Full opinion text
BLAIR, District Judge. The government commenced this civil antitrust action on September 28, 1973 by filing a complaint alleging that the purchase of the McCulloch Corporation (McCulloch) by the Black and Decker Manufacturing Company (Black & Decker) violates § 7 of the Clayton Act as amended, 15 U.S.C. § 18. Divestiture of the acquired company is the principal relief sought. A request by the government for a temporary restraining order to prevent consummation of the Black & Decker/McCulloch merger was denied on September 28, 1973. Thereafter on October 23, 1973 the parties agreed to and the court sanctioned a hold separate order whereby Black & Decker would maintain McCulloch as a separate, identifiable business entity pending resolution of this litigation. Trial before the court in the case commenced April 5, 1976 and consumed eight weeks. Nearly thirty witnesses testified, approximately 1000 exhibits were admitted, and the trial transcript exceeds 5000 pages. Subsequent to trial, the parties submitted proposed findings of fact and conclusions of law. Based on this entire record, the court herein makes its findings of fact and conclusions of law, as required by Federal Rule of Civil Procedure 52(a). Government’s Contentions The government claims in this section 7 Clayton Act suit that potential competition may be substantially lessened by the acquisition of McCulloch by Black & Decker. Specifically, the government asserts a perceived potential entrant theory that the Black & Decker/McCulloch merger eliminated the pro-competitive effect Black & Decker exerted on the gasoline powered chain saw market by reason of its dominant position on' the edge of the market; an actual potential entrant theory that the Black & Decker/McCulloch merger eliminated Black & Decker as the most significant potential entrant either by internal de novo expansion or toehold acquisition into the gasoline powered chain saw market; and an entrenchment theory that the combination of a major portable electric tool manufacturer, Black & Decker, with one of the largest gasoline chain saw manufacturers, McCulloch, will entrench and dominate an already oligopolistic gasoline powered chain saw market. The government does not contend that any actual competition, either horizontal or vertical, has been affected by the Black & Decker/McCulloch merger. The Merger On October 1,1973, pursuant to' an agreement of July 11, 1973, Black & Decker acquired for 550,000 of its shares the outstanding issued stock of the McCulloch Corporation. See Lucier Tr 3533-35; G 1, p. 3; G 6-7; G 178 (Part II, p. 7). With activities and sales world-wide, Black & Decker is a corporation organized under the laws of Maryland, which also is its principal place of business. See G 1, p. 1; G 174 (Part I, p. 6). In 1973, the year of the merger, Black & Decker, exclusive of the McCulloch acquisition, had net sales of 427 million dollars, net earnings of 33 million dollars, and in 1972, Black & Decker had assets of 273 million dollars. See G 124, p. 10; G 125, p. 1. For the year 1972 Black & Decker ranked 372nd in sales, 206th in net income and 69th in net income as a percent of sales in Fortune magazine’s ranking of the top 500 American industrial corporations. See G 174 (Part II, p. 7). Black & Decker is primarily engaged, is recognized as, and admits to being a leader and major competitor, in the manufacturing, sale and servicing of portable electric power tools and accessories. See G 120, p. 3; G 129-31; G 167, p. 13; G 168, p. 10; G 169, p. 9; G 170, p. 12; G 205-07. These tools include electric drills, shears, screwdrivers, grinders, sanders, circular saws, lawn mowers and trimmers. In the United States these products and others are manufactured at plants in Hampstead and Easton, Maryland, Fayetteville and Tarboro, North Carolina, Beloit, Wisconsin and Anderson, Indiana. See Decker Tr 2922; G 108; G 111; G 125, p. 25; G 129-31; G 135-65. A small part of Black & Decker’s business, and an area entered through acquisition, is the manufacture of portable air tools and accessories such as pneumatic drills and impact wrenches. These products are manufactured in Solon, Ohio. See Decker Tr 2927; G 108; G 111; G 129-31. Again as a result of an acquisition, Black & Decker, in a minor aspect of its business, also produces certain types of stationary woodworking and metalworking equipment, which is manufactured in the United States in Lancaster, Pennsylvania. See G 108; G 111; G 129-31. With one exception, all of Black & Decker’s products are electrically or air powered; Black & Decker does sell a small gasoline powered generator, the engine for which is sourced, i. e., purchased from another company. See G 129-31; G 348. Black & Decker products are sold in over 100,000 retail outlets worldwide. See G 121, p. 5; G 168, p. 6; G 171 (Part I, p. 8). In addition to manufacturing, Black & Decker operates over 90 company-owned service centers in the United States while also supplying numerous, authorized independent service stations. See G 108; G 130-31; G 194. See also G 113, p. 16; G 128-29. Black & Decker has realized about 10% of its total business from these servicing activities. See G 172 (Part III, p. 6). Black & Decker was founded by two inventors in 1910 in Baltimore, Maryland as a small machine shop. In 1914 the company developed the first pistol grip, trigger switch electric drill. Thereafter the company developed and manufactured numerous electric tools and innovated in the development of such products as the portable circular saw, the cordless electric drill, and the cordless electric hedge trimmer. Black & Decker pioneered the manufacture of such low cost equipment for sale to the consumer. See Decker Tr 2860-75; G 121, p. 5; G 167, p. 10; G 168, p. 8; G 169, p. 3; G 170, pp. 3, 5-6; G 171, pp. 3-4; D 923, p. 1. For the past fifteen years Black & Decker has grown at the average rate of approximately 15% a year. See G 120, p. 3; G 121, p. 2; G 122, p. 2; G 123, p. 2; G 124, p. 2; G 125, pp. 2, 4; G 167, p. 2; G 175, pp. 2-3; G 178, p. 3. By the 1970’s the portable electric tool market had neared saturation and Black & Decker sought to diversify its product line to insure continued growth. See Graham Tr 3368-69, 3380; Lucier Tr 3509; G 209. At the time of the merger McCulloch was incorporated in Wisconsin with its principal place of business in California. See G 1, p. 1. McCulloch’s primary activity is the manufacture and sale of gasoline powered chain saws. See D 323, pp. 7-8. Additionally, the company has manufactured and sold, among other items, chain saw components, two cycle internal combustion engines, gas generators, and gasoline powered hedge trimmers. See G 9-10; G 12-20. McCulloch, one of the nation’s largest chain saw manufacturers, operates plants in California, Arizona, New York and Australia. See G 1, p. 2; G 310A-314B; D 323, pp. 27-30. In 1972, the year prior to the merger, McCulloch’s net sales totalled approximately 60 million dollars, its aggregate assets were valued at between 64-65 million dollars, and it suffered an operating loss of 1.4 million dollars. See D 227; D 321, pp. 2, 4; D 410; D 431. See also G 19. In 1972 McCulloch sold [C.D.O.] gasoline powered chain saws which accounted for approximately [C.D.O.] of the market, the [C.D.O.] industry share. See G 312B. These chain saw sales constituted over 85% of McCulloch’s total 1972 sales. See G 19; G 134, p. 9. McCulloch products