The novelty of the doctrine and the absence of definitive authority sanctioning it and defining its parameters could well serve as a basis for denial of a preliminary injunction under § 13(b), since it is difficult, if not impossible, to determine FTC's chances of ultimate success when the law is so uncertain and the parameters of the doctrine obscure. But we prefer to rest our decision on another basis, namely, that the district court correctly concluded that a showing of ultimate success under the legal standards which have evolved has not been made. Stated in terms of the proper scope of appellate review of the district court's denial of a preliminary injunction, we cannot say that the district court was so patently in error that its denial of the injunction should be disturbed. See Caldwell v. HUD, 522 F. 2d 4 (4 Cir. 1975); Conservation Council of N.C. v. Costanzo, 505 F. 2d 498 (4 Cir. 1974); West Virginia Highlands Conservancy v. Island Creek Coal Co., 441 F. 2d 232 (4 Cir. 1971).

Turner, in his careful analysis of the actual potential entrant theory, speaks to the threshold question of the quantum of proof required to show a violation of § 7 by loss of a potential new entrant in a market like the copper market which is controlled by a tight oligopoly:

I therefore conclude that when the only (emphasis in original) alleged anticompetitive consequence of a merger is the elimination of what would have been a new entrant in a tight oligopoly, there must, in order to support prohibition, be clear proof that the firm would in fact have entered—an admittedly rare case, and one bound to become even less frequent if this rule were adopted. (Emphasis added) 78 Harv. L. Rev. at 1384.

Later, he states:

When the sole (emphasis in original) alleged anticompetitive consequence of a merger is the loss of what would have been a new entrant, prohibition is appropriate only when the market is a tight oligopoly and when entry by internal expansion would appear to have been certain. (Emphasis added.) 78 Harv. L. Rev. at 1386.8

8 The government has acknowledged that at least Continental Oil, Exxon Corporation and Getty Oil are likely entrants into the copper market. As well, the government's expert indicated that the major petroleum companies as a group (or which there are eighteen) possessed the greatest number of prerequisites for entry into copper mining or fully integrated copper production operations. Naturally, Arco seeks to prove there are even more possible entrants such as the steel producers and other major metal producers. Considering only the government expert's testimony, we do not think the case is one where there are a limited number of buyers or new entrants. See Turner, supra at 1386 (there may be a" reasonable case for prohibition when the acquirer is one of four most likely entrants "that may lessen the burden of proof by strengthening the case for prohibition). We note also that this market is not rapidly expanding but presently is stagnant, thereby lessening the case for prohibition. See Turner, supra at 1386. Cf. United States v. Penn-Olin Chemical Co., 378 U.S. 158, 174-75, 84 S. Ct. 1710, 12 L. Ed. 2d 775 (1964) (use of doctrine in expanding market).

The Turner concept of the quantum of proof to sustain a claim of actual potential competition finds peripheral support in both Falstaff Brewing Co. and Marine Bancorporation. In Marine Bancorporation, the Supreme Court explained that the principal focus of the potential competition doctrine has been on perceived potential competition rather than actual potential competition because "[u] nequivocal proof that an acquiring firm actually would have entered de novo but for a merger is rarely available," 418 U.S. at 624, 94 S. Ct. at 2871 (emphasis added), thereby implying that the standard is one of "unequivocal proof" in a case where only actual potential competition is claimed. The Supreme Court also admonished that "it is to be remembered that § 7 deals in 'probabilities,' not ‘ephemeral possibilities'," 418 U.S. at 622-23, 94 S. Ct. at 2870.

[295] In Falstaff, the Supreme Court did not disturb the district court's finding that Falstaff was not an actual potential entrant while at the same time indicating that the district court relied almost solely on management's post-acquisition statements that Falstaff would not enter de novo. See 410 U.S. at 532, 93 S. Ct. 1096. Given the questionable value of such statements, it is clear that little evidence is required to prove that there would not be de novo entry. See also Case Comment, Mergers-Acquisition of Leading Coal Company by Potential Entrant Into Coal Industry Violated Section 7 of Clayton Act, 86 Harv. L. Rev. 772, 777 n. 26 (1973) ("Section 7 requires a showing of reasonable probability that a merger will have anticompetitive effects ***. It is doubtful that the mere showing of [the company's] ability to enter by toehold or independent expansion, without a showing that it intended or had any reason to do so, satisfies the reasonable probability requirement.")

