Section 7 of the Clayton Act (“Section 7”), which is codified at 15 U.S.C. § 18, forbids any merger or acquisition that is likely to lessen competition substantially in a properly defined relevant market.
Actions under Section 7 are usually brought by federal authorities charged with public enforcement of federal antitrust law — namely, the Federal Trade Commission (the “FTC”), the U.S. Department of Justice’s Antitrust Division (the “Division”), and federal prosecutors employed at the regional offices of the U.S. Attorney Office
Historically, private practitioners have been confined to the following roles in Section 7 cases:
- Defending companies that federal authorities have charged with violating this law.
- Advising companies about this law, especially proponents of a merger or acquisition.
- Protecting companies from violations and future violations by conducting private antitrust litigation under Section 7 or Section 2 of the Sherman Act and/or by trying to persuade federal authorities to prosecute the offenders.
Our work on Section 7 matters has been largely limited to protecting companies from violations by interceding with federal authorities, providing counseling, and writing meet-and-confer correspondence to the proponents or survivor of an at-issue merger or acquisition.
Nevertheless, those harmed by an anticompetitive merger or acquisition can seek antitrust injunctions by bringing private actions under Section 7, which, if vindicated, can support the issuance of an antitrust injunction and an award of attorney’s fees under Section 16 of the Clayton Act, which is codified at 15 U.S.C. § 26. See, e.g., Carlson Companies, Inc. v. Sperry & Hutchinson Co., 507 F.2d 959, 960–62 (8th Cir. 1974).
A private action for antitrust damages (treble damages) will lie under Section 7 only when the plaintiff or class representative can make a strong showing of antitrust injury caused by an anticompetitive merger or acquisition or acts made possible by one. See id.
In the right case, we can file a competitor’s suit or class action under Section 7 to oppose a proposed merger or a recently consummated one: any such action would require strong proof of the following points: (1) the at-issue merger or acquisition (the “Transaction”) will directly and foreseeably render the relevant market either “moderately” or “highly” concentrated according to the Herfindahl–Hirschman Index; (2) because of the merger, the surviving, dominant sellers in this market can increase profits by charging supracompetitive prices; and (3) because of market barriers, no smaller rival already operating in the market can undercut the dominant providers’ supracompetitive prices, and no potential rival can do so after entering the market.
Such market barriers can be blameless or purposeful, but their demonstrable effect must be to prevent or severely impede competitive entry or expansion.
Market barriers in turn can arise from one or more of the following circumstances or trading practices: natural economies of scale; bottlenecks of supply or distribution that are controlled by a surviving, dominant seller or by an upstream or downstream monopolist who is unwilling to offer commercially viable terms to smaller rivals or any entrant; exclusive-dealing arrangements used by one or more surviving sellers that foreclose a substantial part of competition for sales in the relevant market; and so forth.
Those are the kinds of proofs that a private plaintiff must demonstrate to prevail and even to avert summary judgment on a private cause of action for violating Section 7 of the Clayton Act. It’s a tall order, but in the right case it can be done.
Lastly, on behalf of a client or group of clients we can relate information and explain its significance to public authorities, seeking to persuade them to investigate and halt a proposed merger or acquisition that, if permitted, would likely result in a substantial lessening of competition in a properly defined relevant market.
Mr. Markham's Articles on Antitrust Law
AN OVERVIEW OF ANTITRUST LAW (By William Markham, ©2000)
"Antitrust law is the law of competition and is perhaps the least understood law of all. This article provides an overview and explanation of the essential principles of antitrust law."
ANTITRUST EXEMPTIONS AND IMMUNITIES (By William Markham, ©2022)
"Over the years, Congress and the federal courts have established various immunities from federal antitrust law, removing from its reach specified commercial activities and even entire lines of commerce."
HOW THE CONSUMER-WELFARE STANDARD TRANSFORMED CLASSICAL ANTITRUST LAW (By William Markham, ©2021)
"Since the late 1970s, antitrust law in the United States has been transformed out of recognition and rendered largely toothless by consumer-welfare jurisprudence....,"
ANTITRUST AND FREE MARKETS (BY William Markham, © 2022)
UNLAWFUL PRICE DISCRIMINATION (By William Markham, © 2013)
WHY ANTITRUST LAWS MATTER (By William Markham, © 2006)
Mr. Markham's Articles on
Trial Procedure and Contract Law
MAKING SENSE OF THE RULES OF EVIDENCE AND PRESENTING YOUR EVIDENCE AT TRIAL (By William Markham, ©2011)
"I try in this article simply to set forth a list of simple rules to explain the key points of the law of evidence. I also offer several pointers on organizing evidence in order to present it competently at trial."
ANATOMY OF A LAWSUIT (By William Markham, ©2007)
"This article is written for non-lawyers, young litigators, and non-litigator attorneys who wish to understand how a lawsuit works in practice from start to finish."
AN OVERVIEW OF CONTRACT LAW (By William Markham, ©2002)
"Contract law lies at the heart of our system of laws and serves as the foundation of our entire society.... Our society depends upon free exchange in the marketplace at every level. Contract law makes this possible."