Private Merger Challenges Under § 16 of the Clayton Act: Caution Post-JELD-WEN

Abstract

Private merger enforcement is a thorny corner of antitrust law. Private merger challenges pose considerable potential financial downside for industry because in many cases, the motivations of private plaintiffs in initiating a challenge do not align with the purposes of antitrust law. These actions are risky for plaintiffs as well because they are difficult to win. Plaintiff successes have been so uncommon that in a Fourth Circuit case decided in February of 2021, the court stated, “private suits seeking divestiture are rare and, to our knowledge, no court had ever ordered divestiture in a private suit before this case.” While claims brought under section 16 of the Clayton Act have been historically underdiscussed, the Fourth Circuit’s grant of divestiture to a private plaintiff in early 2021 affords us an opportunity to evaluate this oft overlooked corner of antitrust law. Should private plaintiffs be able to mold the shape of industries to such a degree?

In this article, I explore the implications of granting equitable remedies under section 16 to private litigants in merger challenges. I acknowledge that private merger enforcement is part of the overall antitrust enforcement schema designed by Congress, and that the importance of private plaintiffs in the overall system has been echoed by the Supreme Court. I then detail counterbalancing concerns unique to private merger enforcement under section 16 of the Clayton Act. Ultimately, I argue that despite the JELD-WEN ruling, courts should continue to review these suits with a critical eye. When evaluating private merger challenges, courts ought to consistently apply the antitrust injury doctrine, give preference to consumer plaintiffs over competitor plaintiffs, and be wary of unrecoverable waste resulting from divestiture in post-merger consummation challenges.

Keywords: JELD-WEN, antitrust, private merger challenges, private merger enforcement, Clayton Act Section 16