%PDF-1.2 %âãÏÓ 8 0 obj << /Length 9 0 R >> stream BT 180.48 708.72 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (IN THE UNITED STATES COURT OF APPEALS) Tj 4.08 -14.16 TD (FOR THE DISTRICT OF COLUMBIA CIRCUIT) Tj -112.56 -28.32 TD (__________________________________________) Tj 0 -14.16 TD ( ) Tj 108 0 TD ( ) Tj 144 0 TD (\)) Tj -252 -14.16 TD (FEDERAL TRADE COMMISSION ) Tj 216 0 TD ( \)) Tj -180 -14.16 TD (6th Street and Pennsylvania Ave., N.W. ) Tj 216 0 TD (\)) Tj -216 -14.16 TD (Washington, D.C. 20580, ) Tj 216 0 TD (\)) Tj -252 -14.16 TD ( ) Tj 252 0 TD (\)) Tj -252 -14.16 TD ( ) Tj 72 0 TD (Plaintiff-Appellant, ) Tj 180 0 TD (\)) Tj 0 -14.16 TD (\)) Tj -252 -14.16 TD ( vs. ) Tj 252 0 TD (\)) Tj -252 -14.16 TD ( ) Tj 252 0 TD (\)) Tj -252 -14.16 TD (H.J. HEINZ COMPANY ) Tj 252 0 TD (\)) Tj -216 -14.16 TD (600 Grant St., 60th Floor ) Tj 216 0 TD (\)) Tj -216 -14.16 TD (Pittsburgh, PA 15219 ) Tj 216 0 TD (\)) Tj 0 -14.16 TD (\)) Tj 36 0 TD (Docket No.) Tj -216 -14.16 TD (and) Tj 180 0 TD (\)) Tj 0 -14.16 TD (\)) Tj 36 0 TD (Civ. Action No. 1:00CV01688 \(JR\)) Tj -288 -14.16 TD (MILNOT HOLDING CORPORATION) Tj 252 0 TD (\) ) Tj -216 -14.16 TD (100 South Fourth St. ) Tj 216 0 TD (\) ) Tj -216 -14.16 TD (St. Louis, Mo 63102) Tj 216 0 TD (\)) Tj 0 -14.16 TD (\)) Tj -252 -14.16 TD ( Defendants-Appellees. ) Tj 252 0 TD (\)) Tj -252 -14.16 TD (__________________________________________\)) Tj 90.72 -42.72 TD /F1 12 Tf (EMERGENCY MOTION OF THE FEDERAL TRADE) Tj 38.88 -14.16 TD (COMMISSION FOR AN INJUNCTION) Tj -30.24 -14.16 TD (PENDING APPEAL AND TO EXPEDITE APPEAL) Tj ET 171.36 295.92 269.52 0.72 re f BT 72 269.76 TD /F0 12 Tf (RICHARD G. PARKER) Tj 216 0 TD (DEBRA A. VALENTINE) Tj -216 -14.16 TD (Director) Tj 216 0 TD (General Counsel) Tj 0 -28.32 TD (JOHN F. DALY) Tj 0 -14.16 TD (Assistant General Counsel for Litigation) Tj -216 -28.32 TD (RICHARD B. DAGEN) Tj 216 0 TD (DAVID C. SHONKA) Tj -216 -14.16 TD (DAVID A. BALTO) Tj 216 0 TD (Attorneys for Plaintiff-Appellant) Tj -216 -14.16 TD (JAMES A. FISHKIN) Tj 0 -14.16 TD (JOSEPH S. 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Tj 0 Tc (.) Tj 349.68 0 TD (4) Tj -462 -28.32 TD (ARGUMENT) Tj 74.88 0 TD 3.12 Tc (.............................................................) Tj 0 Tc (.) Tj 387.12 0 TD (7) Tj -462 -28.32 TD (I. ) Tj 36 0 TD (THE COMMISSION IS LIKELY TO SUCCEED ON THE MERITS OF ITS) Tj 0 -14.16 TD (APPEAL) Tj 51.36 0 TD 3.12 Tc (...........................................................) Tj 0 Tc (.) Tj 374.64 0 TD (7) Tj -462 -28.32 TD (A. ) Tj 36 0 TD (The District Court Ignored Controlling Case Law in Denying Injunctive Relief) Tj 375.84 0 TD 3.12 Tc (.......) Tj 0 Tc (.) Tj 50.16 0 TD (8) Tj -426 -28.32 TD (B.) Tj 36 0 TD (The Court Erred In Requiring The FTC To Prove Harm To Retail Consumers ) Tj 377.28 0 TD (.) Tj 6.72 0 TD (11) Tj -420 -28.32 TD (C. ) Tj 36 0 TD (The Court Misapplied The Standards Governing The ) Tj -1.68 Tc (\223) Tj 0 Tc (Efficiencies Defense) Tj -1.44 Tc (\224) Tj 364.8 0 TD 3.12 Tc (..) Tj 0 Tc (.) 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Tj 257.52 0 TD (9) Tj ET endstream endobj 25 0 obj 385 endobj 23 0 obj << /Type /Page /Parent 5 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R >> /ProcSet 2 0 R >> /Contents 24 0 R >> endobj 27 0 obj << /Length 28 0 R >> stream 0 0 0 rg 72 154.08 144.24 1.2 re f BT 108 136.32 TD /F0 7.2 Tf 0 Tc 0 Tw (1) Tj 3.6 -4.8 TD /F0 12 Tf ( In its Order denying the injunction pending appeal, the district court observed: ) Tj -1.68 Tc (\223) Tj 0 Tc (The) Tj -39.6 -14.16 TD (Defendants have undertaken in open court that they will take no steps to consummate the merger) Tj 0 -14.16 TD (pending a further order of the Court of Appeals provided that the FTC files its anticipated motion) Tj T* (for an injunction pending appeal \(with a motion for expedited appeal\) by Monday, October 23,) Tj T* (2000.) Tj -0.2057 Tc 0.2057 Tw (\224 App. G.) Tj 175.92 633.6 TD /F1 12 Tf 0 Tc 0 Tw (Preliminary Statement) Tj ET 247.92 706.56 116.16 0.72 re f BT 108 680.4 TD /F0 12 Tf (Plaintiff-appellant Â鶹´«Ã½ Trade Commission \() Tj -1.68 Tc (\223) Tj 0 Tc (Commission) Tj -1.44 Tc (\224) Tj 0 Tc (\), seeks emergency relief to) Tj -36 -28.32 TD (enjoin pending appeal a merger of two of the three manufacturers of jarred baby food, H.J. Heinz) Tj 0 -28.32 TD (Company \() Tj -0.0466 Tc 0.0466 Tw (\223Heinz\224\) and Milnot Holding Corporation, the parent of Beech-Nut Corporation) Tj T* 0 Tc 0 Tw (\(hereafter ) Tj -1.68 Tc (\223) Tj 0 Tc (Beech-Nut) Tj -1.44 Tc (\224) Tj 0 Tc (\). The Commission also asks this Court to expedite the appeal and to) Tj T* (schedule argument at the earliest possible date. This motion is filed pursuant to Fed. R. App. P.) Tj T* (8\(a\) and Circuit Rule 27\(f\) and is properly before this Court.) Tj 36 -28.32 TD (The Commission sought and was denied an injunction pending appeal in the district court,) Tj -36 -28.32 TD (which nonetheless readily agreed that this case raises ) Tj -1.68 Tc (\223) Tj 0 Tc (serious legal issues) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and that ) Tj -1.68 Tc (\223) Tj 0 Tc (the Court of) Tj 0 -28.32 TD (Appeals . . . should review what I have done.) Tj -0.0424 Tc 0.0424 Tw (\224 Appendix H to Â鶹´«Ã½ Trade Commission) Tj -2.88 Tc 0 Tw (\222) Tj 0 Tc (s) Tj T* (Motion for an Emergency Appeal \() Tj -0.0843 Tc 0.0843 Tw (\223App. _\224\) at 6, 15. The court also opined that ) Tj -1.68 Tc 0 Tw (\223) Tj 0 Tc (expedition was) Tj T* (in order.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 48.96 0 TD /F2 12 Tf 0 Tc 0 Tw (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 15. However, it concluded that it was ) Tj -1.68 Tc (\223) Tj 0 Tc (simply . . . unable and certainly unwilling) Tj -62.16 -28.32 TD (to schedule anything for the Court of Appeals.) Tj -1.44 Tc (\224) Tj 226.32 4.8 TD /F0 7.2 Tf 0 Tc (1) Tj 3.6 -4.8 TD /F0 12 Tf ( ) Tj 6.24 0 TD /F2 12 Tf (Id.) Tj -200.16 -28.32 TD /F0 12 Tf (For the reasons described in detail below, the Commission asks that the Court grant the) Tj -36 -28.32 TD (relief requested by this motion. The parties otherwise are free to consummate their transaction,) Tj 0 -28.32 TD (combine the companies, close down plants, share confidential business information, and take other) Tj T* (steps that could make it impractical to recreate premerger competition if the transaction ultimately) Tj T* (is found to be illegal. Only by granting the requested relief can this Court maintain the status quo) Tj T* (and assure that its review is meaningful.) Tj ET endstream endobj 28 0 obj 3278 endobj 26 0 obj << /Type /Page /Parent 5 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 27 0 R >> endobj 31 0 obj << /Length 32 0 R >> stream 0 0 0 rg 72 234.72 144.24 1.2 re f BT 108 216.96 TD /F0 7.2 Tf 0 Tc 0 Tw (2) Tj 3.6 -4.8 TD /F0 12 Tf ( Section 13\(b\) of the FTC Act, 15 U.S.C. \247 53\(b\), authorizes the FTC to seek, and the) Tj -39.6 -14.16 TD (district court to grant, preliminary relief pending the completion of administrative proceedings) Tj 0 -14.16 TD (challenging the proposed acquisition. ) Tj 182.88 0 TD /F2 12 Tf (FTC v. PPG Indus., Inc.,) Tj 120.24 0 TD /F0 12 Tf ( 798 F.2d 1500 \(D.C. Cir. 1986\). ) Tj -267.12 -21.36 TD /F0 7.2 Tf (3) Tj 3.6 -4.8 TD /F0 12 Tf ( Courts have long recognized that mergers in highly concentrated markets must be) Tj -39.6 -14.16 TD (enjoined in the ) Tj 72.72 0 TD /F2 12 Tf (absence) Tj 38.4 0 TD /F0 12 Tf ( of truly extraordinary circumstances justifying such mergers. ) Tj 297.12 0 TD /F2 12 Tf (E.g., PPG,) Tj -408.24 -14.16 TD /F0 12 Tf (798 F.2d at 1503; s) Tj 92.64 0 TD /F2 12 Tf (ee) Tj 10.56 0 TD /F0 12 Tf ( ) Tj 3.12 0 TD /F2 12 Tf (AlliedSignal, Inc. v. B.F. Goodrich Co.) Tj 188.88 0 TD /F0 12 Tf (, 183 F.3d 568 \(7th Cir. 1999\);) Tj -295.2 -14.16 TD /F2 12 Tf (FTC v. Cardinal Health,) Tj 118.56 0 TD /F0 12 Tf ( 12 F. Supp. 2d 34 \(D.D.C. 1998\); ) Tj 168.24 0 TD /F2 12 Tf (FTC v. Staples, Inc.,) Tj 98.88 0 TD /F0 12 Tf ( 970 F. Supp.) Tj -385.68 -14.16 TD (1066 \(D.D.C. 1997\); ) Tj 103.2 0 TD /F2 12 Tf (United States v. United Tote, Inc.,) Tj 163.92 0 TD /F0 12 Tf ( 768 F. Supp. 1064 \(D. Del. 1991\);) Tj -36.24 -26.16 TD (2) Tj -194.88 633.84 TD (The decision below warrants scrutiny by this Court. There are effectively only three baby) Tj -36 -28.32 TD (food manufacturers in the United States: Gerber, with a market share of about 65%, Heinz, with) Tj 0 -28.32 TD (17.4%, and Beech-Nut, with 15.4%. Below, the Commission sought and was denied preliminary) Tj T* (injunctive relief under Section 13\(b\) of the FTC Act, 15 U.S.C. \247 53\(b\), pending completion of an) Tj T* (administrative adjudication to determine whether Heinz) Tj -2.88 Tc (\222) Tj 0 Tc (s proposed