Merger

“ The market share which companies may control by merging is one of the most important factors to be considered when determining the probable effects of the combination on effective competition in the relevant market.71 In an industry as fragmented as shoe retailing, the control of substantial shares of the trade in a city may have important effects on competition. If a merger achieving 5% control were now approved, we might be required to approve future merger efforts by Brown's competitors seeking similar market shares. ”

“ The emotional impact of a merger between the third and sixth largest competitors in a given market, however fragmented, is understandable, but that impact cannot substitute for the analysis of the effect of the merger on competition that Congress required by the 1950 amendment. ”

“ That generally the effect of consolidation, as distinguished from a union by merger of one company into another, is to work a dissolution of the companies consolidating, and to create a new corporation out of the elements of the former, is asserted in many cases, and it seems to be a necessary result. ”

“ The test which the Government advocates is that it 'can satisfy its burden of showing that the merger may have the effect of substantially lessening competition by proving (a) the existence of substantial competition between two industries; (b) a high degree of concentration in either or both of the competing industries ”

“ Economic arrangements between companies standing in a supplier-customer relationship are characterized as 'vertical.' The primary vice of a vertical merger or other arrangement tying a customer to a supplier is that, by foreclosing the competitors of either party from a segment of the market otherwise open to them, the arrangement may act as a 'clog on competition,' Standard Oil Co. ”

“ A merger requires public notice whereas stock can be acquired privately. A shareholder dissenting from a merger has the right to receive the appraised value of his shares * * * whereas no shareholder has a comparable right in an acquisition of stock. Furthermore the corporate existence of a merged company is terminated by a merger, but remains unaffected by an acquisition of stock.' Brief for Appellees, 30-31.↑ The legislative history of the 1914 Act is reviewed in Brown Shoe Co. ”

“ In the formation of a consolidation or a merger the services of a promoter may be necessary. This is especially true if the various companies are direct competitors and deep-rooted jealousies exist. Under the circumstances an outsider has the best chance of effecting an agreement between the parties. The difficulty encountered in all consolidations and mergers is the exaggerated idea of officials regarding the importance and value of their own plant and organization as related to the rest. ”

“ Therefore, if the proposed merger be deemed an assets acquisition, it is not within § 7. [12] Appellant argues vigorously that a merger is crucially different from a pure assets acquisition, [13] and appellees argue with equal vigor that it is crucially different from a pure stock acquisition. [14] Both positions, we think, have merit; a merger fits neither category neatly. Since the literal terms of § 7 thus do not dispose of our question, we must determine whether a congressional design to embrace bank mergers is revealed in the history of the statute. ”

“ Acquiescence by the government for more than eleven years in the actual merger and consolidation of many important parallel and competing lines on railroads and steamships engaged in interstate and international commerce has given a practical construction to the act of July 2, 1890, [3] to the effect that it was not intended to forbid, and does not forbid, the natural processes of unification which are bronght about under modern methods of lease, consolidation, merger, community of interest, or ownership of stock. ”

“ Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv.L.Rev. 226, 308-329 (1960) (no merger by the dominant firm in an industry if its market share is increased by more than 2-3%; no merger by other large firms in the industry where the combined market shares of the two-to-eight largest firms after the merger are increased by 7-8% or more over the shares that existed at any time during the preceding 5-10 years; no merger where acquired firm has 5% market share or more) . ”

“ In such a case, the legality of the merger must surely depend, as it did below, on an inquiry into competitive effects in the actual lines of commerce which are involved. In this case, the result depends-or should depend-on the impact of the merger in the two lines of commerce here involved: the metal container industry and the glass container industry. [12] As the findings of the District Court which are quoted above make plain, reference to these two actual lines of commerce does not preclude protection of inter-industry competition. ”

“ It is the present intention of the Board of Directors of TU to recommend the approval of the Merger Agreement to the Stockholders, unless another offer or proposal is made which in their opinion is more favorable to the Stockholders than the Merger Agreement. ”

“ Unscrambling may be difficult; but Congress may well have been justified in the view that the extra effort is warranted in the interests of securing what it hoped would be careful administrative consideration of the merits of proposed mergers. Not every merger deserves sudden death. In many situations, mergers serve no purpose except the pursuit of bigness. ”

“ Specifically, we think that 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. ”

“ Hereafter, however, slight (or even nonexistent) the competitive impact of a merger on any actual market, businessmen must rest uneasy lest the Court create some 'market,' in which the merger presumptively dampens competition, out of bits and pieces of real ones. No one could say that such a fear is unfounded, since the Court's creative powers in this respect are declared to be as extensive as the competitive relationships between industries. ”

“ The Government may introduce evidence which shows that as a result of a merger competition may be substantially lessened throughout the country, or on the other hand it may prove that competition may be substantially lessened only in one or more sections of the country. ”

“ Every conceivable merger case involves the danger that the merger, unless enjoined, will be effectuated, and the incentive to the Commission to shop among the statutorily available courts of appeals and to seek 'preliminary' injunctions will be great. ”

“ It is plain that Congress considered both competition in commercial banking and satisfaction of 'the convenience and needs of the community' to be in the public interest. It concluded that a merger should be judged in terms of its overall effect upon the public interest. If a merger posed a choice between preserving competition and satisfying the requirements of convenience and need, the injury and benefit were to be weighed and decision was to rest on which alternative better served the public interest. ”

