Richard J. Holwell (RJH-5098)
Robert M. Kelly (RMK-7204)
WHITE & CASE
1155 Avenue of the Americas
New York, New York 10036
Telephone: (212) 819-8200
Attorneys for Plaintiff
Clark Equipment Company
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
CLARK EQUIPMENT COMPANY, : 95 Civ. 2130 (CSH)
:
Plaintiff, :
:
-against- :
:
INGERSOLL-RAND COMPANY, : COMPLAINT
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:
Defendant. :
:
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Plaintiff, Clark Equipment Company ("Clark"), complain-
ing against defendant, Ingersoll-Rand Company ("Ingersoll"),
alleges as follows:
NATURE OF THE ACTION
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1. This action arises from an offer to purchase
Clark's stock which was publicly announced by defendant on March
28, 1995.
2. Plaintiff claims that the offer, if consummated,
will violate the federal antitrust laws.
3. Plaintiff seeks an injunction prohibiting defendant
from taking any further action to acquire control of Clark.
JURISDICTION AND VENUE
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4. This Court has subject matter jurisdiction pursu-
ant to Section 16 of the Clayton Act, 15 U.S.C. Sec. 26, and Sec-
tions 1331 and 1337 of the Judicial Code, 28 U.S.C. Sec.Sec. 1331 and
1337.
5. Venue is proper in this District pursuant to
Section 12 of the Clayton Act, 15 U.S.C. Sec. 22, and Section 1391
of the Judicial Code, 28 U.S.C. Sec. 1391. Plaintiff and defendant
both transact business in this District.
THE PARTIES
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6. Plaintiff Clark is a corporation organized and
existing under the laws of Delaware and having its principal
place of business in Indiana. Clark is engaged in the business
of designing, manufacturing and selling various machinery and
equipment, including self-propelled asphalt paving equipment.
Clark is a publicly held corporation and its stock is listed and
traded on the New York Stock Exchange.
7. Defendant Ingersoll is a corporation organized and
existing under the laws of New Jersey and having its principal
place of business in New Jersey. Ingersoll is engaged in the
business of designing, manufacturing and selling various machin-
ery and equipment, including self-propelled asphalt paving
equipment. Ingersoll is a publicly held corporation and its
stock is listed and traded on the New York Stock Exchange.
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THE ASPHALT PAVING INDUSTRY
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8. One of the principal lines of business in which
both plaintiff Clark and defendant Ingersoll are engaged is the
design, manufacture and sale of self-propelled asphalt paving
equipment.
9. Asphalt paving equipment is used principally for
purposes of paving roads and highways. The bulk of the work for
which such equipment is used consists of public works projects
that are performed by private contractors pursuant to competitive
bidding awards. In addition, a lesser proportion of asphalt
paving equipment is sold directly to governmental agencies for
highway and road maintenance purposes. A certain portion of
asphalt paving work (which is usually done by private paving
contractors) consists of paving large parking lots. Finally, a
certain proportion of asphalt paving work (which is typically
done by private paving contractors using a different type of
equipment) consists of paving small projects such as driveways,
bike and golf paths and small parking lots.
10. Due to differences in applications, the asphalt
paving equipment industry can be divided into distinct market
segments depending upon the size of the equipment manufactured
and sold.
11. For purposes of this lawsuit, the relevant product
market consists of large asphalt pavers, i.e., those weighing
more than approximately 15,000 pounds. Asphalt pavers in this
market classification are used for large scale projects such as
road paving, highway construction, and large parking lots.
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12. For purposes of this lawsuit, the relevant geo-
graphic market consists of all asphalt pavers in the relevant
product market which are sold for use in the United States. The
relevant product market and the relevant geographic market will
hereafter be referred to collectively as "the Relevant Market."
13. Within the Relevant Market, there are two separate
product submarkets: (1) asphalt pavers weighing approximately
15,000 to 30,000 pounds and (2) asphalt pavers weighing more than
30,000 pounds. For purposes of this lawsuit, the relevant
product submarket market consists of asphalt pavers weighing
approximately 15,000 to 30,000 pounds. The relevant product
submarket will hereafter be referred to as "the Relevant
Submarket."
14. Plaintiff Clark and defendant Ingersoll are direct
competitors in the Relevant Market and Submarket.
15. Plaintiff Clark is the largest supplier of asphalt
pavers in the Relevant Market and Submarket. Plaintiff presently
controls a market share of approximately 30 percent of the
Relevant Market and more than 45 percent of the Relevant
Submarket.
16. Defendant Ingersoll presently controls a market
share of approximately 10 percent of the Relevant Market and more
than 25 percent of the Relevant Submarket.
