Task: songer_trialpro

What follows is an opinion from a United States Court of Appeals. You will be asked a question pertaining to issues that may appear in any civil law cases including civil government, civil private, and diversity cases. The issue is: "Did the court's ruling on procedure at trial favor the appellant?" This includes jury instructions and motions for directed verdicts made during trial. Answer the question based on the directionality of the appeals court decision. If the court discussed the issue in its opinion and answered the related question in the affirmative, answer "Yes". If the issue was discussed and the opinion answered the question negatively, answer "No". If the opinion considered the question but gave a mixed answer, supporting the respondent in part and supporting the appellant in part, answer "Mixed answer". If the opinion does not discuss the issue, or notes that a particular issue was raised by one of the litigants but the court dismissed the issue as frivolous or trivial or not worthy of discussion for some other reason, answer "Issue not discussed". If the opinion considered the question but gave a "mixed" answer, supporting the respondent in part and supporting the appellant in part (or if two issues treated separately by the court both fell within the area covered by one question and the court answered one question affirmatively and one negatively), answer "Mixed answer". If the opinion either did not consider or discuss the issue at all or if the opinion indicates that this issue was not worthy of consideration by the court of appeals even though it was discussed by the lower court or was raised in one of the briefs, answer "Issue not discussed".

OPINION OF THE COURT
GIBBONS, Circuit Judge.
I. INTRODUCTION
We have before us appeals and cross-appeals from a final judgment entered in a private antitrust case. The following determinations in the district court are being challenged: (1) the finding of a violation of § 7 of the Clayton Act, 15 U.S.C. § 18; (2) the correctness of the trial judge’s calculation of attorney fees and costs; and (3) the propriety of the trial judge’s entry of a divestiture order in a private antitrust case.
The complaint in this complicated litigation was filed on June 14, 1966 by Treadway Companies, Inc. (then known as National Bowl-O-Mat Corp.) and ten wholly-owned subsidiaries through which it operated bowling centers throughout the United States. The plaintiffs charged Brunswick Corporation (Brunswick), a manufacturer and distributor of bowling equipment, with: (1) entering into resale price maintenance contracts in violation of § 1 of the Sherman Act, 15 U.S.C. § 1 (First Claim); (2) monopolizing and attempting to monopolize the business of operating bowling centers in various markets in which Treadway operated competing centers, thus violating § 2 of the Sherman Act, 15 U.S.C. § 2 (Second Claim); and (3) acquiring and operating bowling centers in the Poughkeepsie, New York, Pueblo, Colorado, and Paramus, New Jersey market areas which had the effect of substantially lessening competition or tending to create a monopoly in violation of § 7 of the Clayton Act, 15 U.S.C. § 18 (Third Claim). During a pre-trial conference held on March 6, 1973, the Sherman Act § 1 claim was abandoned. The § 2 Sherman Act claim and the § 7 Clayton Act claim went to trial. The jury returned a verdict in Brunswick’s favor on the Sherman Act claim. No appeal has been taken from this determination. However, the jury found in favor of three of the plaintiffs — Pueblo Bowl-O-Mat, Inc., Holiday Bowl-O-Mat, Inc., and Bowl-O-Mat Para-mus Operations — on the § 7 Clayton Act claim. Damages were awarded in the following amounts:
(1) Pueblo Bowl-O-Mat, Inc., Pueblo, Colorado $ 964,830
(2) Holiday Bowl-O-Mat, Inc., Poughkeepsie, New York $ 298,800
(3) Bowl-O-Mat Paramus Operations, Paramus, New Jersey $1,094,400
Pursuant to § 4 of the Clayton Act, 15 U.S.C. § 15, the district court trebled each of these awards, and on May 31, 1973 entered judgment on the damage claims for $7,074,090. As a result of Brunswick’s post-trial motions, which were in all other respects denied, the district court granted a new trial as to Pueblo Bowl-O-Mat, Inc., unless Pueblo consented to a remittitur of $499,050. Treadway Cos., Inc. v. Brunswick Corp., 364 F.Supp. 316, 326 (D.N.J.1973) (deeision on post-trial motions). Pueblo did consent, and on October 5, 1973 an order was entered reducing Pueblo’s treble damage recovery to $2,395,440. Thus the total damage award was $6,575,040. The district court also considered plaintiffs’ application for an award of costs and attorney fees. On April 2, 1974 judgment was entered in the district court awarding $428,468 as attorney fees, and $18,509.32 as costs. On September 24, 1974, after the appeals both by plaintiffs and Brunswick from this award were dismissed by this court, the district court entered an order pursuant to Rule 54(b), Fed.R.Civ.P. directing the following: (1) that the May 31, 1973 judgment, and the October 5, 1973 and April 2, 1974 orders, be entered as final; (2) that the entries be made nunc pro tunc as of their original dates for the purpose of fixing the time from which interest at the legal rate would accrue; (3) that the entries be made as of September 24, 1974 for the purpose of taking any appeals. The district court retained jurisdiction over the claim for equitable relief pursuant to § 16 of the Clayton Act, 15 U.S.C. § 26.
