UUnniivveerrssiittyy ooff PPeennnnssyyllvvaanniiaa CCaarreeyy LLaaww SScchhooooll PPeennnn LLaaww:: LLeeggaall SScchhoollaarrsshhiipp RReeppoossiittoorryy Faculty Scholarship at Penn Law 4-1992 CCoorrppoorraattee LLaaww TThhrroouugghh aann AAnnttiittrruusstt LLeennss Edward B. Rock University of Pennsylvania Carey Law School Follow this and additional works at: https://scholarship.law.upenn.edu/faculty_scholarship Part of the Antitrust and Trade Regulation Commons, Banking and Finance Law Commons, Business Administration, Management, and Operations Commons, Business Law, Public Responsibility, and Ethics Commons, Business Organizations Law Commons, Economic Policy Commons, Law and Economics Commons, Policy Design, Analysis, and Evaluation Commons, and the Public Economics Commons RReeppoossiittoorryy CCiittaattiioonn Rock, Edward B., "Corporate Law Through an Antitrust Lens" (1992). Faculty Scholarship at Penn Law. 723. https://scholarship.law.upenn.edu/faculty_scholarship/723 This Article is brought to you for free and open access by Penn Law: Legal Scholarship Repository. It has been accepted for inclusion in Faculty Scholarship at Penn Law by an authorized administrator of Penn Law: Legal Scholarship Repository. For more information, please contact [email protected]. COl_AUMBILA�X RrE VIE VOL. 92 APRIL 1992 NO.3 CORPORATE LAW THROUGH AN ANTITRUSTL ENS EdwarRdo cBk. * I. IntroductiMoanr:k etasn dF irms. . . . . . . .4 9.8 . . . . . . . . . . . . . . . . SECTI1ON,T H EP ROBLEOMFT HEO NEA NDT HEM ANYA,N D II. THEF IRM/MARBKoERTD ERLINE . . . . . . . . . 5.0 5. . . . . . . . . . . . . . . . . A. TheC oncerotf A ctioRne quireme.n. .t . . . . .5 0.6 . . . . . . . . . . B. DistinguisAhmionngg Activit. .i es. . . . . . . . . . . . . . . . . . . . . 511 C.T he Ruleo fR easonA nalys. i.s . . . . . . . 51.3 . . . . . . . . . . . . . . . . D. A CollectAicvtei oAnn alys.i .s . . . . . . . 5.1 5 . . . . . . . . . . . . . . . . E. Summary. . . . . . . . . . . . . . .5 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IIIA.N ANTITRUPSETR SPECTICVoER POONR ALATwE . . . . .5 1.9 . . . . . A. An IllustratDioogdnev:. F orMdo tCoorm pa. .n y. . .5 1.9 . . . . . B. The Paradigm Case: CoAlclteicottnoi C voen trol AgencyC ost.s . . . . . . . . . . . . 5.2 3. . . . . . . . . . . . . . . . . . . . . . . . . . . C.S hareholdeDresc'i sitoonT enderJ:o inBta rgaining Agreemenatnsd F unctionEaqlu ivale.n .t s. . . .5 2.4 . . . . . . . . 1. The Ruleo fR easonA nalys.i s . . . . . . 5.2 6. . . . . . . . . . . . . . a. ShareholdaesrC so -Owner.s . . . . . . . 5.3 .1 . . . . . . . . . . b. The FreezeoCuotm plicati.o.n. ........... .;);'>'.;()).')., .). c. AllocatiAorngaulm ent.s. ................ .5.3.7. ... d. The UltimaBtael anci.n.g. ............... 5.4.0. ... 2.P opulist/DistriAbrugtuimoennatl.s . .......... ..5.4.2. 3. A DoctrinJauls tifica.t.i.o.n. .............. .5.4.3. .... 4. Summary. . . . . . . . . . . . . ...... . . . . .... . . . .... . . . . .. . 544 D. StakeholCdoearl iti.o.n.s. .................. .5.4.5. ...... E. StatTea keoveRre gulatiaonnd t heS hermaAnc t. . . .5 48. . . 1.T heP arkDeorc tri.n e. . . . . . . . . . . .5 5.1 . . . . . . . . . . . . . . . . . 2.A ntitruFsetd eraliasnmd S tatTea keoveLre gislati5o5n2 a. IndianCao ntroSlh arAec quisitiAocnt.s . . . 5.5 4. . . . b. NonshareholCdoenrs titueSntcayt ut. e.s . . 5.5 6. . . . . 3.S tatTea keoveLre gislatainodnT akeoveDre fense.s . 558 4. The InsigohftA ntitruFsetd eraliosnm S tate TakeoveLre gislat.i o.n . . . . . . . . . . 5.5 9. . . . . . . . . . . . . . . . . Conclusi.o. .n . . . . . . . . . . .. .. .. .. .5. 