The United States brought this civil antitrust suit alleging a
violation of § 7 of the Clayton Act by Aluminum Company of
America's (Alcoa's) 1959 acquisition of the stock and assets of
Rome Cable Corporation (Rome), and asking for divestiture. Rome,
which manufactured mainly insulated copper products, in 1958
produced 0.3% of the industry production of bare aluminum
conductor, 4.7% of insulated aluminum conductor and 1.3% of
aluminum conductor (the broader aluminum conductor line consisting
of both bare and insulated conductor). Alcoa, which produced no
copper conductor, in 1958 produced 32.5% of bare aluminum
conductor, 11.6% of insulated aluminum conductor, and 27.8% of
aluminum conductor. These products are used almost entirely by
electrical utilities for transmission and distribution lines --
overhead lines in recent years consisting of mainly bare aluminum
conductor and insulated aluminum conductor; underground lines
consisting essentially of insulated copper conductor. The District
Court found that bare aluminum conductor is a separate "line of
commerce," but held that insulated aluminum conductor is not a line
of commerce distinct from its copper counterpart, and, consequently
that aluminum conductor generally is not a separate line of
commerce. It dismissed the complaint.
Held:
1. Aluminum conductor is a submarket and a separate line of
commerce for purposes of § 7. Pp.
377 U. S.
274-277.
(a) The degree of competition between insulated aluminum
conductor (a component of aluminum conductor) and insulated copper
conductor, while enough to justify grouping them in a single
product market, does not prevent their division into separate
submarkets for § 7 purposes.
Brown Shoe Co. v. United
States, 370 U. S. 294,
followed. P.
377 U. S.
275.
(b) Dividing insulated aluminum conductor and its copper
counterpart into separate submarkets is proper, since each has
Page 377 U. S. 272
developed distinctive end uses, and the price differential, the
most important practical factor in the trade, keeps them apart. P.
377 U. S.
276.
(c) Bare and insulated aluminum conductor may be combined into
one line of commerce, since they are distinct from their copper
counterpart in use and price. Pp.
377 U. S.
276-277.
2. The merger violated § 7, and divestiture is proper. Pp.
377 U. S.
277-281.
(a) The purpose of § 7 is to proscribe mergers with a probable
anticompetitive effect. P.
377 U. S. 280.
(b) In an oligopolistic industry with a few dominant integrated
companies and a small and diminishing group of independents, the
prevention of increased concentration is important. Pp.
377 U. S.
278-281.
(c) Rome ranked ninth among all companies and fourth among
independents in the aluminum conductor market, and eighth and
fourth, respectively, in the insulated aluminum line. Alcoa was the
leading producer of aluminum conductor, and third in the insulated
aluminum field. Pp.
377 U. S. 278,
377 U. S.
280-281.
(d) The acquisition by Alcoa of Rome, though adding but 1.3% to
Alcoa's share of the aluminum conductor market, would, in the
framework of this industry, likely result in a substantial
reduction of competition. P.
377 U. S.
280.
214 F.
Supp. 501, reversed and remanded.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
The question is whether the 1959 acquisition by the Aluminum
Company of America (Alcoa) of the stock and assets of the Rome
Cable Corporation (Rome) "may
Page 377 U. S. 273
be substantially to lessen competition, or to tend to create a
monopoly" in the production and sale of various wire and cable
products and accessories within the meaning of § 7 of the Clayton
Act. [
Footnote 1] The United
States, claiming that § 7 had been violated, instituted this civil
suit and prayed for divestiture. The District Court, after a trial,
held that there was no violation, and dismissed the complaint.
214 F.
Supp. 501. The case is here on appeal, 15 U.S.C. § 29, and we
noted probable jurisdiction. 375 U.S. 808.
I
The initial question concerns the identification of the "line of
commerce," as the term is used in § 7.
Aluminum wire and cable (aluminum conductor) is a composite of
bare aluminum wire and cable (bare aluminum conductor) and
insulated or covered wire and cable (insulated aluminum conductor).
