The opinion of the court was delivered by: TROUTMAN
This matter comes before the Court on the motion of Boyertown Burial Casket Company for a preliminary injunction to restrain a tender offer to Boyertown shareholders made by the defendant, Amedco, Inc., on December 22, 1975. Boyertown alleges that defendant's tender offer, by reason of material misstatements and omissions, violates the Williams Act, 15 U.S.C. §§ 78m(d-e) and 78n(d-f), and that the proposed acquisition violates § 7 of the Clayton Act, 15 U.S.C. § 18. During the hearing on the preliminary injunction, plaintiff moved for a temporary restraining order, alleging that a letter dated January 6, 1976, sent by defendant to plaintiff's shareholders, contained additional material misstatements and likewise omitted relevant information. After three days of hearing the Court entered an order temporarily restraining defendant from undertaking any further acts to promote or effectuate the offer, while reserving to defendant the right to extend the expiration date of the offer pending final adjudication.
Plaintiff's complaint alleges two separate counts by which it seeks to restrain the tender offer. In Count I, Boyertown alleges that defendant's "offer to purchase outstanding shares of common stock" of plaintiff may result, if successful, in a violation of § 7 of the Clayton Act, 15 U.S.C. § 18, since the effect of Amedco's control of plaintiff would be to substantially lessen competition, or tend to create a monopoly in the burial casket industry in which there is a nationwide trend toward economic concentration. Plaintiff also avers the lack of an adequate remedy at law and irreparable injury due, inter alia, to the adverse effect of the tender offer on the morale and performance of Boyertown's management and employees, the disruption of normal business operations, the drain on management's time in resisting the illegal offer, the impairment of Boyertown's competitive ability, and finally, the irreversible damage incident to the ultimate disclosure of trade secrets to defendant's representatives ultimately placed on the plaintiff's Board of Directors.
In Count II, plaintiff alleges that the tender offer violates §§ 10(b) and 14(e) of the Securities Act of 1934 in that it is false and misleading, makes untrue statements of material fact and omits to state material facts necessary in order to make the statements made, in context, not misleading. Specifically, plaintiff alleges that the tender offer failed to accurately describe the proceedings in previous antitrust litigation brought under § 7 of the Clayton Act, Boyertown Burial Casket Company v. Walco National Corp., 344 F. Supp. 1357 (E.D.Pa. 1972) misstates the possibility of antitrust litigation, omits to state the merger rights of dissenting shareholders to the "fair value of their shares", fails to state the "quick value" of plaintiff's shares, and fails to describe accurately the controlling "persons" of Amedco. Thus, in this motion for preliminary injunctive relief, we are faced with a tender offer challenged under the applicable provisions of the antitrust and securities laws.
The Clayton Act, § 7, 15 U.S.C. § 18, prohibits a corporation engaged in commerce from acquiring:
"* * * directly or indirectly, the whole or any part of the stock * * * of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or tend to create a monopoly." 15 U.S.C. § 18.
Prior to granting preliminary relief enjoining a threatened violation of § 7 of the Clayton Act, we are required in this Circuit to apply the following criteria as stated in Allis-Chalmers Mfg. Co. v. White Consolidated Industries, Inc., 414 F.2d 506, 510, 511 (3d Cir. 1969), cert. denied 396 U.S. 1009, 24 L. Ed. 2d 501, 90 S. Ct. 567 (1970).
"Recognizing that preliminary relief is a serious remedy, and because application for such relief, particularly in a complex case, is often based on a record less comprehensive than that which a full adjudication would yield, the courts have required that a plaintiff show a reasonable chance of ultimately prevailing on the merits. In an action by a private party, the plaintiff must also show that it will suffer irreparable injury unless relief is granted."
See also Boyertown Burial Casket Co. v. Walco National Corp., 344 F. Supp. 1357, 1359-1360 (E.D.Pa. 1972).
A plaintiff need not prove that an industry has become heavily concentrated in order to show an antitrust violation since § 7 is intended to check the trend toward concentration in its incipiency. United States v. Von's Grocery Co., 384 U.S. 270, 277, 16 L. Ed. 2d 555, 86 S. Ct. 1478 (1966). Accordingly, in a preliminary hearing, plaintiff need only show a reasonable probability of ultimately proving that the effect of a merger between two corporations engaged in any relevant line of commerce in any section of the country may be to substantially lessen competition or tend to create a monopoly. On the basis of the evidence adduced at the preliminary hearing, we conclude that plaintiff met this burden.
As to the relevant line of commerce, sufficient evidence was introduced to show that the relevant industry is the manufacture and sale of burial caskets. This industry includes firms which manufacture completed caskets for sale to funeral directors, companies which produce incomplete shells or casket parts, and jobbers or finishers who add hardware, interiors and finish to incomplete units and sell the completed caskets to funeral directors.
As to the relevant geographical market, the following standard was set in United States v. Philadelphia National Bank, 374 U.S. 321, 357, 10 L. Ed. 2d 915, 83 S. Ct. 1715 (1963):
"* * * The proper question to be asked in this case is not where the parties to the merger do business or even where they compete, but where, within the area of competitive overlap, the effect of the merger on competition will be direct and immediate. * * * This depends upon 'the geographical structure of supplier-customer relations'."
The nation as a whole, a regional area consisting of several states, or a more localized area may comprise the relevant geographical market for the purposes of § 7. Moreover, as stated in United States v. Pabst Brewing Co., 3 ...