Full opinion text
PENCE, District Judge. DECISION AFTER POST-REMAND TRIAL This is the latest chapter in this continuing antitrust saga, the first three installments of which may be found at 296 F.Supp. 920 (D.Haw.1969) (GTE I); 351 F.Supp. 1153 (D.Haw.1972) (GTE II); and 518 F.2d 913 (9th Cir. 1975) (GTE III). The International Telephone and Telegraph Corporation (ITT) filed this suit in this court in 1967 against the General Telephone and Electronics Corporation (GTE). The gravamen of its complaint was that GTE, through a series of acquisitions both of telephone operating companies and of telephone equipment manufacturers, and through its subsequent business behavior that flowed from those acquisitions, had violated the Clayton and Sherman Acts as well as the Hawaii state antitrust statute, and thus foreclosed ITT from sales in a legally significant portion of the telephone equipment market. In GTE I, this court swept away, on plaintiffs motion to strike, a number of defenses — statute of limitations, laches, estoppel, unclean hands — which GTE had interposed on its behalf. GTE II was this court’s decision on the merits: the challenged acquisitions and practices violated Clayton § 7 and Sherman § 1 with respect to the national market — and their Hawaiian statutory analogues with respect to the state market — in telecommunications equipment (switching, telephone apparatus, and radio transmission, excluding wire and cable) for the market consisting of “independent” telephone operating companies (i. e., excluding the American Telephone and Telegraph system — AT&T or Beil), and ITT as a private “attorney general” had standing to request divestiture and mandatory injunctive relief. On appeal, the Ninth Circuit, in GTE III, affirmed in part and reversed in part, and remanded. It held that divestiture is not available to private antitrust plaintiffs (although full injunctive relief is); that the defense of laches is or may be available to GTE; that AT&T purchases were or may have been improperly excluded from the market defined, as were purchases by customers not telephone operating companies and all potential purchases by telephone subscribers; and that, as to the Hawaii state statute, the relevant market should not have been limited to opportunities for sales to Hawaiian buyers. Further, this court was directed to determine the anti-competitive effect of each individual GTE acquisition. A more complete history of the case may be obtained by reference to the decisions cited above. Thus on remand, ITT v. GTE is again before this court. By stipulation of the parties, the latest clash is to be limited initially to ITT’s claim that GTE has committed a Sherman § 1 violation, based on analysis of GTE’s in-house purchasing policy i. e., the alleged practice of requiring its telephone operating companies to purchase equipment requirements from GTE’s affiliated equipment manufacturers, principally Automatic Electric (AE) and Lenkurt. The parties have agreed that this court’s decision may be made on the basis of the record now before it. They have additionally stipulated as to the annual share of all purchases of telephone equipment in the United States represented by GTE operating companies from affiliated manufacturers for each year from 1945 to 1969, both including and excluding Bell purchases as part of the total market. GTE’s share in 1969 came to 7.41% with Bell included, and 37.72% with Bell excluded. ITT’s basic position here is that GTE, “acting in concert with its subsidiaries, adopt[ed] an in-house purchasing policy, which, wholly apart from its acquisitions, produced an actual trade restraint in violation of Sherman Act § 1” in foreclosing ITT and other equipment manufacturers from GTE’s portion of the telephone equipment market. GTE, in rebuttal, asserts that ITT has not previously raised this claim, which GTE asserts is groundless on the merits, and that in any event the Federal Communications Commission (FCC) has exclusive jurisdiction over the matters at issue. The limited determination of § 1 legality now to be made by this court thus requires a preliminary disposal of several points: (1) may ITT now raise this allegation? (2) if so, may GTE now raise the defense of exclusive jurisdiction? (3) if so, does the FCC in fact have exclusive jurisdiction? (1) May ITT now raise its Sherman § 1 claim? GTE posits that ITT has not previously raised the § 1 claim now asserted, and, by implication, that ITT should now be estopped from presenting new claims on remand. However, ITT brought its original complaint under the Sherman Act as well as the Clayton Act, GTE II, supra, 351 F.Supp. at 1161, and it is clear that ITT there challenge GTE’s in-house purchasing practices. Id. at 1161, 1188-94, 1196-98. Moreover, this court there found a § 1 violation based on GTE’s “mergers and consolidations, and * * * subsequent actions and conduct in effectively foreclosing the market for telephone equipment represented by the GTE telephone operating companies, [which] constituted a continuing combination in unreasonable restraint of interstate trade * * Id. at 1198 (emphasis added). It is thus manifest that the impact of GTE’s in-house purchasing was considered separately from the impact of its acquisitions; therefore ITT is free to make its § 1 claim; it is not new matter. (2) May GTE now raise the defense of exclusive FCC jurisdiction? Since subject matter jurisdiction is never waived, may be raised at any point during litigation, and must in fact be raised by the court itself if the parties fail to do so, therefore, GTE may assert this defense. Louisville & Nashville R. R. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908); Federal Rule of Civil Procedure 12(h)(3). (3) Does the FCC have exclusive jurisdiction? GTE claims that, with the exception of acquisitions and mergers, the FCC “has exclusive jurisdiction to regulate the vertical dealings between telephone company common carriers such as the operating companies of the General System and affiliated manufacturers of telephone equipment such as Automatic Electric.” More specifically, its claim is that the regulatory scheme effected by statute and agency upon telephone companies has worked an implied repeal of the antitrust laws with respect to them; that by the 1934 Communications Act (FCA) Congress committed to the FCC all supervision of interstate wire and radio communication, which subsumes regulation of telephone company equipment purchases from affiliated manufacturers. The essence of FCC authority, says GTE, is rates and profits, which necessarily goes to costs and therefore the reasonableness of equipment prices. GTE also points out that the FCC is currently involved in a complex administrative proceeding (FCC Dkt. 19129) involving the relationship between Bell and its affiliated manufacturer Western Electric (WE), and therefore covering much of the same ground as here; that ITT and GTE are parties to that proceeding; and that therefore this court should not interfere by passing on related antitrust questions. Since the FCC could in its present proceeding regulate telephone equipment purchases from affiliated manufacturers, says GTE, an antitrust court could rule inconsistently on the same issue, and the possibility of such a conflict requires that antitrust immunity be implied to make the regulatory scheme work. GTE relies largely on two recent U. S. Supreme Court decisions, Gordon v. New York Stock Exchange (Gordon), 