(dissenting):
I respectfully dissent. In my view the Commission’s findings — that Tenneco, prior to its acquisition of Monroe, was perceived as a potential competitor in the highly concentrated replacement market by the four top shock absorber manufacturers (which account for 92% of all sales) and that at *359least one of them (Maremont) was thereby led to engage in additional competitive activity — are supported by substantial evidence and should be upheld. The majority, while giving lip service to the substantial evidence rule, nevertheless makes the mistake of substituting its fact-finding for that of the Commission.
The Commission, after a thorough and painstaking review of a voluminous record, made detailed findings to the effect that the replacement shock absorber business represented a separate market, that it is highly concentrated, and that a “perceived potential competition” case had been established within the requirements specified by the Supreme Court in United States v. Falstaff Brewing Corp., 410 U.S. 526, 531-32, 93 S.Ct. 1096, 1099-1100, 35 L.Ed.2d 475 (1973), and United States v. Marine Bancorporation, Inc., 418 U.S. 602, 631, 94 S.Ct. 2856, 2874, 41 L.Ed.2d 978 (1974). See also United States v. Siemens Corp., 621 F.2d 499 (2d Cir. 1980). My two colleagues agree that almost all of the Commission’s findings are supported by substantial evidence. For instance they acknowledge that there is a separate replacement shock absorber market, that it is oligopolistic, with high entry barriers, and that Tenneco was perceived by existing manufacturers as a strong potential competitor. These findings are based on more than ample proof.
The shock absorber business is highly concentrated by any standards, whether one applies the Herfindahl-Hirschman Index now used by the Attorney General of the United States in the Department of Justice’s latest “Guidelines” promulgated on June 30, 1982, see 47 Fed.Reg. 38,493 [sic 28,493] (1982); or the former “4-firm” test used in its pre-existing guidelines issued on May 30, 1968. The four leading manufacturers (Maremont, Monroe, Questor and General Motors) account for 92% of the sales in the replacement market. Of these the two largest (Maremont and Monroe) control 77%. In the words of the majority, “the Commission was fully justified in concluding that the replacement shock absorber market was not genuinely competitive.” (Maj. Opin. p. 353).
The market is also characterized by high barriers to entry. An entrant must have a large plant (with capacity to furnish at least 10% of the market’s needs) in order to operate efficiently and economically. It must have a nationwide distribution network for making prompt deliveries to wholesalers. It must advertise extensively to differentiate its product from others, and it must acquire the technology needed to design and produce competitively saleable shock absorbers.
Tenneco, a major conglomerate (ranking in 1975 as the 15th largest industrial enterprise in the United States) met all of these requirements and had a strong motive to enter. Its Walker Manufacturing Division (“Walker”) is a major producer of auto exhaust system parts which it sells primarily in the replacement market. There is a strong market affinity and compatibility between the sale of exhaust system parts and the sale of replacement shock absorbers, which makes it natural, economical and logical for a manufacturer of one to engage in the other, using the same shipping, warehouse, sales and customer-installation facilities for both. Each is an “under the car product.” The technologies, manufacturing processes, material components and sales organizations for the two products overlap in substantial and economically significant ways. Tenneco, as a dominant figure in the replacement exhaust system parts market, had the administrative, research and market skills needed to enter the replacement shock absorber market, as well as financial strength, a nationwide organization and facilities, plus technological skill in manufacturing hydraulic and air powered jacks, which involve many of the features of shock absorbers. Indeed, until it acquired Monroe, it was the only major manufacturer of exhaust system parts which did not fully engage in the production of shock absorbers. (Prior to the acquisition it had only bought, repackaged and sold some shock absorbers to muffler shops.) Lastly, the replacement shock absorber market, despite its ups and downs, has been consistently profitable.