Brunswick appeals from the damage award of $6,575,040; from the award of attorney fees and costs; and from the district court’s decision awarding interest from the time of the original judgment and order rather than from the time of the Rule 54(b) certification. Brunswick does not dispute the amount of the award of attorney fees and costs assuming the jury verdict is allowed to stand. It contends, howev.er, that if the verdict is set aside the award of fees and costs must also be set aside. Treadway appeals from the calculation of the fee award contending that it was too low.
On November 15, 1974, the district court filed an opinion, and on January 9, 1975 entered a final judgment, pursuant to § 16 of the Clayton Act, enjoining Brunswick from acquiring any existing bowling centers in the Pueblo, Para-mus and Poughkeepsie/Wappingers Falls areas and ordering divestiture of centers previously acquired in those areas. Brunswick filed an appeal from this judgment. On February 14, 1975 this court entered an order directing that Brunswick’s appeal from the injunction and divestiture judgment (No. 75-1152) be consolidated with Brunswick’s other appeal (No. 74^-2127) and with plaintiffs’ cross-appeal (No. 74-2128).
Brunswick’s contentions, listed below in the order in which they shall be considered, present these questions:
(A) With respect to the jury verdict:
(1) Does the record establish a prima facie violation of § 7 of the Clayton Act by Brunswick?
(2) Are treble damages pursuant to § 4 of the Clayton Act recoverable by litigants in the plaintiffs’ positions solely for a violation of § 7 of the Clayton Act?
(3) Did the court properly instruct the jury as to the elements of a Clayton Act § 7 case?
(4) Was the jury properly instructed on § 4 damages?
(B) With respect to the injunction and divestiture order:
(1) Was there evidence in the record sufficient to support the court’s finding of a Clayton Act § 7 violation?
(2) Does § 16 of the Clayton Act authorize the entry of a divestiture order, at the insistence of a private litigant, to redress a violation of Clayton Act § 7?
Plaintiffs’ main contention on their cross-appeal is that the criteria for fee awards laid down in Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) and reiterated in Merola v. Atlantic Richfield Co., 493 F.2d 292 (3d Cir. 1974), while properly applied by the district court, have no place in fully litigated antitrust actions. Rather, it is argued that these criteria should be applied only in class action settlements.
Virtually all of the issues before us are of first impression in this circuit and many are of first impression nationally. The antitrust questions arise because of the unique interaction among the Clayton Act § 7 which proscribes acquisitions having an effect which “may substantially... lessen competition, or. tend to create a monopoly” and the private remedy provisions of § 4 and § 16 of the same act. A statutory prohibition aimed neither at existing conspiracies nor restraints, nor at existing or attempted monopolizations, but at incipient tendencies, presents problems of private enforcement not frequently encountered. Indeed this is perhaps the first case in which an award of money damages has been made to a private plaintiff for an alleged violation of § 7. Thus the district court was exploring largely virgin antitrust territory. Certain errors were committed in this new territory which warrant a new trial. Reconsideration of the fee award will be required as well.