6 .0. .. .. .. .. .. .. .. . . . . . . . . . . . . . * AssisPtraoenfsts oofrL awU,n ivseiyro tfP ennvsyalnLiaaw S chooIla m.g rtafeul focro mmetnsc,rt iiciasnmde, n coaugremefnortm I an AyreEsi,n eErl hauAglee,Gx a vis, LeoK atzM,i hcaeKll ausnJeefrfL, a ngeS,et pheMno rseD,an iPeeln nD,a viSdk eel, Mihcae\l'a Yc'htSeira,Wn a n,ga ndE laibzetWha rreIn a.m especiaglrlaytu elr foB ob Mundheifomr asikngt heq uestitoonw hicthh iAsri tcliesa partainadli neit\abh incmopleatned u nstaiascftyoa rnsweTrhi.sr eseawracssh u pporbtyte hdUe n vier:so,if t PennsylvLaawnS ichao olI'nsst tuitfeo rL awa ndE conmoic.s 497 498 COLU1\1BLIAAT VR EVIEW lVo9L� :497 I. INTRODUCTMIAORNK:E TASN Df iRMS Do antitraunstdc orporaltaew h avem uch to sayt oe acho ther? Judgesl,a wyerlsa,w p rofessoarnsd,l aws tudenatlss le em tot hink that theyd o not.1 Antiitsra ubsotu tm arketcso;r poraltaew i sa boutfi rms. Antitruissat b outc ompetiticoonr;p o:raltaew i sa boutc ooperatiAonn­. titrursetg ulatreesl atioanmso ngfi rms;c orporaltaew g overnrse lations withifmnn s. Int hiAsr ticlIe a,r guet hatt hicso mmon viewi sf unda­ mentallflya wed.W hen shareholdaerresa lscoo mpetitotrhse,n ormal corporaltaew i nstintchta tc ollcetivaec tiosnh oulbde facilitfaatields . At the borderbleitnwee enf irmasn dm arketsa,n titruwsitt,hi tmso re subtlaep preciatfioortn h ec omplexiotfy t her elationshbieptsw een competitiaonnd c ooperaticoonm,e st ot hef ore. The divisiboent weenc orporaltaew a nda ntitrust corretsop onds them oreg eneraaln de qualltyr aditiodniasltc itniobne tweenf irmasn d marketsE.c onomishtasv eh istoricdailsltyi nguisbheetdv 1efeinr misn, whichr elatioanrseg overnebdy c ommandsa,n dm arketisn,w hichr ela­ tionasr er egulatbeydp ricesB.u2t t hec omfortabdlies tinctbieotnw een antitraunsdtc orporaltaew b egintso d issolavset heu nderlyidnigs tinc­ tionb etweemna rketasn df irmbse comesl escsl earI.n b othe conomics and latwh,e fi rm/markedti stincthiaosnl osmtu ch ofi ts signlficance. Int hee conomiocfsi ndustroiragla nizatisoonmse,o f thmoes t e:x.citing modern worhka sq uestionbeodt ht hed efinitiaonnd i mportanoceft he firm/markebto undaryd,e monstrattihnagt i ti sn eithecrl eawrh Cl_tth e firm "isn"o r how relatiownist hifni rmdsi ffefrr omr elatioinnsm ar­ kets.R3CJ _thears,m any havea rguedt,h ei mportanatn d int�resting questiornesl atteow hichk indosf c ontracatrseu sedf orw hicahc tivities and to the economici mplicatioonfs differ.:'ncto ntrat'tl1<tl 3rrangements.4 !.T hisi ntuitisveen seo f then on-overlappdionmga inso f thet wos ubjects manifesittss eilnfa numbero fw ays.R elativfeelwyp eopltee acbho ths ubjtC·>cnttrst.s haveb eenh ostitloea ttempttso i nvokaen titrduosctt riinnec orporactoen texttos prevenfto,r e xampleb,i ddinagg reemenatmso ngc ompetinbgi dderisn a .uctifoonrs corporactoen troSle.e e,. g.F,i nnegavn.C ampeauC orp.9,1 5F .2d8 24 C(i2rd!. 9 90), certd.e nied1,1 1S .C t.1 624( 1991K)a;l manovivt.Gz . H eilemaBnre wing C.o. ' 769 F.2d 152,1 58( 3dC ir1.9 85)_ 2.S eeJ osephE .S tigliStyzm,p osiuomn Organizatiaonnds E conomicJs ,E con_ PerspS.p,r ign 1991a,t 1 5,1 7_ 3.T hel iteratounr teh et heoroyf t hefi rmi sr icahn de xtensivSee.c ,e .g.O,l iver E. WilliamsoMna,r ketasn d HierarchiAensa:l ysainsd AntitruIsmtp licati(o1n9s7 5); Armen AA.l chia&n HaroldD emsetzP,r oductiIonnf,o rmatiCoons ts;,m d Economic Organizati6o2n A,m . Econ_R ev.7 77 (1 972)S;t eveNn. S.C heungT.h e Contractual Naturoef theF irm2,6 J.L&. Econ.I ( 1983R)o;n alHd_ C oaseT,h eN atuer otfh eF irm, 4 Economic3a8 6( 1937O)l;i veHra rtA,n EconomisPte'rss pectoinvt eh eT heorv oft he Firm8,9 ColumL.. R ev1_7 57( 1989M)i;c haeCl.J ense&n Willialm-I . l\icckiing. Theon of the FinMna:n agerial BehaAvgiconrc,vC ostsa ndO wncr�hiSpt n�<t•tiJC , Fi��n _ F.con. 3(0159 '7B6e)n;j amiKnl eicnt a l.V,e rticIanlt egr-ation. :\pplrlo.pcrn;itm;se�.lb k theC ompetitiCYoen tracgt iPnroce21sJ sL .