------------

															Percentages of Total

															------------------------

															With With

															No. of Films "Westerns" "Westerns"

															included excluded

---------------------------------------------------------------------

															Fox . . . . . . . . . . 33 8.31 9.85

															Loew's. . . . . . . . . 33 8.31 9.85

															Paramount . . . . . . . 31 7.81 9.25

															RKO . . . . . . . . . . 38 9.57 11.34

															Warner. . . . . . . . . 19 4.79 5.67

															Columbia. . . . . . . . 41 10.32 12.24

															United Artists. . . . . 16 4.04 4.78

															Universal . . . . . . . 49 12.34 14.63

															Republic. . . . . . . . -29 features 14.86 8.66

															-30 "Westerns"

															Monogram. . . . . . . . -26 features 10.58 7.76

															-16 "Westerns"

															PRC . . . . . . . . . . -20 features 9.07 5.97

															-16 "Westerns"

															---- ------ ------

															Totals. . . . . . . . 397 100.00 100.00

															335 without "Westerns"

---------------------------------------------------------------------

															[ Footnote 20 ]

															Excepted from this prohibition was the acquisition of interests
in theaters jointly owned, a matter we have discussed in a
preceding portion of this opinion.

															[ Footnote 21 ]

															The District Court found,

															"Except for a very limited number of theaters in the very
largest cities, the 18,000 and more theaters in the United States
exhibit the product of more than one distributor. Such theaters
could not be operated on the product of only one distributor."

															MR. JUSTICE FRANKFURTER, dissenting in part.

															"The framing of decrees should take place in the District,
rather than in Appellate Courts. They are invested with large
discretion to model their judgments to fit the exigencies of the
particular case."

															On this guiding consideration, the Court, earlier this Term,
sustained a Sherman Law decree which was not the outcome of a long
trial involving complicated and contested facts and their
significance, but the formulation of a summary judgment on the bare
bones of pleadings. International Salt Co. v. United
States, 332 U. S. 392 , 332 U. S.
400 -401. The record in this case bespeaks more
compelling respect for the decree fashioned by the District Court
of three judges to put an end to violations of the Sherman Law, and
to prevent the recurrence, than that which led this Court not to
find abuse of discretion in the decree by a single district judge
in the International Salt case. Page 334 U. S. 179 This Court has both the authority and duty to consider whether a
decree is well calculated to undo, as far as is possible, the
result of transactions forbidden by the Sherman Law, and to guard
against their repetition. But it is not the function of this Court,
and it would ill discharge it, to displace the district courts and
write decrees de novo. We are, after all, an appellate
tribunal even in Sherman Law cases. It could not be fairly claimed
that this Court possesses greater experience, understanding, and
prophetic insight in relation to the movie industry, and is
therefore better equipped to formulate a decree for the movie
industry, than was the District Court in this case, presided over
as it was by one of the wisest of judges.

															The terms of the decree in this litigation amount, in effect, to
the formulation of a regime for the future conduct of the movie
industry. The terms of such a regime, within the scope of judicial
oversight, are not to be derived from precedents in the law
reports, nor, for that matter, from any other available repository
of knowledge. Inescapably, the terms must be derived from an
assessment of conflicting interests not quantitatively measurable,
and a prophecy regarding the workings of untried remedies for
dealing with disclosed evils so as to advance most the
comprehensive public interest.

															The crucial legal question before us is not whether we would
have drawn the decree as the District Court drew it, but whether,
on the basis of what came before the District Court, we can say
that, in fashioning remedies, it did not fairly respond to
disclosed violations, and therefore abused a discretion the fair
exercise of which we should respect and not treat as an abuse.
Discretion means a choice of available remedies. As bearing upon
this question, it is most relevant to consider whether the District
Court showed a sympathetic or mere niggling awareness of the proper
scope of the Sherman Law and the range of Page 334 U. S. 180 its condemnation. Adequate remedies are not likely to be
fashioned by those who are not hostile to evils to be remedied. The
District Court's opinion manifests a stout purpose on the part of
that court to enforce its thoroughgoing understanding of the
requirements of the Sherman Law as elucidated by this Court. And so
we have before us the decree of a district court thoroughly aware
of the demands of the Sherman Law and manifestly determined to
enforce it in all its rigors.

															How did the District Court go about working out the terms of the
decree some of which this Court now displaces? The case was before
the lower court from October 8, 1945, to January 22, 1947. A vast
body of the evidence which had to be considered below, and must be
considered here in overturning the lower court's decree, consisted
of documents. A mere enumeration of these documents, not printed in
the record before us, required a pamphlet of 42 pages. It took 460
pages for a selection of exhibits deemed appropriate for printing
by the Government. The printed record in this Court consists of
3,841 pages. It is on the basis of this vast mass of evidence that
the District Court, on June 11, 1946, filed its careful opinion,
approved here, as to the substantive issues. Thereafter, it heard
argument for three days as to the terms of the judgment. The
parties then submitted their proposals for findings of fact and
conclusions of law by the District Court. After a long trial, an
elaborate opinion on the merits, full discussion as to the terms of
the decree, more than two months for the gestation of the decree,
the terms were finally promulgated.

															I cannot bring myself to conclude that the product of such a
painstaking process of adjudication as to a decree appropriate for
such a complicated situation as this record discloses was an abuse
of discretion, arrived at as it was after due absorption of all the
light that Page 334 U. S. 181 could be shed upon remedies appropriate for the future. After
all, as to such remedies, there is no test, ultimately, except the
wisdom of men judged by events.

															Accordingly, I would affirm the decree except as to one
particular, that regarding an arbitration system for controversies
that may arise under the decree. This raises a pure question of
law, and not a judgment based upon facts and their significance, as
are those features of the decree which the Court sets aside. The
District Court indicated that, "in view of its demonstrated
usefulness," such an arbitration system was desirable to aid in the
enforcement of the decree. The District Court, however, deemed
itself powerless to continue an arbitration system without the
consent of the parties. I do not find such want of power in the
District Court to select this means of enforcing the decree most
effectively, with the least friction, and by the most fruitful
methods. A decree as detailed and as complicated as is necessary to
fit a situation like the one before us is bound, even under the
best of circumstances, to raise controversies involving conflicting
claims as to facts and their meaning. A court could certainly
appoint a master to deal with questions arising under the decree. I
do not appreciate why a proved system of arbitration, appropriate
as experience has found it to be appropriate for adjudicating
numberless questions that arise under such a decree, is not to be
treated in effect as a standing master for purposes of this decree. See Ex parte Peterson, 253 U. S. 300 . I
would therefore leave it to the discretion of the District Court to
determine whether such a system is not available as an instrument
of auxiliary enforcement. With this exception I would affirm the
decree of the District Court.