761 F.2d 570 (10th Cir. 1985), 83-2588, Monfort of Colorado, Inc. v. Cargill, Inc.

Docket Nº83-2588, 84-1305.
Citation761 F.2d 570
Party NameMONFORT OF COLORADO, INC., Plaintiff-Appellee, v. CARGILL, INC. and Excel Corporation, Defendants-Appellants.
Case DateApril 23, 1985
CourtUnited States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 570

761 F.2d 570 (10th Cir. 1985)

MONFORT OF COLORADO, INC., Plaintiff-Appellee,

v.

CARGILL, INC. and Excel Corporation, Defendants-Appellants.

No. 83-2588, 84-1305.

United States Court of Appeals, Tenth Circuit

April 23, 1985

Page 571

[Copyrighted Material Omitted]

Page 572

Robert F. Hanley (Ronald G. Carr, Alan K. Palmer, and W. Stephen Smith with him on the briefs), of Morrison & Foerster, Denver, Colo., for defendants-appellants.

William C. McClearn (James E. Hartley and Marcy G. Glenn with him on the briefs) of Holland & Hart, Denver, Colo., for plaintiff-appellee.

Before LOGAN, BREITENSTEIN, and McWILLIAMS, Circuit Judges.

LOGAN, Circuit Judge.

Monfort of Colorado, Inc. has brought this private antitrust action seeking to enjoin its competitor, Excel Corporation, a wholly owned subsidiary of Cargill, Inc. (hereinafter defendants or Excel), from acquiring another competitor, Spencer Beef Division of Land O'Lakes, Inc. Defendants appeal the district court's grant of a permanent injunction prohibiting Excel from acquiring Spencer Beef. See Monfort of Colorado, Inc. v. Cargill, Inc., 591 F.Supp. 683, 710-11 (D.Colo.1983). Defendants also appeal an enforcement order that the district court issued after defendants acquired one of Spencer Beef's plants in spite of the original injunction.

Plaintiff Monfort packs and fabricates beef at plants in Greeley, Colorado, and Grand Island, Nebraska. It is the fifth largest beef packer in the country. Defendants Cargill and Excel operate four integrated beef packing and fabrication plants in Kansas, Missouri, and Texas, a slaughter facility in Nebraska, and a fabrication plant in Kansas. Excel is the second largest beef packer in the United States. Its parent company operates subsidiaries in at least thirty-five countries.

Spencer Beef, which Excel seeks to acquire, is a division of the agricultural cooperative Land O'Lakes, Inc. and was the third largest beef packer in the United States when all of its plants in Spencer, Iowa, Oakland, Iowa, and Schuyler, Nebraska were operating. Spencer's Schuyler plant, which has been closed for more than two years, 591 F.Supp. at 689, is approximately sixty miles from Monfort's Grand Island plant. Spencer and Land O'Lakes are not parties to this litigation, although at one time they sought to intervene. See Monfort of Colorado, Inc. v. Cargill, Inc., No. 84-1060 (10th Cir. Aug. 8, 1984) (appeal dismissed).

Monfort brought this suit in July 1983, seeking an injunction under section 16 of the Clayton Act, 15 U.S.C. Sec. 26. It claimed that Excel's proposed acquisition of Spencer Beef would violate section 7 of the Clayton Act, 15 U.S.C. Sec. 18, and section 1 of the Sherman Act, 15 U.S.C. Sec. 1. This case presents the significant threshold issue of whether a company has standing to seek a section 16 injunction against its competitor's

Page 573

horizontal acquisition of a competing firm. It also presents questions concerning the propriety of the proposed acquisition under section 7, as well as the propriety of a partial acquisition of assets once a district court has enjoined the originally proposed transaction. We find that Monfort has antitrust standing, that the district court properly granted Monfort's request for an injunction, and that Excel's subsequent acquisition of a Spencer Beef plant violated this injunction. Therefore, we affirm the district court's judgments.