& Econ.2 97(1 971)_ ) 4. Sec Cheung.n ot�eu3 p.ar t<1 �8 :K lein et aln.o,te 3".ua pt:r )a2 (i: \'or:.1111 B;lnr·l. 1992] ANTITURSTL ENS 499 Similairncl oyr porlaatwie, ti sn owc ommonpltaoct eh inokft he firma sa n etwoorfck o ntraacntdos fc orporlaatwae sp rovidais ntga n­ darfdo rcmo ntraAcsti .ne5 c onomitchsin,se wv ieewr odtehsefi rm/ markbeotu ndaIrfyfi .r masr aen etwoorfck o ntrawchtasst,i gnificance shoubledg ivetnot hef actth asto meo ft hea greemeanrtebs e tween shareholwdheirloset hearrseb etwefiernm s? Indeeadss, o oans o neb egitnost hinakb out antaintdcr ourspto ­ ratlea two gethtewroc, o ntrasfteiantgue rmeesr gFei.r fsrto,am c ollec­ tivaec tipoenr specittii svn eo,ta ta lcll etahra tth erseh oulbdea ny differenscoem:eo ft hem osti nteresqtuiensgt iionbn ost fihe ldrse ­ volvaer ounsdi mivlearrs ioofnt sh ef amilPirairs onDeirlse'm mSae.c ­ ond,t heg overniinntgu itcioonncse rntihnelg a w'psr opeart titude towarcdosl lecatcitvipeor no bleamrser adicdailffleyr einntd,e epdr,e ­ ciseolpyp osiintt eh et wofi elds. Ina ntitrtuhsept a,r adifgomrS hermaAnc tS ecti1o6jn u rispru­ dencmei ghbte t ermetdh e" CartelDiisltesm'm aI.ti" sb ettfeorar l l widgmeatn ufacturers icfeo alclrhea citspiervsie claeyns dr educoeust ­ putb,u ti ti sb ettfeorer a cmha nufactiunrdeirv idtuoca ulptlr yi caensd increoaustep wuhti lteh eo thecrhsa rag hei ghperri cTeh.e e ffecotf theC artelDiisltesm'mi ast hat, aebffseecntctio voer dinaetaicohn ,p ro­ duceirsl ikelcyu ittt posr icaensde xpando uittpsuu ntt iilnt, h eoarty leastth,ec ompetilteivvieeslr each7e d. Thep aradifgomrm ucho fc orporlaatwie st he" ShareholDdi·e·r s' lemm"a8. I ti sb ettfeorrd isperssheadr eholcdoelrlse ctiifev aeclhy contribtuomt oensi torainnddg i sciplmianniangge brust,b ecauaslel wilble neafist l onga ss omeodnoee si,it s b ettfeorer a cnho tt oc ontrib­ uteW.h ens hareholadrideni gssp ertsheicdso, l lecatcitvipeor no blem leadtsor ational baysp haatrheyh olders. EconomAincal ysoifPs r opeRritgyh 5t2-s5 5( 9189()t he vfeirrsmtu hsme a rkiesat f alse dihcootmy). 5.S eeg eneraSlylmyop suim:C ontractuFarle edoimnC orporaLatwe, 89C olum. L.R ev.1 9351-774( 9189()d issciunspgr operro loef m andatorreyq rueimetnsi n corporlaatwe) . 6.S hemranA ct§ I,1 5U. .SC§. (11 898)S.ec tioI np rohib"i[tes) vceornyat ctr, combinatiinot nh ef ormo ft rutos ro htewriseo,rc onsiprcay,i nr esitnroatf t radoer commecrea montgh see verSatalt eosr,w itfhor eignna tio.n.s" . . 7.F ord iscsuisonosf c ompetiatsia o nP risonDeirl'esm mag ame,s eeE dna UlmlannM-aragliTth,eE mergencNeo romf4s 4 -451,72 -2(991 77;J )ohnS .W ilye,J r., ReciprAolctarsulmi a sa F elo:nA yntiustatrn dt hPer isonDeirl'esm m8a6M, i chL. Rev. 10961,9 -124(81 898P)e;t eHru beCro,m petitCioonng,l ormatee,sa ndt heEv olutoifo n Coopaeitron9,3Y alLe . J1.41 71 89(4( )b oorke vioefwR obeArxte lrTohde,E volution ofC ooperat(1i o94n8)) . 8.F ord isscsuioonfts h eS hraeohledrsD'i lemmsae,eR obetCr .C lrakC,o proarte Law§ .59-9.5.4, at3 89--(4108906; )E dwarBd. R ockT,h eL ogiacn d( Uncertain) Signciafincoef I nisutttniaolS harehoelrdA ctiisvm7,9 G eo.L .J -i45,4 5-363(9 191. ) TheS hareholdDeierlsm'm ap rmiariclhva ractelrairzgpeeubs,il clhye lcdo proartioinns whic0h1 vnerishssie ppa raftreodmc otnroCLl osceo rpoornasti,inw hicshhr aehloedrs area lsmoa nagersp,o sdei tsinpcrotb lmes. 500 COLU!vfBILAA T t'R EVIEW [V.o9 l2:74 9 TheC arltiesDtisl'e mamnatd h Seha roelhrd'seD liemmaars ert uc­ turasliilmlyaI rn. t bhco saeiswt,o udbl eb etftroea rlw lo udl-bceat re­ lisotrss ah erhoelrdisaf l clo oapteerbdu,it n t haebs enocfee f fective codoirnatiito bneti,st ferore acthod eefctI.f paarlitle fslo lotwh is startetghype,al yearrsce o llveeclwtyoi rosffe tihafal ncl oo preat.e9d Despei tthdee esprt ucatlsum irilartihtpeir eesv,a lielgiranelg­ spontsote hse sieos neprtr-ypdeim lmeahsav eb eeenx acotplpyo s1i0t e. Ina ntuistttrh,le a twa ktehssed i eo ft hjeia lferrsur,ta tcionmgm ucnai­ tiaonncd o ordinatitohpner oiansme.orI nsnlg a erm geausret,hce e n­ trpaulpr osoefS ect1io oftn h Sehe rmaAnci tts o p erveten csapfoerm