II. THE INDUSTRY BACKGROUND
Brunswick is one of the two largest manufacturers, distributors and financiers of bowling alley equipment in the United States. Its chief competitor is the American Machine and Foundry Company (AMF), a company about equal in size. Prior to 1964 Brunswick supplied the bowling recreation industry with large quantities of equipment such as lanes and automatic pinsetters. Since this equipment required a substantial capital investment Brunswick also financed the equipment on extended secured credit terms. In the early 1960’s, however, the bowling recreation industry went into a sharp decline. The plaintiffs attribute this decline to overexpansion in the industry. They blame Brunswick for this overexpansion, claiming that it financed too many centers, and in particular, that it saturated certain areas with facilities so as to make competitive success impossible.
Simultaneously with the decline in the industry there occurred a collection problem. Defaults on equipment loans became commonplace. Numerous bowling center proprietors were in such hopeless financial straits that it became clear that there was no reasonable prospect of payment. Exercising its chattel security rights, Brunswick made numerous repossessions, and attempted to dispose of the repossessed equipment at discount prices. Such sales, however, did not keep pace with repossessions. Brunswick’s efforts to lease repossessed lanes to new independent proprietors proved unsuccessful. Over the years Brunswick had borrowed close to $300 million in order to finance the manufacture and sale of bowling equipment. By late 1964 its receivables were in excess of $400 million of which more than $100 million dollars were over 90 days delinquent. Brunswick was clearly in serious financial difficulty.
In an effort to reverse its deteriorating condition, Brunswick’s management decided on a plan. In those cases in which attempts to collect receivables failed, it would repossess the equipment and attempt to sell it in place to third parties. If no sale could be effected Brunswick would then consider operating the failing centers itself if there appeared to be any reasonable prospect that a positive cash flow would result.
In January, 1965 Brunswick formed a Bowling Center Operations Division (BCOD) charged with the responsibility of evaluating centers and operating those which could produce a positive cash flow. This development was disclosed by Brunswick’s president to a meeting of the Bowling Proprietors Association, a retail level trade group, in 1965.
Between 1965 and 1972 BCOD evaluated over 600 defaulting centers for possible operation, commenced operating 222 of these, disposed of 11 to third parties, and closed 43 which proved unable to develop a positive cash flow. The highest number operated by Brunswick at any one time was 169. The largest number of centers taken over by Brunswick for operation in any year was 124 in 1965. Of these, centers in three areas are the subject of this appeal. They are Dutchess Lanes in Poughkeepsie, New York, Belmont Lanes in Pueblo, Colorado, and Fair Lawn Lanes, Interstate Lanes, Ten-Pin-on-the-Mall and Lodi Lanes in or near Paramus, New Jersey.
In each of the local retail market areas a Treadway subsidiary operated a bowling center competing for retail customers with the bowling centers taken over by Brunswick. The parties concede that each of these areas, Poughkeepsie, Pueblo, and Paramus, is a separate retail market for recreational bowling. Tread-way does not manufacture or distribute bowling equipment or supplies.
The method used by Brunswick in taking over the operation of the six centers in issue was not identical. For our purposes, however, we can generalize. The acquisitions in question were by a major manufacturer of bowling equipment and supplies who took over bowling centers by means of stock or asset purchases. These newly-acquired facilities competed horizontally at the retail level with Treadway facilities and were kept in business by Brunswick when they otherwise would have failed.
We can conclude our background survey of the bowling industry by noting that Brunswick now operates the largest number of retail bowling centers in the United States — 167. The next largest retail bowling chain operates only 32 centers, and the rest of the retail market is fragmented among smaller chains and individual operators. It is conceded that the relevant market is local, however, not national. Brunswick’s net assets far exceed the net assets of any other chain of bowling centers and it enjoys those additional advantages which accrue from being the manufacturer of the equipment used in its centers.
