Full opinion text
WEIGEL, District Judge. The defendant Jos. Schlitz Brewing Company is a Wisconsin corporation engaged in the production and sale of beer. The defendant General Brewing Company is a California corporation so engaged. John Labatt Limited, a large Canadian brewer, controls General Brewing Company through Labatt’s ownership of a majority of General’s stock. The gravamen of the charge by the United States of America, plaintiff, is that “The effect of the purchase and acquisition of the assets of Burgermeister Brewing Corporation by defendant Schlitz and of the stock acquisition by defendant Schlitz in John Labatt, Ltd., and of each of them, may be substantially to lessen competition, or tend to create a monopoly in the production and sale of beer in the United States, the West, and the State of California in violation of Section 7 of the Clayton Act * * * ” (Complaint, Page 6, lines 23-28). The evidence adduced at the trial and the applicable law sustain the plaintiff’s charge sufficiently to call for granting relief consonant with the plaintiff’s prayer. The office of this memorandum is to serve as Findings of Fact and Conclusions of Law underlying the decree to be entered. The intent is to meet the bench marks indicated, for federal trial courts in cases of this kind, by the Supreme Court in United States v. El Paso Natural Gas Co., 376 U.S. 651, 656-657, 662-663, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964). Extended hearings, briefing and consideration of the trial court with all counsel were focused upon preparation of a definitive Pre-Trial Order approved by all parties. Its scope and content are indicated by the marginal notation of the subject matters listed in its table of contents. That order is referenced here because, for one thing, its delineations of the issues are inserted or grouped as headings in the Findings of Fact below. The trial court directed the parties to include, in the post-trial briefs of each, their respective proposed Findings and Conclusions. Each set has been reviewed by the trial court. While those proposed by the United States and by General Brewing have provided the basic pattern for the trial court’s own Findings and Conclusions, the latter are the product of careful sifting. They incorporate many substantial additions, deletions and revisions as well as numerous other changes including citations to the record. It is believed that the Findings, Conclusions and comment show the reasoning which led this court to its decision on all relevant issues. A final preliminary matter merits discussion. Some weeks after all parties had rested their cases, defendant Schlitz made a “Motion to Reopen the Record for the taking of Additional Evidence and for Other Relief”. The motion was heard upon affidavits, memoranda and argument of counsel. It was predicated upon the post-trial agreement of General Brewing to sell to Miller Brewing Company of Milwaukee, Wisconsin, one of General’s breweries, that located in Azusa, California. This brewery represents 34% of General’s total potential productive capacity. The motion was opposed by the United States and, of course, by General. It was denied by the trial court in what that court considered a sound exercise of discretion. The moving papers and those filed in opposition made it clear beyond cavil, that (1) the agreement to sell was an exercise of General Brewing’s independent business judgment, (2) consummation of the sale would leave General Brewing with more than adequate brewing capacity for all foreseeable increases in sales in all markets which it now taps, (3) General Brewing’s receipt of $8,000,000 for the sale would materially strengthen its capacity to compete with all its competitors, including, notably, Schlitz, (4) the sale would improve General Brewing’s ability to expand into other areas and (5) it would strengthen General Brewing as a vehicle for Labatt’s competition in the U. S. market. The court did order General Brewing promptly to report to the court all express or tacit commitments for any subsequent disposition of any major assets, thus assuring the court of ample opportunity to protect Schlitz in the matter, for example, of its professed concern that General Brewing was engaging in a process of liquidation, despite documented and convincing contrary assurance to the court on General Brewing’s part. FINDINGS OF FACT Jurisdiction 1. Defendant Jos. Schlitz Brewing Company (hereinafter referred to as “Schlitz”) is a corporation organized and existing under the laws of the State of Wisconsin, with its principal office located in Milwaukee, Wisconsin. (PreTrial Order, p. 1). 2. Defendant General Brewing Corporation (formerly known as Lucky Lager Brewing Company and hereinafter referred to as “General Brewing”) is a corporation organized and existing under the laws of the State of California, with its principal office located in San Francisco, California. (Pre-Trial Order, p. 1). 3. John Labatt Limited (hereinafter referred to as “Labatt”) is a Dominion corporation organized and existing under the laws of the Dominion of Canada, with its principal office in London, Ontario, Canada. (Pre-Trial Order, p. 2). 4. Prior to December 31, 1961, Burgermeister Brewing Corporation (hereinafter referred to as “Burgermeister”) was a corporation organized and existing under the laws of the State of California, with its principal office in San Francisco, California. (Pre-Trial Order, p. 2). 5. Defendants Schlitz and General Brewing are engaged in commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. § 18. Prior to December 31, 1961, when its assets were purchased by Schlitz, Burgermeister was engaged in commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. § 18. (Pre-Trial Order, p. 2). 6. Both defendants transact business and are found within the Northern District of California, Southern Division. (Pre-Trial Order, p. 2). 7. The action arises and is brought by the plaintiff under the antitrust laws of the United States, more particularly the Clayton Act, 15 U.S.C. §§ 18 and 25. (Pre-Trial Order, p. 1). Issues Relating To Line of Commerce 1. Is the production and sale of beer a line of commerce within the meaning of Section 7 of the Clayton Act and the appropriate product market for determining the effects on competition of the acquisitions by defendant Jos. Schlitz Brewing Company of the assets of Burgermeister Brewing Corporation and of stock of John Labatt Limited? 2. Is the production and sale of all malt beverages a separate line of commerce within the meaning of Section 7 of the Clayton Act, and if so, is it an appropriate line of commerce to be considered in determining the effects on competition of the acquisitions challenged by the complaint? 3. Is the production and sale of each price level of beer, one of the malt beverages, a separate line of commerce within the meaning of Section 7 of the Clayton Act, and if so, is each level an appropriate line of commerce to be considered in determining the effects on competition of the acquisitions challenged by the complaint? 4. Is the production and sale of ale, another of the malt beverages, a separate line of commerce within the meaning of Section 7 of the Clayton Act, and if so, is it an appropriate line of commerce to be considered in determining the effects on competition of the acquisitions challenged by the complaint? 