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A Private Right to Seek Divestiture Under Section 7 of the Clayton Act – From Theory to Reality

Section 7 of the Clayton Act (15 U.S.C. § 18) prohibits mergers and acquisitions where “the effect may be substantially to lessen competition, or tend to create a monopoly.” Although drafted in part to address potential restraints “in their incipiency” based on an analysis of likely future effects of a transaction, Section 7 applies with equal force to consummated transactions. 

Remedies for a violation of Section 7 can include both damages and injunctive relief, including divestiture for transactions that have already been completed. Although enforcement of Section 7 is not restricted to the antitrust enforcement agencies, divestiture, as a remedy for a Section 7 violation, had until now been largely reserved in practice for actions brought by the government. A recent decision from the Fourth Circuit Court of Appeals affirming the right to divestiture in a private antitrust action, perhaps the first of its kind, is a reminder that parties to a transaction that raises potential competitive concerns must give thought to potential enforcement actions from three sources: (1) the federal enforcement agencies, (2) the states, and (3) private parties. The fact that the transaction involved in this particular action had been consummated four years before private litigation was initiated, and with the knowledge and consent of the private plaintiff no less, is a further reminder that post-merger conduct can serve as the basis for an action under Section 7, and give rise to a claim for divestiture

©2021 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume XI, Number 56
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About this Author

John Steren, Epstein Becker Law Firm, Health Care Litigation Attorney
Member

E. John Steren is a Member of the Firm in the Health Care & Life Sciences and Litigation & Business Disputes practices, in the Washington, DC, office of Epstein Becker Green. Mr. Steren devotes a significant portion of his practice to helping health care organizations manage the antitrust risks of joint ventures and other business arrangements. He also focuses his practice on other complex commercial and civil litigation matters.

202-861-1825
Patricia M. Wagner, Epstein becker green, health care, life sciences
Member

PATRICIA M. WAGNER is a Member of the Firm in the Health Care and Life Sciences and Litigation practices, in the firm's Washington, DC, office. In 2014, Ms. Wagner was selected to the Washington DC Super Lawyers list in the area of Health Care.

Ms. Wagner's experience includes the following:

Advising clients on a variety of matters related to federal and state antitrust issues 

Representing clients in antitrust matters in front of the Federal Trade Commission and the United States Department of...

202-861-4182
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