Full opinion text
ADJUDICATION DITTER, District Judge. Alleging that a proposed merger of two frozen dessert pie producers will substantially lessen competition, the Anti-Trust Division of the Department of Justice has petitioned this court for a preliminary and permanent injunction. Jurisdiction is founded upon 15 U.S.C. § 25. The Government contends that the proposed acquisition of Chef Pierre, Inc. by Consolidated Foods Corporation violates section 7 of the Clayton Act. After an eight day trial on the merits, I have decided that the merger does not offend the provisions of section 7, and that all injunctive relief must therefore be refused. Findings of fact and conclusions of law are stated herein. The analysis and discussion in support of this decision will be expressed at length in an opinion to follow. FINDINGS OF FACT 1. Consolidated Foods Corporation (“Consolidated Foods”) is a Maryland corporation with its principal executive offices in Chicago, Illinois. Consolidated Foods is a diversified company engaged in the businesses of frozen and processed foods, soft drinks and confections, food services, home products and services, commercial products and services and apparel. (Stipulation No. 1, par. 5.) Consolidated is one of the nation’s largest industrial corporations (ranked 78th in Fortune’s 1977 Directory of the Five Hundred Largest U.S. Industrial Corporations) with total sales of approximately $2.75 billion for its fiscal year ended June 30, 1976 and $2.89 billion for its fiscal year ended June 30, 1977. (Consolidated-Answer, Par. 4 and GX 17.) 2. One of the divisions of Consolidated Foods is the Kitchens of Sara Lee (“Sara Lee”). Sara Lee manufactures and sells approximately 25 varieties of frozen baked goods and dessert products including rolls, cakes, cheese cakes, brownies, pound cake, coffee cakes, cup cakes, breakfast Danish, frozen dessert pies, and international desserts. Frozen dessert pies produced by Sara Lee are unbaked. (Stipulation No. 1, par. 6.) 3. Sara Lee’s sales of frozen dessert pies were approximately as follows: Kitchens of Sara Lee Sales of Frozen Dessert Pies Fiscal Year Cases Dollars (July 1 to June 30) 1973- 74-1,179,300 ?7,101,100 1974- 75 1,029,400 7.535.600 1975- 76 827,100 5.638.600 1976- 77 649,600 4,525,100 Virtually all of these sales of frozen desserts were to retail customers, as follows: Kitchens of Sara Lee Retail Sales of Frozen Dessert Pies Fiscal Year Cases (July 1 to June 30) Dollars 1973- 74 1,165,600 7,025,500 1974- 75 1,017,400 7.445.600 1975- 76 811,000 5.522.600 1976- 77 644,200 4,498,200 (Stipulation No. 1, par. 6.) 4. Sara Lee does not produce any pies for sale to institutional (sometimes also referred to as “food service”) customers. In its fiscal year ended June 30,1976, Sara Lee sold approximately $116,000 worth of frozen dessert pies produced by it to institutional customers and in its fiscal year ended June 30, 1977, it sold approximately $26,900 worth of frozen dessert pies produced by it to institutional customers, such sales, for the most part, representing sales of retail frozen dessert pie seconds to the State of Texas. (Stipulation No. 1, par. 6.) 5. Sara Lee produces frozen dessert pies on a production line located at its plant in New Hampton, Iowa, and sells or attempts to sell retail frozen dessert pies throughout the United States. (Stipulation No. 1, par. 6.) 6. Sara Lee pies are produced from bulk fruit frozen in a sugar syrup. In the pie making process the fruit is thawed, the natural juices are cooked and thickened with other ingredients and subsequently recombined with the fruit to make the pie filling. (Stipulation No. 1, par. 6.) 7. Sara Lee currently offers for sale only six varieties of retail frozen dessert pies, apple, Dutch apple, peach, cherry, blueberry, and pumpkin, all in a single size (Tr. 7-149 to 7-149a). 8. Sara Lee has a full line of frozen dessert product sales such as cakes and pastries, all of which go through the same distribution system as frozen dessert pies. (Tr. 3-168); (Tr. 5-71 to 72). 9. Sara Lee has the following market shares for the frozen baked goods and dessert products indicated: Product Share of the Market Coffee Cakes 70% Cheese Cake 95% Layer Cake 20% Single Layer Cake 40-50% Pound Cake 40-50% Cup Cakes 20-25% Crumb Cakes 15-20% (Tr. 7-172 to 173). 10. Consolidated Foods distributes food products and related grocery products to volume feeding operations such as restaurants, hotels, industrial cafeterias, schools and hospitals throughout the United States. (Stipulation No. 1, par. 7.) 11. Consolidated distributes food and related products including frozen dessert pies, to the food service industry through its Monarch, Pearce-Young-Angel, Snow Queen, Harrison House, and Booth Fisheries operations. (GX 17; Tr. 8-94 to 95; Tr. 6-41 to 42; Tr. 5-137 to 138). Monarch/Pearce-Young-Angel (Monarch/PYA) is the nation’s third largest distributor in the institutional food service industry (GX 17 — Consolidated 1977 Annual report, Page 4; Stip. No. 1, Par. 7). 12. Monarch/PYA or Harrison House engage in food service distribution in Massachusetts; southern New Hampshire; Rhode Island; Connecticut; southern New York; southern New Jersey; Delaware; eastern, southern and western Pennsylvania; Maryland; Washington, D. C.; Virginia; North Carolina; South Carolina; Greater Atlanta Georgia area; northern Florida; California; Nevada; Armadello, Texas; Illinois; western Indiana; southern Wisconsin; Iowa; and Minneapolis, Minnesota. (Tr. 8-94 to 97). 13. Chef Pierre, Inc. (“Chef Pierre”) is a corporation organized and existing under the laws of the State of Delaware with its principal place of business in Traverse City, Michigan. Chef Pierre produces frozen dessert pies at facilities located in Traverse City, Michigan, for sale throughout the United States. Chef Pierre is engaged in the production and sale of both retail and institutional frozen dessert pies. (Stipulation No. 1, par. 9.) 14. Chef Pierre’s sales of frozen dessert pies were approximately as follows for the calendar years indicated: Chef Pierre, Inc. Sales of Frozen dessert Pies Year Cases Dollars 1974 3,085,400 $23,686,000 1975 3,477,300 25.444.000 1976 4,030,100 30.012.000 1977 4,336,400 36.133.000 Most of Chef Pierre’s sales of frozen dessert pies were institutional sales, as indicated below: Chef Pierre Inc. Institutional Sales Retail Sales frear Cases Dollars Cases Dollars 1974 $15,733,000 $ 7,953,000 1975 2,374,900 17,023,000 1,102,400 8,421,000 1976 2,870,400 21,449,000 1,249,800 8,563,000 1977 2,960,600 25,885,000 1,375,800 10,248,000 (Stipulation No. 1, par. 9.) 15. Chef Pierre’s principal line of retail frozen dessert pies is its “Chef Pierre Gourmet Fruit Hi-Pie”. “Hi-Pies” are made with fruit which is quick frozen by the processor in individual pieces (“IQF fruit”). In the production process, the pieces are mixed with sugar and other dry ingredients, heaped in pie crusts and packaged, all without thawing the fruit. The resulting unbaked pie has a mound — or dome-like appearance. The fruit thus retains its natural juices until the pie is baked by the ultimate consumer, at which time the fruit cooks down so that the top crust becomes level. (Stipulation No. 1, par. 9.) 16. The Chef Pierre “Hi-pie” is packaged in a clear plastic wrapping rather than in a box. Frozen dessert pies composed of IQF fruit are more expensive than frozen dessert pies utilizing bulk fruit. Chef Pierre also produces boxed pies utilizing bulk fruit. (Stipulation No. 1, par. 9.) 