                    United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 98-1487
                                  ___________

Midwestern Machinery, Inc.;             *
Brian F. Gagan; Sharon Tolbert Glover;  *
Charles M. Koosman; Laurie I. Laner;    *
Jack Reuler; Michael W. McNabb;         *
Nigel Linden,                           *
                                        *
             Appellants.                *
                                        *
       v.                               *
                                        *
Northwest Airlines, Inc.,               * Appeal from the United States
                                        * District Court for the District
             Appellee.                  * of Minnesota.
________________                        *
                                        *
State of Delaware; State of Hawaii;     *
State of Iowa; State of Michigan;       *
State of New York; State of North       *
Dakota; State of Ohio; State of South   *
Dakota; State of Utah; State of West    *
Virginia; State of Wisconsin,           *
                                        *
       Amici on behalf of Appellants.   *
                                   ___________

                            Submitted: October 19, 1998

                                Filed: February 2, 1999
                                 ___________

Before McMILLIAN, FAGG, and BEAM, Circuit Judges.
                            ___________
BEAM, Circuit Judge.

      Midwestern Machinery, Inc., Brian F. Gagan, Sharon Tolbert Glover, Charles
M. Koosman, Laurie I. Laner, Jack Reuler, Michael W. McNabb, and Nigel Linden
appeal the dismissal of their complaint alleging a violation of section 7 of the Clayton
Act. The district court dismissed their complaint under Federal Rule of Civil
Procedure 12(b)(6) because it found that a claim under section 7 of the Clayton Act,
which prohibits acquisitions of stock or assets that substantially lessen competition,
expires when one corporation merges with another and its stock is turned in and
extinguished. We disagree and reverse.

I.    BACKGROUND

        In January 1986, Northwest Airlines (Northwest) reached an agreement with
Republic Airlines (Republic) whereby the two airlines would merge. At the time of
merger, Northwest and Republic were respectively the nation's eighth and ninth largest
airlines and the two largest operators at the Minneapolis-St. Paul International Airport.
The merger was approved by the Department of Transportation, the reviewing agency
at the time, but no antitrust immunity was granted for the transaction. After the merger
was completed in August 1986, all of Republic’s stock was turned in and extinguished,
and Republic ceased to exist as a separate entity.

      The plaintiffs, Midwestern Machinery, Inc., Brian F. Gagan, Sharon Tolbert
Glover, Charles M. Koosman, Laurie I. Laner, Jack Reuler, Michael W. McNabb,
Nigel Linden (hereinafter Midwestern), all frequent travelers on Northwest since the
merger, brought this action in June 1997, alleging a violation of section 7 of the
Clayton Act (hereinafter section 7). 15 U.S.C. § 18. Midwestern’s complaint alleges




                                          -2-
that the merger resulted in Northwest holding and using Republic's stock and assets1
in violation of the section 7 prohibition against acquisitions which substantially lessen
competition. Midwestern alleges that Northwest's disproportionate increases in fares,
market dominance, and use of entry barriers for new competitors illustrate the
substantial lessening of competition following the merger.

       Northwest moved to dismiss Midwestern’s complaint for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6). The district court found that, although
a post-acquisition claim can exist for holding and using stock and assets in violation
of section 7, a completed merger precludes such a claim.

       In order to make out a section 7 claim for post-acquisition holding and use,
Midwestern must allege an anti-competitive use of Republic's stock or assets. The
district court dismissed Midwestern's complaint because it could not "conceive of a
post-acquisition use when Republic ceased to exist effective of the merger and all
Republic stock was turned in and extinguished." Midwestern Machinery Co. v.
Northwest Airlines, Inc., 990 F. Supp. 1128, 1138 (D. Minn. 1998).

II.   DISCUSSION

       We review the district court’s 12(b)(6) dismissal de novo. See Springdale Educ.
Ass'n v. Springdale Sch. Dist., 133 F.3d 649, 651 (8th Cir. 1998). When ruling on a
motion to dismiss, courts are required to accept the complaint's factual allegations as
true and to construe them in the light most favorable to the plaintiff. In essence, this


      1
       Midwestern challenges the post-acquisition holding and use of Republic's stock
and assets. Two previous actions were brought to challenge the acquisition of
Republic. Northwest argues that the previous challenges, International Travel
Arrangers v. NWA, Inc., 991 F.2d 1389 (8th Cir. 1993) and Fischer v. NWA, Inc., 883
F.2d 594 (8th Cir. 1989), preclude this action. The district court correctly rejected this
argument.

