“Strategic Preemptive Acquisitions” in the Lens of Corporate and Antitrust Laws—Following the Pfizer-Novo-Metsera Dispute
Abstract
The recent high-profile Pfizer-Novo-Metsera dispute brings to center, once again, the concern of “strategic preemptive acquisitions.” According to this theory – a potential competitor wishes to enter a market dominated by an incumbent firm by acquiring a smaller firm that already operates in the incumbent’s market. However, before the potential competitor can do so, the incumbent acquires the smaller firm, thereby preempting the potential competitor's entry into the incumbent's market. That was the nature of the Pfizer-Novo-Metsera dispute. Pfizer chose to challenge the proposed Novo-Metsera transaction in two distinct paths: (1) filing a corporate law complaint to the Delaware Court of Chancery, asserting, inter alia, breach of fiduciary duty claims; and (2) filing an antitrust complaint to the Delaware District Court, to enjoin the merger between Novo and Metsera. This essay explores how corporate and antitrust laws, each separately, treat those so-called strategic preemptive acquisitions. Specifically, it shows that modern corporate law does not impose any meaningful limitations on such strategic acquisitions (and therefore, shareholder litigation, as a whole, is less suitable for this task), while antitrust private enforcement against this type of acquisition might face substantial procedural hurdles that should be addressed and resolved, in order to effectively curtail the adverse effect of those acquisitions.
Introduction
The Pfizer-Metsera-Novo dispute is a recent exemplification of the “strategic preemptive acquisitions” theory.[1] According to this theory, Firm A is a potential competitor that wishes to enter the market of Firm B, the incumbent that dominates that market. Firm A intends to do so by acquiring Firm C, a smaller (or nascent) firm that already operates in the market of Firm B. Firm A is not able to independently enter the market of Firm B, and therefore, it seeks to do so by acquiring Firm C. However, before firms A and C can finalize their merger agreement, Firm B steps in and acquires Firm C. In this way, Firm B manages to preempt the entry of Firm A into the market and perpetuates its incumbency.
That was the nature of the Pfizer-Metsera-Novo dispute. Pfizer, the potential competitor[2] that intended to enter the GLP-1 weight-loss drug market (in which it had no prior operations), chose to file two separate complaints against Novo Nordisk (Novo), the dominant firm, and Metsera, the nascent firm that Pfizer sought to acquire in order to enter the market: (1) a corporate law complaint in the Delaware Court of Chancery, asserting, inter alia, breach of fiduciary duty claims, and (2) an antitrust complaint in the Delaware District Court, to enjoin the merger between Novo and Metsera, before it could be consummated. Although Pfizer ultimately prevailed in the bidding war for the acquisition of Metsera,[3] the dispute that will be discussed in this Essay provides a timely and unique perspective on how those so-called strategic preemptive acquisitions are treated by corporate and antitrust laws.
As will be elaborated in this essay, modern corporate law (and more precisely, shareholder litigation) does not effectively prevent such anticompetitive acquisitions and cannot provide an adequate remedy for potential competitors who lost the bidding process to a more dominant firm. It should be stressed at the outset that this Essay will not delve into the normative question of whether corporate law—based on its objectives, roots and history—should be utilized as an antitrust tool, especially given the fact that the U.S. legal apparatus already has multiple antitrust laws that prohibit various anticompetitive conduct.[4] Yet, it remains undisputed that Pfizer filed a corporate law complaint against Novo and Metsera, raising, inter alia, antitrust issues, which in turn raises the question of whether corporate law can de-facto provide any sort of remedy for such allegedly unlawful mergers, regardless of wider normative and fundamental policy questions.
As for private antitrust litigation, such proceedings can potentially curtail strategic preemptive acquisitions, but may face significant procedural hurdles, especially in the form of “antitrust injury” and “antitrust standing,” that will be addressed in this Essay. The Essay contends, based on existing case law, that antitrust standing should be granted to potential competitors to challenge strategic preemptive acquisitions, so that the beneficial and positive effects of private antitrust litigation against such acquisitions are not undermined. This argument is not trivial by any means, as courts have wrongfully dismissed past challenges brought by potential competitors against strategic preemptive acquisitions. Hence, potential competitors who seek to challenge strategic preemptive acquisitions face a concrete and real problem that will be addressed in this Essay. Another contribution of this Essay is to highlight, by evaluating the Pfizer-Metsera-Novo dispute, the phenomenon of strategic preemptive acquisitions, which is rarely discussed in the economic and legal literature.[5]
In sum, the corporate and antitrust litigation proceedings in the matter of Pfizer-Metsera-Novo will be analyzed in tandem, providing commentary about how each legal regime would likely treat preemptive acquisitions. The remainder of this Essay will be organized as follows: Section I presents the factual background of the Pfizer-Metsera-Novo dispute. It should be emphasized, by way of disclaimer, that the facts therein are largely based on the parties’ court submissions and filings, which are publicly available (and the legal evaluation presented in subsequent parts is solely based on these facts).[6] Section II analyzes the Pfizer-Metsera-Novo dispute from a corporate law perspective. Section III does the same, but from an antitrust law perspective.
I. Factual Background
Glucagon-like peptide-1 (GLP-1) are a revolutionary class of medications with an indication for the treatment of Type 2 diabetes (T2D) and obesity.[7] As research shows, T2D and obesity are severe, epidemic-level health crises in America, with roughly 42% of adults having obesity and over 40 million (12–14% of adults) living with diabetes.[8] The conditions are intertwined, with obesity contributing to up to half of new diabetes cases and driving significant mortality.[9]
Pfizer tried to enter the GLP-1 market by developing and introducing its own drug but failed in its effort. Metsera is a nascent biotech company, organized under the laws of Delaware, developing a new-generation GLP-1 drug. According to its publications, Metsera is committed to introducing “affordable medicines . . . that [result] in healthy, sustainable weight loss and maintenance.”[10] It should also be noted up front, that Pfizer was a shareholder of Metsera, even before attempting to acquire the latter. Novo is an incumbent firm in the U.S. GLP-1 market with significant market share. Novo’s portfolio in this field includes, among others, the leading brands “Wegovy” and “Ozempic.” Due to its failure to independently introduce a new GLP-1 drug, Pfizer sought to enter the GLP-1 market by acquiring Metsera and submitted an acquisition bid to Metsera.
On September 21, 2025, Pfizer and Metsera entered into a merger agreement, and the transaction between the parties was cleared by the antitrust regulator.[11] However, the merger agreement between Pfizer and Metsera contained a specific clause that permitted Metsera to consider and accept “Superior Company Proposals” (or, in other words, an offer that exceeds the value of the offer submitted by Pfizer). And indeed, Metsera informed Pfizer that it had received a superior offer from Novo, and in the event Pfizer did not make a superior counteroffer, Metsera would terminate the merger agreement with Pfizer and proceed to consummate the transaction with Novo.
It should be added that Metsera has previously rejected several acquisition bids (at least six) that were submitted by Novo, although they had higher cash and nominal value than Pfizer’s bids. That is because Metsera’s board had concerns that a deal with Novo would not receive antitrust regulatory clearance and the review period of the transaction by the antitrust regulator was expected to be overly prolonged due to the antitrust concerns raised by the transaction).
Notwithstanding the above, Novo’s latest offer to acquire Metsera was comprised of two steps. According to step 1, Metsera’s shareholders would receive from Novo an upfront (payable at signing) substantial payment ($56.50 per share, which, according to Metsera, surpassed Pfizer’s bid) for 50% of Metsera’s non-voting securities. This upfront payment was not contingent on antitrust regulatory clearance. That meant that even if the antitrust agencies blocked the Novo-Metsera transaction, Metsera’s shareholders could keep the payment they received from Novo (which was predominantly intended to “mitigate” regulatory risks). Additionally, Step 1 was not subject to antitrust pre-merger filing notifications—and a mandatory waiting period until the transaction is cleared—pursuant to the Hart-Scott-Rodino (HSR) Act, as the merger notification obligation is regularly not triggered in case voting securities are not transferred (recall that at step 1, Novo would receive only non-voting shares).[12] Only at step 2 (if it ever occurred), was Novo supposed to acquire the remaining shares of Metsera (including voting shares), at which point the entire transaction would have been subject to HSR filings and antitrust regulatory approval.
