an arrangement whereby the ultimate holder of the Nabisco cereal assets will be allowed to use the Nabisco trademark for a period of time before it implements its own transition. See State's Post-Hearing Mem., at 52; see also supra note 2. Although I do not decide now that such a remedy can be ordered, I note that such a remedy would enable Newco to counteract the limited damage to Nabisco's independent identity that may result from the transition. See Tr. at 706.
In sum, I conclude that the evidence does not support a finding of a real and genuine threat to the independence of the Nabisco mark. Decisional law cited by the State is not to the contrary. First, the State cites several trademark infringement and unfair competition decisions. Although the posture of this case focuses the court's attention on the effect of the transition on the independent viability of the Nabisco trademark, it must be remembered that this is an antitrust case. In the trademark infringement decisions cited by the State, the courts granted injunctions to serve different statutory purposes than those at issue here. Although I find these decisions instructive as to the kinds of product packaging or other business practices that are generally deemed confusing to consumers or unfair to competitors, I do not find these decisions dispositive of when such activities threaten an irreparable antitrust injury.
In addition to these trademark cases, the State cites a number of Section 7 cases, each of which presents a more substantial threat of harm than that shown here. In Consolidated Gold Fields PLC, 871 F.2d 252, the Court of Appeals affirmed a preliminary injunction preventing a merger that would have resulted in the defendant eliminating its viable competitors and dominating the world gold market. Although some of the language in that decision may support the State's position, this case does not present a comparable threat of antitrust injury. First, even were I to find that the transition poses a threat to the Nabisco brand equity, there is no basis for concluding that it threatens to eliminate a viable competitor. Second, the Consolidated Gold Fields injunction was entered prior to a takeover. By contrast, in this case, in which the transaction has already been consummated, it is substantially less important to preserve the status quo and otherwise avoid "scrambling the eggs." Grumman Corp v. LTV Corp., 665 F.2d 10 (2d Cir. 1981) and F.& M. Schaefer Corp. v. C. Schmidt & Sons Inc., 597 F.2d 814 (2d Cir. 1979) are equally distinguishable. Both cases involved pre-transaction injunctions and raised concerns not present here, including the threat of disclosure of confidential trade information and disruption of the business. In sum, neither the decisional law cited to me nor the evidentiary record before me indicates that this case presents a threat of irreparable harm to the independence of the Nabisco mark.
C. Threat of Discontinuation of Smaller Nabisco Products.
Among the bases for a finding of irreparable harm advanced by the State is its concern that Kraft plans to discontinue Nabisco's smaller cereal brands, Team Flakes and Fruit Wheats. The State urges the court to preserve these Nabisco assets so that upon rescission or divestiture Nabisco or Newco could cannibalize these assets themselves, or use them as a broader platform from which to expand and compete. See State's Post-Hearing Mem. at 28-9; State's Post-Hearing Reply Mem. at 22-4.
I previously addressed this issue in a July 29, 1993 Opinion and Order denying the State's motion for an injunction pending appeal. In that decision, I concluded that "the value of the Nabisco RTE cereals is best preserved by permitting Kraft to pursue a marketing strategy that maximizes the sale of Nabisco RTE cereals generally, rather than by forcing Kraft to continue to promote and sell unpopular brands solely to preserve the possibility of transferring to a new entrant the Nabisco RTE cereal business exactly as it existed on November 12, 1992 -- a goal that is probably unachievable in any event in the rapidly changing RTE cereal market." Opinion and Order, July 29, 1993, at 8.
To the extent that Kraft intends to use the assets connected with Nabisco's marginal brands to produce and market Nabisco's more successful brands, my conclusion remains the same. However, in renewing its motion for a preliminary injunction, the State points to Kraft business documents suggesting that Kraft intends to discontinue the marginal Nabisco brands to the advantage of other Post brands, as opposed to other Nabisco brands. See Tr. at 515-16, 605. Although this evidence raises new concerns, I find insufficient evidence of a threat of irreparable harm to enjoin Kraft at this time. First, I note that the Nabisco brands at issue here represent a very small share of the RTE cereal market. Elimination of these brands, including the shelf space that is associated with them, would not substantially affect the overall competitive viability of the Nabisco RTE cereal assets. In this regard, I find this case distinguishable from Grumman, in which liquidation of substantial assets was contemplated. See Grumman Corp. v. LTV Corp., 527 F. Supp. 86, 101-02 (E.D.N.Y.), aff'd 665 F.2d 10 (2d Cir. 1981). Moreover, I believe that the market has made a judgment with respect to these marginal brands that would apply regardless of whether they were being managed by Kraft, Nabisco, or Newco. See Tr. at 747-61. To the extent that Kraft's elimination of these brands shifts Nabisco manufacturing facilities to the production and promotion of Post products, see Tr. at 515-16, I believe that it is within my power to restore these assets in the event I eventually order rescission or divestiture.
I conclude therefore that any elimination of the marginal Nabisco brands that may occur during the next three months does not threaten irreparable harm sufficient to warrant a preliminary injunction.
For the foregoing reasons, I conclude that the State has failed to meet its burden to prove that the proposed transition represents a real and genuine threat of irreparable harm. In light of this conclusion, I do not reach questions relating to the merits of the underlying dispute. I hereby deny the State's renewed motion for a preliminary injunction.
DATED: New York, New York
September 12, 1994
Kimba M. Wood
United States District Judge