GINSBURG, Circuit Judge:

This is an appeal from a March 25, 1981, district court order denying the application of the Federal Trade Commission (FTC) for a preliminary injunction to block a proposed merger involving Menasha Corp. and Weyerhaeuser Co. The FTC's initial review suggested that the effect of the proposed transaction might be "substantially to lessen competition in the production of corrugating medium in the West Coast region, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 5 of the [Federal Trade Commission (FTC)] Act, 15 U.S.C. § 45." Complaint at 6. Invoking Section 13(b) of the FTC Act, 15 U.S.C. § 53(b) (1976), the Commission sought to preserve the status quo pending initiation and completion of administrative proceedings and any judicial review subsequent thereto.

The district court, although it determined that the Commission had established "a likelihood of success on the merits," refused to enjoin the merger. Finding that, in the particular circumstances this case presents, the public interest would be "better served by a less drastic remedy," the court ordered Weyerhaeuser to hold separate a portion of the assets acquired from Menasha. FTC v. Weyerhaeuser Co., 1981-1 Trade Cas. ¶ 63,974 (D.D.C. Mar. 25, 1981). We conclude that the manner in which the district court applied Section 13(b) to this case was consistent with the congressional design. Accordingly, we affirm the order on review.

I. BACKGROUND

Weyerhaeuser, a publicly owned corporation, manufactures a variety of forest products. It is the largest producer of corrugated containers in the United States. Before the merger at issue here, Weyerhaeuser was the seventh largest producer of corrugating medium, a component of corrugated containers, on the West Coast. Menasha, a privately held family corporation with about ninety shareholders, also manufactures wood products. Before the merger it was the third largest producer of corrugating medium on the West Coast. The merger would place Weyerhaeuser in the lead position among West Coast medium producers. 1981-1 Trade Cas. ¶ 63,974, at 76,044.

In June 1980, Weyerhaeuser and Menasha filed Premerger Notification and Report forms with the FTC. See 15 U.S.C. § 18a (Supp. III 1979). The reports announced Weyerhaeuser's proposed acquisition of Menasha's West Coast paperboard products assets, including a corrugating medium mill in North Bend, Oregon; an unimproved mill site one mile from the North Bend medium mill; and a cardboard container plant in Anaheim, California. In return for the West Coast assets, Menasha shareholders would receive two million shares of Weyerhaeuser stock. On December 12, 1980, the FTC, seeking to halt the acquisition, commenced this action pursuant to Section 13(b) of the FTC Act. Section 13(b) authorizes the Commission to seek a preliminary injunction when it "has reason to believe" that a party is about to violate the antitrust laws and that an injunction pending resolution of the issue "would be in the interest of the public." The court "may" grant a preliminary injunction "[u]pon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest."

The Commission's 13(b) action challenged only Weyerhaeuser's acquisition of the North Bend corrugating medium mill. Acquisition of the unimproved mill site and the container plant stimulated no objection. Acquisition of the medium mill, the Commission contended, would eliminate Menasha as a competitor in the already concentrated West Coast corrugating medium market, significantly increase concentration in that market, and increase the likelihood that West Coast corrugating medium producers would collude to raise medium prices. Complaint at 6; Plaintiff Federal Trade Commission's Proposed Findings of Fact and Conclusions of Law (hereinafter "FTC's Proposed Findings") at 21, Joint Appendix (J.A.) 841.

After five days of testimony, preceded and punctuated by the submission of numerous exhibits, the district judge concluded that, although the Commission had demonstrated "a likelihood of success on the merits," the merger should not be stopped. Instead, the judge granted interim relief in the form of a hold separate order pending the outcome of FTC-initiated administrative proceedings challenging Weyerhaeuser's acquisition of the North Bend medium mill. FTC v. Weyerhaeuser Co., 1981-1 Trade Cas. ¶ 63,974 (D.D.C. Mar. 25, 1981).

The district judge identified three equitable considerations that weighed against enjoining the merger: the merger would give Menasha shareholders a liquid asset and thus end erosion of the closely held company's capital base through forced redemption of shares; Weyerhaeuser's strong economic incentive to build a new linerboard mill on the North Bend undeveloped site, if pursued, would yield an "almost certain" increase in the supply of linerboard (a cardboard box component distinct from corrugating medium) on the West Coast and for export; construction of the linerboard mill would ease unemployment in North Bend. Id. at 76,047-48. (Weyerhaeuser's anticipated construction and operation of a new linerboard plant, in contrast to its acquisition of the medium mill, occasioned no FTC concern.)