422 U.S. 659, 95 S.Ct. 2598, 45 L.Ed.2d 463 (1975), and United States v. National Association of Securities Dealers (NASD), 422 U.S. 694, 95 S.Ct. 2427, 45 L.Ed.2d 486 (1975), which, GTE asserts, establish the following “fundamental proposition”: Antitrust does not apply to activity (1) subject to the regulation of a federal administrative agency which has supervisory responsibility over that activity which (2) could result in a standard of conduct duplicative of or inconsistent with that established by the antitrust laws, (3) whether or not the agency has actually exercised its jurisdiction to approve or disapprove the challenged conduct. ITT contradicts, claiming that only in cases of plain repugnancy between regulation and antitrust is exclusive agency jurisdiction — antitrust immunity — implied, and regulated industries are so exempted only to the extent legislated by Congress, with such implied exclusion disfavored. The relevant factors leading to a finding of immunity, asserts ITT, are (1) congressional intent to immunize, (2) conflict between regulatory and antitrust standards, and (3) continuing regulatory supervision. None of those factors is present here, maintains ITT. The current FCC administrative proceeding goes to rates, which could only regulate equipment procurement practices indirectly. Moreover, again to paraphrase ITT’s argument, the FCC has never sought to regulate such practices nor concerned itself with their impact on competition in the telephone equipment market. Its jurisdiction over telephone operating companies does not extend to equipment manufacturers. A regulatory statute may of course contain an express immunity from the antitrust laws for specified transactions. Thus, FCA § 221(a) expressly exempts mergers and acquisitions between telephone companies if specifically approved by the FCC. Similarly, combinations between common carriers approved by the Interstate Commerce Commission (ICC) pursuant to the Interstate Commerce Act § 5(11) are shielded. In Re REA Express, Inc., Private Treble Damage, Etc., 412 F.Supp. 1239, 1261 (D.C.) (REA). Antitrust immunity may also arise by implication. This is because there may be instances where regulation by an agency conflicts with judicial decision by an antitrust court; in such instances, the court may be required to give way in appropriate circumstances. As a general rule, such implied repeal of the antitrust laws — representing as they do a fundamental national economic policy — is strongly disfavored and not to be assumed lightly. It is to be found only in case of a plain repugnancy between the regulatory scheme and operation of the antitrust laws, where it is necessary to make that regulatory scheme work as intended, and then only to the minimum extent necessary. An examination of the cited cases shows the single most important factor in determining the immunity question is that of congressional intent: did Congress intend in passing the applicable regulatory statute to immunize the transactions or behavior at issue from the antitrust laws? “Whether conduct Congress has made subject to administrative regulation is exempt from the antitrust laws depends upon Congress’ intent.” Such intent may be found, or not, from a variety of sources: the statutory language itself, the legislative history of the regulatory scheme in question, the pervasive nature of that regulatory scheme on its face or in continuous practice and supervision, an irreconcilable conflict between regulation and the operation of the antitrust laws, the inclusion and relative weight of competitive concerns in the statutory standards to be applied by the agency, and primary anti-competitive effect of the behavior in question on the regulated industry along with agency expertise and incentive to exercise its authority. Consonant with the notion that antitrust immunity is bestowed grudgingly and then just to the minimum extent necessary (see note 9, supra), exclusive administrative jurisdiction, if it is found at all, will not ipso facto work a blanket exemption for the relevant industry, but rather will apply to the particular and discrete activities and circumstances deemed to have been intended by Congress. As indicated by the cited cases, antitrust immunity is found only where judicial analysis has determined that for the regulatory structure to fulfill its functions as intended by Congress, the particular actions of the regulatory agency, then in question, must be immunized from antitrust restraints. In almost none of the cases concerned with the immunity issue, when the agency involved was the FCC, has immunity been implied. The Ninth Circuit, in Industrial Communications Systems, Inc. v. Pacific Telephone & Telegraph Co., 505 F.2d 152 (1974) (Industrial Communications), has held that extensive regulation of telephone companies does not unconditionally preclude antitrust actions against them. Judge Waddy in the District Court for the District of Columbia recently addressed a question similar to the one now before this court, in AT&T, supra, 427 F.Supp. 57. In that case the U.S. Government has sued AT&T and its subsidiaries for monopolization in the telecommunications equipment market, and seeks, inter alia, divestiture of WE by AT&T. WE is AT&T’s wholly-owned manufacturing subsidiary, just as AE/Lenkurt is GTE’s wholly-owned manufacturer. Defendants interposed the defense, among others, that they were impliedly immune from antitrust attack because of the pervasive regulation imposed on them by the FCC and state agencies, which regulation is based on the “public interest” standard and therefore at odds with antitrust’s competitive concerns. Interestingly, the FCC itself, filing an amicus brief on the question of exclusive jurisdiction raised in AT&T, did not claim blanket antitrust immunity for the telecommunications industry under its regulatory eye. The FCC brief urged exclusive jurisdiction over matters involving (1) FCA § 214 certification regarding entry into or exit from a communications common carrier market, (2) FCA § 201 orders requiring interconnection, and (3) FCA § 205 tariffs approved or prescribed by the Commission. Judge Waddy analyzed: When faced with implied immunity questions, the courts have undertaken a case-by-case approach which analyzes the particular industry, the applicable regulatory scheme and procedures, and the statutory history to determine whether operation of the antitrust laws can be reconciled with the regulatory scheme. 