United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-2990

___________

Marty Ginsburg, et al., *

* 

Plaintiffs - Appellants, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Missouri.

InBev NV/SA; Anheuser-Busch *

Companies, Inc.; Anheuser-Busch, Inc., *

*

Defendants - Appellees. *

___________

Submitted: April 14, 2010

Filed: October 27, 2010

___________

Before WOLLMAN, BRIGHT, and LOKEN, Circuit Judges.

___________

LOKEN, Circuit Judge.

Plaintiffs are Missouri beer consumers suing to enjoin the now-consummated

acquisition of Anheuser-Busch Companies, Inc. (“A-B”), by InBev NV/SA (“InBev”)

on the ground that the transaction violated Section 7 of the Clayton Act, 15 U.S.C.

§ 18. Relying on the potential competition theories of § 7 liability, Plaintiffs allege

that the merger threatens to reduce competition and increase beer prices in the United

States because it eliminates InBev, the largest brewer and seller of imported beers, as

an actual and a perceived potential competitor in the U.S. market. Having failed to

obtain a preliminary injunction, Plaintiffs now seek divestiture as equitable relief
under Section 16 of the Clayton Act, 15 U.S.C. § 26. The district court1

 granted

Defendants judgment on the pleadings. We affirm.

I.

 

Before the merger, A-B, based in St. Louis, was the largest brewer in the United

States, with a nearly fifty-percent market share, annual revenues of $16 billion, and

30,000 employees. InBev, created by the merger of Interbrew of Belgium and AmBev

of Brazil, was the world’s largest brewer, with annual revenues of $20 billion and

89,000 employees. Prior to acquiring A-B, InBev primarily competed in the U.S.

market by selling imported brands brewed in other countries. In addition, an InBev

subsidiary (“Labatt USA”) had exclusive rights to brew and distribute in the U.S. a

popular Canadian beer, Labatt, that another InBev subsidiary had the exclusive rights

to brew and distribute in Canada. InBev had also owned a brewery in Latrobe,

Pennsylvania, and one domestic brand, Rolling Rock, but it sold those assets in 2006. 

In late 2006, InBev and A-B agreed to make A-B the exclusive U.S. importer of

several popular InBev brands. 

InBev began its highly publicized efforts to acquire A-B in June 2008. When

A-B rejected the initial offer, InBev sued in Delaware to remove the A-B board of

directors, and A-B countered with a federal action in Missouri alleging deceptive

takeover conduct. The companies reached an accord in July 2008 and announced that

InBev would purchase A-B stock at $70 a share, for a total purchase price of $52

billion. As the subsequent procedural history is critical to an understanding of our

decision, we summarize the significant events chronologically:

1

The HONORABLE JEAN C. HAMILTON, United States District Judge for

the Eastern District of Missouri.

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September 10, 2008 -- Plaintiffs file their Complaint for Injunctive Relief 

 seeking orders preliminarily and permanently “enjoining [D]efendants from 

 consummating their acquisition.”

October 6, 2008 -- Counsel for Defendants advise Plaintiffs that Defendants 

 will turn over by October 17 “the Hart Scott Rodino documents that they 

have by then given to the [United States] Department of Justice,”2

 that “the 

transaction could be consummated . . . as early as November 12, 2008,” and 

 that Defendants would not agree to delay the closing.

October 17, 2008 -- InBev and A-B file Answers to the Complaint and turn 

 over 400,000 pages of Hart-Scott-Rodino documents.

November 3, 2008 -- As directed by the court in an October 23 telephonic 

hearing, Plaintiffs file their motion for a preliminary injunction and 

supporting memorandum.

November 12, 2008 -- A-B shareholders approve the transaction.

November 14, 2008 -- The Department of Justice files in the United States 

District Court for the District of Columbia (D.D.C.) a Competitive Impact 

Statement and a Proposed Final Judgment in which InBev agrees to hold 

separate, and to divest if the Final Judgment is approved by the court, InBev’s 

 Labatt USA assets. See 73 Fed. Reg. 71,682-83 (Nov. 25, 2008) (explaining 

 that, although InBev’s overall U.S. market share was only two percent, the 

 acquisition of A-B would substantially reduce competition in Buffalo, 

Rochester, and Syracuse, New York, because Labatt brand beers account for 

 a significant portion of those local markets).

