It is true that the industry relies on SAMI as an indicator of market trends, and manufacturers regularly purchase the reports at considerable expense. Indeed, I have no doubt that SAMI is a useful tool in a manufacturer's development of marketing techniques. Nevertheless, in light of the deficiencies and limitations noted above, I cannot attribute to the SAMI projections the kind of talismanic quality urged upon me by the Government.
Most importantly, to find that any of the 39 SAMI trading areas is an appropriate section of the country within the meaning of section 7 would be inconsistent with the clear command of precedent. The Government correctly points out that in United States v. Philadelphia National Bank, supra, we are told to look where "the effect of the merger on competition will be direct and immediate." 374 U.S. at 357, 83 S. Ct. at 1738. One need not read on very far, however, to find that "(T)his depends upon "the geographic structure of the supplier-customer relations.' " Id. (citation omitted). The Court went on to explain that the " "area of effective competition in the known line of commerce must be chartered by careful selection of the market area in which the seller operates, And to which the purchaser can practicably turn for supplies.' " Id. at 359, 83 S. Ct. at 1739 (emphasis supplied by the Court), citing Tampa Electric Co. v. Nashville Coal Co., supra, 365 U.S. at 327, 81 S. Ct. at 628.
This statement by the Court, particularly the part which it emphasized, is highly significant for our purposes. It is clear from the evidence that purchasers of retail frozen dessert pies are in no way subject to geographical limitations in the areas to which they can turn for sources of supply. On the contrary, as one witness so tartly put it, with frozen pies "the world is your onion." As seen earlier, the manufacturers typically produce their pies at one or two central plants and ship them throughout the nation. Thus, Mrs. Smith's is in Pennsylvania and Oregon, Chef Pierre is in Michigan, and Sara Lee is in Iowa, all selling pies across the country. Since the frozen pies are physically capable of being shipped long distances, and since transportation costs are not a significant factor, the purchasers in turn can and do look to the entire nation for suppliers.
In Tampa Electric v. Nashville Coal Co., supra, the Supreme Court rejected the argument that the States of Florida and Georgia constituted an appropriate "section of the country" where the product market was the sale of coal. The Court noted that most of the coal sold from the same production area that served Florida and Georgia was marketed in other parts of the country. Therefore, it was unrealistic to say that this two-state region was the effective area in which the producers competed. 365 U.S. at 331-32, 81 S. Ct. at 630. Similarly, it is clear that most of the pies manufactured by the producers who serve any given SAMI trading area, including the seven to which the Government has made special reference, are sold in other areas of the country.
For example, while Mrs. Smith's, Morton, Harriss, Sara Lee, Banquet, Johnston, Mountain Top, Chef Pierre, and Pet Ritz all sell retail frozen desserts pies in the Chicago trading area, the bulk of their pies is sold elsewhere. At the same time, purchasers of retail frozen dessert pies in Chicago are hardly limited to the boundaries of the local SAMI trading area for their source of supply. On the contrary, they buy from manufacturers located in every part of the United States.
Under the teachings of Tampa Electric
and Philadelphia National Bank, therefore, it is clear that the SAMI trading areas are not appropriate sections of the country in which to measure the effects of this merger on competition in the retail frozen dessert pie market.
This conclusion is supported by other authorities as well. In Brown Shoe, supra, the Supreme Court stated that the geographic market must " "correspond to the commercial realities' of the industry and be economically significant." 370 U.S. at 336-37, 82 S. Ct. 1530, quoting American Crystal Sugar Co. v. Cuban American Sugar Co., 152 F. Supp. 387 (S.D.N.Y.1957), aff'd 259 F.2d 524 (2d Cir. 1958). In my view, neither requirement is satisfied here. SAMI trading areas "correspond to commercial realities" only in the sense that they are convenient devices for measuring the warehouse withdrawals of the varied products sold at retail by supermarkets. This is their purpose and this is their use. They are of little value, however, in defining the area of effective competition among producers of retail frozen dessert pies. Moreover, although the Government quotes this very language in its brief, it has made no showing that any SAMI trading area is of particular economic significance to the pie industry.
Also instructive is the concurring opinion of Mr. Justice Harlan in United States v. Pabst Brewing Co., 384 U.S. 546, 86 S. Ct. 1665, 16 L. Ed. 2d 765 (1966) (Harlan, J., concurring), which quotes the Senate report dealing with geographic market as follows:
The Senate Report which discusses the "section of the country" requirement, S.Rep.No.1775, 81st Cong.2d Sess., 5-6 (1950), notes that it "will vary with the nature of the product" so as to determine an "economically significant" area in which to measure a change in the level of competition. Id., at 5. "In determining the area of effective competition for a given product," the report continues, "it will be necessary to decide what comprises an appreciable segment of the market. An appreciable segment of the market may not only be a segment which covers an appreciable segment of the trade, but it may also be a segment which is largely segregated from, independent of, or not affected by the trade in that product in other parts of the country." Id., at 6, U.S.Code Congressional Service 1950, pp. 4293, 4297, 4298.