17. Chef Pierre pies are distributed throughout the United States. Approximately 60% of Chef Pierre’s sales of institutional frozen dessert pies are sold under private labels rather than the “Chef Pierre” label. (Stipulation No. 1, par. 9.) 18. Chef Pierre produces more than 40 varieties of frozen dessert pies (Tr. 8-13), while Sara Lee produces only six varieties. 19. On January 30, 1978, the respective Boards of Directors of Consolidated Foods and Chef Pierre approved a merger agreement pursuant to which Chef Pierre is to be merged into Consolidated Foods. The total value of the transaction is approximately $34 million. (Stipulation No. 1, par. 4.) 20. The retail pie business and the institutional pie business are recognized by the food industry as two distinct businesses. (Tr. 2-15; Tr. 7-181; Tr. 8-21 to 8-22.) 21. It is stipulated that the manufacture and sale of retail frozen dessert pies throughout the United States is a relevant line of commerce for purposes of this case. (Stipulation No. 2.) 22. The customers for retail and institutional frozen dessert pies are different; methods of marketing and distribution are different; advertising, packaging and the size and other characteristics of the pies are different, and the price is different. Chef Pierre reports retail and institutional pie sales separately in its Annual Reports and Form 10-K filed with the Securities and Exchange Commission. (Stipulation No. 1, par. 14.) Sara Lee does not produce institutional pies. (Stipulation No. 1, par. 6.) 23. There is little if any substitution between retail frozen dessert pies and institutional dessert pies. (Tr. 8-128.) 24. Retail dessert pies generally are sold through food stores to consumers for home consumption. Most retail frozen dessert pies are eight inches in diameter. (The “Chef Pierre Gourmet Hi-Pie” is nine inches in diameter.) Advertising for retail dessert pies is aimed directly at the consumer. Packaging for retail dessert pies normally is more expensive than for institutional pies because the packaging must be able to attract the consumer’s attention. Retail pies normally are more expensive than institutional pies particularly when compared on a price per ounce basis. Brand names are more important in the sale of retail frozen dessert pies than in the sale of institutional frozen dessert pies. (Stipulation No. 1, par. 15.) 25. In addition to frozen pies, many retail stores also sell fresh pies. In some instances such fresh pies are delivered to the store already baked. In other instances the pies are “baked-off” at the store, utilizing frozen pies. (Stipulation No. 1, par. 15.) 26. Institutional frozen dessert pies are sold through institutional food distributors to restaurants, hospitals, schools and other institutions which in turn bake or thaw the pies and sell them to customers by the slice for consumption on the premises. Institutional frozen pies usually are ten inches in diameter, and they normally are packaged in plain boxes. 27. Because retail frozen dessert pies and institutional frozen dessert pies are sold to different customers, a different expertise is required for effective marketing of each category. For example, retail salesmen must be familiar with a producer’s advertising program, while institutional salesmen must be able to provide information on nutrition, cost per portion and instructions for baking. Advertising for food service frozen dessert pies is aimed at the food service operator and is mainly restricted to trade magazines. The packaging for retail frozen dessert pies is more expensive than the packaging for food service frozen dessert pies. Advertising is more important in the sale of retail frozen dessert pies than it is in the sale of food service frozen dessert pies. The end user of food service frozen dessert pies is the food service operator. Many frozen dessert pie producers specialize in either the production and sale of food service frozen dessert pies or the production and sale of retail frozen dessert pies. Due to the special expertise required, a substantial number of brokers only sell to either retail or food service customers. Due to the special expertise required, brokers who sell to both retail and food service customers usually have separate sales forces devoted to either the retail or food service accounts. Due to the special expertise required, a substantial number of distributors distribute only to either retail or food service customers. Due to the special expertise required, distributors who distribute to both retail and food service customers usually have separate sales forces devoted to either retail or food service accounts. Regional frozen dessert pie producers overlap with other regional frozen dessert pie producers. (Stipulation of facts read into the record by Government Counsel on April 26, 1978.) 28. Fresh baked dessert pies are sold on consignment and title does not pass with delivery. Fresh baked dessert pies are sold with a return privilege for pies unsold at the end of their shelf life; frozen pies are not sold with such a return privilege. Fresh baked dessert pies are delivered on a daily basis while frozen dessert pies are delivered on less frequent intervals. Frozen dessert pies are sold in the frozen food cabinet of the grocery store. Fresh baked dessert pies are not purchased by the frozen food buyer of the supermarket chain. Fresh baked dessert pies are delivered by pie producers to individual retail grocery stores and food service accounts. 29. Fresh institutional dessert pies are delivered daily to the restaurant’s door already baked and ready to serve. A number of pie companies, including Mrs. Smith’s, Fasano, Best, Vern’s and others sell both fresh and frozen institutional dessert pies. (Tr. 8-85 to 8-86, 8-102 to 8-103; Tr. 5-146 to 5-147; Tr. 6-103; Tr. 7-119 to 7-120; Tr. 8-7, 8-13, 8-22, 8-42; Tr. 8-64.) Fresh pies compete directly and intensely with frozen pies in the institutional market. 30. Although the institutional dessert pie market is a separate economic entity, this line of commerce includes both fresh and frozen pies. There is no separate institutional frozen dessert pie market. 31. Selling Areas Marketing, Inc. (SAMI) collects from certain food distributors figures which show case-movements from their warehouses. SAMI, through extrapolation and projection using constants and formulas it has developed, publishes data to its subscribers. When found to be inaccurate, SAMI reports are rechecked and revised. It is accepted in the food industry that SAMI reports reflect market shares of retail frozen dessert pies. (GX 13, p. 2; Tr. 2- 89 to 90; Tr. 3-158 to 161; Tr. 3-24; Tr. 5-16 to 21; Tr. 6-18 to 10.) 32. Frozen pie producers subscribe to market share data published by SAMI for the sale of retail frozen dessert pies. (Tr. 3- 61, Tr. 2-89 to 90; Tr. 6-20; Tr. 8-56). 33. Consolidated subscribes to SAMI reports for frozen sweet goods at an annual cost of $150,000. (Tr. 7-71.) 34. Chef considers SAMI an accurate reflection of market share percentages in the retail frozen dessert pie market. (GX 13, p. 2.) 35. Certain producers of retail frozen dessert pies have considered SAMI reports on market shares to assist in deciding whether to enter another geographic market, (Tr. 2-89; Tr. 6-53 to 54) or to develop and market a new product. (Tr. 5-16 to 21.) 