[4] There is more reason to require a higher burden of proof to show anticompetitive effect of a merger like that in the instant case than in a traditional vertical or horizontal merger. The reasons are well articulated by Turner, see 78 Harv. L. Rev. at 1320-22, and will not be repeated here. Moreover, the conglomerate merger in the instant case involves no product or market extension; it is a merger purely for purposes of diversification. Arco is not poised on the fringe of the copper market; it has no technological skills readily transferrable to the copper markets; it has no channels of distribution which may be utilized to distribute copper. In short, since it is not probable that an anticompetitive effect in copper should necessarily result from the merger, strict proof of any anticompetitive effect should be required.

[5] When we examine the record, we find that entry into the copper market is more burdensome than entry into many other possible markets. FTC's copper consultant testified that de novo entry into copper is "extremely difficult" and the entry barriers are "severe." Estimates in the record of the cost of entry into mining

and refining range from $200 to $450 million. Entry time is estimated from ten to nineteen years. The starting point is, of course, discovery of a commercially exploitable deposit of ore. This alone may take ten years and involve an expenditure of up to $50 million. An entrant must also construct smelting facilities. In order to assure successful entry, the entrant must attain a certain level of technical expertise. Presently, seventy-five companies are currently engaged in exploration for copper, the first stage of entry, but the obvious deposits have already been discovered. It is clear that entry into the copper market is not easily accomplished.

Unquestionably, FTC has shown that Arco has strong economic incentives to seek diversification inasmuch as oil resources in the United States continue to dwindle and may be depleted in the 1980's. As well, copper offers Arco an investment in an industry which historically has been as profitable as the oil business. Arco is accumulating revenues which it desires to utilize, and it is willing to make large expenditures for a successful investment. In sum, Arco does possess the financial resources to make a de novo entry into the copper markets although the minimum capital costs of successful entry are substantial.

On the other hand, the difficulty of entry into a market to which Arco is neither committed nor impelled, cf. United States v. Phillips Petroleum Co., 367 F. Supp. 1226 (C.D. Cal. 1973), aff'd mem., 418 U.S. 906, 94 S. Ct. 3199, 41 L. Ed. 2d 1154 (1974) (Phillips on edge of lucrative California market in which it had made some investments), certainly indicates that de novo entry or entry by acquisition of other than a large company was not entirely economically suitable. See United States v. Marine Bancorporation, 418 U.S. 602, 642, 94 S. Ct. 2856, 41 L. Ed. 2d 978 (1974); Missouri Portland Cement Co. v. Cargill, Inc., 498 F. 2d 851, 857, 864 (2 Cir.), cert. denied, 419 U.S. 833, 95 S. Ct. 150, 42 L. Ed. 2d 123 (1974); United States v. Falstaff Brewing Corp., 332 [296] F. Supp, 972 (D.R.I. 1971), rev'd on other grounds, 410 U.S. 526, 93 S. Ct. 1096, 35 L. Ed. 2d 475 (1973). This is particularly so considering the long lead time, see Missouri Portland Cement Co. v. Cargill, Inc., 498 F. 2d 851, 857 (2 Cir.), cert. denied, 419 U.S. 833, 95 S. Ct. 150, 42 L. Ed. 2d 123 (1974); United States v. Black & Decker Mfg. Co. 5 Trade Reg. Rep. ¶ 61,033, at 69,589 n. 64 (D. Md. 1976), and the need to acquire more complete technical expertise than Arco presently possesses. See Missouri Portland Cement Co. v. Cargill, Inc., 498 F. 2d 851, 857, 863 (2 Cir.), cert. denied, 419 U.S. 833, 95 S. Ct. 150, 42 L. Ed. 2d 123 (1974); United States v. Black & Decker Mfg. Co., 5 Trade Reg. Rep. ¶ 61,033 at 69,586, 69,592 (D. Md. 1976). Objectively, then, Arco might reasonably be shown to be ripe for diversification and financially capable of entering the copper markets, but there are as well good reasons why copper would not be an appropriate area for grass

roots entry. Indeed, objectively, Arco could have been found to be clearly not a prospective entrant.

There is, however, evidence that Arco, at its various levels of management, has not been unmindful of possible entry into the copper markets, and FTC argues that this interest is indicative of an intent or desire to enter these particular markets. As a forwardlooking corporation, progressively and aggressively managed, one having a substantial cash flow and one whose management is keenly aware that it is engaged in exploiting a diminishing natural resource, Arco, not surprisingly, has long given consideration to diversification into other forms of business activity, particularly into the extraction, processing and sale of minerals other than petroleum and natural gas. The record shows that since the late 1960's, Arco had expressed various degrees of interest in entry into the copper industry and had begun to investigate various methods of entry. Since the late 1960's, some members of Arco's senior management have favored diversification into copper by acquisition and were committed to diversification into copper only if diversification could be accomplished by acquisition.