427 F.Supp. at 59-60. He concluded that nothing in the legislative history of federal regulation of the telecommunications industry reflected a congressional intent to confer a blanket immunity. Nor did such immunity arise from the statutory language, or from the mere fact of regulation even if pervasive, or from the recent administrative proceedings of the FCC. Judge Waddy stated that [i]n each instance * * * the concern has been whether different and potentially conflicting standards with respect to particularized activities and conduct may result, thereby threatening the agency’s ability to carry out its regulatory mandate. Immunity is to be implied only where it is necessary to make the regulatory statutes work, and even then only to the minimum extent necessary. Id. at 61, citing Silver, Gordon, 422 U.S. at 682-83, 95 S.Ct. 2598, NASD, 422 U.S. at 719-20, 95 S.Ct. 2427 all supra. Judge Waddy’s decision demonstrates the continued judicial disinclination to find antitrust immunity and in a context not grossly dissimilar from the instant suit. What we have, then, after a review of most of the cases, is an ocean of antitrust punctuated by isolated islands of implied immunity. GTE claims, however, that the most recent of the relevant Supreme Court pronouncements, Gordon, 422 U.S. at 659, 95 S.Ct. 2598, and NASD, 422 U.S. at 694, 95 S.Ct. 2427, have pushed up a whole continent of exemption and have sent the waters rolling. A close reading of Gordon reveals that the statutory language of the SEA, the pervasive nature of SEC supervision, and the danger of collision with antitrust standards, all played parts in convincing the court that Congress had intended SEC regulation to displace the antitrust laws in the fixing of exchange commission rates. But Gordon notes that immunity is disfavored and is found only in plain instances of antitrust/regulatory conflict. Even then, it is only in a discrete and particular set of circumstances, that the court finds such immunity when based upon a clear expression of congressional intent drawn from a number of sources, most especially specific statutory language. NASD was decided the same day as Gordon, but it produced a 5-4 split decision rather than a second unanimous opinion. NASD found antitrust immunity for vertical restrictions on secondary market activities imposed by a national association of securities dealers, such immunity being implied in the 1940 Investment Company Act § 22(f), and for a horizontal combination of securities dealers in the national association, that immunity being implied in the SEC’s pervasive exercise of regulatory authority under the Act and also under the Maloney Act, which exercises repeatedly weighed competitive concerns. In NASD, the majority found immunity implied from a pervasive exercise of regulatory supervision, and additionally from the incorporation of antitrust factors into the regulatory standards. It appears that the NASD court applied the Gordon “test”, established in the context of an actual antitrust/regulatory conflict based on statutory language, to a situation of mere possible or potential conflict in NASD, and a possibility, moreover, unlikely to be consummated, given the agency’s failure to previously address the matter in issue. The Court couched its decision in well-established axioms: clear repugnancy, immunity not favored, reconcile the two regimes if possible, antitrust to give way if necessary to make regulation work. NASD could be characterized, as it was by this court in oral hearing December 29, 1975, as a deviation from the general line of law, but a deviation only in that the Supreme Court found that, in the SEC problems before it, Congress, while not articulating the proposition quite as clearly as the majority would [have] preferred] it, nevertheless, indicated sufficiently that here was an area that was particularly and peculiarly within the purview of the regulatory agency and that * * * if the antitrust aspects of the problem were allowed to interfere with the agency’s regulatory powers * * * it really [would impinge] * * * directly upon what Congress had intended for the agency to handle. Transcript of Hearing, 52-53. The Supreme Court, subsequently, clearly appeared to reject an expansive interpretation of NASD. In Cantor, the Court stated flatly that [t]he Court has consistently refused to find that regulation gave rise to an implied exemption without first determining that exemption was necessary in order to make the regulatory act work, and even then only to the minimum extent necessary. It also quoted with approval Justice Stewart’s concurring opinion in Gordon in which he stated: The Court has never held, and does not hold today, that the antitrust laws are inapplicable to anticompetitive conduct simply because a federal agency has jurisdiction over the activities of one or more of the defendants. The mere possibility of conflict between antitrust and regulation is insufficient. 428 U.S. at 596-98, 96 S.Ct. 3110. Turning then to the immediate problem, GTE claims that §§ 403 and 218 of the FCA together give the FCC expansive jurisdiction such as to oust this court of antitrust jurisdiction over ITT’s present complaint. Transcript of Hearing, supra, at 12. GTE also offers, additionally or alternatively, as sources of FCC jurisdiction over telephone company/supplier relationships, FCA § 215, and the entire FCA subchapter II on Common Carriers as vesting in the agency regulatory authority over all aspects of interstate wire and radio communication, including telephone operating company purchases from affiliated equipment manufacturers. Ibid. Section 218 grants to the Commission broad authority to make inquiries of and obtain information from carriers subject to its authority, i. e., for our purposes telephone operating companies. (See FCA § 153(h).) Section 403 authorizes the Commission to make an inquiry on its own motion as to any matter which may be the subject of a complaint brought before it, or which may arise under the Act’s provisions, or which relate to the enforcement thereof. Section 215 orders the Commission to examine, among others, any common carrier transactions relating to the furnishing of equipment which may affect service or rates, and to report to Congress thereupon, along with any recommendations for legislation to police those transactions. GTE argues that equipment purchases by pervasively regulated telephone companies is at the heart of FCC jurisdiction, and that FCC jurisdiction is not limited to rates (which, says GTE, would be sufficient jurisdiction in this instance, anyway, because the cost of equipment is a factor in the rate base), but includes regulation of purchase-sale relations between a regulated telephone company and its affiliated equipment manufacturer. In support of this proposition, GTE cites FCC Dkt. 19528 where the Commission dispensed with an interconnect coupler requirement, based on competitive considerations. Since the same question of equipment purchases is before the agency in Dkt. 19129, GTE maintains there is a Gordon threat of antitrust/regulatory collision and inconsistent standards of conduct, especially with regard to relief. GTE Service, where the FCC had expressly not asserted jurisdiction over data processing, is, according to GTE, thereby to be distinguished from the present case, where the FCC does assert jurisdiction over equipment purchases. It must be again noted, however, in AT&T, the FCC has expressly declined the very jurisdiction which GTE claims the Commission has asserted! ITT, on the other hand, claims that the Commission’s jurisdiction over equipment purchases is indirect through its rate power, that the agency has not sought such regulation, and that in any event it could not extend its authority to a non-regulated industry such as telecommunications equipment manufacture, analogous to the tour market in Foremost. 