thCea rteDliilsetmsfm'oai r,it s t hee mdmiatl haptr oduacnedps r e­ srevecso mpieotnTi.ht u,cs ouerntosfr cape e srep roihbiiotonn p rice fixinagm oncgo mpteotr1is1i,tn erp"rgaerte etm"eb nrdola1y2,a nd srcuntiizaen-r detsriecxtc haonfig neosfr mat1ib3oa ns,ip noignp tr icing syesmts1,4p r enaonnucemeonfpt r iicneec arseasn,dd etaiplirecde i 5 boo1k6as l,il no rdteofru r strcaotoer tdiiaonnnaed n ofrcemoefcn otl ­ lectdievcei .si1o7n s 9.C ollecatctiivopenr olbemfisg urper oimnenitnlo yt hearre aosf t hlewa asw ell. Seee,g. .T,h omaHs. JackTshoeLn o,g iacn dL imitosf B anrkuptLcayw 7 -19( 1986) (abnkurptyc);B ruce AcAk.e armn,Be yonCda orlenPer douct9s8,H avr.L . Re7v!.3 , 724-13 1(98 5)( cnostuittionlaalw )H;a orldD emstezT,o warad T heoroyf P roperty Rihgts5,7A m. EcRoenv.3. 4 73,5 4-5(9aP per&s Proc1.96 7)( porperty). I0 .F ora descriionpo tft he" PrisonDeilresm'm, a"s eei nrfat exatc ocmpayning not7e8 . 11S.e ee,. .g,U nietdS tatesS ocvo.n yc-uVuamO ilC o.3,10 U.S1.5 02,2 2-24 (9140);U nitSeatdt ev.s T retnonP ottreie2s7,3U .S.3 923,9 64-02( i927). 12S.e ee,. gA.m,e ricTaonb cacov .U niteSd atte3s2,8 U .S.7 81,80 91-0(1 946): InterstCaictruei vt.U nietdS tat3e0s6U, .S2.0 82,25 -27( 1399). 13.S ee,e .gU.n,ti edS tatve.sU niteSdat etsG ypsum4,3 8U .S4.2 24.2 93-0. 44-0424,5 6-5(91 798)U;n tiedS tatve. Cso mainCeorr .p3. 9 3U .S3.3 ,33 35( 9159); SugarI nsItn.cv ..U nietdS tat2e9s7U, . S5.5 35,9 9( 9136)M;ap lFel oorinMgfr s.; \ss'n v.U nitSetda t2e6s8U, . S5.63 ,5 82( 1295)A:m ericCaonul mn& LumbeCro .v. Untied Satte2s5,7U .S.3 7,7382( 9121)E;at sernS tatReest aLiulm beDre alresA·s s'v_n U nited Satte2s3,4U .S6.0 06,0 3( 149).1 14S.e eF TCv .C emenItns t3.3,3U .S6.8 37,0 0-0(314 98)I;nr eP lywoor\dn ttirlu s Liti6g5.5F, . 26d2 76,31 -32( 5tChi r1.89 1)c,er gtr.a ntseudbn om.' vvVeerhaeuCsoe.r v. LymaLna mbC o.4,5 6U .S9.71 (1982)d,si miss(eatdfe sret tleme4n62tU )..S 1.12 5 (9183). 15.S eeU nietdS attevs.G enerEalle Cco.,. 1 977-2Tr adeC as.( CCH)1 !6�! .659, 61,660( E.DP.a .1 977). 16.S eei d. 17A.n triutstlo'nssg at ndianngdd eespu psicioofan g reeenmtasm oncg ompeitoirs hasb eerne eflcteidnr innggij udiciparols e: Anyc omibnaotnwi hictha meprwsi tphr eis ctrtuucriesse ngageda nu inlna wful activEivteyn. thotuhgemh e mberso ft hep rice-fixginrgo uwpe rei nn o posiotni toc ontrtohlem arket,t ot hee xtentth atth ye raislel'od.;,cc dr,o r stalbieizdp rictehse wyo uldb ed icrctiltnve frering twhifetr he peL w ofm arket force.Ts heA cptl acaelssl u chs chembecs\ ·otnhdep alaen dp rotectthsa vti t�d parotfo ure conornva ganisatn vd egreoef i nterference. UnietdS atte\s'_ S ocom\-'a cuumO ilCo .,3 I 0 L .S1.50 ,2 21 (�1l --!0):� tccoLr ld l!lcd Steastv .T opco. -\ssoc., 4055� )L6G.. S I. 0 ( (1"\9.n7-2t)i ttl ra,u,·sisn g eneraaln.d the 1929] ANTITRUSTL ENS 501 By contrmauscth,o fc orporaltaewc anb er eada sp rovidimnegc h­ anismst o faciliteastcea pfer omt hee quivaleSnhta reholdeDris­' lemma.w Boardso f directoprrso,x yr egulatioantst,o rneyfse'e provisioannsdd, e rivatsiuvietc sa na lble v ieweads a ttempttoss pread thec ostosf m onitorianngd d isciplimnainnagg erasm ongs hareholders pror atat,h ereboyv ercomitnhge icro llectaicvtei odni lemmaI.n c orpo­ ratlea w,th el awt aketsh es ideo ft hep risonemrosv,i ngq uickflryo m thei dentificaotfia o cno llectaicvtei odni lemmtao s trategies facilitating escape.19 At theu ncertabionr derlibneet weenfi rmsa nd marketsw,h ere shareholdaerreas l scoo mpetitotrhse,s dei vergeanptp roachceosl lide. Someo ft hem ostd ifficulctu rrencto rporaltaew i ssueesm ergea tt his problemabtoiucn daryS.h oulbdi dderisna tendeorff era uctiboenp er­ mittetdo a dopatr rangemetnhtaset l iminactoem petitaimoonn gt hem­ selveisn o rdert or educet hep ricpea idt o targesth areholders?20 Shoultda rgesth areholdbeer pse rmittteode iiminactoem petititoon tendetrh eisrh areisn o rdert