These products are designed almost exclusively for use by electric
utilities in carrying electric power from generating plants to
consumers throughout the country. Copper conductor wire and cable
(copper conductor) is the only other product utilized commercially
for the same general purpose. Rome produced both copper conductor
and aluminum conductor. In 1958 -- the year prior to the merger --
it produced 0.3% of total industry production of bare aluminum
Page 377 U. S. 274
conductor, 4.7% of insulated aluminum conductor, and 1.3% of the
broader aluminum conductor line.
Alcoa produced no copper conductor. In 1958, it produced 32.5%
of the bare aluminum conductor, 11.6% of insulated aluminum
conductor, and 27.8% of aluminum conductor.
These products, as noted, are most often used by operating
electrical utilities. Transmission and distribution lines [
Footnote 2] are usually strung above
ground, except in heavily congested areas, such as city centers,
where they are run underground. Overhead, where the lines are bare
or not heavily insulated, aluminum has virtually displaced copper,
except in seacoast areas, as shown by the following table:
bwm:
Percent of Aluminum Conductor in Gross Additions
to Overhead Utility Lines
1950 1955 1959
Transmission Lines (All Bare Conductor) 74.4% 91.0% 94.4%
Distribution Lines:
Bare Conductor . . . . . . . . . . . . 35.5 64.4 79.0
Insulated Conductor. . . . . . . . . . 6.5 51.6 77.2
Total, Transmission and Distribution Lines 25.0 60.9 80.1
ewm:
Underground, where the conductor must be heavily insulated,
copper is virtually the only conductor used. In sum, while aluminum
conductor dominates the overhead field, copper remains virtually
unrivaled in all other conductor applications.
The parties agree, and the District Court found, that bare
aluminum conductor is a separate line of commerce. The District
Court, however, denied that status to the broader aluminum
conductor line, because it found that insulated aluminum conductor
is not an appropriate line
Page 377 U. S. 275
of commerce separate and distinct from its copper counterpart.
The court said the broad product group cannot result in a line of
commerce, since a line of commerce cannot be composed of two parts,
one of which independently qualifies as a line of commerce and one
of which does not.
Admittedly, there is competition between insulated aluminum
conductor and its copper counterpart, as the District Court found.
Thus, in 1959, insulated copper conductor comprised 22.8% of the
gross additions to insulated overhead distribution lines. This is
enough to justify grouping aluminum and copper conductors together
in a single product market. Yet we conclude, contrary to the
District Court, that that degree of competitiveness does not
preclude their division for purposes of § 7 into separate
submarkets, just as the existence of broad product markets in
Brown Shoe Co. v. United States, 370 U.
S. 294, did not preclude lesser submarkets. [
Footnote 3]
Insulated aluminum conductor is so intrinsically inferior to
insulated copper conductor that, in most applications, it has
little consumer acceptance. But, in the field of overhead
distribution, it enjoys decisive advantages -- its share of total
annual installations increasing from 6.5% in 1950 to 77.2% in 1959.
In the field of overhead distribution, the competition of copper is
rapidly decreasing. As the record shows, utilizing a high-cost
metal, fabricators of insulated
Page 377 U. S. 276
copper conductor are powerless to eliminate the price
disadvantage under which they labor, and thus can do little to make
their product competitive unless they enter the aluminum field. The
price of most insulated aluminum conductors is indeed only 50% to
65% of the price of their copper counterparts, and the comparative
installed costs are also generally less. As the District Court
found, aluminum and copper conductor prices do not respond to one
another.