I

A

The threshold issue is whether Monfort has antitrust standing to challenge this merger. The landmark case governing analysis of antitrust standing is Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), with its oft-quoted holding that "[p]laintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Id. at 489, 97 S.Ct. at 697 (emphasis in original). Brunswick involved a claim for damages under section 4 of the Clayton Act; the Court there was particularly concerned with section 4's specific reference to injury: suit may be brought only by persons "who shall be injured." See 429 U.S. at 485-86, 97 S.Ct. at 695-96. In section 16 injunction cases, however, the courts do not require proof of actual injury because they need not calculate damages. Instead, they follow section 16's command to apply equitable standards for an injunction. See, e.g., Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 407-08 (1st Cir.1985); Christian Schmidt Brewing Co. v. G. Heileman Brewing Co., 753 F.2d 1354, 1357-58 (6th Cir.1985), cert. dismissed, --- U.S. ----, 105 S.Ct. 1155, 84 L.Ed.2d 309 (1985). The Supreme Court has held that because section 16 does not require actual injury it does not foreclose antitrust claims for which the injury has yet to occur. See Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130, 89 S.Ct. 1562, 1580, 23 L.Ed.2d 129 (1969).

The antitrust claims in this case and in Brunswick involve both a remedial statute, section 16 or section 4, and a substantive statute defining the antitrust violation, section 7 of the Clayton Act. To obtain antitrust standing a plaintiff must meet the threshold requirements of both the remedial and substantive statutes. In Brunswick the Court observed that to recover section 4 damages for a section 7 violation a plaintiff must prove more than that defendant violated section 7. See 429 U.S. at 486, 97 S.Ct. at 696. The same is true in a section 16 case, but the threshold of proof beyond the section 7 violation remains lower than it would be in a section 4 case. See Board of Regents of the University of Oklahoma v. National Collegiate Athletic Association, 707 F.2d 1147, 1151 (10th Cir.1983), aff'd, --- U.S. ----, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984) (certiorari not sought on standing issue, id. at ---- n. 14, 104 S.Ct. at 2958 n. 14); see also Schoenkopf v. Brown & Williamson Tobacco Corp., 637 F.2d 205, 210 (3d Cir.1980). The practical result of this distinction is that in a section 16 case, because actual injury need not be shown, it is much easier for a plaintiff to show causation of its hypothetical antitrust injury by a putative antitrust violation. The Court in Brunswick recognized this distinction by not foreclosing plaintiffs in that case from seeking an injunction even though they lacked standing to seek damages. 1 See 429 U.S. at 491, 97 S.Ct. at 698.

Page 574

Therefore, when we consider Brunswick's requirements for antitrust standing in this section 16 case, the Court's concerns with restricting section 4 cases, in part because of the peculiar risks of unrestrained treble damages claims, are of little consequence. See, e.g., id. at 485-88, 97 S.Ct. at 695-97; see also Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 543-45, 103 S.Ct. 897, 911-13, 74 L.Ed.2d 723 (1983) (discussing problems of duplicate recovery and complex apportionment of awards in section 4 cases); Blue Shield of Virginia v. McCready, 457 U.S. 465, 473-75, 475 n. 11, 102 S.Ct. 2540, 2545-46, 2546 n. 11, 73 L.Ed.2d 149 (1982); Illinois Brick Co. v. Illinois, 431 U.S. 720, 746, 97 S.Ct. 2061, 2074, 52 L.Ed.2d 707 (1977) (Clayton Act section 4 was intended to compensate victims of antitrust injury as well as to deter antitrust violations). Thus most of the Supreme Court and lower court cases that have addressed antitrust standing are distinguishable in a section 16 case because they involve treble damages and section 4's actual injury requirement.