525 F.2d 281, supra. There are thus two questions for the court here to answer. The first is, does the FCC have power to regulate the operating company/equipment manufacturer relationship? Second, if so, is that power exclusive? The answer to the first is “only indirectly,” which, based on the above analysis of the implied immunity doctrine, ineluctably answers “no” to the second. The heart of FCC jurisdiction is over rates and services. Congressional intent in creating the Commission was to supervise rates and service in the telecommunications industry to ensure protection of the public interest, and uniform, nondiscriminatory treatment of customers with regard thereto. Commission jurisdiction over telephone equipment procurement practices is indirect at most, limited to the effect of equipment costs upon the rate structure. The significance of FCC jurisdiction, if any, over equipment purchasing being indirect at most is that, as the Supreme Court recently noted, “[rjecent cases make it clear that the relevant aspect of the agency’s jurisdiction must be sufficiently central to the purposes of the enabling statute so that implied repeal of the antitrust laws is ‘necessary to make the [regulatory scheme] work.” ’ ” The plain language of § 215 makes quite clear that the agency does not have direct jurisdiction over equipment purchases, but may only report to Congress on further legislation with respect to the same. Furthermore, “the legislative history of the [Communications] Act reveals that the Commission was not given the power to decide antitrust issues as such, and that Commission action was not intended to prevent enforcement of the antitrust laws in federal courts.” RCA, 358 U.S. at 346, 79 S.Ct. at 464 (speaking in context of television regulation). The “primary anticompetitive effect” of GTE’s challenged behavior is upon the telecommunications equipment industry, represented by plaintiff ITT, over which industry the FCC has no direct authority. Therefore it is not exempt from antitrust. Foremost; GTE Service. As noted in oral decision on December 29, 1975, “the circuitous method suggested by the defendants here of attempting to regulate non-regulated companies by means of going into the costs and the effect of those costs of telecommunication instruments upon the ultimate rate structure is not that showing of clear repugnancy between the antitrust laws and the regulatory system which is demanded even by the [NASD] majority * * * [for] implied immunity * * Transcript of Hearing at 54. There is neither statutory language nor legislative history, nor a pattern of past FCC regulation, pervasive or not, nor an instance of present FCC regulation, nor an irreconcilable conflict — or any conflict at all — between the regulatory and antitrust regimes, such as to evidence congressional intent that the relationship between telephone operating company and affiliated equipment manufacturer be immune from antitrust attack. No antitrust immunity may be implied for the dealings between carrier and manufacturer presented in this case. FCC regulation of telephone companies does not exempt them from operation of the Sherman Act. This court properly has jurisdiction over the complaint. Primary Jurisdiction The question nevertheless arises whether, under the doctrine of primary jurisdiction, the court in its discretion ought to defer reaching a decision until the FCC has had the opportunity to determine issues of fact within its special expertise. Although neither party here has raised this point, as it is a jurisdictional matter, it is incumbent upon this court to examine this possibility sua sponte. Louisville & Nashville R.R. v. Mottley, supra, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126, F.R.Civ.P. 12(h)(3). It has already been held here that the FCC has no jurisdiction to directly regulate telephone equipment manufacturers; since that is basically what the present complaint concerns, the rationales for primary referral disappear. As this court previously held, and as it holds again in a different context, “[w]hile admittedly the FCC would have primary jurisdiction if GTE’s rates and practices relating thereto were here being challenged under the antitrust laws, ITT’s action is not so bottomed. The FCC has no jurisdiction over the problems of this case, in its present posture.” GTE II, 351 F.Supp. at 1168 (emphasis added, citation omitted). Here, the FCC does not directly regulate the telecommunications equipment market, on which a substantial adverse effect is claimed. Therefore, primary jurisdiction is inapplicable. • ■ . FINDINGS OF FACT This court adopts as its own the Findings of Fact set out in Appendix A and Subappendices 1-4 attached hereto. They are, essentially, as submitted by ITT and for convenience this court has used ITT’s numbering. Save for stipulated figures necessary to reflect the post-appeal market and market shares, it may be noted that of the 64 findings, 61 are the same in substance and sometimes verbatim as this court found them in GTE II, id. at 1168, et seq. Findings 29, 63 and 64 speak for themselves. Therefore this court, after full and careful review thereof, did not feel it necessary to revamp or reword or change, materially, ITT’s “Proposed Findings.” This court also carefully studied GTE’s proposed findings and save as to the few which parallel ITT’s or are undisputed, finds them essentially to be argumentative conclusions, without merit on the record. This court perforce rejects them. Positions of the Parties ITT’s Sherman 1 claim is that GTE and its subsidiaries, by acquiring AE and Lenkurt and also numerous telephone operating companies, and by implementing an in-house purchasing policy whereby the telecommunications equipment requirements of the General System, i. e., its telephone operating companies, are inexorably channeled to AE/Lenkurt, have unreasonably restrained trade in foreclosing this area of the equipment market from competition, with a Sherman 1 anti-competitive intent and result. ITT adds that the alleged violation does not depend upon any one acquisition, or all of the acquisitions together, alone constituting a violation of Sherman 1 or Clayton 7. GTE makes a number of counter-arguments. First, it argues that the acquisitions in question must be assumed to be legal for Sherman 1 purposes, and, relying heavily on United States v. Columbia Steel, 334 U.S. 495, 68 S.Ct. 1107, 92 L.Ed. 1533 (1948), (Columbia Steel), that the in-house purchasing which flows therefrom is natural and therefore necessarily also legal. Second, GTE asserts that, even so, its stipulated 7.4% of the total telecommunications equipment market is insufficient foreclosure to violate Sherman 1, and that in any event actual foreclosure is less than 7.4%. Finally, and with chutzpa, defendants argue that the intent in their purchasing policies is plainly lawful. ITT responds that in-house purchasing is legal only so long as it does not constitute an unreasonable restraint of trade, that the foreclosure here in light of industry circumstances is sufficient to ground a finding of Sherman 1 illegality, and that GTE’s activities had anti-competitive intent. Legal and Factual Analysis This case is presented here in something of an unusual posture. The more common vehicle for a challenge to the activities flowing from or related to an acquisition or acquisitions is a direct attack on the acquisitions themselves, under Clayton 7. ITT took this route in the original District Court proceeding, and succeeded in GTE II. On appeal, however, the Ninth Circuit ruled that, absent a discretionary finding by this court on remand that equitable reasons existed for ITT’s delay or that no prejudice had accrued to GTE by reason of delay, ITT’s challenges to certain of the acquisitions would be barred by a four-year laches period. GTE III, 518 F.2d at 926. As the suit was filed in 1967, the barred acquisitions would include Leieh (acquired in 1950), AE (1955), Lenkurt (1959), Theodore Gary & Co. (1955), Peninsular