Separation of insulated aluminum conductor from insulated copper
conductor and placing it in another submarket is, therefore,
proper. It is not inseparable from its copper equivalent, though
the class of customers is the same. The choice between copper and
aluminum for overhead distribution does not usually turn on the
quality of the respective products, for each does the job equally
well. The vital factors are economic considerations. It is said,
however, that we should put price aside, and
Brown Shoe,
supra, is cited as authority. There, the contention of the
industry was that the District Court has delineated too broadly the
relevant submarkets -- men's shoes, women's shoes, and children's
shoes -- and should have subdivided them further. It was argued for
example, that men's shoes selling below $8.99 were in a different
product market from those selling above $9. We declined to make
price, particularly such small price differentials, the
determinative factor in that market. A purchaser of shoes buys with
an eye to his budget, to style, and to quality, as well as to
price. But here, where insulated aluminum conductor, price-wise,
stands so distinctly apart, to ignore price in determining the
relevant line of commerce is to ignore the single most important,
practical factor in the business.
The combination of bare and insulated aluminum conductor
products into one market or line of commerce
Page 377 U. S. 277
seems to us proper. [
Footnote
4] Both types are used for the purpose of conducting
electricity, and are sold to the same customers, electrical
utilities. While the copper conductor does compete with aluminum
conductor, each has developed distinctive end uses -- aluminum as
an overhead conductor and copper for underground and indoor wiring,
applications in which aluminum's brittleness and larger size render
it impractical. And, as we have seen, the price differential
further sets them apart.
Thus, contrary to the District Court, we conclude (1) that
aluminum conductor and copper conductor are separable for the
purpose of analyzing the competitive effect of the merger and (2)
that aluminum conductor (bare and insulated) is therefore a
submarket, and, for purposes of § 7 a "line of commerce."
II
Taking aluminum conductor as an appropriate "line of commerce,"
we conclude that the merger violated § 7.
Alcoa is a leader in markets in which economic power is highly
concentrated. Prior to the end of World War II, it was the sole
producer of primary aluminum and the sole fabricator of aluminum
conductor. It was held in 1945 to have monopolized the aluminum
industry in violation of § 2 of the Sherman Act.
See United
States v. Aluminum Co., 148 F.2d 416. Relief was deferred
while the United States disposed of its wartime aluminum
facilities
Page 377 U. S. 278
under a congressional mandate to establish domestic competition
in the aluminum industry. [
Footnote
5] As a result of that policy and further federal financing and
assistance, five additional companies entered the primary aluminum
field, so that, by 1960, the primary producers showed the following
capacity:
Aluminum Ingot Capacity Existing or Under
Construction at the End of 1960
[SHORT TONS]
Company Capacity % of U.S.
Aluminum Company of America 1,025,250 38.6
Reynolds Metals Company 701,000 26.4
Kaiser Aluminum & Chemical Corp. 609,500 23.0
Ormet, Inc 180,000 6.8
Harvey Aluminum 75,000 2.8
Anaconda Aluminum Company 65,000 2.4
United States total 2,655,750 100.0
In 1958 -- the year prior to the merger -- Alcoa was the leading
producer of aluminum conductor, with 27.8% of the market; in bare
aluminum conductor, it also led the industry, with 32.5%. Alcoa
plus Kaiser controlled 50% of the aluminum conductor market and,
with its three leading competitors, more than 76%. Only nine
concerns (including Rome, with 1.3%) accounted for 95.7% of the
output of aluminum conductor. In the narrower market of insulated
aluminum conductor, Alcoa was third with 11.6%, and Rome with
eighth with 4.7%. Five companies controlled 65.4%, and four smaller
ones, including Rome, added another 22.8%.
In other words, the line of commerce showed highly concentrated
markets, dominated by a few companies but
Page 377 U. S. 279
served also by a small, though diminishing, [
Footnote 6] group of independents. Such
decentralization as has occurred resulted from the establishment of
a few new companies through federal intervention, not from normal,
competitive decentralizing forces.
The proposition on which the present case turns was stated in
United States v. Philadelphia National Bank, 374 U.