November 18, 2008 -- The district court denies Plaintiffs’ motion for a 

preliminary injunction. The purchase transaction closes, and Defendants 

merge the operations of the two companies, subject to a Hold Separate 

Stipulation and Order regarding InBev’s Labatt USA assets entered by D.D.C. 

 pending approval of the Final Judgment.

2

The Hart-Scott-Rodino Act, 15 U.S.C. § 18a, required premerger notification

and submission of relevant documents to the government.

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November 20, 2008 -- Plaintiffs move for reconsideration of the denial order. 

December 17, 2008 -- The district court denies the motion for reconsideration.

December 30, 2008 -- The district court denies Plaintiffs’ Motion to Hold 

Defendants’ Assets Separate.

January 19, 2009 -- Plaintiffs appeal the three district court orders.

February 17, 2009 -- Defendants move for judgment on the pleadings under 

 Rule 12(c) of the Federal Rules of Civil Procedure, and to stay discovery.

February 26, 2009 -- Eighth Circuit dismisses Plaintiffs’ appeals from the first 

 two orders as untimely and summarily affirms denial of the Motion to Hold 

 Defendants’ Assets Separate. See Judgment, No. 09-1148 (8th Cir. Feb. 26, 

 2009).

March 11, 2009 -- Department of Justice moves for entry of Final Judgment by 

 D.D.C. An independent, government-approved entity is identified that will 

 purchase InBev’s Labatt USA assets. 

March 17, 2009 -- After denying Plaintiffs’ motion to intervene, D.D.C. grants 

 them leave to appear as amici curiae and schedules a hearing on the 

government’s motion to approve the Proposed Final Judgment.

April 16-17, 2009 -- Plaintiffs appear at D.D.C. motion hearing and file 

 supplemental exhibits opposing the merger. 

August 3, 2009 -- The district court grants Defendants’ motion for judgment 

 on the pleadings and denies Plaintiffs’ request for leave to amend.

August 11, 2009 -- Applying the standard of review mandated by the Tunney 

 Act, 15 U.S.C. § 16(e)(1), D.D.C. rejects Plaintiffs’ effort to block the entire 

 merger and approves the consent decree and Final Judgment proposed by the 

 government. United States v. InBev N.V./S.A., No. 08-1965. 

In its November 18, 2008, order denying Plaintiffs’ motion for a preliminary

injunction, the district court concluded (i) that the substantial Hart-Scott-Rodino

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documentary record “demonstrates that it is overwhelmingly likely that Plaintiffs

cannot succeed on the merits” because InBev’s actions demonstrate that it does not

intend to enter the U.S. beer market de novo, and because InBev’s presence as a

perceived potential competitor does not affect A-B’s competitive behavior; and (ii)

that Plaintiffs provided no support for their speculative claim of antitrust injury,

namely, that the merger would result in increased beer prices even though it would not

increase concentration in the U.S. market. 

In its August 3, 2009, order that is the subject of this appeal, the district court

granted judgment on the pleadings, concluding that Plaintiffs’ Complaint did not

contain sufficient facts supporting their conclusory allegations that InBev intended to

enter the U.S. market de novo, or that any rational market participant had tempered its

pricing activities in the existing market because it viewed InBev as a potential de novo

entrant, allegations at odds with InBev’s sale of its Pennsylvania brewery and Rolling

Rock assets, its long-term agreement with A-B for distribution of InBev’s imported

brands, and its lack of assets and relationships needed for effective de novo entry. On

appeal, Plaintiffs argue that their lengthy Complaint adequately pleaded claims under

the actual and perceived potential competition theories of § 7 liability.

II.

Section 7 of the Clayton Act prohibits any acquisition affecting commerce

whose effect “may be substantially to lessen competition, or to tend to create a

monopoly.” In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557-58 (2007), noting

“the unusually high cost of discovery in antitrust cases,” the Supreme Court held that,

to survive a motion to dismiss, a complaint alleging an agreement in violation of § 1

of the Sherman Act, 15 U.S.C. § 1, must allege specific facts “plausibly suggesting

(not merely consistent with) agreement” in restraint of trade. This landmark decision

was later extended to other causes of action in Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949

(2009). 

