Competitor Standing to Challenge a Merger of Rivals: The Applicability of Strategic Behavior Analysis Comment 75 California Law Review 1987

75 Calif. L. Rev. 2057 (1987)
Competitor Standing to Challenge a Merger of Rivals: The Applicability of Strategic Behavior Analysis

handle is hein.journals/calr75 and id is 2071 raw text is: Competitor Standing to Challenge a
Merger of Rivals: The Applicability
of Strategic Behavior Analysis
Recent changes in governmental antitrust enforcement policy have
forced private parties, particularly competitors, to file private suits to enjoin
mergers. Some commentators have argued that a competitor cannot estab-
lish standing to challenge a merger of rivals, because it cannot demonstrate
an antitrust injury as required by the Clayton Act and Cargill, Inc. v.
Monfort of Colorado, Inc. This Comment argues that a competitor can
demonstrate antitrust injury by means of strategic behavior analysis-a
new method of understanding market structure and competition. Drawing
on the Clayton Act's legislative history and case law, it first develops a
proposed standard of antitrust injury. It then describes strategic behavior
analysis and argues that such analysis can identify those mergers that
threaten antitrust injury to competitors by positioning the merged firm to
engage in anticompetitive strategic behavior. It concludes by considering
some hypothetical mergers to illustrate the sorts of cases in which a private
plaintiff can use strategic behavior analysis to meet the proposed standard
for antitrust injury.
INTRODUCTION
Until recently, government intervention was the primary means of
preventing anticompetitive mergers.' Few private plaintiffs sought to
enjoin illegal mergers through the standing granted them by section 16 of
the Clayton Act.' But in 1982, the Department of Justice issued new
guidelines' by which it would determine whether a proposed merger
would produce the anticompetitive effects prohibited by section 7 of the
1. The broad scope of the Clayton Act condemns mergers when the effect of such acquisition
may be substantially to lessen competition. 15 U.S.C. § 18 (1982 & Supp. 1985).
2. Section 16 states:
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 (1982 & Supp. 1985) (codifying section 16 of the Clayton Act). Due to the volatile
nature of the financial markets, a preliminary injunction effectively destroys a merger in most
instances.
3. 47 Fed. Reg. 28,493 (1982).

2057

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