acquisition of Beech-Nut) Tj T* (would violate Section 7 of the Clayton Act, 15 U.S.C. \247 18.) Tj 285.6 4.8 TD /F0 7.2 Tf (2) Tj -249.6 -33.12 TD /F0 12 Tf (The district court found the essential elements of a Section 7 violation, starting with) Tj -36 -28.32 TD (presumptively illegal post-merger concentration levels in the market for the manufacture and sale) Tj 0 -28.32 TD (of ) Tj 12.96 0 TD /F0 11.76 Tf 0.069 Tc -0.2466 Tw (jarred baby food in the United States. The Court also found that barriers make ) Tj -1.5456 Tc 0 Tw (\223) Tj 0.1557 Tc -0.3333 Tw (entry difficult) Tj -12.96 -28.08 TD 0.1817 Tc -0.3593 Tw (and improbable) Tj -1.3056 Tc 1.128 Tw (\224 ) Tj 0.0964 Tc -0.274 Tw (\(App. F at 11\), and that neither defendant is a failing firm or anything close to it. ) Tj 0 -27.84 TD 0.1409 Tc -0.3185 Tw (The logical conclusions from these findings are that this is a case for the Commission to closely) Tj T* 0.1348 Tc -0.3124 Tw (review administratively and that the court below should have entered a preliminary injunction. ) Tj 36 -27.84 TD 0.1145 Tc -0.2921 Tw (The lower court, however, denied the Commission) Tj -2.7456 Tc 0 Tw (\222) Tj 0.1737 Tc -0.3513 Tw (s motion for a preliminary injunction) Tj -36 -28.08 TD 0.1656 Tc -0.3432 Tw (and in so doing ) Tj 75.6 0 TD /F0 12 Tf 0 Tc 0 Tw (departed from settled antitrust jurisprudence. No court has previously approved a) Tj -75.6 -28.32 TD (merger to duopoly in the presence of significant entry barriers where the acquired firm was not) Tj 0 -28.56 TD (failing. ) Tj 35.52 0 TD /F1 12 Tf ( ) Tj 3.12 0 TD /F0 12 Tf (The court neither cited a single case permitting such a merger, nor distinguished those) Tj -38.64 -28.56 TD (cases condemning them.) Tj 115.68 4.8 TD /F0 7.2 Tf (3) Tj 3.6 -4.8 TD /F0 12 Tf ( The court achieved this result by applying a standard that would require) Tj ET endstream endobj 32 0 obj 4001 endobj 29 0 obj << /Type /Page /Parent 30 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 31 0 R >> endobj 34 0 obj << /Length 35 0 R >> stream 0 0 0 rg 72 192.24 144.24 1.2 re f BT 72 169.68 TD /F2 12 Tf 0 Tc 0 Tw (United States v. Ivaco) Tj 105.6 0 TD /F0 12 Tf (, 704 F. Supp. 1409 \(W.D. Mich. 1989\).) Tj -69.6 -21.36 TD /F0 7.2 Tf (4) Tj 3.6 -4.8 TD /F0 12 Tf ( Nothing in the record supports the claim that an injunction would ) Tj -1.68 Tc (\223) Tj 0 Tc (kill the merger) Tj -1.44 Tc (\224) Tj 0 Tc (: the) Tj -39.6 -14.16 TD (record shows that Beech-Nut is not about to look for alternative buyers, and Heinz) Tj -2.88 Tc (\222) Tj 0 Tc (s officials are) Tj 0 -14.16 TD (eager to consummate the transaction. The district court) Tj -2.88 Tc (\222) Tj 0 Tc (s concern that the parties might ) Tj -1.68 Tc (\223) Tj 0 Tc (kill the) Tj T* (merger) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (is based wholly on argument.) Tj 230.88 -26.16 TD (3) Tj -230.88 633.84 TD (the government to show that the merger would ultimately harm retail consumers even though the) Tj 0 -28.32 TD (Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s complaint alleged harm in an entirely different market -- the manufacture and sale) Tj T* (of jarred baby food at the wholesale level. App. B \266 12. By incorrectly placing on the) Tj T* (government the burden of showing that competition by manufacturers for supermarket shelf space) Tj T* (results in quantifiably lower retail prices, the court effectively eliminated upstream intermediaries) Tj T* (from the protection of the antitrust laws unless an impact on consumer prices is shown. ) Tj 36 -28.32 TD (The court also held that any anticompetitive effects of the merger were offset by) Tj -36 -28.32 TD (efficiencies that Heinz would realize from the merger. Yet, the court failed to conclude that the) Tj 0 -28.32 TD (efficiencies would benefit anyone but Heinz. To the contrary, the court found that ) Tj -1.68 Tc (\223) Tj 0 Tc (it remains to) Tj T* (be seen) Tj -0.1108 Tc 0.1108 Tw (\224 whether Heinz ) Tj -0.029 Tc 0.029 Tw (\223will use the . . . savings from the merger to mount a vigorous campaign) Tj T* 0 Tc 0 Tw (against Gerber.) Tj -0.08 Tc 0.08 Tw (\224 App. F at 23. Finally) Tj 185.52 0 TD /F0 11.76 Tf 0.0998 Tc -0.2774 Tw (, the court turned equity on its head by concluding that the) Tj -185.52 -28.08 TD 0.1295 Tc -0.3071 Tw (equities favored the defendants because the risk that a preliminary injunction ) Tj 366 0 TD /F2 11.76 Tf 0.0614 Tc 0 Tw (might) Tj 27.12 0 TD /F0 11.76 Tf 0.0925 Tc -0.2701 Tw ( lead to their) Tj -393.12 -27.84 TD 0.0898 Tc -0.2674 Tw (terminating the merger \() Tj 114.72 0 TD /F2 11.76 Tf 0.0032 Tc 0 Tw (id.) Tj 12.24 0 TD /F0 11.76 Tf -0.0442 Tc -0.1334 Tw ( at 27\)) Tj 30 4.56 TD /F0 6.96 Tf -0.12 Tc 0 Tw (4) Tj 3.36 -4.56 TD /F0 11.76 Tf 0.1066 Tc -0.2842 Tw ( outweighed its finding that:) Tj -88.32 -27.84 TD 0.0935 Tc -0.2711 Tw ([I]f the merger is allowed to proceed before the full-scale administrative) Tj -36 -13.92 TD 0.1085 Tc -0.2861 Tw (proceedings contemplated by the Â鶹´«Ã½ Trade Commission Act can be had, the outcome) Tj 0 -13.92 TD 0.0887 Tc -0.2663 Tw (of such proceedings will not matter, because [Beech-Nut) Tj -2.7456 Tc 0 Tw (\222) Tj 0.1676 Tc -0.3452 Tw (s] Canajoharie plant will be) Tj T* 0.1674 Tc -0.345 Tw (closed, the Beech-Nut distribution channels will be closed, the new label and recipes will) Tj T* 0.1245 Tc -0.3021 Tw (be in place, and it will be impossible as a practical matter to undo the transaction.) Tj -36 -27.84 TD /F2 11.76 Tf -0.072 Tc 0 Tw (Id.) Tj 12.72 0 TD /F0 11.76 Tf -0.0198 Tc -0.1578 Tw ( at 26-27. ) Tj ET endstream endobj 35 0 obj 3620 endobj 33 0 obj << /Type /Page /Parent 30 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 34 0 R >> endobj 37 0 obj << /Length 38 0 R >> stream 0 0 0 rg 72 265.2 144.24 1.2 re f BT 108 247.44 TD /F0 7.2 Tf 0 Tc 0 Tw (5) Tj 3.6 -4.8 TD /F0 12 Tf ( Under Section 13\(b\) an injunction is appropriate if the Commission ) Tj -1.68 Tc (\223) Tj 0 Tc (raise[s] questions) Tj -39.6 -14.16 TD (going to the merits so serious, substantial, difficult and doubtful as to make them fair ground for) Tj 0 -14.16 TD (thorough investigation, study, deliberation and determination by the FTC in the first instance and) Tj T* (ultimately by the Court of Appeals.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 175.92 0 TD /F2 12 Tf 0 Tc 0 Tw (University Health) Tj 85.44 0 TD /F0 12 Tf (, 938 F.2d at 1218; ) Tj 94.32 0 TD /F2 12 Tf (Cardinal) Tj 43.2 0 TD /F0 12 Tf (, 12) Tj -398.88 -14.16 TD (F. Supp.2d at 45; ) Tj 85.92 0 TD /F2 12 Tf (Staples) Tj 34.56 0 TD /F0 12 Tf (, 970 F. Supp. at 1072. The Commission ) Tj -1.68 Tc (\223) Tj 0 Tc (need not prove that the) Tj -120.48 -14.16 TD (proposed merger would in fact violate Section 7 of the Clayton Act. ) Tj -2.88 Tc (\221) Tj 0 Tc (The determination . . . is) Tj 0 -14.16 TD (reserved for the FTC and is, therefore, not before this Court.) Tj -2.88 Tc (\222) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 304.8 0 TD /F2 12 Tf 0 Tc 0 Tw (Cardinal) Tj 43.2 0 TD /F0 12 Tf (, 12 F. Supp.2d at 45,) Tj -348 -14.16 TD /F2 12 Tf (quoting Staples) Tj 74.4 0 TD /F0 12 Tf (, 970 F. Supp. at 1070; ) Tj 113.28 0 TD /F2 12 Tf (accord, e.g., FTC v. Alliant Techsystems, Inc.) Tj 219.84 0 TD /F0 12 Tf (, 808 F.) Tj -407.52 -14.16 TD (Supp. 9, 19 \(D.D.C. 1992\). Doubts are to be resolved against the transaction and in favor of a) Tj 0 -14.16 TD (preliminary injunction. ) Tj 113.04 0 TD /F2 12 Tf (FTC v. Elders Grain, Inc.) Tj 124.08 0 TD /F0 12 Tf (, 868 F.2d 901, 906 \(7th Cir. 1989\), ) Tj 175.44 0 TD /F2 12 Tf (citing) Tj -412.56 -14.16 TD (United States v. Philadelphia Nat) Tj -4.08 Tc (\222) Tj 0 Tc (l Bank) Tj 196.56 0 TD /F0 12 Tf (, 374 U.S. 321, 362-63 \(1963\). ) Tj 34.32 -26.16 TD (4) Tj -194.88 634.08 TD /F0 11.76 Tf 0.1316 Tc -0.3092 Tw (Any temporary inconvenience that an expedited appeal may inflict on defendants) Tj -2.7456 Tc 2.568 Tw (\222 ) Tj 0.032 Tc 0 Tw (merger) Tj -36 -27.84 TD 0.1591 Tc -0.3367 Tw (plans is insignificant in light of the substantial legal issues raised by this appeal and the strong) Tj 0 -27.84 TD 0.124 Tc -0.3016 Tw (public interest in securing appellate review of the district court) Tj -2.7456 Tc 0 Tw (\222) Tj 0.1651 Tc -0.3427 Tw (s decision. ) Tj 169.44 -28.32 TD /F1 12 Tf 0 Tc 0 Tw (Statement of Jurisdiction) Tj -133.44 -28.08 TD /F0 12 Tf (This is an appeal from the denial of a statutory preliminary injunction sought under) Tj -36 -28.32 TD (Section 13\(b\) of the FTC Act in aid of an administrative proceeding to determine the legality of) Tj 0 -28.32 TD (defendants' transaction under Section 7 of the Clayton Act, 15 U.S.C. \247 18, 15 U.S.C. \247 21; ) Tj 440.88 0 TD /F2 12 Tf (PPG,) Tj -440.88 -28.32 TD /F0 12 Tf (798 F.2d 1500; ) Tj 76.08 0 