were distributed through approximately 9800' retail dealers and serviced by over 5500 service facilities. See G 25, p. 12; G 79. McCulloch was a family owned corporation, dominated by Robert P. McCulloch, the company’s founder and president prior to its merger with Black & Decker. See G 11; G 289; D 323, p. 31. McCulloch has existed for about 30 years and originated as a manufacturer of aircraft engines. The company began manufacturing chain saws in the mid to late 1940’s. See G 285 (“McC History & Organization”); D 323, p. 1; D 330; D 1064. McCulloch’s operations have been characterized by product innovations in the gasoline powered chain saw area. In the late 1940’s McCulloch pioneered the manufacture of the one man gasoline powered chain saw and the company has since been responsible for the introduction of innovative small, lightweight chain saws. See Straetz Tr 109-11; Shaeffer Tr 3061; G 12, pp. 6-7; G 44, p. 3; G 354. See also Straetz Tr 115. The Market Analysis of possible anticompetitive consequences under section 7 of the Clayton Act requires definition of the “line of commerce” and “section of the country,” that is, the relevant product and geographic markets, affected by the merger. See United States v. Marine Bancorporation, 418 U.S. 602, 618, 620-21, 94 S.Ct. 2856, 41 L.Ed.2d 978 (1974); United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 356, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963); Varney v. Coleman Co., 385 F.Supp. 1337, 1344 (D.N.H.1974). The relevant geographic market, that area of the country where anticompetitive effects may exist and where the acquired firm is an actual competitor, has been stipulated by the parties to be the fifty states comprising the United States. See United States v. Marine Bancorporation., supra, 418 U.S. at 622, 94 S.Ct. 2856; United States v. Pabst Brewing Co., 384 U.S. 546, 549-50, 86 S.Ct. 1665, 16 L.Ed.2d 765 (1966); United States v. Philadelphia Nat’l Bank, supra, 374 U.S. at 357, 83 S.Ct. 1715; United States v. Bethlehem Steel Corp., 168 F.Supp. 576, 595-96 (S.D.N.Y.1958); G 2. In defining the product market, the court “must recognize meaningful competition where it is found to exist.” United States v. Continental Can Co., 378 U.S. 441, 449, 84 S.Ct. 1738, 1743, 12 L.Ed.2d 953 (1964). The parties have stipulated the relevant product market to be gasoline powered chain saws. See G 2. At trial, however, the parties disagreed whether the relevant product market encompassed only manufacturers and sellers of gasoline powered chain saws or whether the market extended to manufacturers and/or sellers of gasoline powered chain saws. See Tr 1119-1121; Tr 1660. By their definition defendants seek to include in the relevant product market such companies as Montgomery Ward and Sears & Roebuck which through private labelling agreements sell under their own name but do not manufacture gasoline powered chain saws. The defendants do not cite, nor has the court discovered, any precedent supporting the definition of a relevant product market to include manufacturers and/or sellers of a certain product. Contrary, albeit implicit, authority exists. See, e. g., United States v. Falstaff Brewing Co., 410 U.S. 526, 527, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973); United States v. Continental Can Co., 378 U.S. 441, 447-58, 84 S.Ct. 1738, 12 L.Ed.2d 953 (1964); 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. Standard Oil Co., 253 F.Supp. 196, 198 (D.N.J.1966). The court recognizes that: [s]ince the purpose of delineating a line of commerce is to provide an adequate basis for measuring the effects of a given acquisition, its contours must, as nearly as possible, conform to competitive reality. Where the area of effective competition cuts across industry lines, so must the relevant line of commerce; otherwise an adequate determination of the merger’s true impact cannot be made. United States v. Continental Can Co., supra, 378 U.S. at 457, 84 S.Ct. at 1747. It is thus possible that both the manufacturers of a product and its sellers, while ostensibly in different industries, could fall within the same relevant product market. Commercial realities, however, dictate rejection of the defendants’ proposed product market. While one witness from a gas chain saw manufacturer testified that Sears & Roebuck was a competitor, another former gas chain saw manufacturer testified that Sears & Roebuck was not perceived as a competitor, which conclusion is bolstered by the industry trade association’s practice of collecting sales data only from manufacturers. See Straetz Tr 175; Nolan Tr 687-88; McCallister Tr 797-98. The differences between a manufacturer of a product and its retail seller are significant; the retail seller is primarily a customer of the manufacturer. While a retail seller such as Sears & Roebuck may sell under its private label a gasoline chain saw made by a chain saw manufacturer which sells its saws to wholesalers, the two are not in direct competition. The buyer sought by Sears & Roebuck is the ultimate consumer; the chain saw manufacturer seeks to sell to a variety of wholesalers and retailers. Simply stated, the manufacturer of the chain saw and its retail seller operate at different levels in the merchandising process. While “complete inter industry competitive overlap need not be shown”, there is no evidence of any significant overlap in this case. See United States v. Continental Can Co., supra at 457, 84 S.Ct. at 1747. Accord United States v. Connecticut Nat’l Bank, 418 U.S. 656, 662, 94 S.Ct. 2788, 41 L.Ed.2d 1016 (1974). The relevant product market, then, is the manufacture and sale of gasoline powered chain saws. In addition to the product market defined above, the government also contends that a submarket exists, the manufacture and sale of lightweight, inexpensive (suggested retail price of less than $170) gasoline powered chain saws which are sold to occasional users, that is, primarily homeowners who do not use the saw to earn their livelihood. See Tr 1119. In Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 1524, 8 L.Ed.2d 510 (1962), the Court delineated the factors to be analyzed in determining the existence of any sub-market: within this broad market, well-defined submarkets may exist, which, in themselves, constitute product markets for antitrust purposes. United States v. E. I. duPont de Nemours & Co., 353 U.S. 586, 593-595, 77 S.Ct. 872, 1 L.Ed.2d 1057. The boundaries of such a submarket may be determined by examining 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, [footnote omitted]. Accord General Foods Corp. v. FTC, 386 F.2d 936, 940-43 (3d Cir. 1967), cert. denied, 391 U.S. 919, 88 S.Ct. 1805, 20 L.Ed.2d 657 (1968); United States v. Kennecott Copper Corp., 231 F.Supp. 95, 98-100 (S.D.N.Y.1964), aff’d per curiam, 381 U.S. 414, 85 S.Ct. 1575, 14 L.Ed.2d 692 (1965). Application of these factors to the facts of this case leads this court to conclude that an occasional user submarket does exist. It is beyond cavil that the gasoline powered chain saw industry clearly recognizes that its lower priced, lightweight saws, for which demand has risen rapidly, are marketed to a class of occasional users, consumers using the product for a variety of “do it yourself” tasks around the home. See Straetz Tr 130-31, 140, 146, 178-79, 287-89; Nolan Tr 558-59; McCallister Tr 798-99, 837-38; Bartelt Tr 1000, 1005-08; Deming Tr 1139-40, 1207-08; G 338(a); G 377 (pp. 13, 17, 150); G 378 (pp. 64-66); G 379 (pp. 34-36, 268-69). McCulloch itself has recognized an occasional user chain saw market. See G 21, pp. 8-9; G 25, p. 5; G 42, p. 28; G 64; G 354. Chain saws manufactured for the occasional user, as opposed to those made for the professional user, are characterized by their lighter weight, smaller engine size, shorter cutting bar and shorter durability. See Straetz Tr 140-41, 150-53; McCallister Tr 805-06; Bartelt Tr 1008; G 377 (pp. 13-15, 17-19); G 378 (p. 65, Vol. II, pp. 45-46); G 379 (pp. 34-35). Review of the above testimony and depositions indicates that while some overlap exists between the models sold to the professional logger and to the homeowner (see Straetz Tr 167-68; Bartelt Tr 1093-95; D 925), that overlap is minimal since the desired product characteristics of the saws bought by these two classes differ significantly. The production facilities and processes used to manufacture gasoline powered chain saws are not distinct, and, hence, this factor suggests the absence of a submarket. See United States v. Kennecott Copper Co., 231 F.Supp. 95, 99 (S.D.N.Y.1964), aff’d per curiam, 381 U.S. 414, 85 S.Ct. 1575, 14 L.Ed.2d 692 (1965); United States v. Hughes Tool Co., 415 F.Supp. 637 at 642 (C.D.Cal.1976); Beatrice Foods Co., 3 Trade Reg.Rep. ¶ 20,944, p. 20,787 n.3 (FTC 1975); Straetz Tr 312-15; Sublett Tr 348; Epstein Tr 2829; Shaeffer Tr 3099-3100. See generally, R.D., 89 Harv.L.Rev. 800 (1976). Additionally, the record does not suggest that prices of chain saws below a certain figure (e. g., $170) are insensitive to the prices of more expensive chain saws. For a sub-market to exist, however, not all of the Brown Shoe criteria must be met. See General Foods Corp. v. FTC, 386 F.2d 936, 941 (3d Cir. 1967), cert. denied, 391 U.S. 919, 88 S.Ct. 1805, 20 L.Ed.2d 657 (1968); Reynolds Metals Co. v. FTC, 114 U.S.App.D.C. 2, 309 F.2d 223, 227 (1962). In this case, the presence of the other Brown Shoe criteria outweighs the lack of distinct production facilities and price sensitivity of different gasoline powered chain saw models. As revealed in the testimony and depositions, gasoline powered chain saws produced for the occasional user are meant for distinct customers. These saws are designed to appeal to the “weekend warrior” homeowner who uses a gasoline powered chain saw infrequently, on the average of 10 hours a year, and who does not use the saw to earn a living. See Straetz Tr 131, 151; Nolan Tr 558; McCallister Tr 837-38; Bartelt Tr 1001-03; G 378 (Part I, p. 64); G 379 (p. 34). The chain saws produced for the occasional user market also have distinct prices, prices significantly lower than those for professional model saws. Industry testimony concerning the upper limit of prices for occasional user chain saws varied between figures of $150 to $200. See Straetz Tr 157, 289 ($200); Nolan Tr 557 ($150-$160); McCallister Tr 838 ($170-$200); Bartelt Tr 1005-06 ($200); Deming Tr 1207 ($170); G 377 (pp. 14-15) ($150-$160); G 379 (pp. 35-36) ($200). McCulloch itself recognized an occasional user submarket with most saws selling at $169 and less. See G 22 (pp. 3-4). Defendants strongly contest the existence of a submarket, as advocated by the government, as the manufacture and sale of those gasoline powered chain saws with suggested retail prices of less than $170. Defendants argue that the same model gasoline powered chain saw, because of private labeling arrangements, may be sold within both the over and under $170 category. It is contended that Sears & Roebuck or some other mass merchandiser under its own label might sell a manufacturer’s saw at a price below $170 while the manufacturer’s suggested retail price would be over $170. While such pricing disparities may exist, there has been no proof that the practice was sufficiently widespread to defeat the finding of a product submarket. See Jt 9 (p. 2); Jt 10 (pp. 2, 7, 9); Jt 25 (p. 2); D 564A. Additionally, defendants assert that manufacturer price changes could place the same model gasoline powered chain saw in different price categories (above and below $170) in different years and even in the same year. See, e. g., Jt 2 (p. 2) [C.D.O.]; Jt 26 (pp. 2-3) [C.D.O.]; Jt 40 (pp. 2-3) [C.D.O.]. These discrepancies, coupled with the industry’s most common recognition of $200 as the upper limit for the occasional user, persuade the court that the submarket should be defined as the manufacture and sale of gasoline powered chain saws with a suggested retail price of less than $200. By that figure, sales of occasional user chain saws have thinned out significantly. See Straetz Tr 155, 289. Of course, some occasional user sales are made of gasoline powered chain saws priced in excess of $200. See Nolan Tr 1006. The clear weight of the testimony, however, is that by far most of the occasional users purchase gasoline powered chain saws priced less than $200. The court recognizes the problems inherent in employing arbitrary price limits in defining a product submarket. See Brown Shoe Co. v. United States, 370 U.S. 294, 326, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962); Beatrice Foods Co., 3 Trade Reg. Rep. ¶ 20,944, pp. 20,786-87 (FTC 1975). But see United States v. Aluminum Co. of America, 377 U.S. 271, 276, 84 S.Ct. 1283, 12 L.Ed.2d 314 (1964). Yet some approximation is needed to “recognize meaningful competition where it is found to exist.” United States v. Continental Can Co., 378 U.S. 441, 449, 84 S.Ct. 1738, 1743, 12 L.Ed.2d 953 (1964). “The ‘market,’ as most concepts in law or economics, cannot be measured by metes and bounds. . . . Obviously no magic inheres in numbers . . . .” Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 611-12, 73 S.Ct. 872, 881, 97 L.Ed. 1277 (1953). “Industrial activities cannot be confined to trim categories.” United States v. E. I. duPont de Nemours & Co., 351 U.S. 377, 395, 76 S.Ct. 994, 1007, 100 L.Ed. 1264 (1956). Accord United States v. Continental Can Co., supra, 378 U.S. at 456, 84 S.Ct. 1738. While limiting the submarket of occasional user chain saws to those with suggested retail prices under $200 does not confine the market precisely, the ceiling does insure that the great majority of occasional user sales are included. Finally, the presence of specialized vendors for the occasional user chain saw indicates a submarket. Occasional user chain saws, unlike professional chain saws, are sold predominantly through hardware outlets with some marketing done through mass merchandisers. See Straetz Tr 153-55; McCallister Tr 834-35, 972-74; Bartelt Tr 1011; Deming Tr 1139^40; G 377 (pp. 24-26). Relatedly, the occasional user chain saws are largely advertised through popular media such as television while saws for professional users are primarily advertised in specialty trade publications. See Straetz Tr 155-57; Bartelt Tr 1023-24; G 377 (pp. 26-27). For the reasons stated in the foregoing analysis of, inter alia, the Brown Shoe criteria, the court holds that the product market involved in this ease is the manufacture and sale of gasoline powered chain saws and that a submarket, the manufacture and sale of gasoline powered chain saws retailing for less than $200, also exists and is significant for analysis of possible antitrust implications of the Black & Deeker/McCulloch merger. Since its inception over thirty years ago, the gasoline powered chain saw industry, as defined above, has witnessed a gradual evolution from