In addition to these equities, the district judge further found that eventual divestiture of the North Bend corrugating medium mill would be a "feasible remedy" if the FTC ultimately succeeded in its administrative complaint, since the mill was "an integrated operation" that "would not be `scrambled' with Weyerhaeuser's [other] assets." Id. at 76,048-49. Finally, the judge indicated that a hold separate order could prevent interim anticompetitive harm during the pendency of FTC proceedings by "assuring that the North Bend mill's management, supply, production, sales, and pricing decisions are insulated from Weyerhaeuser, and . . . that the mill is guaranteed sufficient capital to maintain its operations and expand its capacity as demand requires." Id. at 76,049. Considering the equities weighing against a full stop preliminary injunction as well as the potential of a rigorous hold separate order to alleviate the Commission's concerns, the judge permitted the merger to proceed, but directed Weyerhaeuser to "cause the North Bend mill to be maintained and operated as a separate and ongoing entity in order that the mill will be capable of being divested as a viable competitor in the West Coast corrugating medium market pursuant to a subsequent order of the Federal Trade Commission." J.A. 1035B.

The FTC immediately asked the district judge to stay the merger pending appeal, or for thirty days, or even for seventy-two hours to permit the Commission to seek an injunction from this court pending appeal. The judge denied these requests as well as a final Commission plea to stay the merger until the following morning. He rejected the plea for an overnight stay despite FTC representations that, absent a holding order, Weyerhaeuser and Menasha might consummate the merger before the Commission could apply to the court of appeals for emergency relief. J.A. 1063-64.

On the evening of March 25, 1981, less than three hours after the district court had refused to grant any restraint against the merger, the FTC filed in this court an emergency motion for an injunction pending appeal. Approximately seventy minutes later this court granted a temporary stay. Before the FTC had even filed its emergency motion, however, Weyerhaeuser and Menasha had consummated the merger.

On April 7, 1981, a motions panel of this court granted the FTC's motion for an injunction pending appeal. FTC v. Weyerhaeuser Co., 648 F.2d 739 (D.C. Cir. 1981). The Commission emphasized then, as it does now, that preliminary injunctions rather than hold separate orders had issued in every known horizontal merger case in which the government sought injunctive relief, demonstrating both (1) a likelihood of ultimate success, and (2) the prospect of interim anticompetitive harm in the absence of any restraint. See Brief of Appellant at 54. Finding that the FTC had met the standards of Virginia Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958), for an injunction pending appeal and that the companies "acted at their peril in completing the act that the FTC sought to enjoin," 648 F.2d at 742, the motions panel directed the parties "to return to the status quo existing at the time when the motion for injunctive relief was denied in the District Court." Id. The panel explained that its direction to undo the merger was designed to preserve this court's ability to review in full on the merits the district court's denial of the FTC's request for a preliminary injunction. An order of that preservative genre may be issued, the panel noted, even "`without considering the ultimate rights of the parties in the controversy.'" Id. (quoting Ramsburg v. American Investment Co., 231 F.2d 333, 337 (7th Cir. 1956)).

Although the motions panel thus ordered the merger undone, the parties have not accomplished the dissolution. On April 17, 1981, Weyerhaeuser submitted a proposed implementing order that would declare the merger void ab initio. We deferred consideration of that suggestion pending additional submissions by the parties addressed to the issue.

The appropriate method of undoing the merger has become an academic question in view of our affirmance of the district court's order. Nonetheless, we pause to comment on the extraordinary situation our motions panel confronted. It was not consistent with the fair, effective administration of justice for the district judge to deny to a party, situated as was the FTC in this case, even a brief holding order affording time to apply to this court for provisional relief.

II. MOOTNESS

Before turning to the merits of the Commission's appeal, we respond to the argument, still pressed by Menasha and Weyerhaeuser, that consummation of the merger when no restraining order was outstanding removed the district court's ruling from this court's scrutiny. We concur in the motions panel's view of this issue. 648 F.2d at 741-42. Since all participants in the merger are parties to the action, this tribunal is not bereft of authority to command return to the status quo ante.

The FTC instituted this action against Weyerhaeuser and Weybuy. Less than a month after the action commenced, Menasha sought and obtained leave to intervene as a party defendant. Both Menasha and Weyerhaeuser filed briefs as appellees and presented oral argument on appeal. This is not a case in which the absence of a party to the transaction at issue disarms the court from granting effective relief. Cf., e.g., In re Combined Metals Reduction Co., 557 F.2d 179 (9th Cir. 1977) (after district court decision, trustee in bankruptcy disposed of property; appeal was moot since purchasers and other interested parties were not before court); Fink v. Continental Foundry Machinery Co., 240 F.2d 369 (7th Cir.) (shareholders of Continental sued to prevent company from selling assets; officers sold assets pending appeal; claim was moot because purchasers were not before court), cert. denied, 354 U.S. 938, 77 S.Ct. 1401, 1 L.Ed. 1538 (1957); Sobel v. Whittier Corp., 195 F.2d 361 (6th Cir. 1952) (shareholder of Whittier Corp. sued to restrain merger of Whittier with Detroit Housing Corp.; companies merged pending appeal; claim was moot because Detroit Housing Corp. had never been made a party and court could not order effective relief in its absence); Shaw v. Lane, 47 App.D.C. 170 (1917) (suit to enjoin Secretary of Interior from delivering mineral leases; leases were delivered pending appeal; case was moot since lessees were not before the court), appeal dismissed sub nom. Shaw v. Payne, 254 U.S. 609, 41 S.Ct. 60, 65 L.Ed. 436 (1920). Rather, all parties necessary to effective review and disposition of the controversy are represented in this court as they were in the district court. We therefore follow the precedent relevant in these circumstances. See, e.g., Industrial Bank of Washington v. Tobriner, 405 F.2d 1321 (D.C. Cir. 1968) (bank sued to enjoin D.C. Commissioners from issuing tax deed to one Scheve; Commissioners issued deed pending appeal; case was not moot since both Commissioners and Scheve were parties); Bastian v. Lakefront Realty Corp., 581 F.2d 685 (7th Cir. 1978) (shareholder of Lakefront Realty Corp. sued to enjoin sale of property to Northwestern University; sale completed pending appeal; case was not moot because both Lakefront and Northwestern were before the court); Ramsburg v. American Investment Co., 231 F.2d 333 (7th Cir. 1956) (shareholders of Domestic Finance Corp. sought to enjoin merger with American Investment Co.; companies merged pending appeal; case was not moot since both companies were parties).

