United States v. E. I. Du Pont De Nemours and Company (351 U.S. 377)/Opinion of the Court

The United States brought this civil action under § 4 of the Sherman Act against E. I. du Pont de Nemours and Company. The complaint, filed December 13, 1947, in the United States District Court for the District of Columbia, charged du Pont with monopolizing, attempting to monopolize and conspiracy to monopolize interstate commerce in cellophane and cellulosic caps and bands in violation of § 2 of the Sherman Act. Relief by injunction was sought against defendant and its officers, forbidding monopolizing or attempting to monopolize interstate trade in cellophane. The prayer also sought action to dissipate the effect of the monopolization by divestiture or other steps. On defendant's motion under 28 U.S.C. § 1404(a), 28 U.S.C.A. § 1404(a), the case was transferred to the District of Delaware. After a lengthy trial, judgment was entered for du Pont on all issues.

The Government's direct appeal here does not contest the findings that relate to caps and bands, nor does it raise any issue concerning the alleged attempt to monopolize or conspiracy to monopolize interstate commerce in cellophane. The appeal, as specifically stated by the Government, 'attacks only the ruling that du Pont has not monopolized trade in cellophane.' At issue for determination is only this alleged violation by du Pont of § 2 of the Sherman Act.

During the period that is relevant to this action, du Pont produced almost 75% of the cellophane sold in the United States, and cellophane constituted less than 20% of all 'flexible packaging material' sales. This was the designation accepted at the trial for the materials listed in Finding 280, Appendix A, this opinion, 76 S.Ct. 1012.

The Government contends that, by so dominating cellophane production, du Pont monopolized a 'part of the trade or commerce' in violation of § 2. Respondent agrees that cellophane is a product which constitutes 'a 'part' of commerce within the meaning of Section 2.' Du Pont brief, pp. 16, 79. But it contends that the prohibition of § 2 against monopolization is not violated because it does not have the power to control the price of cellophane or to exclude competitors from the market in which cellophane is sold. The court below found that the 'relevant market for determining the extent of du Pont's market control is the market for flexible packaging materials,' and that competition from those other materials prevented du Pont from possessing monopoly powers in its sales of cellophane. Finding 37.

The Government asserts that cellophane and other wrapping materials are neither substantially fungible nor like priced. For these reasons, it argues that the market for other wrappings is distinct from the market for cellophane and that the competition afforded cellophane by other wrappings is not strong enough to be considered in determining whether du Pont has monopoly powers. Market delimitation is necessary under du Pont's theory to determine whether an alleged monopolist violates § 2. The ultimate consideration is such a determination is whether the defendants control the price and competition in the market for such part of trade or commerce as they are charged with monopolizing. Every manufacturer is the sole producer of the particular commodity it makes but its control in the above sense of the relevant market depends upon the availability of alternative commodities for buyers: i.e., whether there is a cross-elasticity of demand between cellophane and the other wrappings. This interchangeability is largely gauged by the purchase of competing products for similar uses considering the price, characteristics and adaptability of the competing commodities. The court below found that the flexible wrappings afforded such alternatives. This Court must determine whether the trial court erred in its estimate of the competition afforded cellophane by other materials.

The burden of proof, of course, was upon the Government to establish monopoly. See United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 423, 427. This the trial court held the Government failed to do, upon findings of fact and law stated at length by that court. For the United States to succeed in this Court now, it must show that erroneous legal tests were applied to essential findings of fact or that the findings themselves were 'clearly erroneous' within our rulings on Rule 52(a) of the Rules of Civil Procedure, 28 U.S.C.A. See United States v. UnitedStates Gypsum Co., 333 U.S. 364, 393-395, 68 S.Ct. 525, 541, 92 L.Ed. 746. We do not try the facts of cases de novo. Timken Roller Bearing Co. v. United States, 341 U.S. 593, 597, 71 S.Ct. 971, 974, 95 L.Ed. 1199.

Two additional questions were raised in the record and decided by the court below. That court found that, even if du Pont did possess monopoly power over sales of cellophane, it was not subject to Sherman Act prosecution, because (1) the acquisition of that power was protected by patents, and (2) that power was acquired solely through du Pont's business expertness. It was thrust upon du Pont. 118 F.Supp. at pages 213-218.