36. Certain producers of retail frozen dessert pies have used SAMI reports on market shares to demonstrate to potential and new customers their market share positions in various geographic markets. (Tr. 3-24; Tr. 6-18.) 37. Certain producers of frozen dessert pies rely on reports on frozen dessert pies issued by SAMI and use them in their day-to-day business. (Tr. 2-89 to 90; Tr. 3-158 to 161, Tr. 4-63 to 64.) 38. Certain producers of frozen dessert pies may rely on reports on frozen dessert pies issued by SAMI to reflect probable competitors’ sales, market trends, competitors’ promotional activities, and fluctuations in different types and sizes of frozen dessert pies in SAMI’s regional marketing areas. (Tr. 6-18 to 19; Tr. 5-18; Tr. 2-89 to 90.) 39. SAMI reports on 39 regional markets in the United States. The reports are issued every four weeks, 13 times a year. (Tr. 3-51.) 40. SAMI is concerned only with retail data. (Tr. 3-52.) 41. Since SAMI data is based on “warehouse withdrawals,” i. e., food withdrawn from wholesale warehouses and sent to food stores, a manufacturers’ sale of frozen pies directly to a retail store is not included in the SAMI data base. (Tr. 3-66.) 42. Certain chains that operate warehouses do not report to SAMI. One such non-participating operator is Safeway, a large supermarket chain. (Tr. 3-66.) 43. A “private label” is the brand name of a distributor or group of distributors rather than that of the manufacturer. A private brand pie is boxed with the distributor’s label on it, and its manufacturer is not identified. Two or more manufacturers may be authorized to package under the same private label, and when they do, each competes for sales to those distributors who use that private label. 44. Regardless of their aggregate, SAMI does not report private label sales in any geographic area where less than three private brands are sold. (Tr. 3-67 to 3-69.) 45. With a seasonal product, such as pumpkin pie, SAMI’s report for a four week period within the product’s season will be disproportionately high as contrasted to yearly sales for that product. (Tr. 3-85 to 3-86.) 46. Not all the food service operators in a given SAMI market area report to SAMI and SAMI’s 39 market areas do not include all the counties in the United States. SAMI knows that its participating food operators in a given market area “do approximately x percent” of that market. The figures for these operators are therefore “blown-up” to cover the total market.. Thus calculated, the 39 markets are added together. Each of the remaining counties which are not included in any SAMI market area are assigned “some value,” and these are added as well. The resulting figure is the total sales projection for the entire United States. (Tr. 3-75 to 3-77.) 47. Therefore, the SAMI market figures for the total United States are, in essence, a projection on a projection. 48. Although the existence of regional, geographic submarkets within the United States is a contested matter, the parties have stipulated that the United States as a whole is a relevant geographical market in which to assess the effects of the merger of Chef Pierre and Consolidated Foods. Frozen pies can be and are sold throughout the United States from a single plant. Consequently, producers of frozen pies are able to compete and do compete for customers throughout the United States. Frozen pie companies including Mrs. Smith’s, Morton, Banquet, Pet, and Lloyd J. Harriss, as well as Sara Lee and Chef Pierre compete on a nationwide basis. In addition, regional frozen pie producers overlap with other regional frozen pie producers. (Stipulation No. 1, par. 18; Tr. 8-125 to 8-131, 8-134 to 8-135.) 49. Frozen dessert pies are generally produced for inventory rather than to fill specific customer orders, and purchasers of ■frozen dessert pies are able to look to producers located' throughout the United States to meet their requirements of frozen dessert pies. (Tr. 3-123.) Individual producers do not vary to a significant degree the prices of either their retail or their institutional frozen dessert pies from one geographic section of the country to another. (Tr. 8-130; Tr. 4-162 and 4-163.) 50. Buyers and potential buyers of retail frozen dessert pies and buyers and potential buyers of institutional frozen dessert pies are located throughout the United States. (Stipulation No. 1, par. 18.) Institutional food distributors also are located throughout the United States. (Tr. 4-46.) 51. In 1977, total sales of retail frozen dessert pies were $144,546,000. Sales of retail frozen dessert pies by individual producers in 1977 were: Company Mrs. Smith's $59,137,000 (GX 48) Morton's 15.814.000 (Stip. No. 3) Ward 10.490.000 (Stip. No. 3) Chef Pierre Harriss 10.248.000 (Stip. No. 1) 9.606.000 (Stip. No. 3) Banquet 9.400.000 (Stip. No. 3) Pet 7.334.000 (Stip. No. 3) Fasano 5.195.000 (Stip. No. 3) Quality 5,120,000. (Stip. No. 3) Edwards 4.636.000 (GX 6) Sara Lee 4,498,0CC (Stip. No. 1) Table Talk 1.980.000 (Stip. No. 3) 1.088.000 (Stip. No. 3) Chef’s and Consolidated’s dollar sales of retail frozen dessert pies in 1977 were 7 percent and 3.1 percent, respectively, of the retail frozen dessert pie market. If the merger is consummated, the combined market share of Consolidated and Chef would be 10.1 percent of the retail frozen dessert pie market and Consolidated would be the third largest producer of retail frozen dessert pies in the United States. 52. According to the Government’s exhibits and the stipulations of the parties, total 1977 sales of institutional frozen dessert pies in the United States were $65,860,-000. This figure represents the sum of the sales by the following individual producers in 1977: Company Sales Percent of total Chef Pierre 525,885,000 39.30 (Stip. No. 1) Mrs. Smith's 15,736,000 23.89 (GX 48) Company Percent of total Edwards 14,484,000 21.77 (GX 6) Harriss 5.927.000 8.99 (Stip. No. 3 Fasano 1.544.000 2.34 (Stip. No. 3) Fields 1.088.000 1.65 (Stip. No. 3) Ward 641.000 .973 (Stip. No. 3) Awrey 220.000 .334 (Stip. No. 3) Table Talk 112,000 .170 (Stip. No. 3) Quality 107,000 .162 (Stip. No. 3} Chef Francisco 89,000 .135 (Stip. No. 3) Sara Lee 27,000 .04 (Stip. No. 1) But see the estimates in Finding of Fact No. 69, which differ substantially from this total. 53. Sara Lee frozen pie sales have declined from $7,101,100 in fiscal 1973-74 to $4,525,100 in fiscal 1976-77, a 36 percent decline in dollar sales. During the same period, total retail sales of all companies’ frozen dessert pies increased by 45 percent. During this same period, Sara Lee’s unit sales' have declined 45 percent, from 1,179,-300 cases in 1973-74 to 649,600 cases in 1976-77. (Stipulation No. 1, par. 6; Tr. 7-153; Tr. 9-4, 9-6.) 