Spokane, Washington, had a highly concentrated banking market, with the three largest banks holding 42.1 percent, 36.6 percent, and 18.6 percent of deposits, respectively. National Bank of Commerce (NBC) (defendant), a subsidiary of Marine Bancorporation, Inc., was the second-largest bank headquartered in Washington State but did no business in Spokane. Under state law, NBC could not independently open a branch in Spokane, and Bancorporation could not hold more than 25 percent of the stock of another bank. Due to these restrictions, NBC sought to acquire Washington Trust Bank, the third-largest bank in the city. The United States government (plaintiff) sued to stop the merger, arguing that NBC’s acquisition of Washington Trust Bank could eliminate potential competition in violation of § 7 of the Clayton Act. The government’s argument relied on the theory that banking in Spokane could be deconcentrated if NBC were to enter the market independently or by acquiring a smaller company (called a foothold acquisition) rather than through the proposed merger. The district court dismissed the case, and the government appealed.