Regardless of the deal’s structure, Pfizer argued that the Novo-Metsera transaction prevented it from entering the GLP-1 market, and Novo’s substantial payment for Metsera (amounting to more than $6.5 billion in cash) was solely meant to incentivize Metsera to terminate its existing merger agreement with Pfizer. Accordingly, this Essay categorizes the Novo-Metsera transaction as strategic preemptive acquisition, because it had the potential of foreclosing Pfizer from the relevant (GLP-1) market. Pfizer also alleged that the Novo-Metsera transaction might turn-out to be a “killer acquisition” (i.e., an acquisition in which an incumbent firm acquires a nascent firm, and discontinues the operations of the latter, almost immediately after consummating the merger),[13] as it is likely that Novo would shelve Metsera’s product(s), post-acquisition. To substantiate its allegations, Pfizer presented evidence that showed Novo had previously acquired emerging rival firms in the field of GLP-1 medications and discontinued their developed products thereafter. Overall, according to Pfizer’s allegations, the Novo-Metsera transaction had a dual anticompetitive purpose: (1) blocking Pfizer’s entry into the GLP-1 market; and (2) halting Metsera’s operations post-merger. By that, Novo intended to entrench its dominant position in the GLP-1 market.
It is also imperative to note, that only after Pfizer had filed its two complaints (i.e., corporate and antitrust) against the Novo-Metsera transaction, did the Federal Trade Commission (FTC) send a letter to Novo and Metsera’s legal counsels,[14] expressing concern that the transaction’s structure was meant to circumvent the HSR rules, and even evade HSR antitrust review altogether.[15] However, at the same time, the FTC clarified that it took “no position on the proposed transaction’s competitive effects, or whether it is lawful under the antitrust laws.” At the time of writing this Essay, the FTC has not initiated any formal antitrust proceeding against Novo and Metsera regarding this transaction structure. Thus, it cannot be precisely stated that the FTC intervened to block the Novo-Metsera transaction, and Pfizer was in fact the only party seeking to enjoin it via corporate and antitrust litigation.
Ultimately, Pfizer managed to outbid Novo and acquire Metsera (by offering a $10 billion deal, which successfully topped Novo’s bid).[16] Nevertheless, the subsequent parts of this Essay will discuss how strategic preemptive acquisitions are treated by corporate and antitrust laws, based on Pfizer’s complaints against the Novo-Metsera transaction.
II. Corporate Law Analysis
A. Pfizer's Corporate Law Complaint
Pfizer brought its corporate law complaint as a shareholder of Metsera.[17] The said complaint was accompanied by a request for a temporary restraining order (TRO) against the Novo-Metsera deal.[18] In this capacity, Pfizer argued that Metsera’s board of directors “owe Pfizer, as stockholder of Metsera, fiduciary duties of loyalty and care. These duties required [Metsera’s directors] to act in the best interests of Metsera and its stockholders, including Pfizer, to exercise independent and informed judgment, and to maximize stockholder value during the sale process.”[19]
Pfizer claimed that Metsera’s directors breached their fiduciary duties by purporting to accept Novo’s anticompetitive acquisition proposal.[20] More concretely, Pfizer claimed that because Novo’s acquisition of Metsera is anticompetitive and will most likely be blocked by the antitrust agency, it cannot be considered a “Superior Company Proposals” under the Pfizer-Metsera merger agreement.[21] For that reason, Pfizer contended that the board was not allowed to terminate the Pfizer-Metsera merger agreement in favor of Novo’s “not-superior” acquisition bid. In those circumstances, and according to Pfizer, accepting Novo’s bid would not maximize shareholder value, and would only cause Metsera’s directors to breach their fiduciary duties towards Pfizer and the other shareholders of Metsera.[22] Finally, Pfizer contended that by accepting Novo’s proposal, the controlling shareholders and directors of Metsera would gain a “personal financial benefit that is not equally shared by Metsera stockholders and runs afoul of public policy.”[23] Accordingly, Pfizer sought to block the Novo-Metsera deal (also) via shareholder litigation.
B. Controllers are Generally not Restricted from Selling Corporate Control to Strategic Acquirers
As a general principle, controlling shareholders (and their appointed directors on their behalf) are not restricted from selling corporate control to strategic acquirers. For instance, it can be inferred from the Emerson Radio Corp. case,[24] that the controlling shareholders of a company are allowed to sell the “control bloc for a premium to a strategic buyer that also operated in that same market space” of that company.[25] The mere sale of control to strategic acquirers does not constitute, of its own, a breach of fiduciary duties. Thus, and as a starting point for the corporate law analysis, corporate law does not impose any specific limitations on the sale of corporate control to a strategic acquirer who also competes with the acquired firm in the same market.
Corporate law imposes certain limitations on the sale of corporate control in narrow circumstances only. For example, corporate law limits the ability to sell corporate control to a “known looter” who seeks to plunder the corporation’s assets in a way that might bring the corporation to ruin.[26] Typically, “looting” harms the corporation itself and also, indirectly, the remaining minority shareholders (or non-selling shareholders), whose share value decreases as a result of the looting of the corporation’s main assets.[27] Hence, in looting scenarios, the minority shareholders often seek redress through derivative lawsuits against the selling controlling shareholders and their appointed directors (who authorized, on behalf of the controller, the sale of control to a known looter), to recover damages on behalf of the corporation.[28] Accordingly, controlling shareholders and their appointed directors may be subject to breach of fiduciary duty claims, if they knowingly or negligently sell corporate control to a known looter.[29] This essentially limits the controllers' ability to sell corporate control to certain buyers.
However, it is important to emphasize that in the above-mentioned Emerson Radio Corp. case, the Delaware Supreme Court has clarified that selling to a strategic buyer, that is also a competitor of the acquired company, does not equate to selling to a known looter, and by selling control to such a strategic buyer, the company’s directors—who authorized the deal—do not necessarily breach their fiduciary duties.[30]
The implication of the above legal principle on the Pfizer-Novo-Metsera dispute can thus be summarized as follows: The mere fact that Metsera’s board of directors chose to sell Metsera to Novo, a buyer that strategically (and allegedly) sought to acquire Metsera to prevent the entry of Pfizer to the GLP-1 market, does not constitute a breach of fiduciary duties on behalf of Metsera’s board. Furthermore, Pfizer itself has not categorized Metsera’s acquisition by Novo as a looting case, but as a killer acquisition case, i.e.—according to Pfizer, Novo intended to cease Metsera’s operations, post-acquisition, in order to prevent future competition. As already explained above, killer acquisitions involve an incumbent firm (such as Novo) buying an innovative rival (such as Metsera) to shut down its projects and prevent future competition, primarily affecting market structure, and consequently harming consumers.[31] Conversely, corporate looting involves extracting the assets, cash flow, or value from a target company for short-term gain, often leaving it insolvent or crippled, focusing on wealth transfer rather than competition.[32] And as explained above, looting cases often cause injury to the company itself and its minority (non-selling) shareholders (the injury to shareholders is merely a “reflection” of the loss sustained by the corporation) rather than to consumers.[33] For that reason, killer acquisition cases are not equivalent to looting cases, and therefore, killer acquisitions cannot be prevented (directly or indirectly) by the “selling to a known-looter” doctrine. Indeed, Pfizer’s main argument, including in its corporate law complaint, was that Novo’s goal, in acquiring Metsera, was to “prevent [Metsera’s] pipeline product from reaching the market, to the detriment of . . . consumers that are dependent on these life-changing drugs.”[34] Thus, Pfizer’s complaint, at its core, is targeted at an anticompetitive acquisition that might harm consumers, and not against corporate looting.
All of the above leads us to conclude that corporate law is less effective at preventing strategic preemptive acquisitions. On the contrary—corporate law allows such acquisitions, and absent any fiduciary duty breaches, the “strategic” intention of the buyer (e.g., preventing other bidders from entering the relevant market, or ceasing the acquired firm's operations post-merger) seems to be less relevant in the context of corporate law.