o increaset etnhdeeiorrffe r prem�um? Shoulndo n-equisttya keholdbeerp se rmittteodf ormc oalitiaognasi nst shareholderSsh?o2u1l sdt atbees p ermittteodo pto uto ft hec ompeti­ tivnea tionaanld i nternatimoanrakle fto rc orporactoen trolE?a cho f thesies sureesv olves artohuetn edn siboent weecno operatainodnc om­ petition, between ainndtm raar-kfierrtem l ations. Corporaltaew w,i thi tesm phasiosn fiduciadruyt ya ndi tass sump­ tiont hatc ooperatiiosng ood,p rovideasn inadequactoen ceptual framewofrokr a nalysbiesc ausaes,a ntitrtuesatc hesso,m etimceoso per­ atioinsb ad.N akedp ricfiex inagm ongc ompetithoarssf ewd efenders. Buta corporaltaewj urisprudetnhcafeto cusoens fiduciadruyt yc annot askt heq uestiwohne thearc tiotnhsa atr ei nt hei ntereosfts sh arehold­ erss houlbde prohibitIetdi .s n ots urprisitnhge,n t,h ata so nea p- ShermaAnc ti np arctuilaarr.e tMhaeg naC artoaf f eree nterspe.r iThey are as importt taotn hep reservoafte icoonnm oic freedoma nd ofuerree nterpsryitsseema s the BoifRl ilhg tiss top rtohtee cotfio ounrf u ndametanple rnsaofler edmos.".) 18.S eeC larks,u prnao t8e, § 9 .5.a4t,3 94-400. 19.F ore xamploefs tchoepr oraltaew m ove form ideinvftinag c oelcltiavcet ion prolbemt of acilitea3ctaipnsege.e L uciAa.nB ebchuTko,w arUdn ditosnedC hoice and EquaTlr eatmeinntC orporTaatkeeov er,9s 8H avr.L Rev.1 6931.6 961,7 52-5(41 985): JohCn. C offeeJ,rU.n,s taCbolaleti io:nC sorpaotrGeo vernnaceas a M ulti-PGlaamvee,r 78G eoL.J .1 4951,5 42-4(41 990D)a;l Ae. O esteer,Tl he Negotiai\t!oidoeonlf T ender OfferD eefnseasn dt heD elawaSruep remCeo ur7'2t ,C ornellL Rev1.\ 7,1 24-31 (1 986)D;a leA . Oe>terTlaer,g eMta naegrsa s NegotiaAtgienngt sfo r Target Shraeohldresi nT endeOri lersA: R eply tPoa sstith1eyTi heiss7,1C orenlLl Re1_5 3, 78-82 (19l8h5ee)ri ntaefOre sterlTea.r geMta naegr]s. 20.I d isctuhsiqssu etsio11n1d etaiinE ld warBd.R okc.A nittursatn dt h1'-lea rkcfotr CoproratCeo tnro7l7,C aLL Re\.1 365( !989). 21.A "staokledherhe"r ree fetrosa lpla rticiipna nttcshor ep oraetnet erep.r is icnluidnsgh aerhloderesm,pl O\.eb oensdholdecrus.� tomcsrusp.p lianedrs su rurnoding commmuues.S ee,e ..g.1 5P a.C osn.S tat..1,. n n.§ 5i5l()a( )l� ( ) 91()d irectnour1 s cosnidneorn sharlechlicomerr ests)_ 502 COLUi'vAi LABWI REIVEW [oVl9.2: 497 porachtehfiser /mmarbkoeutn rdywa hesraher eheoralsrd neo jtsu cto ­ owenr,sb uatl scoo mpertsci,ot roaptolera 'wst rdaiitonfaarlm eowrk shouplrdo ivneea qduate. Byc onatsratn,tt rituh salso nbge efnor cetdos aercfhoa rna ppro­ priabtael abnetcwee ecno mpetaintdci ooonap teiraonni ,s stuhea t arimsoessst ah rpaltty h beor dleirbneet wfieremnas n mda kretIsa .r ­ guien t hAirst itchlaet a ntthuiestp tre rspepcrtodivevise e asnnsit eal analoyfcs oirsp olraaiwts es luyeisan ttg h feri mm/arkbeotu nrd,yta hta thaen rtusiptte rspeicbst eitvatebe ltreo g arppwliett hha em buiiygot f thdiisis ntctainodn ,at nhttauritsp tor vdieasu suelcf oncepfartmuea­l worfkort hinakbiontught ie tn erpolfca oyoe pratainocdno mpetiint ion thceo proatre cloanwxtt .eI nP arItII d ,e rsbicet haen ttrituj sruipsur­ denocfet hbeor derbleiwtneeef nri ms maanrdtk seI.n PIaIIIra, tp ply thainstt urista naslitysof uori mporctoanntte fixrtststh:,pe ar aidmg coraptolera cwa soefc olleaccttitivooce no r notalg enccoys stceso;n, d colleaccttiibvoyesn h arerhsot ole dleimicnoamttpeie ttioot ne nder thesiahrr eisna t endoefferrt ;h isratdk,e hoclodatelirio annsdf;n,i a lly, sattee mapttttsoo potu otft hceo mpetmiatrikfveroect o ntrol. Thea ntturisatn yaslciass ptesnr eattliinggoh ntt h siesot fi ssues. Frotmh aent iutsprte rspetchtpeiar vaed,i gcmoartpioclr aaswrtt aet ye g offc ailaitticnoglc lteicvoen torfao geln ccyo sitjssu siteidf aubesei cn cotnorllaigenngcc yo sstahsr,e dheordlson octo mpweitteeh a chh eort. Moreeorcv,o lleaccttiiivosnen e cersyts oea nofrcteh ceo tnrabce­ts tween