Again, we note that the suggestion of mootness was made possible only by the district court's resistance to a holding order of any kind. A temporary restraint pending an application to this court would have provided the breathing space warranted under the circumstances without implying that the district judge was insecure about the judgment he had made. See Washington Metropolitan Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 843, 844-45 (D.C. Cir. 1977) (district court may "grant a stay even though its own approach may be contrary to movant's view of the merits"; "tribunals may properly stay their own orders when they have ruled on an admittedly difficult legal question and when the equities of the case suggest that the status quo should be maintained"); cf. FTC v. National Tea Co., 603 F.2d 694 (8th Cir. 1979) (although district court denied, and court of appeals upheld denial of, FTC request for an injunction, court of appeals enjoined merger for ten additional days to afford Commission an opportunity to seek relief from Supreme Court).

III. THE MERITS

On the facts as well as the law, the FTC contends that clear error infects the district court's order. The Commission assails particularly the finding below, as "one of the equities," that pursuit of Weyerhaeuser's plan to construct a new linerboard mill would yield an "almost certain" increase in the supply of that product. As to the governing law, the FTC charges no mere misapplication of Section 13(b), but a refusal to apply the statute. According to the Commission, when, as in this case, the FTC demonstrates a likelihood of success, and the court acknowledges the prospect of interim anticompetitive harm if provisional relief is not granted, then, almost without exception, a preliminary injunction must issue. We deal first with the Commission's assault on the district court's determination relating to Weyerhaeuser's plans to construct a linerboard mill, next with the governing legal standard, and finally with the application of that standard to the congeries of circumstances this case presents.

A. Challenged Fact Findings.

The fact findings challenged by the FTC bear significantly on the district court's decision to order safeguards stopping short of a preliminary injunction. We therefore indicate in some detail why we disagree with the Commission's view that the findings should be set aside as "clearly erroneous." See Fed.R.Civ.P. 52(a).

Consummation of the acquisition, the district court stated, would result in "the almost certain increase of linerboard supply through construction of a new liner mill at Menasha's undeveloped mill site." 1981-1 Trade Cas. ¶ 63,974, at 76,047. This new construction would "(1) increas[e] linerboard supply on the West Coast, and for export; and (2) increas[e] employment in the North Bend area." Id. at 76,048. The FTC attacks these findings as resting on nothing more solid than Weyerhaeuser's "purely self-serving speculation." Brief of Appellant at 28. We find more substantial support for the findings in the record.

Weyerhaeuser's vice president in charge of the paperboard and packaging division, John H. Waechter, testified that his company "very definitely" planned to construct a linerboard mill at the vacant site. J.A. 337. That construction, he said, "was one of the prime considerations" for the Menasha acquisition. J.A. 338. Indeed, the FTC stated in its Proposed Findings (90 n. 2, 98 n. 1) that "Weyerhaeuser's initial interest focused on the [undeveloped] mill site," J.A. 863, that "[s]uch mill sites are scarce," and that "there are no other known comparable mill sites in the West Coast region." J.A. 867. These undisputed realities, we believe, contradict the dissenting opinion's repeated references to "the piece of vacant land" as a pretext, a "creative use of boot," a tacked on "appurtenance." See Dissent at 1094, 1095, 1096.

Waechter had discussed the new mill with the board of directors when he presented the proposed merger to them. J.A. 392. He looked toward commencement of construction in 1986 or earlier, although he was unable currently to supply an estimate of the starting time. J.A. 353, 392. Weyerhaeuser was not likely to encounter antitrust objections with respect to its construction and operation of the linerboard plant. See FTC's Proposed Findings 98, J.A. 867. Waechter believed the company would build the plant even if it were ordered, as a result of the FTC's administrative complaint, to divest the one Menasha asset the Commission maintains Weyerhaeuser should not acquire — the North Bend corrugating medium mill. J.A. 338.