*360None of the foregoing is disputed by the majority. Nor does it deny that the record evidence fully supports the Commission’s finding that Tenneco, prior to its acquisition of Monroe, was viewed by the members of the highly concentrated oligopoly as a likely entrant. The majority concedes that “[tjhere is abundant evidence that the oligopolists in the market for replacement shock absorbers perceived Tenneco as a potential entrant.” (Maj. Opin. p. 355). Indeed, the evidence is overwhelming. Byron O. Pond Jr., Senior Vice President and Director of Maremont, the largest of the four manufacturers of shock absorbers, testified that his company considered Tenneco to be a likely entrant into the market, noting that “the shock absorber business has been a very profitable and lucrative business and one that would be an enticing one to be in.” (App. 679). Similarly Paul Putman, Chairman of Questor, another one of the “Big Four,” testified that Tenneco not only had the ability to enter the manufacture and sale of shock absorbers without acquiring Monroe but, as Questor had done, Tenneco “could have set up a facility and hired the proper technical people and the production people and marketing people . . . and I think they would have gotten their share of the business, same as we did.” (App. 750-51). Nor were their perceptions of entry lacking in foundation.
Existing manufacturers were fully aware that Tenneco had publicly demonstrated a strong and growing interest in entering the shock absorber market. In 1974 it had acquired Triple S, a small manufacturer of steering dampers and hydraulic steering stabilizers (both of which are akin to shock absorbers), holding patents on a new type of shock absorber, the “Terramatic,” which had certain advantages over existing shock absorbers. The acquisition brought with it substantial know-how in shock absorber manufacture. It was also known to shock absorber manufacturers that over the years Tenneco had acquired a sizeable Canadian chain of muffler installation shops through which it had sold and installed shock absorbers made by others. It could reasonably be anticipated that the chain would be expanded into the United States and used as a market for Tenneco’s own manufactured shock absorbers. In addition, Tenneco had negotiated seriously with Armstrong Patents, Ltd., the largest manufacturer of shock absorbers in Britain, either for purchase of shock absorbers for resale in the United States or a license to manufacture domestically. In 1976, while negotiating for acquisition of Monroe, Tenneco manifested a clear interest in acquiring the DeCarbon Shock Absorber Company, a French firm manufacturing a type of gas pressurized shock absorber considered to be superi- or in some respects to conventional shock absorbers. Early in 1973 Tenneco had indicated an interest in acquiring Tropic Industries, a small company with a shock absorber prototype, and dropped the matter only because of insufficient patent protection. In short, it was known throughout the market that Tenneco was eager to get into the shock absorber business.1 Moreover, no *361other firm had its capability and interest as a potential entrant when it acquired Monroe. Indeed, it was Monroe, aware of Tenneco’s interest, that approached Tenneco.
The sole remaining element of a “perceived potential competition” case is a finding that the “edge” or “wings” effect of the perceived potential entrant, Tenneco, had a pro-competitive effect on the small group which presently controlled the market. There cannot be any question about the Commission’s findings, based on undisputed evidence, that during the years prior to the acquisition of Monroe, when Tenneco was stepping up its efforts to enter the market, Maremont, the largest of the existing manufacturers of replacement shock absorbers, engaged in a burst of pro-competitive conduct. It improved its ability to fill orders by investing more heavily in inventory, thus increasing availability and speed of delivery of the many types of absorbers demanded by the purchasing market. It embarked on new-product development and research, introducing a new “air-oil” absorber, and moved into the market for McPherson strut replacement cartridges. It cut and absorbed manufacturing costs, which enabled it to reduce prices.
The Commission found that this pro-competitive activity on the part of Maremont could not be adequately explained by factors indigenous to the existing replacement shock absorber market, and it inferred from all of the circumstances that Maremont’s conduct was at least in substantial part a response to Tenneco’s standing at the edge of the market as a competent, efficient, and financially powerful potential competitor, which would enter the market unless it were discouraged because existing competitive pressure reduced the profit prospects. The majority rejects this finding as not supported by substantial evidence. I disagree.