TD /F2 12 Tf (FTC v. University Health, Inc.) Tj 146.64 0 TD /F0 12 Tf ( 938 F.2d 1206, 1209 \(11th Cir. 1991\).) Tj 187.2 4.8 TD /F0 7.2 Tf (5) Tj -373.92 -33.12 TD /F0 12 Tf (This Court has jurisdiction over this appeal under 28 U.S.C. \247\247 1291 and 1292\(a\)\(1\). The) Tj -36 -28.32 TD (order under review denied all relief sought by the Commission in the district court and resolved all) Tj 0 -28.32 TD (issues before that court. The order is also reviewable as an order refusing to grant an injunction. ) Tj T* (This emergency motion has been filed promptly and is properly before this Court pursuant to Fed.) Tj T* (R. App. P. 8\(a\).) Tj 178.08 -28.56 TD /F1 12 Tf (Statement of the Case) Tj -142.08 -28.08 TD /F0 12 Tf (The Commission filed its complaint and motion for a preliminary injunction on July 14,) Tj -36 -28.32 TD (2000. In a five-day evidentiary hearing, the court heard testimony from numerous fact and expert) Tj ET endstream endobj 38 0 obj 4037 endobj 36 0 obj << /Type /Page /Parent 30 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 37 0 R >> endobj 40 0 obj << /Length 41 0 R >> stream 0 0 0 rg 72 234.72 144.24 1.2 re f BT 108 216.96 TD /F0 7.2 Tf 0 Tc 0 Tw (6) Tj 3.6 -4.8 TD /F0 12 Tf ( This Court has previously based its merger analysis upon the HHI. ) Tj 328.32 0 TD /F2 12 Tf (PPG Indus.) Tj 55.92 0 TD /F0 12 Tf (, 798) Tj -423.84 -14.16 TD (F.2d at 1503.) Tj 36 -21.36 TD /F0 7.2 Tf (7) Tj 3.6 -4.8 TD /F0 12 Tf ( The district court found 90% of all supermarkets stock only two brands of baby food,) Tj -39.6 -14.16 TD (and Gerber is invariably one of the two. App. F at 5, 24. Heinz and Beech-Nut compete) Tj 0 -14.16 TD (vigorously to be the second brand on the shelf. As the head of Heinz Infant Feeding explained,) Tj T* (Heinz and Beech-Nut are in a ) Tj -1.68 Tc (\223) Tj 0 Tc (bidding and promotion war,) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and one way out was to acquire) Tj T* (Beech-Nut. App. K at 359. At the hearing, Beech-Nut) Tj -2.88 Tc (\222) Tj 0 Tc (s CEO conceded that he is concerned) Tj T* (about protecting Beech-Nut) Tj -2.88 Tc (\222) Tj 0 Tc (s distribution base against inroads by Heinz. App. P at 925.) Tj 230.88 -26.16 TD (5) Tj -230.88 633.84 TD (witnesses and received over 2000 documents into evidence. On October 18, 2000, the court) Tj 0 -28.32 TD (entered the decision and order that is the subject of this appeal.) Tj 36 -28.32 TD (The court held that the proposed merger substantially would increase concentration in the) Tj -36 -28.32 TD (market for the manufacture and sale of jarred baby food in the United States. ) Tj 368.88 0 TD /F0 11.76 Tf 0.0339 Tc -0.2115 Tw (The court noted that) Tj -368.88 -28.08 TD 0.0567 Tc -0.2343 Tw (the proposed merger would ) Tj -1.5456 Tc 0 Tw (\223) Tj 0.1228 Tc -0.3004 Tw (increase the [Herfindahl-Hirschman \() Tj -0.1061 Tc -0.0715 Tw (\223HHI\224\)] index to 5285, an) Tj 0 -27.84 TD 0.1247 Tc -0.3023 Tw (increase of 510 points . . . five times the 100 point threshold established in the Merger) Tj 0 -28.08 TD 0.206 Tc 0 Tw (Guidelines.) Tj -0.1336 Tc -0.044 Tw (\224 App. F. at 11.) Tj 129.84 4.56 TD /F0 6.96 Tf -0.12 Tc 0 Tw (6) Tj 3.36 -4.56 TD /F0 11.76 Tf 0 Tc -0.1776 Tw ( ) Tj 5.76 0 TD /F0 12 Tf 0 Tw (The court thus said: ) Tj -1.68 Tc (\223) Tj 0 Tc ([t]here is no serious dispute, and I find, that) Tj -138.96 -28.32 TD (the proposed merger would increase concentration in an already highly concentrated market. ) Tj 0 -28.32 TD (That showing and my finding establish a prima facie case.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 284.64 0 TD /F2 12 Tf 0 Tc 0 Tw (Id. ) Tj 16.32 0 TD /F0 12 Tf (at 11-12. The Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s) Tj -300.96 -28.32 TD (prima facie case was bolstered by proof showing that barriers are high and make entry, in the) Tj 0 -28.32 TD (court) Tj -2.88 Tc (\222) Tj 0 Tc (s opinion, both ) Tj -1.68 Tc (\223) Tj 0 Tc (difficult and improbable.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 235.92 0 TD /F2 12 Tf 0 Tc 0 Tw (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 12.) Tj -213.12 -28.32 TD (The court denied the Commission a preliminary injunction because, in its view, Heinz and) Tj -36 -28.32 TD (Beech-Nut do not compete significantly against each other at the ) Tj 311.76 0 TD /F2 12 Tf (retail) Tj 25.92 0 TD /F0 12 Tf ( level and because the) Tj -337.68 -28.32 TD (merger might increase ) Tj 108.48 0 TD /F2 12 Tf (retail) Tj 25.92 0 TD /F0 12 Tf ( competition between Heinz and Gerber. App. F. at 20. The) Tj -134.4 -28.32 TD (Commission was contending, however, that the loss of competition was at the ) Tj 374.16 0 TD /F2 12 Tf (distribution) Tj 55.92 0 TD /F0 12 Tf ( level) Tj -430.08 -28.32 TD (and the record is replete with admissions that defendants face a ) Tj -1.68 Tc (\223) Tj 0 Tc (constant threat) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (of competition) Tj 0 -28.32 TD (from each other at the distribution level \(App. L at 266 \(Heinz\); App. O at 180 \(Beech-Nut\)\)) Tj 443.04 4.8 TD /F0 7.2 Tf (7) Tj 3.6 -4.8 TD /F0 12 Tf ( and) Tj ET endstream endobj 41 0 obj 4040 endobj 39 0 obj << /Type /Page /Parent 30 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 40 0 R >> endobj 43 0 obj << /Length 44 0 R >> stream BT 302.88 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (6) Tj -230.88 633.84 TD (that they are ) Tj -1.68 Tc (\223) Tj 0 Tc (engaged in a fight for survival and cannot afford to lose.) Tj -0.072 Tc 0.072 Tw (\224 App. J at 837. While the) Tj 0 -28.32 TD 0 Tc 0 Tw (court recognized that there was strong competition between Beech-Nut and Heinz at that level) Tj T* (which resulted in trade spending, such as promotions and allowances, the court held that the loss) Tj T* (of this competition was not significant. ) Tj 36 -28.32 TD (Although the court found that Heinz has ) Tj -1.68 Tc (\223) Tj 0 Tc (tended to follow Gerber prices) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (\(App. F at 4\), it) Tj -36 -28.32 TD (dismissed the Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s central concern that, absent a third competitor, Gerber and Heinz are) Tj 0 -28.32 TD (likely to engage in coordinated actions. It did so in a one-sentence footnote generally citing) Tj T* (defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (expert testimony of ) Tj -1.68 Tc (\223) Tj 0 Tc (structural market barriers) Tj -0.0436 Tc 0.0436 Tw (\224 without explaining why these factors) Tj T* 0 Tc 0 Tw (are dispositive. ) Tj 77.76 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 20 n.7. ) Tj -54.96 -28.32 TD (In approving the merger, the court also relied on the defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (asserted efficiencies) Tj -36 -28.32 TD (claims and the ) Tj -1.68 Tc (\223) Tj 0 Tc (enhanced prospects of the merged entity to introduce innovative products.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 441.12 0 TD /F2 12 Tf 0 Tc 0 Tw (Id.) Tj 13.2 0 TD /F0 12 Tf ( at) Tj -454.32 -28.32 TD (20. The court found cost savings of ) Tj 175.68 0 TD /F0 11.76 Tf 0.1221 Tc -0.2997 Tw ( $9.4 - $12 million in a market that it valued at between $865) Tj -175.68 -28.32 TD 0.2807 Tc -0.4583 Tw (million to $1 billion. ) Tj 104.64 0 TD /F2 11.76 Tf -0.072 Tc 0 Tw (Id.) Tj 12.72 0 TD /F0 11.76 Tf 0.0818 Tc -0.2594 Tw ( at 2, 21. The court made no finding that these cost savings ) Tj 283.68 0 TD /F0 12 Tf 0 Tc 0 Tw (would, in any) Tj -401.04 -28.32 TD (way, be passed along to purchasers of baby food. ) Tj 240.72 0 TD /F2 12 Tf (See id.) Tj 32.16 0 TD /F0 12 Tf ( at 23.) Tj -236.88 -28.32 TD (As to the equities, the court found that the Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s anticipated administrative) Tj -36 -28.32 TD (review of the merger will be futile, absent an injunction, because Beech-Nut) Tj -2.88 Tc (\222) Tj 0 Tc (s manufacturing) Tj 0 -28.32 TD (facility ) Tj -0.12 Tc 0.12 Tw (\223will be closed,) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (its ) Tj -1.68 Tc (\223) Tj 0 Tc (distribution channels will be closed, the new label and recipes will be) Tj T* (in place, and it will be impossible as a practical matter to undo the transaction.