8. The term “beer”, in the context of the relevant line of commerce, includes beer, lager, ale, porter, stout and malt liquor, even though there is some conflict in expert testimony and that of members of the industry as to ale. A single brewery can produce beer, lager, ale, porter, stout and malt liquor. Moreover, regardless of the niceties of definition, sales in the United States of lager, ale, porter, stout and malt liquor are so insignificant, compared with sales of beer, as to make the inclusion or exclusion of lager, ale, porter, stout and malt liquor, or any one or more of them, of no consequence to any issue in this case. (Tr. 387, line 20—393, line 19; Tr. 150, line 6—151, line 11; Tr. 1552, lines 6-8; Tr. 468, lines 1-5). 9. Beer is produced in unique production facilities, breweries, and is marketed through specialized vendors who are referred to as wholesalers or distributors. (Tr. 192, line 25—193, line 10; Tr. 158, lines 13-25; Tr. 1552, lines 6-8). 10. There is very little difference in price or quality between the cheapest and the most expensive ingredients used in brewing beer in the United States. (Tr. 316, lines 10-16; Tr. 404, lines 6-20; Tr. 405," lines 20-23; Tr. 389, lines 3-19). 11. Beer has its own pricing structure and sells at a wide spectrum of prices; in California, for example, the range is from 79 cents through $1.44 per six-pack of 12-oz. cans. (Pre-Trial Order pp. 85-115; Tr. 1517, line 1—1519, line 19). 12. For many years it has been the practice in the brewing industry to refer to various brands of beer by terms such as “premium beer”, “regional beer” or “popularly priced beer” and “local price” or “shelf beer”. The term premium beer has generally referred to those beers which have been priced somewhat higher than the popular or regional beers. Such premium beers include Budweiser (Anheuser-Busch, Inc.), Schlitz (Jos. Schlitz Brewing Co.), and Miller High Life (Miller Brewing Co.). Popularly priced or regional beers include such brands as Lucky Lager (General Brewing Co.), Burgermeister (Jos. Schlitz Brewing Co.), Hamms (Theo. Hamm Brewing Co.), and Falstaff (Falstaff Brewing Corp.). The so-called price beers are beers which generally are not extensively advertised and sell at a price below that of the popularly priced beers. Such beer is often sold by grocery store chains as private label beer, i. e., the specified chain has the exclusive right to sell beer under the label. Other beers exist which do not fit into any of the particular categories described above. For example, Coors beer and Olympia beer sell in California at prices midway between the premium, and the popular level. Miller High Life sells in some areas, such as California, at a price above Budweiser and Schlitz. Other beers sell at a price midway between the popular and the price beer level. Some beers have moved from one category to another or have shifted from a category to an in-between level. (Pre-Trial Order, p. 9; Tr. 1517-1519). 13. There are no significant differences in the costs of labor nor equipment for production of the various brands of beer. (Tr. 434, lines 6-15). 14. All brands and types of beer compete with each other in price, image, point of sale advertising, media advertising, shelf space, floor display, refrigerator position and in attention from wholesalers and retailers. (Tr. 114— 116; Tr. 193, lines 11-17; Tr. 208, line 20 — 209, line 4; Tr. 316, line 9; Tr. 343, lines 16-22; Tr. 454, line 4; Tr. 585, line 21 — 587, line 4; Tr. 1236, line 21— 1237, line 8; Tr. 1579, lines 1-11; Tr. 1583, line 18; Tr. 1588, line 18 et seq.; Tr. 1856, line 13 — 1857, line 24). 15. There is both public and industry recognition of beer as a separate and unique product. (Tr. 193, line 15; Tr. 386, line 20; Tr. 387, line 9; Tr. 454, lines 7-22; Tr. 1598, lines 13-20; Tr. 1856, line 24 — 1857, line 5; see also citations for Finding 14). 16. Beer is a line of commerce. (Findings 8-15, inclusive). Issues Relating To Section of the Country 5. Are the following areas, or any of them, sections of the country within the meaning of Section 7 of the Clayton Act: (a) the United States; (b) the eight Western States of California, . Oregon, Washington, Idaho, Montana, Nevada, Utah and Arizona; (c) the State of California; (d) the State of Hawaii; (e) or some part of the United States less than the entire United States but larger than or different from the eight Western States; and if so, is each or any such section a relevant geographic market to be considered in determining the effects on competition of the acquisitions challenged by the complaint ? 17. The United States as a whole is a geographic market for the production and sale of beer. (Tr. 956, lines 21-22; Tr. 592, line 8; Tr. 482, lines 7-11). 18. The Eight Western States area consists of the contiguous States of California, Oregon, Washington, Idaho, Montana, Nevada, Utah and Arizona. Its boundaries are the Pacific Ocean, the Canadian and Mexican borders, and, approximately, the Continental Divide. 19. Freight rates are a substantial factor in the sale of beer. (Tr. 204, line 13; Tr. 91, lines 21-23; Tr. 313, lines 17-19; Tr. 451, line 19 — 452, line 10). 20. Most breweries and the bulk of brewing capacity in the western portion of the United States are located along the Pacific Coast. (Pre-Trial Order, pp. 47-49). 21. Freight rates make it more economical for brewers to supply beer to points west of the Continental Divide from Pacific Coast breweries, rather than from Eastern or Midwestern breweries. Brewers who have breweries both on the Pacific Coast and in the Midwest generally supply the Eight Western States area from their Pacific Coast breweries and supply areas east of the Eight Western States area from their Midwestern breweries. (Tr. 1354, line 16 — 1355, line 3; Tr. 584, line 11 — 585, line 3; Plaintiff’s Exhibit 35). 22. Brewers attempt, for profit purposes, to sell a maximum quantity of their production as close as possible to the brewery at which it is produced. (Tr. 94, lines 2-11; Tr. 314, line 22). 23. Approximately 80% of all beer sold within the Eight Western States in 1963 was produced in that area. An additional 13.6% was produced in Denver, Colorado, just outside the area. (Pre-Trial Order, pp. 47-49, 65-68). 24. Over 94% of the beer produced in the Eight Western States in 1963 was sold in that area. (Pre-Trial Order, pp. 47-49, 65-68). 25. The Eight Western States area is the principal marketing territory for General Brewing; about 90% of its sales are concentrated there. (Tr. 451, lines 6-11; Tr. 475, lines 15-25). 26. National brewers have, or, in the case of Schlitz, have had in the recent past, separate sales organizations to handle the western market. The great majority of brewers recognize the existence of a western market for beer. (Tr. 584, line 10; Tr. 199, lines 13-17; Tr. 1334, lines 10-14; Tr. 200, lines 5-12; Plaintiff’s Exhibit 1, pp. 9-10). 27. The Eight Western States area is a separate geographic market for the production and sale of beer. (Findings 18-26, inclusive). 28. The State of California is an area of heavy production and consumption of beer. During the period between 1947 and 1963, consumption of beer in California has increased six times as much as the nationwide increase in consumption of beer. In 1963, California accounted for about 8% of the total amount of beer consumed in the United States. (Pre-Trial Order, pp. 13, 14, 46, 48, 64). 