54. Sara Lee is not one of the leading sellers of retail frozen dessert pies. Sara Lee’s currently estimated share of all retail frozen dessert pies sold is 1.6 percent (GX 11); in Sara Lee’s fiscal 1977 retail frozen dessert pie sales of $4,498,200 (Stipulation No. 1, par. 6) were less than the 1977 retail frozen pie sales of Mrs. Smith’s (GX 48), ITT (Morton), Ward Foods (Johnston and Simple Simon), Lloyd J. Harriss, RCA (Banquet), Pet Inc. (Pet-Ritz), Chef Pierre, Fasano, Quality Baking Co. (Mountain Top), (Stipulation No. 3) and Edwards (Tr. 2-174.) (The apparent discrepancy between the estimate of 1.6 percent and the total sales of $4,498,000 may be explained on the basis that the 1.6 percent is an estimate of Sara Lee’s current position as of December 28,1977. The total sales of $4,498,000 were for the fiscal year ending June 30, 1977. This total when compared to sales of other frozen dessert pie companies for the period ending December 31, 1977, shows a 3.1 percent share for Sara Lee.) 55. Chef Pierre does not regard Sara Lee as a significant competitor. Thus, Chef Pierre has not priced or promoted its pies against Sara Lee pies. (Tr. 8-27, 8-29.) Similarly, Edwards Pie Co. did not name Sara Lee as a major competitor in the retail frozen dessert pie business (GX 6, p. 4). Neither Mrs. Smith’s nor Heinz view Sara Lee as a significant competitor (Tr. 5-60; Tr. 3-32.) No witness testified that the merger would reduce competition between Sara Lee and Chef Pierre. (Tr. 9-7, 9-8, 9-11.) 56. Sara Lee has been forced to discontinue a number of varieties of retail frozen dessert pies due to insufficient sales and poor distribution (Tr. 7-150.) As stated above, Sara Lee now sells only six varieties of retail frozen dessert pies in one size (see finding no. 7, supra.) This may be contrasted, for example, with Mrs. Smith’s which produces approximately 40 different sizes and varieties of retail frozen dessert pies (Tr. 4-78 to 4-79.) 57. Sara Lee’s position in the retail frozen dessert pie market is even weaker than appears from its level of sales. In order for a company to compete successfully in the retail frozen dessert pie business, it is necessary that the company’s products be available to consumers on a regular basis. Sara Lee retail frozen pie distribution is spotty (Tr. 7-153). In many of the areas where Sara Lee sells retail frozen pies, only a few chains carry them. Moreover, those stores which do stock Sara Lee pies for the most part only carry apple and possibly pumpkin in season. (Tr. 7-153 to 7-154; 9-4.) 58. Sara Lee’s pie sales and distribution are even more seasonal than those of most other pie sellers, since its largest selling variety is pumpkin. For most pie producers, including Chef Pierre, the largest selling variety is apple. Pumpkin pies accounted for 32 percent of all Sara Lee pie sales in fiscal 1976-77 (compared with 18 percent in fiscal 1973-74). Pumpkin and custard pies combined accounted for 17 percent of Chef Pierre retail pie sales in 1977. Sara Lee’s pumpkin pie sales also tend to be more promotional in nature, and are sold on a “fully guaranteed” basis, i. e., Sara Lee agrees to take back all unsold pumpkin pies. (Stipulation No. 1, pars. 6, 9; Tr. 7-154 to 7-155.) 59. Reflecting Sara Lee’s marginal position in the frozen dessert pie business, Sara Lee’s frozen pie operations have been consistently unprofitable for several years and Sara Lee’s outlook for the future of its retail frozen dessert pie business is described by Sara Lee’s president, Mahoney, as “very bleak” (Tr. 7-155, 7-161). 60. It has been stipulated that Sara Lee does not produce institutional frozen dessert pies (Stipulation No. 1, par. 6), which as stated in Finding No. 14, represent the major portion of Chef Pierre’s sales. (Tr. 9-7, 9-8.) 61. Both retail and institutional frozen dessert pies face significant competition not only from fresh pies but also from homemade pies and other dessert products. Because there is a high degree of substitutability between frozen dessert pies and other dessert items, there is also a significant degree of price sensitivity between frozen dessert pies and other dessert products. If the price of frozen dessert pies were to rise significantly, consumers and food service operators would switch to other dessert products. (Tr. 8-139, 140.) 62. Frozen pie shells, which are used with canned or home-made pie fillings, also compete with pies for retail freezer case space and for the consumer’s and food service operator’s dollar. (Tr. 4-65 to 4-66; Tr. 8-23; Tr. 8-140.) 63. The retail frozen dessert pie business is characterized by intense competition. (Tr. 6-114; Tr. 7-83.) This competition includes price competition and promotional allowances and activity. (Tr. 5-46 to 5-48; Tr. 4-39 to 4-41.) Sara Lee sells a large portion of its total pie sales through promotions. (Tr. 7-160 to 7-161.) Such promotional activity indicates competitive industry performance. (Tr. 8-163 to 8-164.) 64. To the extent that the retail frozen dessert pie market can be characterized as concentrated, such concentration is largely attributable to a single firm, Mrs. Smith’s, which has a market share of approximately 40 percent (Tr. 5-75; Tr. 4-12; Tr. 8-160). High concentration ratios are not regarded as significant by industrial organization economists in the absence of high barriers to entry. In addition, there has been no trend toward concentration in the retail frozen pie market. (Tr. 8-162 to 8-163.) To the contrary new competitors have recently entered the market, Heinz and Mountain Top; existing manufacturers are seeking to expand their product lines; (Tr. 5- 16 and 17), and existing manufacturers are expanding into new geographic markets. (Tr. 6-53 and 6-88.) 65. The sale of institutional frozen dessert pies also is highly competitive. (Tr. 6- 114; 9-28 to 9-34.) Competitors described the institutional pie business as “viciously competitive” (Tr. 3-188; see also Tr. 5-134). 66. In the institutional dessert pie business, fresh-baked pies compete with frozen pies in sales to food service operators. (See Finding No. 29, supra; Tr. 5-146 to 5-147; Tr. 8-89, 8-102 to 8-103; Tr. 8-7, 8-13, 8-22 to 8-23, 8-42; Tr. 8-64; Tr. 7-119 to 7- 120.) 67. There are a large number of producers and sellers of retail frozen dessert pies, institutional frozen dessert pies, or both, other than Sara Lee and Chef Pierre. (Tr. 8- 160 to 8-161.) They include some large companies of which the frozen dessert pie business is a division: Kellogg Co. (Mrs. Smith’s), Pet Inc. (Pet-Ritz), ITT (Morton), RCA (Banquet), Lloyd J. Harriss Pie Co., Ward Foods Inc. (Johnston), Quality Baking Co. (Mountain Top), Edwards Pie Co., Fasano Pie Co., H. J. Heinz Co., Awrey Bakeries Inc., Field’s Inc., Vera’s Pie Co., Table Talk (Stipulation No. 3), Wick’s Pies (Tr. 6-27), Best Pie Co. (Tr. 3-98 to 3-99), Quality Home Bakers/Bowie Pie Co. (Tr. 7-36), Kitchen Made, Gourmaid Frozen Foods, Sterling Pie Co. (Tr. 5-184), Progressive Bakeries, and Jessie Lord Inc./International House of Pies (Tr. 7-39 to 7-40). In addition, companies including Howard Johnson Co. and Marriott Corp. produce institutional frozen dessert pies for their own use. (Tr. 2-177; Tr. 5-136 to 5-137; Tr. 8-42.) Mrs Smith’s also sells its institutional frozen dessert pies to Howard Johnson (Tr. 5-136 to 5-137) indicating the existence of competition between frozen pies produced by restaurant chains for their own use and those purchased from an outside manufacturer. 68. In measuring total production and sale of institutional frozen dessert pies by all manufacturers, frozen dessert pies manufactured by Mrs. Smith’s and baked-off and distributed to food service operators through Mrs. Smith’s “Pie Kitchens” also must be considered. The Mrs. Smith’s “Pie Kitchens” are a means to compete with private label frozen dessert pies and “an attempt to move ahead and build a frozen pie business” (Tr. 4-136, emphasis added). The Smith “Pie Kitchens” have also made sales of unbaked institutional frozen dessert pies to Best Pie Company. (Tr. 4-61.) Pie Kitchens’ sales were approximately $10 to $11 million in 1976 (Tr. 4-19), and the internal sales reports of Mrs. Smith’s Frozen Division for 1977 place an intra-company transfer value of $4.3 million on the frozen pies transferred to the Pie Kitchens (GX 48). 