United States v. Falstaff Brewing Corporation, Civ. A. No. 3523.

• Citation: 332 F. Supp. 970
• Decision Date: 07 October 1971
• Docket Number: Civ. A. No. 3523.
• Parties: UNITED STATES of America, Plaintiff, v. FALSTAFF BREWING CORPORATION and Narragansett Brewing Company, Defendants.
• Court: United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island

332 F. Supp. 970

UNITED STATES of America, Plaintiff, v. FALSTAFF BREWING CORPORATION and Narragansett Brewing Company, Defendants.

Civ. A. No. 3523.

United States District Court, D. Rhode Island.

October 7, 1971.

Lincoln C. Almond, U. S. Atty., Providence, R. I., Philip F. Cody, Bruce Repetto, Kenneth A. Sagat, Norman H. Seidler, Attys., Dept. of Justice, Anti Trust Dept., New York City, for plaintiff.

Matthew W. Goring, George M. Vetter, Jr., James K. Irvin, of Hinckley, Allen, Salisbury & Parsons, Providence, R. I., for Falstaff and Narragansett.

James S. McClellan, Jerome M. McLaughlin, of Willson, Cunningham & McLaughlin, St. Louis, Mo., for Falstaff.

OPINION

DAY, District Judge.

This is an action brought by the United States pursuant to the provisions of Section 15 of the Clayton Act, 15 U.S.C. § 25, for declaratory and injunctive relief to enjoin the proposed acquisition by Falstaff Brewing Corporation (Falstaff) of all the assets of Narragansett Brewing Company (Narragansett) on the ground that the effect of the proposed acquisition may be substantially to lessen competition in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18.¹ As appears from the allegations of the Government's complaint and the evidence presented during the trial of this action, Falstaff and Narragansett, on May 26, 1965, had executed an "Agreement Pursuant To Plan Of Complete Liquidation" under the provisions of which Falstaff would acquire all the assets and assume the debts and liabilities of Narragansett on July 15, 1965.

The instant action was filed on July 13, 1965. In its complaint the Government sought a temporary restraining order and a preliminary injunction enjoining the defendants from consummating said acquisition agreement. I declined to grant said temporary restraining order and after a hearing on July 14, 1965, denied the Government's prayer for a preliminary injunction against Narragansett. At that time service of process had not been made upon Falstaff. On July 15, 1965, Falstaff acquired the assets and assumed the debts and liabilities of Narragansett. Service of process was made on Falstaff on July 21, 1965 at St. Louis, Missouri, where its principal place of business was located.

Subsequently Narragansett's motion to dismiss this action as to it was granted and Falstaff agreed to maintain Narragansett as a separate wholly-owned subsidiary until otherwise ordered or permitted by this Court. Extensive pre-trial discovery was then conducted by the parties. Finally, on May 18, 1970, an order was entered by this Court that all said discovery should be completed not later than June 30, 1970.

Trial upon the plaintiff's prayer that Falstaff be required to divest itself of Narragansett began on October 6, 1970 and was concluded on October 15, 1970. At the conclusion thereof I reserved decision pending the filing of briefs by counsel for the parties and the preparation of the transcript of the evidence presented during the trial. These briefs were subsequently filed and have been carefully considered by me.

The Government contends that Falstaff's acquisition of all the assets of Narragansett violates the provisions of said Section 7 of the Clayton Act because it will substantially lessen competition in the New England beer market, so-called, by eliminating the potential competition that would have been created and would have existed if Falstaff entered said market independently. It further contends that at the time of said acquisition Falstaff was a potential entrant into said market. Falstaff denies that it was a potential entrant into said market and denies that it would have entered said market except by acquiring Narragansett, which had an established, strong and viable distribution system that would assure an adequate distribution of its brand of beer.

The evidence adduced at trial establishes the following facts. Said New England beer market comprises the six New England states. Said beer market at the time of said acquisition was a highly competitive market. Narragansett was then the largest seller of beer in said market with approximately twenty (20) per cent of the sales therein. It had a strong, viable distribution system. Falstaff had its principal brewery in St. Louis, Missouri, and owned several smaller breweries elsewhere, of which the nearest to New England was located in Fort Wayne, Indiana. Falstaff was not a national...