29. The State of California is an area of intense competition in the sale of beer. (Pre-Trial Order, pp. 14-46; Tr. 487, lines 1-8; Tr. 1360 — 1361; Tr. 960, line 20 — 961, line 3). 30. Approximately 60% of General Brewing’s sales are made in the State of California. Prior to its acquisition by Schlitz, approximately 96% of Burgermeister’s sales were made in the State of California. (Tr. 451, lines 3-5; Tr. 89, lines 20-23). 31. The State of California is recognized by the brewing industry as a separate sub-market for the production and sale of beer. (Tr. 112, line 16; Tr. 197, line 9; Tr. 313, line 18; Tr. 337, line 25; Tr. 456, line 15 — 457, line 6; Tr. 1888, lines 6-19; Tr. 338, lines 7-17). 32. The State of California is an integrated, homogeneous market for the production and sale of beer. (Tr. 110, lines 15-19). 33. The State of California is a separate geographic sub-market for the production and sale of beer. (Findings 28-31, inclusive). 34. The State of Hawaii is geographically isolated from the continental United States, and it has a unique group of beer consumers whose local pride requires special marketing techniques. (Tr. 457, lines 10-18; Tr. 1336, lines 14-17). 35. Approximately 6% of General Brewing’s sales are made in Hawaii. This represented about 41.2% of the total amount of beer sold in Hawaii in 1963. (Tr. 476, lines 15-17; Plaintiff’s Exhibit 34). 36. The State of Hawaii is a separate market for the sale of beer. (Tr. 457, lines 10-17). 37. The State of Hawaii is a separate geographic sub-market for the production and sale of beer. (Findings 34-36, inclusive). Issues Generated By The Schlitz Acquisition of An Interest in Labatt 6. Will the reasonably probable effect of the acquisition by defendant Jos. Schlitz Brewing Company of stock of John Labatt Limited be substantially to lessen competition or to tend to create a monopoly in an appropriate line of commerce in one or more of the relevant sections of the country? 7. Will the reasonably probable effect of the indirect acquisition of an interest in General Brewing Corporation by defendant Schlitz be substantially to lessen competition or to tend to create a monopoly in an appropriate line of commerce in one or more relevant sections of the country ? 8. Is John Labatt Limited a corporation engaged in commerce within the meaning of Section 7 of the Clayton Act? 9. Was the purchase of stock of John Labatt Limited by defendant Jos. Schlitz Brewing Company solely for the purpose of making an investment in Canada? 10. Ia the acquisition of a stock interest in John Labatt Limited by defendant Schlitz an investment exempt from the prohibition of Section 7 of the Clayton Act? 38. Defendant Schlitz is the Nation’s second largest brewer, with 1964 sales of $311,394,654 and with seven breweries located throughout the country. From 1954 to 1964, its share of the California market rose (with some intermediate ebb and flow) from 2.40% to 12.1%. (PreTrial Order, pp. 116, 36-46; Plaintiff’s Exhibit 11). 39. In February 1964, Schlitz acquired 39.3 % of the stock of John Labatt Limited, a sufficient amount for voting control of the latter. (Schlitz Answer to Complaint, p. 5, lines 17-20; Tr. 797, lines 5-11; Plaintiff’s Exhibit 11, p. 5). 40. John Labatt Limited is the third largest Canadian brewer, with 1964 sales of $108,585,537 and with seven breweries located throughout Canada. (PreTrial Order, p. 117; Tr. 633, lines 16-22; Plaintiff’s Exhibit 17). 41. John Labatt Limited controls 63.5% of the common stock of General Brewing Corporation. (Pre-Trial Order, p. 117; Defendant Schlitz Exhibit 198). 42. General Brewing was the 14th largest U. S. brewer in 1963, and has two plants in California, one in Washington, and one in Utah. General Brewing in 1963 ranked second in the California beer market, with 13.7% of sales, second in the Eight Western States market with 13.3% of sales, and first in the Hawaii market with 41% of sales. (Pre-Trial Order, pp. 56, 48, 49, 45, 65-67, 50). 43. A strong trend toward concentration exists in the brewing industry. Since 1952 the number of plants has decreased from 334 to 190 in 1964, and the number of companies has decreased from 307 to 144 in 1964, while tax paid withdrawals have increased from 84,293,-646 barrels to 96,247,413 barrels in 1964. (Pre-Trial Order, p. 71; Plaintiff’s Exhibit 25). 44. The share of beer sales accounted for by the 10 largest and 25 largest brewers has increased from approximately 40% and 60%, in 1953, to approximately 57% and 82%, in 1963, respectively. (Pre-Trial Order, pp. 57-58; Plaintiff’s Exhibits 26, 27). 45. The rank and market share of each of the 25 largest sellers of beer in the United States in each of the years 1939-1963 is shown in Appendix A hereof. (Pre-Trial Order, pp. 51-58). 46. A trend toward concentration also exists in the Eight Western States area and in California. (Pre-Trial Order, pp. 62, 75; Plaintiff’s Exhibits 28, 30). 47. The trend toward concentration fin the beer industry will continue un“abated. (Tr. 328, line 22—329, line 10; Tr. 590, lines 7-10; Tr. 408, line 3—409, line 1). 48. Acquisitions and mergers have played an important part in the trend toward concentration in the brewing industry. A substantial number of these acquisitions and mergers involved the largest brewers and a majority were of regional firms in the larger size cate- , gories, which stand the best chance for independent survival. Schlitz has made imany of these acquisitions. (Pre-Trial !| Order, pp. 118-127; Defendant Schlitz | Exhibit 192; Tr. 2099, line 23—2100, iline 4). 49. It is extremely difficult for a new firm to enter the United States brewing industry due to the great expense of buying or building a plant and acquiring sufficient business to support it. The present cost of building a million barrel brewing facility is between $30,000,000 and $35,000,000. So far as the record discloses, just one brewery, Carlings of Canada, has successfully entered the industry in the United States since 1947. (Tr. 409, line 7—411, line 21; Tr. 190, line 15—192, line 3). 50. Control of General Brewing by Schlitz will give Schlitz over 10% of the national beer market, raising it from second to first ranked, and will give the two largest brewers over 20% of the' national beer market. (Pre-Trial Order, pp. 51-58). 51. The market share of each major seller of beer in the Eight Western States in 1963 and the total sales of beer in the Eight Western States in 1963 are shown in Appendix B hereof. (Pre-Trial Order, pp. 65-68; Plaintiff’s Exhibit 53), 52. The tax paid withdrawals of each brewery operated in the Western States, for each of the years 1960 through 1963, inclusive, are set forth by State at pages 48 and 49 of the Pre-Trial Order, in evidence. (Pre-Trial Order, pp. 48-49). 53. Control of General Brewing by Schlitz will enhance the trend of acquisitions and mergers in the brewing industry and will substantially increase concentration in the brewing industry nationally, in the Eight Western States, in California, and in Hawaii. (Pre-Trial Order, pp. 51-59,48-49, 65-67,14-46, 50; Plaintiff’s Exhibit 26-30, 32-34; Tr. 605, lines 12-13). 54. The market share of each major seller of beer in California and total beer sales, for each of the years 1933 through 1964, inclusive, is shown in Appendix C hereof. (Pre-Trial Order, pp. 11-46). 55. Control of General Brewing by Schlitz will give Schlitz six breweries, 22.9% of production, 23 % of sales in the Eight Western States, making Schlitz the largest seller of beer in the area. (PreTrial Order, pp. 48-49, 65-67; Plaintiff’s Exhibit 29). 