Since the Government specifically excludes attempts and conspiracies to monopolize from consideration, a conclusion that du Pont has no monopoly power would obviate examination of these last two issues.

I. Factual Background.-For consideration of the issue as to monopolization, a general summary of the development of cellophane is useful.

In the early 1900's, Jacques Brandenberger, a Swiss chemist, attempted to make tablecloths impervious to dirt by spraying them with liquid viscose (a cellulose solution available in quantity from wood pulp, Finding 361) and by coagulating this coating. His idea failed, but he noted that the coating peeled off in a transparent film. This first 'cellophane' was thick, hard, and not perfectly transparent, but Brandenberger apparently foresaw commercial possibilities in his discovery. By 1908 he developed the first machine for the manufacture of transparent sheets of regenerated cellulose. The 1908 product was not satisfactory, but by 1912 Brandenberger was making a saleable thin flexible film used in gas masks. He obtained patents to cover the machinery and the essential ideas of his process.

It seems to be agreed, however, that the disclosures of these early patents were not sufficient to make possible the manufacture of commercial cellophane. The inadequacy of the patents is partially attributed to the fact that the essential machine (the Hopper) was improved after it was patented. But more significant was the failure of these patents to disclose the actual technique of the process. This technique included the operational data acquired by experimentation.

In 1917 Brandenberger assigned his patents to La Cellophane Societe Anonyme and joined that organization. Thereafter developments in the production of cellophane somewhat paralleled those taking place in artificial textiles. Chemical science furnished the knowledge for perfecting the new products. The success of the artificial products has been enormous. Du Pont was an American leader in the field of synthetics and learned of cellophane's successes through an associate, Comptoir des Textiles Artificiel.

In 1923 du Pont organized with La Cellophane an American company for the manufacture of plain cellophane. The undisputed findings are that:

'On December 26, 1923, an agreement was executed between     duPont Cellophane Company and La Cellophane by which La      Cellophane licensed duPont Cellophane Company exclusively      under its United States cellophane patents, and granted      duPont Cellophane Company the exclusive right to make and      sell in North and Central America under La Cellophane's      secret processes for cellophane manufacture. DuPont     Cellophane Company granted to La Cellophane exclusive rights      for the rest of the world under any cellophane patents or      processes duPont Cellophane Company might develop.' Finding      24.

Subsequently du Pont and La Cellophane licensed several foreign companies, allowing them to manufacture and vend cellophane in limited areas. Finding 601. Technical exchange agreements with these companies were entered into at the same time. However, in 1940, du Pont notified these foreign companies that sales might be made in any country, and by 1948 all the technical exchange agreements were canceled.

Sylvania, and American affiliate of a Belgian producer of cellophane not covered by the license agreements above referred to, began the manufacture of cellophane in the United States in 1930. Litigation between the French and Belgian companies resulted in a settlement whereby La Cellophane came to have a stock interest in Sylvania, contrary to the La Cellophane-du Pont agreement. This resulted in adjustments as compensation for the intrusion into United States of La Cellophane that extended du Pont's limited territory. The details do not here seem important. Since 1934 Sylvania has produced about 25% of United States cellophane.

An important factor in the growth of cellophane production and sales was the perfection of moistureproof cellophane, a superior product of du Pont research and patented by that company through a 1927 application. Plain cellophane has little resistance to the passage of moisture vapor. Moistureproof cellophane has a composition added which keeps moisture in and out of the packed commodity. This patented type of cellophane has had a demand with much more rapid growth than the plain.

In 1931 Sylvania began the manufacture of moistureproof cellophane under its own patents. After negotiations over patent rights, du Pont in 1933 licensed Sylvania to manufacture and sell moistureproof cellophane produced under the du Pont patents at a royalty of 2% of sales. These licenses with the plain cellophane licenses, from the Belgian company, made Sylvania a full cellophane competitor, limited on moistureproof sales by the terms of the licenses to 20% of the combined sales of the two companies of that type by the payment of a prohibitive royalty on the excess. Finding 552. There was never an excess production. The limiting clause was dropped on January 1, 1945, and Sylvania was acquired in 1946 by the American Viscose Corporation with assets of over two hundred million dollars.