Telephone (1957), Sylvania (1959, but already ruled not illegal, GTE II at 1196), and Panhandle Electric (1962). Those not barred would be California Water & Telephone Co., West Coast Telephone Co., The Southwestern States Telephone Co., and Western Utilities Corp. (all 1964), Central Iowa Telephone Co., Hawaiian Telephone Co., and Northern Ohio Telephone Co. (all 1967). Since the meat of ITT’s complaint is the vertical relationship between the GTE operating companies and their affiliated equipment manufacturers AE/Lenkurt, the application of laches to bar a challenge to acquisition of the latter would gut ITT’s Clayton 7 claim. The Ninth Circuit also noted, however, that “When the relief sought in a § 16 suit is an injunction forbidding recurrence of the violation (e. g., adherence to an anti-competitive purchasing policy), it would seem proper, as a basic and initial proposition, to measure the laches period from the time when the violation occurred rather than from the time of the prior merger. * * * * An exception to the limitations doctrine exists for continuing acts. Hoopes v. Union Oil Co. of Calif., 9 Cir., 374 F.2d 480 at 486. * * * ITT cannot justify viewing GTE’s acquisitions together as a continuing violation of the antitrust laws in order to avoid the defense of laches. * * However, other ‘acts’ allegedly committed by GTE, such as adherence to a restrictive purchasing policy, may well fall within the continuing-acts exception. The district court should explore this matter on remand.” GTE III at 928, 929. The net effect of the above direction is that this court may hold that ITT’s challenge to the continuing and. ongoing in-house purchasing practiced by the General System is not barred by laches, and with certainty, on the evidence before it, this court does so hold. The challenged antitrust violation here is GTE’s “entire course of conduct directed to the establishment and maintenance” of in-house purchasing, and with each successive acquisition (save that of Sylvania), GTE’s implementation and imposition of its in-house purchasing policy has ever increasingly eliminated competition in its acquired portion of the market. Hoopes, 374 F.2d at 486. That conduct continues today and, barring court action or other not dissimilar circumstances, will carry on tomorrow. Clearly it is logically absurd that ITT could be deemed “dilatory” in challenging such conduct, for then its challenge would never be timely, and alleged violations would have been irrevocably “grandfathered” into a legislatively and judicially-unintended immunity from attack. Plainly, ITT has presently eschewed its § 7 claim, and has instead elected to press on with its § 1 allegations, to avoid the effect of laches. Under the appellate ruling it is now barred from attempting to undo some of the more important GTE acquisitions, in particular AE/Lenkurt, and so has turned to battling the anticompetitive consequences of those acquisitions, i. e., in-house procurement. ITT is not here challenging the legality of the acquisitions qua acquisitions, under § 7, but only as they constitute an integral part of the § 1 combination alleged to have structured and implemented the purchasing practices in question. It must here be noted in this regard that the plaintiff’s § 1 claim is not a new matter; it was raised, and decided in ITT’s favor, in the first go-round. GTE II at 1198. Even that conclusion must, however, be reconsidered in light of GTE III. This court has already found that the General System adheres to an in-house purchasing policy which forecloses other equipment manufacturers from the GTE share of the market, and that such policy and foreclosure is not a result of better product quality, price, or service on the part of the affiliated supplier AE/Lenkurt. GTE II at 1188-93,1196-97. Cf. also, Findings 50-55, infra. Market foreclosure is the cutting off of competition, the fundamental wrong at which the antitrust laws are aimed. What would seem to remain, then, since the above findings were not disturbed on appeal and cannot be challenged now, is an analysis of whether the quality and quantity of foreclosure here,' in light of the appellate court’s directions on market redefinition (see discussion infra), is sufficient to place GTE’s practices beyond the pale of permission. There is an initial consideration, however, that GTE urges precludes such an analysis. GTE’s position, paraphrased, is that ITT cannot forego an attack on the acquisitions and instead challenge the resulting practices; that ITT’s § 1 claim is expressly indifferent to the legality of the General acquisitions, that the acquisitions must therefore be assumed to be legal (or tantamount to internal expansion), that in-house purchasing follows as a natural and legal consequence of a legal vertical acquisition (or internal vertical expansion), and that GTE’s procurement policy is thus automatically valid. GTE reads Columbia Steel, the only case even arguably in point, to say that in-house buying is expected to flow from vertical integration, and that if the integration withstands antitrust attack, so does the buying. Where the foreclosure resulting from such an acquisition approaches the level of a § 1 violation, GTE implies, the acquisition itself must violate the lower incipiency threshold of Clayton 7. Since ITT cannot sustain its § 7 claim, GTE implies further, it is now trying to get in through the back door via Sherman 1. Certainly most antitrust plaintiffs who object to a defendant’s acquisitions, and the consequences thereof, will proceed under § 7 and not § 1 precisely because the former’s standard of illegality is easier to satisfy. Indeed, that is why the present posture of this case is so unusual, and why there is a poverty of precedent. Due to the laches issue, however, and legal strategy decisions on the part of ITT, plaintiff here is now unable to go the § 7 path. This, ipso facto, does not mean the way of § 1 is blocked as well. Acquisition-related conduct can be proscribed by § 1 when it cannot be reached by § 7; such conduct can violate § 1 without necessarily violating § 7. Here, Clayton § 7 illegality would have to be found to exist for each acquisition individually (GTE III at 935), whereas the § 1 claim is based on a single, continuous unitary trade practice — in-house purchasing— flowing from the acquisitions as they now exist en masse. In short, the Sherman § 1 whole can be more than its Clayton 7 parts. Even were this not so, however, even if § 1 could not be violated separate and apart from § 7 here, ITT would not be barred. Columbia Steel is a § 1 case decided in a 5-4 split decision in 1948, before enactment of the present-day § 7. The United States challenged U.S. Steel’s acquisition of the assets of Consolidated Steel, which purchased 3% of the total rolled steel products in the relevant Western U.S. market. One of the charges was that U.S. Steel, a producer of rolled steel, would lessen competition to the extent of foreclosing other producers from Consolidated’s share of the market. The Court held that the acquisition reflected a normal business purpose and did not unreasonably restrict the opportunities of competitor producers of rolled steel to market their product, and that the market share was only 3% “[and] may be expected to be lower * * * in the future.” Vertical integration was not per se illegal; its legality was to be determined by, inter alia, “characterizing the nature of the