69. The plaintiff has failed to prove that total industry sales of institutional frozen dessert pies were only $58.8 million in 1976 as alleged in the complaint. Edwards Pie Co. estimated that total annual sales of institutional frozen dessert pies are approximately $160 million. (GX 6, p. 3.) The defendants’ economic expert, Mr. Oliver, estimated that total sales of institutional frozen dessert pies are at least $100 million annually and may be much higher. (Tr. 9-21 to 9-28.) The lowest estimate ($72 million in 1977) was that of Mrs. Smith’s marketing manager for waffle products, Charles Palledino, who virtually ignored most small producers in arriving at his estimate. (Tr. 5-164.) Mrs. Smith’s projects however, that sales of institutional frozen dessert pies will total $90 million in 1978 with a 6 percent to 8 percent growth rate. (DX 5A.) 70. The impact of institutional fresh pie sales on the institutional frozen dessert pie market cannot be ignored. (See Tr. 5-146 to 5-147; 8-22 to 8-23.) Total sales of fresh baked institutional pies are estimated to exceed frozen institutional pie sales (Tr. 8-22) and may be as high as $300 million. (Tr. 9-16 to 9-17.) Although there is a retail frozen dessert pie market, there is not an institutional frozen dessert pie market nor is there a frozen dessert pie market. 71. Mrs. Smith’s Pie Company alone had institutional fresh pie sales of some $30 million in 1976. (Tr. 4-16.) Fresh pies constituted 85 percent of all revenues from Mrs. Smith’s “dessert services group,” which consisted of seven facilities serving about 25,000 institutional customers in a nine-state area. (Tr. 4-14.) 72. In assessing whether producers are performing competitively, one of the indicators to which economists look is the level of profitability in the several companies. If there is high profitability which has tended to remain stable over a period of years, this is thought to signify that there is an absence of competition. On the other hand, if profitability is only average or below average in comparison with other industries, this is regarded as an indication that there is competitive performance. Profitability among frozen pie producers approximates at most the average level of profitability for all manufacturing industries. (Tr. 8-138 to 8-139; 8-165 to 8-169; 6-68; 7-46 to 7-47.) 73. Capital requirements necessary to enter the manufacture of frozen dessert pies are not high. Utilizing used machinery one could acquire the necessary equipment to enter the business competitively for as little as $25,000 to $30,000. (Tr. 8-18 to 8-21.) Sources of such used equipment exist in Philadelphia, New York, Chicago, and Los Angeles. (Tr. 8-19.) Chef Pierre plans to build a new production facility in Forest, Mississippi which will virtually duplicate the company’s present plant in Traverse City, Michigan, which has a capacity of 20,000 pies per hour. (Tr. 8-18.) The new plant will cost approximately $6 million. (Tr. 8-29 to 8-30.) 74. No significant patents are involved in the manufacture and sale of frozen dessert pies, nor is the technology involved, which is largely common to the fresh-bake pie business and the frozen food industry generally, particularly sophisticated. (Tr. 8-15 to 8-17.) 75. Both the retail and institutional pie businesses are characterized by low levels of advertising and brand differentiation. For example, Mrs. Smith’s, which has the largest advertising expenditures for frozen dessert pies, spent approximately $1,418,800 on media advertising (other than newspapers and spot radio) in 1977 (GX 54 and 55). These advertising expenditures represent less than 3 percent of Mrs. Smith’s sales of retail frozen dessert pies. This may be compared, for example, with the ready-to-eat breakfast cereal industry, where advertising to sales ratios average 12 percent to 15 percent. (Tr. 8-153 to 8-159.) Mrs. Smith’s is the only frozen pie producer which engages in national television advertising. (Tr. 7-61.) 76. Advertising levels are far lower for institutional pies than for retail pies, and institutional pie advertising is limited for the most part to trade magazines. (Tr. 7-65; Tr. 7-62 to 7-63; Tr. 8-24, 8-54.) For example, Mrs. Smith’s institutional advertising amounts to only about 0.00003 percent of Mrs. Smith’s institutional pie sales. (Tr. 3-135.) 77. Particularly in selling to institutional customers, brand names are not significant. Approximately 60 percent of Chef Pierre’s sales of institutional frozen dessert pies are sold under private labels rather than under the Chef Pierre label. (Stipulation No. 1, par. 9.) 78. H. J. Heinz Co. recently entered the manufacture and sale of frozen dessert pies (both' retail and institutional) (Tr. 3-4 to 3-5). Mr. Audette of Heinz, which currently produces only cream pies, also recognizes that “[TJhere is a good potential” for Heinz’ entry into retail frozen fruit pies and that this capability could also be used for institutional fruit pies. (Tr. 3-24, 3-33.) In addition, Quality Baking Co. (Mountain Top) recently entered the production and sale of institutional frozen dessert pies. (Tr. 6-105; Tr. 7-34.) Balta is considering entry into the frozen pie business. (Tr. 4-90.) 79. Subsequent to the announcement of the proposed merger of Chief Pierre into Consolidated Foods, an agreement was reached for the sale of the Lloyd J. Harriss Pie Co. to two persons, one of whom has had some experience in the food industry and is not presently engaged in the pie business. (Tr. 4-34 to 4-38; Tr. 7-67 to 7-68.) 80. There are no significant barriers to entering the manufacture and sale of either retail or institutional frozen dessert pies. (See Tr. 8-142 to 8-160; 9-30 to 9-33.) 81. Sara Lee attempted to produce and sell institutional frozen dessert pies in 1970-72, but decided to cease manufacturing institutional pies because it was unable to achieve an acceptable level of sales or to achieve profitability. In view of its previously unsuccessful attempt to enter the institutional frozen dessert pie business, and in view of its declining position in the retail .frozen dessert pie business, Sara Lee cannot be perceived as a likely potential entrant into the production and sale of institutional frozen dessert pies. (Tr. 7-152, 7-164, 7-170 to 7-171; Tr. 8-26.) 82. There are producers of retail frozen dessert pies whose sales exceed those of Sara Lee and who do not currently produce institutional frozen dessert pies. These firms include Morton (which is part of ITT Corp.), Banquet (which is part of RCA), and Pet-Ritz (which is part of Pet Inc.). (Stipulation No. 3.) 83. Firms producing frozen dessert pies measuring less than eight inches in diameter (“mini-pies”) for sale to institutional customers must be considered as potential entrants into the production and sale of traditional 10-inch institutional frozen dessert pies. The equipment used to manufacture mini-pies also can be used to produce larger pies. (Tr. 8-161 to 162; 9-48.) 