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Plaintiffs argue the district court erred in granting judgment on the pleadings,

relying on the breadth of the § 7 prohibition and the plausibility of alleging that the

world’s largest brewer, having a minimal present share of the U.S. beer market, is both

an actual and a perceived potential competitor in that market. This is a difficult

procedural issue, made more so by the unusual posture in which it reaches us.3

 We

focus instead on an independent reason why the district court did not err in dismissing

the Complaint at this stage of the proceedings. 

III.

Plaintiffs are beer consumers who purchase beer from taverns and retailers, not

directly from breweries. As indirect purchasers, they may not sue for damages under

the Clayton Act. Illinois Brick Co. v. Illinois, 431 U.S. 720, 734-35 (1977). But

indirect purchasers are private parties who may sue for injunctive relief under § 16 of

the Act. See Campos v. Ticketmaster Corp., 140 F.3d 1166, 1172 (8th Cir. 1998),

cert. denied, 525 U.S. 1102 (1999). Here, Plaintiffs initially sued to enjoin the merger. 

As the acquisition has now occurred, they conceded at oral argument that the only

equitable relief to which they would be entitled, if they ultimately prevailed on their

potential competition theories, is divestiture. As Plaintiffs note, divestiture is a

remedy that is available to private plaintiffs for a violation of § 7 “when appropriate

in light of equitable principles.” California v. American Stores Co., 495 U.S. 271, 285

(1990). However, the Supreme Court cautioned, the remedy though available may not

always be appropriate. Private plaintiffs must prove antitrust injury, and “equitable

3

As a general rule, a Rule 12(c) motion for judgment on the pleadings is

reviewed under the same standard as a 12(b)(6) motion to dismiss. See Clemons v.

Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009), cert. denied, 130 S. Ct. 3507 (2010). 

But what effect on this standard, if any, does the fact that Defendants’ Rule 12(c)

motion was timely made after denial of Plaintiffs’ motion for a preliminary injunction

-- an exercise that generated a record outside the pleadings of some 400,000 document

pages? The parties cite no case addressing this unusual procedural issue. 

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defenses such as laches . . . may protect consummated transactions from belated

attacks by private parties . . . .” Id. at 296. Here, when we consider both the liability

and remedy issues that would be addressed in a trial where Plaintiffs were able to

prove a potential competition violation of § 7, we conclude that divestiture, the only

remedy they seek, would not be appropriate as a matter of law. 

The potential competition theories of § 7 address mergers between firms that

are not actual competitors because they produce different products or operate in

different geographic markets. Thus, their merger does not reduce the number of

competitors or raise concentration in the markets of either. However, their merger

may reduce competition in two ways -- because the threat of new entry by the

acquiring firm induced competitors in the acquired firm’s market to perform more

competitively (“perceived potential competition”), or because the merger forecloses

the acquiring firm’s future de novo entry into the acquired firm’s market (“actual

potential competition”). See 5 P. Areeda & H. Hovenkamp, Antitrust Law ¶ 1121a

(3d ed. 2009). Nearly forty years ago, the Supreme Court identified these as plausible

theories of § 7 liability but left their parameters undefined; we then upheld the Federal

Trade Commission’s application of the theories five years later. United States v.

Marine Bancorp., Inc., 418 U.S. 602, 623-25 (1974); United States v. Falstaff Brewing

Corp., 410 U.S. 526, 531-37 (1973); Yamaha Motor Co. v. F.T.C., 657 F.2d 971, 977-

78 (8th Cir. 1981), cert. denied, 456 U.S. 915 (1982). Neither court has applied the

theories since. Whatever else may be said, proof of liability under either theory is

certain to entail expensive, uncertain litigation, even if, as here, the acquiring firm is

rich and powerful and the acquired firm’s market highly concentrated. See 5 Areeda

& Hovenkamp ¶¶ 1121-1134.