III. SUMMARY OF PLAINTIFFS’ § 7 THEORY
This case involves a “deep pocket” manufacturer’s decision to integrate vertically forward into local re;ail markets and to compete with smaller competitors having shallower pockets. The jury verdict in favor of Brunswick on the Sherman Act § 2 claim establishes that this forward integration was not done in an attempt to monopolize the local retail bowling market. Plaintiffs contend, however, that the entry of such a competitor into these markets had the potential for lessening horizontal competition and that such potential lessening of competition suffices to establish a § 7 violation. It is therefore argued that Brunswick’s presence in these markets was illegal, and that plaintiffs suffered damages within the meaning of § 4. These damages were suffered, it is suggested, because in the absence of that illegal presence the acquired centers would have gone out of business thus effectively transferring customers to Treadway’s centers.
IV. WAS A PRIMA FACIE VIOLATION OF § 7 ESTABLISHED?
A. The potential effect on competition.
This case does not present the classic § 7 problem of a merger with, or a purchase of assets from, a competitor on the same competitive level. Nevertheless, Brunswick’s acquisitions had two aspects of possible significance for § 7 purposes. First, Brunswick was a major manufacturer integrating vertically forward into its customer market. Second, it was a giant entering local markets inhabited by pygmies. While both factors may have significance for purposes of § 7, in this case the first factor standing alone is not significant.
A major vice of vertical combinations is market foreclosure to competing manufacturers. See Brown Shoe Co. v. United States, 370 U.S. 294, 323-24, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). But in the bowling industry there is only insubstantial continuous distribution from manufacturer to retailer. The principal products of the manufacturing end of the industry — pinsetters and alleys — are one-shot affairs, and the sales of these products by Brunswick had already taken place long before their reacquisition. It cannot be said, and it has not been shown, that AMF suffered or was likely to suffer any market foreclosure as a result of those reacquisitions. Moreover, Treadway is neither an actual nor a potential competitor at the manufacturing level, and hence is not a potential market foreclosure victim. Thus it probably lacks standing to assert the manufacturer’s market foreclosure issue. In any event, manufacturer’s market foreclosure is not the theory Treadway advances.
The second characteristic of the acquisition, however, is its potential effect on retail level competition. The entry of a giant into a market of pygmies certainly suggests the possibility of a lessening of horizontal retail competition. This is because such a new entrant has greater ease of entry into the market, can accomplish cost-savings by investing in new equipment, can resort to low or below cost sales to sustain itself against competition for a longer period, and can obtain more favorable credit terms. There is evidence from which the jury could have found that several of these factors applied to Brunswick’s acquisitions in the Poughkeepsie, Paramus and Pueblo markets. Treadway urges that this evidence suffices to sustain the verdict that there was a § 7 violation. Brunswick, on the other hand, argues that there must be a showing of actual lessening of competition before the jury can find such a violation. We think, however, that Brunswick’s argument confuses the showing which must be made to sustain recovery under § 4 with that which must be made to show a § 7 violation..
Three § 7 cases suggest that there was sufficient evidence here to go to the jury on the theory that Brunswick’s entry into a local retail market both created the possibility of substantially lessening horizontal retail competition and tended toward the creation of a retail monopoly. Although these cases arose in three different merger contexts, they all involved the potential effect of mergers on horizontal competition.