large, heavy two man chain saws to lighter weight, portable models. See Straetz Tr 108-11, 132-34, 136, 140-41; G 12 (pp. 6-7); G 285 (“McC Marketing” p. 1); G 378 (pp. 20-21). In that period the number of companies in the market has grown steadily from less than ten to more than thirty presently. See D 538. Among the firms entering the market were several prominent foreign manufacturers including Husqvarna, Jobu and Kioritz. See D 538; Jt 17-19. With the declining weight of the chain saws, the average prices also dropped, thereby expanding the product’s appeal from professional loggers alone to include also homeowners and farmers. See Straetz Tr 126, 132-35; G 377 (pp. 110-11, 167-68); D 989 (pp. 204-05). Concomitantly, the distribution channels for gasoline powered chain saws broadened to include lawn and garden dealers and mass merchandisers such as Sears & Roebuck, Western Auto and Montgomery Ward. See Straetz Tr 135; D 538. Advertising patterns also reflected this shifting demand with television being, more commonly employed to reach potential consumers. See Straetz Tr 137-38. The declining price and broader market contributed to the explosive sales growth that the gasoline powered chain saw market has enjoyed, with unit sales nearly tripling from 1970 to 1974 alone. See G 316A. Concisely stated, the gasoline powered chain saw industry, once focused on sales exclusively to professionals, has become increasingly involved in marketing a consumer product. Section 7 of the Clayton Act Section 7 of the Clayton Act was amended by Congress in 1950 in response to “a fear of what was considered to be a rising tide of economic concentration in the American economy. . . .” Brown Shoe Co. v. United States, 370 U.S. 294, 315, 82 S.Ct. 1502, 1518, 8 L.Ed.2d 510 (1962). In amending section 7, Congress sought to effectuate the policy “that corporate growth by internal expansion is socially preferable to growth by acquisition” and to “presence] the possibility of eventual deconcentration”. United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 365 n.42, 370, 83 S.Ct. 1715, 1742, 10 L.Ed.2d 915 (1963). Accord United States v. Aluminum Co. of America, 377 U.S. 271, 279, 84 S.Ct. 1283, 12 L.Ed.2d 314 (1964). Consistent with this Congressional purpose, section 7 was designed to cope with restraints of trade and monopolistic tendencies “in their incipiency and well before they have attained such effects as would justify a Sherman Act proceeding . . . ” and before mergers constituted a “clear-cut menace to competition.” S.Rep.No.1775, 81st Cong., 2d Sess. pp. 4-5, quoted in United States v. Atlantic Richfield Co., 297 F.Supp. 1061, 1066 (S.D.N.Y.1969), aff’d mem. sub nom., Bartlett v. United States, 401 U.S. 986, 91 S.Ct. 1233, 28 L.Ed.2d 527 (1971); Brown Shoe Co. v. United States, supra, 370 U.S. at 323, 82 S.Ct. 1502. See FTC v. Procter & Gamble Co., 386 U.S. 568, 577, 87 S.Ct. 1224, 1229, 18 L.Ed.2d 303 (1967); United States v. Penn-Olin Chemical Co., 378 U.S. 158, 170-71, 84 S.Ct. 1710, 12 L.Ed.2d 775 (1964); United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 589, 77 S.Ct. 872, 1 L.Ed.2d 1057 (1957). As the Court stated in. FTC v. Procter & Gamble Co., supra: [T]he core question [under section 7] is^ whether a merger may substantially lessen competition, and necessarily requires a prediction of the merger’s impact on competition, present and future. The section can deal only with probabilities, not with certainties. And there is certainly no requirement that the anticompetitive power manifest itself in anticompetitive action before § 7 can be called into play. If the enforcement of § 7 turned on the existence of actual anticompetitive practices, the congressional policy of thwarting such practices in their incipiency would be frustrated, [citations omitted]. See United States v. Von’s Grocery Co., 384 U.S. 270, 277, 86 S.Ct. 1478, 16 L.Ed.2d 555 (1966); United States v. Penn-Olin Chemical Co., supra, 378 U.S. at 170-71, 84 S.Ct. 1710; United States v. Philadelphia Nat’l Bank, supra, 374 U.S. at 362, 83 S.Ct. 1715; S.Rep.No.1775, 81st Cong., 2d Sess., p. 6, quoted in, United States v. Bethlehem Steel Corp., 168 F.Supp. 576, 603 (S.D.N.Y.1958). Of course, while section 7 does not require certainty of anticompetitive effect, “proof of a mere possibility of a prohibited restraint or tendency to monopoly will not establish the statutory requirement”. United States v. E. I. du Pont de Nemours & Co., supra, 353 U.S. at 598, 77 S.Ct. at 880 [emphasis in original]. See United States v. Phillips Petroleum Co., 367 F.Supp. 1226, 1232 (C.D.Cal.1973), aff’d per curiam, 418 U.S. 906, 94 S.Ct. 3199, 41 L.Ed.2d 1154 (1974). As noted previously, the Black & Decker/McCulloch merger is alleged to involve the loss of potential competition. For the potential competition doctrine to operate, the relevant market must be concentrated, since in a competitive market potential competition will not influence market behavior. In this concentrated market, the oligopolists enjoy substantial market shares and the capacity to control price and production output. Parallel pricing policies may exist by which the oligopolists seek to attain excess profits. Potential competition has a moderating impact on these anticompetitive practices. The actual potential entrant aspect of potential competition is concerned with the means of entry chosen by the firm entering the market. Actual potential entrant theory favors entry into the market by internal expansion, de novo, or by acquisition of a small firm in the market, a so called toehold acquisition. By entering a market internally, the actual potential entrant adds new production capacity and has significant incentive to avoid the anticompetitive oligopolistic market practices in order to realize and expand a market share. By acquiring a small firm, the actual potential entrant may bring similar competitive forces to bear on the concentrated market in attempting to augment the toehold’s small market share. Both of these avenues of entry, de novo and toehold acquisition, are thought to be preferable to acquisition by the actual potential entrant of a large firm in the market, where given its large instant market share, the new entrant may well favor continuation of the market’s oligopolistic practices. See United States v. Falstaff Brewing Corp., 410 U.S. 526, 560-61, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973) (Marshall, J., concurring). As the court stated in United States v. Phillips Petroleum Co., supra at 1232: The crux of the entry effect is that if the company which enters the market by acquisition had entered unilaterally [de novo or by toehold acquisition], it would have supplied an additional competitive force without eliminating one already present in the market. An acquisition of a company in the market by a company which is likely to enter on its own thus has an anticompetitive effect on the market. [footnote omitted]. See United States v. Ford Motor Co., 405 U.S. 562, 587, 92 S.Ct. 1142, 31 L.Ed.2d 492 (1972) (Burger, C. J., concurring & dissenting). The perceived potential entrant exerts a “fringe” or “edge” effect on the anticompetitive practices of the market. By its position on the edge of the market, and its apparent willingness to enter the market on certain conditions, such as the lowering of entry barriers, the perceived potential entrant provides a present procompetitive effect. As the Court stated in United