Court Opinion

ID: 8968335
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:21:03.41818+00
Date Added: 2024-06-11T17:10:23.123706
License: Public Domain

ALTIMARI, Circuit Judge,
concurring in part and dissenting in part:
I concur in the well-reasoned opinion of the majority except as it relates to target standing. Today the court grants a takeover target standing to challenge its takeover as a violation of the antitrust laws. *264In so doing, the majority expressly relies on Grumman Corp. v. LTV Corp., 665 F.2d 10 (2d Cir.1981). Because Grumman is of limited vitality following the Supreme Court’s decision in Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986), and because the takeover target has failed to show “antitrust injury,” I respectfully dissent from the grant of standing to Consolidated Gold Fields PLC (“Gold Fields”).
In Cargill, the Supreme Court determined that in order to obtain injunctive relief under section 16 of the Clayton Act, 15 U.S.C. § 26 (1982), “a private plaintiff must allege threatened loss or damage ‘of the type the antitrust laws were designed to prevent and that flows from that which makes defendants’ acts unlawful.' ” 479 U.S. at 113, 107 S.Ct. at 491 (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977)), By itself, an allegation of “injury causally linked to an illegal presence in the market” is insufficient to show “antitrust injury.” Brunswick, 429 U.S. at 489, 97 S.Ct. at 697. A private plaintiff must also show “that his own injury coincides with the public detriment tending to result from the alleged violation.” P. Areeda & H. Hovenkamp, Antitrust Law ¶ 334.2b, at 305 (Supp.1988); see Brunswick, 429 U.S. at 487-89, 97 S.Ct. at 696-98; Ball Memorial Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325, 1333-34 (7th Cir.1986).
Gold Fields asserts that if the takeover is completed it will lose its power of independent decision-making as to price and output, and its ability to compete independently in the market. These injuries, however, “do[] not result from the possibility of substantially lessened competition, but rather derive[] from the fact that after a successful, albeit unfriendly, merger, two corporate entities become one.” Carter Hawley Hale Stores, Inc. v. The Limited, Inc., 587 F.Supp. 246, 250 (C.D.Cal.1984); see also Burlington Indus., Inc. v. Edelman, 666 F.Supp. 799, 805 (M.D.N.C.1987). For example, each of the injuries alleged by Gold Fields would occur if the combining corporations controlled a total market share of only 2%, or if the entity attempting the takeover was not a competitor of the target. By definition, when two corporations merge there is a loss of independence. Clearly, the loss of independence which occurs in every merger is not the type of loss that the “antitrust laws were intended to prevent.” Brunswick, 429 U.S. at 489, 97 S.Ct. at 697. Thus, although Gold Fields’ loss might be “causally linked to an illegal presence in the market,” id., Gold Fields has not shown antitrust injury because its loss did not “flow[ ] from that which makes defendants’ acts unlawful.” Cargill, 479 U.S. at 113, 107 S.Ct. at 491 (quoting Brunswick, 429 U.S. at 489, 97 S.Ct. at 697).
I disagree with the majority’s contention that target standing is compelled by our decision to allow a target to challenge its takeover in Grumman. In that case we did not consider, nor were we required to at the time, whether the injury asserted by the target was “antitrust injury” as defined in Brunswick. Similarly, each of the cases to which the majority cites as “endorse[ment] of the Grumman analysis” were decided prior to Cargill and also did not consider whether the target suffered “antitrust injury.” See Marathon Oil Co. v. Mobil Corp., 669 F.2d 378, 383-84 (6th Cir.1981), cert. denied, 455 U.S. 982, 102 S.Ct. 1490, 71 L.Ed.2d 691 (1982); Laidlaw Acquisition Corp. v. Mayflower Group, Inc., 636 F.Supp. 1513, 1517-19 (S.D.Ind.1986); Gearhart Indus., Inc. v. Smith Int’l, Inc., 592 F.Supp. 203, 211 n. 1 (N.D.Tex.1984), modified on other grounds, 741 F.2d 707 (5th Cir.1984); Arnett v. Gerber Scientific, Inc., 566 F.Supp. 1270, 1274 (S.D.N.Y.1983); Whittaker Corp. v. Edgar, 535 F.Supp. 933, 950 (N.D.Ill.1982). In contrast, post-Cargill courts which have considered takeover target standing have explicitly or implicitly rejected Grumman, and have denied standing to the targets. See Burnup & Sims, Inc. v. Posner, 688 F.Supp. 1532, 1534-35 (S.D.Fla.1988); Burlington, 666 F.Supp. at 804-06. Denial of target standing is further supported by a substantial number of pre-Cargill cases, see Central Nat’l Bank v. Rainbolt, 720 *265F.2d 1183, 1187 (10th Cir.1983); A.D.M. Corp. v. Sigma Instruments, Inc., 628 F.2d 753, 754 (1st Cir.1980); Carter Hawley Hale Stores, 587 F.Supp. at 248-50; see also H.H. Robertson Co. v. Guardian Indus. Corp., 50 Antitrust & Trade Reg.Rep. (BNA) 166, 169-71 (3d Cir.), vacated pending hearing in banc, No. 85-3232 (3d Cir.1986), and by scholarly commentary. See, e.g., P. Areeda & H. Hovenkamp, supra, If 340.2i, at 368-70; Easterbrook & Fischel, Antitrust Suits by Targets of Tender Offers, 80 Mich.L.Rev. 1155 (1982). Accordingly, I believe that the majority’s reliance on Grumman and its per se rule that takeover targets have standing to assert section 16 claims to prevent their takeover is unwarranted.
Moreover, I am unpersuaded by the policy rationale advanced by the majority in support of target standing. The majority asserts that “if we fail to recognize target standing, we would substantially impair enforcement of the antitrust laws to protect against anticompetitive takeovers.” The majority believes this to be so because consumers are unlikely to bring suit, and “non-target competitors claiming standing face the substantial barriers of proof erected by Cargill.” However high the barriers, they must also be faced by target competitors. We cannot lessen the burden for one type of plaintiff merely because other potential plaintiffs are also burdened. Although the barriers may be substantial, competitors are not foreclosed from bringing suit under section 16, see Cargill, 479 U.S. at 121, 107 S.Ct. at 495, and they can obtain standing when they show antitrust injury. See R. C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102 (2d Cir.1989).
Accordingly, I would affirm the district court’s denial of standing to Gold Fields. In all other respects, I agree with the majority opinion.