Two internal Weyerhaeuser documents supported Waechter's testimony. The company's report to its board of directors on the proposed merger calls attention to the "potential linerboard site." J.A. 1207. And a confidential interoffice communication, introduced into evidence by the FTC, indicates that by January 1980 Weyerhaeuser had commenced preparatory work on the project. Weyerhaeuser officials had contacted Oregon's Department of Ecology concerning environmental aspects of the mill's construction and operation and had inquired about the supply of water. J.A. 1208.

Third parties supplied relevant statements. Two testified in court, others submitted affidavits. William E. Smith, Mayor of North Bend, testified at the hearing and confirmed that Weyerhaeuser had checked with local authorities about the availability of water to run the mill. J.A. 315. He expressed his confidence, and that of the community, based on past "good experience" with Weyerhaeuser, that the mill site would be developed "if Weyerhaeuser had it." J.A. 316. See also J.A. 314. The group vice president of an independent corrugated container manufacturer also testified to his expectation that Weyerhaeuser would construct the linerboard plant and expand supply of linerboard. J.A. 207-08, 212-13 (testimony of Richard Brundage).

There was abundant testimony that if Weyerhaeuser did construct the mill, it would alleviate unemployment in North Bend, increase domestic supplies of linerboard, and produce some linerboard for export. The FTC did not seriously dispute this testimony. The Commission's expert witness stated that "[a]ll other factors constant," an increase in linerboard production would be procompetitive. J.A. 501 (cross-examination of Walter J. Mead). The FTC's Reply to Defendants' Prehearing Memorandum acknowledged that if Weyerhaeuser acquired only the undeveloped mill site, and if its representations were genuine, it "could improve employment prospects to Coos Bay residents; increase the supply of linerboard; [and] protect the environment." J.A. 40B. The FTC did insist that construction of the linerboard mill was an independent matter that should not be compounded with, and did not justify, acquisition of the corrugating medium mill. However, the Commission recognized that construction of the former facility would produce important benefits.

Weyerhaeuser is not legally bound to develop the mill site, and the district court so stated. 1981-1 Trade Cas. ¶ 63,974, at 76,048. However, Weyerhaeuser's assertion of a fixed intention to build and operate a linerboard plant at the site is supported by live testimony of a high-ranking officer, company documents, prehearing action taken by the company, third party testimony, and the FTC's own Proposed Findings (90 n. 2, 98 n. 1, J.A. 863, 867). Hearings on preliminary injunctions necessarily look to the future and decisions must rest on comparative, tentative assessments of the course of events if the injunction is issued, and if it is not. We cannot conclude from the evidence we have reviewed that the district judge, who heard and evaluated the testimony first hand, clearly erred when he determined that, absent a preliminary injunction, Weyerhaeuser would proceed to complete and implement plans for the construction and operation of a linerboard plant at North Bend.

B. The Statutory Standard.

As noted earlier, Section 13(b) conditions issuance of a temporary restraining order or a preliminary injunction "[u]pon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest." The FTC maintains that the district judge defined "the equities" in a manner incompatible with the purpose of 13(b) and that, despite his recognition that the FTC had established a claim for relief, he displaced the only remedy specified in 13(b), a preliminary injunction, and substituted for it an interim arrangement (the hold separate order) of his own invention. We treat in turn each of the charges that the district judge acted in opposition to the directions set for him by Congress.

1. The Equities.

The Commission urges that there is no equity to weigh here other than the one it advances — the public interest in effective antitrust enforcement. Once the Commission shows a likelihood of ultimate success and a prospect of interim harm if a merger goes unchecked, then, according to the FTC, a preliminary injunction barring the acquisition should issue without further ado. Our reading of the statute and its legislative history does not accord with the Commission's. We find that Congress had in view equities other than antitrust enforcement and a role for the court less mechanical than the one the FTC describes.

Section 13(b) was initiated by a Senate floor amendment to the proposed Federal Lands Right-of-Way Act of 1973. As originally composed, the provision did not include the phrase "weighing the equities and considering the Commission's likelihood of ultimate success." 119 Cong.Rec. 22978-79 (1973) (text of floor amendment). That language was added in Conference. H.R. Rep. No. 624, 93d Cong., 1st Sess. 18 (1973), U.S. Code Cong. Admin.News 1973, p. 2417. We do not believe the deliberate addition of a reference to "the equities" should be brushed aside as essentially repetitive or meaningless.

The Conference Report provides an explanation of the derivation and purpose of 13(b). In its entirety, the Report's discussion of 13(b) reads:

[The Section] relates to the standard of proof to be met by the Federal Trade Commission for the issuance of a temporary restraining order or a preliminary injunction. It is not intended in any way to impose a totally new standard of proof different from that which is now required of the Commission. 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 the need for injunctive relief.

The inclusion of this new language is to define the duty of the courts to exercise independent judgment on the propriety of issuance of a temporary restraining order or a preliminary injunction. This new language is intended to codify the decisional law of Federal Trade Commission v. National Health Aids, D.C., 108 F.Supp. 340 and Federal Trade Commission v. Sterling Drug, Inc., [2d Cir.] 317 F.2d 669, and similar cases which have defined the judicial role to include the exercise of such independent judgment. The Conferees did not intend, nor do they consider it appropriate, to burden the Commission with the requirements imposed by the traditional equity standard which the common law applies to private litigants.