Assuming Plaintiffs proved at trial that InBev was so significant a perceived or

actual potential competitor that the effect of its acquisition of A-B “may be

substantially to lessen competition,” the trial court would turn to the question of

remedy. When the federal government sues to enforce § 7 in the public interest,

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divestiture has been called the “most effective [] of antitrust remedies” but also the

“most drastic.” United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 326

(1961). As Plaintiffs are private, indirect purchasers rather than a federal antitrust

enforcement agency, divestiture’s “far-reaching effects put it at the least accessible

end of a spectrum of injunctive relief.” Antoine Garabet, M.D., Inc. v. Autonomous

Tech. Corp., 116 F. Supp. 2d 1159, 1172 (C.D. Cal. 2000); see 2A Areeda &

Hovenkamp ¶ 326, at 24-25. Never has a federal court ordered divestiture at the

request of a private party who was neither a customer nor a competitor of the merging

parties. Garabet, 116 F. Supp. 2d at 1173 n.13; Glendora v. Gannett Co., 858 F. Supp.

369, 372 (S.D.N.Y. 1994), cert. denied, 514 U.S. 1054 (1995). Here, the Department

of Justice, after reviewing 400,000 pages of Hart-Scott-Rodino documents, only

challenged the transaction in local geographic markets where there was significant

actual competition between InBev and A-B. When InBev agreed to preserve that

competition by selling its Labatt USA assets to an independent firm, the government

did not oppose consummation of the merger, despite the presence of obvious potential

competition issues. 

In most litigated § 7 cases, divestiture has been considered the most important

antitrust remedy because “[i]t is simple, relatively easy to administer, and sure.” 

American Stores, 495 U.S. at 281, quoting du Pont, 366 U.S. at 331. But this is only

true before the transaction is consummated, or if stock or discrete tangible assets are

all that later need be divested. In Falstaff, for example, defendants agreed to operate

the acquired firm separately until the government’s § 7 challenge was litigated. 410

U.S. at 530. In Yamaha, divestiture was accomplished by the § 7 offender selling its

38% stock interest in an unrelated Japanese company. 657 F.2d at 982. In Marine

Bancorp., relief enjoining a proposed bank acquisition was denied. 418 U.S. at 641-

42. And in California Stores, the two firms merged, but a preliminary injunction was

entered before “their business operations” were combined. 495 U.S. at 276. 

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In this case, Plaintiffs waited nearly two months after A-B and InBev

announced their agreement to merge before filing this lawsuit. Defendants advised

that the transaction could close as early as November 12, yet Plaintiffs did not file a

motion for preliminary injunction until November 3, and then only because the court

imposed this deadline. When dealing with transactions of this nature, these were

inexcusable delays. See American Stores, 495 U.S. at 298 (Kennedy, J., concurring). 

Then, having been furnished the same 400,000 pages of Hart-Scott-Rodino documents

that prompted the government not to pursue potential competition theories, Plaintiffs

offered no other proof in support of their motion for preliminary injunction. 

Concluding on this substantial record that Plaintiffs’ § 7 potential competition claims

were “purely speculative,” the district court denied their request for preliminary

injunctive relief. The transaction then closed on November 18, 2008, with no

opposition by the government’s antitrust enforcers. A-B and InBev have combined

their sizeable operations and today function as one corporate entity. 

In some cases, lack of diligence in seeking § 7 relief has completely barred the

equitable remedy of divestiture. See Midwestern Mach. Co. v. Northwest Airlines,

Inc., 392 F.3d 265, 277 (8th Cir. 2004); Garabet, 116 F. Supp. 2d at 1172-73. But

even if Plaintiffs were not so dilatory as to trigger the defense of laches, their failure

to obtain a preliminary injunction that would make the divestiture remedy “easy to

administer and sure” must be taken into account in fashioning an appropriate remedy

some years later.

Fashioning appropriate equitable antitrust relief requires that courts balance the

benefit to competition against the hardship or competitive disadvantage the remedy

may cause.4

 Here, to prevail on the merits, Plaintiffs must not only prove that InBev

4

“Courts must exercise care to ensure that the cost of correcting the market

failure does not exceed the anticompetitive injury visited on consumers.” E. Thomas

Sullivan, The Jurisprudence of Antitrust Divestiture: The Path Less Traveled, 86

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was an actual or perceived potential competitor, the only issue addressed in their

briefs, but also that they suffered antitrust injury -- “threatened loss or damage of the

type the antitrust laws were designed to prevent and that flows from that which makes

defendants’ acts unlawful.” Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 113

(1986) (quotation omitted). Plaintiffs allege the injury of higher retail beer prices. 