17. The Relevant Market is highly concentrated. In
addition to Clark and Ingersoll, only three other companies
compete in the Relevant Market: (1) Caterpillar Paving Products,
Inc. (including its wholly-owned subsidiary Barber-Greene Compa-
ny), (2) Cedarapids, Inc. (which is a wholly-owned subsidiary of
Raytheon
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Company), and (3) Roadtec, Inc. (which is a wholly-owned subsid-
iary of Astec Industries, Inc.).
18. The Relevant Submarket is even more concentrated.
In addition to Clark and Ingersoll, only two companies compete in
the Relevant Submarket: Caterpillar and Cedarapids.
19. In addition to the unusually high levels of
concentration, the Relevant Market and Submarket have significant
barriers to entry. For example, it is necessary to have access
to a well-developed dealer network in order to compete effective-
ly in this market. Due to the high cost of downtime and machine
malfunction, customers insist on a reliable dealer network to
service machines and supply replacement parts. Dealers normally
handle one supplier's product line exclusively and, because of
the importance of parts sales, dealers have a strong incentive to
stay with an existing supplier with an established market share
rather than switch to a new supplier. The resulting lack of
access to an established distribution network was a significant
factor in the unsuccessful attempt of several foreign manufactur-
ers to enter the U.S. market.
20. The cost and inconvenience of having to train
operators and maintenance personnel in new equipment, customer
loyalty to established product lines, and interchange of replace-
ment parts with existing product base also constitute significant
barriers to entry in the Relevant Market and Submarket.
21. Should Ingersoll acquire Clark, the level of
concentration in both the Relevant Market and Submarket would
radically increase. The combined entity would have a market
share
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of more than 50 percent in the Relevant Market and more then 65
percent of the Relevant Submarket. In light of these market
shares and given the significant barriers to entry in the indus-
try, the proposed acquisition would substantially lessen competi-
tion and tend to create a monopoly in the Relevant Market and
Submarket.
THE OFFER
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22. On March 28, 1995, defendant Ingersoll publicly
announced that it had made an offer to acquire control of Clark.
James Perrella, Ingersoll's Chairman and Chief Executive Officer,
sent a letter to Clark indicating that Ingersoll intended to
proceed with its offer. The letter was publicly released by
Ingersoll on March 28, 1995, and on March 29, 1995, Ingersoll's
intention to launch a hostile tender offer was widely reported in
the press, including both The Wall Street Journal and The New
York Times.
23. If the tender offer is allowed to proceed and
Clark is acquired by Ingersoll, there will be a massive reduction
of competition in, and defendant's total domination and monopoli-
zation of, both the Relevant Market and the Relevant Submarket.
FIRST CLAIM FOR RELIEF
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(Violation of Section 7
of the Clayton Act)
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24. Plaintiff repeats the allegations contained in
paragraphs 1 through 23.
25. Clark and Ingersoll are both engaged in commerce
and in activities affecting commerce.
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26. The effect of the proposed acquisition of Clark by
Ingersoll will be substantially to lessen competition and tend to
create a monopoly in the Relevant Market and Submarket.
27. Defendant is thereby threatening to violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
28. Plaintiff will sustain irreparable injury by
reason of defendant's threatened violation of the antitrust laws
and is entitled to the relief requested herein.
29. Plaintiff has no adequate remedy at law.
SECOND CLAIM FOR RELIEF
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(Violation of Section 2
of the Sherman Act)
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30. Plaintiff repeats the allegations contained in
paragraphs 1 through 29.
31. Defendant, acting with specific intent to do so,
is attempting to monopolize the Relevant Market and Submarket.
32. There is a dangerous probability that defendant
will achieve monopoly power in the Relevant Market and Submarket
through its actions.
33. As a result of the forgoing acts, defendant has
violated and, unless enjoined by this Court, will continue to
violate Section 2 of the Sherman Act, 15 U.S.C. Sec. 2.
34. Plaintiff will sustain irreparable injury by
reason of defendants' violation of the antitrust laws and is
entitled to the relief requested herein.
35. Plaintiff has no adequate remedy at law.
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WHEREFORE, plaintiff respectfully prays that judgment
be entered as follows:
(a) Declaring that the proposed acquisition of plain-
tiff by defendant violates Section 7 of the Clayton Act and
Section 2 of the Sherman Act;
(b) Preliminarily and permanently enjoining defendant,
its officers, directors, employees and agents, and all other
persons acting on their behalf or in concert with them, from
proceeding with the proposed tender offer;
(c) Granting plaintiff its costs and disbursements in
this action, including attorneys' fees; and
(d) Granting plaintiff such other and further relief
as the Court deems appropriate.
Dated: New York, New York
March 29, 1995
WHITE & CASE
By: /s/ Richard J. Holwell
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Richard J. Holwell (RJH-5098)
Robert M. Kelly (RMK-7204)
1155 Avenue of the Americas
New York, New York 10036
Telephone (212) 819-8200
Attorneys for Plaintiff
Clark Equipment Company
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