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 383.76 0 TD /F2 12 Tf 0 Tc 0 Tw (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 27. ) Tj -396.96 -28.32 TD (However, the Court also opined that entering a preliminary injunction would vitiate the) Tj 0 -28.32 TD (defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (right of appeal because they would likely terminate the transaction. The court) Tj T* (concluded:) Tj ET endstream endobj 44 0 obj 3340 endobj 42 0 obj << /Type /Page /Parent 30 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 43 0 R >> endobj 46 0 obj << /Length 47 0 R >> stream BT 302.88 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (7) Tj -194.88 633.84 TD (Appellate review of my decision in this case is thus, as a practical matter, available only if) Tj 0 -14.16 TD (the motion for preliminary injunction is denied. While this observation does not affect the) Tj T* (overall resolution of the instant motion, it is a factor that tips the balance of the equities) Tj T* (slightly in favor of denying the motion. ) Tj -36 -28.32 TD ( ) Tj 3.12 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 27-28. Thus, the court acknowledged that, absent an injunction, further Commission) Tj -16.32 -28.32 TD (review of the merger would be futile, but it denied an injunction because it perceived that) Tj 0 -28.32 TD (defendants would terminate the transaction rather than pursue an appeal.) Tj 198.48 -28.56 TD /F1 12 Tf (ARGUMENT) Tj -162.48 -28.32 TD (I. ) Tj 36 0 TD (THE COMMISSION IS LIKELY TO SUCCEED ON THE MERITS OF) Tj 0 -14.16 TD (ITS APPEAL.) Tj -36 -28.08 TD /F0 12 Tf (The district court decision turns on several legally erroneous determinations. Each of) Tj -36 -28.32 TD (these rulings is subject to plenary review by this Court. ) Tj 267.36 0 TD /F2 12 Tf (Ambach v. Bell,) Tj 76.56 0 TD /F0 12 Tf ( 686 F.2d 974, 979 \(D.C.) Tj -343.92 -28.32 TD (Cir. 1982\), ) Tj 55.44 0 TD /F2 12 Tf (cert. denied,) Tj 59.76 0 TD /F0 12 Tf ( 403 U.S. 911 \(1971\). ) Tj 111.6 0 TD /F2 12 Tf (Accord Ayuda, Inc. v. Thornburgh, ) Tj 171.84 0 TD /F0 12 Tf (948 F.2d 742,) Tj -398.64 -28.32 TD (757 \(D.C. Cir. 1991\); ) Tj 106.56 0 TD /F2 12 Tf (Foltz v. U.S. News & World Report,) Tj 171.84 0 TD /F0 12 Tf ( 760 F.2d 1300, 1306 \(D.C. Cir. 1985\);) Tj -278.4 -28.32 TD /F2 12 Tf (Friends for All Children, Inc. v. Lockheed Aircraft Corp.,) Tj 277.44 0 TD /F0 12 Tf ( 746 F.2d 816, 835 n.32 \(D.C. Cir.) Tj -277.44 -28.32 TD (1984\). ) Tj 36 -28.32 TD ( This Court ) Tj -1.68 Tc (\223) Tj 0 Tc (do[es] not afford deference when the appeal presents a substantial argument) Tj -36 -28.32 TD (that the trial court) Tj -2.88 Tc (\222) Tj 0 Tc (s decision was premised upon an erroneous legal conclusion.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 390.24 0 TD /F2 12 Tf 0 Tc 0 Tw (Ayuda, ) Tj 36.96 0 TD /F0 12 Tf (948) Tj -427.2 -28.32 TD (F.2d at 757, ) Tj 60.96 0 TD /F2 12 Tf (citing Foundation on Economic Trends v. Heckler, ) Tj 250.56 0 TD /F0 12 Tf (756 F. 2d 143, 152 \(D.C. Cir.) Tj -311.52 -28.32 TD (1985\). ) Tj -0.08 Tc 0.08 Tw (\223When the district court) Tj -2.88 Tc 0 Tw (\222) Tj 0 Tc (s estimate of the probability of success depends on an incorrect) Tj 0 -28.32 TD (or mistakenly applied legal premise, ) Tj -2.88 Tc (\221) Tj 0 Tc (the appellate court furthers the interest of justice by) Tj T* (providing a ruling on the merits . . . .) Tj -2.88 Tc (\222) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 190.32 0 TD /F2 12 Tf 0 Tc 0 Tw (Air Line Pilots Ass) Tj -4.08 Tc (\222) Tj 0 Tc (n v. Eastern Air Lines, Inc.,) Tj 227.76 0 TD /F0 12 Tf ( 863 F.2d) Tj -418.08 -28.32 TD (891, 895 \(D.C. Cir. 1988\), ) Tj 130.8 0 TD /F2 12 Tf (quoting Natural Resources Defense Council, Inc. v. Morton,) Tj 290.4 0 TD /F0 12 Tf ( 458 F.2d) Tj -421.2 -28.32 TD (827, 832 \(D.C. Cir. 1972\).) Tj ET endstream endobj 47 0 obj 3282 endobj 45 0 obj << /Type /Page /Parent 30 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 46 0 R >> endobj 50 0 obj << /Length 51 0 R >> stream BT 302.88 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (8) Tj -158.88 633.6 TD /F1 12 Tf (A. ) Tj 36 0 TD (The District Court Ignored Controlling Case Law in Denying) Tj 0 -14.16 TD (Injunctive Relief) Tj -72 -28.08 TD /F0 12 Tf (The district court) Tj -2.88 Tc (\222) Tj 0 Tc (s decision is contrary to controlling case law, which holds that) Tj -36 -28.32 TD (preliminary injunctive relief is necessary in cases where \(1\) the government shows \(a\) that a) Tj 0 -28.32 TD (merger will lead to further increases in concentration in any market that is already highly) Tj T* (concentrated; and \(b\) that high entry barriers make it unlikely that any anticompetitive effects will) Tj T* (readily be undone; and \(2\) where the acquired firm is in no danger of failing. As this Court \(per) Tj T* (Judge Bork\) observed in ) Tj 120.24 0 TD /F2 12 Tf (PPG) Tj 23.04 0 TD /F0 12 Tf ( \(a case with even lower concentration than the present one\):) Tj -71.28 -28.32 TD (The pre-acquisition HHI calculated by the district court shows that the relevant) Tj -36 -14.16 TD (market . . . is already ) Tj -1.68 Tc (\223) Tj 0 Tc (highly concentrated) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and the effect of the acquisition would be a) Tj 0 -14.16 TD (dramatic increase in concentration. Both measures bring the . . . merger well within the) Tj T* (range where, absent really extraordinary circumstances, the Department and the) Tj T* (Commission will proceed against an acquisition under section 7 of the Clayton Act on the) Tj T* (theory that the increased concentration raises a likelihood of ) Tj -1.68 Tc (\223) Tj 0 Tc (interdependent) Tj T* (anticompetitive conduct.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (. . . The district court also found high market-entry barriers that) Tj T* (would prolong high market concentration. ) Tj 207.36 0 TD /F2 12 Tf (There is no doubt that the pre- and post-) Tj -207.36 -14.16 TD (acquisition HHI) Tj -4.08 Tc (\222) Tj 0 Tc (s and market shares found in this case entitle the Commission to some) Tj 0 -14.16 TD (preliminary relief) Tj 84.96 0 TD /F0 12 Tf (.) Tj -120.96 -28.32 TD (798 F.2d at 1503 \(emphasis added\). ) Tj 36 -28.32 TD (This Court) Tj -2.88 Tc (\222) Tj 0 Tc (s decision in ) Tj 116.88 0 TD /F2 12 Tf (United States v. Baker Hughes, Inc.,) Tj 174.96 0 TD /F0 12 Tf ( 908 F.2d 981 \(D.C. Cir.) Tj -327.84 -28.32 TD (1990\), does not support a contrary result, as the district court concluded. In that case, this Court) Tj 0 -28.32 TD (sustained the denial of a permanent injunction after a full trial on the merits where the shares in) Tj T* (the relevant market were ) Tj -1.68 Tc (\223) Tj 0 Tc (volatile and shifting) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and ) Tj -1.68 Tc (\223) Tj 0 Tc (easily skewed) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (\() Tj 330.96 0 TD /F2 12 Tf (id.) Tj 12.48 0 TD /F0 12 Tf ( at 986\) and ) Tj -1.68 Tc (\223) Tj 0 Tc (entry was) Tj -343.44 -28.32 TD (likely) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (\() Tj 37.92 0 TD /F2 12 Tf (id.) Tj 12.48 0 TD /F0 12 Tf ( at 987\). In those circumstance, high market shares were not an accurate predictor of) Tj -50.4 -28.32 TD (future competition. None of these factors are present in this case. This Court) Tj -2.88 Tc (\222) Tj 0 Tc (s decision in ) Tj 436.8 0 TD /F2 12 Tf (PPG) Tj -436.8 -28.32 TD /F0 12 Tf (compels the entry of preliminary relief so the Commission, and ultimately a reviewing court, can) Tj 0 -28.32 TD (fully assess the competitive impact of defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (proposed merger.) Tj ET endstream endobj 51 0 obj 3674 endobj 48 0 obj << /Type /Page /Parent 49 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 50 0 R >> endobj 53 0 obj << /Length 54 0 R >> stream 0 0 0 rg 72 151.92 144.24 1.2 re f BT 108 134.16 TD /F0 7.2 Tf 0 Tc 0 Tw (8) Tj 3.6 -4.8 TD /F0 12 Tf ( As a leading antitrust treatise observes: ) Tj -1.68 Tc (\223) Tj 0 Tc ([i]t is a central object of merger policy to) Tj -39.6 -14.16 TD (obstruct the creation or reinforcement by merger of such oligopolistic market structures in which) Tj 0 -14.16 TD (tacit coordination can occur.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (Phillip Areeda, IV ) Tj 237.6 0 TD (Antitrust Law) Tj ET 309.6 99.12 66.72 0.72 re f BT 376.32 101.04 TD (, \266 901b2 at 9 \(1998 rev. ed.\).) Tj -73.44 -26.16 TD (9) Tj -194.88 633.84 TD ( By creating a duopoly in a market where almost all customers require two suppliers, the) Tj -36 -28.32 TD (proposed merger would substantially ease the ability of Gerber and Heinz to coordinate their) Tj 0 -28.32 TD (behavior. ) Tj -1.68 Tc (\223) Tj 0 Tc ([I]t is easier for two firms to collude without being detected than for three to do so.) Tj -1.44 Tc (\224) Tj 459.12 4.8 TD /F0 7.2 Tf 0 Tc (8) Tj 3.6 -4.8 TD /F0 12 Tf ( ) Tj -462.72 -28.32 TD /F2 12 Tf (American Hospital Supply Corp. v. Hospital Products Limited) Tj 299.28 0 TD /F0 12 Tf (, 780 F.2d 589, 602 \(7th Cir.) Tj -299.28 -28.32 TD (1986\). As this Court has held, ) Tj -0.0329 Tc 0.0329 Tw (\223where rivals are few, firms will be able to coordinate their) Tj 0 -28.32 TD 0 Tc 0 Tw (behavior, either by overt collusion or implicit understanding, in order to restrict output and) Tj T* (achieve profits above competitive levels.