Harrison's Reports (1946)

HARRISON'S REPORTS January 12, 1946 charges of monopoly in the distribution and exhibition of motion pictures. The brief's introduction maintains that "motion picture distributors are free to choose their customers in accordance with their own notions of self-interest; to license their products in any lawful manner designed to assure them the largest reward and to maintain the stability of their enterprises by embarking on any business authorized by their charters, including the ownership and operation of theatres, upon which their stockholders are willing to hazard their capital. The right to choose customers includes the right to choose them arbitrarily. ..." The "Big Five's" denial of the Government's charges is treated in the brief by means of two major points. In the first point it is argued that "the license agreements used in the industry are lawful," and the brief then goes into a discourse of the necessity and of the legality of runs, clearance agreements, percentage licenses, and the specifying of minimum admissions prices during the exhibition of the particular picture or pictures licensed. In the second point it is argued that the theatreowning companies, "each independently engaged in producing and distributing motion pictures, are entitled as a matter of law to own theatres exhibiting pictures to the public"; that "competition in both distribution and exhibition is substantially increased, rather than diminshed, by a theatre exhibiting the pictures of more than one distributor"; that "five wholly autonomous companies cannot be treated 'collectively' to establish a Sherman Act violation"; that "a definite agreement to restrain trade or to monopolize must be established, either by evidence of an actual agreement or by proof of circumstances from which such an agreement may be properly inferred"; that "separate license agreements of two or more distributors with a theatre operated by either an independent or by one affiliated with a distributor, are not, in and of themselves, circumstances from which collective action to monopolize can be inferred"; that " 'cross-licensing,' as used in this case, is but an empty catchword, not establishing 'collective' action"; that "there is in this case no evidence of exclusion or discrimination from which an agreement to restrain trade is to be inferred"; that "the Government has failed to sustain its burden of proving circumstances from which an inference of agreement to restrain trade may be properly drawn"; that "divestiture is a wholly unwarranted remedy in the case at bar"; that "to grant this blanket indiscriminate relief would be an act not warranted by evidence of existing wrongs"; and that "the relief of divestiture has no relation to the matters complained of." In the joint brief submitted by Universal and United Artists, and in the separate brief filed by Columbia, these companies answer the Government's charges against them, and defend their operations as not being in violation of the Sherman Act. In addition to the aforementioned briefs, the "Big Five," on January 2, filed with the Court a separate brief dealing with the decisions in arbitration proceedings under the Consent Decree. As was reported in the October 20 issue of this paper, the government during the trial offered as evidence of anti-trust violations certain arbitration cases and Appeal Board decisions. The theatre-owning distributor-defendants, through their battery of lawyers objected vehemently against the admission of arbitration proceedings as evidence of violations, but the Court, after taking the question under advisement, overruled their objections. At that time it was evident that the "Big Five" considered it most important to keep this evidence relating to arbitration out of the case, and it was deemed a blow to their defense when the Court decided to accept the evidence. Now again their great concern about this evidence is manifest in the fact that they took pains to prepare a separate brief, consisting of 1 1 1 pages, dealing with only the one subject — the Consent Decree and the arbitration decisions under it. The brief defends the Consent Decree and the operation of its arbitration machinery, and it challenges the Government's allegation that the decree is inadequate to give the relief that the Sherman Act requires. Maintaining that Government counsel agreed to all provisions of the decree when it was submitted to the Court in 1940 for approval, the brief asserts that "the unjustified attempt by present counsel for the Government to minimize the importance of the decree . . . deserves nothing but criticism." Most of the brief is devoted to a separate analysis of each of the arbitration proceedings that had been received in evidence by the Court, and the remainder concerns itself with a brief history of the Consent Decree, with arguments of law stressing the legality of its provisions, and with a restatement of the defendants' objections relative to the admissibility of the arbitration decisions as evidence of anti -trust violations. The conclusions reached by the brief are as follows: " 1 . The arbitration system has been efficiently and impartially administered. (Ed. Tsjote: The Government's brief specifically concedes that it has no com.' plaint on this score) . 2. The arbitration system is an efficacious method of settling industry disputes. "3. If there are any real defects in the system, due to the limitations on the scope of the arbitration, they are subject to cure by revision of existing provisions. "4. Even if the facts recited in the opinions were proved as facts in this case, they do not establish any violation of law, nor do they show any consistent pattern of discrimination against any class of exhibitors. "5. The number of arbitrations instituted, 400 and the many thousands of contracts entered into since the entry of the decree, out of the total number of theatres in the country, 18,000, shows that there does not exist in the industry widespread claims of discrimination and unfairness. Indeed, we think it is most significant that the scope of the relief which most of the complaints have sought was not a striking down of the essential methods of doing business but, rather, only some particular amelioration of their individual playing position." And now the industry must wait until January 15, for the oral argument, at which time the Government will undoubtedly point out to the Court its views on the shortcomings and weaknesses of the arguments contained in the aforementioned briefs.