S. 321,
374 U. S. 365,
n. 42, as follows:
"It is no answer that, among the three presently largest firms
(First Pennsylvania, PNB, and Girard), there will be no increase in
concentration. If this argument were valid, then, once a market had
become unduly concentrated, further concentration would be legally
privileged. On the contrary, if concentration is already great, the
importance of preventing even slight increases in concentration,
and so preserving the possibility of eventual deconcentration, is
correspondingly great. "
Page 377 U. S. 280
The Committee Reports on § 7 show, as respects the
Celler-Kefauver amendments in 1950, that the objective was to
prevent accretions of power which "are individually so minute as to
make it difficult to use the Sherman Act test against them." S.Rep.
No. 1775, 81st Cong., 2d Sess., p. 5.
And see H.R.Rep. No.
1191, 81st Cong., 1st Sess., p. 3. As the Court stated in
Brown
Shoe Co. v. United States, 370 U. S. 294,
370 U. S.
323:
"Congress used the words '
may be substantially to
lessen competition' (emphasis supplied), to indicate that its
concern was with probabilities, not certainties. Statutes existed
for dealing with clear-cut menaces to competition; no statute was
sought for dealing with ephemeral possibilities. Mergers with a
probable anticompetitive effect were to be proscribed by this
Act."
See also United States v. Philadelphia National Bank,
374 U.S. at
374 U. S. 362,
and
United States v. El Paso Natural Gas Co., 376 U.
S. 651,
376 U. S.
658.
The acquisition of Rome added, it is said, only 1.3% to Alcoa's
control of the aluminum conductor market. But, in this setting,
that seems to us reasonably likely to produce a substantial
lessening of competition within the meaning of § 7. It is the basic
premise of that law that competition will be most vital "when there
are many sellers, none of which has any significant market share."
United States v. Philadelphia National Bank, 374 U.S. at
374 U. S. 363.
It would seem that the situation in the aluminum industry may be
oligopolistic. As that condition develops, the greater is the
likelihood that parallel policies of mutual advantage, not
competition, will emerge. That tendency may well be thwarted by the
presence of small but significant competitors. Though,
percentage-wise, Rome may have seemed small in the year prior to
the merger, it ranked ninth among all companies, and fourth
Page 377 U. S. 281
among independents in the aluminum conductor market; and, in the
insulated aluminum field, it ranked eighth and fourth,
respectively. Furthermore, in the aluminum conductor market, no
more than a dozen companies could account for as much as 1% of
industry production in any one of the five years (1955-1959) for
which statistics appear in the record. Rome's competition was
therefore substantial. The record shows, indeed, that Rome was an
aggressive competitor. It was a pioneer in aluminum insulation, and
developed one of the most widely used insulated conductors. Rome
had a broad line of high quality copper wire and cable products in
addition to its aluminum conductor business, a special aptitude and
skill in insulation, and an active and efficient research and sales
organization. The effectiveness of its marketing organization is
shown by the fact that, after the merger, Alcoa made Rome the
distributor of its entire conductor line. Preservation of Rome,
rather than its absorption by one of the giants, will keep it "as
an important competitive factor," to use the words of S.Rep. No.
1775,
supra, p. 3. Rome seems to us the prototype of the
small independent that Congress aimed to preserve by § 7.
The judgment is reversed, and, since there must be divestiture,
the case is remanded to the District Court for proceedings in
conformity with this opinion.
Reversed and remanded.
[
Footnote 1]
Section 7 of the Clayton Act, 38 Stat. 731, as amended by the
Celler-Kefauver Antimerger Act, 64 Stat. 1125, 15 U.S.C. § 18,
provides in relevant part:
"No corporation engaged in commerce shall acquire, directly or
indirectly, the whole or any part of the stock or other share
capital and no corporation subject to the jurisdiction of the
Federal Trade Commission shall acquire the whole or any part of the
assets of another corporation engaged also in commerce, where in
any line of commerce in any section of the country, the effect of
such acquisition may be substantially to lessen competition, or to
end to create a monopoly."
[
Footnote 2]
Transmission lines are the "wholesale" lines which carry current
at high voltages to substations. Distribution lines are the
"retail" lines which carry current from the substations to the
consumers.