84. Firms producing and selling institutional fresh-baked dessert pies which do not now produce frozen pies also must be considered as potential entrants into the production and sale of institutional frozen dessert pies. (Tr. 8-148 to 150; 9-48; 9-67 to 9-70; 9-78.) Fresh pie producers have all of the equipment and know-how necessary to produce frozen dessert pies, with the exception of packaging and freezing equipment. (Tr. 7-76 to 7-77; Tr. 8-16.) Some fresh pie producers such as Balta Bros., already have freezer capacity. (Tr. 4-90, 4-119.) Several leading producers of institutional frozen dessert pies, including Mrs. Smith’s, Lloyd J. Harriss, Chef Pierre, and Edwards, as well as Table Talk and other firms, started out as producers of institutional fresh baked pies. (Tr. 3-134; Tr. 2-169; Tr. 8-7 to 8-8, 8-38.) Edwards, for example, entered the institutional frozen dessert pie business in 1968 and has enjoyed good growth since that time. (Tr. 2-169 to 2-170.) 85. A firm such as Pillsbury Co., which produces institutional dessert pies for its “Poppin Fresh” chain of pie shops, also must be considered as a potential entrant into the production and sale of institutional frozen dessert pies. (Tr. 8-162.) 86. The evidence does not show any perception of Sara Lee as a potential entrant into the manufacture and sale of institutional frozen dessert pies which has in fact tempered oligopolistic behavior by existing institutional frozen dessert pie producers. 87. Institutional frozen food distributors handle products on a non-exclusive basis. That is, unlike brokers, who act as a substitute for the manufacturer’s sales force and do not represent competing lines, distributors can, and do, handle competing products. (Tr. 8-85.) 88. Distributors of institutional frozen dessert pies normally sell more than one brand of frozen dessert pie. (Tr. 8-82.) This decision is generally influenced by the distributor’s end user institutional customers who often prefer particular brands of pies. (Tr. 3-93; Tr. 8-113; Tr. 7-121, 7-124.) Thus, in the marketing of institutional frozen dessert pies, producers direct their sales efforts to end-user customers (food service operators) as well as to their immediate customers (institutional food distributors) in order to create demand for their products. (Tr. 3-17; Tr. 5-107, 5-108; Tr. 8-110; Tr. 7-122; Tr. 7-126 to 7-127.) Even when the distributor carries a private-label brand, it is not unusual for him also to sell one or more additional brands. (Tr. 4- 27 to 4-28; Tr. 5-121; Tr. 8-88.) 89. Two Consolidated divisions, Monarch/Pearce-Young-Angel (“PYA”) and, to a lesser extent, Booth Fisheries, distribute foot products to institutional customers. These divisions are operated as separate profit centers. Consolidated imposes no requirement that these units purchase from Sara Lee, or any other Consolidated units, or refrain from purchasing products competitive with those offered by Sara Lee or any other Consolidated unit. (Tr. 7-156 to 7-157; Tr. 8-92 to 8-93; Tr. 8-73.) On the contrary, Consolidated requires its subsidiary companies to deal with one another at “arm’s length.” (Tr. 7-157; 8-92.) 90. Monarch/PYA currently distributes frozen dessert products made by various manufacturers, including Heinz and Mrs. Smith’s, which are directly competitive with products offered by Sara Lee. (Tr. 8-93; Tr. 3-41 to 3-42.) 91. There are approximately 2400 institutional frozen food distribution outlets in the United States. Mrs. Smith’s sells to about 1000 of these, ranging from the largest institutional food distributor, CFS-Continental, Inc., to “any distributor that has the facilities to handle frozen products.” CFS-Continental purchases private-label institutional frozen dessert pies from Mrs. Smith’s and Harriss. (Tr. 5-119, 5-140; Tr. 5- 162, 5-192; Tr. 7-27 to 7-31.) 92. Several producers of institutional frozen dessert pies including Mrs. Smith’s and Edwards sell their products directly to food service operators which handle their own distribution, bypassing institutional food distributors with respect to such sales. (Tr. 5-129; Tr. 2-167.) 93. There has been no showing that, if the merger is consummated, present and potential suppliers of institutional frozen dessert pies will be foreclosed from opportunities to sell to Monarch/PYA and Booth Fisheries. (Tr. 8-92 to 8-93; Tr. 8-73.) In any event, even if Monarch/PYA and Booth Fisheries were foreclosed as customers to frozen dessert pie manufacturers other than Chef Pierre, there is no likelihood that such other manufacturers would be foreclosed from effective distribution of their products in view of the nature of the institutional dessert pie market and the availability of multiple distribution outlets and methods available to them. CONCLUSIONS OF LAW 1. This court has jurisdiction of this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. § 25. 2. The manufacture and sale of dessert pies is a relevant product market, and the United States as a whole is a relevant geographic market, within which the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods might be measured. 3. The plaintiff has failed to prove any relevant geographic submarket within which there can be measured the probable effect on the dessert pie market of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods. 4. Plaintiff has failed to sustain its burden of proving the boundaries of the dessert pie market because: (a) Fresh and frozen dessert pies are competing products in this market; (b) The manufacture and sale of fresh pies is a substantial part of the dessert pie market; (c) The size of the dessert pie market cannot be measured without considering the manufacture and sale of fresh pies; and (d) No market statistics were introduced to show the actual size of the dessert pie market. 5. Since the boundaries of the dessert pie market have not been established, the probable effect of the acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation in this market cannot be measured. 6. Market sales statistics do not establish the probable effect on competition in the dessert pie market of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation. 7. The plaintiff has failed to sustain its burden of proving that the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation may be substantially to lessen competition, or to tend to create a monopoly, in the dessert pie market in any section of the country. 8. The manufacture and sale of retail frozen dessert pies is a relevant product submarket, and the United States as a whole is a relevant geographic market, within which the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation might be measured. 9. The plaintiff has failed to prove any relevant geographic submarket within which there can be measured the probable effect on the retail frozen dessert pie market of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation. 10. Market share statistics do not establish the probable effect on competition in the retail frozen dessert pie submarket of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation. 11. The plaintiff has failed to sustain its burden of proving that the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation may be substantially to lessen competition, or to tend to create a monopoly, in the retail dessert pie submarket in any section of the country. 