Between 1928 and 1950, du Pont's sales of plain cellophane increased from $3,131,608 to $9,330,776. Moistureproof sales increased from $603,222 to $89,850,416, although prices were continuously reduced. Finding 337. It could not be said that this immense increase in use was solely or even largely attributable to the superior quality of cellophane or to the technique or business acumen of du Pont, though doubtless those factors were important. The growth was a part of the expansion of the commodity-packaging habits of business, a by-product of general efficient competitive merchandising to meet modern demands. The profits, which were large, apparently arose from this trend in marketing, the development of the industrial use of chemical research and production of synthetics, rather than from elimination of other producers from the relevant market. That market is discussed later at 76 S.Ct. 1006. Tables appearing at the end of this opinion (Appendix A, Findings 279-292, inclusive, 76 S.Ct. 1012-1014) show the uses of cellophane in comparison with other wrappings. See the discussion, infra, 76 S.Ct. 1009 et seq.

II. The Sherman Act and the Courts.-The Sherman Act has received long and careful application by this Court to achieve for the Nation the freedom of enterprise from monopoly or restraint envisaged by the Congress that passed the Act in 1890. Because the Act is couched in broad terms, it is adaptable to the changing types of commercial production and distribution that have evolved since its passage. Chief Justice Hughes wrote for the Court that 'As a charter of freedom, the act has a generality and adaptability comparable to that found to be desirable in constitutional provisions.' Appalachian Coals, Inc., v. United States, 288 U.S. 344, 359-360, 53 S.Ct. 471, 474, 77 L.Ed. 825. Compare on remedy, Judge Wyzanski in United States v. United Shoe Machinery Corp., D.C., 110 F.Supp. 295, 348. It was said in Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 50, 31 S.Ct. 502, 511, 55 L.Ed. 619, that fear of the power of rapid accumulations of individual and corporate wealth from the trade and industry of a developing national economy caused its passage. Units of traders and producers snowballed by combining into so-called 'trusts.' Competition was threatened. Control of prices was feared. Individual initiative was dampened. While the economic picture has changed, large aggregations or private capital, with power attributes, continue. Mergers go forward. Industries such as steel, automobiles, tires, chemicals, have only a few production organizations. A considerable size is often essential for efficient operation in research, manufacture and distribution.

Judicial construction of anti-trust legislation has generally been left unchanged by Congress. This is true of the Rule of Reason. While it is fair to say that the Rule is imprecise, its application in Sherman Act litigation, as directed against enhancement of price or throttling of competition, has given a workable content to antitrust legislation. See note 18, infra. It was judicially declared a proper interpretation of the Sherman Act in 1911, with a strong, clear-cut dissent challenging its soundness on the ground that the specific words of the Act covered every contract that tended to restrain or monopolize. This Court has not receded from its position on the Rule. There is not, we think, any inconsistency between it and the development of the judicial theory that agreements as to maintenance of prices or division of territory are in themselves a violation of the Sherman Act. It is logical that some agreements and practices are invalid per se, while others are illegal only as applied to particular situations.

Difficulties of interpretation have arisen in the application of the Sherman Act in view of the technical changes in production of commodities and the new distribution practices. They have called forth reappraisal of the effect of the Act by business and government. That reappraisal has so far left the problems with which we are here concerned to the courts rather than to administrative agencies. Cf. Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C.A. § 46. It is true that Congress has made exceptions to the generality of monopoly prohibitions, exceptions that spring from the necessities or conveniences of certain industries or business organizations, or from the characteristics of the members of certain groups of citizens. But those exceptions express legislative determination of the national economy's need of reasonable limitations on cutthroat competition or prohibition of monopoly. '(W)here exceptions are made, Congress should make them.' United States v. Line Material Co., 333 U.S. 287, 310, 68 S.Ct. 550, 562, 92 L.Ed. 701. They modify the reach of the Sherman Act but do not change its prohibition of other monopolies. We therefore turn to § 2 (note 2, supra) to determine whether du Pont has violated that section by its dominance in the manufacture of cellophane in the before-stated circumstances.