emraasnn asdgh raeohlrd.se Byc onatsrcto,l leactttievmtepo ct oso rdisnahearhteor l'sdr ee­ sposnet ot endoeffrei rno rdteoir n carsteee ndoefrfpe errm uimsa re a fnudamendtffiaelerlnytu :n likpea artdmhi egc asseah,r eheor,lsa db­ sencto liectiovre u rlaeacgyttp oirroeocntt icoonm,p weitetr shep etcot slelitnhges iahrr esT.h2ei2 nu ttiiboenh itnhdsi esc tiitsoh nia ittus s e­ futlo tahbionaukrgt e emeanmtosnc go mpesthieanhrgo rlstd oee limi­ ntaec omepittitoont endaesra naglooutso aegmreenatmso ng competwiindggm eatnf aucteusrtr oe limicnoamtpee tiints ieolnl ing widtgseI.nt hetsemers a,gr eeemntasm onsgah rheodlerasr aerg ee- 22.R eugalotry proivsiodniss place osfto mheec ompetitaimoonn gt arget sharehorlstd eot endeFro.re xamplteh,e p ro raantdab est pprroivciieso nosf t he WiiliaAmc,st 1 5U ..SC.§ 7 8nd()(6a)n d7 8n)((d7,)r equitrheat te ndeedrs hares be accteeppdr o raantdta ha te alrietre ndersihanrge holrdeecresti hvseea mper icaes l ater tendersihanregh odlesr.T hespero viisonlsi mtihtem eanbsy w hicah b iddcearnp lay targsehtae rhoelrdos ffa gainesatc oht her. Buts ucphro visidoonn so ten tireellyi min(aatnaeds ,I a rgubee loswh,uo ldn obte read ianst endtione gl imtien,)a compettiiotno t endenro,rd o thve palcet raget shareheorisln dt hbea raginipnogs itoifao sno loew nerD.ie rccto mpetittoti eonnd er canb er eintrodulcwem de anosfa p artoirat lw ot ietre ndoefrf el\ri.o rerm,dei fficulties f�1cbevds hareholdienrc so ordinaac toilenlcgit 1r-ees pnose toa oneo rt 1o-1ti ert ender offemra v,a sa pracitcal mattearp,po rximate thee fefctosfd irect competitioFno.r ; 1 disucssioof,n , .}h1\es et regulaptroovisriovn s sholudn otb e intperreteads o usting the antitr]uas,t, fr·osm thete ndero ffecro ntexste.e t exatcc ompatwinign frnao tes1 71-17!). 1992] ANTITURST LENS 503 mentsa mongs elletrhsa wti lhla vet het ypicaanld p redictanbelgea tive impacotn theb uyertsh,e b idders. Fort hossek eptiocfat lh iisn tuititohneq, u estiiosnh owt hec ollec­ tiveel iminatoifoc no mpetititootn e ndebry s hareholddeirffse rfsr om thec ollecteilviem inatoifoc no mpetitiinow ni dgetbsyw idgemta nufac­ turerTsh?e n ormaclo rporaltaewj ustificatiojno-itnbhtaa rtgainiinsg int hei ntereosftt sa rgestha reholderass-u insp ersuasaisvt eh ea nalo­ gousa rgumentth aptr icfiex inigs i nt hei ntereosftc so mpetinmga nu­ facturerTsw.o2 3p rincipsaelc ondajruys tificatliioknesw ifsaei lj:o int bargainianmgo ng shareholcdaenrnso tb e justifieeidt heorn the groundtsh asth areholdaerres co-ownoefar cso mmonlyh elda sseotr on theg rounds that shareuhnollidkweeir dsg,e mta nufacturearrse, subjetcotb einfgr ozeonu tb ya majoristhya reholdWehri.l et heraer e substantailallo catiaorngaulm entfso rj oint bargatihneia nngt,i trust perspectmiavkee sc leatrh ate,v eni fs ucha llocaticolnaailm asr e demonstrated, propoofns euncthas g reemenmtuss ta lsos howt hat joinbta rgainaignrge emenatrser easonably necteoas cshaireyav lel oca­ tionaelffi ciencayn,d i na dditiotnh,at th ep rocompetibteinveefi tosu t­ weigha nticompetietffievcet s-burdtehnasht a ven oty etb eenm et.I thena rguet haptl ausibploep uliasntd d octrinjauls tificatairoean lss o insufficient. An extensioofnt hiasn alysuinsd ermintehse s uggestitohna tth e laws hould facitlhieft oartmea tioofns takeholder coaIlnip tairotnisc.u ­ lara,b senatd ditionnoarlm atiavreg umenrtesg ardisntga keholdeenr­s' titlemenotnse, c annotc oncludteh ats takeholdceorl lectaicvtei on problemasr em arkefta ilurreast hetrh anm arket successes. Finaltlhye,a ntitrluesntps r ovetso b ep articuluasrelfyui lna nalyz­ ingt hev alidiotfsy t ataen titakeover legIinsc loanttiroanws.it t ht he standajrudd iciaanld s cholaralnya lysethse,a ntitrpuesrts pectsiuvge­ gesttsh atth ec entriasls upeo sedb ys tataen titakeover sitsoa nteuo tfe s antitrust fedetroaw lhiastm :e xteanntd, w ithw hatc onditiocnasn, 23T.h usw,h