Summary
The Second Circuit considered whether R.C. Bigelow had standing under sections 7 and 16 of the Clayton Act to challenge Lipton’s proposed acquisition of Celestial Seasonings. The court held that a genuine issue of material fact existed regarding threatened antitrust injury and that the appeal was not moot despite the proposed transaction’s abandonment, reversing the district court’s summary judgment for defendants.
Topics
Practice areas
Questions Presented
- Whether the appeal became moot after the proposed Lipton-Celestial transaction was abandoned and Celestial was sold to another group.
- Whether Bigelow raised a genuine issue of material fact sufficient to establish a substantial likelihood of antitrust injury and survive summary judgment on its section 16 Clayton Act challenge to the proposed merger.
Holdings
- The appeal was not moot because defendants failed to show that the allegedly anticompetitive conduct could not reasonably be expected to recur.
- A competitor challenging a proposed merger may survive summary judgment by presenting accurate market-share evidence indicating substantial market power and a substantial likelihood of antitrust injury; an alleged post-acquisition market share of 84% was sufficient to create a genuine issue for trial.
- Cargill does not categorically foreclose a competitor from challenging a merger based on threatened post-acquisition antitrust injury, and the court declined to follow Phototron to the extent it required proof of antitrust injury at the preliminary-injunction stage rather than a sufficient factual showing to survive summary judgment.
Key quotations
“a merger which produces a firm controlling an undue percentage share of the relevant market, and results in a significant increase in the concentration of firms in that market, is so inherently likely to lessen competition substantially that it must be enjoined in the absence of evidence clearly showing that the merger is not likely to have such anticompetitive effects.” (¶ 22)
“Market share data--assuming that it is accurate and indicative of substantial market power to eliminate competition--constitutes sufficient evidence, in and of itself, of antitrust injury to a competitor to create a genuine issue for trial.” (¶ 36)
Factual background
Lipton, a subsidiary of Unilever, proposed acquiring Celestial Seasonings, the largest producer of herbal tea in the United States. The two companies together would control approximately 84% of the herbal-tea market, while Bigelow, the third-largest producer, held approximately 13% of that market. Bigelow alleged that the merger threatened antitrust injury, including reduced access to supermarket shelf space, and sought to enjoin the transaction. After the proposed sale was abandoned and Celestial was sold to a management-led buyout group, defendants argued that the appeal was moot.
Procedural history
Bigelow sued to prevent Lipton's proposed acquisition of Celestial Seasonings. The district court temporarily enjoined the merger, then granted defendants' motion for summary judgment after concluding that Bigelow had not raised a genuine issue of material fact concerning antitrust injury. The Second Circuit held that the appeal was not moot because defendants had not carried their heavy burden of showing that the challenged conduct could not reasonably recur, and it reversed and remanded for further proceedings.
Remand instructions
The case was remanded to the district court for further proceedings consistent with the opinion, including consideration of the merits of the requested injunctive relief after a full trial.