market to be served, and the leverage on the market which the particular vertical integration creates or makes possible * * * [and] the purpose or intent with which the combination was conceived. When a combination through its actual operation results in an unreasoanble restraint, intent or purpose may be inferred.” Some of the factors to be considered in determining the Sherman 1 legality of a vertical integration are “the percentage of business controlled, the strength of the remaining competition, whether the action springs from business requirements or purpose to monopolize, the probable development of the industry, consumer demands, and other characteristics of the market. * * * * The relative effect of percentage command of a market varies with the setting in which that factor is placed.” Speaking specifically to in-house purchasing, in a passage important to this case, the Court noted that a “subsidiary will in all probability deal only with its parent for goods the parent can furnish. That fact, however, does not make the acquisition invalid. When other elements of Sherman Act violations are present, the fact of corporate relationship is material and can be considered in the determination of whether restraint or attempt to restrain exists. * * Exclusive dealings * * * brought about by vertical integration or otherwise, are not illegal, at any rate until the effect of such control is to unreasonably restrict the opportunities of competitors to market their product.” The relevant portion of the Court’s holding can be summed up as follows: vertical integration is not illegal per se, but is to be analyzed on a ease-to-case basis where the claim is one of unreasonable restraint of trade; more specifically, a subsidiary’s not unnatural tendency to buy or sell in-house is not illegal unless the “combination through its actual operation” unreasonably forecloses the market to competitors of the parent or subsidiary. The reaction to Columbia Steel resulted in the 1950 amendments to Clayton 7; Congress passed an anti-merger and assets-acquisition statute with a lower “incipiency” standard so as . to reach transactions such as those validated in that decision. It is for this reason that few if indeed any major cases after Columbia Steel really speak to the legality of a merger or acquisition under the Sherman Act; they don’t have to; plaintiffs can more easily meet the incipiency standard of Clayton 7 and so move under that provision. This is not to say, however, by any means, that Sherman 1 does not speak to mergers or acquisitions. It may condemn them as unreasonable restraints of trade just as it may any other business conduct. Columbia Steel makes this point explicit; it just so happened, in the circumstances of that case, that the acquisition in question did not amount to such a restraint. Time and again cases have held that Columbia Steel is to be restricted to its own special set of facts, as indeed the Court there impliedly admonished and explicitly set out in analytical framework. GTE claims that Columbia Steel means that if a vertical acquisition is legal, so is the in-house purchasing, since the one follows the other as the night the day. Transcript of Hearing, August 18, 1976, at 43. That interpretation, however, is 'precisely backwards: what Columbia Steel says is that if the in-house purchasing is legal — i. e., it does not amount to an unreasonable vertical restraint of trade — then so is the merger or acquisition from which it flows. GTE has erroneously and reversely interchanged analysis and conclusion in its interpretation of the decision. Nevertheless, even were this court to construe Columbia Steel as fully applicable, it does not doom ITT. Conceding that in-house purchasing is a probable consequence of vertical integration, and is not per se illegal, nevertheless such action may violate § 1 just as any other unreasonable restraint of trade when the facts of a given ease are considered. That courts have not had to deal with acquisitions under § 1 because such cases are ordinarily brought under § 7, does not mean that acquisition cases cannot be brought under § 1. They can, as Columbia Steel explicitly makes clear. It is simply ITT’s misfortune that under GTE III, § 7 is not here available to it; it has, then proceeded under § 1 and attempted to meet the heavier burden of proof therein. A potential problem arises, however. ITT is attacking GTE’s acquisitions not in and of themselves, but rather for fostering, as an integral part thereof an in-house purchasing policy. And presumably, since in the Ninth Circuit divestiture is not now available to a private party in an antitrust suit (GTE III at 920), any relief granted ITT would definitely focus on the in-house purchasing practice but perhaps, leave the facts of acquisitions and corporate relationship intact. Nothing in the antitrust law requires an antitrust plaintiff to attack or have standing to effectively undo the underlying fact (or cause) rather than the overt manifestation (or fact) of a violation. GTE, though, insists that since ITT is not challenging the legality of the acquisitions here, thus the acquisitions are legal, and, ergo, so must be the in-house purchasing. Were its actions as pure as GTE paints them, this assertion might have some merit, e. g., if for example, only a single legal acquisition were involved. But a series of acquisitions, even if severably legal, may when assembled together produce a synergistic effect of restraining trade. GTE’s claim is untenable. To repeat, the court of appeals has ruled that this court, on remand, should make “consistent findings of legality or illegality with respect to each acquisition * * * because ITT’s request for relief is grounded on the theory that the acquisitions and accompanying trade practices constituted actual violations of the Sherman and Clayton Acts.” GTE III at 935 (first emphasis added). Here, however, ITT is challenging a trade practice, in-house dealing, and not the illegality of the acquisitions qua acquisitions. It would appear obvious that a series of acquisitions can generate collectively a unitary practice that restrains trade under § 1, even though not necessarily individually amounting to as much as a violation of § 7. Cf. United States v. Jerrold Electronics Corp., 187 F.Supp. 545, 536, 566 (E.D.Pa. 1960), aff’d per curiam, 365 U.S. 567, 81 S.Ct. 755, 5 L.Ed.2d 806 (1961) (Jerrold Electronics). As this court sees it, such is the proper characterization of ITT’s complaint. However, even if a § 7 violation were inextricably linked with § 1 abuses here, ITT’s stance would still be permissible. In explaining why, the court must disabuse GTE of a number of express or implied theories it holds. GTE’s first thesis is that somehow ITT must bring a Clayton 7 claim if such necessarily accompanies its Sherman 1 claim in this fact situation. As stated heretofore, there is no such requirement. Antitrust complaints need not cover every possible ground for violation, nor need they be tidily packaged so as to encompass all directly relevant antitrust law. Plaintiffs may pick and choose, and courts will examine what charges and allegations are so presented to them. The fact that ITT is by judicial fiat now equitably barred by laches from mounting a § 7 assault on many of GTE’s earlier acquisitions does not in the least mean that those transactions were or are not violations of § 7. Under United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 