C. Metsera’s Board Decision to Sell to Novo was Consistent with the Revlon Doctrine
In a nutshell, according to the Delaware Supreme Court's landmark Revlon decision,[35] when a company is put up for sale, the directors’ duty shifts from defending the corporate entity to maximizing immediate shareholder value.[36] In other words, the directors must act as auctioneers to secure the highest price reasonably available for the company's shareholders.[37] Furthermore, under the Revlon doctrine, a board of directors cannot favor a specific bidder if doing so halts an active bidding contest and prevents shareholders from getting the best price reasonably available.[38] According to the Revlon doctrine, by preferring a bid that does not maximize shareholder value, the directors might be seen as breaching their fiduciary duties towards the company's shareholders.[39]
Over the years, Revlon and its progeny have sparked a flurry of litigation proceedings, in which plaintiffs commonly argue that a company's directors breached their fiduciary duties by favoring a specific bidder, and by doing so, failed to maximize shareholder value.[40] For instance, in the Macmillan case,[41] Macmillan’s (a large publishing, educational and informational services company) management favored a buyout by Kohlberg Kravis Roberts (KKR), a private equity firm, over a higher bid submitted to it by Mills Acquisition Co. The Delaware Supreme Court held that by favoring KKR over a higher bid offered by Mills, the board failed to oversee the auction process adequately, and thus, the auction was fundamentally flawed, and the board breached its fiduciary duties of care and loyalty under the Revlon doctrine. The court explicitly held that the “proper objective of Macmillan's fiduciaries was to obtain the highest price reasonably available for the company, provided it was offered by a reputable and responsible bidder.”[42]
However, according to Delaware case law,[43] a board of directors is entitled to reject a seemingly high acquisition bid if the board assumes that accepting it might not receive antitrust regulatory approval (or receiving it would be overly complicated and prolonged). In such cases, the board, by rejecting the bid, does not breach its fiduciary duties under Revlon. For instance, in the Family Dollar Stores case,[44] the Family Dollar board of directors decided (unanimously) to reject a higher bid submitted by Dollar General in favor of a lower-priced bid that was submitted by Dollar Tree. The court found that the board acted reasonably in these particular circumstances, given the significantly higher antitrust risks associated with the Dollar General bid, which threatened the certainty of the transaction’s closing. And in the Court's own words, “the Board’s decision [to choose a lower-bid] reflects the reality that, for the Company’s stockholders, a financially superior offer on paper does not equate to a financially superior transaction in the real world if there is a meaningful risk that the transaction will not close for antitrust reasons.”[45] Thus, it was concluded that the directors of Family Dollar did not breach their fiduciary duties towards the company’s shareholders.
Notwithstanding the above, Delaware case law does not require directors of a company to take a step further and determine which transaction best promotes competition. Put differently, once the board reaches, in good faith, the conclusion that the chosen bid maximizes shareholder value, and it does not raise significant regulatory (including antitrust) risks, the board is not compelled to assume the role of the FTC (or any other sector regulator) and determine which transaction would be more appropriate for enhancing the competitive process in the relevant market.[46] This goes far beyond what Delaware case law, and corporate law in general, typically require from a board of directors.
In its answering brief to Pfizer’s TRO, Metsera argued that its decision to accept Novo’s offer was consistent with the Revlon doctrine, as it was a higher bid compared to Pfizer’s bid (thus, Novo’s bid can also be deemed as “Superior Company Proposals” under the Pfizer-Metsera merger agreement),[47] and it is Pfizer that seeks to “interrupt a successful bidding process under well-settled Revlon principles in order to prevent Metsera . . . from accepting a superior proposal that would maximize stockholder value, and take the risk that the higher bidder [i.e., Novo] walks away.”[48] Furthermore, and with regard to the antitrust regulatory risk, Metsera argued that Novo’s payment which “is not contingent on regulatory clearance,” alleviates the antitrust regulatory risk, as Metsera’s shareholders could keep Novo’s payment even if the antitrust agencies would intervene, in the future, and challenge (and even reverse) the Novo-Metsera transaction.[49]
On its face, Metsera’s decision to accept Novo’s proposal indeed seems to be consistent with Revlon—the board had not preferred a specific buyer (such as Pfizer) but conducted a competitive auction. In that particular auction, Metsera’s board acted in accordance with Revlon and chose Novo’s bid, which seemed, at the relevant time, to maximize shareholder value. The board also took into account the regulatory risks and was still of the opinion that Novo’s bid was the superior proposal. Under these circumstances, Metsera’s board was not required to determine whether acquisition by Pfizer would better promote competition in the GLP-1 market than acquisition by Novo. More specifically, and according to traditional corporate law, the board was not required to take into account that acquisition by Novo would probably block Pfizer’s entry into the GLP-1 market (and as a result, harm competition in that market). And as Metsera’s directors have not breached their fiduciary duties, it is highly questionable whether Pfizer could have enjoined the Novo-Metsera transaction via shareholder litigation. The subsequent part of this Essay will further address this issue.
D. Shareholder Litigation Cannot Effectively Prevent Preemptive Acquisitions
Interestingly, in the past, and particularly in the late nineteenth century, anticompetitive acquisitions were blocked or prevented via shareholder litigation.[50] Notably, in Dunbar v. American Telephone and Telegraph Co.,[51] the minority shareholders of the Kellogg Switchboard and Supply Company, managed to prevent the sale of its control to its competitor, AT&T—a dominant firm that sought to acquire Kellogg to preempt competition in the telephone business. The Illinois Supreme Court held that “the purchase by [AT&T] . . . of the majority stock of the Kellogg company with the purpose and intent of controlling the latter and putting it out of business as a competitor . . . was an attempt to exercise a power which it did not have. . . . [I]t would seem to follow that each and every stockholder in the latter company would have the right to say that [AT&T] . . . should be restrained.”[52]
If we apply the Dunbar ruling to the Pfizer-Novo-Metsera corporate dispute, we can reach the following conclusion: Pfizer, as a minority shareholder of Metsera, could try to block the Novo-Metsera transaction via shareholder litigation, as it is essentially an acquisition of a nascent firm (Metsera) by an incumbent firm (Novo), that could potentially prevent the nascent firm’s innovative product from reaching the market, allowing the incumbent (Novo) to entrench its position in the GLP-1 market. Pfizer’s argument, in this regard, could have been substantiated by Novo’s past acquisitions of emerging competitors in the GLP-1 market, some of which were put out of business, post-merger (and borrowing from Dunbar, each and any stockholder of Metsera would have a right to challenge Novo’s acquisition of Metsera, as being anticompetitive).[53] Accordingly, the court could declare that such an acquisition is anticompetitive and unlawful, similar to the Dunbar ruling. In this way, Pfizer could have, indirectly, prevented a preemptive acquisition that was meant to prevent it from entering the GLP-1 market. As such, the Pfizer-Novo-Metsera corporate dispute can be seen as a case of “history repeating itself,” and a modern Dunbar case.
However, current corporate law is a far cry from the days of the Dunbar decision,[54] and as of today, shareholder litigation seems to be less effective at preventing anticompetitive acquisitions, including strategic preemptive acquisitions. In particular, courts that specialize in corporate law,[55] such as the Delaware Court of Chancery, have long held that U.S. antitrust law claims should be brought in federal courts, and they are the “correct forum” for hearing such claims.[56] For example, in the Components case,[57] the Court of Chancery held that “it is firmly established that in matters directly concerned with the antitrust laws of the United States, the federal courts have exclusive jurisdiction.”[58] This means that plaintiffs have less ability to challenge anticompetitive misconduct via corporate litigation (and in general, “corporate courts” do not accommodate antitrust claims). Metsera, itself, in its answering brief to Pfizer’s TRO, invoked the above Components case, and argued that Pfizer’s “antitrust claims belong elsewhere.”[59] Importantly, the Chancery Court denied Pfizer’s TRO, stating that Pfizer’s “objections to the proposed deal weren’t a legitimate reason for stopping Novo’s offer.”[60] This is not surprising in light of contemporary cases (such as the above Components case), which exactly held that federal courts are the “correct forum” for antitrust claims, and such claims do not belong in corporate law proceedings.
