Thank You For Submiting Feedback!
Statistics concerning market share and concentration, while of great significance, are not conclusive indicators of anticompetitive effects. Congress indicates plainly that a merger has to be functionally viewed, in the context of its particular industry. Statistics reflecting the shares of the market controlled by the industry leaders and the parties to the merger are, of course, the primary index of market power; but only a further examination of the particular market, its structure, history and probable future, can provide the appropriate setting for judging the probable anticompetitive effect of the merger.
Material Service Corp., a deep-mining coal producer, and its successor, appellee General Dynamics Corp., acquired, through stock purchases, control of appellee United Electric Coal Companies, a strip-mining coal producer. The Government brought a civil antitrust action in the United States District Court for the Northern District of Illinois, alleging that the acquisition violated 7 of the Clayton Act, 15 U.S.C.S. § 18. Upon trial, the District Court entered judgment for the defendants, finding no violation on the ground, inter alia, that the Government's evidence -- consisting principally of past production statistics showing that within certain geographic markets the coal industry was concentrated among a small number of large producers, that this concentration was increasing, and that the acquisition here would materially enlarge the acquiring company's market share and thereby contribute to the concentration trend -- did not support the Government's contention that the acquisition substantially lessened competition in the production and sale of coal in either or both of two specified geographic markets. This conclusion was primarily based on a determination that United Electric's coal reserves were so low that its potential to compete with other producers in the future was far weaker than the aggregate production statistics relied on by the Government might otherwise have indicated, virtually all of United Electric's proved reserves being either depleted or already committed by long-term contracts with large customers so that its power to affect the price of coal was severely limited and steadily diminishing. The United States sought appellate review by the United States Supreme Court.
Did the district court err in finding that the Government's statistical evidence did not support its contention that the stock acquisition of General Dynamics’ predecessor substantially lessened competition in any product or geographic market?
The United States Supreme Court held that absent other pertinent factors, the Government's statistical showing would have sufficed for a determination of probable anticompetitive effects. However, the district court was justified in finding that fundamental changes in the structure of the coal market mandated a finding that no substantial lessening of competition had occurred or was threatened by the stock acquisition. The Government's statistical evidence regarding past production did not--in conjunction with proof of structure, history and the probable future of the coal industry--give a proper picture of General Dynamics’ future ability to compete. Significantly, General Dynamics’ current and future power to compete for long term contracts was severely limited by respondent's scarce uncommitted resources. The district court's findings were not clearly erroneous, and its judgment was affirmed