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 204.24 0 TD /F2 12 Tf 0 Tc 0 Tw (PPG) Tj 23.04 0 TD /F0 12 Tf (, 798 F.2d at 1503; ) Tj 94.32 0 TD /F2 12 Tf (see University Health) Tj 103.68 0 TD /F0 12 Tf (, 938) Tj -425.28 -28.32 TD (F.2d at 1218 n.24. The threat is that ) Tj -1.68 Tc (\223) Tj 0 Tc (firms in a concentrated market might in effect share) Tj 0 -28.32 TD (monopoly power, setting their prices at a profit-maximizing, supracompetitive level by) Tj T* (recognizing their shared economic interests and their interdependence with respect to price and) Tj T* (output decisions.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 89.52 0 TD /F2 12 Tf 0 Tc 0 Tw (Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.) Tj 281.76 0 TD /F0 12 Tf (, 509 U.S. 209, 227) Tj -371.28 -28.32 TD (\(1993\). Defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (expert economist testified to the same effect. App. P at 1106-07.) Tj 36 -28.32 TD (The district court implicitly recognized the serious threat of coordination in this case by) Tj -36 -28.32 TD (observing that Heinz generally follows Gerber) Tj -2.88 Tc (\222) Tj 0 Tc (s pricing lead \(App. F. at 4\) and by noting that) Tj 0 -28.32 TD (both Heinz and Beech-Nut have tempered their competitive efforts in response to competitive) Tj T* (pressure from Gerber. ) Tj 111.36 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 17-19, 23 n.8. Nevertheless, the court seemed to suggest that) Tj -124.56 -28.32 TD -1.68 Tc (\223) Tj 0 Tc (structural antitrust doctrine) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (has limited value. ) Tj 232.32 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 19. This is incorrect on at least two levels. ) Tj -245.52 -28.32 TD (The first is legal. The experience of this Court, and others as well, is that structure and) Tj 0 -28.32 TD (concentration are good predictors of post-merger effects. ) Tj 279.36 0 TD /F2 12 Tf (E.g., PPG,) Tj 52.08 0 TD /F0 12 Tf ( 798 F.2d at 1503;) Tj -331.44 -28.32 TD /F2 12 Tf (University Health) Tj 85.44 0 TD /F0 12 Tf (, 938 F.2d at 1219-20. These cases should not be so easily ignored, particularly) Tj ET endstream endobj 54 0 obj 3732 endobj 52 0 obj << /Type /Page /Parent 49 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 53 0 R >> endobj 56 0 obj << /Length 57 0 R >> stream BT 300 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (10) Tj -228 633.84 TD (in the case of a preliminary injunction seeking to preserve the status quo so a full record can be) Tj 0 -28.32 TD (developed.) Tj 36 -28.32 TD (The second problem with the analysis below is evidentiary. Evidence that price leadership) Tj -36 -28.32 TD (is occurring with three market participants supports the legal conclusion that reducing the market) Tj 0 -28.32 TD (to two players will make the situation worse. Moreover, the Commission went beyond core) Tj T* (structural analysis and presented undisputed evidence of substantial entry barriers, which the court) Tj T* (accepted. App. F. at 12. But the court ignored the serious competitive significance of the fact) Tj T* (that ) Tj -1.68 Tc (\223) Tj 0 Tc (barriers make concentrated markets more threatening, since there is little chance that other) Tj T* (firms \(new or old\) would be able, in the face of anticompetitive practices, to spur competition.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj T* /F2 12 Tf 0 Tc 0 Tw (University Health,) Tj 88.56 0 TD /F0 12 Tf ( 938 F.2d at 1219. This Circuit has held that it is precisely these situations) Tj -88.56 -28.32 TD (where preliminary relief is critical. ) Tj 168 0 TD /F2 12 Tf (PPG,) Tj 26.16 0 TD /F0 12 Tf ( 798 F.2d at 1503.) Tj -158.16 -28.32 TD (Equally important, the strong likelihood that Heinz and Gerber would engage in) Tj -36 -28.32 TD (coordinated interaction, as established by the extraordinary concentration levels and high entry) Tj 0 -28.32 TD (barriers, should not as a legal matter be overcome at this preliminary stage by the court) Tj -2.88 Tc (\222) Tj 0 Tc (s apparent) Tj T* (belief that the merger is the only way defendants can challenge Gerber) Tj -2.88 Tc (\222) Tj 0 Tc (s dominance. The court) Tj -2.88 Tc (\222) Tj 0 Tc (s) Tj T* (unwillingness to allow for a more thorough inquiry into how this very concentrated market will) Tj T* (function -- simply in response to defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (argument that the merger is a necessary predicate to) Tj T* (successful competition with Gerber -- turns Section 7 on its head: it permits mergers ) Tj 404.88 0 TD /F2 12 Tf (because) Tj -404.88 -28.32 TD /F0 12 Tf (markets ) Tj 40.8 0 TD /F2 12 Tf (are) Tj 15.84 0 TD /F0 12 Tf ( concentrated. This argument would effectively permit every market in which there) Tj -56.64 -28.32 TD (was a dominant firm to merge into a duopoly and is directly contradictory to the Supreme Court's) Tj 0 -28.32 TD (admonition that ) Tj -1.68 Tc (\223) Tj 0 Tc (if concentration is already great, the importance of preventing even slight) Tj T* (increases in concentration is correspondingly great.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 255.12 0 TD /F2 12 Tf 0 Tc 0 Tw (United States v. General Dynamics Corp.,) Tj ET endstream endobj 57 0 obj 2882 endobj 55 0 obj << /Type /Page /Parent 49 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 56 0 R >> endobj 59 0 obj << /Length 60 0 R >> stream 0 0 0 rg 72 220.56 144.24 1.2 re f BT 108 202.8 TD /F0 7.2 Tf 0 Tc 0 Tw (9) Tj 3.6 -4.8 TD /F0 12 Tf ( Numerous retailers testified that the bidding competition between Heinz and Beech-Nut) Tj -39.6 -14.16 TD (ultimately benefitted consumers even when it did not directly lead to lower retail prices. App. P) Tj 0 -14.16 TD (at 143-44, 547, 551, 845-46. A Heinz executive testified to the same effect. ) Tj 369.6 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 619-21. ) Tj -346.8 -21.36 TD /F0 7.2 Tf (10) Tj 7.2 -4.8 TD /F0 12 Tf ( The district court compounded its error by requiring that the FTC ) Tj 322.56 0 TD /F2 12 Tf (quantify) Tj 39.6 0 TD /F0 12 Tf ( the future) Tj -405.36 -14.16 TD (price effects in a downstream market. ) Tj 185.04 0 TD /F2 12 Tf (See) Tj 16.56 0 TD /F0 12 Tf ( App. F at 17. And even when the FTC presented) Tj -201.6 -14.16 TD (evidence that wholesale competition benefits consumers, the court held that ) Tj -1.68 Tc (\223) Tj 0 Tc (it is impossible to) Tj 0 -14.16 TD (conclude with any certainty) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (that any such benefits would be lost as a result of the merger. ) Tj 436.8 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( ) Tj -222 -26.16 TD (11) Tj -228 633.84 TD (415 U.S. 486, 497 \(1974\), quoting ) Tj 169.2 0 TD /F2 12 Tf (United States v. Aluminum Co. of America) Tj 204.96 0 TD /F0 12 Tf (, 377 U.S. 271,) Tj -374.16 -28.32 TD (279 \(1964\); ) Tj 59.52 0 TD /F2 12 Tf (see Philadelphia Nat) Tj -4.08 Tc (\222) Tj 0 Tc (l Bank) Tj 135.84 0 TD /F0 12 Tf (, 374 U.S. at 370 \(law and sound antitrust policy prefer) Tj -195.36 -28.32 TD -1.68 Tc (\223) Tj 0 Tc (growth by internal expansion . . . to growth by acquisition) Tj -1.44 Tc (\224) Tj 0 Tc (\). ) Tj 72 -28.56 TD /F1 12 Tf (B.) Tj 36 0 TD (The Court Erred In Requiring The FTC To Prove Harm To Retail) Tj 0 -14.16 TD (Consumers ) Tj -72 -28.08 TD /F0 12 Tf ( The court denied the Commission a preliminary injunction because it failed to quantify) Tj -36 -28.32 TD (adverse effects in a market \(retail\) other than the one the Commission identified in its complaint) Tj 0 -28.32 TD (\(wholesale\). App. F at 12-13. The wholesale focus of the Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s case could not be more) Tj T* (clear. The complaint alleged, ) Tj 143.52 0 TD /F2 12 Tf (inter alia,) Tj 47.52 0 TD /F0 12 Tf ( that ) Tj -1.68 Tc (\223) Tj 0 Tc ([t]he relevant line of commerce \() Tj 185.76 0 TD /F2 12 Tf (i.e.) Tj 14.88 0 TD /F0 12 Tf (, the product) Tj -391.68 -28.32 TD (market\) in which the competitive effects of the proposed merger may be assessed is the) Tj 0 -28.32 TD (manufacture and sale of jarred baby food.) Tj -0.0343 Tc 0.0343 Tw (\224 App. B \266 12.a. The defendants manufacture jarred) Tj T* 0 Tc 0 Tw (baby food and sell it at the ) Tj 128.88 0 TD /F2 12 Tf (wholesale) Tj 47.28 0 TD /F0 12 Tf ( level to wholesalers and retailers. As the district court) Tj -176.16 -28.32 TD (acknowledged, this case is about ) Tj -1.68 Tc (\223) Tj 0 Tc (distribution competition.) Tj -0.0655 Tc 0.0655 Tw (\224 App. F at 14. But the court) Tj 0 -28.32 TD 0 Tc 0 Tw (erroneously determined that such competition was only relevant if directly and quantifiably linked) Tj T* (to prices at the ) Tj 73.92 0 TD /F2 12 Tf (retail) Tj 25.92 0 TD /F0 12 Tf ( level.) Tj 28.32 4.8 TD /F0 7.2 Tf (9) Tj 3.6 -4.8 TD /F0 12 Tf ( ) Tj 6.24 0 TD /F2 12 Tf (Id.) Tj 13.2 0 TD /F0 12 Tf ( at 11-15. This was legal error.) Tj -115.2 -28.32 TD (Section 7 applies to ) Tj -1.68 Tc (\223) Tj 102 0 TD /F2 12 Tf 0 Tc (any) Tj 17.28 0 TD /F0 12 Tf ( line of commerce) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and does not require the government to show) Tj -155.28 -28.32 TD (the retail price effects of a merger that lessens competition at the manufacturing and wholesale) Tj 0 -28.32 TD (distribution level.) Tj 82.56 4.8 TD /F0 7.2 Tf (10) Tj 7.2 -4.8 TD /F0 12 Tf ( And for good reason. There are thousands of intermediate goods markets) Tj ET endstream endobj 60 0 obj 4126 endobj 58 0 obj << /Type /Page /Parent 49 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 59 0 R >> endobj 62 0 obj << /Length 63 0 R >> stream 0 0 0 rg 72 319.68 144.24 1.2 re f BT 72 297.12 TD /F0 12 Tf 0 Tc 0 Tw (The court imposed impossible burdens on the Commission. It is black letter law that Section 7) Tj 0 -14.16 TD -1.68 Tc (\223) Tj 0 Tc (can deal only with probabilities, not with certainties.