Brown Shoe Co. v. United States, supra, involved a merger in which a major shoe manufacturer and retailer (Brown) acquired another retailer (Kinney). Thus, the merger had both vertical and horizontal aspects. First, the Court held that the vertical aspect of the merger— Brown’s acquisition of a retailer — had potential market foreclosing effects for competing manufacturers and thus violated § 7. Second, the Court held that the Brown-Kinney combination had a potential for substantially lessening competition at the retail level. This conclusion was reached even though Brown and Kinney, in combination, controlled but a small percentage of the retail shoe market, and even though Brown and Kinney had competed in only a small fraction of the geographic markets before the merger. It is true that since they did compete at retail, at least in a fraction of the geographic markets, the combination fits the classic § 7 pattern of a merger of competitors at the same level. But the significance of Brown Shoe lies less in that fact than in the Court’s analysis of the probable effect of the merger on horizontal retail competition. Brown and Kinney in combination controlled only a small percentage of the retail shoe market. Yet, the Court declined to look at the mere quantitative substantiality of the resulting concentration. Instead it looked at qualitative substantiality. Among the qualitative factors which it mentioned were: (1) the fragmented nature of the retail industry; (2) the ability of a strong national chain to insulate selected outlets from the vagaries of local competition in selected locations; (3) the style leadership of the large chains and its effect on competitors’ inventories; (4) the ability of an integrated manufacturer-retailer to eliminate wholesalers by increasing the volume of its retail purchases from its manufacturing division; and (5) the historical tendency toward concentration in the industry. 370 U.S. at 344-45, 82 S.Ct. 1502. Finally, the court perceived in § 7 a congressional intention to protect small competitors even at the short run expense of consumers. It wrote:
“[EJxpansion is not rendered unlawful by the mere fact that small independent stores may be adversely affected. It is competition, not competitors, which the- Act protects. But we cannot fail to recognize Congress’ desire to promote competition through the protection of viable, small, locally owned businesses. Congress appreciated that occasional higher costs and prices might result from the maintenance of fragmented industries and markets. It resolved these competing considerations in favor of decentralization. We must give effect to that decision.” 370 U.S. at 344, 82 S.Ct. at 1534.
Of the major qualitative substantiality factors referred to in Brown Shoe there is evidence in this case tending to show that at least four may have been operative in the retail bowling recreation industry: a fragmented industry, the ability of a strong national chain to insulate itself from competitive vagaries in a local market, Brunswick’s promotional (style) leadership, and, after the debacle of the early 1960’s, the tendency toward concentration. This is not to suggest that the evidence on any such factor was undisputed.
The qualitative substantiality approach of Brown Shoe pointed out rather clearly that although Brown and Kinney were retail competitors this factor was not of crucial significance for purposes of § 7. Many of the factors could result from the vertical integration of a pygmy into a giant in any wholesale or retail market. Shortly after Brown Shoe Chief Justice (then Judge) Burger so read the case. Reynolds Metals Co. v. FTC, 114 U.S.App.D.C. 2, 309 F.2d 223 (1962). There a manufacturer of aluminum, Reynolds, acquired its customer, Arrow, a converter of aluminum into florist foil. The florist foil conversion industry was a line of commerce which consisted of approximately eight competitors who sold to 700 wholesale florist outlets. The District of Columbia Circuit refused to set aside an FTC order requiring divestiture. The court held, on the authority of Brown Shoe, that Arrow’s assimilation into Reynolds’ enormous capital structure and resources gave it an immediate advantage over its competitors. This advantage might have had the effect of substantially lessening competition or might have tended to create a monopoly.
In 1967 the Supreme Court made explicit what had been implicit in Brown Shoe — that a merger or acquisition fell within § 7 even though the acquiring corporation and the acquired one were not competitors and even though the transaction did not involve potential market foreclosure of suppliers. In FTC v. Procter & Gamble Co., 386 U.S. 568, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967), it affirmed an FTC determination that Procter & Gamble’s acquisition of Clorox Chemical Company in a “product extension” merger violated § 7. Horizontal competition in the household bleach market was threatened, the Court concluded, because Clorox, already a dominant force in that market, would have the benefit of Procter & Gamble’s advertising discounts, retailing distribution network, and deep pocket. New entrants into the bleach market might be discouraged, active competition might be inhibited by fear of retaliation from so strong a force, below cost sales might be financed by Procter & Gamble’s deep pocket.
The marketing of household bleach is, of course, only remotely comparable to the marketing of recreational bowling. But the Court’s analysis in Procter & Gamble shows that Chief Justice Burger’s reading of Brown Shoe was correct. In some industries the acquisition of a competitor by a deep pocket parent can have sufficient potential to harm horizontal competitors so as to violate § 7. There was sufficient evidence of such potential here to submit the case to the jury on the issue of effect on competitors.
