19. «Tying» effect. «Tying» is making it a condition of the sale of a product or the furnishing of a service that the customer purchase an additional product or service. » When money is *637 scarce or in great demand the possibility for tying is, of course, greater. Banks and their various departments and affiliates encourage customers of one department or affiliate to deal with the other departments or affiliates.
Tying «effect» is suggested to be the tendency of customers to patronize one portion of a lender’s operation without any overt suggestion so that they will get a favored position with the lending departments when loan time arrives
There was considerable testimony describing tying and tying effects, and some testimony which was contended to demonstrate that tying had actually taken place, but the court on this record is unable to conclude that any tying actually has occurred nor that the tying «effect» is anything more than a contention on the part of the plaintiff, nor that it would be likely to occur in the future.
A factoring client under the testimony may be a poor customer for conventional bank loans. He may be factoring in the first instance because of a less than excellent credit rating; to obtain factoring he must assign his accounts receivable which are his liquid assets; and those who factor their accounts receivable are therefore apparently not the prime candidates for conventional bank loans in the first place. There is therefore serious doubt on this record that the tying effect, even if demonstrated, would constitute a substantial impairment to competition.
Wachovia is not licensed under the North Carolina statutes as a small loan lender
20. Consumer lending (small loans on security other than automobiles). American, through its Home Credit Companies, makes small loans (under $900) in North Carolina and in other states. In 1969 its consumer loan volume was more than $196,000,000 and the number of customers was more than 256,000 (GX 2, page 16). Of that volume, $34,043,522 was North Carolina business. The record shows that American had about 13% of the consumer loan receivables outstanding in the State of North Carolina. American Credit appears to be the largest consumer lender in the state.
Small loan operations are subject to state regulation, and enjoy the higher interest rates allowed by North Carolina General Statutes, 53-173. Generally, speaking, their loans under $900 are allowed to be made at interest rates substantially higher than rates allowed to other lenders.
Its interest rates are fixed by North Carolina General Statutes, Chapter 24, at a maximum of 15% simple interest, which is considerably less than the rates allowed small loan companies (see Sanders Affidavit, paragraph 10; Affidavit of Robert S. Nooe, paragraph 2).
Wachovia is not in the consumer loan business, and is not a competitor of American in the small loan business. Plaintiff contends Wachovia is a potential entrant into the market, but the effect of such entrance if made, compared with the effect of Wachovia’s purchase of American, is not demonstrated by the evidence. The Wachovia Corporation could not enter the consumer financing business under its present charter (Sanders Affidavit, page 15); it is not shown to have or to have had any such intentions; and the court is unable to conclude that Wachovia is a competitor or a read what he said potential competitor with American Credit Company in consumer financing, nor that the relevant market and the relevant section of the country have been established.
There is no clear showing that competition between American and other finance companies with which it now competes would be lessened by the merger. American now gets its money primarily from out of state banks and insurance companies (Defendants’ Exhibits 3 and 4). It competes with other consumer finance companies having parent organizations of a great deal more capital than Wachovia. American borrows little from Wachovia now; and if the merger takes place, further borrowing from Wachovia would be economically unprofitable *638 under federal banking laws. (12 U.S.C. 371c, requires that if Wachovia lends to its affiliate American, the collateral must be 110% of the value of the loan in state and local government bonds or 120% of the value of the loan in other marketable securities. This in practical effect would cut Wachovia off as a probable source of borrowing for American. Johnson Affidavit, paragraph 4; R. 337).