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UNITED STATES v. GILLETTE CO.

May 5, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
THE GILLETTE COMPANY, et al., Defendants.



The opinion of the court was delivered by: ROYCE C. LAMBERTH

 This case comes before the court on plaintiff's motion for a preliminary injunction. Upon consideration of the representations of counsel, and for the reasons stated below, plaintiff's motion is denied.

 I. BACKGROUND.

 Plaintiff's interest in this acquisition is focused on the premium fountain pen *fn1" market in the United states. Based on 1991 sales, *fn2" Gillette (through its Waterman brand) controls approximately twenty-one percent of the U.S. premium fountain pen market; Parker has a nineteen percent share. *fn3" Plaintiff's concern is that the effect of the combination of Gillette and Parker "may be substantially to lessen competition" in the premium fountain pen market. See 15 U.S.C. § 18.

 Unable to reach an agreement with the defendants, plaintiff brought this suit on March 22, 1993, seeking a declaration that the proposed acquisition is in violation of Section 7; as well as a temporary restraining order, a preliminary injunction, and a permanent injunction barring any combination of the two defendants. Immediately thereafter, in an attempt to forestall Gillette's March 23, 1993, tender offer, plaintiff moved for a temporary restraining order. The motion was heard by Judge Sporkin, sitting as the motions judge. Judge Sporkin denied the motion, largely on Gillette's representation that it would not acquire any shares of Parker until May 6, 1993.

 This court granted the parties' motions for expedited discovery and a shortened briefing schedule in order to resolve this case before May 6, 1993, when Gillette's Offer Arrangements Agreement with Parker terminates. Thus, after hearing oral argument on plaintiff's motion for a preliminary injunction on May 4, 1993, the case is ready for decision. *fn4"

 II. DISCUSSION.

 A. Preliminary Injunction Standards.

 This case is before the court on plaintiff's motion for a preliminary injunction. Often in Clayton Act cases, the suit is brought by the Federal Trade Commission (FTC) pursuant to 15 U.S.C. § 53(b). In those cases, the standard for a preliminary injunction is the statutory "public interest" test: whether "upon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest." 15 U.S.C. § 53(b). See, e.g., FTC v. Owens-Illinois, Inc., 681 F. Supp. 27, 33 (D.D.C.), vacated as moot, 850 F.2d 694 (D.C.Cir. 1988).

 This case, however, is not brought pursuant to § 53(b) and therefore the court must apply this circuit's fundamental four-part preliminary injunction standard. That test requires that the court balance:

 
(1) the likelihood of the plaintiff's success on the merits;
 
(2) the threat of irreparable injury to the plaintiff in the absence of an injunction;
 
(3) the possibility of substantial harm to other interested parties from a grant of injunctive relief; and
 
(4) the interests of the public.

 See, e.g., Foundation on Economic Trends v. Heckler, 244 U.S. App. D.C. 122, 756 F.2d 143, 151-52 (D.C. Cir. 1985).

 B. Likelihood of Success.

 Before a preliminary injunction may be issued, plaintiff must establish that it has demonstrated a likelihood of success on the merits. In a Section 7 case, plaintiff effectively must meet two criteria: (1) it must demonstrate that a proposed combination will affect a "line of commerce," (the determination of which includes the demonstration of a relevant product market and a relevant geographic market); and (2) it must demonstrate that the combination "may be substantially to lessen competition." 15 U.S.C. § 18.

 1. Line of Commerce.

 The first step in any Section 7 case is to determine the relevant product market. United States v. E.I. duPont de Nemours & Co., 353 U.S. 586, 593, 1 L. Ed. 2d 1057, 77 S. Ct. 872 (1957). To this end, plaintiff alleges that the relevant "line of commerce" is premium fountain pens, which it defines as "high quality refillable fountain pens that have an established premium image among consumers." Complaint P 3. (A more practical definition, given plaintiff's evidence and arguments, is "refillable fountain pens with a SRP of between $ 50 and $ 400.") The relevant geographic market, plaintiff asserts, is the United States.

 Defendants object to both aspects of this definition. First, defendants asserts that a market for fountain pens may not be segregated out from what is a continuum of prices; in other words, the government cannot exclude pens with SRPs of less than $ 50 or more than $ 400 in its definition of the relevant product market. Second, defendants claim that the definition should be expanded to include other highline writing instruments. *fn5" Third, defendants contend that plaintiff's market statistics are incomplete, ...


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