## Facts

- Michael Finnegan, a shareholder of Federated Department Stores, Inc. (the takeover target), filed a putative class action on behalf of Federated shareholders.
- In March 1988, R.H. Macy & Co., Inc. and Campeau Corp. publicly competed in a bidding contest for control of Federated, repeatedly increasing their bids.
- In April 1988, Macy’s agreed to withdraw its outstanding bid of $75.51 per share, allowing Campeau to acquire control at $73.50 per share.
- Finnegan alleged the withdrawal reduced the price paid to Federated shareholders and diminished shareholder value by approximately $172 million.
- As consideration for withdrawing, Macy’s allegedly received reimbursement of about $60 million in bidding-related expenses and rights to purchase two Federated divisions after Campeau obtained control.
- Finnegan characterized the arrangement as an agreement between competing bidders to suppress competition for Federated shares.
- The district court dismissed the complaint under Federal Rule of Civil Procedure 12(b)(6), concluding federal securities regulation of tender offers displaced the asserted antitrust theory.

## Issues

1. Whether a target-company shareholder may state a Sherman Act § 1 claim based on an agreement between rival tender-offer bidders for one bidder to withdraw in exchange for compensation and post-acquisition benefits.
2. Whether applying antitrust law to such a bidder agreement would conflict with the federal securities regulatory framework governing tender offers, including disclosure-based regulation under the Williams Act.

## Decision

- The Second Circuit affirmed dismissal for failure to state a claim.
- The court held the antitrust laws did not provide a cause of action to target shareholders on these allegations.
- The court reasoned that tender-offer bidder coordination contemplated and regulated by federal securities law (through required disclosure) could not be recast as an antitrust conspiracy without disrupting Congress’s chosen scheme.
- The court indicated any shareholder remedy, if available, would lie under corporate or securities law rather than antitrust.

## Legal Principles

- Where Congress has established a detailed securities-law framework for tender offers that permits certain bidder arrangements subject to disclosure, courts will not apply antitrust doctrine in a way that would negate or obstruct that framework.
- The Williams Act’s emphasis in tender offers is on disclosure to investors, not on guaranteeing that shareholders receive the maximum possible takeover price through antitrust enforcement.
- Target shareholders alleging economic harm from bidder agreements in a takeover context generally must pursue remedies, if any, through securities-law disclosure claims or corporate-law theories, not Sherman Act § 1 damages.

## Conclusion

The Second Circuit held that Federated shareholders could not pursue a Sherman Act § 1 claim against rival tender-offer bidders based on an agreement ending a bidding contest, because the tender-offer disclosure regime governs such arrangements and antitrust liability would conflict with that regulatory structure.


Finnegan v. Campeau Corp., 915 F.2d 824 (2d Cir. 1990)