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 264.72 0 TD /F2 12 Tf 0 Tc 0 Tw (E.g., FTC v. Procter & Gamble Co.) Tj 171.6 0 TD /F0 12 Tf (, 386) Tj -436.32 -14.16 TD (U.S. 568, 577 \(1967\).) Tj 36 -21.36 TD /F0 7.2 Tf (11) Tj 7.2 -4.8 TD /F0 12 Tf ( As the Supreme Court has recognized in another context, this burden would be) Tj -43.2 -14.16 TD (enormous, in light of the recognized ) Tj -1.68 Tc (\223) Tj 0 Tc (uncertainties and difficulties in analyzing price and output) Tj 0 -14.16 TD (decisions) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (in multi-level industries. ) Tj 172.08 0 TD /F2 12 Tf (See Illinois Brick Co. v. Illinois) Tj 151.68 0 TD /F0 12 Tf (, 431 U.S. 720 \(1977\). ) Tj -323.76 -14.16 TD (There, the Court held these difficulties to be so great as to call for a prophylactic rule relieving) Tj 0 -14.16 TD (direct purchasers from adducing evidence about how anticompetitive overcharges are ) Tj -1.68 Tc (\223) Tj 0 Tc (passed on) Tj -1.44 Tc (\224) Tj T* -0.0095 Tc 0.0095 Tw (\226 and at the same time limited damage actions to such direct purchasers. It turns antitrust) Tj T* 0 Tc 0 Tw (principles on their head to require the government to prove pass-through to ultimate consumers) Tj T* (under Section 7, an incipiency statute that is satisfied ) Tj -0.21 Tc 0.21 Tw (\223where in ) Tj 303.84 0 TD /F2 12 Tf 0 Tc 0 Tw (any line of commerce) Tj 103.2 0 TD /F0 12 Tf ( or in ) Tj 28.32 0 TD /F2 12 Tf (any) Tj -435.36 -14.16 TD (activity affecting commerce ) Tj 136.08 0 TD /F0 12 Tf (in any section of the country, the effect of such acquisition ) Tj 281.28 0 TD /F2 12 Tf (may be) Tj -417.36 -14.16 TD /F0 12 Tf (substantially to lessen competition, or ) Tj 182.4 0 TD /F2 12 Tf (tend to) Tj 33.12 0 TD /F0 12 Tf ( create a monopoly.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (15 U.S.C. \247 18 \(emphasis) Tj -215.52 -14.16 TD (added\).) Tj 228 -26.16 TD (12) Tj -228 633.84 TD (that could be adversely affected if the government had to show anticompetitive effects not just in) Tj 0 -28.32 TD (those markets, but price effects in all subsequent downstream markets. For example, when an) Tj T* (automobile manufacturer obtains a better price on tires through a competitive bid, it is not) Tj T* (possible to trace the dollar savings immediately to a lower automobile price for consumers. Yet) Tj T* (we know that) Tj 36 -28.32 TD (not only are the price benefits of a competitive bid not precisely quantifiable absent) Tj 0 -14.16 TD (competition, but it is authoritatively recognized that competition produces unquantifiable) Tj T* (efficiencies in ) Tj -1.68 Tc (\223) Tj 0 Tc (all elements of a bargain -- quantity, service, safety, and durabily -- and not) Tj T* (just the immediate cost.) Tj -1.44 Tc (\224) Tj -36 -28.32 TD 0 Tc ( ) Tj 3.12 0 TD /F2 12 Tf (Alliant) Tj 32.88 0 TD /F0 12 Tf (, 808 F. Supp. at 23, n.5, ) Tj 122.4 0 TD /F2 12 Tf (quoting) Tj 36.72 0 TD /F0 12 Tf ( ) Tj 3.12 0 TD /F2 12 Tf (Nat. Soc) Tj -4.08 Tc (\222) Tj 0 Tc (y of Prof. Eng) Tj -4.08 Tc (\222) Tj 0 Tc (rs v. United States,) Tj 208.32 0 TD /F0 12 Tf ( 435 U.S.) Tj -406.56 -28.32 TD (679, 695 \(1978\). In other words, Section 7 presumes that competition is good, whether the) Tj 0 -28.32 TD (effects are quantifiable or not. Surely the law does not, and should not, permit mergers to) Tj T* (monopoly or duopoly in industries that provide components of automobiles simply because the) Tj T* (government is unable precisely to trace the savings pocketed by firms or passed on to consumers) Tj T* (in every subsequent intermediate or final goods market.) Tj 264 4.8 TD /F0 7.2 Tf (11) Tj 7.2 -4.8 TD /F0 12 Tf ( ) Tj ET endstream endobj 63 0 obj 4002 endobj 61 0 obj << /Type /Page /Parent 49 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 62 0 R >> endobj 65 0 obj << /Length 66 0 R >> stream BT 300 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (13) Tj -192 633.84 TD (The district court) Tj -2.88 Tc (\222) Tj 0 Tc (s holding would immunize mergers of firms engaged in sales at the) Tj -36 -28.32 TD (wholesale or other intermediate levels of trade, unless the plaintiff carries the dual burden of) Tj 0 -28.32 TD (proving not only a likelihood of adverse effects in the upstream market in which the merger) Tj T* (occurs, but also that ultimate consumers would pay higher prices. That holding is contrary to vast) Tj T* (numbers of cases involving upstream levels of commerce. For example, in ) Tj 356.88 0 TD /F2 12 Tf (PPG) Tj 23.04 0 TD /F0 12 Tf (, this Court) Tj -379.92 -28.32 TD (directed the district court to enjoin a proposed merger of two manufacturers of aircraft) Tj 0 -28.32 TD (transparencies \(canopies\) engaged in design and bid competition to supply aircraft manufacturers. ) Tj T* (In doing so, this Court did not demand proof that competition between the two firms ultimately) Tj T* (affected either the price of aircraft or the price of commercial airline tickets. Rather, once this) Tj T* (Court found evidence that the firms bid against each other, the nature of that competition did ) Tj -1.68 Tc (\223) Tj 0 Tc (not) Tj T* (merit further discussion.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (798 F.2d at 1505. Likewise, in ) Tj 278.64 0 TD /F2 12 Tf (United States v. El Paso Natural Gas) Tj -278.64 -28.32 TD (Co.,) Tj 20.16 0 TD /F0 12 Tf ( 376 U.S. 651 \(1964\), the Supreme Court recognized that even unsuccessful bidders can have) Tj -20.16 -28.32 TD (significant influence on the pricing and other business strategies of competing wholesale suppliers;) Tj 0 -28.32 TD (but the Court did not require proof that competition at the upstream level ultimately benefits) Tj T* (consumers. In both cases, the transactions were enjoined because they were likely substantially to) Tj T* (lessen competition at the wholesale level. Similarly, in ) Tj 265.44 0 TD /F2 12 Tf (Elders Grain, Inc.,) Tj 90.72 0 TD /F0 12 Tf ( ) Tj 3.12 0 TD /F2 12 Tf (supra, ) Tj 33.36 0 TD /F0 12 Tf (the court) Tj -392.64 -28.32 TD (affirmed an injunction against two grain mills without requiring that the Commission first show) Tj 0 -28.32 TD (any effect on consumer prices for cereals and other corn products. And in ) Tj 356.64 0 TD /F2 12 Tf (Cardinal Health,) Tj -356.64 -28.32 TD (supra, ) Tj 33.36 0 TD /F0 12 Tf (the court enjoined two mergers between wholesale distributors of pharmaceuticals even) Tj -33.36 -28.32 TD (though there was no showing that consumers would have to pay higher retail prices. ) Tj 36 -28.32 TD (Here, the Commission introduced unrebutted evidence of bidding competition between) Tj -36 -28.32 TD (Heinz and Beech-Nut for wholesale accounts. Such bidding invariably resulted in lower prices to) Tj ET endstream endobj 66 0 obj 2899 endobj 64 0 obj << /Type /Page /Parent 49 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 65 0 R >> endobj 69 0 obj << /Length 70 0 R >> stream BT 300 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (14) Tj -228 633.84 TD (supermarkets. The fact that there will be only one brand remaining to bid for the second slot on) Tj 0 -28.32 TD (store shelves post-merger compels the conclusion there will be a significant loss of competition. ) Tj T* (Indeed, as the district court observed during the closing argument: ) Tj -1.68 Tc (\223) Tj 0 Tc (I can) Tj -2.88 Tc (\222) Tj 0 Tc (t disagree with the) Tj T* (Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s position that Heniz and Beech-Nut are competing and that a merger of the two) Tj T* (companies will end that competition.) Tj -0.1309 Tc 0.1309 Tw (\224 App. P at 31.) Tj 72 -28.56 TD /F1 12 Tf 0 