On this background, one can try advocating for the “revival” of the late nineteenth century attempts to use corporate law to address anticompetitive acquisitions. According to this proposal, minority shareholders (e.g., Pfizer) will be able to challenge the sale of corporate control to an incumbent firm, before it could be finalized, and courts would be authorized to declare that such a sale of control is unlawful and void. Such declaration would not only prevent supposedly killer acquisitions, but also strategic preemptive acquisitions (and as such, killer acquisitions and strategic preemptive acquisitions would be regarded as a corporate law issue, and not only an antitrust problem). Accordingly, this solution can serve as an additional mechanism (which was utilized in the past, as the Dunbar demonstrates) that limits the right to sell corporate control, in other words, the sale of corporate control could be restricted, via corporate litigation, when it raises anticompetitive concerns, and not only in “selling to a known-looter” scenarios. As the Pfizer-Novo-Metsera dispute demonstrates (and also cases such as Dunbar), shareholders can detect attempts to sell corporate control to incumbent firms, which might turn out to be anticompetitive, and try to block them before they can be finalized. Hence, it seems logical to enable shareholders to challenge such allegedly anticompetitive acquisitions, rather than leaving this task only to public and private antitrust enforcers. Especially since, as Pfizer’s corporate complaint shows, shareholders may detect allegedly anticompetitive acquisitions more efficiently than the antitrust regulator (and are better positioned for this task); Pfizer challenged the Novo-Metsera deal before the FTC stepped-in and sent its letter to Novo and Metsera’s legal counsels.
However, one could imagine that policymakers and courts would be reluctant to adopt this proposal, given the dearth of cases in which shareholders have tried to block anticompetitive acquisitions via shareholder litigation (which could be the primary shortcoming of this proposal as a solution for challenging anticompetitive acquisitions). This might indicate that shareholders do not have much incentive to challenge allegedly anticompetitive acquisitions via shareholder litigation, which might render such a solution as less appealing for policymakers and courts. For that reason, it is very likely that courts specializing in corporate law would continue “referring” such cases to federal courts and prevent shareholders, in a handful of cases, from challenging such acquisitions. And that was exactly the fate of Pfizer’s corporate law complaint.
Overall, from the above discussion, it can be concluded that shareholder litigation is less effective at preventing strategic preemptive acquisitions.
E. Antitrust Laws should Step-in to Fill the Gap
The tension between corporate and antitrust law is not intuitive, and is rarely discussed in the literature.[61] However, one commentator has suggested resolving any possible tension between corporate and antitrust laws in the following manner.[62] “Antitrust law should only step in to solve a problem of competition in the market for corporate control when the existing modes of governance for that market—state corporate law, together with federal securities regulation—are incapable of resolving the problem on their own.”[63] By contrast, “when there is a problem that corporate law can solve, either on its own or in conjunction with federal securities law, antitrust law need not be involved.”[64]
One can argue that in the matter of the Pfizer-Novo-Metsera dispute, and in scenarios of strategic preemptive acquisitions in general, a tension arises between corporate and antitrust laws. On the one hand, the controlling shareholders wish to sell the company to the highest bidder (e.g., Metsera’s board sought to sell the company to the highest bidder, Novo). On the other hand, the sale to the specific highest bidder (e.g., Novo) can potentially yield anticompetitive results. In the Pfizer-Novo-Metsera dispute, and according to Pfizer’s allegations, the acquisition of Metsera by Novo could have potentially blocked Pfizer’s entry into the GLP-1 market and also bring the discontinuation of Metsera’s innovative product(s).
As was thoroughly explained above, modern corporate law does not offer a viable solution for preemptive acquisitions, and from a corporate law perspective—the board was not restricted from selling Metsera to Novo, regardless of any anticompetitive risk that might materialize post-merger. For that reason, and based on the above suggested formula for resolving tension between corporate and antitrust laws, one can reach the conclusion that antitrust laws should step-in to fill this gap. However, and as will be elaborated in the following sections of this Essay, antitrust law does not provide a clear and simple path for curbing preemptive acquisitions. Accordingly, the Essay will explain how courts should treat challenges against such allegedly anticompetitive acquisitions.
III. Antitrust Law Analysis
A. Pfizer's Antitrust Law Complaint
As a prelude, Pfizer stated in the opening section of its antitrust complaint that it “seeks to enjoin one of the most cynical and anticompetitive mergers ever contemplated,”—the Novo-Metsera transaction.[65]
Pfizer then moved to establish that Novo is already a dominant firm in the GLP-1 market,[66] with a substantial market share, which enables it to extract exorbitant prices from patients who require GLP-1 medications. Pfizer added that Novo also sought to insulate itself from competition by aggressively abusing its market dominance.[67] For example, Pfizer contended that Novo went “on a buying spree” to acquire emerging companies in the field of GLP-1 medications to preempt future competition.[68]
Pfizer explained that it had no operations in the GLP-1 market, but “[t]hrough its signed agreement to acquire Metsera, [it] is poised to compete vigorously in the U.S. markets for GLP-1 drugs.”[69] Pfizer added that it “is committed to bringing [Metsera’s developed] drugs to market quickly and to competing vigorously with Novo Nordisk, which would inevitably result in lower prices, greater output, and enhanced product innovation, for the benefit of all Americans.”[70]
Pfizer accused Novo of stepping-in and trying to derail its merger agreement with Metsera,[71] in a way that would ultimately prevent Pfizer from entering the GPL-1 market. Essentially, Pfizer claimed that the transaction between Novo and Metsera was a preemptive acquisition, even though it did not explicitly label it as so. Consequently, Pfizer sought to enjoin the merger between Novo and Metsera, pursuant to the provisions of the Clayton Act.[72]
B. Pfizer was a Potential Competitor that Intended to Enter the Relevant Market by a Toehold Acquisition
A potential competitor, is a type of competitor that does not yet operate in the relevant market (as opposed to actual competitors that already operate in it), but might enter it in the near future.[73] Antitrust law acknowledges that a potential competitor can enter the relevant market either by developing and presenting its own product(s) (i.e., de novo entry), or by acquiring a smaller firm that already operates in the relevant market—i.e., entry by a “toehold acquisition” (especially when the potential competitor is not able to enter the market de novo).[74] Entry by acquisition of a smaller firm is commonly considered procompetitive, and equivalent to de novo entry (or entry by internal expansion of the firm).[75] Furthermore, the potential competitor might have financial resources and commercialization skills that the smaller firm usually lacks, and thus, a merger between a potential competitor and smaller firm can enhance the latter’s competitive capabilities post-merger, and overall spur competition in the relevant market.[76]
In the Pfizer-Novo-Metsera dispute, Pfizer was indeed a potential competitor in the GLP-1 market. As described above, and as admitted by Pfizer itself, it had no operations in the GLP-1 market but intended to enter it. First, Pfizer tried to do so by developing its own product(s). In other words, Pfizer attempted to enter the market de novo. Only when it failed in its endeavor did it seek to enter the GLP-1 market by a toehold acquisition of Metsera, a small firm that already existed in that market (although its product(s) were still under development).
In this regard, Pfizer established that its (toehold) acquisition of Metsera would be deemed procompetitive, as Pfizer could “provide its significant resources and apply its deep commercial and manufacturing infrastructure and expertise to Metsera’s clinical portfolio, with the aim of shepherding Metsera’s promising GLP-1 treatments through FDA approval and providing consumers with superior alternatives in a critical therapeutic area.”[77] Pfizer added that it “has a track record of bringing new drugs to market and is particularly well-positioned, and incentivized, to do so quickly and effectively.”[78]
Even though Pfizer is a well-established global pharmaceutical company, in the GLP-1 market it was merely a potential competitor that sought to enter it by acquiring Metsera, in order to “vigorously compete with Novo.”[79] Antitrust laws encourage this type of entry, and it is regarded as procompetitive and can challenge the incumbent's dominant position in the relevant market.
C. Strategic Preemptive Acquisitions Prevent Market Entry by Toehold Acquisitions
Strategic preemptive acquisitions can be seen as a distinct type of antitrust misconduct that prevents potential competitors from entering the market of the incumbent, by toehold acquisitions. The anticompetitive effect of strategic preemptive acquisitions can be even more severe when the potential competitor cannot enter the market de novo. That means that the potential competitor has no alternative effective way of entering the market of the incumbent, and in those instances, the incumbent manages to entrench its dominant position in the relevant market.
This is clearly demonstrated by the Pfizer-Novo-Metsera dispute. As discussed above, Pfizer failed to enter the GLP-1 market independently, while Novo tried to preempt Pfizer’s entry into that market by toehold acquisition of Metsera, which appeared to be the only viable option for Pfizer to enter said market. Viewed in this manner, Novo’s attempt to strategically acquire Metsera could have frustrated market entry of a potential competitor – Pfizer – by a toehold acquisition.