12. The manufacture and sale of institutional dessert pies is a relevant product submarket, and the United States as a whole is a relevant geographic market, within which the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation might be measured. 13. The plaintiff has failed to prove any relevant geographic submarket within which there can be measured the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods on the manufacture and sale of institutional dessert pies. 14. Plaintiff has failed to sustain its burden of proving the boundaries of the institutional dessert pie submarket because: (a) Fresh and frozen dessert pies are competing products in this submarket; (b) The manufacture and sale of fresh pies is a substantial part of the institutional dessert pie submarket; (c) There is no separate institutional frozen dessert pie submarket; (d) The size of the institutional dessert pie submarket cannot be measured without considering the manufacture and sale of fresh pies; and (e) No market statistics were introduced to show the actual size of the institutional dessert pie submarket. 15. Since the boundaries of the institutional dessert pie submarket have not been established, the probable effect of the acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation in this submarket cannot be measured. 16. Market sales statistics do not establish the probable effect on competition in the institutional pie submarket of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation. 17. The plaintiff has failed to sustain its burden of proving that the probable effect of the proposed acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation may be substantially to lessen competition, or to tend to create a monopoly, in the institutional dessert pie submarket in any section of the country. 18. There are no high entry barriers to the dessert pie market, to the retail frozen dessert pie submarket, or to the institutional dessert pie submarket. 19. The plaintiff has not established that the acquisition of Chef Pierre, Inc., by Consolidated Foods Corporation may be anti-competitive in that there will be eliminated from the institutional dessert pie sub-market a potential competitor. 20. The plaintiff has not established that Sara Lee or Consolidated Foods was perceived by anyone as a potential entrant into the institutional dessert pie submarket or that its presence “standing in the wings” in any way tempered oligopolistic behavior on the part of any manufacturers or sellers already in the market. 21. The plaintiff has failed to prove that any substantial vertical foreclosure might result from the proposed merger. 22. The plaintiff has failed to prove that the acquisition by Consolidated Foods of Chef Pierre may substantially lessen competition or. tend to create a monopoly in any line of commerce in any section of the country. OPINION This is a civil anti-trust suit in which the Department of Justice has sought an injunction prohibiting the merger of two frozen dessert pie producers, Consolidated Foods Corporation and Chef Pierre, Inc. On May 10,1978,1 issued an order accompanied by my Findings of Fact and Conclusions of Law, in which I denied all injunctive relief. This opinion will set forth my reasoning and analysis in support of that ruling. Through its Anti-Trust Division, the Justice Department filed the complaint in this matter on April 13, 1978, charging that the proposed merger would violate section 7 of the Clayton Act. Jurisdiction is vested in this court by section 15 of the Clayton Act. An eight day trial produced a record of some 1600 pages, together with a substantial quantity of exhibits. After reviewing these materials and the able arguments of counsel, I concluded that the Government failed to sustain its burden of proof, and that a violation of section 7 of the Clayton Act had not been shown. As with any section 7 case, in order to resolve the issues presented, my task is “to describe the companies involved, analyze the product and geographic market in which they compete, and explore the structure of the industry affected by the merger, to the end that we may properly assess the probable effects of the merger on competition.” Stanley Works v. F.T.C., 469 F.2d 498 (2d Cir. 1972). I. The Companies and the Industry Consolidated Foods Corporation is a large conglomerate, ranking 78th in Fortune’s 1977 Directory of the Five Hundred Largest U.S. Industrial Corporations. One of Consolidated’s divisions is the Kitchens of Sara Lee, a major producer of dessert products. While Sara Lee is an industry leader with regard to such sales as cheese cake and coffee cake, controlling 95 percent of the former and 70 percent of the latter, the company’s sales of frozen dessert pies have been conspicuously unimpressive. Indeed, Sara Lee’s frozen pie sales declined from over $7 million in 1973-74 to about $4.5 million .in 1976-77 despite an expanding market during that period. Chef Pierre, Inc., is a Delaware corporation with its principal place of business in Traverse City, Michigan. At its Traverse City plant, Chef produces a wide variety of frozen dessert pies, and it markets them with considerably greater success than does Sara Lee. Chef’s total frozen pie sales in 1977 exceeded $36 million. To understand the frozen dessert pie business, one must grasp at the outset the important distinction between retail and institutional sales. Retail pies are generally sold through supermarkets and grocery stores to consumers for home use. Most retail frozen dessert pies are eight inches in diameter, and their packaging is design-oriented in order to attract the consumer’s attention. Institutional pies, on the other hand, are sold through food distributors to restaurants, hospitals, schools, etc., to be consumed by the slice on the premises. These pies typically are ten inches across and they are packaged in plain boxes. For all practical purposes, Sara Lee’s sales are exclusively retail. In 1976-77, the company had less than $27,000. in institutional sales, and these consisted primarily of retail pie seconds sold to the State of Texas. Sara Lee’s $4.5 million volume placed it eleventh among thirteen major retail frozen dessert pie producers in 1977, with 3.1 per cent of the retail market. Chef Pierre, by contrast, leads the field of institutional frozen dessert pie manufacturers. Chef’s $25 million in sales, amounted to 39.3 percent of the institutional frozen pie business in 1977. In addition, the company does a respectable retail trade as well. Its $10,248,000 in sales makes Chef Pierre the fourth ranked producer with seven percent of the retail market- institutional frozen dessert pies are sold, for the most part, through institutional frozen food distributors, of which there are some 2,400 throughout the United States. Three of these, Monarch/Pearce-Young-Angel, Harrison House, and Booth Fisheries, are owned by Consolidated. It is a common practice for a distributor or a group of distributors to adopt a “private label.” When a manufacturer sells to such a distributor, he packages the pies under the appropriate private label rather than his own brand name. About 60 percent of Chef Pierre’s institutional pies are sold in this manner. A factor that must not be overlooked in analyzing the frozen dessert pie business is the degree of competition from other dessert products in general, and from fresh pies in particular. Because of the high degree of substitutability, there is considerable