III. The Sherman Act, § 2-Monopolization.-The only statutory language of § 2 pertinent on this review is: 'Every person who shall monopolize * *  * shall be deemed guilty *  *  * .' This Court has pointed out that monopoly at common law was a grant by the sovereign to any person for the sole making or handling of anything so that others were restrained or hindered in their lawful trade. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 51, 31 S.Ct. 502, 512, 55 L.Ed. 619. However, as in England, it came to be recognized here that acts bringing the evils of authorized monopoly-unduly diminishing competition and enhancing prices-were undesirable, id., 221 U.S. at pages 56, 57, 58, 31 S.Ct. at pages 514, 515, and were declared illegal by § 2. Id., 221 U.S. at pages 60-62, 31 S.Ct. at pages 515-516. Our cases determine that a party has monopoly power if it has, over 'any part of the trade or commerce among the several states', a power of controlling prices or unreasonably restricting competition. Id., 221 U.S. at page 85, 31 S.Ct. at page 525.

Senator Hoar, in discussing § 2, pointed out that monopoly involved something more than extraordinary commercial success, 'that it involved something like the use of means which made it impossible for other persons to engage in fair competition.' This exception to the Sherman Act prohibitions of monopoly power is perhaps the monopoly 'thrust upon' one of United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 429, left as an undecided possibility by American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575. Compare United States v. United Shoe Machinery Corp., D.C., 110 F.Supp. 295, 342.

If cellophane is the 'market' that du Pont is found to dominate, it may be assumed it does have monopoly power over that 'market.' Monopoly power is the power to control prices or exclude competition. It seems apparent that du Pont's power to set the price of cellophane has been limited only by the competition afforded by other flexible packaging materials. Moreover, it may be practically impossible for anyone to commence manufacturing cellophane without full access to du Pont's technique. However, du Pont has no power to prevent competition from other wrapping materials. The trial court consequently had to determine whether competition from the other wrappings prevented du Pont from possessing monopoly power in violation of § 2. Price and competition are so intimately entwined that any discussion of theory must treat them as one. It is inconceivable that price could be controlled without power over competition or vice versa. This approach to the determination of monopoly power is strengthened by this Court's conclusion in prior cases that, when an alleged monopolist has power over price and competition, an intention to monopolize in a proper case may be assumed.

If a large number of buyers and sellers deal freely in a standardized product, such as salt or wheat, we have complete or pure competition. Patents, on the other hand, furnish the most familiar type of classic monopoly. As the producers of a standardized product bring about significant differentiations of quality, designed, or packaging in the product that permit differences of use, competition becomes to a greater or less degree incomplete and the producer's power over price and competition greater over his article and its use, according to the differentiation he is able to create and maintain. A retail seller may have in one sense a monopoly on certain trade because of location, as an isolated country store or filling station, or because no one else makes a product of just the quality or attractiveness of his product, as for example in cigarettes. Thus one can theorize that we have monopolistic competition in every nonstandardized commodity with each manufacturer having power over the price and production of his own product. However, this power that, let us say, automobile or soft-drink manufactures have over their trademarked products is not the power that makes an illegal monopoly. Illegal power must be appraised in terms of the competitive market for the product.

Determination of the competitive market for commodities depends on how different from one another are the offered commodities in character or use, how far buyers will go to substitute one commodity for another. For example, one can think of building materials as in commodity competition but one could hardly say that brick competed with steel or wood or cement or stone in the meaning of Sherman Act litigation; the products are too different. This is the interindustry competition emphasized by some economists. See Lilienthal, Big Business, c. 5. On the other hand, there are certain differences in the formulae for soft drinks but one can hardly say that each one is an illegal monopoly. Whatever the market may be, we hold that control of price or competition establishes the existence of monopoly power under § 2. Section 2 requires the application of a reasonable approach in determining the existence of monopoly power just as surely as did § 1. This of course does not mean that there can be a reasonable monopoly. See notes 7 and 9, supra. Our next step is to determine whether du Pont has monopoly power over cellophane: that is, power over its price in relation to or competition with other commodities. The charge was monopolization of cellophane. The defense, that cellophane was merely a part of the relevant market for flexible packaging materials.