In considering the issue of whether the presence of a powerful potential competitor at the edge of a concentrated market controlled by a few manufacturers has a pro-competitive edge effect upon them, the Supreme Court has recognized that it would be an extraordinary case where such an effect could be proved by direct evidence. The burden is satisfied by circumstantial evidence from which the trier of fact may draw a reasonable inference of causation. See United States v. Falstaff Brewing Corp., supra, 410 U.S. at 534-35 n. 13, 93 S.Ct. at 1101-1102 n. 13, where the Court stated:
“The Government did not produce direct evidence of how members of the New England market reacted to potential competition from Falstaff, but circumstantial evidence is the lifeblood of antitrust law, see Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 [89 S.Ct. 1562, 23 L.Ed.2d 129] (1969); Interstate Circuit, Inc. v. United States, 306 U.S. 208, 221 [59 S.Ct. 467, 472, 83 L.Ed. 610] (1939); Frey & Son, Inc. v. Cudahy Packing Co., 256 U.S. 208, 210 [41 S.Ct. 451, 65 L.Ed. 892] (1921), especially for § 7 which is concerned ‘with probabilities, not certainties,’ Brown Shoe Co. v. United States, 370 U.S., at 323 [82 S.Ct., at 1522], As was stated in United States v. Penn-Olin Chemical Co., 378 U.S. 158, 174 [84 S.Ct. 1710, 1718, 12 L.Ed.2d 775] (1964), ‘[potential competition cannot be put to a subjective test. It is not “susceptible of a ready and precise answer.” ’
“Nor was there any lack of circumstantial evidence of Falstaff’s on-the-fringe competitive impact. As the record shows, Falstaff was in the relevant line of commerce, was admittedly interested in entering the Northeast, and had, among other ways, see n. 8, supra, made its interest known by prior-acquisition discussions. Moreover, there were, as my Brother Marshall would put it, objective economic facts as to Falstaff’s capability to enter the New England market; and the same facts which he would have the District Court look to in determining whether the particular theory of potential *362competition we do not reach has been violated, would be probative of violation of § 7 through loss of a pro-competitive on-the-fringe influence. See FTC v. Procter & Gamble Co., supra, [386 U.S.] at 580-81 [87 S.Ct. at 1231-32]; United States v. Penn-Olin Chemical Co., supra, [378 U.S.] at 173-177 [84 S.Ct. at 1718-1720]; United States v. El Paso Natural Gas Co., 376 U.S. 651, 660 [84 S.Ct. 1044, 1049, 12 L.Ed.2d 12] (1964).”
The Commission is not required, as the majority here apparently demands, to introduce “smoking gun” evidence to establish the element of causation. On the contrary, § 7 is concerned “with probabilities, not certainties,” Brown Shoe Co. v. United States, 370 U.S. 294, 323, 82 S.Ct. 1502, 1522, 8 L.Ed.2d 510 (1962). It is sufficient, therefore, to show a “probability that the acquiring firm prompted premerger pro-competitive effects within the target market by being perceived by the existing firms in that market as likely to enter,” not a certainty. United States v. Marine Bancorporation, Inc., supra, 418 U.S. at 625, 94 S.Ct. at 2871 (emphasis added). Section 7 bars an acquisition where “the effect . . . may be substantially to lessen competition ...” (emphasis added). Nor is it necessary to show that all pro-competitive activities in the market be attributed to the potential competitor’s presence at the edge as long as some substantial lessening of competition is shown, even though partial. Id.
In determining whether the Commission’s findings are supported by substantial evidence we may not substitute our inferences for those drawn by the Commission, provided its findings are rationally based. Fruehauf Corp. v. FTC, 603 F.2d 345, 351 (2d Cir. 1979). Nor may we reject the Commission’s findings merely because there is an equally plausible inference or because we have doubts about the reasonableness of the inference and consider another to be equally or even more reasonable. See NLRB v. Crystal Springs Shirt Corp., 637 F.2d 399, 402 (5th Cir. 1981). In short we are not the fact finders.
In the present case the majority in my view has violated these principles in rejecting the Commission’s finding of pro-competitive edge effect. The majority, without any foundation in the record or elsewhere, concludes that the Commission “ignored evidence contrary to its hypothesis,” and that “[w]e must weigh this evidence in our review of the substantiality of the record evidence,” supra, p. 357 (emphasis added). The first statement flies in the face of the record and the second violates the well-established rule that we do not “weigh” the evidence. We merely determine whether there was substantial evidence in support of the Commission’s findings.