ens hraeholdceormsp etteh,e" hpyothceatsli hraeholdceornsrt'a ct" standaorftde,n i nvokiendl awa nde coonmicsan alyosefcs o rporlaatwem, u stb e expandteodi cnludael alff ectpeadr tiients h eh ypothenteigcoatloi na.tT ihea ntitrust approatchhu isd entiafi ceosn cenronta ddresds ient hec urrelnitt eratHuarded.o ck, Maceayn dM cChesneyf,o erx amplaer,g uteh abte cautsheer esainsctreu lteh awti ll maximitzaer gsehta roedlheri nteestrsw ilplr boablyv arfyr om compacnoym ptaon y, targsehatr ehloderssh oludb ea blteo p recorntmopi astis vi(tfyoe rx amplbeya, c harter provismiaonnd ating mtaanraggeetm epnasts iiytv)b,u ts holudn otbe requtiodr oes do . SeeD aviDd. H addocekta .lP,r opeRrityg hitnAs s stesa ndR essitantcoTe endeOrff ers, 73V a.L .R ev7.0 17,2 6-3(718 97).Bu to nec annoatn swetrh qeu estiwohne thtearr get shraeholdsehrolsud b er equitroea dd opstu cahr ulseo ellbyy r eefrentcoet hei nterests oft argsehtra eholdTerhsaw.to ulbde e quiavletnota rgnugit hawti dgmeatn ufacturers sholud be able (althroeuqguhi rnteoodt p) r eocmmitt o competitbieocna use competoinmt iightb ei nt heiinrt ereIstit sas s .e paraantdea dditioqnueastli ownh ether sucahr uliesl ikewpirsees umptoipvtemilalyf ort hwei dget buyemrasv a,ws ah roe stu l of the prauyhl ieg,h perri coersw ,h etehrs ucah r ulies e fficie-nenchynacinogn cea ll interaersett ask einn taoc count. 504 COLUMBILA4 W REVIEW fVol9.2 :497 stateosp to uto fc ompetitimvaer ketsT?h e centrqaule stiotno,d ate entirely iginsow rheedt,h er state attote esmcpatpfser oma competitive marketf orc ontroalr ep rohibitoerd l imitebdy theS hermanA cta nd then ationcaolm mitmentto c ompetitieomnb odieidn i t.I a rgueb elow thatth is approparcohv ideas m ores atisfacatnoarlyy stihsa ne itheorf thep revailainnagl ytfirca meworkdso,r manCto mmerceC lausaen alysis orp reemptiobny theW illiamAsc t.I nt ermso fa ntitrfuesdte ralism, stataen titakeosvteart utaersep roblematnioctf ort hec onventiorneaal­ sont hatth eyi nterfweirteh a competitmiavrek efto rc ontro(la lthough theym ay alsob e problematfiocrt hatr easonb)u,t p rimarily because theyd o sob ya llowipnrgi vatien,t eresptaerdt ieasc,t inwgi thouatc tive statseu pervisitoodn e,t erminweh etheorr n ott herseh oulbde c ompe­ titifoonr c ontrol. Conceptualltyh,i Asr ticrleefl ectsso methinogf a mirroirm ageo f theC hicagSoc hoola'psp roactho a ntitruAs t.f undamental insight of theC hicagSoc hooli st hatm any (initiuanlflaym iliianrt)e r-fiarrm­ rangemenctasn b ev ieweads t hee quivaleonfet ffi ciency-enhanicni­ng tra-firamr rangementsT.h2u4s ,f ore xample, verrteisctarla ihnatvse beend efendeda sa meanso fc ontrollfirnege ridai pnrgo,b lesmo lved ino thecro ntexbtysb ringiannga ctivwiittyh itnh efi rmt hrougvhe rtical integratioTnh.i2sA5 r ticmlaek est heo ppositmeo ve,e xploritnhge e x­ tentt ow hichn ominalilnyt ra-fiarrmr angemenctasnb es eena sa nalo­ goust oc ompetition-destirnotyei1n-gfi arrmr angements.26 My argumenhte rei sa n argumenfto ra fundamentadlilffye rent wayo ft hinkianbgo utc orporaltaew .F ort hosweh o arec onvinceidt, mav follow Stehcatti olno ft heS hermanA cts houlbde intemretteod ' 1 regulatseh areholdbearr gainianggr eementasn d theirf unctional equivalepnoti,s opni llBsu.t t haits a na dditiosntaelp w,e llb eyondt he scopeo ft his ArtiFcolrep .r esenptu rposeIs ,s eekt os howt hatt he antitrpuesrts pectpirvoev idaensi mportavnatn tagpeo inotn corporate lawp roblemasr isiantgt hef irm/markbeotu ndaryT.h e precise legal :ruleism plied byp etrhspaetc tciavnec omel ater. 24.S eee.. .g. R obertH . BarkT,h eA ntitrPuasrta do(x1 978R)i;c haAr.dP osner, AntitrLuaswt:A nE conomPiecr spec(t1i9v7e6F )r;a nHk. E asterbrMoaoxki,m uPmr ice Fixin4g8.U .C hi.L .R ev8.8 6, 908(-11908 1F)r;a nHk. E asterbrTohoekL .i miotsf Antitr6u3sT te,x aLs Revl., l -2( 1984R)i;c haAr.dP osneArn,t itrusta nPdot lhiec y SupremCeo urtA:n Analysoifts h eR estricDtiesdt ribuHtoiroinz,o nMtearlg er and PotentCioamlp etitDieocni si7o5nC so,lu rn.L .R ev. 2(18 927 5R)i;c haAr.dP osnerT,h e Ruloef R eason andt heE conomAipcp roacRhe:fl ectioonnt sh eS ylvaDneicai si4o5n . U.C hiL.. Rev.l ,1 0-1(31 977s)e;ea lsVov' illiasmuspornna,o t3e, a t2 24-4(7m aking thes amep oint frrhoepm e rspecotfitr vanes actoin coste conomics). 