Competitive Prices Act
Bill: H.R.8777 | Sponsor: Rep. Porter, Katie (D-CA)
Policy area: Commerce

Summary:
Competitive Prices Act
This bill makes a consciously parallel pricing coordination (i.e., a tacit agreement among two or more persons to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services) a prohibited form of price fixing.

To specify the standards governing claims of consciously parallel 
  pricing coordination in civil actions under the Sherman Act, and to 
 clarify the meaning of contract, combination in the form of trust or 
            otherwise, or conspiracy under the Sherman Act.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Competitive Prices Act''.

SEC. 2. PURPOSE.

    The purpose of this Act is to clarify and amend the law with 
respect to--
            (1) the illegality of consciously parallel pricing 
        coordination under sections 1 and 3(a) of the Sherman Act (15 
        U.S.C. 1, 3(a)); and
            (2) the concerted-action requirement for claimed violations 
        of section 1 or 3(a) of the Sherman Act.

SEC. 3. FINDINGS.

    (a) Consciously Parallel Pricing Coordination.--
            (1) The American economy is built on the foundations of 
        open markets and fair competition. These core principles of 
        economic freedom are what stimulate innovation, improve the 
        quality of products and services, and ensure that prices are 
        competitive.
            (2) The antitrust laws are designed to ensure American 
        consumers and businesses are afforded the benefits of 
        competition throughout the economy. The supreme evil of 
        antitrust law is, accordingly, collusion among market rivals. 
        Such collusion undermines competitive markets, stifles 
        innovation, and results in degraded quality and prices that are 
        dictated by competitors' agreement rather than competitors' 
        rivalry.
            (3) Sections 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 
        3(a)) categorically prohibit--as the most pernicious types of 
        contracts, combinations in the form of trust or otherwise, or 
        conspiracies, in restraint of trade or commerce--naked 
        agreements among actual or potential competitors to fix prices, 
        rig bids, or allocate markets. An agreement to fix the quantity 
        of products or services bought or sold is a form of agreement 
        to fix prices. These agreements are per se unlawful.
            (4) Courts have been unduly hostile to claims of price 
        fixing that are based on tacit agreement among competitors. 
        They have, at times, declined to recognize tacit agreement as a 
        contract, combination in the form of trust or otherwise, or 
        conspiracy; they have held that allegations or evidence, taken 
        as a whole, that are as consistent with ``conscious 
        parallelism'' as with agreement are generally insufficient to 
        survive a motion to dismiss or motion for summary judgment; and 
        they have concluded a claimant must offer allegations or 
        evidence tending to exclude the possibility of independent 
        action. See, e.g., Brooke Grp. Ltd. v. Brown & Williamson 
        Tobacco Corp., 509 U.S. 209, 227 (1993); Matsushita Elec. 
        Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986); 
        Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 
        (1984).
            (5) Section 4 of this Act rejects the judicial decisions 
        that have prevented meritorious price-fixing cases from 
        advancing to trial and judgment. It does so by providing that, 
        in civil actions, consciously parallel pricing coordination--as 
        defined by this Act--is a ``contract, combination in the form 
        of trust or otherwise, or conspiracy, in restraint of trade or 
        commerce'' under sections 1 and 3(a) of the Sherman Act.
            (6) Section 4 of this Act does not supersede the law 
        governing price fixing. It instead supplements and complements 
        that law. It does not apply to criminal prosecutions.
    (b) Concerted Action.--
            (1) The words ``contract, combination in the form of trust 
        or otherwise, or conspiracy'' in sections 1 and 3(a) of the 
        Sherman Act require some form of agreement between two or more 
        persons, but that agreement need not be expressly made. A tacit 
        agreement also qualifies. Accordingly, the words ``contract, 
        combination in the form of trust or otherwise, or conspiracy'' 
        encompass both express and tacit agreements.
            (2) Although consciously parallel behavior alone does not 
        constitute a contract, combination in the form of trust or 
        otherwise, or conspiracy under sections 1 and 3(a) of the 
        Sherman Act, consciously parallel behavior can be evidence of 
        an agreement. And once the consciously parallel behavior 
        crosses the line into consciously parallel coordination, the 
        behavior qualifies as tacit agreement--that is, a contract, 
        combination in the form of trust or otherwise, or conspiracy.
            (3) In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 548-
        49, 553-57, 564-70 (2007), the Supreme Court held that a 
        complaint alleging that competitors engaged in parallel, 
        anticompetitive conduct did not do enough to exclude the 
        possibility that the competitors engaged in independent action 
        and therefore failed to plausibly plead the existence of a 
        conspiracy under section 1 of the Sherman Act. In so holding, 
        the Court understated the significance of consciously parallel 
        behavior as evidence of agreement and left little or no room 
        for tacit agreements in the meaning of ``contract, combination 
        in the form of trust or otherwise, or conspiracy''.
            (4) Section 5 of this Act rejects the Twombly Court's 
        cramped reading of the Sherman Act's language, clarifies that 
        the words ``contract, combination in the form of trust or 
        otherwise, or conspiracy'' encompass tacit agreements, and 
        specifies the standards for pleading and proving a contract, 
        combination in the form of trust or otherwise, or conspiracy 
        under sections 1 and 3(a) of the Sherman Act.

SEC. 4. CONSCIOUSLY PARALLEL PRICING COORDINATION.

