Antitrust Suits by Targets of Tender Offers

Abstract

One of the most effective defensive strategies is to invoke the aid of courts. The target argues that the acquisition proposed by the bidder would violate the antitrust laws.If the court enjoins the acquisition, even the most determined bidder must surrender. The managers of Grumman and Marathon defeated strong bids by LTV and Mobil in just this way.' And the strategy appears immune from complaints by shareholders. What could be objectionable about action by a target's management that protects shareholders from the consequences of an antitrust violation while simultaneously vindicating the public's interest in vigorous antitrust enforcement? We explore in this Article the basis and consequences of the target's suit under the antitrust laws.2 We approach the question from the perspective of federal antitrust law and state corporation law. We argue in Part I that the target is a singularly poor private attorney general because it is a beneficiary, not a victim, of any violation. An antitrust suit thus must be understood as an attempt by managers to defend their own positions, not as an attempt to vin-