B. The “in commerce” requirement.
Section 7 applies when a corporation “engaged in commerce” acquires the stock or assets of “another corporation engaged also in commerce.” At the time this case was tried, the Third Circuit was committed to the proposition that the Clayton Act § 7, like §§ 1 and 2 of the Sherman Act, represented an exercise of Congress’ full powers under the commerce clause. In Transamerica Corp. v. Board of Governors, 206 F.2d 163, 166 (3d Cir.), cert. denied, 346 U.S. 901, 74 S.Ct. 225, 98 L.Ed. 401 (1953), Judge Maris wrote that Congress, in enacting § 7, intended “to exercise its power under the commerce clause of the Constitution to the fullest extent.”
Had the district court been possessed of perfect foresight, it would have foreseen a major development in § 7 law that was just over the horizon. In United States v. American Building Maintenance Industries, 422 U.S. 271, 95 S.Ct. 2150, 45 L.Ed.2d 177 (1975), the Supreme Court considered the jurisdictional reach of § 7. It concluded that unlike §§ 1 and 2 of the Sherman Act, § 7 did not encompass the whole of the commerce power. Effectively, Transamerica Corp. v. Board of Governors, supra, had been overruled. The Supreme Court wrote:
“In sum, neither the legislative history nor the remedial purpose of § 7 of the Clayton Act, as amended and re-enacted in 1950, supports an expansion of the scope of § 7 beyond that defined by its express language. Accordingly, we hold that the phrase ‘engaged in commerce’ as used in § 7 of the Clayton Act means engaged in the flow of interstate commerce, and was not intended to reach all corporations engaged in activities subject to the federal commerce power.” 422 U.S. at 283, 95 S.Ct. at 2157.
Applying this new standard to the record before us is a problem of no little difficulty. In fact, had the district court granted a motion to dismiss at the close of the plaintiffs’ case, on the ground that the new § 7 threshold had not been met, we might have been inclined to affirm that decision. There was, however, some evidence in the record to suggest that at least some of the acquired bowling centers may have made purchases of pins, pinsetter parts and perhaps other supplies, directly from Brunswick, rather than from local distributors. Thus, they arguably were engaged “in the flow of interstate commerce” within the meaning of the new § 7 test. We think it would be unjust, given the intervening change in the law, to find that the evidence presented was insufficient to cross the jurisdictional threshold and thus order that the district court dismiss the case. We think it more appropriate, consistent with the way in which we will ultimately dispose of the case, to have the “in commerce” question relitigated, with the plaintiffs’ being given an opportunity to satisfy the new and more stringent jurisdictional test. See 28 U. S.C. § 2106.
V. DOES § 4 PROVIDE A PRIVATE REMEDY FOR THIS § 7 VIOLATION?
Until the Supreme Court read the first paragraph of § 7 disjunctively in the du Pont eases so that it covered not only the horizontal acquisition of a competitor, but also acquisitions of non-competitors, the possibility of private recovery for a § 7 violation was remote. Du Pont involved a § 7 violation resulting from du Pont’s acquisition of a 23% stock interest in General Motors, a company to which du Pont supplied paint and fabric. Subsequently, minority stockholders of General Motors brought a derivative action against du Pont seeking (1) § 4 damages from du Pont for the § 7 violation found in the government case, (2) damages for violations of §§ 1 and 2 of the Sherman Act, and (3) damages for a breach of a common law fiduciary duty. In an interlocutory decision, the district court held that since § 7 violations involved potential restraints or monopolizations such violations could not support recoveries under § 4 for injuries to business or property. The case proceeded to trial on the Sherman Act and fiduciary duty claims and resulted in a judgment for du Pont. On appeal from this final judgment the Second Circuit reversed the earlier interlocutory holding that a § 7 violation could not be the basis for a § 4 recovery. Gottesman v. General Motors Corp., 414 F.2d 956 (2d Cir. 1969). (Gottesman I). Judge Feinberg’s opinion required, in effect, that the plaintiff show (1) a violation of § 7, (2) an actual injury causally connected to the violation, and (3) damages of a reasonably certain amount flowing from the causally connected injury. The § 7 violation in the du Pont-General Motors case was the potential market foreclosing effect of du Pont’s 23% ownership of a large customer for automotive fabrics and finishes. The great significance of Gottesman I was that it did not hold that only those foreclosed from the General Motors market could recover. General Motors itself, which was not in the fabrics and finishes business, could recover as well. The Second Circuit remanded to the district court for a reconsideration of the evidence in the light of this interpretation of the interaction between § 7 and § 4.