Pursuant to this interest, Arco made inquiries concerning the possible acquisition of other copper producers. As well, Arco undertook studies regarding the copper industry and its future importance in the domestic economy. The studies concluded that copper was the most appropriate nonferrous metal into which Arco could diversify and Arco's Executive Group (consisting of senior management), in late 1974 or early 1975, approved the conclusion that copper was the most attractive nonferrous metal into which to diversify. Through its approval of Arco's long-range plan for future goals, Arco's Board of Directors formally approved diversification into copper by September, 1975, without any decision, however, as to the mode, time or method of market entry.

Other groups within Arco's lower management, more particularly the Synthetic Crude and Minerals Division (SCMD), began in the early 1970's to evaluate entry by exploration, by acquisition of a known copper ore deposit, by joint venture with a company already active in copper exploration or developing a known ore deposit, or by acquisition of a copper producing company. A joint task force from Corporate Planning and SCMD recommended grass roots exploration for non-energy minerals including copper, lead, zinc and their associated metals as the most appropriate diversification vehicle at that time, and it recommended financial studies and a thorough analysis of the existing copper-lead-zinc industry, the companies in the mining industry, and how other energy companies have diversified into minerals. In March and August, 1975, senior management directed further study of copper exploration and the possible acquisition of copper reserves, as well as accumulation of technological assessment expertise in copper.

While the proof thus shows a continuing interest on the part of Arco in the copper industry and continuing studies as to the best means of entry, it fails to show a significant commitment at the decisional level that Arco was seriously considering [297] original entry into the copper markets or entry by toehold acquisition.9 Indeed, the proof is equally consistent with an attitude of gathering information and watchful waiting for a future determination of the means of entry to be employed if diversification into copper was to be undertaken. Thus, the decision to diversify cannot be divorced from the means to be employed.

FTC sought to complete its proof by the affidavit of Dr. George F. Leaming, a professional economist who is an expert in the copper industry and who has had widespread experience as an economic consultant both for industry and various governmental groups. Dr. Leaming found Arco to be a "leading potential entrant" and it was his expert opinion that from Arco's history of making overtures to copper companies regarding possible acquisition, Arco's investigation of possible purchase of copper deposits, Arco's study of copper exploration techniques, Arco's avowed corporate interest in diversification into copper industry and Arco's large annual income, and Arco's capital investment capabilities, that Arco was a "likely potential entrant into the United States copper industry by means other than the acquisition of an existing large copper producer." While certainly relevant and entitled to consideration, we cannot say that Dr. Leaming's expert opinion is a substitute for a specific commitment at Arco's top managerial level to enter the copper markets by original entry or by toehold acquisition, particularly when Arco's top management indicated a conviction against de novo entry while approving large acquisition entry. Nor do we think that Dr. Leaming's opinion demonstrates the existence of such factors as would reasonably impel Arco to such a decision if the merger is not permitted. As we have earlier stated, we think that the quantum of proof necessary to show Arco to be

9We think there is a fundamental distinction between suggestions and ideas advanced by lower-level management that grass roots entry into copper was advisable and a commitment by the company to that type of diversification. See Stanley Works v. F.T.C., 469 F. 2d 498, 517-18 (2 Cir. 1972) (Mansfield, J., dissenting), cert denied, 412 U.S. 928, 93 S. Ct. 2750, 37 L. Ed. 2d 155 (1973); United States v. Crowell, Collier & Macmillan, Inc., 361 F. Supp. 983, 1005 (S.D.N.Y. 1973); United States v. Penn-Olin Chemical Co., 246 F. Supp. 917, 927-28 (D. Del. 1965), aff'd by an equally divided court, 389 U.S. 308, 88 S. Ct. 502, 19 L. Ed. 2d 545 (1967). Indeed, the FTC in its original Memorandum of Points and Authorities in Support of Complaint for Temporary Restraining Order and Preliminary Injunction states at p. 10:

It has been Arco s top management philosophy that Arco should only enter the copper business by acquiring a large copper company. They never seriously evaluated or considered the acquisition of a smaller company and infusing sums of money into it. . ..

While such a top-management view would not prevent a finding of a fringe effect, it does suggest that Arco would not enter by the means suggested by lower-level management. Indeed, certain members of lower management advised against the acquisition of Anaconda; yet the decision of senior management was to the contrary.