56. Control of General Brewing by Schlitz will give Schlitz 38.9% of production and 26.8% of sales in California, making it the largest seller of beer in that state, and nearly twice as large as the second ranked firm. (Pre-Trial Order, pp. 48-49, 45; Plaintiff’s Exhibits 32, 33). 57. The market share of each seller of beer in Hawaii and total sales of beer in Hawaii for each of the years 1961, 1962 and 1963 are shown in Appendix D hereof. (Pre-Trial Order, p. 50). 58. Control of General Brewing by Schlitz will give Schlitz 50.9% of beer sales in Hawaii. (Pre-Trial Order, p. 50; Plaintiff’s Exhibit 34). 59. Distributors (also referred to as wholesalers) are extremely important to successful competition of brewers in the brewing industry. Control of General Brewing by Schlitz will place General’s distributor “system” in Schlitz’ hands and will result in a significant competitive advantage to Schlitz and a substantial competitive disadvantage to its competitors. (Tr. 335, lines 7-15; Tr. 347, line 7 — 350, line 3; Tr. 352, line 15 — 359, line 8; Tr. 212, lines 13-24; Tr. 213, line 24 — 214, line 1.; Plaintiff’s Exhibit 45; Tr. 217, line 19 — 218, line 1; Tr. 490, lines 1-3; Tr. 158, lines 13-25). 60. Control of General Brewing by Schlitz will result in a substantial lessening of competition in the sale of beer in the United States, the Eight Western States, the State of California, and the State of Hawaii. (Tr. 489, lines 17-24; Tr. 352, lines 15-19; Findings 38-67). 61. At the time Schlitz purchased its stock in John Labatt Limited, Labatt and General Brewing had formulated and partially put into effect plans to expand General Brewing eastward to become a national brewer. (Tr. 463, lines. 2-25; Tr. 464, lines 6-19; Tr. 715, line 25— 716, line 3; Tr. 780, line 3 — 782, line 13). 62. The plans of Labatt and General Brewing are based on General’s need to overcome its natural disadvantages as a regional brewer, and Labatt’s need and desire to market in the United States to meet the advertising spill-over advantage currently possessed by its largest competitor, Canadian Breweries Ltd. (PreTrial Order, p, 69; Tr. 462, line 12 — 463, line 1; Tr. 632, line 19 — 635, line 15). 63. In connection with the plans to expand General Brewing, and also in its role as the parent corporation, Labatt has given extensive practical and technical assistance to General Brewing of great value to the latter. (Tr. 635, lines 14-16; Tr. 703, line 2 — 708, line 21; Tr. 470, lines 17-19). 64. Labatt has also helped General Brewing to introduce a premium priced beer under the Labatt brand which General Brewing executives felt was needed. (Tr. 709, line 17 — 710, line 23; Tr. 1185, lines 7-24; Tr. 1613, line 23 — 1614, line 13). 65. At the time of its acquisition of Labatt stock, Schlitz attempted to eliminate potential competition of Labatt by attempting to halt the introduction of Labatt beer into the United States by General Brewing. (Tr. 711, line 18— 712, line 15; Plaintiff’s Exhibit 7). 66. Labatt and General Brewing’s plans represent substantial potential competition in the United States, the Eight Western States ánd California which will be eliminated if Schlitz is allowed to control Labatt. (Findings 60-65, supra). 67. Schlitz’ acquisition of stock of Labatt will result in a substantial lessening of actual and potential competition, and will tend to create a monopoly, in the production and sale of beer in the United States as a whole, the Eight Western States, the State of California, and the State of Hawaii. (Findings 38-66, supra), 68. John Labatt Limited each -year sells approximately $2,000,000 worth of beer in 20 States of the United States, located for the most part in the Midwest and eastern portions of the United States. This beer is produced in Labatt’s Canadian breweries. (Tr. 783, line 2; Tr. 784, lines 2-5; Plaintiff’s Exhibit 12). 69. To facilitate these sales, Labatt has organized a distribution system in the United States composed of two master distributors and a number of local distributors. (Tr. 784, lines 8-13). 70. In order to stimulate sales of its beer in the United States, Labatt provides advertising allowances, finances shared advertising programs, and makes partial payment of salesmen’s salaries. (Tr. 788, line 16 — 790, line 4). 71. Labatt sales in the United States are supervised by Labatt’s export manager, who spends one-third to one-half of his time in the United States working with the master distributors and local distributors. (Tr. 786, line 24 — 788, line 9). 72. Approximately 20% to 25% of the Labatt beer sold in the United States is shipped to the United States on Labatt-owned trucks. (Tr. 786, lines 4-6). 73. Orders for Labatt beer are placed by telephone by United States distributors to the brewery, sometimes as frequently as daily. (Tr. 785, lines 9-12). 74. Labatt deals directly with government agencies in the' United States in obtaining approval for marketing its beer in the United States. (Tr. 790, line 5— 791, line 4). | 75. The continuous flow of Labatt beer from Canada to Labatt’s distributors in the United States constitutes an ¡I engagement in foreign and interstate ijcommerce by John Labatt Limited. (Tr. 3783 — 790). 76. John Labatt Limited engages in commerce in the United States through its control of, and close business relationship with and assistance to, General Brewing Corporation. (Tr. 703, line 2— 708, line 21; Pre-Trial Order, p. 117, lines 4-9). 77. From the outset of the negotiations Schlitz sought working control of John Labatt Limited. But for the issuance of the temporary restraining order, Schlitz obtained and would now have such control. (Tr. 1103, line 4; Tr. 1315, line 2; Tr. 717, lines 15-18; Tr. 824, lines 3-16). 78. Schlitz purchased 1,700,000 shares, or 39.3% of the Labatt stock at $23 (Canadian) a share at a price which was described to Labatt shareholders as “an historically high level” and one appearing “to discount future growth of the Company [Labatt] for some years.” (Plaintiff’s Exhibit 22). 79. Schlitz was correctly advised by the Labatt management that its acquisition of Labatt stock would meet with an adverse reaction from the Canadian public. (Tr. 719, lines 14-22; Tr. 765, line 6 — 766, line 13). 80. During the course of negotiations for Schlitz’ acquisition of a controlling interest in Labatt, both parties recognized the possible anti-competitive consequences of consummation. (Tr. 718, line 9—722, line 6). 81. The possibility of Labatt management marketing Schlitz brand beer wás discussed but never resolved between Labatt and Schlitz. (Tr. 817, line 21—819, line 7). 82. During the course of negotiations Schlitz sought to dissuade Labatt from introducing the Labatt brand of beer through General Brewing. (Tr. 711, line 18—713, line 17; Plaintiff’s Exhibit 7). Issues Generated By The Schlitz Acquisition of Burgermeister 11. May plaintiff challenge in these proceedings the acquisition of the assets of Burgermeister Brewing Corporation by defendant Schlitz? 12. Was Burgermeister Brewing Corporation a failing firm? 13. Will the reasonably probable effect of the acquisition by defendant Schlitz of all of the assets, except cash, of Burgermeister Brewing Corporation be substantially to lessen competition or to tend to create a monopoly in an appropriate line of commerce in one or more of the relevant sections of the country ? 