That is a type of antitrust injury, but the Department of Justice Competitive Impact

Statement stated that, because beer is sold to consumers through a three-tier

distribution system throughout the United States, “[b]rewers develop beer pricing and

promotion strategies on a ‘local’ market basis, based on an assessment of local

competitive conditions . . . . ” 73 Fed. Reg. at 71,683. This means that any antitrust

injury Plaintiffs could prove would be both speculative and localized.

By contrast, the hardship and competitive disadvantage resulting from forced

divestiture would be both dramatic and certain. InBev acquired A-B for $52 billion

nearly two years ago and has combined the assets and operations of the two very large

firms. While the price benefit beer drinkers would gain from divestiture is unclear,

a court decree splitting up the combined entities would impose obvious hardship on

the employees and distributors of former A-B and might well damage competition and

consumers by crippling the operations of the largest domestic producer of immensely

popular products. In these circumstances, as in Garabet, 116 F. Supp. 2d at 1173, the

remedial equities balance overwhelmingly in favor of denying this remedy. Accord

NBO Indus. Treadway Cos. v. Brunswick Corp., 523 F.2d 262, 279 (3d Cir. 1975),

aff’d sub nom. Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc., 429 U.S. 477 (1977). 

“Hypothetical anticompetitive conduct, speculative monopoly power, and remote

injuries do not merit the extreme remedy of divestiture.” Broadcom Corp. v.

Qualcomm Inc., 501 F.3d 297, 322 (3d Cir. 2007). Accordingly, Plaintiffs’ only

available remedy is barred as a matter of law, and judgment dismissing their

Complaint at this stage of the litigation was appropriate.

Minn. L. Rev. 565, 613 (2002). 

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IV.

Given our resolution of the primary issue, the additional issues Plaintiffs raise

on appeal require little discussion. First, Plaintiffs argue that the district court erred

by improperly considering materials outside the pleadings and failing to treat

Defendants’ Rule 12(c) motion as one for summary judgment, as Rule 12(d) requires. 

The issue is not free from doubt. See Porous Media Corp. v. Pall Corp., 186 F.3d

1077, 1079 (8th Cir. 1999). However, even if it is Rule 12 error for us to consider

portions of the substantial preliminary injunction record without converting the Rule

12(c) motion to one for summary judgment, no amount of additional Rule 56

procedure would cure the fatal flaw in Plaintiffs’ prayer for the divestiture remedy. 

Accordingly, any error was harmless. See Country Club Estates, L.L.C. v. Town of

Loma Linda, 213 F.3d 1001, 1005 (8th Cir. 2000). 

Second, Plaintiffs argue the district court abused its discretion by barring them

from deposing the chief executive officers of InBev and A-B before granting

Defendants’ Rule 12(c) motion. As Plaintiffs fail to allege specific prejudice from this

ruling, and as these depositions could not possibly affect our conclusion that

divestiture is not an appropriate remedy, any error again was harmless. Finally,

Plaintiffs argue the district court abused its discretion in denying their request, first

made in their reply to the motion for judgment on the pleadings, that they be given

leave to amend their Complaint. Plaintiffs never submitted a proposed amended

complaint nor explained what amendments would be made, which is reason enough

to uphold the denial. See In re 2007 Novastar Fin., Inc. Sec. Litig., 579 F.3d 878,

884-85 (8th Cir. 2009). In any event, as Plaintiffs concede that the only remedy they

would seek in an amended complaint would be divestiture, any amendment would be

futile.

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Conclusion.

As the only equitable remedy Plaintiffs seek would not be appropriate, granting

the relief they request on appeal would result only in extensive discovery and an

unsuccessful trial that would increase the cost of brewing and selling the beers

Plaintiffs drink. Increased costs inevitably lead to higher prices, the very economic

injury Plaintiffs sued to prevent. We decline their request for a Pyrrhic procedural

victory. When the issue is equitable remedies, procedural perfection must yield to

practical reality.

The judgment of the district court is affirmed.

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