Court Opinion

ID: 9430747
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:30:28.690268+00
Date Added: 2024-06-11T17:15:50.282486
License: Public Domain

Justice Stevens,
with whom Justice White joins, dissenting.
This case presents the question whether the antitrust laws provide a remedy for a private party that challenges a horizontal merger between two of its largest competitors. The issue may be approached along two fundamentally different paths. First, the Court might focus its attention entirely on the postmerger conduct of the merging firms and deny relief *123unless the plaintiff can prove a violation of the Sherman Act. Second, the Court might concentrate on the merger itself and grant relief if there is a significant probability that the merger will adversely affect competition in the market in which the plaintiff must compete. Today the Court takes a step down the former path;11 believe that Congress has directed us to follow the latter path.
In this case, one of the major firms in the beef-packing market has proved to the satisfaction of the District Court, 591 F. Supp. 683, 709-710 (Colo. 1983), and the Court of Appeals, 761 F. 2d 570, 578-582 (CA10 1985), that the merger between Excel and Spencer Beef is illegal. This Court holds, however, that the merger should not be set aside because the adverse impact of the merger on respondent’s profit margins does not constitute the kind of “antitrust injury” that the Court described in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477 (1977). As I shall demonstrate, Brunswick merely rejected a “novel damages theory,” id., at 490; the Court’s implicit determination that Brunswick forecloses the appropriate line of inquiry in this quite different case is therefore misguided. In my view, a *124competitor in Monfort’s position has standing to seek an injunction against the merger. Because Monfort must compete in the relevant market, proof establishing that the merger will have a sufficient probability of an adverse effect on competition to violate §7 is also sufficient to authorize equitable relief.
I
Section 7 of the Clayton Act was enacted in 1914, 38 Stat. 731, and expanded in 1950, 64 Stat. 1125, because Congress concluded that the Sherman Act’s prohibition against mergers was not adequate.2 The Clayton Act, unlike the Sherman Act, proscribes certain combinations of competitors that do not produce any actual injury, either to competitors or to competition. An acquisition is prohibited by § 7 if “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” 15 U. S. C. § 18. The legislative history teaches us that this delphic language was designed “to cope with monopolistic tendencies in their incipiency and well before they have attained such effects as would justify a Sherman Act proceeding.” S. Rep. No. 1775, 81st Cong., 2d Sess., 4-5 (1950).3 In Brunswick, *125supra, this Court recognized that § 7 is “a prophylactic measure, intended ‘primarily to arrest apprehended consequences of intercorporate relationships before those relationships could work their evil . . . 429 U. S., at 485 (quoting United States v. E. I. du Pont de Nemours & Co., 353 U. S. 586, 597 (1957)).
The 1950 amendment to §7 was particularly concerned with the problem created by a merger which, when viewed by itself, would appear completely harmless, but when considered in its historical setting might be dangerous to competition. As Justice Stewart explained:
“The principal danger against which the 1950 amendment was addressed was the erosion of competition through the cumulative centripetal effect of acquisitions by large corporations, none of which by itself might be sufficient to constitute a violation of the Sherman Act. Congress’ immediate fear was that of large corporations buying out small companies. A major aspect of that fear was the perceived trend toward absentee ownership of local business. Another, more generalized, congressional purpose revealed by the legislative history was to protect small businessmen and to stem the rising tide of concentration in the economy. These goals, Congress thought, could be achieved by ‘arresting mergers at a time when the trend to a lessening of competition in a line of commerce was still in its incipiency.’ Brown Shoe Co. v. United States, [370 U. S.,] at 317.” United States v. Von’s Grocery Co., 384 U. S. 270, 283-284 (1966) (dissenting).
Thus, a merger may violate § 7 of the Clayton Act merely because it poses a serious threat to competition and even though the evidence falls short of proving the kind of actual restraint that violates the Sherman Act, 15 U. S. C. §1. The language of § 16 of the Clayton Act also reflects Congress’ emphasis on probable harm rather than actual harm. Section 16 authorizes private parties to obtain injunctive re*126lief “against threatened loss or damage” by a violation of § 7.4 The broad scope of the language in both § 7 and § 16 identifies the appropriate standing requirements for injunctive relief. As the Court has squarely held, it is the threat of harm, not actual injury, that justifies equitable relief:
