Communication and Concerted Action

It is a familiar scenario in U.S. antitrust litigation: The plaintiffs allege that a pattern of identical pricing (or refusals to deal) is "concerted" and therefore per se illegal; the defendant responds that the practice is merely "consciously parallel" or "interdependent" and therefore legal. Under U.S. law, to avoid summary judgment or judgment as a matter of law, a plaintiff must produce a "plus factor," evidence that "tends to exclude the possibility" that the defendants' actions were merely interdependent. Courts have identified various plus factors-for example, evidence that the alleged conduct was against the defendant's interest unless it was pursuant to an agreement-but they have been notably vague about what exactly constitutes concerted action. Obviously, the Sherman Act does not require the plaintiff to prove that the defendants formed a legally enforceable contract-the Sherman Act, after all, makes agreements illegal and therefore unenforceable. But beyond that, the law tells us little. Courts still quote the Supreme Court's sixty-year-old formulation that a Sherman Act agreement requires only "a unity of purpose, a common design and understanding, or a meeting of the minds." Unfortunately, however, this language could easily be interpreted to condemn conscious parallelism. In this article, I argue that concerted action should be defined to require communication among rivals. I begin by describing the development of the distinction in law and theory between consciously parallel and concerted action. I then show that the received definitions of concerted action leave courts and especially juries with inadequate guidance. Economic expert testimony does not fill the void, because Marshall M. Criser Eminent Scholar, University of Florida Levin College of Law. I would like to thank Oliver Black, Roger Blair, Tom Cotter, Michael Freed, Christine Klein, John Lopatka, Gregg Polsky, Mark McLaughlin, and Spencer Waller for helpful comments. I also benefited from comments at a workshop at the University of Florida Levin College of Law and at the Loyola University Chicago conference on the legacy of Matsushita. HeinOnline -38 Loy. U. Chi. L.J. 405 2006-2007 Loyola University Chicago Law Journal economic theory does not distinguish concerted and interdependent conduct. I propose, building on the recent work of Oliver Black,1 that the distinguishing characteristic of concerted action is communication among rivals, not only of intentions, but also of the firms' reliance on their rivals' actions in choosing a common course of action. I argue that the proposed definition has implications for U.S. antitrust law. First, it is at least consistent with the older Supreme Court cases. Second, it helps us evaluate whether various public announcements or private communications justify the inference that parallel conduct is concerted. Finally, courts applying the standard plus-factors analysis in recent years have implicitly required something like the communications in the proposed definition, even though they continue nominally to apply the received nebulous definitions. Including communication in the definition of concerted action would have limited consequences. Communication is itself an ambiguous term that requires clarification. Even if it can be defined with reasonable clarity, courts will still be required to determine whether proven communications satisfy the definition. Moreover, plaintiffs would not necessarily be required to produce direct evidence of communications that meet the definition, so long as they can offer circumstantial evidence that would permit an inference that the requisite communications have occurred. Thus, the problem of inferring an agreement from ambiguous evidence, including communications of various kinds, will remain under the proposal. But at least courts, juries, and litigants will know better what they are supposed to be inferring. 1. OLIVER BLACK, CONCEPTUAL FOUNDATIONS OF ANTITRUST (2005). [Vol. 38 HeinOnline -38 Loy. U. Chi. L.J. 406 2006-2007 Communication and Concerted Action