828 F. Supp. 2d 1118
N.D. Cal.2011Background
- Plaintiffs allege Southwest’s acquisition of AirTran violates Section 7 of the Clayton Act by reducing competition among LCCs and the overall domestic airline market.
- Merger completed May 2, 2011; plaintiffs filed suit May 3, 2011, seeking to enjoin and later for injunctive relief in the amended complaint.
- Plaintiffs contend the merged entity would account for a large share of LCCs and overall market, reducing capacity and raising prices.
- Defendants moved to dismiss arguing failure to plead a plausible relevant product market and lack of entitlement to injunctive relief, including divestiture.
- Court conducted oral arguments; the motion to dismiss was granted, and the Amended Complaint was dismissed with prejudice as to injunctive relief and overall claim.
- Plaintiffs’ requested remedy (divestiture) was deemed unavailable given consummation of the merger and the equities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Plaintiff plausibly plead a relevant product market under §7 | Taleff argues a Low Cost Carrier sub-market is a plausible product market | Southwest/AirTran contend market definition is uncertain or lacking plausibility | Not reached; court did not decide product-market plausibility |
| Entitlement to injunctive relief (divestiture) after merger has closed | Divestiture is warranted due to irreparable harm and inadequate legal remedies | Divestiture not warranted; remedies insufficiently shown and divestiture is inappropriate post-merger | Denied; court granted dismissal and found divestiture unavailable |
Key Cases Cited
- Am. Stores Co. v. Am. Sec. & Com. Bank (American Stores), 495 U.S. 271 (1990) (divestiture authority under Clayton Act may be appropriate in equity cases)
- Ginsburg v. InBev NV/SA, 623 F.3d 1229 (8th Cir. 2010) (divestiture post-merger is unlikely; importance of preliminary injunction to preserve remedies)
- Antoine L. Garabet, M.D., Inc. v. Autonomous Tech. Corp., 116 F.Supp.2d 1159 (C.D. Cal. 2000) (divestiture unavailable when merger already consummated; substantial hardship)
- Glendora v. Gannett Co. Inc., 858 F.Supp. 369 (S.D.N.Y. 1994) (divestiture for completed transactions involving ongoing integration not granted)
- Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007) (extreme remedy of divestiture requires careful balancing of equities)