In a section 16 case, Brunswick mandates only an inquiry into the causal connection between the threatened injury and the putative antitrust violation. If a plaintiff surmounts this causation hurdle it has standing to seek an injunction. Of course it still must satisfy section 16's requirements in order to obtain the injunction, 2 and in the course of doing so it will have to prove a substantive antitrust violation such as the section 7 violation alleged here. The Supreme Court has said that this causation inquiry is like proximate cause analysis, see Blue Shield, 457 U.S. at 477, 102 S.Ct. at 2547; Associated General Contractors, 459 U.S. at 535-36, 103 S.Ct. at 907-08. To decide whether Monfort has antitrust standing, we now consider whether Excel's increased market power after acquisition of Spencer Beef would be a proximate cause of Monfort's threatened injury. 3

B

Excel and Monfort are direct horizontal competitors in the beef packing and fabricating business. Excel contends that competitors generally should be denied standing to challenge a merger because they actually benefit from any increased concentration in the industry. Excel argues, in effect, that Monfort would have fewer competitors if the proposed merger were consummated and thus would accrue some of

Page 575

the advantages of oligopoly rather than suffer any antitrust injury. Excel also suggests that even if Monfort suffers from the merger it would only be suffering the effects of competition; it alludes to the statement, recently reaffirmed in Brunswick, that the "antitrust laws were enacted for 'the protection of competition, not competitors.' " Brunswick, 429 U.S. at 488, 97 S.Ct. at 697 (emphasis in original) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 1521, 8 L.Ed.2d 510 (1962) ). 4

In support of its theory that the acquisition may injure competition, Monfort does not claim that consumers of beef will immediately be hurt by higher beef prices. Indeed, Monfort would surely benefit if beef prices rose following Excel's acquisition. Instead Monfort claims that Excel will be able to engage in what we consider to be a form of predatory pricing in which Excel will drive other companies out of the market by paying more to its cattle suppliers and charging less for boxed beef that it sells...