83. Shortly before the acquisition of Burgermeister by Schlitz, the Department of Justice requested Schlitz to submit detailed information concerning the transaction; in response, Schlitz submitted certain information concerning its acquisition of Burgermeister and relating to the business of each of the companies; after consideration of the information submitted by Schlitz, counsel for Schlitz was advised that the Department of Justice was not prepared to take any action at that time to block the Schlitz acquisition of Burgermeister; the Department of Justice took no action at that time to block the Schlitz acquisition of Burgermeister. (Defendant Schlitz Exhibits 52, 207; 53A-P, 207). 84. Defendant Schlitz did not submit a written request for written clearance of its acquisition of Burgermeister; (The record is barren of any proof that the Department of Justice gave clearance to the acquisition of Burgermeister by defendant Schlitz). (Defendant Schlitz Exhibit 207). 85. Defendant Schlitz requested and obtained clearance letters from the Department of Justice for its acquisition of the Hawaii Brewing Company and a Puerto Rican brewery. (Tr. 1312, line 10—1313, line 3). 86. Oral clearances for mergers or acquisitions are not given by the Antitrust Division. (Tr. 1781, line 2—1782, line 17). 87. The sales by dollar and volume and after-tax earnings by Burgermeister in the five years preceding its acquisition were as follows: Volume (barrels) After-Tax Earnings Year Sales 973.501 $1,013,829 1957 $37,319,900 971.502 988,823 1958 37,221,851 974,347 944,687 1959 38,197,664 892,711 720,951 1960 35,554,000 726,533 408,602 1961 29,154,891 (Pre-Trial Order, pp. 43,116; Plaintiff’s Exhibits 3, 4; Defendant Schlitz Exhibits 53K, 53L). 88. In 1960, Burgermeister was the third largest selling California brewery accounting for 10.7% of all beer sold in the State of California. (Pre-Trial Order, p. 42). 89. Burgermeister’s one brewery, located in San Francisco, California, was completely rebuilt during the period from 1944 to 1948. (Tr. 89, lines 3-13). 90. In 1960 Burgermeister had one of the most modern plants, equipped with the finest draft beer equipment, in the United States. (Tr. 89, lines 14-16; Tr. 105, lines 21-24). 91. At the time of its acquisition by Schlitz, Burgermeister had an exceptionally strong distributor organization. (See Finding 59 as to the great value of this.) (Tr. 95, lines 19-23; Tr. 158, lines 5-10; Tr. 188, lines 8-9). 92. 1960 was the twenty-first consecutive year in which Burgermeister Brewing Corporation paid dividends to its shareholders. (Plaintiff’s Exhibit 4, P. 2). 93. At the time its assets were purchased by Schlitz, Burgermeister Brewing Corporation had no long-term outstanding debts. (Plaintiff’s Exhibit 4, P. 5). 94. At the time its assets were purchased by Schlitz, Burgermeister Brewing Corporation was a solvent corporation in a healthy financial position. (Plaintiff’s Exhibits 3, 4; Tr. 105, lines 10-24; Tr. 1543, line 16—1544, line 22). 95. At the time its assets were purchased by Schlitz, Burgermeister Brewing Corporation was not in a deteriorating- or declining condition nor could it be termed a failing plant. (Plaintiff’s Exhibits 3, 4; Tr. 187, line 25—188, line 9; Tr. 2065, lines 3-6). 96. In 1960 Miller Brewing Company offered to purchase Burgermeister for $11,000,000. This offer was raised to $12,000,000 in March of 1961. (Tr. 160, lines 7-8; Tr. 169, lines 5-8; Tr. 187, lines 4-11). 97. On December 29, 1961, defendant Schlitz purchased the assets of Burgermeister, except for cash in the amount of $1,700,000, for $12,039,250. (Plaintiff’s Exhibit 1, p. 3). 98. Had Burgermeister in 1961 spent its usual amount for advertising, including point-of-purchase advertising and service costs, the net earnings for 1961 would have been over one million dollars. (Tr. 104, lines 12-19; Tr. 139, lines 1-25). 99. From 1948 to 1961 several national brewers who had no brewing facilities in California, acquired California breweries. (Pre-Trial Order, pp. 12, 13, 40-43, 120, 121). 100. The volume and market share of firms brewing or selling beer in California for the years 1955 through 1964, inclusive, are shown at pages 37-46 of Appendix C hereof. (Pre-Trial Order, pp. 37-46). 101. For the years 1955 through 1960, Burgermeister’s sales in California, its rank and , its percentage of the California market were as follows: Year Calif. Sales (barrels) Rank Percent of Market 1955 977,561 2 16.12 1956 943,762 2 14.97 1957 887,798 3 13.53 1958 886,359 3 12.78 1959 887,106 4 11.93 1960 805,289 3 10.7 (Pre-Trial Order, pp. 37-42). 102. For the years 1955 through 1960, Schlitz sales in California, its rank and its percentage of the California market were as follows: Year Calif. Sales (barrels) Percent of Rank Market 1955 243,190 9 4.01 1956 264,860 9 4.20 1957 283,692 9 4.32 1958 273,331 10 3.94 1959 292,559 10 3.94 1960 293,238 11 3.9 (Pre-Trial Order, p i. 37-42). 103, The dollar value of beer sales by Burgermeister Brewing Corporation for each of the years 1957 through 1960 in each of the States in which it sold are shown on Appendix E hereof. (Plaintiff’s Exhibit 5). 104. 1961 sales for Burgermeister are not reliable indicia of the effect of the Schlitz acquisition of the Burgermeister assets because such sales were seriously distorted by the demoralizing effect of awareness, in the industry, its distributors and corporate personnel, of negotiations for the sale of Burgermeister which commenced in 1960. (Tr. 104, line 4 — 105, line 4; Tr. 1544, lines 3-11). 105. In 1961 Schlitz was the tenth ranking brewer in California and had 3.6% of the California market. In 1962 Schlitz was the third ranking brewer in California and had 12.3% of the California market. (Pre-Trial Order, pp. 43, 44). 106. At the time of its acquisition by Schlitz, Burgermeister was a substantial independent competitor in California. (Tr. 497, lines 14-16; Tr. 1620, lines 5-8; Pre-Trial Order, pp. 42, 43). 107. After Schlitz acquired Burgermeister, Schlitz attempted to have its wholesalers carry a full line of Schlitz products. (Tr. 1270, lines 7-13). 108. When Schlitz acquired Burgermeister, it was able to choose between the Schlitz and the Burgermeister wholesaler. Schlitz thus was able to strengthen its wholesaler organization by choosing the more effective of the two wholesalers. (Plaintiff’s Exhibit 2). 109. In the first six months following the acquisition of Burgermeister by Schlitz, Schlitz terminated on its own initiative its relationship with thirty-nine beer distributors in various market areas of the West. Fourteen of these were former Burgermeister distributors, and twenty-five of these were former Schlitz distributors. Eight of the fourteen former Burgermeister distributors were in California, and twenty-three of the twenty-five former Schlitz distributors were in California. (Answer of Defendant Jos. Schlitz Brewing Company to Plaintiff’s First Set of Interrogatories to Said Defendant, pp. 55-76). 110. Schlitz’ ability to choose between the Schlitz and Burgermeister wholesaler when it acquired Burgermeister caused substantial detriment to other brewers whose beers were formerly being sold by either the Schlitz or Burgermeister wholesaler. (Tr. 1609, lines 5- 19; Tr. 1611, lines 20-25; Tr. 493, line 17 — 493A, line 2; Tr. 188, line 25— 190, line 14; Tr. 220, line 8 — 222, line 20; Tr. 290, line 14 — 292, line 6). 