Strategic preemptive acquisitions should be distinguished from “input foreclosure acquisitions,” which are also known as a type of anticompetitive acquisition.[80] In a scenario of an input foreclosure acquisition, the dominant firm acquires a supplier of essential products, which are regularly being purchased not only by the dominant firm, but also by its competitors. Post-acquisition, the dominant firm refuses to the sell the essential products to its competitors (which were just being sold pre-acquisition), conduct that has the potential of excluding them from the relevant market, especially if the competitors depend on these essential products and cannot acquire any substitutes.[81] Simply put, in such a scenario, the dominant firm controls, post-acquisition, an upstream essential product which is crucial for a certain downstream market in which the dominant firm also operates. The dominant firm can thus diminish downstream competition by preventing its competitors, in the downstream market, from acquiring the upstream essential product (which is controlled by the incumbent) required for their operations.[82] By that, the dominant firm may also gain entire control of the downstream market.
This type of acquisition can be readily defined as an input foreclosure acquisition, as it prevents an essential input from other competitors. As opposed to strategic preemptive acquisitions, input foreclosure acquisitions do not necessarily prevent entry of potential competitors into the market but raises a risk for excluding existing (or actual) competitors from it. Pfizer was not an actual competitor in the GLP-1 market, it was not a client of Metsera and had not purchased any products from Metsera. Pfizer only sought to enter the GLP-1 market by acquiring Metsera. Thus, the attempt to acquire Metsera by Novo did not raise a risk of preventing an essential input from Pfizer, nor did it raise a risk of excluding Pfizer from any given market (especially not from the GLP-1 market, where Pfizer had no operations). As elaborated above, Novo’s attempt to acquire Metsera raised the risk of preventing Pfizer, a potential competitor, from entering the GLP-1 market already dominated by Novo. Accordingly, Pfizer challenged a strategic preemptive acquisition and not an input foreclosure acquisition.
This Essay contends that potential competitors, such as Pfizer, should be eligible to challenge strategic preemptive acquisition in private antitrust litigation. However, potential competitors may face substantial procedural barriers that will be immediately discussed in the subsequent part of this Essay.
D. Antitrust Procedural Barriers
An unsuccessful bidder (which can also be a potential competitor) who seeks to challenge an allegedly anticompetitive merger, in private antitrust litigation, usually faces procedural barriers in the form of antitrust injury and antitrust standing. For starters, these procedural barriers, which were initially introduced by the U.S. Supreme Court in its Brunswick and Cargill decision,[83] were designed to screen-out meritless antitrust challenges, particularly those that are bought by actual competitors, by requiring proof of antitrust injury (i.e., the plaintiff must show that its injury “flows from that which makes defendants’ acts unlawful”).[84] In case the plaintiff cannot demonstrate that it (personally) suffered an antitrust injury, then the court would probably dismiss the complaint against the merger at the outset, for lack of antitrust standing. For instance, the plaintiff can try to demonstrate that the merged firm (i.e., after consummating the merger) would engage in predatory pricing (i.e., charging below cost-prices), which would eventually drive the plaintiff out of the market.[85] If the plaintiff succeeds in showing that the merger would likely cause it an antitrust injury (such as exclusion from the relevant market), then the court might grant the plaintiff standing to challenge the merger.[86]
However, in the context of antitrust injury and antitrust standing, the Lucas decision creates a significant hurdle for unsuccessful bidders in private antitrust litigation.[87] There, Lucas Automotive and Coker Tire were competitors in the vintage tires market. Bridgestone/Firestone (BFI) invited both Lucas Automotive and Coker Tire to submit bids for an exclusive license to manufacture and distribute BFI’s brand vintage tires worldwide. Coker Tire managed to outbid Lucas Automotive and became the dominant firm, with a 75% share in the vintage tires market. Lucas Automotive challenged the BFI-Coker Tire transaction, claiming that it created a monopoly in the relevant market, and thus, violated Section 7 of the Clayton Act. The district court dismissed the complaint, and Lucas Automotive appealed. The Court of Appeals (Ninth Circuit) denied Lucas Automotive’s appeal, holding that it “would have suffered the same injury had a small business acquired the exclusive right to manufacture and to distribute [BFI's] tires. Because it cannot demonstrate ‘antitrust injury’ as defined in Brunswick, Lucas Automotive lacks competitor standing to sue Coker Tire.”[88]
It is undisputed, that at the time Pfizer challenged the Novo-Metsera transaction, it was an unsuccessful bidder.[89] If Metsera proceeded with Novo’s offer, and Pfizer with its antitrust complaint, one could expect that Metsera and/or Novo would rely on the Lucas decision, arguing that Pfizer would have suffered the same injury if Metsera had been acquired by a non-dominant firm, instead of Novo. According to the reasoning of the Court of Appeals, this does not constitute an antitrust injury, and thus, Pfizer would not be eligible to challenge the Novo-Metsera transaction in court.
However, as will be explained below, in the matter of Pfizer-Novo-Metsera the Lucas decision is distinguishable, and potential competitors such as Pfizer should be granted “antitrust standing” to challenge allegedly preemptive acquisitions.
E. Potential Competitors, such as Pfizer, should be Eligible to Challenge Preemptive Acquisitions
First and foremost, it should be emphasized that in the Lucas decision, Lucas Automotive was already an actual competitor in the vintage tires market, and not a potential competitor, like Pfizer, who sought to enter it. Therefore, the BFI-Coker Tire transaction had not entirely foreclosed Lucas Automotive from the vintage tires market, and thus, it is not surprising that the court held that Lucas Automotive (as an actual competitor that already operated in the relevant market) had suffered no cognizable antitrust injury and lacked standing to sue. As such, the Lucas decision is less relevant to potential competition cases, such as the Pfizer-Novo-Metsera dispute.
Unlike Lucas Automotive, Pfizer had no operations in the GLP-1 market, and it was merely a potential competitor that sought to enter the market. And unlike the BFI-Coker Tire transaction (which had not foreclosed Lucas Automotive from the relevant market), the Novo-Metsera transaction had the potential of preempting Pfizer's entry into the GLP-1 market, which was already dominated by Novo. Accordingly, it was purported elsewhere that potential competitors, such as Pfizer, should be granted standing to challenge, in private antitrust litigation, mergers that allegedly prevented their entry into the market of the incumbent.[90] Specifically, the antitrust injury that a potential competitor, such as Pfizer, suffers in those cases, is not being able to enter the relevant market because of a preemptive acquisition, and thus, the plaintiff potential competitor should be granted standing to challenge that acquisition. Overall, it can be summarized that the Lucas decision is more applicable to actual competition cases, and not to cases in which a potential competitor seeks to enjoin a preemptive acquisition.
In the specific context of the Pfizer-Novo-Metsera dispute, this position can heavily rely on the Retrophin case.[91] The facts of the Retrophin case very much resemble those of the Pfizer-Novo-Metsera dispute. Retrophin, Inc. (Retrophin) was a biopharmaceutical company focused on developing therapies for rare diseases. Retrophin planned to enter the U.S. ACTH therapeutic drug (for the treatment of Infantile Spasms) market, in which it had no operations, by purchasing rights from Novartis to manufacture and sell “Synacthen,” (a drug that was primarily sold in the EU, but with an indication for the treatment of Infantile Spasms) in U.S. market. Retrophin explained that it was costly, risky and overly prolonged to enter the market independently (or de novo), and therefore, sought to enter the relevant market by acquiring Synacthen from Novartis by a toehold acquisition.[92]
The U.S. ACTH therapeutic drug market was dominated by Questcor, which sold its medication under the brand “Acthar,” and held a market share of 100%. According to the pertinent facts of the case, “Retrophin intended to compete in the Relevant Markets with Questcor by selling Synacthen at a fraction of the price charged by Questcor for Acthar.”[93] As can be observed, Retrophin was a potential competitor that intended to enter the market of the incumbent, Questcor, by acquiring an existing drug, Synacthen. However, before Retrophin could do so, Questcor “swept in” and acquired the rights to Synacthen instead.[94]
Retrophin challenged Questcor’s acquisition of Synacthen, contending that it prevented Retrophin from entering Questcor’s market, and cemented Questcor’s super-dominant position (of 100%) in it.[95] In response, Questcor filed a motion to dismiss Retrophin’s complaint, relying on the Lucas decision.[96] More broadly, Questcor argued that Retrophin would have suffered the same injury if a non-dominant firm (instead of Questcor) had acquired Synacthen, and based on the court's reasoning in the Lucas decision, Retrophin had not suffered an antitrust injury.[97] Accordingly, Retrophin should not be granted standing to sue.