[
Footnote 3]
Cf. United States v. Philadelphia National Bank,
374 U. S. 321,
where we held it proper to make commercial banking a line of
commerce for purposes of § 7 even though in some services,
e.g., the making of small loans, banks compete with other
institutions. We said that commercial banks enjoy "such cost
advantages as to be insulated within a broad range from substitutes
furnished by other institutions."
Id. at
374 U. S. 356.
And see United States v. Bethlehem Steel
Corp., 168 F.
Supp. 576, 593;
Reynolds Metals Co. v. Federal Trade
Comm'n, 114 U.S.App.D.C. 2, 309 F.2d 223, 229;
United
States v. Corn Products Refining Co., 234 F. 964, 976.
[
Footnote 4]
The dissent criticizes this grouping of bare and insulated
aluminum conductor into one line of commerce. This overlooks the
fact that the parties agree, and the District Court found, that
bare aluminum conductor and conductor generally (aluminum and
copper, bare and insulated) constitute separate lines of commerce.
Having concluded above that insulated aluminum conductor and
insulated copper conductor are separable, even though some
inter-product competition exists, the conclusion that aluminum
conductor (bare and insulated) is a line of commerce is a logical
extension of the District Court's findings.
[
Footnote 5]
See the Surplus Property Act of 1944, 58 Stat. 765;
United States v. Aluminum Co., 91 F. Supp.
333;
United States v. Aluminum Co., 153 F.
Supp. 132. Litigation was terminated on June 28, 1957.
Ibid. Twelve days later, Alcoa made its first attempt to
acquire Rome.
[
Footnote 6]
The absorption of Rome by Alcoa was one of the five acquisitions
by producers of primary aluminum since 1957. In that year, Olin
Mathieson (a one-half owner of Ormet, Inc.) acquired Southern
Electric Corporation, then the largest independent manufacturer of
aluminum conductor, and Kaiser acquired the Bristol, Rhode Island,
plant of the U.S. Rubber Company, one of the top 10 in the
insulated aluminum field. These moves, and the threat they were
thought to pose, were specifically identified as factors
influencing Alcoa's 1959 decision to acquire Rome. And it was
partly in response to the three prior acquisitions that Reynolds,
in 1961, acquired the wire and cable facilities of John A.
Roebling's Sons Division of the Colorado Fuel and Iron Company, a
small fabricator. Finally, in February, 1963, too late to be noted
in the record below, Aluminium, Ltd., of Canada announced the
acquisition of Central Cable Corporation, one of the largest of the
independents. As a result of this series of mergers, there now
remain only four nonintegrated fabricators of aluminum conductor
whose individual shares of total industry production (based on 1959
figures, the latest in the record) amounted to more than 1%.
MR. JUSTICE STEWART, whom MR. JUSTICE HARLAN and MR. JUSTICE
GOLDBERG join, dissenting.
In this civil action, brought under § 7 of the Clayton Act, as
amended, the District Court found that the Government had failed to
sustain its burden of proof as to both the "line of commerce" and
competitive effect issues. Because I think the Government clearly
failed to prove its "line of commerce" claims, I dissent from
today's reversal of the trial court's judgment.
Page 377 U. S. 282
A four-week trial was held -- after 22 months of extensive
pretrial discovery. Five hundred documentary exhibits were received
in evidence, and 50 witnesses were heard. The record amounts to
more than 3,500 pages. The district judge wrote a long and careful
opinion, accompanied by meticulous findings of fact and thoroughly
reasoned conclusions of law. In determining the relevant lines of
commerce involved here, the trial judge conscientiously applied the
standards postulated by this Court in
Brown Shoe Co. v. United
States, 370 U. S. 294,
370 U. S. 325,
and made detailed findings of fact fully supporting his
determinations.
214 F.
Supp. 501. The Government has not claimed that any of these
findings of fact are clearly erroneous, nor does the Court today
hold them to be. Nevertheless, the Court reverses the judgment. I
find it difficult to understand the Court's conclusion, and
impossible to agree with it.