States v. Penn-Olin Chemical Co., 378 U.S. 158, 174, 84 S.Ct. 1710, 1719, 12 L.Ed.2d 775 (1964): The existence of an aggressive, well equipped and well financed corporation engaged in the same or related lines of commerce waiting anxiously to enter an oligopolistic market would be a substantial incentive to competition which cannot be underestimated. The perceived potential entrant can deter anticompetitive market conduct such as interdependent pricing or production control because if the practices become too pronounced or prices rise too high, the perceived potential entrant could profitably enter the market. The effect of such entry, which might include price competition, could well be unsettling to the oligopolists. In order to prevent such entry, the oligopolists may restrain their anticompetitive practices; it is this beneficial effect and enhanced prospect for a competitive market that the perceived potential entrant theory is designed to foster. “Potential competition . . . as a substitute for . [actual competition] may restrain producers from overcharging those to whom they sell or underpaying those from whom they buy. . ” Id., quoting Wilcox, Competition and Monopoly in American Industry, TNEC Monograph No. 21 (1940) 7-8. See FTC v. Procter & Gamble Co., 386 U.S. 568, 581, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967). In analyzing whether a company is a perceived potential entrant, the Court in United States v. El Paso Natural Gas Co., 376 U.S. 651, 660, 84 S.Ct. 1044, 1049, 12 L.Ed.2d 12 (1964) stated, “[t]he effect on competition in a particular market . is determined by the nature or extent of that market and by the nearness of the absorbed company to it, that company’s eagerness to enter that market, its resourcefulness, and so on.” See United States v. Marine Bancorporation, 418 U.S. 602, 633, 94 S.Ct. 2856, 41 L.Ed.2d 978 (1974). The third anticompetitive effect allegedly precipitated by the Black & Decker/McCulloch merger is the entrenchment of McCulloch as the leading firm in the gasoline powered chain saw market. Briefly stated, entrenchment arises when the acquiring firm has resources such as marketing advantages or financial strength that, when made available to the acquired firm, could raise barriers to entry and result in the acquired firm dominating the market. See FTC v. Procter & Gamble Co., 386 U.S. 568, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967); Kennecott Copper Corp. v. FTC, 467 F.2d 67, 78-79 (10th Cir. 1972), cert. denied, 416 U.S. 909, 94 S.Ct. 1617, 40 L.Ed.2d 114 (1974); Allis-Chalmers Mfg. Co. v. White Consolidated Industries, Inc., 414 F.2d 506, 518 (3d Cir. 1969), cert. denied, 396 U.S. 1009, 90 S.Ct. 567, 24 L.Ed.2d 501 (1970); General Foods Corp. v. FTC, 386 F.2d 936, 944-47 (3d Cir. 1967), cert. denied, 391 U.S. 919, 88 S.Ct. 1805, 20 L.Ed.2d 657 (1968); Ekco Products Co. v. FTC, 347 F.2d 745, 752-53 (7th Cir. 1965); United States v. Crowell, Collier & Macmillan, Inc., 361 F.Supp. 983, 991-93, 1002-03 (S.D.N.Y.1973). Marine Bancorporation and Potential Competition In United States v. Marine Bancorporation, supra, the Supreme Court, in its most recent potential competition opinion, further refined the doctrine’s scope. In Marine Bancorporation, a geographic extension merger, the Court explicitly held that for potential competition to operate the relevant market must be concentrated. The Court stated: The potential-competition doctrine has meaning only as applied to concentrated markets. That is, the doctrine comes into play only where there are dominant participants in the target market engaging in interdependent or parallel behavior and with the capacity effectively to determine price and total output of goods or services. If the target market performs as a competitive market in traditional antitrust terms, the participants in the market will have no occasion to fashion their behavior to take into account the presence of a potential entrant. 418 U.S. at 630, 94 S.Ct. at 2874. In proving the market to be anti-competitive the government can rely on concentration ratios, if they have sufficient magnitude, to establish a prima facie case. Id. at 631, 94 S.Ct. 2856. The defendants may then, however, introduce evidence that the concentration ratios and their structural analysis do ndt accurately reflect the competitive nature of the market. Id. Marine Bancorporation thus extends the scope of the judicial inquiry into the economic nature of the relevant market and mandates that in analyzing a potential competition case, a court first determine if the target market is competitive. Equally significantly, the Court in Marine Bancorporation, while reserving final decision on the status of the actual potential entrant aspect of potential competition, nonetheless, formulated two preconditions to its application: (1) that the acquiring firm have feasible alternative means of entering the relevant market other than by acquisition of the target company and (2) that those alternative means “offer a substantial likelihood of ultimately-producing deconcentration of that market or other significant proeompetitive effects.” 418 U.S. at 633, 639, 94 S.Ct. 2856. While not so expressly holding, the Court suggested that these same preconditions are relevant to the perceived potential entrant aspect of potential competition. Id. at 639, 94 S.Ct. 2856. The Court reasoned that if feasible alternative means of entry capable of producing deconcentration or other significant proeompetitive effects are not known to be available by firms in the market, then there is little possibility of any proeompetitive “fringe” effect. Id. at 639-40, 94 S.Ct. 2856. In conclusion, the Court stated: [i]f regulatory restraints are not determinative, courts should consider the factors that are pertinent to any potential-competition case, including the economic feasibility and likelihood of de novo entry, the capabilities and expansion history of the acquiring firm, and the performance as well as the structural characteristics of the target market. Id. at 642, 94 S.Ct. at 2880. Earlier Potential Competition Cases In United States v. Penn-Olin Chemical Co., 378 U.S. 158, 84 S.Ct. 1710, 12 L.Ed.2d 775 (1964), the Supreme Court first began development of section 7 of the Clayton Act as it applied to potential competition. Pennsalt Chemicals Corporation and Olin Mathieson Company formed a joint venture for the production of sodium chlorate. After holding that § 7 of the Clayton Act extended to joint ventures, the Court reversed the lower court’s dismissal of the suit based on the finding that both Pennsalt and Olin Mathieson would not both have entered the sodium chlorate industry but for the joint venture. See id. at 167-73, 84 S.Ct. 1710. The Court held that while only one company might have entered, the other could have remained on the edge of the market exerting a proeompetitive effect. See id. at 173-74, 84 S.Ct. 1710. In Penn- Olin, then, the perceived potential entrant aspect of potential competition was recognized as a theory for relief under section 7. In FTC v. Procter & Gamble Co., 386 U.S. 568, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967), Clorox, the nation’s leading manufacturer in the concentrated liquid bleach market, was acquired in a product extension merger by Procter & Gamble, a leading detergent manufacturer. Emphasizing the complementary nature of the two company’s products, their common consumers, and