Id. at 31, U.S. Code Cong. Admin.News 1973, p. 2533 (emphasis in original).

As the second paragraph of the Conference Report discussion highlights, Section 13(b) was not designed to innovate. Rather, Congress "intended to codify the decisional law." The courts had evolved an approach to cases in which government agencies, acting to enforce a federal statute, sought interim relief. The agency, in such cases, was not held to the high thresholds applicable where private parties seek interim restraining orders. Most importantly, the case law lightened the agency's burden by eliminating the need to show irreparable harm.

In addition to emphasizing the lighter burden placed on the agency, however, the Conference Report underscores another point — the judgmental role envisioned for the courts. The case law Congress codified removes irreparable damage as an essential element of the preliminary injunction proponent's case and permits the judge to presume from a likelihood of success showing that the public interest will be served by interim relief. However, the judge remains obligated "to exercise independent judgment on the propriety of issuance of a temporary restraining order or a preliminary injunction." H.R. Rep. No. 624, at 31, U.S. Code Cong. Admin.News 1973, p. 2533. Independent judgment is not exercised when a court responds automatically to the agency's threshold showings. To exercise such judgment, the court must take genuine account of "the equities."

The district court weighed both private and public equities in reaching its determination. In the former category, the court considered the interest of Menasha shareholders in realizing the value of their stock and the advantage to Menasha of continued operations on a more centralized basis. As public equities, the court counted the potential increase in linerboard supply on the West Coast and for export, and the development of employment opportunities in the North Bend area.

The FTC asserts that the fortunes of Menasha Corp. and its shareholders merit no or, at most, minimal weight. And the advantages forecast for the North Bend economy and the linerboard market, the Commission argues, are irrelevant since these benefits would not supply a defense to the pending charge of anticompetitive effects in the corrugating medium market. We conclude that private equities merit consideration, although, standing alone, they do not override an FTC likelihood of success showing. We reject the FTC's argument that public benefits do not count unless they relate to the relevant market, here, corrugating medium, and could form part of the defense to the Commission's antitrust complaint.

As to private equities, we note that the statutory reference to "the equities" is not qualified. Prior to the enactment of Section 13(b), courts weighed private equities in the balance in cases in which preliminary injunctive relief was sought to restrain an alleged statutory violation. Since Congress intended to codify that case law, we have no warrant to drop private equities from the calculus. However, we agree with the Commission to this extent. Private equities do not outweigh effective enforcement of the antitrust laws. When the Commission demonstrates a likelihood of ultimate success, a countershowing of private equities alone would not suffice to justify denial of a preliminary injunction barring the merger. We hold only that a district court does not err when it considers private equities weighing against a total stop order in conjunction with public equities that also support less drastic interim relief.

The public equities involved here, projected procompetitive benefits from construction of a new linerboard mill, with attendant improvement in the area employment rate, would not qualify as defenses to the charged violation of Section 7 of the Clayton Act, the FTC maintains. As the Commission puts it, "[a] merger which may lessen competition is not saved because, `on some ultimate reckoning of social or economic debits and credits, it may be deemed beneficial.'" Brief of Appellant at 62-63 (quoting United States v. Philadelphia National Bank, 374 U.S. 321, 371, 83 S.Ct. 1715, 1745, 10 L.Ed.2d 915 (1963)). But the district court's reckoning in a 13(b) proceeding is tentative. The determination of a likelihood of success must be made under time pressure and on incomplete evidence. The risk of an erroneous assessment is therefore higher than it is after a full evidentiary presentation. Accordingly, it is permissible for the court to weigh among "the equities" the potential benefits, public and private, that may be lost by a merger-blocking preliminary injunction, whether or not those benefits could be asserted defensively in a proceeding for permanent relief. We do not believe that the district court, mindful that its "likelihood of success" evaluation is only a forecast, should be precluded from taking into account the costs entailed should its prediction prove erroneous.

2. Relief Pursuant to Section 13(b) Short of a Full Stop Order: The Hold Separate Order. a. Authority to issue a hold separate order.

According to the FTC, Section 13(b) presents the courts with an all or nothing choice. The FTC argues that 13(b) authorizes a preliminary injunction blocking a merger in toto, but no relief short of a full restraint. A less drastic measure, such as a hold separate order, does not bear congressional approval, the FTC maintains, and can be justified, if at all, only as an exercise of the court's "inherent equity powers." Although embraced by our dissenting colleague ( see Dissent at 1091-92, 1093, 1095-96), we find scant sense in this distinction, nor is it moored to the words of the statute or its legislative history.