                                           -3-
mandates that a complaint should not be dismissed "unless it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim that would demonstrate
an entitlement to relief." Id. As indicated, Midwestern alleges a substantial lessening
of competition shown by Northwest's disproportionate increases in fares, market
dominance, and use of entry barriers for new competitors following the merger.
Accepting these factual allegations as true, we are left with the issue of whether a
completed merger, where all the stock of one corporation is turned in and extinguished,
can violate section 7.

       Northwest argues, consistent with the district court opinion, that when the two
airlines became fully merged, no section 7 claim is possible since all of Republic's
stock is turned in and extinguished. In essence, Northwest argues that no Republic
stock or assets are left to substantially lessen competition. We hold that a section 7
cause of action can exist even though a merger occurs and two corporations effectively
become one. We reach this conclusion because: (1) the language of section 7 expressly
covers acquisitions of all the stock and assets of a corporation; and (2) section 7 has
been interpreted to extend a cause of action beyond the completion of an acquisition
or merger.

      A.     Acquisitions of All or Part

        The starting point for interpreting a statute is always the language of the statute
itself. See Norwest Bank v. Doth, 159 F.3d 328, 333 (8th Cir. 1998). We are guided
by the plain language of section 7 of the Clayton Act which prohibits acquisitions of
the "whole or any part of the stock" or assets of a company, where the effect may be
to substantially lessen competition or tend to create a monopoly. 15 U.S.C. § 18
(emphasis added).2 The language of section 7 expressly provides for a claim even

      2
       The relevant portions of section 7 of the Clayton Act provide:

      No person engaged in commerce or in any activity affecting commerce

                                           -4-
when all ("whole") of the stock or assets are acquired. The existence of a section 7
claim does not rise or fall with the percentage of the corporation acquired—whether
it be a merger of all or acquisition of only part. Compare United States v. Von's
Grocery Co., 384 U.S. 270, 278 (1966) (finding a violation of section 7 where
competing grocery store chains completely merged) with United States v. E.I. Du Pont
De Nemours & Co., 353 U.S. 586, 588 (1957) (finding a violation of section 7 where
one company acquired only part of another company's stock). Thus, although the
merger of Republic and Northwest resulted in the acquisition of all of Republic's stock
and assets, it did not cut-off a section 7 claim.

       As noted, after the merger was completed, Republic's stock was turned in and
extinguished. Northwest views this action as significant for purposes of section 7. If
extinguishing stock eliminated section 7 claims, corporations could seek to use this


      shall acquire, directly or indirectly, the whole or any part of the stock or
      other share capital and no person subject to the jurisdiction of the Federal
      Trade Commission shall acquire the whole or any part of the assets of
      another person engaged also in commerce or in any activity affecting
      commerce, where in any line of commerce or in any activity affecting
      commerce in any section of the country, the effect of such acquisition
      may be substantially to lessen competition, or to tend to create a
      monopoly.

      No person shall acquire, directly or indirectly, the whole or any part of
      the stock or other share capital and no person subject to the jurisdiction
      of the Federal Trade Commission shall acquire the whole or any part of
      the assets of one or more persons engaged in commerce or in any activity
      affecting commerce, where in any line of commerce or in any activity
      affecting commerce in any section of the country, the effect of such
      acquisition, of such stocks or assets, or of the use of such stock by the
      voting or granting of proxies or otherwise, may be substantially to lessen
      competition, or to tend to create a monopoly.

15 U.S.C. § 18.

                                          -5-
approach as an antitrust shelter and the speed at which it is accomplished would control
the existence of a claim. The plain language of section 7 does not support such a
result. The district court's concern that it could not "conceive" of how Republic's stock
or assets could be used to substantially lessen competition and thereby violate section
7 centers around the fact that the two corporate entities are no longer distinct, and
therefore the use of Republic's stock or assets is unclear and difficult to trace.
However, this is a matter for discovery, proof, summary judgment or trial and not a
matter for decision on a motion to dismiss.3 Midwestern's complaint should not be
dismissed simply because Northwest acquired all of the assets of Republic and then
Republic's stock was turned in and extinguished.