the critical advantages, including volume discounts, the combined companies enjoyed in advertising and marketing, the Court held the merger to violate section 7. See id. at 578-81, 87 S.Ct. 1224. In delineating the entrenchment possibilities the Court noted that the advertising advantages accruing to the merged firms could result in raised entry barriers and that the introduction of a large company such as Procter & Gamble could intimidate the smaller firms in the market into refraining from forceful competition. See id. at 578-79, 87 S.Ct. 1224. The Court then elucidated the factors that made Procter & Gamble the most likely entrant into the liquid bleach market: Procter & Gamble’s leadership and market power in a similar industry, its diversification policy, and the complementary nature of its products which would allow exploitation of existing marketing channels, of common advertising, and of management experience. Further the Court pointed to the lack of any need for specialized manufacturing processes, the availability of raw materials, the reasonableness of plant cost, and Procter & Gamble’s earlier consideration of de novo entry. See id. at 580-81, 87 S.Ct. 1224. In United States v. Falstaff Brewing Corp., 410 U.S. 526, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973), similar to Penn-Olin, supra, the Court remanded to the lower court for consideration of a perceived potential entrant claim. See id. at 532-33, 93 S.Ct. 1096. The lower court found, and the Supreme Court did not question, that Falstaff, the only major beer manufacturer not selling in New England and which had acquired Narragansett, the largest seller of beer in New England, would not have entered that market de novo. See id. at 530-32, 93 S.Ct. 1096. Nonetheless, the Court held that a finding that Falstaff was not an actual potential entrant did not foreclose the possibility that Falstaff was perceived as a potential entrant and thus exerted a procompetitive effect on the market. See id. at 532-37, 93 S.Ct. 1096. In providing guidelines for analysis of the perceived potential entrant claim, the Court stated: The specific question . is . whether, given its financial capabilities and conditions in the New England market, it would be reasonable to consider it [Falstaff] a potential entrant into that market. Surely, it cannot be said on this record that Falstaff’s general interest in the New England market was unknown; and if it would appear to rational beer merchants in New England that Falstaff might well build a new brewery to supply the northeastern market then its entry by merger becomes suspect under § 7. The District Court should therefore have appraised the economic facts about Falstaff and the New England market in order to determine whether in any realistic sense Falstaff could be said to be a potential competitor on the fringe of the market with likely influence on existing competition. Id. at 533-34, 93 S.Ct. at 1101 (footnotes omitted). Thus, even if a firm would not in fact enter a market de novo, if it is rationally perceived as capable of and likely to enter by participants in that market, entry by acquisition may be proscribed. As noted previously, in Falstaff the Court expressly left unresolved the validity of the actual potential entrant aspect of potential competition. See id. at 537-38, 93 S.Ct. 1096. Finally, United States v. Phillips Petroleum Company, 367 F.Supp. 1226 (C.D.Cal.1973), aff’d per curiam, 418 U.S. 906, 94 S.Ct. 3199, 41 L.Ed.2d 1154 (1974) relied upon heavily by the government in this case, was decided by the lower court prior to Marine Bancorporation, but was affirmed by the Supreme Court subsequent to that decision. In a thoughtful and exhaustive opinion by Judge Ferguson, the court found both on perceived and actual potential entrant theories that Phillips’ acquisition of Tidewater Oil Company violated section 7. See id. at 1229, 1251, 1254, 1256. Phillips, one of the nation’s largest oil producers, had acquired Tidewater, in a geographic extension merger, in order to gain entry into the lucrative California market. In analyzing Phillips’ capability to enter de novo or by toehold acquisition, the court examined Phillips’ size and financial capabilities as a major oil producer, its prior history of rapid de novo expansion and diversification as opposed to growth by acquisition, its technological capabilities, its previous activities in the California market, its management and marketing expertise, its logical need for a West Coast refinery, and the successful de novo entry into the California market by another oil producer. See id. at 1239-42. Relying on objective evidence, the court probed Phillips’ motivation to enter the market by analysis of such factors as Phillips’ goal to become a nationwide marketer, its extensive prior examination of means of entry into the California market alternative to the Tidewater acquisition, its relatively cursory examination of Tidewater despite the 366 million dollar cost, the profitability of the target market, the advertising, marketing, product supply, and credit advantages accruing to a nationwide oil producer, and Phillips’ ability to expand other activities (petrochemicals) complementary to those of the acquired firm. See id. at 1242-47. After application of these factors and determination that Phillips had both the motivation and capability to enter the California market de novo, the court considered whether any unique features of the California market precluded Phillips’ entry by internal expansion. In deciding none existed, the court relied heavily upon another oil producer’s earlier de novo entry, and pointed to such factors as the approximately equal costs of entry de novo or by acquisition, and the availability of gasoline and crude oil supply, and of marketing outlets. See id. at 1247-51. In determining Phillips to be a perceived potential entrant, the court noted the high barriers to entry, the fact that Phillips was the largest major oil producer not previously in the California market, and the clear industry recognition and fear of Phillips as a likely entrant. See id. at 1254-56. The indicia employed in Phillips provide useful guidance for analysis of Black & Decker’s possible role as an actual and/or perceived potential entrant. In a nutshell, review of prior potential competition cases suggests that the competitiveness of the market must first be determined; the feasibility of alternative means of entry to a leading firm acquisition must then be explored with reference to the incentive and capability of the acquiring company; and finally, the ability of those alternative means of entry, if any, to deconcentrate or provide significant procompetitive effects must be examined. The Competitiveness of the Gasoline Powered Chain Saw Market As provided in Marine Bancorporation, supra, 418 U.S. at 631, 94 S.Ct. 2856, the government has relied on the introduction of concentration ratios to create a prima facie showing that the relevant market is sufficiently concentrated to warrant application of the potential competition doctrine. In 1972, the year preceding the merger, the two largest manufacturers of gasoline powered chain saws accounted for 54.3%, in units, of the gasoline powered chain saws sold, the top four manufacturers accounted for 77.5%, and the top eight manufacturers accounted for 93.5%. From 1970 to 1974 the share, again in units, for the two largest manufacturers declined overall