    (a) Definitions.--
            (1) The term ``consciously parallel pricing coordination'' 
        means a tacit agreement among two or more persons to raise, 
        lower, change, maintain, or manipulate pricing for the purchase 
        or sale of reasonably interchangeable products or services.
            (2) The term ``person'' has the meaning given the term in 
        subsection (a) of the first section of the Clayton Act (15 
        U.S.C. 12(a)).
    (b) Consciously Parallel Pricing Coordination.--In a civil action, 
including an action brought by the United States or by a State attorney 
general, or by the Federal Trade Commission under section 5 of the 
Federal Trade Commission Act (15 U.S.C. 45), consciously parallel 
pricing coordination is a ``contract, combination in the form of trust 
or otherwise, or conspiracy, in restraint of trade or commerce'' under 
sections 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 3(a)).
    (c) Prima Facie Case.--
            (1) A claimant establishes a prima facie case of 
        consciously parallel pricing coordination by demonstrating that 
        two or more persons--
                    (A) engaged in substantially similar action, within 
                a substantially similar time period, with respect to 
                pricing for reasonably interchangeable products or 
                services; and
                    (B) had a substantially similar motivation to 
                coordinate their efforts to raise, lower, change, 
                maintain, or manipulate pricing for the purchase or 
                sale of reasonably interchangeable products or 
                services.
            (2) A claimant asserting a claim of consciously parallel 
        pricing coordination in violation of section 1 or 3(a) of the 
        Sherman Act bears the burden of proving the prima facie case 
        described in paragraph (1) by a preponderance of evidence, at 
        which point the burden of production shifts to the defending 
        party as set forth in subsection (d).
    (d) Burden of Rebutting Prima Facie Case.--The defending party 
bears the burden of rebutting a prima facie case of consciously 
parallel pricing coordination by producing evidence, sufficient to 
raise a genuine dispute of material fact, that the defending party's 
action described in paragraph (1)(A) of subsection (c) was motivated by 
business judgment that is economically rational in the absence of any 
consciously parallel pricing coordination. Evidence of this nature may 
include, but is not limited to, evidence that the defending party acted 
rationally in response to or in anticipation of changing conditions 
affecting the market for or the marketability of the products or 
services concerned.
    (e) Ultimate Burden.--If the defending party rebuts the prima facie 
case, the burden shifts back to the claimant to prove, by a 
preponderance of the evidence, that the defending party entered a tacit 
agreement among two or more persons to raise, lower, change, maintain, 
or manipulate pricing for the purchase or sale of reasonably 
interchangeable products or services. The claimant may do so by means 
that include, but are not limited to, proving that--
            (1) the business judgment described in subsection (d) was 
        not--
                    (A) economically rational in the absence of 
                consciously parallel pricing coordination; or
                    (B) the predominant motivating factor for the 
                defending party's action described in paragraph (1)(A) 
                of subsection (c);
            (2) the defending party, knowing that coordinated action to 
        raise, lower, change, maintain, or manipulate pricing for the 
        purchase or sale of reasonably interchangeable products or 
        services was contemplated and invited by a competitor, adhered 
        to the scheme and participated in it; or
            (3) based on circumstantial evidence implying a traditional 
        conspiracy, it is more likely than not that the defending party 
        entered an agreement among two or more persons to raise, lower, 
        change, maintain, or manipulate pricing for the purchase or 
        sale of reasonably interchangeable products or services.
    (f) Affirmative Defense.--It is an affirmative defense to a claim 
of consciously parallel pricing coordination, on which the defending 
party bears the burden of proof by a preponderance of the evidence, 
that any affirmative defense to price fixing applies.

SEC. 5. CLARIFYING THE MEANING OF CONTRACT, COMBINATION IN THE FORM OF 
              TRUST OR OTHERWISE, OR CONSPIRACY.

    (a) Meaning of Contract, Combination in the Form of Trust or 
Otherwise, or Conspiracy.--A tacit agreement is a form of ``contract, 
combination in the form of trust or otherwise, or conspiracy'' under 
sections 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 3(a)).
    (b) Standards of Pleading and Proof.--In a civil action, including 
an action brought by the United States or by a State attorney general, 
or by the Federal Trade Commission under section 5 of the Federal Trade 
Commission Act (15 U.S.C. 45)--
            (1) a complaint--
                    (A) plausibly pleads a ``contract, combination in 
                the form of trust or otherwise, or conspiracy'' under 
                sections 1 and 3(a) of the Sherman Act if the complaint 
                contains factual allegations, which may consist of 
                allegations of consciously parallel conduct, 
                demonstrating that the existence of the alleged 
                contract, combination in the form of trust or 
                otherwise, or conspiracy is among the realm of 
                plausible possibilities; and
                    (B) need not allege facts tending to exclude the 
                possibility of independent action to plausibly plead 
                the existence of a ``contract, combination in the form 
                of trust or otherwise, or conspiracy'' under sections 1 
                and 3(a) of the Sherman Act; and
            (2) a claimant--
                    (A) demonstrates a genuine dispute of material fact 
                that a defending party entered a ``contract, 
                combination in the form of trust or otherwise, or 
                conspiracy'' under sections 1 and 3(a) of the Sherman 
                Act by offering evidence, which may be direct or 
                circumstantial, that is sufficient to allow a trier of 
                fact to reasonably conclude that the defending party 
                entered the contract, combination in the form of trust 
                or otherwise, or conspiracy; and
                    (B) need not offer evidence tending to exclude the 
                possibility of independent action to demonstrate a 
                genuine dispute of material fact that a defending party 
                entered a ``contract, combination in the form of trust 
                or otherwise, or conspiracy'' under sections 1 and 3(a) 
                of the Sherman Act; although, at trial, the trier of 
                fact may consider the existence or absence of evidence 
                tending to exclude the possibility of independent 
                action when determining whether a defending party 
                entered the contract, combination in the form of trust 
                or otherwise, or conspiracy.
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