IV. The Relevant Market.-When a product is controlled by one interest, without substitutes available in the market, there is monopoly power. Because most products have possible substitutes, we cannot, as we said in Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 612, 73 S.Ct. 872, 882, give 'that infinite range' to the definition of substitutes. Nor is it a proper interpretation of the Sherman Act to require that products be fungible to be considered in the relevant market.

'we do not here urge that in no circumstances may competition     of substitutes negative possession of monopolistic power over      trade in a product. The decisions make it clear at the least     that the courts will not consider substitutes other than      those which are substantially fungible with the monopolized      product and sell at substantially the same price.'

But where there are market alternatives that buyers may readily use for their purposes, illegal monopoly does not exist merely because the product said to be monopolized differs from others. If it were not so, only physically identical products would be a part of the market. To accept the Government's argument, we would have to conclude that the manufactures of plain as well as moistureproof cellophane were monopolists, and so with films such as Pliofilm, foil, glassine, polyethylene, and Saran, for each of these wrapping materials is distinguishable. These were all exhibits in the case. New wrappings appear, generally similar to cellophane, is each a monopoly? What is called for is an appraisal of the 'cross-elasticity' of demand in the trade. See Note, 54 Col.L.Rev. 580. The varying circumstances of each case determine the result. In considering what is the relevant market for determining the control of price and competition, no more definite rule can be declared than that commodities reasonably interchangeable by consumers for the same purposes make up that 'part of the trade or commerce', monopolization of which may be illegal. As respects flexible packaging materials, the market geographically is nationwide.

Industrial activities cannot be confined to trim categories. Illegal monopolies under § 2 may well exist over limited products in narrow fields where competition is eliminated. That does not settle the issue here. In determining the market under the Sherman Act, it is the use or uses to which the commodity is put that control. The selling price between commodities with similar uses and different characteristics may vary, so that the cheaper product can drive out the more expensive. Or, the superior quality of higher priced articles may make dominant the more desirable. Cellophane costs more than many competing products and less than a few. But whatever the price, there are various flexible wrapping materials that are bought by manufacturers for packaging their goods in their own plants or are sold to converters who shape and print them for use in the packaging of the commodities to be wrapped.

Cellophane differs from other flexible packaging materials. From some it differs more than from others. The basic materials from which the wrappings are made and the advantages and disadvantages of the products to the packaging industry are summarized in Findings 62 and 63. They are aluminum, cellulose acetate, chlorides, wood pulp, rubber hydrochloride, and ethylene gas. It will adequately illustrate the similarity in characteristics of the various products by nothing here Finding 62 as to glassine. Its use is almost as extensive as cellophane, Appendix C, 76 S.Ct. 1016, and many of its characteristics equally or more satisfactory to users.

It may be admitted that cellophane combines the desirable elements of transparency, strength and cheapness more definitely than any of the others. Comparative characteristics have been noted thus:

'Moistureproof cellophane is highly transparent, tears     readily but has high bursting strength, is highly impervious      to moisture and gases, and is resistant to grease and oils. Heat sealable, printable, and adapted to use on wrapping     machines, it makes an excellent packaging material for both      display and protection of commodities.

'Other flexible wrapping materials fall into four major     categories: (1) opaque nonmoistureproof wrapping paper      designed primarily for convenience and protection in handling      packages; (2) moistureproof films of varying degrees of      transparency designed primarily either to protect, or to      display and protect, the products they encompass; (3)      nonmoistureproof transparent films designed primarily to      display and to some extent protect, but which obviously do a      poor protecting job where exclusion or retention of moisture      is important; and (4) moistureproof materials other than      films of varying degrees of transparency (foils and paper      products) designed to protect and display.'

An examination of Finding 59, Appendix, B, 76 S.Ct. 1015, will make this clear.