77 S.Ct. 872, 1 L.Ed.2d 1057 (1957) (du Pont), the government at least could attack them as such. The laches doctrine, as now applied here, simply means that GTE’s acquisitions appear to be immune from private antitrust attack four years after their consummation; it does not perforce make those acquisitions legal. Laches is an equitable and procedural bar which quite flatly has nothing to do with abstract substantive and legal merits. Therefore, a court in this context is entirely free to find § 7 violations as incidents to a Sherman 1 claim that itself is not barred by laches. The § 1 claim stands on its own, procedurally. Nevertheless, GTE seems to maintain that ITT has (somehow) stipulated, for purposes of the § 1 claim now before the court, that GTE’s acquisitions are legal. This court can only find that ITT has done nothing of the sort. Rather, ITT has asserted that the alleged § 1 violation does not depend upon the illegality, under either § 1 or § 7, of GTE’s acquisitions. See n. 22, supra. At most, it could be construed as a putative stipulation that the court need not make preliminary enquiry into the legality of the acquisitions, per se, in examining the challenged practices flowing from them; it does not mean that the court cannot make such enquiry, even less does it mean that the court cannot make a eonclusory finding with respect to the acquisitions qua acquisitions incidental to and following its disposition of the main claim. Contrary to GTE’s repeated assertions, the court does not “have to” “assume” anything. Columbia Steel and other cases have said that in-house purchasing is the natural or logical or probable result of vertical integration. A practice that is “natural” in a business sense is not necessarily always legal. Indeed, if all “natural” business conduct were legal, there would be no need for the antitrust laws. Although an earlier argument is that if the natural result of an acquisition restrains trade, it follows that the acquisition itself will have a tendency to lessen competition or will restrain trade. Nevertheless it is not absolutely necessary that a vertical acquisition engender in-house dealing, and even less necessary that any such dealing not be the result of free competition. The corporate affiliation could remain, and with it the profits from each company, while vertical dealings were still conducted on an arms’ length, open market basis. The question, then, is does foreclosure of 7.4% of the total telecommunications equipment market, in light of all the relevant industry characteristics, unreasonably restrain trade? Initially, this court must refer to its findings and conclusions in GTE II. “The General System policy of ‘standardizing’ on AE(Lenkurt) products and resistance to use of non in-house equipment effectively forecloses competing manufacturers from selling competing products to the General System. * * * whether one takes the independent telephone industry to constitute the relevant market, as this court has done, or takes the total telephone industry market, as GTE insists, in either market there has been a most substantial foreclosure of competition flowing from the vertical integration and continued horizontal merger policy of GTE.” 351 F.Supp. at 1196-97 (emphasis added). On appeal, the Ninth Circuit dismissed this court’s statement that either market definition gave rise to substantial foreclosure (and therefore, by implication, restraint of trade) as “hypothetical” and “speculative” because (1) this court did ground its findings in the independent market, and (2) even if it alternatively found a violation in the larger, Bell-inclusive market, it “committed other errors in defining the market”, viz: exclusion of purchases by non operating-company customers, and of all potential purchases by telephone subscribers from manufacturers not affiliated with the operating company serving those subscribers. GTE III at 932-33. As to (1), this court in GTE II stated in what it thought was plain language that restraint of trade existed also in the larger market, as defined by GTE, based on GTE’s share therein. 351 F.Supp. at 1187, 1196-97. As to (2), correction of the “other errors” complained of above has reduced GTE’s market share from 7.9% (id. at 1196) to 7.4%. So this issue is back before this court six years after this court believed it had decided it. So be it. In the present posture of the complaint, this court will now attempt to follow the appellate court’s directions. Unquestionably vertical foreclosure is one of the evils to which antitrust law and the Sherman Act in particular may address itself; it is a “clog on competition” and can be a restraint of trade. The Sherman Act § l’s central policy is “against contracts which take away freedom of purchasers to buy in an open market.” As has been noted above, and as the cases indicate, the normal route for challenging the effects of an acquisition is § 7. Therefore, perforce, most relevant precedents will consist of § 7 cases. Since it is exclusive in-house dealing that is the nub of ITT’s challenge, § 3 cases will also be used in analysis, since § 3 normally provides an easier standard for plaintiffs to meet. Where the Sherman § 1 restraint of trade alleged is market foreclosure — -as contrasted to a per se violation such as a group boycott or a tie-in — § 1 focuses on the same concerns and factors as Clayton § 7 and § 3, albeit judging by the stricter standard of actual restraint over and beyond mere incipiency. The difference, in this context, between Clayton and Sherman violations is one of degree and not of kind. See Brown Shoe, supra, n. 41, 370 U.S. at 328, 82 S.Ct. 1502. Business behavior which violates the Clayton Act’s incipieney standards may also be so egregious and effective as to rise to the level of, and constitute, Sherman Act restraints of trade. Id. at 328, 333, 82 S.Ct. 1502. Therefore, Clayton Act cases dealing with similar behavior are persuasively instructive, all the while recognizing and deferring to the higher standard of illegal!ty mandated by the Sherman Act and ITT’s concomitant burden necessary to sustain its application here. It is axiomatic that a percentage figure for a market foreclosure is not, per se, usually antitrust-determinative. Market share, where between de minimum and blatant monopoly proportions, can only be fairly assessed in light of all the many other relevant industry circumstances. Thus, antitrust violations have been founded on vertical market foreclosures of as low as 1-2% or even less than 1%. The only § 1 case on vertical foreclosure through acquisition is Columbia Steel, where a 3% foreclosure which was expected to decline was held legal Relevant factors in assessing the real impact of foreclosure include: (a) —the degree of existing concentration in the industry as well as any trend towards concentration. A highly concentrated or concentrating industry will magnify the anticompetitive impact of foreclosure. (b) —the degree of existing vertical integration in the industry as well as any trend towards vertical integration. A highly vertically integrated or integrating industry will magnify the anti-competitive effect of vertical foreclosure. (c) —the nature and type of arrangement involved; less permanent relationships such as contracts, or more socially useful business behavior such as internal expansion, are less likely to be found illegal than foreclosure by acquisition or merger. As stated