25.S ee.e .g.B,o rk.s upran ote2 4.a t2 97-9s8e;e a lsoot hesro urcceist esdu pra not2e4 . 26.T hisa pproaccho mplemenPtrso fesHsoovre nkamprn'asn clousrhi ch and revealhiinstgo riicnavle stigatiinotntosh ei ntersecotvieornla.an pd,r e cirpocailn fluence ofa ntitrausntdc orvorlaatwee. s pecidauirlivan ngt itrfuosrtm'ast yievaer Sse.e H erbert HovenbmpE.n terprise Aamnedr icLaanw .1 836-!9(3179 9!). 1992] ANT!TURST L ENS 505 IIS.E CTION 1,TH EP ROBLEMO FT HEO NEA ND THMEA NY,A NDT HE FIR/MMARKTE BORDRELINE Secti1oo nf t heS hremanA ctp roscri"b[e]evesr yc ontraccto,m bi­ nati.on. o.rc onsipra,ci ynr estraoiftn rta doerc ommerc.e. ".2.7A s suchi,ta pplioensl tyo c onecrteadci to.n Becausmeo re thanp ero­ne soni sn earlayl waiynsv olviena dn yb usindeescsi siaor ne,cr unirgq ues­ tiohna sb eenw hetrh epaa rticaurlraagrne mento ra ctiporen sentthse requies ciotnceorfat c titooni mplaitcet he comtpievcteoi ncrensu nder­ lyinSge cti1on. Int wop aradigmaatnitrciu sttc ontex,tt sheq uetsiownh ethetrh e necesrsyca onceorfat c tiiospn r esehnatss eemedo bivou.s Int hec las­ sipcr icfexi incga rt,ec loncerotf a ctioofnt her equisistoreti sc lear: Thec artiesnl o htinmgo re thaann a greementa mongc ompetitosrt of ix pricaensd r estroiucttpt u.L ikweisei,nt hec asoef o rdinya srinlgef rim acitons,u cha sw hena frim decidteosi ncreapsreie cs,t her esuilst equayl clleaArl.t hohu ign almeovsetrc ya se rtewh ielble seo "magree­ mentb"e wteena tl easttw op eolp-esayb,e tweetnh eE xecutViivcee Presidfeorn 0tD eartioannsd t heE xecutViivcePe r eisdenftor Market- � in-gint heo rdniayr casteh atr eeamgenth asn otb eent houhgtt ob e thes ortth attr iggSeercst i1o2.n8 I ns uhc case"s[t,] he officoefar s sinlgef rim aren ots eparateec onomaicct so prursuisnegpr aateec o­ nomiicn teesrtsso,a geremetnsa mongt hme don ots uddenlbyri ngt o­ getheerc onomipcow er thatw as pvrieouspluyr suidnigv ergent goals".29S uchd eicsio,nw shilpee rhap"sp' ricfexi ingi'n tlhtiee ral sens"e3,0a re treaastu enldi aetraalc tiaonnd t heroerfen ots ujbectt o Secti1o.n Theq uestioonfc ocnertaecdt iboenc omepsr oblemaitnip cr eceiyls thosien asntcewsh eno new ouledx pecittt o bweh:e nt hec haelnlged ageremenotc curisna contetxhta ftal lbse wteent hep aardimgatiicn ­ dependefinrtm a ndt hep aradigmmaatrikce tT.h ec ourhtasv ed ealt witthh iiss suiena widvea iretoyfc aess.I ne acohf t hesceo nte,xt thse acotrsa reb oth partiicnit phae"n fitrsm " waesla ls c ompeittorisn t he "markte."A s I wilslh ow below, these caasmebpsir gouvoiutdshe e oultineofsa moreg eneraaln tiutsrtan alysis. 27. 15U .S..C§ I (9188). 28.S eeC opperweiCdo rpv.. I ndepndeenceT ubeC orp,.4 67U ..S7 527,6 9( !894). InC oppeno,te hleCd ourotv rerulde the" itnraenterpcroinpssier acdyo"c trei,wn hichha d heltdh aatn a greemeanmto ngs epaarteliyn corpaotresd ubsiidarioersb etweean parent anda sepraateilnyc orporastuebd� airdyis atisfiethde concreto fa ctiorne quiremfeonrt SectiIon.S eea lsKon utsovn.D ailRye vieIwn c,5. 48F .2d7 958,0 1-03( 9tChi r1. 976) (qoutinPgh illAirpee daA,n ttirusAtn alys3i1s9( 2de d.1 974))( "Sloo nga sa business enterpriisrs eeg ardaesd ainnd iviadleu conomiucn iti,t mustp erbmei tttedoa ct".), cetr.d enie,d4 33U ..S9 10( 9177)N;e lsoRna diaon dS upplCvo .v .M otorloaI,n c,.� 00 F.29d 11,9 14( 5thC ir.1 952)( "cAo ropraticoann nocto nspiwriet iht se.l.f. ". )c.cr t. denie,d3 45U .S9.2 5( 1593.) 29.C oppmur4l6d7,C . Sa.t 7 ()q C:\0.B roadcaMsuts icI.n .c\ .C BS,4 -tl U.S1., 8 1(97 9.)