But, despite cellophane's advantages it has to meet competition from other materials in every one of its uses. Cellophane's principal uses are analyzed in Appendix A, Findings 281 and 282. Food products are the chief outlet, with cigarettes next. The Government makes no challenge to Finding 283 that cellophane furnishes less than 7% of wrappings for bakery products, 25% for candy, 32% for snacks, 35% for meats and poultry, 27% for crackers and biscuits, 47% for fresh produce, and 34% for frozen foods. Seventy-five to eighty percent of cigarettes are wrapped in cellophane. Finding 292. Thus, cellophane shares the packaging market with others. The over-all result is that cellophane accounts for 17.9% of flexible wrapping materials, measured by the wrapping surface. Finding 280, Appendix A., 76 S.Ct. 1012.

Moreover a very considerable degree of functional interchangeability exists between these products, as is shown by the tables of Appendix A and Findings 150-278. It will be noted, Appendix B, that except as to permeability to gases, cellophane has no qualities that are not possessed by a number of other materials. Meat will do as an example of interchangeability. Findings 205-220. Although du Pont's sales to the meat industry have reached 19,000,000 pounds annually, nearly 35%, this volume is attributed 'to the rise of self-service retailing of fresh meat.' Findings 212 and 283. In fact, since the popularity of self-service meats, du Pont has lost 'a considerable proportion' of this packaging business to Pliofilm. Finding 215. Pliofilm is more expensive than cellophane, but its superior physical characteristics apparently offset cellophane's price advantage. While retailers shift continually between the two, the trial court found that Pliofilm is increasing its share of the business. Finding 216. One further example is worth noting. Before World War II, du Pont cellophane wrapped between 5 and 10% of baked and smoked meats. The peak year was 1933. Finding 209. Thereafter du Pont was unable to meet the competition of Sylvania and of greaseproof paper. Its sales declined and the 1933 volume was not reached again until 1947. Findings 209-210. It will be noted that greaseproof paper, glassine, waxed paper, foil and Pliofilm and used as well as cellophane, Finding 218. Findings 209-210 show the competition and 215-216 the advantages that have caused the more expensive Pliofilm to increase its proportion of the business.

An element for consideration as to cross-elasticity of demand between products is the responsiveness of the sales of one product to price changes of the other. If a slight decrease in the price of cellophane causes a considerable number of customers of other flexible wrappings to switch to cellophane, it would be an indication that a high cross-elasticity of demand exists between them; that the products compete in the same market. The court below held that the '(g)reat sensitivity of customers in the flexible packaging markets to price or quality changes' prevented du Pont from possessing monopoly control over price. 118 F.Supp. at page 207. The record sustains these findings. See references made by the trial court in Findings 123-149.

We conclude that cellophane's interchangeability with the other materials mentioned suffices to make it a part of this flexible packaging material market.

The Government stresses the fact that the variation in price between cellophane and other materials demonstrates they are noncompetitive. As these products are all flexible wrapping materials, it seems reasonable to consider, as was done at the trial, their comparative cost to the consumer in terms of square area. This can be seen in Finding 130, Appendix C. Findings as to price competition are set out in the margin. Cellophane costs two or three times as much, surface measure, as its chief competitors for the flexible wrapping market, glassine and greaseproof papers. Other forms of cellulose wrappings and those from other chemical or mineral substances, with the exception of aluminum foil, are more expensive. The uses of these materials, as can be observed by Finding 283 in Appendix A, are largely to wrap small packages for retail distribution. The wrapping is a relatively small proportion of the entire cost of the article. Different producers need different qualities in wrappings and their need may vary from time to time as their products undergo change. But the necessity for flexible wrappings is the central and unchanging demand. We cannot say that these differences in cost gave du Pont monopoly power over prices in view of the findings of fact on that subject.

It is the variable characteristics of the different flexible wrappings and the energy and ability with which the manufacturers push their wares that determine choice. A glance at 'Modern Packaging,' a trade journal, will give, by its various advertisements, examples of the competition among manufacturers for the flexible packaging market. The trial judge visited the 1952 Annual Packaging Show at Atlantic City, with the consent of counsel. He observed exhibits offered by 'machinery manufacturers, converters and manufacturers of flexible packaging materials.' He stated that these personal observations confirmed his estimate of the competition between cellophane and other packaging materials. Finding 820. From this wide variety of evidence, the Court reached the conclusion expressed in Finding 838:

'The record establishes plain cellophane and moistureproof     cellophane are each flexible packaging materials which are      functionally interchangeable with other flexible packaging      materials and sold at same time to same customers for same      purpose at competitive prices; there is no cellophane market      distinct and separate from the market for flexible packaging      materials; the market for flexible packaging materials is the      relevant market for determining nature and extent of duPont's      market control; and duPont has at all times competed with      other cellophane producers and manufacturers of other      flexible packaging materials in all aspects of its cellophane      business.'