price sensitivity between frozen pies and other dessert products. Thus, if the price of frozen pies was to rise significantly, consumers and institutional food service operators would probably switch to other dessert products. This is particularly true with regard to institutional frozen pies, which must combat very keen competition from fresh pies. II. The Relevant Product Markets Having briefly described the companies and the industry in which they compete, I must define the product market or line of commerce in which the effects of this merger are to be measured. The government argues that frozen dessert pies constitute a relevant product market for the purposes of this case, and that retail frozen dessert pies and institutional frozen dessert pies are two relevant submarkets. The parties have stipulated that retail frozen dessert pies are a relevant sub-market, and I have no quarrel with their conclusion. In Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), the Supreme Court explained that within a broad product market, “well-defined submarkets may exist which, in themselves, constitute product markets for anti-trust purposes.” 370 U.S. at 325, 82 S.Ct. at 1524. The Court identified certain “practical indicia” which might be examined in order to define the boundaries of such a submarket. These included “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.” 370 U.S. at 325, 82 S.Ct. at 1524 (footnote omitted). It is clear that a submarket may exist where less than all these criteria are met. General Foods Corporation v. F.T.C., 386 F.2d 936 (3d Cir. 1967), cert. denied, 391 U.S. 919, 88 S.Ct. 1805, 20 L.Ed.2d 657 (1968); United States v. Black and Decker Mfg. Co., 430 F.Supp. 729 (D.Md.1976). In fact, the presence of as few as three Brown Shoe indicia has been held to define a distinct submarket. Reynolds Metal Co. v. F.T.C., 114 U.S.App.D.C. 2, 309 F.2d 223, 227 (1962). Under several of these criteria, retail frozen dessert pies qualify as a separate submarket. A number of witnesses testified that the industry and the public both recognize this submarket as a separate economic entity. Selling Areas Marketing, Inc. (SAMI) is a research firm owned by Time-Life, Inc., which measures the market shares of producers within a given industry in various geographic sections of the country. The data it produces is purchased at considerable expense by manufacturers in the frozen pie industry and it is relied upon by them in developing their marketing strategies. SAMI data is strictly oriented to retail sales and it recognizes the retail submarket as a separate economic concern. Chef Pierre reports retail and institutional sales separately on its Form 10-K reports filed with the Securities and Exchange Commission. Furthermore, the packaging of retail frozen pies is a distinct characteristic since it must attract the consumer’s attention, while institutional pies are packaged in plain boxes. Retail frozen pies are also more expensive than institutional pies, especially on an ounce for ounce basis. Finally, there clearly are specialized vendors for retail frozen pies. Many food brokers, acting as sales agents for manufacturers, specialize in the sale of retail pies, and those that sell both retail and institutional maintain separate staffs for each. Thus, I have no problem agreeing that the sale of retail frozen dessert pies constitutes a relevant line of commerce within which to measure the effects of this merger. The government further argues that, like their retail counterparts, institutional frozen dessert pies also constitute a relevant product market. I cannot agree with this contention. It is clear from the evidence presented at trial that institutional frozen dessert pies compete so regularly and intensely with institutional fresh pies that together they constitute a relevant line of commerce. To divide them into separate product markets is inconsistent both with economic reality and with the purposes of the Clayton Act. Even under the highly mechanical approach of the seven Brown Shoe criteria, supra, it appears that fresh and frozen institutional pies should be included within the same product market. Noting once again that fewer than all the criteria need be satisfied, a number of qualities common to both fresh and frozen institutional pies can be gleaned from the record. While one product is frozen and the other is not, the end uses of both are identical. Manufacturing facilities for both products are virtually the same, with the sole exception that one involves a freezer and the other an oven at the end of an otherwise identical production line. The ultimate customers for both are absolutely the same, and prices are quite similar.’ Variations in the prices of fresh and frozen institutional pies are caused by the same factors, i. e., labor, ingredient, and overhead costs. There was also testimony that each is sensitive to changes in the price of the other. Application of the Brown Shoe criteria, therefore, requires that fresh and frozen institutional pies be included in the same product market. Were this to end the inquiry however, there would be no basis for excluding fresh pies from the retail market, for many of the similarities noted above also exist between fresh and frozen retail pies. Nevertheless, this record does not contain any indication of substantial competition between fresh and frozen pies on the retail side. If such competition exists, it is not shown by the evidence presented in this case. Absent a showing of competition between the two products, there is no justification for including them in the same product market, despite the presence of certain similarities under the Brown Shoe indicia. See United States v. Connecticut National Bank, 418 U.S. 656, 94 S.Ct. 2788, 41 L.Ed.2d 1016 (1974). As to institutional pies, by contrast, there is compelling evidence in favor of a finding that fresh and frozen pies are fiercely competitive. No fewer than five Government witnesses and at least one defense witness testified that fresh and frozen pies compete with one another at the institutional level. At the same time, no witness testified that they did not compete. Mrs. Smith’s Pie Co., the largest dessert pie producer in the United States, developed its pie “Kitchens”, in which frozen pies are baked in regional facilities and sold as fresh, as an “end-run” around fresh pies, for the express purpose of meeting competition posed by fresh pies to the company’s institutional 'frozen pie business. The Kitchen operation accounted for ten to eleven million dollars in sales during 1977. The evidence also showed that one large distributor actually discontinued its line of Mrs. Smith’s frozen institutional pies because of the intense competition from Mrs. Smith’s fresh pies. There was further testimony that this distributor had also lost a large institutional buyer of Smith’s frozen pies to Smith’s fresh operation, and that it was trying to persuade other buyers of fresh pies to switch to frozen. At the same time, one fresh pie company was said to be “reeling” under the pressure of competition from the frozen industry. Finally, it should be noted that, like many current frozen pie companies, Chef Pierre itself had its genesis in the fresh pie field, and entered the frozen industry when market conditions made it opportune to do so. Thus, the record is replete with evidence showing that