111. General Brewing Company and Miller Brewing Company are two examples of breweries who were detrimentally affected by the Schlitz acquisition of Burgermeister in that their distributor organizations were disrupted. (Tr. 1203, lines 2-7; Tr. 1226, lines 3-14; Tr. 190, lines 2-14; Tr. 205, lines 6- 12; Tr. 212, line 3 — 214, line 16; Tr. 226, lines 11-19). 112. At the time of the Schlitz acquisition of Burgermeister, Miller Brewing Company had twenty-two joint distributors with Burgermeister. After the acquisition, six of these dropped Miller and took on Schlitz, six dropped Burgermeister and stayed with Miller, two went out of business after having Burgermeister withdrawn from them, four took on Schlitz and retained Miller, and four did not take on Schlitz. (Tr. 188, line 25 — 189, line 10; Tr. 220, line 8 — 222, line 20). 113. At the time of its acquisition of Burgermeister, Schlitz was distributing its popular priced beer, Old Milwaukee, in the middle west, southern, and southeastern States. (Tr. 1252, lines 5-17). 114. Old Milwaukee’s marketing area has been expanded so that it is now being sold in substantially every other State where Burgermeister is not presently marketed. (Tr. 1304, line 24 — 1305, line 9). 115. Since its acquisition of Burgermeister, Schlitz has succeeded in expanding Burgermeister’s selling area eastward until it has met that of Old Milwaukee. (Tr. 1346, line 21 — 1347, line 6). 116. In 1961 Schlitz was aware that in order to improve its position on the West Coast, it could either introduce its own popular priced brand or acquire a going brand. (Plaintiff’s Exhibit 2, pp. 2, 3). 117. It would have been very costly for Schlitz to introduce its own brand on the West Coast in 1961. (Plaintiff’s Exhibit 2, p. 2). 118. But for its .acquisition of the Burgermeister assets, Schlitz would have introduced its own popular priced beer on the West Coast. (Plaintiff’s Exhibit 2). 119. The changes in its distributor organization that Schlitz effectuated after it acquired the assets of Burgermeister resulted in a substantial lessening of competition and a tendency to create a monopoly in the production and sale of beer in the Eight Western States area and in California. (Findings 107-112, supra). 120. The failure of Schlitz to introduce its own popular priced brand beer into the West Coast because of its acquisition of the assets of Burgermeister resulted in a substantial lessening of actual and potential competition and a tendency to create a monopoly in the production and sale of beer in the Eight Western States area and in California. (Findings 113-118, supra). 121. The elimination of Burgermeister as a substantial independent competitor by Schlitz’ purchase of the assets of Burgermeister resulted in a substantial lessening of competition and a tendency to create a monopoly in the production and sale of beer in the Eight Western States area and in California. (Findings 95,106, supra). 122. The purchase of the assets of Burgermeister by Schlitz further enhanced the trend toward concentration in the brewing industry, resulting-in a substantial lessening of competition and a tendency to create a monopoly in the production and sale of beer in the Eight Western States area and in California. (Findings 43-49, 99, supra). 123. The acquisition of the assets of Burgermeister by Schlitz resulted in a substantial lessening of actual and potential competition and a tendency to create a monopoly in the production and sale of beer in the Eight Western States area and in California. (Findings 99-118, supra). 124. The evidence was not sufficient to establish that the Schlitz acquisition of Burgermeister resulted in a substantial lessening of competition, actual or potential, nor in a tendency to create a monopoly in the production and sale of beer in the United States or in Hawaii. 125. The acquisition by Schlitz of the assets of Burgermeister, in connection with Schlitz’ subsequent acquisition of Labatt stock and thereby control of General Brewing, is further evidence of the continuing trend toward concentration in the brewing industry in general and of the attempts by Schlitz, in particular, to increase its sales and market share by the acquisition of competitors. (Findings 38, 43, 44, 45, 46, 47, 48, 50, 53, 59, 65, 80, 82, 85, 97, 104, 105, 106, 107, 109, 111, 112, 118, 119-24). CONCLUSIONS OF LAW 1. The Court has jurisdiction over the subject matter of the complaint herein and the parties hereto. 2. The production and sale of beer is a line of commerce within the meaning of Section 7 of the Clayton Act, the relevant provisions of which are set forth in Appendix F hereof. Beer is the appropriate product market for determining the effects on competition of the acquisitions by defendant Jos. Sehlitz Brewing Company of the assets of Burgermeister Brewing Corporation and of stock of John Labatt Limited. United States v. Continental Can Co., 378 U.S. 441, 456-457, 84 S.Ct. 1738, 12 L.Ed.2d 953 (1964). Brown Shoe Co. v. United States, 370 U.S. 294, 325-326, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). United States v. E. I. duPont de Nemours & Co., 353 U.S. 586, 593-595, 77 S.Ct. 872, 1 L.Ed.2d 1057 (1957). A. G. Spalding & Bros., Inc. v. Federal Trade Commission, 301 F.2d 585, 604 (3rd Cir. 1962). Crown Zellerbach Corporation v. Federal Trade Commission, 296 F.2d 800, 811 (9th Cir. 1961), cert. den., 370 U.S. 937, 82 S.Ct. 1581, 8 L.Ed.2d 807 (1962). American Crystal Sugar Co. v. Cuban-American Sugar Co., 259 F.2d 524, 529-530 (2d Cir. 1958). Hamilton Watch Co. v. Benrus Watch Co., 114 F.Supp. 307, 311 (D.Conn. 1953), affirmed, 206 F.2d 738 (2d Cir.). 3. There are no distinguishable price levels of beer which constitute relevant product sub-markets within the line of commerce found by the Court and designated as the production and sale of beer. United States v. Continental Can Co., 378 U.S. 441, 456-457, 84 S.Ct. 1738, 12 L.Ed.2d 953 (1964). Brown Shoe Co. v. United States, 370 U.S. 294, 325-326, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). Hamilton Watch Co. v. Benrus Watch Co., 114 F.Supp. 307, 311 (D.Conn. 1953), affirmed, 206 F.2d 738 (2d Cir.). 4. The following areas are each sections of the country for the production and sale of beer, within the meaning of Section 7 of the Clayton Act, and each is a relevant geographic market to be considered in determining the effects on competition of the acquisitions challenged by the complaint: the United States; the Eight Western States of California, Oregon, Washington, Idaho, Montana, Nevada, Utah and Arizona; the State of California; the State of Hawaii. United States v. El Paso Natural Gas Co., 376 U.S. 651, 657, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964). United States v. The Philadelphia National Bank, 374 U.S. 321, 357, 360-361, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). Brown Shoe Co. v. United States, 370 U.S. 294, 336-337, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). Crown Zellerbach Corporation v. Federal Trade Commission, 296 F.2d 800, 817 (9th Cir. 1961), cert. den., 370 U.S. 937, 82 S.Ct. 1581, 8 L.Ed.2d 807 (1962). American Crystal Sugar Co. v. Cuban-American Sugar Co., 152 F.Supp. 387, 398 (S.D.N.Y.1957), affirmed, 259 F.2d 524 (2d Cir. 1958). United States v. Bethlehem Steel Corp., 168 F.Supp. 576, 599-603 (S.D.N.Y.1960). 