“ Article 151: The merger shall be considered effective as of the last
publication date of the amended or new contract, depending on the
circumstances. On this date, the corporate status of the companies
merging into the new company shall be terminated. The Registrar's
endorsement of the contract is tantamount to a license of establishment
Article 152: All the rights and commitments of the merger shall be
transferred to the company with which it was merged, or the company
resulting from the merger.
Section Three: Transformation of a Company ”

“ Where one of the constituent companies of a merger survives, a director or auditor of the surviving company who took office before the merger shall be retired when the regular general meeting, held in a settling term which comes first after the merger, is completed, except as otherwise prescribed by the written agreement of the merger. ”

“ Shareholders of merging corporations surrender their interests in those corporations in exchange for their very different rights in the resulting corporation. In an asset acquisition, however, the shareholders of the selling corporation obtain no interest in the purchasing corporation and retain no interest in the assets transferred. In a merger, unlike an asset acquisition, the resulting firm automatically acquires all the rights, powers, franchises, liabilities, and fiduciary rights and obligations of the merging firms. ”

“ The Department contends that under the statute when a proposed merger will result in a substantial diminution of competition between two financially healthy, competing roads, its anticompetitive effects should preclude the approval of the merger absent a clear showing that a serious transportation need will be met or important public benefits will be provided beyond the savings and efficiencies that normally flow from a merger. ”

“ The embellishment which adorns these statistics is the proposition that 'where merging companies are major competitive factors in a relevant market, the elimination of significant competition between them, by merger or consolidation, itself constitutes a violation of § 1 of the Sherman Act,' ante, pp. ”

“ Kintner, The Federal Trade Commission in 1960 Apologia Pro Vita Nostra, 1961 Antitrust Law Symposium 21, 41.↑ For example, in some situations the merger of relatively small competitors may result in creation of an enterprise capable of meaningful competition with a company otherwise in unchallenged domination of an industry. ”

“ Where a company which issued several classes of shares comes to inflict a loss to a class of shareholders due to division or a merger through division, the division or merger through division shall be subject to a resolution by the general meeting of such shareholders under Article 435. ”

“ Where, as frequently happens, a partnership is a party to the merger, it is necessary to consider the method of handling certain items in the partnership accounting which differs from their handling under the corporate form, so that the valuation of the assets and earnings of all the properties can be placed on an equitable basis. ”

“ Given a trend towards fewer and fewer sellers which promises to continue, it is clear to me that where the eight leading firms have over 40% of the market, any merger between the leaders or between one of them and a lesser company is vulnerable under § 7, absent some special proof to the contrary. ”

“ Certainly in the merger context, a director may not abdicate that duty by leaving to the shareholders alone the decision to approve or disapprove the agreement. See Beard v. Elster, Del.Supr., 39 Del. Ch. 153, 160 A.2d 731, 737 (1960) . Only an agreement of merger satisfying the requirements of 8 Del.C. § 251 (b) may be submitted to the shareholders under § 251 (c) . See generally Aronson v. Lewis, supra at 811-13; see also Pogostin v. Rice, supra. ”

“ An "interested stockholder" is one owning 10% of the voting stock, directly or through associates (anyone acting in concert with it) , § 180.726 (1) (e) . A "business combination" is a merger with the bidder or any of its affiliates, sale of more than 5% of the assets to bidder or affiliate, liquidation of the target, or a transaction by which the target guarantees the bidder's or affiliates debts or passes tax benefits to the bidder or affiliate, § 180.726 (1) (e) . ”

“ While agreeing with the Government that, with regard to manufacturing, the relevant geographic market for assessing the effect of the merger upon competition is the country as a whole, Brown contended that with regard to retailing, the market must vary with economic reality from the central business district of a large city to a 'standard metropolitan area'2 for a smaller community. ”

“ Nor should common stock values be made to depend on whether the Commission, in enforcing compliance with the Act, resorts to dissolution of a particular company in the holding company system, or resorts instead to the devices of merger or consolidation, which would not run afoul of a charter provision formulated years before adoption of the Act in question. ”

“ The participants in the concentration are obliged to notify the concentration to the Commission for Protection of Competition prior to its implementation and following the procedural order of the merger agreement, the announcement of the public bid for the purchase or the acquisition of the controlling interest in the nominal capital of the undertaking. ”

“ See, e.g., Kaysen & Turner, Antitrust Policy 133-136 (1959) (horizontal merger with direct competitor is prima facie unlawful where acquiring company accounts for 20% or more of the market, or where merging companies together constitute 20% or more of the market; acquisitions producing less than 20% market control unlawful only where special circumstances are present, such as serious barriers to entry or substantial influence on prices by the acquired company) ”

“ Clearly the opportunity for reciprocity is not alone enough to invalidate a merger under § 7. The Clayton Act was not passed to outlaw diversification. Yet large scale diversity of industrial interests almost always presents the possibility of some reciprocal relationships. Often the purpose of diversification is to acquire companies whose present management can benefit from the technical skills and sales acumen of the acquiring corporation. ”