The opinion of the court was delivered by: Sand, District Judge.
On March 26, 1991, this Court heard oral argument on
defendants' Order to Show Cause why Counts I, II, III and IV of
plaintiff's Amended and Supplemental Complaint ("Complaint")
should not be dismissed. At that time the Court issued an oral
Opinion denying defendants' motion and reserved the right to
issue a subsequent
written Opinion. The following constitutes that written
In the motion presently before the Court, defendants move to
dismiss the first four Counts of the Complaint pursuant to F.R.
Civ.P. 12(b)(6) for failure to state a claim upon which relief
can be granted. Counts I and II allege violations of § 7 of the
Clayton Act, 15 U.S.C.S. § 18 (1990). Count III alleges
violations of § 8 of the Clayton Act, 15 U.S.C.S. § 19 (1990).
Count IV alleges that defendants have conspired to restrain
trade in violation of § 1 of the Sherman Act, 15 U.S.C.S. §
1 (1990). Plaintiff seeks preliminary and permanent injunctive
Plaintiff, Square D Company ("Square D"), is a Delaware
corporation with its principal place of business in Palatine,
Illinois. Square D is principally engaged in the business of
producing electrical distribution and electrical control
products for commercial and industrial use.
The defendants in this action are a number of corporations
and individuals all allegedly affiliated with Schneider, S.A.
(hereinafter "Schneider"). The complaint alleges that defendant
Schneider, acting through a group of commonly controlled
companies known as Groupe Schneider, is engaged in an illegal
plan to acquire Square D.
The complaint states that on February 21, 1991, Schneider
announced its intention to engage in a proxy fight for control
of Square D's Board of Directors, the purpose of which is to
install Directors who will effectuate consummation of a merger
between Square D and Schneider. Complaint ¶ 62. The complaint
also states that Schneider launched a hostile all-share tender
offer for Square D on March 4, 1991. Complaint ¶ 65.
With regard to the proxy fight, the complaint alleges that
Schneider has proposed a slate of eleven candidates for Square
D's Board. All eleven are allegedly "either employees,
officers, directors, or consultants of Schneider or one or more
of its subsidiaries." Complaint ¶ 122. The complaint further
alleges that one of the Schneider nominees, defendant Mahmoud
Tiar, sits on the Board of a Schneider subsidiary that competes
with Square D in the United States. Complaint ¶ 124. It also
asserts that five other nominees are officers or directors of
two Schneider affiliated companies — Spie Batignolles and
Jeaumont-Schneider — which in turn own a controlling interest
in a third company (Jeumont Schneider Automation) which
competes with Square D. Complaint ¶ 125.
In deciding a motion to dismiss, this Court is required to
accept the plaintiff's allegations as true and construe those
allegations in the light most favorable to plaintiff. See
Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40
L.Ed.2d 90 (1974). The complaint will be dismissed only if the
plaintiff can prove no set of facts that would entitle him to
relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,
101-02, 2 L.Ed.2d 80 (1957); Goldman v. Belden, 754 F.2d 1059,
1065 (2d Cir. 1985).
A. Counts I and II — Alleged Violations of § 7
of Clayton Act
Section 7 of the Clayton Act, as amended, provides in
pertinent part that "No [natural or legal] person engaged in
commerce . . . shall acquire, directly or indirectly, the whole
or any part of the stock or . . . assets of another person . .
. where in any line of commerce . . . in any section of the
country, the effect of such acquisition may be substantially to
lessen competition, or to tend to create a monopoly." 15
U.S.C.S. § 18. Counts I and II of the Amended Complaint allege that
if Schneider succeeds in acquiring Square D, the effect will be
to lessen actual or potential competition among certain
products in the United States.
Defendants recognize that in Consolidated Gold Fields PLC v.
Minorco, S.A., 871 F.2d 252, 257-61 (2d Cir.), cert. dismissed,
492 U.S. 939, 110 S.Ct. 29, 106 L.Ed.2d 639 (1989), the Second
Circuit held that a target of a hostile takeover had standing
under § 7 of the Clayton Act because the target's allegation
that it would "lose its ability to compete independently" was
antitrust injury within the meaning of Cargill. Defendants
further acknowledge that Square D has alleged that ...