5. The reasonably probable effect of the acquisition by defendant Jos. Schlitz Brewing Company of stock of John Labatt Limited (and thereby control of General Brewing Company) will be substantially to lessen competition and to tend to create a monopoly in the production and sale of beer in the United States as a whole, the Eight Western States, the State of California, and the State of Hawaii. United States v. Aluminum Co. of America, 377 U.S. 271, 84 S.Ct. 1283, 12 L.Ed.2d 314 (1964). United States v. Continental Can Co., 378 U.S. 441, 84 S.Ct. 1738, 12 L.Ed.2d 953 (1964). United States v. Penn-Olin Chemical Co., 378 U.S. 158, 84 S.Ct. 1710, 12 L.Ed.2d 775 (1964). United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964). United States v. The Philadelphia National Bank, 374 U.S. 321, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). American Crystal Sugar Co. v. Cuban-American Sugar Co., 152 F.Supp. 387 (S.D.N.Y. 1957), affirmed, 259 F.2d 524 (2d Cir. 1958). United States v. Bethlehem Steel Corp., 168 F.Supp. 576 (S.D.N.Y.1960). 6. John Labatt Limited is a corporation engaged in commerce within the meaning of Section 7 of the Clayton Act. Clayton Act, Section 1, 38 Stat. 730 (15 U.S.C. § 12). 7. The acquisition of a stock interest in John Labatt Limited by defendant Schlitz is not an investment exempt from the prohibition of Section 7 of the Clayton Act. Hamilton Watch Co. v. Benrus Watch Co., 114 F.Supp. 307, 316 (D.Conn.1953), affirmed, 206 F.2d 738 (2d Cir.). 8. The Department of Justice may challenge the acquisition of Burgermeister Brewing Corporation by defendant Schlitz in this proceeding and is not estopped or restrained from doing so by its failure to bring suit at the time of the acquisition. United States v. New Orleans Chapter, Associated General Contractors of America, Inc., 382 U.S. 17, 86 S.Ct. 33, 15 L.Ed.2d 5 (1965), reversing 238 F.Supp. 273 (E.D.La.1964). United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150, 226, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). United States v. Grinnell Corporation, 30 F.R.D. 358, 363 (D.R.I.1962). 9. At the time of its acquisition by defendant Schlitz, Burgermeister Brewing Corporation was not a failing firm. International Shoe Co. v. Federal Trade Commission, 280 U.S. 291, 301-302, 50 S.Ct. 89, 74 L.Ed. 431 (1929). Erie Sand and Gravel Company v. Federal Trade Commission, 291 F.2d 279, 280-281 (3rd Cir. 1961). 10. The acquisition of all of the assets, except cash, of the Burgermeister Brewing Corporation by defendant Schlitz had, and continues to have, the reasonably probable effect of substantially lessening competition and tending to create a monopoly in the production and sale of beer in the Eight Western States area and in the State of California. Such lessening of competition was and is actual competition in the State of California and primarily potential competition in the Eight Western States area. United States v. Aluminum Co. of America, 377 U.S. 271, 84 S.Ct. 1283, 12 L.Ed.2d 314 (1964). United States v. Continental Can Co., 378 U.S. 441, 84 S.Ct. 1738, 12 L.Ed.2d 953 (1964). United States v. Penn-Olin Chemical Co., 378 U.S. 158, 84 S.Ct. 1710, 12 L.Ed.2d 775 (1964). United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964). United States v. The Philadelphia National Bank, 374 U.S. 321, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). American Crystal Sugar Co. v. Cuban-American Sugar Co., 152 F.Supp. 387 (S.D.N.Y.1957), affirmed, 259 F.2d 524 (2d Cir. 1958). United States v. Bethlehem Steel Corp., 168 F.Supp. 576 (S.D.N.Y.1960). 11. The acquisition of the assets, except cash, of the Burgermeister Brewing Corporation by defendant Jos. Schlitz Brewing Company, as charged in the complaint herein, violated Section 7 of the Clayton Act. 12. The acquisition of stock of John Labatt Limited by defendant Jos. Schlitz Brewing Company, as charged in the complaint herein, violated Section 7 of the Clayton Act. 13. The relief necessary to accomplish the alleviation of the unlawful effects of the violations found herein will be the divestiture by defendant Schlitz of the assets of Burgermeister Brewing Corporation and of the stock of John Labatt Limited. 14. Such relief will require appropriate exercise of the injunctive power of this court upon defendant Jos. Schlitz Brewing Company and defendant General Brewing Company. COMMENTS ON THE FINDINGS OF FACT PROPOSED BY DEFENDANT JOS. SCHLITZ BREWING CO. The proposed Findings of Fact submitted by the defendant Schlitz were closely examined and carefully considered by the trial court. In the main, Schlitz’ Findings have been rejected, because in their most important aspects, they are not supported by the evidence. No attempt is here made to detail the reasons for this conclusion as to each and every Finding of Fact proposed by Schlitz. Instead, the following comments serve to point out the major areas of disagreement between the court’s view of the evidence and of the applicable law as contrasted to those urged by defendant Schlitz. The Relevant Line of Commerce Schlitz maintains that premium and non-premium beer constitute separate lines of commerce within the meaning of Section 7 of the Clayton Act. This conclusion is grounded largely on the assumptions that there is a clear price differential between premium and non-premium beer and that sales of premium beer have held a constant 20% of the national beer market. Insofar as Schlitz’ conclusion is based on a price differential between premium and non-premium beer, it is not supported by the evidence nor by the applicable case law. The trial court has found that in California, beer prices range over a wide spectrum from $.79 to $1.44 a six-pack. There is no rational way of choosing a point along this price spectrum and saying that all beer which sells above that point constitutes a line of commerce, or even a sub-market, apart from all beer which sells below that point. This is precisely what the Supreme Court refused to do in Brown Shoe Co. v. United States, 370 U.S. 294, 325-326, 82 S.Ct. 1502 (1962), when it rejected the'defendant’s position that medium-price and low-price shoes constituted separate lines of commerce for purposes of Section 7. In fact, an examination of the criteria listed by the Supreme Court in Brown Shoe and the evidence adduced here on the issue of the relevant line of commerce shows that each and every factor mentioned in the Supreme Court’s opinion points toward a finding that all beer is the only relevant line of commerce in the present case. This conclusion is not vitiated by a showing that some percentage of beer consumers will purchase only premium, or only non-premium beer. Even Schlitz admits that there is “an area in which consumers cross over from premium to non-premium beers”. (Schlitz Proposed Finding of Fact No. 132.) This conclusion was expressed almost unanimously by the witnesses from the brewing industry. In United States v. Continental Can Co., 378 U.S. 441, 84 S.Ct. 1738 (1964), the Supreme Court held that the government could establish that metal and glass containers constituted a single line of commerce without proving that the area of competitive overlap between them was complete. The Court said: “There may be some end uses for which glass and metal do not and could not compete, but complete interindustry competitive overlap need not be shown. We would not be true to the purpose of the Clayton Act’s line of commerce concept as a framework within which to measure the effect of mergers on competition were we to hold that the existence of noncompetitive segments within a proposed market area precludes its being treated as a line of commerce.” 