from 54.6% to 48.4%, while the share of the four largest manufacturers grew overall from 71.9% to 75.1%. The top eight manufacturers’ market share in that same period declined slightly overall from 92.9% to 92% See G 315. In the submarket previously defined as the manufacture and sale of gasoline powered chain saws with retail prices of less than $200, a similar picture emerges (in units, by percentage): 1970 1971 1972 1973 1974 2 largest Manufacturers 53.9 48.8 51.9 49.2 50.3 4 largest Manufacturers 71.8 69.5 79.4 79.8 82.0 8 largest Manufacturers 93.9 91.6 93.6 95.5 96.0 See G 320; G 324; G 328; G 332; G 336. While not of the magnitude of those held to establish, prima facie, a concentrated market in Marine Bancorporation, where the top three banks controlled 92.3% of the market, the above concentration ratios nonetheless suffice to evidence a heavily concentrated market and submarket, requiring a potential competition analysis. See 418 U.S. at 607-08 n.2, 631, 94 S.Ct. 2856. In United States v. Falstaff Brewing Corp., 410 U.S. 526, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973), where the Court remanded for further application of the potential competition doctrine and where the market was characterized by Mr. Justice Marshall in a concurring opinion as “highly concentrated,” the top four firms accounted, at the time of the merger, for 61.3% of the market, up from 50% five years earlier, the top eight for 81.2%, up from 74% four years earlier. See id. at 527-28, 537, 571, 93 S.Ct. 1096. In United States v. Phillips Petroleum Co., 367 F.Supp. 1226, 1253 (C.D.Cal.1973), aff’d per curiam, 418 U.S. 906, 94 S.Ct. 3199, 41 L.Ed.2d 1154 (1974), where the court found the market to be “at least as highly concentrated” as the one in Falstaff and where the court determined the market to warrant application of the potential competition doctrine, the top two firms, at the time of the merger, controlled 39% of the market, the top four, 58%, the top seven, 81.2%. Five years previously, the top two controlled 32.5%, the top four, 52%, the top seven, 79.2%. Id. These figures from Falstaff and Phillips Petroleum represent significantly lesser degrees of concentration than is present in the gasoline powered chain saw market. While the concentration trends in this case have fluctuated and do not uniformly demonstrate increasing concentration (e. g., decline of two firm ratio for period 1970-1974), as the ratios in some earlier cases have done, the concentration figures are of sufficient magnitude to establish the government’s prima facie case with respect to showing a concentrated market. The burden thus shifts to the defendants to demonstrate with evidence of actual competitive market performance that these concentration ratios do not accurately reflect the competitive nature of the gasoline powered chain saw markets. See Marine Bancorporation, supra, 418 U.S. at 631, 94 S.Ct. 2856. To this end, defendants have introduced evidence of various aspects of volatile, competitive market performance. It is undisputed that in the years surrounding the Black & Decker/McCulloch merger up until about 1975 demand for gasoline powered chain saws rose dramatically, with nearly threefold growth occurring between 1970 to 1974 alone. See Straetz Tr 216, 219, 228-29; Bartelt Tr 1015, 1074-80; Deming Tr 1200-04; Jernigan Tr 1563, 1862, 5112-13; Epstein Tr 2521; G 316A; G 377 (pp. 22, 104); G 380 (p. 165); G 381 (pp. 40-41); D 256; D 548; D 743-44. Such growth is significant since it can provide incentive for new entry. See Jernigan Tr 1563; United States v. Wilson Sporting Goods Co., 288 F.Supp. 543, 553 (N.D.Ill.1968). Not surprisingly, then, in response to this tremendous growth, a substantial number of new manufacturing companies made de novo entries into the gasoline powered chain saw market, including Quadra Manufacturing Company, Danarm, Husqvarna, Jobu, Jonsereds, and Kioritz. See Nolan Tr 685-87; Epstein Tr 2539-49; G 379 (pp. 213-14); D 538; D 556; D 990 (p. 18); Jt 17-19; Jt 29; Jt 32; Jt 37; Jt 43. This introduction of new firms and fluid condition of market entry and exit can indicate competitive behavior. See United States v. Hughes Tool Co., 415 F.Supp. 637 at 643-644 (C.D.Cal.1976); Beatrice Foods Co., [1970-1975 Transfer Binder] Trade Reg.Rep. ¶ 20,212, p. 22,113 (FTC 1972). A number of these new entrants and the smaller firms in the market multiplied their unit sales and two of the new entrants were among the top ten firms in the market by 1974. Compare G 310A with 314A. See also Straetz Tr 190-91; McCallister Tr 914-15; Bartelt Tr 1072-77; Deming Tr 1144, 1201-05; D 245; D 255; D 1053; D 1055. Their growth and increase in market share help to explain the loss of market share and less rapid growth by the largest manufacturers in the market, including McCulloch. See note 38 supra; Straetz Tr 190-91; Epstein Tr 2705; Nodar Tr 3716-18; Lehman Tr 4630-32; G 310A-314A; D 555; D 981; D 983. While the market shares of the top two manufacturers did decline appreciably between 1970 and 1974 in both the market and submarket, and the share of the top eight manufacturers declined slightly in the same period, no clear trend to deconcentration stemming from the new entrants has emerged. Rather the new entrants have expanded their small market shares but these shares remain slight compared to those of the larger firms. See G 422. The two new entrants in the top ten manufacturers, [C.D.O.], had market shares in 1974 of 2% and 1.8% respectively. In fact [C.D.O.] which had entered the market by acquisition in the late 1960’s had less than a 5% market share in 1974. See G 310A; G 422. Realistically, these new entrants, despite rising demand, had not at the time of this suit significantly deconeentrated the market or established a trend toward such deconcentration. See Jernigan Tr 5108-11, 5114-15, 5122-23. See generally Kennecott Copper Corp. v. FTC, 467 F.2d 67, 73 (10th Cir. 1972), cert. denied, 416 U.S. 909, 94 S.Ct. 1617, 40 L.Ed.2d 114 (1974). The number of new entrants also does not belie the substantial entry barriers characteristic of the gasoline powered chain saw market which are another aspect of market analysis. See United States v. Penn-Olin Chemical Co., 378 U.S. 158, 164, 175, 84 S.Ct. 1710, 12 L.Ed.2d 775 (1964); Brown Shoe Co. v. United States, 370 U.S. 294, 322, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962); United States v. Amax Inc., 402 F.Supp. 956 (D.Conn.1975), reported in BNA, ATRR, (No. 738-11/11/75). To be discussed more fully infra in analysis of the actual potential entrant claim, the design and sale of a gasoline powered chain saw entails subtle calculations of two cycle engine design and demands considerable technical and manufactoring expertise. See, e. g., Decker Tr 2898-2904; Graham Tr 3433-36; D 848-914; D 989 (pp. 32-34, 47-48, 55, 65). Moreover the state of the two cycle gasoline engine art was evolving rapidly in the early 1970’s and this dynamism presented additional problems for new entrants. See Graham Tr 3417-20A, 3484-85; D 848-914. The firms that did enter the United States market in this period tended to be foreign chain saw manufacturers or companies with prior gasoline engine experience. D 538. See, e. g., Jt 18; Jt 19; Jt 27. The ability to obtain marketing outlets, again a factor to be analyzed infra in the actual potential entrant discussion, also constituted an entry barrier in the nation’s gasoline powered chain saw