On remand, the district court again held for du Pont. When appealed, the Second Circuit, in an opinion by Judge Maris, affirmed. Gottesman v. General Motors Corp., 436 F.2d 1205 (2d Cir.), cert. denied 403 U.S. 911, 91 S.Ct. 2208, 29 L.Ed.2d 689 (1971) (Gottesman II). It is in this latter opinion that the Second Circuit fully considered the damage issue. Damages were not awarded because General Motors stockholders did not prove that the company paid a higher price to du Pont for fabric and finishes than was charged to other du Pont customers and did not prove that the materials in question could have been purchased on the open market, at lower prices, with equal quality and service. Plaintiffs did not prove, in other words, that General Motors’ business or property had been injured.
Brunswick and Treadway attach diametrically opposed significance to Gottesman I and II. Brunswick’s theory is that there can be a § 4 recovery only if there is an actual foreclosure of competitors or an actual lessening of competition which results in injury.- That approach may work in a situation such as du Pont-General Motors where the § 7 violation depends upon the potential for market foreclosure. A party losing foreclosed sales might then recover lost profits, and the foreclosed customer, such as General Motors, might recover overcharges. But when the § 7 violation depends upon the potential injury to a horizontal competitor at the same level as the acquired company, Brunswick’s approach would virtually preclude recovery by the competitor until he has been driven out of business.
Brunswick also focuses on the “substantially to lessen competition” language of § 7 and urges that no recovery can be had when activity in the marketplace has the effect of preserving a competitor and reducing consumer prices. But to focus on short run beneficial effects on consumer prices is to disregard the disjunctive “or tend to create a monopoly” clause in § 7, and to confuse injury to the public with injury to competitors. The public is not injured while a potential monopolist is vigorously competing to achieve monopoly power, though that injury may come later. Competitors, on the other hand, are injured in their business or property in a short-run period of predatory competition. Brunswick would permit recovery only when there is an injury to competition (such as market foreclosure) and an injury to the competitor.
Treadway’s theory differs from Brunswick’s. It argues that if an acquisition is illegal under § 7 because it has a sufficient potential to injure competition or to tend to create a monopoly, then the mere presence of the violator in the market which in fact produces a causally linked injury to the business or property of the competitor suffices for a § 4 recovery. To require more it urges, is to force a private plaintiff to prove a Sherman Act § 1 or § 2 violation and to eliminate private damage recoveries for § 7 violations. Under Treadway’s theory it can recover the profits on any sales which it lost by virtue of Brunswick’s presence, or any sales which it would have gained in Brunswick’s absence.
Treadway’s interpretation of the interaction between § 7 and § 4 obviously has far-reaching ramifications. Nevertheless we believe it to be more consistent with the purposes of § 7 to hold that illegal presence which causes injury to the business or property of a competitor is compensable under § 4. This is not to say that proof of a § 7 violation will permit every competitor of the acquired company to recover automatically. As can be seen from Gottesman II, the proof of causal connection and of damage still is formidable.
We hold, then, that a horizontal competitor of a company acquired by a deep pocket parent in violation of § 7 can recover damages under § 4 if it shows injury in fact causally related to the violator’s presence in the market, whether or not that injury flows from or results in an actual lessening of competition. In this case there was sufficient evidence to go to the jury on the fact of such injury, although as we indicate hereafter there are difficulties with the manner in which the issue was framed in the court’s charge.
VI. DID THE COURT PROPERLY CHARGE A § 7 VIOLATION?
A. The impact on competition.
In presenting the case to the jury the district court first charged on the Sherman Act § 2 aspects on which, as we pointed out above, there was a verdict for Brunswick. The court then turned to the § 7 count, explaining that there were three elements involved in determining whether Brunswick violated that section: (1) the relevant lines of commerce, (2) the relevant geographic markets, and (3) “the likely anticompetitive effects of the acquisition of bowling centers in the relevant local market.” (4 App. at 2268a). The court then indicated that there were three relevant geographic markets for bowling center operations, and continued:
“You must decide whether the effect of the acquisition of bowling centers by Brunswick may be substantially to lessen competition or tend to create a monopoly in that ‘line of commerce’ and ‘section of the country.’