378 U.S. at 457, 84 S.Ct. at 1747. Clearly, there is at least as great a “competitive overlap” between premium and non-premium beers as between metal and glass containers. Furthermore, the testimony establishes conclusively that this competition for the beer consumers’ dollar is reflected in competition among all beers for shelf space, servicing at retail outlets • and point-of-sale advertising space. The Relevant Section of the Country Schlitz insists that the entire United States is the only relevant section of the country in this case. It contends that to quench their thirst, consumers can and do turn to brewers located anywhere in the nation. However, Schlitz seems to overlook the fact that only three brewers —Schlitz, Miller and Anheuser-Busch— actually compete on a national basis. The competitive “mix” of suppliers in the beer industry in any area or section of the country is composed of the three national brewers and a group of local and regional brewers. The evidence in this case shows that freight rates and population density and growth are among the most important factors relied upon by local and regional brewers in determining their geographic markets. Freight rates for shipping beer across the Continental Divide strongly support the conclusion that the Eight Western States area is a relevant section of the country; the population density and growth of California strongly supports the conclusion that it is a relevant section of the country. Furthermore, both of the acquired American breweries made at least 90% of their sales in California or in the Eight Western States area. In much quoted language in its Brown Shoe decision, the Supreme Court said that “[t]he geographic market selected must * * * both ‘correspond to the commercial realities’ of the industry and be economically significant.” 370 U.S. at 336-337, 82 S.Ct. at 1530. An examination of the brewing industry in general and of the competitors involved here in particular, shows that the trial court’s Findings on the relevant sections of the country are completely consistent with the Brown Shoe test. To support its position that the entire United States is the only relevant section of the country, Schlitz points out that the Miller Brewing Co. has only one brewery —in Milwaukee, Wisconsin — and that Miller competes successfully west of the Continental Divide. However, it was established at the trial that Miller sold its beer in California at a price considerably above that of the other “national premiums”, Schlitz and Budweiser. It seems clear that Miller would be an even stronger competitor in the West if it could move its beer into western outlets at a lower cost for freight. Apparently, Miller feels this way also, since it has now made a firm offer to purchase General Brewing’s Azusa brewery in Southern California. The Probable Effect on Competition of Schlitz’ Acquisition of Labatt and General Brewing The record supports Schlitz’ contention that Labatt is not now a substantial competitor in the United States. However, Schlitz goes further and states that “there is no evidence that Labatt plans to expand its efforts in the United States”. (Schlitz Proposed Finding No. 61.) This statement is patently erroneous. Both Mr. John H. Moore, President of John Labatt, Ltd., and Mr. John B. Cronyn, Executive Vice President of John Labatt, Ltd., testified that Labatt did desire and intend to expand its operations into the United States markets and that it intended to use General Brewing as a vehicle for accomplishing this purpose. (Tr. 780, line 13 — 782, line 13; Tr. 632, line 19 — 633, line 11; Tr. 635, lines 5-13). The evidence clearly demonstrates that Labatt had the desire, the intention and the resourcefulness to enter the United States markets and to make General Brewing a stronger competitor in those markets. Schlitz makes much of Labatt’s early setbacks in entering the United States markets through its licensing agreement with General Brewing. In United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964), the Supreme Court held that the acquisition of Pacific Northwest Pipeline Corp. by El Paso violated Section 7 of the Clayton Act because Pacific Northwest was a strong potential competitor in the California market. The Court pointed out that Pacific Northwest had the desire and the ability to enter this market. El Paso argued that Pacific Northwest had already tried to sell gas in California but had failed. The Court rejected this argument, saying: “That might be weighty if a market presently saturated showed signs of petering out. But it is irrelevant in a market like California, where incremental needs are booming.” 376 U.S. at 660, 84 S.Ct. at 1049. It is appropriate to point out that the evidence in the present case shows that California’s demand for beer is booming almost as quickly as its demand for gas. Like Pacific Northwest, Labatt is anxious and able to help meet the demand. Schlitz’ position in regard to General Brewing is that Schlitz never wanted control of General Brewing and that Schlitz would use its power as controlling stockholder of Labatt to arrange for a sale of General Brewing. This argument, even if supported by the evidence, is irrelevant to the issue of whether Schlitz’ acquisition of Labatt and General Brewing violated Section 7 of the Clayton Act. “[T]he test of a violation of § 7 is whether, at the time of suit, there is a reasonable probability that the acquisition is likely to result in the condemned restraints.” United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 607, 77 S.Ct. 872, 884, 1 L.Ed.2d 1057 (1957) (emphasis added). At the time of suit, Schlitz did in fact control General Brewing. Furthermore, even if Schlitz’ contention about its intentions vis-a-vis General Brewing is deemed relevant to the issue of the terms of the trial court’s decree, the facts of the present case show that the ends of the Clayton Act will not be served by allowing Schlitz to keep Labatt and divest itself of General Brewing. Preliminarily, it should be pointed out that the trial court is not convinced that from the outset of its negotiations with Labatt, Schlitz had no desire to control General Brewing. If this were true, Schlitz could have gone a great deal further in making sale of General Brewing a prerequisite for its purchase of Labatt stock. But, even accepting Schlitz’ contention at face value, it is clear that. Labatt ownership and support of General Brewing is most likely to maintain, and even increase, competition in United States brewing industry markets. Entry into American brewing markets by new American firms is highly unlikely, and the large established Canadian brewers represent the most probable sources of potential substantial competition in the United States markets. But, if General Brewing were to be sold by Schlitz, the most likely buyer would be one of the larger American brewing firms. Both of the other large Canadian breweries already have an interest in an American brewing company, and Schlitz probably would not desire to increase the chances of strong potential competition from Canada. The smaller American brewing companies, on the other hand, probably would not have the resources to purchase General Brewing and give it the necessary financial and technical help needed to reverse its present downward trend. The sale of General Brewing to one of the larger Ameri