When Congress enacted Section 13(b) in 1973, the hold separate order was an established device in antitrust law enforcement. Indeed, the first reported government effort to enjoin a merger under the Clayton Act resulted in a hold separate order. United States v. Brown Shoe Co., 1956 Trade Cas. ¶ 68,244 (E.D.Mo. 1956). See also FTC v. PepsiCo, Inc., 477 F.2d 24 (2d Cir. 1973); United States v. G. Heileman Brewing Co., 345 F.Supp. 117 (E.D.Mich. 1972); United States v. International Telephone Telegraph Corp., 306 F.Supp. 766 (D.Conn. 1969), appeal dismissed, 404 U.S. 801, 92 S.Ct. 20, 30 L.Ed.2d 34 (1971). Section 13(b) confirms the equity power courts exercised prior to its enactment to grant interim relief in aid of the FTC's law enforcement authority. Congress expressed a plain purpose to codify decisional law, not to straitjacket it, and to recognize "the duty of the courts to exercise independent judgment." See pp. 1081-82 supra.

We emphasize that 13(b) does not "mandate" remedial rigidity. Cf. Dissent at 1091, 1095. Principally, it posts a clear entrance sign for FTC provisional relief applications by eliminating the need for the Commission to resort to the All Writs Act. See note 20 supra. Further, it speaks of relief the court "may" (not shall) grant.

Significantly, legislative proposals explicitly authorizing FTC provisional relief applications initially focused on consumer protection cases, not mergers threatening antitrust violations. See S. 986, 92d Cong., 1st Sess. (1971); S. 3065, 90th Cong., 2d Sess. (1968). The expanded authorization in 13(b) encompassing "any provision of law enforced by the Federal Trade Commission" was introduced by Senate floor amendment. See note 20 and accompanying text supra. Apparently sparked by the FTC General Counsel's request to Senator Jackson, see 119 Cong.Rec. 22979 (1973), the enlarged scope of the authorization was not specifically discussed in any committee report or floor debate. We therefore believe our dissenting colleague is misguided in assuming that Congress wanted only full stop orders, temporary or preliminary, and no less drastic restraint, as a 13(b) remedy. See Dissent at note 5 and accompanying text. A wide range of offenses mark the areas (unfair methods of competition, unfair or deceptive acts or practices) that first attracted congressional concern to arm the FTC with clear authority to seek interim relief. See 15 U.S.C. § 53(a). We therefore think it most logical to assume that Congress anticipated the courts would mold decrees "to the necessities of the particular case," with the "[f]lexibility rather than rigidity" that has distinguished "[t]he historic injunctive process." Hecht Co. v. Bowles, 321 U.S. 321, 329, 64 S.Ct. 587, 591, 88 L.Ed. 754 (1944).

In sum, neither we nor our dissenting colleague can confidently assert based on the wording or the genesis of 13(b) that Congress, when it enacted the provision, adverted specifically to a hold separate order. We believe, however, that we are on secure ground in recognizing that "[w]e are dealing here with the requirements of equity practice with a background of several hundred years of history." Id. "The historic injunctive process," id., entails decrees adjusted to fit the practical situation the case presents, not wooden, mandatory rulings. A hold separate order is in form and effect a preliminary restraint, albeit less drastic than a full stop order. Such an order, we conclude, is not outside the range of relief a 13(b) application may warrant.

b. The effect of a "likelihood of success" finding on the choice of an interim remedy.

The Commission argues most strenuously than even if a hold separate order in lieu of a preliminary injunction barring an acquisition is compatible with Section 13(b) in some circumstances, such an order, commanded by the court, never comports with the public interest in a horizontal merger case once the FTC has demonstrated a likelihood of ultimate success on the merits and the risk of anticompetitive harm pendente lite. See Brief of Appellant at 54 (in every known case presenting these features courts have found a hold separate order an inappropriate substitute for a full stop preliminary injunction). In such a case, the Commission maintains, the court must issue a full stop order to assure that adequate final relief will be available and to prevent interim anticompetitive harm.

While we do not adopt the absolute position the FTC espouses, we agree that a likelihood of success finding weighs heavily in favor of a preliminary injunction blocking the acquisition during the course of proceedings on the Commission's administrative complaint. Section 13(b) authorizes such an order after the court has "weigh[ed] the equities and consider[ed] the Commission's likelihood of ultimate success." While the words of the statute are permissive, not mandatory, the underlying intent to secure effective antitrust enforcement indicates that, once the FTC has shown a likelihood of success, a preliminary injunction stopping the merger should issue unless three countervailing features mark the particular case: significant equities favor the transaction and the less drastic restraint of a hold separate order realistically can be expected (a) to safeguard adequate eventual relief if the merger is ultimately found unlawful, and (b) to check interim anticompetitive harm. This approach avoids two undesirable extremes. It does not countenance "equity [which] varies like the Chancellor's foot." Neither does it displace the independent judgment of the court by committing to the sole discretion of the FTC the decision whether, despite a likelihood of success assessment, factors unique to the particular case warrant acquiescence in a hold separate order.

We thus resist holding that a court has no remedial choice once it finds a likelihood of ultimate success (and, absent any restraint, a prospect of interim harm) but must leave it to the FTC to acquiesce or not in relief less stringent than a full stop preliminary injunction. We recognize, however, that, in many situations, a hold separate order would not adequately secure eventual final relief or prevent interim anticompetitive harm. We indicate below some of the considerations that, in particular cases, will weigh against provisional relief less potent than a merger-blocking preliminary injunction.