market. See Straetz Tr 161. In addition to establishing a broad based marketing system that could reach the various groups of chain saw buyers including the expanding occasional user segment, a new firm in the market would also have to create an extensive service network to support its chain saw sales. See id. at 162; Bartelt Tr 1009, 1012-13; Ronconi Tr 3813-21; G 379 (pp. 37-38); D 323, p. 10. Relatedly, lack of brand name awareness can hinder a new entrant’s establishment of a marketing and distribution system. See Bartelt Tr 1020-26. Advertising represented another, although less significant, entry barrier in the gasoline powered chain saw market. While defendants sought to prove that advertising was not a substantial impediment to growth by suggesting that firms with below average advertising expenditures grew faster than firms with greater expenditures, the evidence was not persuasive. See D 542. In terms of unit sales between 1972 and 1974, a group of 12 firms grew 94.6% with an advertising to sales ratio of $1.77 while a group of 11 firms in that period with a growth rate of 71.7% had an average advertising to sales ratio of $8.19. Two aspects of the data underlying these figures defeat the inference defendants would have the court draw. First, seven of the 12 firms in the initial group suffered unit sales declines in this period, while only one of the firms in the latter group experienced declining unit sales. See Jernigan Tr 5052-57; G 410. More significantly, the firms included in the first group are, without exception, the smallest firms and thus are the ones in the easiest position to multiply their market shares. See id. Defendants’ proof, far from suggesting advertising to be inconsequential, in fact indicates advertising to have significant impact on product sales. See generally G 309. This conclusion accords with common sense especially when the increasingly consumer oriented nature of the gasoline powered chain saw market is recalled. See Straetz Tr 137-38, 145; McCallister Tr 825-29; Jernigan Tr 1586-7, 1895; G 21, pp. 11-13; G 309; G 377 (pp. 26-27). Apart from its role as an entry barrier, advertising has fiirther relevance, according to the defendants, to analysis of competitive market performance. Defendants seek to dichotomize informative, pro-competitive advertising and less competitive, economically wasteful, image advertising and suggest the former characterizes advertising in the gasoline powered chain saw market. See Epstein Tr 2449-50, 2493-95. It is true that some chain saw advertising does relate such useful information as price, weight, and the types of trees suitable for the product, but the line between image and informative advertising is not as clear as defendants suggest. See D 509; D 509A; D 533; D 563. Moreover, even granting that chain saw advertising is relatively informative, this factor seems to relate less to any competitive aspect of the market than to the type of product involved. Unlike a low price product which is physically indistinguishable from its competitive equivalent and which must rely on image advertising for distinction, more expensive chain saw models differ in the variety of features offered and may be differentiated by informative advertising. See Jernigan Tr 5059-63; D 562. See generally FTC v. Procter & Gamble Co., 386 U.S. 568, 572, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967); United States v. Lever Bros. Co., 216 F.Supp. 887, 893 (S.D.N.Y.1963). In realizing and expanding market shares, the new firms entering without acquisition have indisputably added production capacity and product supply to the gasoline powered chain saw market. See Defendants’ Proposed Finding of Fact & Conclusions, ¶ 152. Moreover, existing firms have increased plant capacity. In so doing, both the new and existing firms appear to have responded competitively to the rise in consumer demand since this increased supply of goods encourages lower prices. See Epstein Tr 2521. The gasoline powered chain saw market’s clear record of product innovation and improvement also tends to indicate competitive performance. See United States v. Falstaff Brewing Corp., 383 F.Supp. 1020, 1023 (D.R.I.1974), on remand from 410 U.S. 526, 93 S.Ct. 1096, 35 L.Ed.2d 475 (1973). Through its history the industry has witnessed the repeated introduction of smaller, lighter weight, and lower priced chain saw models with improved safety features that broadened the product’s appeal from the professional logger to include farmers and homeowners. See Straetz Tr 119-20,124-26, 130-34, 136, 140-42, 187, 230; Nolan Tr 537, 557, 692; Epstein Tr 2406, 2452, 2475-77, 2480-83; Jernigan Tr 5223; G 377 (pp. 110-11, 167-68); D 531; D 532; D 535; D 989 (pp. 204-05). This expanded appeal, in turn, increased demand for the product. The product innovation in the gasoline powered chain saw market resulted from a strong industry commitment to research and development. See Jernigan Tr 5223. The impact of the private label sellers such as Sears & Roebuck and Montgomery Ward is also said to promote competitive market performance. By exercising significant buying power through their large purchases from relatively small gasoline powered chain saw manufacturers, these sophisticated purchasers, defendants contend, have encouraged lower prices. See Epstein Tr 2550-54; Jernigan Tr 1897-99. Cf. United States v. Hughes Tool Co., 415 F.Supp. 637 at 644 (C.D.Cal.1976). The suggestion is that private label accounts are so critical to a small firm’s survival that, for accommodation, the small firms will pass along volume discounts to their private labeller customers. These savings in turn may be passed on to the ultimate purchaser. Downward price pressure further results, defendants argue, when private labellers price saws lower than do the manufacturers for the equivalent model. See Epstein Tr 2514-16; D 564A. Additionally, private labellers with their large and concentrated purchases are said to afford new firms the possibility of rapid growth, thereby lessening entry barriers. See Epstein Tr 2550-54, 2711. With respect to the first claimed pro-competitive effect of volume discounts being passed along to the private labellers and thence to ultimate purchasers, there is no direct evidence. There is evidence, however, that the private labellers did encourage lower prices. Sears & Roebuck was recognized as pricing 10-15% below the rest of the market for equivalent models. See D 686, p. 3. See also G 378 (Part II, p. 54); D 564A. In certain instances the private labellers did apparently retail gas chain saws at prices below those of the manufacturers. More significantly, the private labellers offer an opportunity for growth to their suppliers. See, e. g., Bartelt Tr 1014-20; Jt 9, pp. 3-8; Jt 29, pp. 2-3; Jt 31, pp. 2-3. See also Epstein Tr 2553-54; Jernigan Tr 5236; Jt 10; Jt 19; Jt 47. While not discounting these beneficial effects entirely, and while recognizing that the number of private labellers in the market has grown significantly in recent years, the court believes the impact of the private labellers on the gasoline chain saw market to be questionable. See Epstein Tr 2539-44; G 377 (p. 92); D 538; D 556. Despite their rise in absolute numbers, the private labellers accounted for only about 15% of the sales in the gasoline powered chain saw market in the years 1970 to 1974. See G 417-421. Moreover, there is no discernible trend to increased market share bei