“The evident premise for striking [the injunction at issue] was that Zenith’s failure to prove the fact of injury barred injunctive relief as well as treble damages. This was unsound, for § 16 of the Clayton Act, 16 U. S. C. § 26, which was enacted by the Congress to make available equitable remedies previously denied private parties, invokes traditional principles of equity and authorizes injunctive relief upon the demonstration of ‘threatened’ injury. That remedy is characteristically available even though the plaintiff has not yet suffered actual injury; ... he need only demonstrate a significant threat of injury from an impending violation of the antitrust laws or from a contemporary violation likely to continue or recur.” Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S. 100, 130 (1969) (citations omitted).
Judged by these standards, respondent’s showing that it faced the threat of loss from an impending antitrust violation clearly conferred standing to obtain injunctive relief. Re*127spondent alleged, and in the opinion of the courts below proved, the injuries it would suffer from a violation of § 7:
“Competition in the markets for the procurement of fed cattle and the sale of boxed beef will be substantially lessened and a monopoly may tend to be created in violation of Section 7 of the Clayton Act;
“Concentration in those lines of commerce will be increased and the tendency towards concentration will be accelerated.” 1 App. 21.
More generally, given the statutory purposes to protect small businesses and to stem the rising tide of concentration in particular markets, a competitor trying to stay in business in a changing market must have standing to ask a court to set aside a merger that has changed the character of the market in an illegal way. Certainly the businesses — small or large— that must face competition in a market altered by an illegal merger are directly affected by that transaction. Their inability to prove exactly how or why they may be harmed does not place them outside the circle of interested parties whom the statute was enacted to protect.
II
Virtually ignoring the language and history of § 7 of the Clayton Act and the broad scope of the Act’s provision for injunctive relief, the Court bases its decision entirely on a case construing the “private damages action provisions” of the Act. Brunswick, 429 U. S., at 478. In Brunswick, we began our analysis by acknowledging the difficulty of meshing §7, “a statutory prohibition against acts that have a potential to cause certain harms,” with § 4, a “damages action intended to remedy those harms.” Id., at 486. We concluded that a plaintiff must prove more than a violation of § 7 to recover damages, “since such proof establishes only that injury may result.” Ibid. Beyond the special nature of an action for treble damages, § 16 differs from § 4 because by its terms it requires only that the antitrust violation threaten *128the plaintiff with loss or damage, not that the violation cause the plaintiff actual “injur[y] in his business or property.” 15 U. S. C. §15.
In the Brunswick case, the Court set aside a damages award that was based on the estimated additional profits that the plaintiff would have earned if competing bowling alleys had gone out of business instead of being acquired by the defendant. We concluded “that the loss of windfall profits that would have accrued had the acquired centers failed” was not the kind of actual injury for which damages could be recovered under §4. 429 U. S., at 488. That injury “did not occur ‘by reason of’ that which made the acquisitions unlawful.” Ibid.
In contrast, in this case it is the threatened harm — to both competition and to the competitors in the relevant market— that makes the acquisition unlawful under § 7. The Court’s construction of the language of § 4 in Brunswick is plainly not controlling in this case.5 The concept of “antitrust injury,” which is at the heart of the treble-damages action, is simply not an element of a cause of action for injunctive relief that depends on finding a reasonable threat that an incipient disease will poison an entire market.
A competitor plaintiff who has proved a violation of § 7, as the Brunswick Court recognized, has established that injury may result. This showing satisfies the language of § 16 provided that the plaintiff can show that injury may result to him. When the proof discloses a reasonable probability that competition will be harmed as a result of a merger, I would also conclude that there is a reasonable probability that *129a competitor of the merging firms will suffer some corresponding harm in due course. In my opinion, that reasonable probability gives the competitor an interest in the proceeding adequate to confer standing to challenge the merger. To hold otherwise is to frustrate § 7 and to read § 16 far too restrictively.
It would be a strange antitrust statute indeed which defined a violation enforceable by no private party. Effective enforcement of the antitrust laws has always depended largely on the work of private attorney generals, for whom Congress made special provision in the Clayton Act itself.6 As recently as 1976, Congress specifically indicated its intent to encourage private enforcement of § 16 by authorizing recovery of a reasonable attorney’s fee by a plaintiff in an action for injunctive relief. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, 90 Stat. 1396 (amending 15 U. S. C. § 26).
The Court misunderstands the message that Congress conveyed in 1914 and emphasized in 1950. If, as the District Court and the Court of Appeals held, the merger is illegal, it should be set aside. I respectfully dissent.