The determination of this question will establish whether or not this acquisition was a violation of Section 7 of the Clayton Act.
This determination must be made in light of several factors: the primary index of legality is the market share of the acquired and acquiring companies and the extent of concentration in the industry.
An acquisition which produces a firm controlling and undue percentage of the relevant market and resulting in a significant increase in concentration is presumptively unlawful, unless the defendants can overcome this presumption by other evidence to establish the vigor of competition or affirmative justifications in support of the acquisition.
While market shares are not determinative of legality of an acquisition, I instruct you that high market shares and significant increases in concentration may be sufficient in itself to establish a violation of Section 7. Section 7 of the Clayton Act may be violated either by showing a reasonable probability of a substantial lessening of competition in the future or by showing a substantial lessening of competition which has already occurred.” (4 App. at 2269a-70a).
This charge, in the context of the acquisition of retail outlets in relatively small geographic markets, was virtually a directed verdict. Without highlighting other factors, it emphasized the market share held by Brunswick in each of the markets in question, after the acquisitions.
The charge was defective in a number of ways. It did not say, for example, that the jury must consider such factors as the relative financial strength of Brunswick, Treadway, and other competitors. This would have been significant, for although Brunswick was many times larger than Treadway, the latter was still a large public company, and in the bowling recreation industry there are practical limitations on the extent to which capital may be utilized for competitive advantage. Nor did the charge say that the jury must find that Brunswick’s position as an equipment manufacturer or equipment financier gave it any retail market advantage. Certainly if the vertical integration forward had this effect the jury could have found a tendency toward monopolization or the potential for a substantial lessening of competition. The jury also was not asked to take into account the historical tendency in the industry toward concentration or lack of such a tendency.
By emphasizing the quantitative substantiality of the market shares held by Brunswick, to the exclusion of other factors, the court failed to draw the jury’s attention to the indicators of qualitative substantiality referred to in Brown Shoe Co. v. United States, supra, Reynolds Metals Co. v. FTC, supra and FTC v. Procter & Gamble Co., supra. While the quantitative substantiality of the market shares is important in a case involving a merger of horizontal competitors, it is far less important here because Brunswick was not previously in any of the three markets. Brunswick’s entry into the picture did not increase concentration, but only acted as a substitution of competitors.
Treadway would have us overlook the deficiencies in the § 7 charge because extensive “deep pocket” evidence was introduced on the Sherman Act § 2 claim and the jury was instructed as to the relevancy of that evidence to that claim. There are two obstacles here. First, the court in its instructions quite clearly treated the two counts separately, and we must assume that the jury understood as much. Second, because of the verdict in Brunswick’s favor on the Sherman Act § 2 count we cannot speculate as to how the jury evaluated the “deep pocket” evidence.
Because the § 7 charge was inappropriate to the only theory upon which a § 7 violation could in the circumstances of this case be predicated, a new trial is required.
B. The commerce requirement.
The district court charged:
“Each of these plaintiffs, to be entitled to prevail on its claim under Section 7 of the Clayton Act, must prove
First, that the assets acquired by the defendant were acquired from a corporation engaged in interstate commerce.” (4 App. at 2342a).
Elsewhere, however, the court had charged:
“The undisputed evidence shows that Brunswick acquired Belmont Lanes in April 1965. As a matter of law this was an acquisition in a line of commerce, the operation of bowling centers, in a section of the country, namely, the Pueblo, Colorado, metropolitan area.” (4 App. at 2317a).
It gave almost the identical instruction with respect to the Poughkeepsie acquisition. (4 App

Question: Did the court's ruling on procedure at trial favor the appellant? This includes jury instructions and motions for directed verdicts made during trial.
A. No
B. Yes
C. Mixed answer
D. Issue not discussed
Answer:

Answer: B