      B.     Completed Acquisitions

       Northwest further argues that completion of a merger forecloses section 7 claims
for post-acquisition activities. However, Midwestern contends that even though the
merger was completed in 1986, subsequent holding and use can violate section 7.
Section 7 is primarily aimed at arresting, at their incipiency, acquisitions and mergers
that substantially lessen competition or tend to create a monopoly. See Du Pont, 353
U.S. at 589. For this purpose, the language of section 7 is structured such that a
violation can occur when there is a threat or possibility of substantially lessening
competition or creating a monopoly. See id. at 607. No restraints, monopolies, or
substantial lessening of competition need actually occur to violate section 7. Cf.
Carlson Co. v. Sperry and Hutchinson Co., 507 F.2d 959, 961-62 (8th Cir. 1974)
(finding section 7 primarily aimed at arresting the possibility or threat). However, the
primary purpose of section 7 does not preclude a claim once the merger or acquisition




      3
       This might seem to open up a merger or acquisition to continual challenge
under section 7. However, there are limits such as the statute of limitations, the
doctrines of laches and problems of proof and causation.

                                          -6-
is complete.4 Midwestern's section 7 claim is not lost because the Northwest-Republic
merger is complete.

       The underlying rationale for extending section 7 liability beyond completion of
the acquisition or merger is that "as a practical matter it often may be difficult to
foresee and evaluate the real impact and effect of an acquisition until the transaction
has been completed and the aggregate combine is operating." Id. at 962. Therefore,
"while the primary thrust of § 7 is to prohibit and thus to forestall anti-competitive and
monopolistic acquisitions," id., completed acquisitions and "post-acquisition conduct
may amount to a violation of § 7." Federal Trade Comm'n v. Consolidated Foods
Corp., 380 U.S. 592, 598 (1965). An "acquisition," for purposes of section 7, extends,
and therefore can be challenged, until the deal is undone. See United States v. ITT
Continental Baking Co., 420 U.S. 223, 242 (1975).

       The Supreme Court's decision in Du Pont aptly illustrates the vitality of a section
7 claim after acquisition is completed. See Du Pont, 353 U.S. 586. In Du Pont, a
section 7 violation was established even though it was not manifest at the time of initial
acquisition and over thirty years had passed since the actual acquisition of stock. The
Supreme Court analogized section 7 to a fire which, although smoldering, may blaze
into anti-competitive activity at any time and thereby give rise to a claim. See id. at
607. Under Du Pont, a Clayton Act violation may occur "at or any time after the
acquisition, depending upon the circumstances of the particular case." Id. at 597; see
ITT, 420 U.S. at 242 (finding that a cause of action arises even if at the time of the



      4
        Northwest argues that a post-acquisition claim is properly brought pursuant to
other antitrust sections such as the Sherman Act. In Carlson we found that although
a private action for damages under section 7 "may provide a double basis for liability
in a factual situation that also is violative of § 1 and § 2 of the Sherman Act, the action
is not precluded by statutory exception, statutory language, nor the legislative history
of the Clayton Act." Carlson, 507 F.2d at 962.

                                           -7-
initial acquisition there was no realistic threat or restraint of commerce or creation of
a monopoly).

       Case law is clear that "holding as well as obtaining assets" is potentially
violative of section 7.5 ITT, 420 U.S. at 240. It is an artificial limitation to eliminate
the possibility of a section 7 claim because a merger is completed and all the stock of
the merging company is turned in and extinguished. The continuing "fire" of potential
illegal activity described in Du Pont cannot so easily be extinguished. The district
court erred by dismissing the complaint for failure to state a claim.

III.   CONCLUSION

      For the foregoing reasons, we reverse and remand to the district court for further
proceedings.

       A true copy.

             Attest:

                 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




       5
       The district court found that merely holding stock does not violate section 7.
It concluded that there must also be some anti-competitive use. There is no
requirement that one intend to restrain competition, but only that the acquisition of
stock or assets threatens or actually lessens competition. See Du Pont, 353 U.S. at 607.

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