Tc 0 Tw (C. ) Tj 36 0 TD -0.0131 Tc 0.0131 Tw (The Court Misapplied The Standards Governing The \223Efficiencies) Tj 0 -14.16 TD -0.09 Tc 0 Tw (Defense\224) Tj -72 -28.08 TD /F0 12 Tf 0 Tc (The district court properly stated that efficiencies can overcome the government) Tj -2.88 Tc (\222) Tj 0 Tc (s prima) Tj -36 -28.32 TD (facie case where they are ) Tj -0.0275 Tc 0.0275 Tw (\223merger-specific and cognizable -- i.e., verified and not the result of) Tj 0 -28.32 TD 0 Tc 0 Tw (anticompetitive reductions in output and services.) Tj -0.0424 Tc 0.0424 Tw (\224 App. F at 21. The court failed however to) Tj T* 0 Tc 0 Tw (address two additional vital requirements: that the efficiencies will \(1\) produce a significant) Tj T* (economic benefit to purchasers \() Tj 155.28 0 TD /F2 12 Tf (University Health,) Tj 88.56 0 TD /F0 12 Tf ( 938 F.2d at 1222) Tj 84.96 0 TD /F2 12 Tf (-) Tj 4.08 0 TD /F0 12 Tf (23;) Tj 15.12 0 TD /F2 12 Tf ( Cardinal Health) Tj 82.08 0 TD /F0 12 Tf (, 12 F.) Tj -430.08 -28.32 TD (Supp.2d at 62; ) Tj 73.2 0 TD /F2 12 Tf (Staples) Tj 34.56 0 TD /F0 12 Tf (, 970 F. Supp. at 1089-91; ) Tj 129.36 0 TD /F2 12 Tf (United Tote) Tj 57.12 0 TD /F0 12 Tf (, 768 F. Supp. at 1084-85\); and \(2\)) Tj -294.24 -28.32 TD (outweigh the anticompetitive effects of the acquisition and result in a more competitive market) Tj 0 -28.32 TD (\() Tj 4.08 0 TD /F2 12 Tf (Cardinal Health) Tj 78.96 0 TD /F0 12 Tf (, 12 F. Supp.2d at 64; ) Tj 107.28 0 TD /F2 12 Tf (Staples) Tj 34.56 0 TD /F0 12 Tf (, 970 F. Supp. at 1089-91\). As the Eleventh) Tj -224.88 -28.32 TD (Circuit has held, efficiencies are to be credited where they are ) Tj -1.68 Tc (\223) Tj 0 Tc (significant) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and ) Tj -1.68 Tc (\223) Tj 0 Tc (ultimately would) Tj 0 -28.32 TD (benefit competition, and hence, consumers.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 217.2 0 TD /F2 12 Tf 0 Tc 0 Tw (University Health) Tj 85.44 0 TD /F0 12 Tf (, 938 F.2d at 1222-23. Also, they) Tj -302.64 -28.32 TD (must not be based upon conjecture and speculation. ) Tj 252.24 0 TD /F2 12 Tf (Id.) Tj -216.24 -28.32 TD /F0 12 Tf (The court) Tj -2.88 Tc (\222) Tj 0 Tc (s efficiency analysis is silent on whether the claimed efficiencies will enhance) Tj -36 -28.32 TD (competition or benefit anyone other than Heinz. Indeed, the court voiced serious doubts about) Tj 0 -28.32 TD (whether any of these efficiences will improve the competitive landscape or result in lower prices: ) Tj T* -1.68 Tc (\223) Tj 0 Tc ([w]hether Heinz will use the considerable cost savings from the merger to mount a vigorous) Tj ET endstream endobj 70 0 obj 3404 endobj 67 0 obj << /Type /Page /Parent 68 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 69 0 R >> endobj 72 0 obj << /Length 73 0 R >> stream BT 300 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (15) Tj -228 633.84 TD (campaign against Gerber for shelf space and market share remains to be seen.) Tj -0.12 Tc 0.12 Tw (\224 App. F. at 23. ) Tj 0 -28.32 TD -1.68 Tc 0 Tw (\223) Tj 0 Tc (Remains to be seen) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (is not the standard that the courts or the enforcement agencies have) Tj T* (adopted to determine whether efficiencies are sufficient to overcome the anticompetitive aspects) Tj T* (of the merger. ) Tj 73.68 0 TD /F2 12 Tf (See University Health) Tj 105.12 0 TD /F0 12 Tf (, 938 F.2d at 1223.) Tj -142.8 -28.32 TD (Defendants also did not show, and the court did not find, that the claimed efficiencies) Tj -36 -28.32 TD (outweigh the possible anticompetitive effects of the merger. The ) Tj -1.68 Tc (\223) Tj 0 Tc (proven) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (savings of $9.4 to $12) Tj 0 -28.32 TD (million are incredibly modest. According to the court, the domestic market for 80 million cases of) Tj T* (jarred baby food is ) Tj -1.68 Tc (\223) Tj 0 Tc ($865 million to $1 billion.) Tj -0.0533 Tc 0.0533 Tw (\224 App. F at 2. Since even a minimal) Tj T* 0 Tc 0 Tw (anticompetitive price increase of 2% \(about a penny per jar\) would overwhelm the ) Tj -1.68 Tc (\223) Tj 0 Tc (proven) Tj -1.44 Tc (\224) Tj T* 0 Tc (efficiencies, the court) Tj -2.88 Tc (\222) Tj 0 Tc (s full crediting of such modest efficiencies is stunning, especially in a market) Tj T* (where Gerber regularly increases prices, and Heinz follows. ) Tj 289.44 0 TD /F2 12 Tf (Id) Tj 10.08 0 TD /F0 12 Tf (. at 4. ) Tj -227.52 -28.56 TD /F1 12 Tf (D. ) Tj 36 0 TD (The Court Applied The Incorrect Standard In Weighing The Equities) Tj -72 -28.08 TD /F0 12 Tf (The district court correctly recognized that ) Tj -1.68 Tc (\223) Tj 0 Tc (if the merger is allowed to proceed before the) Tj -36 -28.32 TD (full-scale administrative proceedings contemplated by the Â鶹´«Ã½ Trade Commission Act can be) Tj 0 -28.32 TD (had, the outcome of such proceedings will not matter,) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (because ) Tj -1.68 Tc (\223) Tj 0 Tc (it would be impossible as a) Tj T* (practical matter to undo the transaction.) Tj -0.0313 Tc 0.0313 Tw (\224 App. F at 26-27. That is a sufficient equity to support) Tj T* 0 Tc 0 Tw (a preliminary injunction. ) Tj 121.44 0 TD /F2 12 Tf (PPG, supra. ) Tj 65.76 0 TD /F0 12 Tf (Because of the inherent deficiencies in divestiture orders,) Tj -187.2 -28.32 TD (Congress gave the Commission power to seek pre-consummation injunctive relief in cases such as) Tj 0 -28.32 TD (this one. ) Tj 46.56 0 TD /F2 12 Tf (See, e.g., Elders Grain, supra; FTC v. Warner Communications, ) Tj 313.2 0 TD /F0 12 Tf (742 F.2d 1156 \(9th) Tj -359.76 -28.32 TD (Cir. 1984\)) Tj 49.2 0 TD /F2 12 Tf (; FTC v. Rhinechem Corp.) Tj 127.68 0 TD /F0 12 Tf (, 459 F.Supp. 785, 790 \(N.D. Ill. 1978\); ) Tj 194.4 0 TD /F2 12 Tf (FTC v. Lancaster) Tj -371.28 -28.32 TD (Colony Corp.,) Tj 68.4 0 TD /F0 12 Tf ( 434 F. Supp. 1088, 1097 \(S.D.N.Y. 1977\). Because most acquisitions mean that) Tj -68.4 -28.32 TD (corporate assets and operations will be commingled and consolidated, the ineffectiveness of) Tj ET endstream endobj 73 0 obj 3302 endobj 71 0 obj << /Type /Page /Parent 68 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 72 0 R >> endobj 75 0 obj << /Length 76 0 R >> stream 0 0 0 rg 72 123.6 144.24 1.2 re f BT 108 105.84 TD /F0 7.2 Tf 0 Tc 0 Tw (12) Tj 7.2 -4.8 TD /F0 12 Tf ( Milnot is privately held and, from the perspective of Heinz, this is a small transaction. ) Tj 184.8 -26.16 TD (16) Tj -228 633.84 TD (efforts to "unscramble the eggs" following a full administrative adjudication dictates that the) Tj 0 -28.32 TD (public interest in preserving competition can only be safeguarded by a preliminary injunction. ) Tj 36 -28.32 TD (The court, however, erred by holding that that the strong public equity in effective) Tj -36 -28.32 TD (administrative review was trumped by the possibility, which the court treated as a certainty, that) Tj 0 -28.32 TD (defendants would abandon the transaction if a preliminary injunction issued. It is legal error for) Tj T* (the court to give dispositive weigh to this quintessential ) Tj -1.68 Tc (\223) Tj 0 Tc (private) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (equity: the parties) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (interest in) Tj T* (consummating the merger cannot overcome the strong public equities present here.) Tj 36 -28.32 TD (The court quoted ) Tj 86.16 0 TD /F2 12 Tf (FTC v. Exxon Corp.,) Tj 100.32 0 TD /F0 12 Tf ( 636 F.2d 1336, 1343 \(D.C. Cir. 1980\), for the) Tj -222.48 -28.32 TD (proposition that ) Tj -1.68 Tc (\223) Tj 0 Tc (as a result of the short life-span of most tender offers, the issuance of a) Tj 0 -28.32 TD (preliminary injunction blocking an acquisition or merger will in all likelihood prevent the) Tj T* (transaction from being consummated.) Tj -0.0313 Tc 0.0313 Tw (\224 App. F at 24. But this transaction is not a tender offer) Tj T* 0 Tc 0 Tw (and issuance of a preliminary injunction therefore will not itself ) Tj -1.68 Tc (\223) Tj 0 Tc (kill this merger.) Tj -1.44 Tc (\224) Tj 387.12 4.8 TD /F0 7.2 Tf 0 Tc (12) Tj 7.2 -4.8 TD /F0 12 Tf ( Nor will it ) Tj -394.32 -28.32 TD (interfere with defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (right of appeal. Just as the Commission may appeal the denial of a) Tj 0 -28.32 TD (preliminary injunction, defendants may appeal the grant of a preliminary injunction. If they have a) Tj T* (private deadline for completing the transaction, they can choose to extend it pending appeal. ) Tj 445.2 0 TD /F2 12 Tf (See) Tj -445.2 -28.32 TD (n.) Tj 9.12 0 TD /F0 12 Tf (5) Tj 6 0 TD /F2 12 Tf (, supra.) Tj 36.48 0 TD /F0 12 Tf ( Choosing to abandon the transaction is a private decision that affects only the) Tj -51.6 -28.32 TD -1.68 Tc (\223) Tj 0 