The District Court for the Central District of California denied Questcor’s motion to dismiss, and held that unlike Lucas Automotive, “Retrophin alleges that it was foreclosed from using Synacthen to enter the Relevant Markets and compete with Questcor, and that as a result Questcor continues to maintain a monopoly in the Relevant Markets through Acthar.”[98] The court added that “Retrophin’s injury—exclusion from the Relevant Markets—is inseparable from the alleged harm to competition.”[99] Thereby, the court found that Retrophin has sufficiently alleged antitrust injury.[100] More generally, the court acknowledged that potential competitors, such as Retrophin, that were prevented from entering the incumbent's market, because the incumbent had acquired a firm or set of assets that were required for the potential competitors’ entry into the market, should be granted standing to challenge such acquisitions.[101]
This Essay contends that because Pfizer was a potential competitor, and the Novo-Metsera transaction had the potential of preventing Pfizer’s entry into this market, Pfizer would have suffered an antitrust injury—in the form of market foreclosure—and in those circumstances, should be granted antitrust standing to challenge the transaction, similar to the Retrophin case. Moreover, Pfizer’s foreclosure from the market could yield anticompetitive results—which harms consumers—as Novo would have continued to dominate the GLP-1 market and charge excessive prices for its GLP-1 medication. If we apply the language of Retrophin to the Pfizer-Novo-Metsera dispute, Pfizer would have suffered an injury that is “inseparable from the alleged harm to competition.”
Regretfully, this is more easily said than done, as not all courts follow the reasoning of Retrophin, and there are cases in which challenges that have been brought by potential competitors against preemptive acquisitions, were dismissed at the most preliminary stages of the trial for lack of antitrust standing. For instance, in the Gulf States case,[102] Gulf States Reorganization Group (GSRG) sought to enter the hot rolled coil market in the Southeast region of the United States by acquiring the assets of an insolvent firm. Those assets were put for sale in a bankruptcy auction. The relevant market was dominated by Nucor, which also participated in the auction. Nucor managed to outbid GSRG and acquired the relevant assets. Consequently, GSRG challenged the acquisition, asserting Nucor prevented it from entering the relevant market,[103] and thus, violated antitrust laws. In other words, GSRG was a potential competitor that challenged a preemptive acquisition that prevented it from entering, by a toehold acquisition, the relevant market of the incumbent (Nucor). The District Court of Alabama dismissed GSRG’s complaint, holding that “all that can be shown is that GSRG was the losing bidder at a fair and open bankruptcy court-supervised auction. GSRG’s failure to prevail at the auction is not an ‘antitrust injury.’”[104] The court added that GSRG would have suffered the same “injury” (i.e., of not being able to enter the relevant market) if a non-incumbent firm (other than Nucor) had acquired those assets (a reasoning similar to the Lucas case).[105] The court concluded that GSRG had no antitrust standing to challenge the acquisition of the assets by Nucor, as it suffered no cognizable antitrust injury. However, GSRG appealed, and the Court of Appeals (Eleventh Circuit) reversed the District Court’s ruling.[106] More specifically, the Court of Appeals held that “the district court erred in concluding that [GSRG] had failed to show antitrust standing . . . the injury to [GSRG]—its exclusion from the relevant market—is inseparable from the alleged harm to competition. It is this same exclusion from the market that denies consumers the benefit of the pressure to lower prices that would likely accompany [GSRG]’s becoming a viable competitor.”[107] Simply put, the Court of Appeals recognized that GSRG was a potential competitor whose entry was blocked by a preemptive acquisition by Nucor. Thus, standing was ultimately granted to GSRG.
As can be observed, there is an inconsistency between the rulings of lower courts; that is, some grant standing, while others dismiss the antitrust complaint at the outset for lack of antitrust standing. Due to this discrepancy, it is unclear whether potential competitors, such as Pfizer, would be granted standing to challenge preemptive acquisitions that prevented them from entering the incumbent’s market. This Essay contends that if courts apply cases such as Lucas to disputes similar to the Pfizer-Novo-Metsera dispute, potential competitors will have less ability to challenge mergers that prevented their entry into the relevant market. This, in turn, could undermine the benefits of private merger litigation, and at the same time, leave many allegedly anticompetitive mergers unchecked (which might even turn-out to be killer acquisitions).[108] Hence, and in order to overcome the procedural hurdles, this Essay suggests that in disputes similar to the Pfizer-Novo-Metsera dispute, courts should follow the reasoning set out in Retrophin, and be more lenient towards potential competitors by granting them antitrust standing to challenge preemptive acquisitions that prevented their entry into the market. Granting standing in such cases also seems to be congruent with the theory of entry by toehold acquisition, while not granting standing might frustrate entry by this method, and ultimately, harm competition.
Before concluding this Section, it should be mentioned that the question of how a substantive review of strategic preemptive acquisitions should be conducted by courts (i.e., if standing is established and granted) goes beyond the scope (and intended length) of this Essay, and will be addressed in future research. The primary aim of this Section is to point out that before reaching the question of substantive review, plaintiffs face a substantial procedural obstacle that should be resolved first and suggests how this should be done. Regarding the Pfizer-Novo-Metsera dispute, it can be mentioned briefly that Pfizer could have used the evidence that the antitrust authority had approved its transaction with Metsera, while the board of Metsera already rejected, in the past, several acquisition bids that were submitted by Novo, due to antitrust concerns. The court could have used such evidence to conclude that a Pfizer-Metsera merger was more procompetitive than a Novo-Metsera merger. The courts could also rely on the fact that Novo had previously acquired nascent GLP-1 companies and discontinued their operations post-merger, to hold that Metsera’s acquisition by Novo might raise similar anticompetitive concerns, eventually harming consumers. Overall, the substantive review of strategic preemptive acquisitions will heavily rely on the evidence presented by the potential competitor plaintiff on a case-by-case basis.
F. Pfizer was the Most Efficient Enforcer of Antitrust Laws
Before concluding this Essay, this Section will show that it is justified to grant standing to a potential competitor plaintiff, such a Pfizer, as it can be regarded as the most efficient enforcer of antitrust laws.[109] According to well established principles of antitrust laws, antitrust standing is usually granted to efficient enforcers of the antitrust laws.[110] As the Pfizer-Novo-Metsera dispute demonstrates, Pfizer was indeed the most efficient enforcer of antitrust laws, primarily as it was the first party to detect and challenge the allegedly anticompetitive Novo-Metsera transaction. Only following Pfizer’s complaints, did the FTC send its letter to Novo and Metsera’s legal counsels,[111] expressing HSR filings concerns, but deciding not to challenge the Novo-Metsera transaction. As described above, the FTC clarified in its letter that it did not take any stance regarding the competitive effect of the Novo-Metsera transaction, but only referred to the filing obligation under the HSR Act.[112] Furthermore, Step-1 of the Novo-Metsera deal was structured in such a way that the parties assumed that HSR filings were not required. Accordingly, they had not submitted merger notices to the FTC. In general, antitrust agencies face significant challenges in tracking and investigating ostensibly “unreportable” transactions,[113] and it seems that plaintiffs like Pfizer are better positioned to detect them. The fact that the FTC “stepped-in” only after Pfizer has filed its complaints, might indeed indicate that the FTC itself had not detected the Novo-Metsera deal in real time.
As explained extensively elsewhere,[114] potential competitors, such as Pfizer, also have the incentive to challenge preemptive acquisitions because they prevent them from entering the relevant market. Thus, not only can potential competitors more easily detect preemptive acquisitions, but they also have an incentive to challenge them. Finally, and as discussed elsewhere,[115] antitrust agencies rarely challenge strategic preemptive acquisitions, and they are often challenged by potential competitors that were blocked by them.
For all those reasons, this Essay contends that potential competitors are the most efficient enforcers of antitrust laws and therefore should be granted antitrust standing to sue against strategic preemptive acquisitions. Otherwise, such acquisitions might go unscrutinized, and it is highly questionable if there will be any other party that will have an incentive and ability to challenge them.
Conclusion
This Essay has shown how strategic preemptive acquisitions are treated through the lens of corporate and antitrust laws (separately), by capitalizing on the recent Pfizer-Novo-Metsera dispute. It showed that corporate law does not offer any viable solutions for curtailing such anticompetitive acquisitions, while antitrust private enforcement might face substantial procedural obstacles. This stems from the stringent standing rules formulated by the U.S. Supreme Court in its Brunswick and Cargill decisions. The Essay suggested how to overcome those hurdles. It concludes that in cases where the plaintiff is a potential competitor where its entry into the incumbent’s market was preempted by the incumbent’s anticompetitive acquisition, courts should recognize that the plaintiff has in fact suffered an antitrust injury and should be granted antitrust standing to challenge such preemptive acquisitions.
