Ginsburg v. Inbev Nv

• Citation: 623 F.3d 1229
• Decision Date: 27 October 2010
• Docket Number: No. 09-2990.,09-2990.
• Parties: Marty GINSBURG, et al., Plaintiffs-Appellants, v. INBEV NV/SA; Anheuser-Busch Companies, Inc.; Anheuser-Busch, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

623 F.3d 1229

Marty GINSBURG, et al., Plaintiffs-Appellants,

v.INBEV NV/SA; Anheuser-Busch Companies, Inc.; Anheuser-Busch, Inc., Defendants-Appellees.

No. 09-2990.

United States Court of Appeals,Eighth Circuit.

Submitted: April 14, 2010.

Filed: Oct. 27, 2010.

Joseph M. Alioto, Jr., argued, Joseph M. Alioto, Sr., Theresa D. Moore, Thomas P. Pier, San Francisco, CA, Theodore F. Schwartz, Kenneth R. Schwartz, Clayton, MO, Daniel R. Shulman, Minneapolis, MN, Gilmur R. Murray, Derek G. Howard, Larkspur, CA, on the brief, for Plaintiffs-Appellants.

Peter E. Moll, argued, Washington, DC, James F. Bennett, Erika Anderson, St. Louis, MO, Brian D. Wallach, Stephen Weismann, Washington, DC, on the brief, for Defendants-Appellees.

Before WOLLMAN, BRIGHT, and LOKEN, Circuit Judges.

LOKEN, Circuit Judge.

Plaintiffs are Missouri beer consumers suing to enjoin the now-consummated acquisition of Anheuser-Busch Companies, Inc. (“A-B”), by InBev NV/SA (“InBev”) on the ground that the transaction violated Section 7 of the Clayton Act, 15 U.S.C. § 18. Relying on the potential competition theories of § 7 liability, Plaintiffs allege that the merger threatens to reduce competition and increase beer prices in the United States because it eliminates InBev, the largest brewer and seller of imported beers, as an actual and a perceived potential competitor in the U.S. market. Having failed to obtain a preliminary injunction, Plaintiffs now seek divestiture as equitable relief under Section 16 of the Clayton Act, 15 U.S.C. § 26. The district court ¹ granted Defendants judgment on the pleadings. We affirm.

I.

Before the merger, A-B, based in St. Louis, was the largest brewer in the United States, with a nearly fifty-percent market share, annual revenues of $16 billion, and 30,000 employees. InBev, created by the merger of Interbrew of Belgium and AmBev of Brazil, was the world's largest brewer, with annual revenues of $20 billion and 89,000 employees. Prior to acquiring A-B, InBev primarily competed in the U.S. market by selling imported brands brewed in other countries. In addition, an InBev subsidiary (“Labatt USA”) had exclusive rights to brew and distribute in the U.S. a popular Canadian beer, Labatt, that another InBev subsidiary had the exclusive rights to brew and distribute in Canada. InBev had also owned a brewery in Latrobe, Pennsylvania, and one domestic brand, Rolling Rock, but it sold those assets in 2006. In late 2006, InBev and A-B agreed to make A-B the exclusive U.S. importer of several popular InBev brands.

InBev began its highly publicized efforts to acquire A-B in June 2008. When A-B rejected the initial offer, InBev sued in Delaware to remove the A-B board of directors, and A-B countered with a federal action in Missouri alleging deceptive takeover conduct. The companies reached an accord in July 2008 and announced that InBev would purchase A-B stock at $70 a share, for a total purchase price of $52 billion. As the subsequent procedural history is critical to an understanding of our decision, we summarize the significant events chronologically:

September 10, 2008-Plaintiffs file their Complaint for Injunctive Relief seeking orders preliminarily and permanently “enjoining [D]efendants from consummating their acquisition.”

October 6, 2008-Counsel for Defendants advise Plaintiffs that Defendants will turn over by October 17 “the Hart Scott Rodino documents that they have by then given to the [United States] Department of Justice,” ² that “the transaction could be consummated ... as early as November 12, 2008,” and that Defendants would not agree to delay the closing.

October 17, 2008-InBev and A-B file Answers to the Complaint and turn over 400,000 pages of Hart-Scott-Rodino documents.

November 3, 2008-As directed by the court in an October 23 telephonic hearing, Plaintiffs file their motion for a preliminary injunction and supporting memorandum.

November 12, 2008-A-B shareholders approve the transaction.

November 14, 2008-The Department of Justice files in the United States District Court for the District of Columbia (D.D.C.) a Competitive Impact Statement and a Proposed Final Judgment in which InBev agrees to hold separate, and to divest if the Final Judgment is approved by the court, InBev's Labatt USA assets. See 73 Fed.Reg. 71,682-83 (Nov. 25, 2008) (explaining that, although InBev's overall U.S. market share was only two percent, the acquisition of A-B would substantially reduce competition in Buffalo, Rochester, and Syracuse, New York, because Labatt brand beers account for a significant portion of those local markets).