 Whether or not it so intends, the Court in practical effect concludes that a private party may not obtain injunctive relief against a horizontal merger unless the actual or probable conduct of the merged firms would establish a violation of the Sherman Act. The Court suggésts that, to support a claim of predatory pricing, a competitor must demonstrate that the merged entity is “able to absorb the market shares of its rivals once prices have been cut,” either because it has a high market share or because it has “sufficient excess capacity to enable it rapidly to expand its output and absorb the market shares of its rivals.” Ante, at 119-120, n. 15. The Court would also require a competitor to demonstrate that significant barriers to entry would exist after “the merged firm had eliminated some of its rivals ....” Ante, at 120, n. 15. Indeed, the Court expressly states that the antitrust laws “require the courts to protect small businesses . . . only against the loss of profits from 'practices forbidden by the antitrust laws.” Ante, at 116 (emphasis added). By emphasizing postmerger conduct, the Court reduces to virtual irrelevance the related but distinct issue of the legality of the merger itself.

 “Broadly stated, the bill, in its treatment of unlawful restraints and monopolies, seeks to prohibit and make unlawful certain trade practices which, as a rule, singly and in themselves, are not covered by the act of July 2, 1890 [the Sherman Act], or other existing antitrust acts, and thus, by making these practices illegal, to arrest the creation of trusts, conspiracies, and monopolies in their incipiency and before consummation.” S. Rep. No. 698, 63d Cong., 2d Sess. 1 (1914).

 This Court has described the legislative purpose of § 7 as follows:
“[I]t is apparent that a keystone in the erection of a barrier to what Congress saw was the rising tide of economic concentration, was its provision of authority for arresting mergers at a time when the trend to a lessening of competition in a line of commerce was still in its incipiency. Congress saw the process of concentration in American business as a dynamic force; it sought to assure the Federal Trade Commission and the courts the power to brake this force at its outset and before it gathered momentum.” Brown Shoe Co. v. United States, 370 U. S. 294, 317-318 (1962) (footnote omitted).

 Section § 16 states, in relevant part:
“Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, including sections 13, 14, 18, and 19 of this title, when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings, and upon the execution of proper bond against damages for an injunction improvidently granted and a showing that the danger of irreparable loss or damage is immediate, a preliminary injunction may issue . . . .” 15 U. S. C. § 26.

 In Brunswick, we reserved this question, stating: “The issue for decision is a narrow one. . . . Petitioner questions only whether antitrust damages are available where the sole injury alleged is that competitors were continued in business, thereby denying respondents an anticipated increase in market shares.” 429 U. S., at 484 (footnote omitted). Nor did we reach the issue of a competitor’s standing to seek relief from a merger under § 16 in Associated General Contractors of California, Inc. v. Carpenters, 459 U. S. 519 (1983). Id., at 524, n. 5.

 15 U. S. C. § 15. This Court has emphasized the importance of the statutory award of fees to private antitrust plaintiffs as part of the effective enforcement of the antitrust laws. In Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S. 100, 130-131 (1969), the Court observed:
“[T]he purpose of giving private parties treble-damage and injunctive remedies was not merely to provide private relief, but was to serve as well the high purpose of enforcing the antitrust laws.”
See also Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134, 139 (1968); Fortner Enterprises, Inc. v. United States Steel Corp., 394 U. S. 495, 502 (1969); Hawaii v. Standard Oil Co., 405 U. S. 251, 262 (1972).