The opinion of the court was delivered by: MACMAHON
MacMAHON, District Judge.
This is a motion by the Federal Trade Commission ("FTC"), under Section 13(b) of the Federal Trade Commission Act (15 U.S.C. § 53(b) (Supp. IV, 1977)), for a preliminary injunction enjoining the acquisition by respondent, Lancaster Colony Corp., Inc. ("Lancaster"), of the assets of the Federal Glass Company Division of respondent, Federal Paper Board Co., Inc. ("Federal"), pending determination of administrative proceedings commenced by the FTC challenging the lawfulness of the acquisition under the antitrust laws (Section 7 of the Clayton Act (15 U.S.C. § 18)) and Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45).
The governing statute, Section 13(b), provides, in pertinent part:
"(b) Whenever the Commission has reason to believe--
(1) that any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission, and
(2) that the enjoining thereof pending the issuance of a complaint by the Commission and until such complaint is dismissed by the Commission or set aside by the court on review, or until the order of the Commission made thereon has become final, would be in the interest of the public--
the Commission by any of its attorneys designated by it for such purpose may bring suit in a district court of the United States to enjoin any such act or practice. Upon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest, and after notice to the defendant, a temporary restraining order or a preliminary injunction may be granted without bond...."
The statute is relatively new and has not yet received much judicial attention. Moreover, the public interest standard laid down for injunctive relief, though long applied by administrative agencies, is novel and raises policy issues which courts are ill equipped to resolve.* It seems clear, however, from the language and legislative history of Section 13(b) that the central issue for us is not whether respondents have violated, or are about to violate, the antitrust laws, for adjudication of those issues is vested in the FTC in the first instance. FTC v. Food Town Stores, Inc., 539 F.2d 1339, 1342 (4th Cir. 1976). Rather, the question for us is whether the FTC has shown prima facie that the public interest requires that a preliminary injunction issue to preserve the status quo until the FTC can perform its adjudicatory function. FTC v. Food Town Stores, Inc., supra, 539 F.2d at 1142.
According to the statute, in determining whether an injunction is in the public interest, we must weigh both the "equities" and the "likelihood" that the FTC will ultimately prevail on the merits of its antitrust claims. The legislative history of Section 13(b), however, reveals that:
"The intent is to maintain the statutory or 'public interest' standard which is now applicable, and not to impose the traditional 'equity' standard of irreparable damage, probability of success on the merits, and that the balance of equities favors the petitioner. This latter standard derives from common law and is appropriate for litigation between private parties. It is not, however, appropriate for the implementation of a Federal statute by an independent regulatory agency where the standards of the public interest measure the propriety and need for injunctive relief." H.R. Rep. No. 624, 93d Cong., 1st Sess. 31 (1971) ("Conference Report") (emphasis in original).
Thus, while the statute requires us to consider the FTC's likelihood of ultimate success and to exercise our independent judgment in that regard,** it appears that it does not require the FTC to prove, or us to find, probable success on the merits but something less. We think the FTC meets its burden on the "likelihood of success" issue if it shows preliminarily, by affidavits or other proof, that it has a fair and tenable chance of ultimate success on the merits. In short, if it shows that the newly-minted "equities" weigh in its favor, a preliminary injunction should issue if the FTC has raised questions going to the merits so serious, substantial, difficult and doubtful as to make them fair ground for thorough investigation, study, deliberation and determination by the FTC in the first instance and ultimately by the Court of Appeals. Cf. Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1953), enjoining a merger under the Clayton Act.
Accordingly, we see no need for an evidentiary hearing nor for extensive analysis of the underlying antitrust issues. In Hamilton Watch Co., supra, our Court of Appeals characterized such an approach as thoroughly sound where an evidentiary hearing would have had to examine the economic characteristics of a substantial industry and the injunction merely preserved the status quo. SEC v. Frank, 388 F.2d 486, 491 (2d Cir. 1968).
Surely, we are not required, on a Section 13(b) application, to examine the economic characteristics of the entire glassware industry or to try the case. As a practical matter, a district court can hardly do more at so early a stage of antitrust litigation than to make a considered estimate of the FTC's apparent chances of success based upon what must necessarily be an imperfect, incomplete and fragile factual basis. Similar estimates are made on equally insecure footings on most motions for a preliminary injunction in antitrust cases. This is particularly true when the challenge to the acquisition is grounded on Section 7 of the Clayton Act, where the ultimate question is whether the effect of the acquisition may be substantially to lessen competition or to tend to create a monopoly in any line of commerce in any section of the country.
As the Supreme Court noted in United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 362, 10 L. Ed. 2d 915, 83 S. Ct. 1715 (1963), these are not the kind of questions which are "susceptible of a ready and precise answer." They require "not merely an appraisal of the immediate impact of the [acquisition] upon competition, but a prediction of its impact upon competitive conditions in the future.... Such a prediction is sound only if it is based upon a firm understanding of the structure of the relevant market; yet the relevant economic data are both complex and elusive."
Obviously, a "firm understanding" of the setting and unique facts of a given market cannot be made without a plenary trial. It, therefore, seems clear that Congress intended that on applications under Section 13(b), the district court be guided by preliminary and tentative findings of fact without attempting to resolve the underlying antitrust issues of fact. Imperfections are inherent in the problem. We must work within the limitations of the allotted time imposed by the need for speedy action due to the imminence of the challenged transaction and the burdens of this congested court. Cf. SEC v. Frank, supra, 388 F.2d at 490 et seq.
The structure of the relevant market and the competitive effect of a given acquisition vary with the setting and unique facts of each case. Brown Shoe Co. v. United States, 370 U.S. 294, 322, 8 L. Ed. 2d 510, 82 S. Ct. 1502 n.38 (1962). We turn, then, to consideration of the FTC's likelihood of success based on the facts and setting shown in the evidence and exhibits submitted by the parties.
On March 4, 1977, Lancaster announced that it had agreed to acquire the assets of Federal Glass Company Division. The closing was scheduled for April 25, 1977, but on June 7, 1977 the FTC issued its administrative complaint charging that the acquisition would violate Clayton § 7 and § 5 of the Federal Trade Commission Act. At the request of the FTC's staff, Lancaster agreed to postpone the transaction until June 24, 1977 and later until July 5, 1977. This application followed, and the motion was adjourned until July 7, 1977, at the request of the parties, under an agreement not to consummate the ...