* Antitrust attorney (PhD, Haifa University, Faculty of Law, Israel).
[1] A theory which was comprehensively discussed in Lior Frank and C. Paul Rogers III., Potential Competitors’ Antitrust Standing Against Preemptive Acquisitions, 78(3) SMUL. Rev. 533 (2025). This essay stands as a follow-up to the aforementioned article, this time capitalizing on the Pfizer-Novo-Metsera dispute.
[2] And also, an unsuccessful bidder at the time this dispute erupted.
[3] And for obvious reasons, Pfizer decided to withdraw its said legal complaints, as stipulated in the Stipulation and (Proposed) Order of Dismissal, Pfizer, Inc. v. Metsera, Inc, No. 2025-1259-MTZ (Del. Ch. Feb. 23, 2026).
[4]See e.g., Sherman Act of 1890, 15 U.S.C. §§ 1–7; Clayton Act of 1914, 15 U.S.C. § 12–27; Robinson-Patman Act of 1936, 15 U.S.C. § 13.
[5]See generally Frank and Rogers, supra note 1.
[6] Especially on: Complaint, Pfizer, Inc. v. Novo Nordisk A/S, No. 1:25-cv-01339(D. Del. Nov. 3, 2025) [hereinafter Pfizer Antitrust Complaint]; Complaint and Motion for a Temporary Restraining Order (TRO), Pfizer, Inc. v. Metsera, Inc., No. 2025-1259-MTZ (Del. Ch. Oct. 31, 2025) [hereinafter Pfizer Corporate Complaint]; and Metsera, Inc. and the Director Defendant’s Answering Brief in Opposition to Plaintiff’s TRO, Pfizer, Inc. v. Metsera, Inc., No. 2025-1259-MTZ (Del. Ch. Nov. 03, 2025) [hereinafter Metsera’s Answering Brief to Pfizer’s TRO]. For further elaboration on the Pfizer-Novo-Metsera dispute, see: Steven C. Salop, Novo Nordisk’s Killer Non-Acquisition Merger Contract Proposal Is a Case of “Heads I Win, Tails You Lose”, ProMarket (Nov. 11, 2025).
[7]See, e.g., John O. Olukorode, et al., Recent Advances and Therapeutic Benefits of Glucagon-like Peptide-1 (GLP-1) Agonists in the Management of Type 2 Diabetes and Associated Metabolic Disorders, 16(10) Cureus (2024).
[8] Kristina S. Boye et al., The Association Between Obesity and the 5-year Prevalence of Morbidity and Mortality Among Adults with Type 2 Diabetes, 14(4) Diabetes Therapy 709 (2023).
[9]Ibid.
[10]See Dan Budwick, Metsera Launches to Lead the Next Generation of Medicines for Obesity and Metabolic Diseases, Bus. Wire (Apr. 18, 2024), https://www.biospace.com/metsera-launches-to-lead-the-next-generation-of-medicines-for-obesity-and-metabolic-diseases
[11]See FTC, 20260047: Pfizer Inc.; Metsera, Inc., https://www.ftc.gov/legal-library/browse/early-termination-notices/20260047 (last visited April 8, 2026).
[12] Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, 16 C.F.R. § 801.2. According to the HSR Act, only when the merger filing obligation is triggered, the parties are not allowed to consummate their merger until a certain waiting period has ended.
[13] Colleen Cunningham, Florian Ederer & Song Ma, Killer Acquisitions, 129(3) J. Pol. Econ. 649 (2021); see also C. Scott Hemphill & Tim Wu, Nascent Competitors, 168 U. Pa. L. Rev. 1879 (2019).
[14] Letter from Daniel Guarner, Directo, Bureau of Competition, FTC to Arthur J. Burke, Novo Nordisk legal counsel, and Scott A. Sher, Metsera legal counsel, (Nov. 4, 2025) (on file with the FTC).
[15]Id. The FTC has stated that the proposed transaction between Novo and Metsera “implicates 16 C.F.R. § 801.90, which prohibits transactions or other devices employed for the purpose of avoiding the requirements of the HSR Act.”
[16] Pfizer, Pfizer Completes Acquisition of Metsera (Nov. 13, 2025), https://www.pfizer.com/news/press-release/press-release-detail/pfizer-completes-acquisition-metsera.
[17] Pfizer’s Corporate Complaint, supra note 6, at 11.
[18] Motion for Temporary Restraining Order, supra note 6.
[19] Pfizer’s Corporate Complaint, supra note 6, at 58.
[20]Id. at 59.
[21]Id. at 41.
[22]Id. at 59.
[23]Id.
[24] Abraham v. Emerson Radio Corp., 901 A.2d 751 (Del. Ch. 2006).
[25]Id. at 1, 15.
[26]See, e.g., Ford v. VMware, Inc., No. 11714-VCL (Del. Ch. May 2, 2017); In re Sears Hometown and Outlet Stores, Inc. S’holder Litig., 309 A.3d 474 (Del. Ch. 2024); see also Jens Dammann, The Controlling Shareholder's General Duty of Care: A Dogma That Should Be Abandoned, 2015 U. Ill. L. Rev. 479, 493 (2015); Einer Elhauge, The Triggering Function of Sale of Control Doctrine, 59(4) U. Chi. L. Rev. 1465 (1992).
[27]Ibid.
[28]Ibid.
[29]Ibid.
[30]Supra note 24, at 16.
[31]See supra note 13.
[32]See supra note 26.
[33]Ibid.
[34] Pfizer’s Corporate Complaint, supra note 6, at 6.
[35] For further discussion regarding the Revlon case, see, e.g., Christina M. Sautter, The Golden Ratio of Corporate Deal-making, 41 J. Corp. L. 817 (2015); Robert T. Miller, Delaware Law Requires Directors to Manage the Corporation for the Benefit of Its Stockholders and the Absurdity of Denying It: Reflections on Professor Bainbridge's Why We Should Keep Teaching Dodge v. Ford Motor Co, 48 J. Corp. L. Digit. 32 (2022).
[36] Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986).
[37]Id. at 182 (holding that “[t]he directors’ role changed from defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at a sale of the company.”).
[38]Id. at 184.
[39]Ibid.
[40]See, e.g., Matthew D. Cain et al., Does Revlon Matter? An Empirical and Theoretical Study, 108 Calif. L. Rev. 1683 (2020).
[41] Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261 (Del. 1989).
[42]Id. at 17.
[43]See e.g., In re J.P. Stevens & Co. S’holders Litig., 542 A.2d 770 (Del. Ch. 1988); In Re Cogent, Inc. S’holder Litig.,7 A.3d 487 (Del. Ch. 2010) (holding that “‘[t]he need for potential regulatory approvals relating to antitrust considerations presents a legitimate risk factor for the Board to consider in determining whether a proposed transaction would maximize stockholder value. If regulatory approval is denied or drawn out in a costly delay, then a higher bid price does not necessarily mean a greater return for stockholders.’”); In re BJ's Wholesale Club, Inc. S’holders Litig., C.A. No. 6623-VCN (Del. Ch. Jan. 31, 2013).
[44] In re Family Dollar Stores, Inc. S’holder Litig., Consol., No. 9985-CB (Del. Ch. Dec. 19, 2014).
[45]Id. at 39.
[46] This might stem from cases such as eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1 (Del. Ch. 2010), in which it was held that in a for-profit company, the company's management is required to prioritize shareholder wealth maximization (which is also known as the “shareholder primacy” approach) over broader social and public aims and considerations (this could also include competition and consumer wealth considerations).
[47] Metsera’s Answering Brief to Pfizer’s TRO, supra note 6, at 1. According to Metsera, Novo “has outbid Pfizer by approximately $1 billion, an 18.9% premium to the value Metsera stockholders would have received under the existing Pfizer merger agreement.”
[48]Ibid.
[49]Id. at 20. Metsera also added, that Delaware case-law “recognizes that directors may discount higher nominal bids to account for regulatory and closing risk” but “it does not impose a rule that they must do so.” Id. at 21.