A hold separate order that cordons the acquired assets, even if it preserves the possibility of divestiture, may risk transfer of confidential information from the acquired, "held separate" company to the acquiring company. If that transfer occurs, ultimate divestiture will not fully restore competition because the acquiring company will retain trade secrets of its acquired competitor. Similarly, a hold separate order may be ineffective if unique management personnel serve the acquired company. A talented entrepreneur may not remain at the helm of the business once it is placed under the aegis of another company. Nor will a hold separate order preserve divestiture as an effective ultimate remedy if the held separate assets are not sufficiently attractive to interest a buyer or if the only likely disposition of the assets is a sale that would itself lessen competition.

As to interim anticompetitive harm, the practicalities of the situation suggest that, even if all or part of an acquired company is held separate from its acquiring parent, competition between the enterprises will not retain the vigor it had prior to the merger. A hold separate order, therefore, may not be a feasible device where the competitiveness of firms in a particular industry turns, in large part, on aggressive or innovative management initiatives. Hold separate orders will also be contraindicated where the acquired company was planning prior to the acquisition to embark on a new pro-competitive venture; where it is not in the acquiring company's economic interest to preserve its new purchase as a going business; where goodwill built up by the acquired company might be impaired by its association with the acquiring company; where uncertainty about the acquired entity's future may substantially impair its ability to achieve long-term contracts necessary for its continued vitality or notably undermine personnel recruitment and employee morale and performance; or where the acquired company markets its products through distributors who may leave the fold in anticipation of the ultimate integration of the acquired entity into its purchaser.

In sum, a hold separate order, in face of an FTC showing of a likelihood of success, should not issue absent careful review of the particular features of the proposed merger and a reasoned determination from the evidence that the milder restraint will operate as an adequate preservative (impeding interim harm, and safeguarding eventual divestiture) and, in view of the equities entailed, genuinely serve the public interest. When such a determination is fairly made, however, the hold separate order can secure important benefits that a merger-blocking preliminary injunction would sacrifice. A preliminary injunction may kill, rather than suspend, a proposed transaction. A hold separate order, on the other hand, aims to preserve a transaction that may, after all, turn out to be legal. In addition, a hold separate order shifts the risk of decline in value of the challenged assets from the acquired company to the acquiring company. FTC v. Exxon Corp., 636 F.2d 1336, 1343-44 n. 26 (D.C. Cir. 1980). Finally, such an order permits the public immediately to reap the unchallenged benefits of a proposed transaction where, as in this case, the Commission disputes only part of the transaction.

Having rejected the Commission's proposed per se rule that courts may not impose, sua sponte, a hold separate order in lieu of a full stop preliminary injunction when the Commission has established a likelihood of ultimate success, we turn finally to the question whether the district court acted reasonably in directing a hold separate arrangement in this case.

C. The District Court's Exercise of Discretion.

In the preceding section, we ruled that, even when the Commission establishes a likelihood of success on the merits, a court may enter a hold separate order rather than a merger-blocking preliminary injunction if (1) strong equities favor consummation of the transaction; (2) a hold separate order will check interim competitive harm; and (3) such an order will permit adequate ultimate relief. We now consider whether the district court's disposition comports with this ruling.

We have no occasion to question the district court's determination that the Commission had established a likelihood of success on the merits. No cross-appeal has been pursued on this issue. The district court concluded from the evidentiary presentation that the merger would "significantly" increase concentration in an already concentrated West Coast corrugating medium market, eliminate Menasha as a competitor, and increase the likelihood of collusion. 1981-1 Trade Cas. ¶ 63,974, at 76,044-45. The motions panel observed in this regard that the Commission had made a " strong showing . . . that the merger . . . violates Section 7 of the Clayton Act." 648 F.2d at 741 (emphasis in original).

But the district court proceeded to identify strong equities favoring the merger. The court found that Weyerhaeuser was almost certain to increase linerboard supply by constructing a new linerboard mill at the site left undeveloped by Menasha near North Bend. Construction of the linerboard mill will alleviate unemployment in North Bend and the surrounding area, and it is likely to provide an output for which there is a demand in this country as well as abroad. We deem significant in evaluating these equities the FTC's recognition that "Weyerhaeuser's initial interest [in an acquisition from Menasha] focused on the [undeveloped] mill site," and that "there are no other known comparable mill sites in the West Coast region." FTC's Proposed Findings 90 n. 2, 98 n. 1, J.A. 863, 867.

In the private equity category, the district judge stated that the merger would permit Menasha's shareholders to trade their illiquid shares in that company for highly liquid Weyerhaeuser stock. More was at stake than the private financial gain that might attend any merger. The exchange would relieve pressure on the company to redeem shares of stockholders seeking to meet death taxes or other obligations. While similar benefits might have been obtained from a transaction that did not elicit the FTC's concern, the district court could properly consider Menasha's interest in disposing at once of all its West Coast paperboard facilities so that it could concentrate on expanding and improving its Midwest production. Taken together, we find the public and private equities in this case sufficient to satisfy the first condition of our test. We do not believe the district court's weighing of these equities is appropriately characterized as an abuse of discretion.

