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Nathaniel Asker, Joseph Larson, Nov 30, 2008
A recent case in the Eastern District of Pennsylvania, Charming Shoppes Inc. v. Crescendo Partners II, L.P., raises an interesting standing issue that raiders or activists in proxy contests could use to eliminate Clayton Act §8 (prohibits persons from being officers and directors of competing corporations) as a potential defense for target companies. Specifically, Charming Shoppes held that a company subject to a proxy contest lacked standing to enjoin an activist investor’s proposed alternate slate of directors from running for election because the company could not show antitrust injury arising from the alleged violation of Section 8 of the Clayton Act. In prior cases where target companies raised Section 8 issues with respect to a raider’s proposed slate, antitrust injury has been either assumed or simply not addressed. The issue of antitrust injury in Section 8 warrants deeper judicial review from both a technical legal as well as a policy perspective because there are strong arguments on both sides of the issue.