The majority first faults the Commission’s statement that the record does not reveal competitive pressure by Monroe or by the other existing manufacturers on Maremont that would cause it to engage in its competitive campaign prior to Tenneco’s entry. The Commission’s statement, however, is clearly correct. There was no evidence of financial weakness on the part of Maremont when it engaged in active pro-competitive activities during the years immediately prior to the Tenneco-Monroe merger. Although Gabriel had been in a weak condition when it was acquired by Maremont in 1962, the business had long since been strengthened and was thriving now that Maremont had become the largest producer of replacement shock absorbers, accounting for more than 46.1% of replacement sales in 1976. If Maremont ever had a “shaky position in the replacement shock absorber market,” as the majority suggests, it was a decade earlier. In short, Maremont had made its heavy investment in Gabriel and through competition had captured the lion’s share of the market so that it was no longer required to engage in competitive activity, as it had years earlier, to maintain its No. 1 position as against the three other leading shock absorber manufacturers.
The majority next concludes that the Commission erred in stating that Maremont would not have voluntarily cut its prices and profits in a concentrated market. The majority attributes this activity, without any evidentiary basis, to Maremont’s need *363to compete against Monroe and others rather than to its desire to forestall Tenneco’s entry. Economic experience in an oligopolistic market is to the contrary. When, as here, four leading manufacturers possess what amounts to a collective monopoly in a business with high entry barriers, controlling 92% of the market sales, it is usually self-defeating for one to cut prices and profits, since the effect more often than not is to force the other three to do the same, leaving the market shares the same but profits reduced for all. 2 P. Areeda & D. Turner, Antitrust Law § 404b, at 273-74 (1978). This is what § 7 is all about.
“Nevertheless there is general agreement, . . . that an undue reduction in the number of competing sellers, or undue concentration of sales in the hands of a few relatively large sellers, is likely to lead to non-competitive pricing, either through recognized interdependence or actual collusion or both. Acceptance of that proposition brings one to the second key problem: neither economic theory nor empirical evidence specifies the minimum number of sellers normally necessary for effective price competition or the level of concentration among leading firms normally impeding it. However, there is a substantial consensus that independent pricing among sellers of a homogeneous product is likely to occur in a market with as few as 10 to 12 equivalent sellers or, unless the total number of firms is very small, with a four-firm concentration ratio below 55 or 60 percent. When that ratio exceeds 75 or 80 percent, the danger of non-competitive pricing is likely to be very high.” 4 P. Areeda & D. Turner, supra, § 908, at 27 (emphasis added).
Indeed, the majority’s earlier finding (p. 11) that the market “was not genuinely competitive” is inconsistent with its later finding that Maremont’s activity can “be explained by a need to compete against those already in the market,” specifically citing Monroe. (Maj. Opin. p. 357).
The majority next asserts that the Commission erred in rejecting the following testimony of Byron O. Pond, Jr., Senior Vice-President and Director of Maremont:
“Q Did the presence of Walker, IPC or Midas and/or TRW as likely potential entrants into the shock absorber market, have any effect on Maremont’s decisions, business decisions?
“A I don’t think that we looked specifically at competitors on a periodic basis or potential competitors, in developing our strategy. I think we developed our strategy and approach to the business based on how we perceive it and how we perceived the opportunities . . . . ” (Maj. Opin. p. 358).
Pond’s testimony is described by the majority as “direct evidence that Tenneco had no direct effect on Maremont’s business decisions or competitive activity.” Id. at 358. If this testimony stood alone it might support the majority’s characterization, subject to its being discounted heavily by the Commission (as is its right) as the statement of an obviously biased member of the “Big Four,” which had a great deal to gain by preventing a divestiture of Monroe that would put Tenneco back on the edge of the market, determined to enter as a new, fifth competitor rather than simply to succeed by acquisition to Monroe’s share as one of the existing four.
The inference drawn by the majority from Pond’s testimony, however, is destroyed by the balance of his answer:
“A ... We have long felt that the shock absorber business has been a very profitable and lucrative business and one that would be an enticing one to be in.
“And our feeling has been that this has made the shock absorber business an attractive one. Our — the attractive nature of the shock absorber business has caused us to invest because of the opportunities and also to invest because, if we didn’t invest, someone else would.
“We maintain service levels higher than most other people do in the industry. Where very often the norm is 90 to 92 percent availability, we have invested
*364considerably more in inventory to provide service levels in the 98 and 99 percent range. We have made significant investments in research and development in bringing new products to the market, not only to help increase our share of the business, but to make that a less exciting or less desirable business for competitors to expand in.
“Q Did this potential have any effect on Maremont’s costs or prices?