The district judge further determined that a hold separate order would satisfy the second element of our test. He found such an order adequate to check interim anticompetitive harm. The order forbids Weyerhaeuser from taking any "direct or indirect" action that would interfere with the North Bend corrugating medium mill's operation as a "separate and ongoing enterprise." J.A. 1035B. Menasha must recruit any additional management and sales personnel needed to operate the medium mill as an "independent competitor." Id. None of the management or sales personnel of the mill may own stock in Weyerhaeuser, and none may have been recent employees of Weyerhaeuser. Id.

In addition, the hold separate order addresses two of the Commission's specific concerns in prosecuting this action. The North Bend corrugating medium mill may not give Weyerhaeuser's container plants any preference, id.; therefore, the mill's supply of medium will be available on the open market. Further, Weyerhaeuser may not reduce annual production at the mill. Id. This restriction is of key importance, since the FTC indicated that "the basic theory of [its] case" was that the merger would give Weyerhaeuser "an inordinate ability to restrict production if they wanted to raise prices." J.A. 808C (inquiry of district judge during FTC's closing argument). The district court's order, however, is plainly intended to prevent the North Bend medium mill from participation in any agreement, implicit or explicit, to reduce supply and thus raise prices. Moreover, the FTC, pursuant to the order, may request further and more precise directions to carry out its purpose. J.A. 1035C. Given the circumstances of the industry, the initial terms of the hold separate order, and the avenue open to the FTC to seek clarifying or strengthening provisions, we find that the district judge reasonably concluded that such an order would prevent interim anticompetitive harm.

We emphasize that the record in this case does not manifest impediments to effective operation of a hold separate order. See pp. 1085-87 supra. The merger forestalled no plans by Menasha to embark on new, aggressive competition. It is in Weyerhaeuser's economic interest to maintain the vitality of the North Bend medium mill; should the FTC ultimately fail in its complaint, Weyerhaeuser expects to use the medium mill to supply its own box plants. See J.A. 326-27 (testimony of John H. Waechter, Weyerhaeuser vice president in charge of paperboard and packaging). Since corrugating medium is a fungible product, there is little brand loyalty, see, e. g., J.A. 458-59 (testimony of James B. Hoover, executive vice president of Newark Group, Inc.); demand for medium produced by the North Bend mill should not slacken while it is held separate. The North Bend medium mill does not market its product through a network of distributors that may wither away during the pendency of an administrative proceeding. Further, although the FTC expert witness asserted at one point that Menasha was a particularly independent competitor, J.A. 606 (redirect examination of Walter J. Mead), the evidence does not appear to support that assertion. As Steven V. Hudson, a manager for International Paper, explained, Menasha (like most medium manufacturers) consumed most of its corrugating medium, either directly or indirectly, in its own box plants. J.A. 422. Menasha's North Bend mill sold only 4.2% of its output on the open market. J.A. 260 (testimony of Richard Johnson, chairman of Menasha's board of directors). Trading only this small amount of medium on the open market, Menasha is not readily labeled a markedly "independent" or "aggressive" competitor. In sum, we cannot discern, nor has the FTC directed our attention to, any specific ways in which a well-designed hold separate order would be inadequate to prevent interim anticompetitive harm in this case.

The district court further determined that the third prong of our test was satisfied. He concluded from the evidence that eventual divestiture would be a "feasible remedy." 1981-1 Trade Cas. ¶ 63,974, at 76,048. We find no fatal flaw in his conclusion. Nor has the FTC or our dissenting colleague suggested any. The evidence showed that the North Bend corrugating medium mill is an efficient, low-cost operation, an attractive asset that Menasha has operated as a largely self-sufficient entity. The manufacture of medium involves no trade secrets that could be siphoned off by Weyerhaeuser during the administrative proceedings. And, as mentioned above in relation to the efficacy of the hold separate order to prevent interim anticompetitive harm, customers of the mill are not likely to develop a "brand name" loyalty, since medium is a fungible product. It appears, therefore, that in the event the acquisition is held illegal, Weyerhaeuser could dispose of the North Bend mill through sale to another wood product manufacturer or sale to a manufacturer in an unrelated market.

Since it was not unreasonable to conclude that public and private equities favored the merger, and that a hold separate order could protect against interim harm and preserve the prospect of effective ultimate relief, we hold that the district judge did not abuse his discretion in denying a full stop preliminary injunction and in granting instead a less drastic restraint. Our decision is not intended to encourage district judges to compromise the public interest in antitrust enforcement with a "Solomonlike" judgment in favor of a hold separate order whenever any equities favor the transaction. Each case must be approached on its unique facts and with appropriate attention to the purpose of Section 13(b).

CONCLUSION

In accordance with the foregoing, we affirm the district court's order, and remand the case for further proceedings to implement the hold separate arrangement.

It is so ordered.