The facts above considered dispose also of any contention that competitors have been excluded by du Pont from the packaging material market. That market has many producers and there is no proof du Pont ever has possessed power to exclude any of them from the rapidly expanding flexible packaging market. The Government apparently concedes as much, for it states that 'lack of power to inhibit entry into this so-called market (i.e., flexible packaging materials), comprising widely disparate products, is no indicium of absence of power to exclude competition in the manufacture and sale of cellophane.' The record shows the multiplicity of competitors and the financial strength of some with individual assets running to the hundreds of millions. Findings 66-72. Indeed, the trial court found that du Pont could not exclude competitors even from the manufacture of cellophane, Finding 727, an immaterial matter if the market is flexible packaging material. Nor can we say that du Pont's profits, while liberal (according to the Government 15.9% net after taxes on the 1937-1947 average), demonstrate the existence of a monopoly without proof of lack of comparable profits during those years in other prosperous industries. Cellophane was a leader over 17%, in the flexible packaging materials market. There is no showing that du Pont's rate of return was greater or less than that of other producers of flexible packaging materials. Finding 719.

The 'market' which one must study to determine when a producer has monopoly power will vary with the part of commerce under consideration. The tests are constant. That market is composed of products that have reasonable interchangeability for the purposes for which they are produced-price, use and qualities considered. While the application of the tests remains uncertain, it seems to us that du Pont should not be found to monopolize cellophane when that product has the competition and interchangeability with other wrappings that this record shows.

On the findings of the District Court, its judgment is affirmed.

Affirmed.

Mr. Justice CLARK and Mr. Justice HARLAN took no part in the consideration or decision of this case.

VIII. Results of du Pont's Competition With Other Materials.

(Findings 279-292.)

279. During the period du Pont entered the flexible packaging business, and since its introduction of moistureproof cellophane, sales of cellophane have increased. Total volume of flexible packaging materials used in the United States has also increased. Du Pont's relative percentage of the packaging business has grown as a result of its research, price, sales and capacity policies, but du Pont cellophane even in uses where it has competed has not attained the bulk of the business, due to competition of other flexible packaging materials.

280. Of the production and imports of flexible packaging materials in 1949 measured in wrapping surface, du Pont cellophane accounted for less than 20% of flexible packaging materials consumed in the United States in that year. The figures on this are:

Waxing Papers (18 Pounds and over). 4,614,

Sulphite Bag and Wrapping Papers. 1,788,

Pliofilm, Polyethylene, Saran and Cry-O-Rap. 373,

Total du Pont Cellophane Production. 2,629,

Du Pont Cellophane Per Cent of Total United

Flexible Packaging Materials...... 17.9% 281. Eighty percent of cellophane made by du Pont is sold for packaging in the food industry. Of this quantity, 80% is sold for packaging baked goods, meat, candy, crackers and biscuits, frozen foods, fresh vegetables and produce, potato chips, and 'snacks,' such as peanut butter sandwiches, popcorn, etc. A small amount is sold for wrapping of textiles and paper products, etc. Largest nonfood use of cellophane is the overwrapping of cigarette packages.

The breakdown of du Pont cellophane sales for the year 1949 was:

Total................. 120,478. 67.7 Use     Sales  Percent of

MISCELLANEOUS     (M pounds)  Total Sales

282. Sales of cellophane by du Pont in 1951, by principal uses, were approximately as follows:

Cake and other baked sweet goods. 22,000,

283. 1949 sales of 19 major representative converters whose business covered a substantial segment of the total converting of flexible packaging materials for that year showed the following as to their sales of flexible packaging materials, classified by end use:

284. About 96% of packaged white bread produced in the United States is wrapped in waxed paper or glassine, and about 6% in cellophane. The cellophane figure includes sales by all U.S. producers.

