Opinion ID: 548938
Heading Depth: 3
Heading Rank: 1

Heading: Purposes of the Williams Act

Text: 18 In the case at bar, the antitrust laws are inconsistent with the Williams Act and implied repeal is necessary to make the securities regulations work. See Silver, 373 U.S. at 357, 83 S.Ct. at 1257. In 1968 Congress enacted the Williams Act, which amended sections of the 1934 Act, to close a significant gap in investor protection under the Federal securities laws by requiring the disclosure of pertinent information to stockholders when persons seek to obtain control of a corporation by a cash tender offer or through open market or privately negotiated purchases of securities. 113 Cong.Rec. 854 (1967) (quoted in Piper v. Chris-Craft Indus. Inc., 430 U.S. 1, 26, 97 S.Ct. 926, 941, 51 L.Ed.2d 124 (1977)). Its purpose is to insure that public shareholders who are confronted by a cash tender offer ... will not be required to respond without adequate information.... Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 58, 95 S.Ct. 2069, 2075, 45 L.Ed.2d 12 (1975). 19 Declining to pass legislation that benefitted either bidders or incumbent management, Congress instead adopted a policy of evenhandedness. Chris-Craft, 430 U.S. at 31, 97 S.Ct. at 944. The twin aims of the Williams Act were therefore protection of target shareholders and neutrality as between bidders and target companies. See Johnson & Millon, Misreading the Williams Act, 87 Mich.L.Rev. 1862, 1895-96 (1989). These goals are to be reached through the disclosure requirements mandated under the Williams Act. 20 Section 14(d) of the statute grants to the SEC the authority to prescribe substantive rules and regulations setting forth information necessary to protect shareholders of target companies. Under Sec. 14(d), a bidder for a public company whose shares are registered with the SEC under the 1934 Act must file a Schedule 14D-1 with the SEC on the date of the commencement of the tender offer. The disclosure requirements of Schedule 14D-1 and the language of the Williams Act contemplate agreements between bidders. Item 7 of Schedule 14D-1 reads: 21 Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities. Describe any contract, arrangement, understanding or relationship ... between the bidder ... and any person with respect to any securities of the subject company (including ... joint ventures ...), naming the persons with whom such contracts, arrangements, understandings or relationships have been entered into.... 22 17 C.F.R. Sec. 240.14d-100 (1989). 23 Further, Sec. 14(d)(2) of the 1934 Act, 15 U.S.C. Sec. 78n(d)(2) (1988), reads: 24 When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of an issuer, such syndicate or group shall be deemed a person for purposes of this subsection. 25 Because disclosure is the means by which Congress sought to protect target shareholders, the prior provisions make clear that once information regarding an agreement between rival bidders has been revealed in a filing, the target company's shareholders have received the protection Congress and the SEC designed for them and there has been compliance with the Williams Act. 26 Recognizing the logical implication of the word group as anticipating the sort of bid made by Macy's and Campeau, appellant contends that these provisions authorize only those agreements made by bidders prior to engaging in a contest for control of a target company, not agreements made by rival bidders during the bidding process such as was the case here. We are unable to agree with this view because neither the Williams Act nor the SEC regulations make a distinction between joint bids made by parties prior to entering a battle for control of the target and those made by parties who are rival bidders at the outset. We would think the SEC justified in deeming an agreement such as that alleged here to be a joint bid and to require the parties to file amendments to their existing filings under Schedule 14D-1, see 17 C.F.R. Sec. 240.14d-3(b) (1990). Further, joint bids are not that uncommon. For example, in 1984 Reliance Financial Services Corporation and Fisher Brothers jointly offered to purchase Walt Disney Productions, and Waste Management, Inc. and Genstar made a joint offer for SCA Services, Inc. See 1 M. Lipton and E. Steinberger, Takeovers and Freezeouts, Sec. 1.08(4) (1989 ed.).