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13 practice notes
  • 636 F.Supp. 1513 (S.D.Ind. 1986), IP 86-602, Laidlaw Acquisition Corp. v. Mayflower Group, Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Southern District of Indiana
    • 11 Junio 1986
    ...v. General Motors Corp., 589 F.Supp. 1182 (D.D.C.1984); Monfort of Colorado, Inc. v. Cargill, Inc., 591 F.Supp. 683 (D.Colo.1983), aff'd, 761 F.2d 570 (10th Cir.1985) cert. granted, --- U.S. ----, 106 S.Ct. 784, 88 L.Ed.2d 763 (1986) (the guidelines "are primarily a statement of ... en......
  • Guideline institutionalization: the role of merger guidelines in antitrust discourse.
    • United States
    • William and Mary Law Review Vol. 48 Nbr. 3, December 2006
    • 1 Diciembre 2006
    ...612 F. Supp. 1298 (D.N.J. 1985). There were only two rulings in which the CR measure dominated. Montfort of Colo., Inc. v. Cargill, Inc., 761 F.2d 570 (10th Cir. 1985) (using only the CR measure), rev'd, 479 U.S. 104 (1986); Christian Schmidt Brewing Co. v. G. Heileman Brewing Co., 600 F. S......
  • Copyright as trade regulation.
    • United States
    • University of Pennsylvania Law Review Vol. 155 Nbr. 4, April 2007
    • 1 Abril 2007
    ...428 (2d Cir. 1945). (106) Brown Shoe Co. v. United States, 370 U.S. 294, 315 (1962); see also Monfort of Colo., Inc. v. Cargill, Inc., 761 F.2d 570, 576 (10th Cir. 1985) (noting that "Congress intended section 7 of the Clayton Act to prevent" industry concentration, which likely r......
  • 691 F.Supp. 1280 (E.D.Okl. 1986), 75-92, Lone Star Steel Co. v. United Mine Workers of America
    • United States
    • Federal Cases United States District Courts 10th Circuit Eastern District of Oklahoma
    • 21 Febrero 1986
    ...and thus, Lone Star does not have antitrust standing to challenge the Union's conduct. See Monfort of Colorado, Inc. v. Cargill, Inc., 761 F.2d 570, 573-74 (10th Cir.1985), cert. Page 1305 granted, 474 U.S. 104, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986). CONCLUSIONS OF LAW 1. Jurisdiction in thi......
  • Free signup to view additional results
10 cases
  • 636 F.Supp. 1513 (S.D.Ind. 1986), IP 86-602, Laidlaw Acquisition Corp. v. Mayflower Group, Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Southern District of Indiana
    • 11 Junio 1986
    ...v. General Motors Corp., 589 F.Supp. 1182 (D.D.C.1984); Monfort of Colorado, Inc. v. Cargill, Inc., 591 F.Supp. 683 (D.Colo.1983), aff'd, 761 F.2d 570 (10th Cir.1985) cert. granted, --- U.S. ----, 106 S.Ct. 784, 88 L.Ed.2d 763 (1986) (the guidelines "are primarily a statement of ... en......
  • 691 F.Supp. 1280 (E.D.Okl. 1986), 75-92, Lone Star Steel Co. v. United Mine Workers of America
    • United States
    • Federal Cases United States District Courts 10th Circuit Eastern District of Oklahoma
    • 21 Febrero 1986
    ...and thus, Lone Star does not have antitrust standing to challenge the Union's conduct. See Monfort of Colorado, Inc. v. Cargill, Inc., 761 F.2d 570, 573-74 (10th Cir.1985), cert. Page 1305 granted, 474 U.S. 104, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986). CONCLUSIONS OF LAW 1. Jurisdiction in thi......
  • 479 U.S. 104 (1986), 85-473, Cargill, Inc. v. Monfort of Colorado, Inc.
    • United States
    • Federal Cases United States Supreme Court
    • 9 Diciembre 1986
    ...suggests that Congress intended this Court to ignore injuries caused by such anticompetitive practices as predatory pricing. Pp. 120-122. 761 F.2d 570, reversed and BRENNAN, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and MARSHALL, POWELL, O'CONNOR, and SCALIA, JJ., j......
  • 807 F.2d 1381 (7th Cir. 1986), 85-3185, Hospital Corp. of America v. F.T.C.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Seventh Circuit
    • 18 Diciembre 1986
    ...See United States v. Philadelphia Nat'l Bank, supra, 374 U.S. at 362-63, 83 S.Ct. at 1740-41; Monfort of Colorado, Inc. v. Cargill, Inc., 761 F.2d 570, 580 (10th Cir.1985), rev'd on other grounds, -------- U.S. 93, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986). But it did. First it pointed out that ......
  • Free signup to view additional results
3 books & journal articles
  • Guideline institutionalization: the role of merger guidelines in antitrust discourse.
    • United States
    • William and Mary Law Review Vol. 48 Nbr. 3, December 2006
    • 1 Diciembre 2006
    ...612 F. Supp. 1298 (D.N.J. 1985). There were only two rulings in which the CR measure dominated. Montfort of Colo., Inc. v. Cargill, Inc., 761 F.2d 570 (10th Cir. 1985) (using only the CR measure), rev'd, 479 U.S. 104 (1986); Christian Schmidt Brewing Co. v. G. Heileman Brewing Co., 600 F. S......
  • Copyright as trade regulation.
    • United States
    • University of Pennsylvania Law Review Vol. 155 Nbr. 4, April 2007
    • 1 Abril 2007
    ...428 (2d Cir. 1945). (106) Brown Shoe Co. v. United States, 370 U.S. 294, 315 (1962); see also Monfort of Colo., Inc. v. Cargill, Inc., 761 F.2d 570, 576 (10th Cir. 1985) (noting that "Congress intended section 7 of the Clayton Act to prevent" industry concentration, which likely r......
  • CHALLENGES TO HORIZONTAL MERGERS BY COMPETITORS UNDER SECTION 7 OF THE CLAYTON ACT
    • United States
    • American Business Law Journal Nbr. 24-2, June 1986
    • 1 Junio 1986
    ...market share, ie., by competition. See id See also Petition for Writ of Certiorari, at 10, Cargill, Inc. v. Monfort of Colorado, Inc., 761 F.2d 570 (10th Cir. 19851, cert. grunted, 106 S. Ct. 591 (1985) (NO. 85-473). 591 F. Supp. at 691. Id. at 690-95. 1986 I Chalhges to Horizontal Mergers ......