in U. S. Steel v. FTC, 426 F.2d at 598 n. 14: While vertical integration by internal generation creates many of the same evils as does such integration by acquisition, it is not a specific subject of concern [under] ... § 7. The most frequent explanation given for not proscribing internal generation of vertical facilities is that such expansion generates an additional competitive factor in the market place, rather than merely changing the ownership of an existing competitive unit. Hence, it is more likely than acquisition of existing facilities to intensify product, price and service competition. Also, such internal generation being less likely to succeed because one must compete with the existing utilization of facilities is less dangerous to competition in the market place (citing Kennecott Copper at 102-04, 104 n. 6; Brown Shoe, 370 U.S. at 329-30, 332 n. 55, 82 S.Ct. 1502). (d) —the intent and purpose behind the challenged conduct. This is related to the type and nature of the arrangement in question, just discussed above. Intent may not be relevant per se but may be helpful in interpreting the purpose and effect of the behavior; (e) —the availability of alternative marketing outlets for foreclosed competitors. The less available alternatives, the more likely illegality; (f) —the introduction of an “irrelevant and alien factor” into free choice among competing products in a given market. The presence of such a factor will invite condemnation; (g) —entry barriers in the affected market. The higher the entry barrier, the more anti-competitive the foreclosure; (h) —the degree of market leverage, if any, possessed by the foreclosing entity. As a threshold matter, GTE urges that its stipulated 7.4% of the market is not tantamount to an equal degree of foreclosure. It argues that it would supply a healthy chunk of that 7.4% even without the existing vertical integration because (1) the GTE operating companies historically bought large amounts of telecommunications equipment from AE/Lenkurt prior to acquisition, and (2) over and above that, replacement parts are ordinarily purchased from the original equipment manufacturer. This is at odds with this court’s implicit finding in GTE II that all of GTE’s market share was foreclosed. ITT in its Reply Brief cites a number of cases for the proposition that courts include pre-acquisition vertical dealings as part of the market foreclosed by the acquisition, to wit, Kennecott Copper, Columbia Steel, and Kimberly-Clark. In Kennecott Copper, Kennecott’s sales to the acquired company Okonite had declined to nothing prior to the merger. 231 F.Supp. at 97-98. In Kimberly-Clark, the court made reference to foreclosure of “increased sales” but it did not exclude pre-existing figures from its computations. 264 F.Supp. at 463-64. In Columbia Steel, since even including the preexisting sales of rolled steel by U.S. Steel to Consolidated (about one-half of the post-acquisition share) that the 3% share in a declining market was held legal, gives rise to a strong inference that any increase in percentage or a different state of the market would not have been so approved. However, no case has been cited (or found) wherein final vertical market share figures excluded prior dealings. A court must look to the realities of the marketplace in determining foreclosure. Nevertheless, using the entire telecommunication equipment market as blocked out by GTE III, at least the full 7.4% is not an improper measure here. While the test for foreclosure in a § 7 setting is future-oriented, in a § 1 case the court looks backward to see if actual foreclosure and restraint of trade have occurred. Obviously, at the time of each of GTE’s acquisitions the foreclosure, which is now in the past, would have been then in the future. Therefore, although a § 1 claim might not then have been successfully proved, now, through the passage of time and events, it can; the foreclosure analysis is the same. What would reasonably appear to be foreclosed in the future under § 7 has been actually foreclosed in the past under § 1; the two measures are the same. And that same measure necessarily includes at least all of the stipulated 7.4%. If the court of appeals can validly postulate that “[t]here is thus no basis for concluding that Bell’s purported foreclosure of a large fraction of the telephone equipment market is an immutable fact of market life” {GTE III at 931), then with at least equal certainty it can be said that there is, or was at the time of each of the acquisitions in issue, no basis for concluding that AE/Lenkurt’s historic share of the pre-acquisition operating companies’ purchases would continue come hell or high water, come competition or no. Much telephone equipment is compatible. GTE II at 1183. Of importance, too, is the proven fact that GTE has used its integrated structure to (1) keep prices at a high, non-discounted level, when a non-affiliated manufacturer might well offer volume discounts to the General operating companies as a group and thus win their business, were there no GTE-affiliated manufacturer (id. at 1193), and (2) resist “introduction into the General System of improved equipment until AE or Lenkurt makes it” (id. at 1192), again designedly and positively foreclosing its market share because of its integrated structure. In short, GTE has actually used its vertical structure to irrevocably foreclose its full market share of 7.4% by taking every means to exclude any chance, howsoever small, of any portion of it being served by competitor manufacturers no matter how superior their products, service, or prices. To put it another way, the portion of GTE’s 7.4% which might represent the “historic” pre-acquisition equipment sales is no longer won or retained on a competitive basis, as it was before GTE foreclosed it upon acquisition of the operating companies. Therefore it is not the same portion, qualitatively or quantitatively, as it was before acquisition and consequently cannot be related back. The same reasoning applies with equal force to replacement parts, since the original equipment may well have been purchased after foreclosure. In the posture of the case it would be incumbent on GTE to show otherwise,' and it has not. Moreover, the increasingly rapid rate of technological change and research and development in telecommunications equipment may well have mooted much of GTE’s “replacement parts” argument. In any event, this court has already found that new types of products bought from non-affiliated competitors would have replaced existing GTE equipment but for vertical integration and GTE’s policy of resisting use of such products until AE/Lenkurt made them. Ibid. This court can but conclude that GTE’s in-house purchasing policy has foreclosed a full 7.4% of the gross relevant market. Moving now to other relevant factors in assessing the anti-competitive impact of that policy: (a) Degree of existing concentration in the telecommunications equipment market as well as any trend towards concentration WE has supplied and supplies 99%+ of Bell’s equipment requirements (id. at 1176) and thus has an equipment market share of about 80%, given that the parties’ stipulation as to GTE’s shares of the Bell-inclusive and Bell-exclusive lead to a Bell purchasing share of 80.36%. Since AE/Lenkurt has a lock on General System purchases, then, together, two firms — WE and AE/Lenkurt — control over 87% of the equipment market. Furthermore, only three