Opinion and Order
FULLAM, D. J.:
This is a civil antitrust action brought by the government challenging the April 1965 merger of the Ritter Company, Inc., a manufacturer of dental products, and the M. F. Patterson Dental Supply Company, a retailer of dental products, as violative of Section 7 of the Clayton Act, 15 U.S.C. § 18. Two other related cases challenging forward vertical acquisition in the dental products industry have been disposed of by voluntary settlement.
After reviewing the entire record and considering the proposed findings of fact and conclusions of law submitted by counsel, I make the following
Findings of Fact
1. Defendant, Sybron Corporation (hereinafter Sybron), is a New York corporation with its principal place of business in Rochester, New York.
2. Sybron transacts business in the Eastern District of Pennsylvania.
3. Sybron is engaged in interstate commerce at both the manufacturing and retailing levels.
4. Sybron is a diversified company with divisions and subsidiaries engaged in the manufacture of products for the medical and dental professions, hospitals, and waste treatment.
(a) The original Ritter Dental Manufacturing Company was founded in 1887 to manufacture products for the dental profession. By the 1920's, the company was publicly held. In later years the operating function of the company was conducted under the name of the Ritter Equipment Co.
(b) On June 5, 1957, the Ritter Company, Inc., the holding company, acquired Liebel-Flarsheim Co., located in Cincinnati, Ohio. Liebel-Flarsheim Co. manufactured x-ray specialties as components for other x-ray machine manufacturers, and miscellaneous medical equipment. The total 1956 sales of Liebel-Flarsheim were approximately $3,000,000. This company is presently operated as a subsidiary of Sybron.
(c) In June of 1959, Wilmot Castle Company was acquired by Ritter Company, Inc. Wilmot Castle's annual sales for 1958 were approximately $7,000,000 in hospital equipment (sterilizers, lights and tables), and $2,500,000 in lights and sterilizers for the dental and medical profession.
(d) In April of 1964, Ritter Company, Inc. acquired the Kerr Manufacturing Company of Detroit, Michigan. Kerr was founded in 1891, and has served the dental profession since that time by supplying a large line of dental sundries and instruments. Kerr's gross sales in 1963 of $4,471,832 made it one of the strongest competitors in the sundries segment of the dental products field. Kerr is presently operated as a subsidiary of Sybron.
(e) In April of 1965, the M. F. Patterson Dental Supply Company and the Ritter Company, Inc. merged to form the Ritter Corp. (hereinafter the merger). Patterson was the largest independent dental supply store chain in the nation with its 41 stores almost exclusively located west of the Mississippi River. In addition, Patterson controlled General Refineries, a manufacturer of precious metal products for the dental profession. Prior to trial of this case, Sybron divested itself of General Refineries.
(f) In late 1965, the Ritter-Pfaudler Corporation was formed by the merger of Ritter Corporation and Pfaudler Permutit, Inc. Pfaudler's activities were not related to the dental products field. In 1968, Ritter-Pfaudler changed its name to the Sybron Corporation.
(g) Since 1965, Sybron has made one minor acquisition in the dental products field and purchased the inventories of two companies going out of business. Numerous non-dental related companies have also been acquired by Sybron.
5. In 1964, the Ritter Company, Inc. (including Kerr) had net sales of $41,598,000; of which dental equipment accounted for 46%, dental sundries 13%, medical and hospital equipment 37%, x-ray specialties 4%.
6. On a pro forma combined basis for the year 1964, Sybron (Ritter and its related companies and Pfaudler and its related companies) had net sales of $119,335,000 and total assets of $97,166,000 as of June 30, 1965. By 1968, Sybron had total sales of $264,570,000 and assets of $229,177,000. Dental products sales in 1968 accounted for 19% of Sybron's total sales.
7. As Finding Number 4 indicates, the Ritter Company, Inc., has engaged in a significant diversification program, and dental product expansion program through acquisitions and mergers over the last 15 years. The purpose of these programs was twofold: to lessen the difficulties associated with the annual cyclical demand curve and long-term cyclical fluctuations in the dental products industry; and to achieve greater growth potential.
8. Dental products, consisting of the sum total of equipment, sundries, artificial teeth, and precious metals purchased and utilized by dentists and dental laboratories, is a recognized market in the industry.
9. Dental equipment, consisting of durable products such as dental chairs, units, x-ray machines, sterilizers, lights and cabinets, is a recognized sub-market of the dental products market.
10. Dental sundries, consisting primarily of nondurable consumable dental products such as filling material, anesthetics, impression materials, waxes, cements, dental chemicals, non-precious metals, and instruments, is a recognized sub-market of the dental products market. A particular instrument or small piece of equipment is considered a sundry if its price is less than $200 per unit.
11. Sybron manufactures dental equipment through the Ritter Equipment Company, and sundries through the Kerr Manufacturing Company.
12. The following table shows Sybron's share of manufacturers' sales of dental products for 1963 through 1968:
United States Sales of Dental Products
(thousands of dollars) n1
as a Percentage
Sybron Total of Total U.S.
Year Sales n2 U.S. Sales Sales
1963 $14,996 $171,279 8.8%
1964 16,401 178,815 9.2
1965 17,849 210,331 8.5
1966 16,670 224,033 7.4
1967 17,042 240,713 7.1
1968 18,041 267,913 6.7
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