Thurgood Marshall on SFAS 157

"Alleging that Falstaff Brewing Corp.'s acquisition of the Naragansett Brewing Company in 1965 violated S 7 of the Clayton Act, 38 Stat 731, as amended, 15 USC S 18 [15 USCS S 18], the [US] brought this antitrust suit under the theory that potential competition in the New England beer market may be substantially lessened by the acquisition", US v. Falstaff Brewing Corp., 35 L Ed 2d 475, 478 (1973). "For several years Falstaff publicly expressed its desire for national distribution and after making several efforts in the early 1960's to enter the Northeast by acquisition, agreed to acquire Narragansett in 1965", 479. "In the case before us, Falstaff was not a competitor in the New England market, nor is it contended that its merger with Narragansett represented an entry by a dominant market force. It was urged, however, that Falstaff was a potential competitor so situated that its entry by merger rather than de novo violated S 7", 481. "I share the majority's view that the District Judge erred as a matter of law and that the case must be remanded for further proceedings. I cannot agree, however, with the theory upon which the majority bases the remand", 488, Marshall's concurring opinion. "In the course of a nine-day trial, the Government introduced voluminous evidence to support its potential competition theory. ... The court held that Falstaff 'was not a potential entrant into said market by any means or way other than by said acquisition. ... The District Judge based this conclusion on testimony by Falstaff executive personnel that 'Falstaff had consistently decided not to attempt to enter said market unless it could acquire a brewery with a strong and viable distribution system such as that possessed by Narragansett.' .... I would hold that where, as here, strong objective evidence indicates that a firm is a potential entrant into a market, it is error for the trial judge to rely solely on the firm's subjective prediction of its own future conduct. While such subjective evidence is probative of the issue of potential entry, it is inherently unreliable and must be used with great care. ... Even then, subjective evidence should be preferred only when the objective evidence is weak or contradictory", my emphasis, 490. "The unavoidable problems of proof are compounded in some cases by the relevance of subjective statements of future intent by the management of the acquiring firm. Although not susceptible of precise analysis, the objective conditions of the market may at least be measured and quantified. But there exists no very good way of evaluating a subjective statement by a manager of a firm that the firm does or does not intend to enter a given market at some future date", my empasis, 499. "But it is in the very nature of such evidence that in the usual case, it is not worthy of credit. First, any statement of future intent will be inherently self-serving", my emphasis, 501-2. "It is thus strongly in management's interest to represent that it has no intention of entering de novo--a representation which is not subject to external verification and which is so speculative in nature that it could virtually never serve as a predicate for a perjury charge. ... Thus, in most cases, subjective statements contrary to the objective evidence simply should not be believed", 502.

Thank you Thurgood Marshall for your learned discourse on SFAS 157-e and the Big 87654's expected problems in "auditing" bank clients which apply it. I hereby posthumously elevate you to FASB chairmanship. Deceased, you're better than who we have today. Bank statements of intent are inherently unauditiable. The Big 87654 should disclaim opinions on banks which follow SAFS 157-e. At least three current FASB members had major CPA firm experience. I wonder if any of them audited anything. Barney Frank (BF), a major proponent of the recent SFAS 157 revision, went to Harvard College and Law School. I wonder what he learned there. Not much about evidence apparently.