[50]See e.g., Naomi R. Lamoreaux and Laura Phillips Sawyer, Voting Trusts and Antitrust: Rethinking the Role of Shareholder Litigation in Public Regulation, from the 1880s to the 1930s, 39(3) Law & Hist. Rev. 569 (2021); Herbert Hovenkamp, Enterprise and American Law, 1836-1937 241-49, 166-67 (Harv. Univ. Press 1st ed. 1991).
[51] 224 Ill. 9 (1906).
[52]Id. at 25–26.
[53]Cf. Michael A. Carrier and Gwendolyn J. Lindsay Cooley, Prior Bad Acts and Merger Review, 111 Geo. L.J. Online 106 (2022).
[54] And cases similar to it, such as Harding v. Am. Glucose Co., 182 Ill. 551 (1899), which was also decided by the Illinois Supreme Court.
[55] See in this regard: Yifat Aran and Moran Ofir, The Effect of Specialised Courts over Time, in Time, Law and Change: An Interdisciplinary Study (Ranchordas S. and Roznai Y. eds., Hart Publ’g 2020).
[56]See e.g., Williamson v. Columbia Gas & Elec. Corp., 27 F. Supp. 198 (D. Del. 1939).
[57] W. Elec. Co. v. Components, Inc., No. 2820, 1970 Del. Ch. LEXIS 114 (Del. Ch. Dec. 7, 1970).
[58]Id. at 1.
[59]Metsera’s Answering Brief to Pfizer’s TRO, supra note 6, at 4.
[60]See Jef Feeley, Pfizer Loses Legal Bid to Temporarily Block Novo’s Metsera Offer, Bloomberg (Nov. 5, 2025), https://www.bloomberg.com/news/articles/2025-11-05/pfizer-loses-legal-bid-to-temporarily-block-novo-s-metsera-offer.
[61] The main reason for the lack of discourse regarding this tension was summarized by Prof. Rock as so: “[a]ntitrust is about markets; corporate law is about firms. Antitrust is about competition; corporate law is about cooperation. Antitrust regulates relations among firms; corporate law governs relations within firms.” Edward B. Rock, Corporate Law Through an Antitrust Lens, 92 Colum. L. Rev. 497 (1992). See also in this regard: Edward B. Rock, Antitrust and the Market for Corporate Control, 77 Calif. L. Rev. 1365 (1989); Spencer Weber Waller, Corporate Governance and Competition Policy, 18 Geo. Mason L. Rev. 833 (2011).
[62] Nicholas Walter, Antitrust and Corporate Law: Revisiting the Market for Corporate Control, 15 U. Pa. J. Bus. L. 755 (2012).
[63]Id. at 771.
[64]Id. at 775.
[65] Pfizer’s Antitrust Complaint, supra note 6, at 1.
[66]Id. at 10–12.
[67]Id. at 11–12.
[68]Ibid.
[69]Id. at 6.
[70] Id. at 5.
[71] Id. at 17.
[72]Id. at 26–27.
[73] Herbert Hovenkamp, Potential Competition, 86 ALJ 805, 806 (2025) (explaining that “‘[p]otential competition’ refers to sources of competition that have not yet emerged as actual competitors. These could be firms that produce somewhat different products in the same geographic area, or those that sell the same product but in a different geographic area. It can also refer to the potential of sellers that do not yet even exist, but who might be expected to emerge if conditions become favorable.”).
[74]See e.g., Thomas L. Vankirk, Antitrust Consideration in Making Investment in the United States, 1 Penn St. Int’l L. Rev. 81 (1982).
[75]See e.g., Frank H. Easterbrook, Toehold Acquisitions and the Potential Competition Doctrine, 40 U. Chi. L. Rev. 156 (1972). By contrast, when a potential competitor merges with an incumbent firm, it is usually deemed anticompetitive, as the relevant market would still be dominated by the incumbent, post-merger. See, e.g., FTC v. Proctor & Gamble Co., 886 U.S. 568 (1967).
[76] Vankirk, supra note 74, at 95 (explaining that “[e]ntry into a market by means of an acquisition may be deemed to contribute to competition, rather than lessen it, in what are termed ‘toe-hold’ acquisitions. This doctrine asserts that an acquisition of a small firm in an oligopolistic market might enhance competition as well as a de novo entry. Since the small firm was not effective in its competition with the oligopolists, the small firm fortified by the acquiring firm, may become a viable competitor. An acquisition of a firm with a market share of 10% or less in a concentrated industry can be expected to qualify as a toe-hold acquisition.”).
[77] Pfizer’s Antitrust Complaint, supra note 6, at p.16.
[78]Id. at 16–17.
[79]Id. at 13.
[80]Cf. Steven C. Salop, Analysis of Foreclosure in the EC Guidelines on Vertical Restraints, in Annual Proceedings of the Fordham Corporate Law Institute (Barry E. Hawk, ed., Fordham Corp. L. Inst. 2001); see also Carl Shapiro, Vertical Mergers and Input Foreclosure Lessons from the AT&T/Time Warner Case, 59(2) Rev. Ind. Organ 303 (2021).
[81] The 2020 Vertical Merger Guidelines, issued by the FTC and DOJ on June 30, 2020, demonstrates this by the following example (at p. 6): “Situation: Upstream firms supply oranges to downstream firms, which use the oranges to produce orange juice. All orange suppliers make take-it-or-leave-it offers to sell at constant unit prices. A supplier of oranges (the related product) merges with a producer of orange juice (the relevant market) that buys its entire orange demand from the supplier. Discussion: The merged firm may have the ability to restrict the supply of oranges to rival orange juice producers. If those rivals lack alternative sources of oranges to those of the merged firm in sufficient quantity at comparable price and quality, the merged firm may be able to increase their costs by raising the price at which it sells them oranges or by refusing to sell them oranges altogether.”
[82]Ibid.
[83] Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977); Cargill v. Monfort, 479 U.S. 104 (1986).
[84]Ibid.
[85]Ibid.
[86]See e.g., Frank and Rogers, supra note 1.
[87] Lucas Auto. Eng’g, Inc. v. Bridgestone/Firestone, Inc., 140 F.3d 1228 (1998).
[88]Id. at 1233.
[89] Metsera itself named Pfizer a “Sore-loser bidder” in its response to Pfizer's TRO. Supra note 6, at 41. Hence, it is not fanciful that it would have argued against Pfizer's antitrust complaint, that Pfizer as an unsuccessful bidder, should not be granted “antitrust standing,” as it has suffered no “antitrust injury,” similar to the Lucas ruling.
[90] Frank and Rogers, supra note 1.
[91] Retrophin, Inc. v. Questcor Pharms., Inc., 41 F. Supp. 3d 906 (C.D. Cal. 2014). This case and its implications on potential competitors' standing rights against preemptive acquisitions was more broadly discussed in Frank and Rogers, supra note 1, at 52–53.
[92]Id. at 909.
[93]Ibid.
[94]Ibid.
[95]Ibid.
[96]Id. at 912.
[97]Ibid.
[98]Id. at 913.
[99]Ibid.
[100]Ibid.
[101]Ibid.
[102] Gulf States Reorganization Grp., Inc. v. Nucor Corp., No. 1:02-cv-2600-RDP, 2005 U.S. Dist. LEXIS 39027 (N.D. Ala. Sep. 30, 2005).
[103] Id. at 13.
[104]Id. at 15.
[105]Ibid.
[106] Gulf States Reorganization Grp., Inc. v. Nucor Corp., 466 F.3d 961 (2006). This case and its implications on potential competitors' standing rights against preemptive acquisitions was more broadly discussed in Frank and Rogers, supra note 1, at 51–52.
[107] Id. at 967–68.
[108] For elaboration on the benefits of private antitrust litigation, see, e.g., Robert H. Lande and Joshua P. Davis, Benefits from Private Antitrust Enforcement: An Analysis of Forty Cases, 42 U.S.F. L. Rev. 879 (2008).
[109] This point was also broadly discussed in Frank and Rogers, supra note 1, at 556–58.
[110] In re Am. Express Anti-Steering Rules Antitrust Litig., 19 F.4th 127 (2d Cir. 2021).
[111]Supra note 14.
[112]Ibid.
[113]Cf. Richard A. Epstein, The DOJ and FTC's Misguided Attack on Mergers, 49 J. Corp. L. 275 (2023).
[114] Frank and Rogers, supra note 1, at 56–58.
[115]Ibid.