A "[d]etermination of the relevant market is a necessary
predicate to a finding of a violation of the Clayton Act."
United States v. E. I. Du Pont De Nemours & Co.,
353 U. S. 586,
353 U. S. 593.
In order to prove that this was a horizontal merger in violation of
§ 7, the Government was therefore faced with the necessity of
showing substantial percentages of market shares in competitive
products. [
Footnote 2/1] Alcoa
manufactured no copper cable, and, in the conductor field, was
chiefly a producer of bare aluminum cable. Over 90% of Rome's
production was in insulated copper products, and its production of
bare aluminum cable was
de minimis (.3% of the market
share). The District Court found that conductor wire and cable
(both bare and insulated, aluminum and copper), and insulated
conductor (both aluminum and copper), were lines of commerce, but
that Alcoa's and Rome's market shares in these broad product
markets were insufficient to support a finding
Page 377 U. S. 283
of requisite anticompetitive effect, 214 F. Supp. at 518-519 --
a conclusion which the Government does not question here. More
substantial market share percentages would be forthcoming, however,
if aluminum conductors could be set apart from the rest of the
conductor manufacturing industry. Accordingly, the Government asked
the District Court to find aluminum conductors in general, and
insulated aluminum conductors in particular, to be separate lines
of commerce.
The District Court declined to make such a finding, and for good
reason. A line of commerce is an "area of effective competition,"
to be determined in accordance with the principles laid down in our
prior decisions. In
Brown Shoe, this Court held that there
are broad product markets within which there may be "well defined"
and "economically significant" submarkets. 370 U.S. at
370 U. S. 325.
The Court in that case did not attempt to formulate any rigid
standard for determining submarket boundaries, but indicated that a
broad-ranging pragmatic evaluation of market realities was
required. The federal trial courts were admonished to examine
"such practical indicia as industry or public recognition of the
submarket as a separate economic entity, the product's peculiar
characteristics and uses, unique production facilities, distinct
customers, distinct prices, sensitivity to price changes, and
specialized vendors."
Ibid. These "practical indicia" to be considered in
determining submarket boundaries express in practical terms the
basic economic concept that markets are to be defined in terms of
the close substitutability of either product (demand) or production
facilities (supply), since it is ultimately the degree of
substitutability that limits the exercise of market power, and it
is only by delimiting the area of effective competition that an
acquisition's competitive effects can be ascertained.
Page 377 U. S. 284
The District Court applied these practical indicia with
meticulous care, and found that the conductor industry does not
differentiate between copper and aluminum insulated products; that
copper and aluminum products are functionally interchangeable; and
that there are no unique production facilities, distinct customers
or specialized vendors for insulated aluminum conductor products.
214 F. Supp. at 509. The trial judge did not, as the Court implies,
ignore the fact that the prices of copper and aluminum insulated
products are generally distinct. It explicitly recognized this
fact, but concluded on closer examination of the industry that this
price difference did not foreclose "actual competition."
Ibid. Accordingly, making a practical judgment based on
the
Brown Shoe submarket indicia, the District Court
concluded that insulated aluminum conductor had not been
established as a line of commerce. And since the other alleged line
of commerce -- aluminum conductor generally -- was no more than the
sum of bare and insulated aluminum conductors, the court concluded
that it, too, could not constitute an "area of effective
competition," since as to the insulated segment, important
competitive copper elements would be improperly and arbitrarily
excluded.
Id. at 510.
The District Court, in other words, did a careful and thoughtful
job. It applied the proper law, and its reasoning was impeccable.
Yet this Court overrules its decision with little more than a wave
of the hand. On the basis of two assertions, that the record
shows
"fabricators of insulated copper conductor are powerless to
eliminate the price disadvantage under which they labor and thus
can do little to make their product competitive,"
and that the difference in price between aluminum and copper
conductors is "the single, most important, practical factor in the
business," both of which are contrary to the explicit findings of
the District Court, the Court summarily concludes
Page 377 U. S. 285
that aluminum conductor is, "for purposes of § 7, a
line of
commerce.'"