285. Forty-eight percent of specialty breads are wrapped in du Pont cellophane, the remainder in other cellophane or other materials. Most of this balance is wrapped in waxed paper and glassine.

286. Approximately 45% of cake and baked sweet goods packaged by wholesale bakers is wrapped in du Pont cellophane. The balance is wrapped in other cellophane or in waxed paper or glassine.

287. Between 25% and 35% of packaged candy units sold in the United States are wrapped in du Pont cellophane.

288. Of sponge and sweet crackers and biscuits combined approximately 25 to 30% of the packaged units produced in 1951 were wrapped in du Pont cellophane.

289. Du Pont cellophane at the present time is used on approximately 20 to 30% of packaged retail units of frozen foods. The remainder use waxed paper, waxed glassine, polyethylene, Pliofilm, Cry-O-Vac, or vegetable parchment.

290. Approximately 20 to 30% of packages of potato chips and other snacks are wrapped in du Pont cellophane. Most of the remainder are packaged in glassine and other flexible wraps.

291. Approximately 4 to 6% of the packaged units of cereal are wrapped in du Pont cellophane. The principal flexible packaging materials used are waxed paper and glassine.

292. Du Pont cellophane is used as an outer wrap on the paper-foil packages for approximately 75 to 80% of cigarettes sold in the United States. Sales for this use represent about 11.6% of du Pont's total sales of cellophane.

59. The accompanying Table compares, descriptively, physical of cellophane and other flexible packaging materials:

Materials Sealability ability Clarity  (Elmendorf)

Cellophane (plain) Yes (if  Yes     Highly Transparent    Low

coated)

Cellophane Yes (if  Yes  Highly Transparent  Low

(Moisture-proof) coated)

paper

Lacquered Glassine Yes  Yes  Commercially  Good

Waxed Glassine Yes  (1)  Commercially  Good

Vegetable Parch- No  Yes  Tends to be Opaque  Good

ment

(18 lbs. or over)  Transparent

(Heat Sealing)

Cellulose Acetate Yes  Yes  Highly Transparent  Low

Pliofilm (rubber Yes (3)  Yes (3)   Highly Transparent    Medium

hydrochloride)     with Slight Haze

Saran (Vinylidene Yes (3)  Yes (3)  Highly Transparent    High

Polyethylene Yes (3)  Yes (3)       Transparent with    High

Cry-O-Rap  Yes (3)  Yes (3)  Transparent with  High

ish wrapper and

label paper)

Absorption      Dimens. Resistance Machine

Bursting in 24 hrs.  Moisture Permeability  Change With   to Grease  Running

Strength Immersion  Permeability  to Gases (2)  Humid Diff. & Oils Qualities

High  High  High  Very Low  Large  Excellent  O.K.

High  High  Low-Medium  Very Low  Large  Excellent  O.K.

Low  High  High  Medium  Moderate  Good  O.K.

Low  High  High  Low  Moderate  Good  O.K.

Low  Low  Low-Medium  Low  Moderate  Good  O.K.

Low  Low  Low  Low  Moderate  Good  O.K.

Good  High  High  Low  Moderate  Good  O.K.

Good  Low  Low-Medium  High  Moderate  None  O.K.

Low  Nil  Very Low  Very Low  None  Excellent  O.K.

Low  Nil  Nearly Nil  Very Low  None  Excellent  O.K.

High  Low  High  Variable  Very Small  Excellent  O.K.

High  Low  Medium  Low  Very Small  Excellent  Good (3)

High  Low  Very Low  Very Low  None  Excellent  Poor (3)

High  Low  Medium  High  None  (4)  Poor (3)

High  Low  Medium  Low  None  Excellent  Poor (3)

Medium High  Very High  High  Moderate  None  O.K.

(Finding of Fact 130.)

1949 average wholesale prices of flexible packaging materials in the United States were:

Packaging Material  ''1,000 sq. in.  per lb.  per lb.''

Saran   (cents)  (cents)  (sq. in.)

.00088"........... 3.3. 82.0 25,

.002"-18" Flat Width. 5.4. 81.0 15,

.00035"........... 1.8. 52.2 29,

Cry-O-Rap. Sold only in converted form.