“A Well, it certainly had an impact on our cost. One of the ways that you strengthen your position in a business and restrict or limit the amount of competition that you are faced with is to make considerable efforts to become a low-cost producer. We have had as a company very aggressive cost-reduction programs over the past eight or nine years, but more specifically, over the past three to four years, to reduce the cost of our product, to reduce the cost of our every-day market products.” (App. at 678-81) (emphasis added).
In my view it was not unreasonable for the Commission to interpret Pond’s testimony, when viewed against all of the surrounding circumstances, as an admission implying that Tenneco was the “someone else” who would invest if Maremont did not and that Maremont had pursued its “efforts to become a low-cost producer” in order to “restrict or limit the [potential] competition that [it] . . . faced” from Tenneco. One would hardly expect Maremont, the largest manufacturer in a highly concentrated business — one of four controlling 92% of the market — to describe Tenneco by name as the reason for its own increased competitive efforts. An astute witness such as Pond, a top Maremont official, would recognize that in an antitrust suit based on lessening of perceived potential competition, testimony along such lines would increase the chances that Tenneco would be ordered to divest itself of Monroe, and that this in turn might result in Tenneco’s later entering the market de novo or by toe-hold acquisition, increasing the competition heavily as compared with the status quo which would continue if Tenneco were to remain simply as a successor to Monroe, the second largest manufacturer, accounting for 32.4% of replacement sales in 1976.
Regardless whether one agrees that Pond’s testimony supports the Commission’s finding, the interpretation most favorable to Tenneco would be that Pond’s testimony, standing alone, is ambiguous, not that it negates any “edge effect” caused by Tenneco’s potential entry. Not even the Administrative Law Judge went as far as the majority does here.. He simply stated that the testimony was “unclear” because it “can be read to refer to potential competitors, or it can be read to refer to competitors presently in the market, or to both.” Thus the majority errs in suggesting that the Commission’s finding is contrary to credibility findings made by an administrative law judge “who has observed the witnesses,” citing Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (holding that while the Board must consider an ALJ’s findings it may reverse an ALJ even though his findings are not “clearly erroneous”). The ALJ’s recommended decision here was not based on an appraisal of Mr. Pond’s credibility but on his unwillingness to choose one of three plausible interpretations of Pond’s testimony, each of which he recognized as reasonable. As the Supreme Court made clear in Universal Camera Corp., supra, the Commission, as the ultimate fact finder, was entitled, as long as it gave due consideration to the ALJ’s findings, which it certainly did here, to choose one of these interpretations rather than reject the testimony entirely as “unclear.” When one considers Pond’s testimony against the strong and undisputed proof that Tenneco was viewed by Maremont and others in the concentrated market as a powerful potential competitor, the Commission’s finding of edge effect is both rational and supported by substantial evidence.
For these reasons I dissent.
. Tenneco attempts to minimize its efforts at entry by pointing to the disadvantages posed by each: (1) that its negotiations with Armstrong died in July 1974 when the latter indicated that it was not for sale; (2) that negotiations through a broker for DeCarbon likewise failed because it set a selling price of 100 times earnings; and (3) that although it acquired the Terramatic patent with its purchase of Triple S, it did not allocate any of the purchase price to the patent. The record and findings of the ALJ, however, reveal other evidence from which continuing interest in a new entry by toe-hold acquisition may reasonably be inferred.
The ALJ found that Tenneco, following Armstrong’s 1974 refusal to sell, nevertheless believed Armstrong might react differently if it received a specific offer above the price quoted on the exchange for its stock. Moreover, Tenneco instructed its European office to maintain contact with Armstrong. The ALJ further found that Tenneco “continued to maintain its interest in Armstrong through 1976.” Tenneco acquired Monroe in 1976. Similarly, with respect to DeCarbon, the ALJ found that, although “the matter of price blocked a possible acquisition from the outset,” Tenneco in November 1976, during its on-going negotiations with Monroe, instructed the broker who had brought the DeCarbon prospect to Tenneco, to “stay in contact with the situation.”
With respect to its “Terramatic” patent acquired from Triple S, Tenneco as late as August *36112, 1976, took steps to insure that the patent rights be preserved and shortly prior to its acquisition of Monroe indicated that it planned to use the Terramatic design in the manufacture of steering dampers and to adapt it to other types of shock absorbers.