The District Court found that neither insulated aluminum nor
insulated copper conductor products are recognized as a separate
economic entity. Insulated products are identified and defined by
the industry and reported to the Bureau of the Census in accordance
with their function or type,
"not according to the metal used as conductor, and manufacturers
regard themselves simply as insulators of wire and cable
products."
Moreover, there is complete manufacturing interchangeability
between copper and aluminum, and manufacturers constantly review
their product lines and "switch readily from one product or
conductor metal to another in accordance with market conditions."
As a result, if a fabricator should feel himself at a competitive
disadvantage because of his use of copper, he is not, as the Court
asserts, powerless to eliminate a price disadvantage. The supply
flexibility which this implies exerts a profound restraint upon an
aluminum cable manufacturer's power to achieve any sort of market
advantage.
The Court points to nothing in the record justifying its second
assertion that "price . . . is . . . the single, most important,
practical factor in the business." Whether it is or not is a matter
of fact, and the trial judge found upon substantial evidence
that,
"[s]ince copper and aluminum products are completely
interchangeable from a performance standpoint, utility companies
choose between copper and aluminum insulated or covered overhead
products solely on the basis of economics. The decision requires
evaluation of numerous economic factors in addition to the cost
of the wire or cable itself."
(Emphasis supplied.) The record amply supports this finding.
There was undisputed testimony that, in some situations, the final
installed cost of aluminum conductor may be greater than its copper
counterpart because of other economic factors
Page 377 U. S. 286
such as the higher cost of connectors which must be used with
aluminum and the fact that the copper-aluminum cost difference
becomes less significant the more complex the conductor required
for the job. That the copper-aluminum price difference is not
always the determining factor is further borne out by other
findings of the trial judge, fully supported by the record, that
even in areas where aluminum has gained "increasing use," there is
a "lively competition between aluminum and copper products"; that
the aluminum-copper price difference does not foreclose "actual
competition," and that, in fact, "substantial quantities" of the
copper version of overhead distribution products are sold.
But, even if insulated aluminum conductor is a proper line of
commerce, there is no basis in logic, or in the competitive
realities of the conductor industry, for lumping together in one
line of commerce bare and insulated aluminum conductors. Even the
Government does not claim that the two are competitive; different
equipment and engineering skills are required for their manufacture
and sale; and, as the District Court found, the combination of bare
and insulated aluminum conductors is not generally "recognized in
the industry as a separate economic entity" or submarket. The
grouping of bare and insulated aluminum conductors into one line of
commerce, therefore, is not, as the Court says, "a logical
extension of the District Court's findings," [
Footnote 2/2] but a repudiation of those findings. And
it adds nothing to note, as the Court does, that both bare and
insulated aluminum conductors are used to conduct electricity, and
are sold to electrical utilities. All electrical conductors are
used for this purpose and sold to these customers. Such a
non
sequitur cannot justify the separation of aluminum conductors
from the rest of the electrical conductor field.
Page 377 U. S. 287
The short of it is there is here no relevant market upon which
to predicate a violation of § 7. The District Court correctly
described this acquisition as "the combination of an aluminum and
an essentially copper manufacturing company," undertaken by Alcoa
"in the face of its declining market," for the purpose of obtaining
insulating know-how and diversification needed "to overcome a
market disadvantage, rather than to obtain a captive market . . .
or to eliminate a competitor." 214 F. Supp. at 512. I am totally
unable to join the Court in its
ipse dixit transformation
of this essentially "know-how" acquisition into a horizontal merger
in violation of § 7.
I would affirm the judgment of the District Court.
[
Footnote 2/1]
See United States v. Philadelphia Nat. Bank,
374 U. S. 321.
[
Footnote 2/2]
See note 4 of the
Court's opinion