November 18, 2008-The district court denies Plaintiffs' motion for a preliminary injunction. The purchase transaction closes, and Defendants merge the operations of the two companies, subject to a Hold Separate Stipulation and Order regarding InBev's Labatt USA assets entered by D.D.C. pending approval of the Final Judgment.

November 20, 2008-Plaintiffs move for reconsideration of the denial order.

December 17, 2008-The district court denies the motion for reconsideration.

December 30, 2008-The district court denies Plaintiffs' Motion to Hold Defendants' Assets Separate.

January 19, 2009-Plaintiffs appeal the three district court orders.

February 17, 2009-Defendants move for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure, and to stay discovery.

February 26, 2009-Eighth Circuit dismisses Plaintiffs' appeals from the first two orders as untimely and summarily affirms denial of the Motion to Hold Defendants' Assets Separate. See Judgment, No. 09-1148 (8th Cir. Feb. 26, 2009).

March 11, 2009-Department of Justice moves for entry of Final Judgment by D.D.C. An independent, government-approved entity is identified that will purchase InBev's Labatt USA assets.

March 17, 2009-After denying Plaintiffs' motion to intervene, D.D.C. grants them leave to appear as amici curiae and schedules a hearing on the government's motion to approve the Proposed Final Judgment.

April 16-17, 2009-Plaintiffs appear at D.D.C. motion hearing and file supplemental exhibits opposing the merger.

August 3, 2009-The district court grants Defendants' motion for judgment on the pleadings and denies Plaintiffs' request for leave to amend.

August 11, 2009-Applying the standard of review mandated by the Tunney Act, 15 U.S.C. § 16(e)(1), D.D.C. rejects Plaintiffs' effort to block the entire merger and approves the consent decree and Final Judgment proposed by the government. United States v. InBev N.V./S.A., No. 08-1965.

In its November 18, 2008, order denying Plaintiffs' motion for a preliminary injunction, the district court concluded (i) that the substantial Hart-Scott-Rodino documentary record “demonstrates that it is overwhelmingly likely that Plaintiffs cannot succeed on the merits” because InBev's actions demonstrate that it does not intend to enter the U.S. beer market de novo, and because InBev's presence as a perceived potential competitor does not affect A-B's competitive behavior; and (ii) that Plaintiffs provided no support for their speculative claim of antitrust injury, namely, that the merger would result in increased beer prices even though it would not increase concentration in the U.S. market.

In its August 3, 2009, order that is the subject of this appeal, the district court granted judgment on the pleadings, concluding that Plaintiffs' Complaint did not contain sufficient facts supporting their conclusory allegations that InBev intended to enter the U.S. market de novo, or that any rational market participant had tempered its pricing activities in the existing market because it viewed InBev as a potential de novo entrant, allegations at odds with InBev's sale of its Pennsylvania brewery and Rolling Rock assets, its long-term agreement with A-B for distribution of InBev's imported brands, and its lack of assets and relationships needed for effective de novo entry. On appeal, Plaintiffs argue that their lengthy Complaint adequately pleaded claims under the actual and perceived potential competition theories of § 7 liability.

II.

Section 7 of the Clayton Act prohibits any acquisition affecting commerce whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557-58, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), noting “the unusually high cost of discovery in antitrust cases,” the Supreme Court held that, to survive a motion to dismiss, a complaint alleging an agreement in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, must allege specific facts “plausibly suggesting (not merely consistent with) agreement” in restraint of trade. This landmark decision was later extended to other causes of action in Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

Plaintiffs argue the district court erred in granting judgment on the pleadings, relying on the breadth of the § 7 prohibition and the plausibility of alleging that the world's largest brewer, having a minimal present share of the U.S. beer market, is both an actual and a perceived potential competitor in that market. This is a difficult procedural issue, made more so by the unusual posture in which it reaches us. ³ We focus instead on an independent reason why the district court did not err in dismissing the Complaint at this stage of the proceedings.

III.

Plaintiffs are beer consumers who purchase beer from taverns and retailers, not directly from breweries. As indirect purchasers, they may not sue for damages under the Clayton Act. Illinois Brick Co. v. Illinois, 431 U.S. 720, 734-35, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). But indirect purchasers are private parties who may sue for injunctive relief under § 16 of the Act. See Campos v. Ticketmaster Corp., 140 F.3d 1166, 1172 (8th Cir.1998), cert. denied, 525 U.S. 1102, 119 S.Ct. 865, 142 L.Ed.2d 768 (1999). Here, Plaintiffs initially sued to enjoin the...