Tc (corporate interests of Heinz and Milnot,) Tj -0.03 Tc 0.03 Tw (\224 which, as the district court elsewhere recognized, is a) Tj 0 -28.32 TD 0 Tc 0 Tw (private equity that should have no effect on the outcome of this matter. App. F at 26 n.9. ) Tj ET endstream endobj 76 0 obj 2848 endobj 74 0 obj << /Type /Page /Parent 68 0 R /Resources << /Font << /F0 6 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 75 0 R >> endobj 78 0 obj << /Length 79 0 R >> stream 0 0 0 rg 72 151.92 144.24 1.2 re f BT 108 134.16 TD /F0 7.2 Tf 0 Tc 0 Tw (13) Tj 7.2 -4.8 TD /F0 12 Tf ( The district court in ) Tj 103.92 0 TD /F2 12 Tf (Staples, ) Tj 40.8 0 TD /F0 12 Tf (970 F. Supp. at 1093, likewise recognized that an) Tj -187.92 -14.16 TD (injunction ) Tj -0.06 Tc 0.06 Tw (\223will most likely kill the merger) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 0 Tc 0 Tw (and affect shareholders, but deemed that private) Tj 0 -14.16 TD (equity insufficient to overcome the public interest in enjoining the transaction.) Tj 228 -26.16 TD (17) Tj -192 633.84 TD (The Ninth Circuit, in ) Tj 102 0 TD /F2 12 Tf (Warner Communications,) Tj 123.6 0 TD /F0 12 Tf ( under similar circumstances granted an) Tj -261.6 -28.32 TD (injunction but ordered the Commission to expedite its administrative proceeding.) Tj 384.48 4.8 TD /F0 7.2 Tf (13) Tj 7.2 -4.8 TD /F0 12 Tf ( 742 F.2d at) Tj -391.68 -28.32 TD (1165. Similarly, the Eleventh Circuit observed in ) Tj 237.84 0 TD /F2 12 Tf (University Health) Tj 85.44 0 TD /F0 12 Tf (:) Tj -287.28 -28.32 TD ([T]he FTC only asks for a preliminary injunction; if the appellees can demonstrate the) Tj 0 -14.16 TD (legality of the proposed acquisition to the FTC or, ultimately, the court of appeals, the) Tj T* (acquisition will take place. We do not think that this delay, in and of itself, will spell) Tj T* (disaster for [the acquired firm] or grave harm to the public. ) Tj 287.76 0 TD /F2 12 Tf (Rather, we think the public) Tj -287.76 -14.16 TD (will be best served by enjoinment of this acquisition pending extensive analysis of its) Tj 0 -14.16 TD (competitive effect.) Tj -36 -28.32 TD /F0 12 Tf (938 F.2d at 1225 \(emphasis added\). The district court here committed legal error in according) Tj 0 -28.32 TD (defendants) Tj -2.88 Tc 2.88 Tw (\222 ) Tj 0 Tc 0 Tw (private equity claim conclusive weight against serious public concerns. ) Tj 399.84 0 TD /F2 12 Tf (Id.; Warner) Tj -399.84 -28.32 TD (Communications,) Tj 84.24 0 TD /F0 12 Tf ( 742 F.2d at 1165.) Tj -48.24 -28.56 TD /F1 12 Tf (II. ) Tj 36 0 TD (THE COMMISSION WILL SUFFER IRREPARABLE HARM WITHOUT) Tj 0 -14.16 TD (AN EMERGENCY INJUNCTION PENDING APPEAL) Tj -36 -28.08 TD /F0 12 Tf (The equitable considerations discussed above regarding the need for a preliminary) Tj -36 -28.32 TD -0.0655 Tc 0.0655 Tw (injunction \226 ) Tj 59.28 0 TD /F2 12 Tf 0 Tc 0 Tw (i.e.,) Tj 18 0 TD /F0 12 Tf ( the prospect of the immediate and irreversible loss of competition in the market,) Tj -77.28 -28.32 TD (and the impracticability of ) Tj -1.68 Tc (\223) Tj 0 Tc (unscrambling the eggs) Tj -1.08 Tc 1.08 Tw (\224 \226 ) Tj 0 Tc 0 Tw (constitute serious irreparable injury that, at) Tj 0 -28.32 TD (the very least, amply justifies the modest delay that would be occasioned by an injunction pending) Tj T* (appeal. Absent such relief, defendants may close their transaction any time. Beech-Nut) Tj -2.88 Tc (\222) Tj 0 Tc (s) Tj T* -1.68 Tc (\223) Tj 5.04 0 TD /F0 11.76 Tf 0.1598 Tc -0.3374 Tw (Canajoharie plant will be closed, the Beech-Nut distribution channels will be closed, the new) Tj -5.04 -28.08 TD 0.1626 Tc -0.3402 Tw (label and recipes will be in place, and it will be impossible as a practical matter to undo the) Tj 0 -28.08 TD 0.0324 Tc 0 Tw (transaction.) Tj 54.72 0 TD /F0 12 Tf -0.0218 Tc 0.0218 Tw (\224 App. F at 26-27. Beech-Nut will no longer exist as an independent competitor,) Tj ET endstream endobj 79 0 obj 3510 endobj 77 0 obj << /Type /Page /Parent 68 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 78 0 R >> endobj 81 0 obj << /Length 82 0 R >> stream BT 300 74.88 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (18) Tj -228 633.84 TD (offering price competition, and distinct consumer choice in terms of product quality, and) Tj 0 -28.32 TD (innovation. Competition during the administrative proceeding will be lost. ) Tj 36 -28.32 TD (Also, Heinz will gain immediate access to the most sensitive commercial data, including) Tj -36 -28.32 TD (recipes and trade secrets, business plans, marketing strategies, and details of costs and personnel) Tj 0 -28.32 TD (of Beech-Nut. Even assuming that Heinz does not close Beech-Nut) Tj -2.88 Tc (\222) Tj 0 Tc (s plant, divestiture cannot) Tj T* (repair this damage, since what Heinz learns of Beech-Nut) Tj -2.88 Tc (\222) Tj 0 Tc (s internal workings cannot be) Tj T* (unlearned. As this Court has held, if business sensitive information is transferred, ) Tj -1.68 Tc (\223) Tj 0 Tc (ultimate) Tj T* (divestiture will not fully restore competition.) Tj -1.44 Tc 1.44 Tw (\224 ) Tj 223.68 0 TD /F2 12 Tf 0 Tc 0 Tw (FTC v. Weyerhaeser, Co.) Tj 121.68 0 TD /F0 12 Tf (, 665 F.2d 1072, 1085-86) Tj -345.36 -28.32 TD (\(D.C. Cir. 1981\). Thus, irreparable harm would continue even after divestiture, because Heinz) Tj -2.88 Tc (\222) Tj 0 Tc (s) Tj 0 -28.32 TD (knowledge of Beech-Nut will provide it with significant competitive advantages which could) Tj T* (facilitate future anticompetitive conduct.) Tj 36 -28.56 TD /F1 12 Tf (III.) Tj 36 0 TD (DEFENDANTS WILL NOT SUFFER SUBSTANTIAL HARM FROM AN) Tj 0 -14.16 TD (INJUNCTION PENDING AN EXPEDITED APPEAL) Tj -36 -28.08 TD /F0 12 Tf (Defendants will not be irreparably harmed by the brief delay occasioned by this Court's) Tj -36 -28.32 TD (consideration of the Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s appeal of the district court's order. Indeed, if the Court grants) Tj 0 -28.32 TD (the Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s request to expedite this appeal, any delay attributable to the grant of injunctive) Tj T* (relief will cause little or no damage whatever. An expedited appeal would serve both the public's) Tj T* (interest in effective antitrust enforcement and defendants' interest in protecting their commercial) Tj T* (relationship.) Tj 36 -28.32 TD (In ) Tj 12.96 0 TD /F2 12 Tf (University Health) Tj 85.44 0 TD /F0 12 Tf (, the Commission also sought an emergency injunction pending) Tj -134.4 -28.32 TD (appeal. On April 18, 1991, the Eleventh Circuit entered an order expediting the appeal and) Tj 0 -28.32 TD (directed all parties to file simultaneous opening briefs by April 24, 1991; and short reply briefs by) Tj ET endstream endobj 82 0 obj 2626 endobj 80 0 obj << /Type /Page /Parent 68 0 R /Resources << /Font << /F0 6 0 R /F1 10 0 R /F2 16 0 R >> /ProcSet 2 0 R >> /Contents 81 0 R >> endobj 84 0 obj << /Length 85 0 R >> stream BT 300 53.28 TD 0 0 0 rg /F0 12 Tf 0 Tc 0 Tw (19) Tj -228 655.44 TD (April 29, 1991. That Court heard oral argument on May 6, 1991. A similar briefing schedule) Tj 0 -28.32 TD (would be appropriate in this case, with argument set at the earliest date convenient to the Court. ) Tj T* (Such a schedule would impose only a marginal delay upon defendants, yet would give this Court a) Tj T* (chance to decide the substantial legal issues posed by the district court's decision. In the interim,) Tj T* (the injunction will limit any harm to competition.) Tj 36 -28.56 TD /F1 12 Tf (IV.) Tj 36 0 TD (AN INJUNCTION PENDING APPEAL IS IN THE PUBLIC INTEREST ) Tj -36 -28.08 TD /F0 12 Tf (For the reasons identified in Parts I-III above, entry of an injunction pending appeal is) Tj -36 -28.32 TD (strongly in the public interest. The district court has committed serious errors of law that warrant) Tj 0 -28.32 TD (careful appellate review; the Commission) Tj -2.88 Tc (\222) Tj 0 Tc (s ability to obtain effective ultimate relief depends upon) Tj T* (entry of emergency relief now; and defendants will not be seriously harmed by the brief delay) Tj T* (associated with an expedited appeal. Under these circumstances, the strong public interest in) Tj T* (effective enforcement of the merger laws requires entry of an injunction pending appeal.) Tj 193.44 -28.56 TD /F1 12 Tf (CONCLUSION) Tj ET 265.44 366.72 81.12 0.72 re f BT 108 340.56 TD /F0 12 Tf (For the foregoing reasons, the FTC's motion for an injunction pending appeal should be) Tj -36 -28.32 TD (granted and the appeal should be expedited.) Tj 144 -28.32 TD (Respectfully submitted,) Tj -144 -28.32 TD (RICHARD G. PARKER) Tj 216 0 TD (DEBRA A. VALENTINE) Tj -216 -14.16 TD (Director, Bureau of Competition) Tj 216 0 TD (General Counsel) Tj 0 -28.32 TD (JOHN F. 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