Opinion ID: 3000181
Heading Depth: 2
Heading Rank: 2

Heading: Classification of Alleged Conspiracy

Text: When an agreement between competitors at the same level of distribution restrains trade, it has traditionally been denominated horizontal. See Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 730 (1988). Trade restraining agreements between firms at different levels of distribution, e.g., a wholesale supplier and a retail distributor, are deemed vertical restraints. Id. In this case, the district court did not classify the alleged conspiracy as either horizontal or vertical, reasoning that such a classification was immaterial to the outcome. Specifically, the court stated: A review of the cases suggests that whether one classifies the agreement as horizontal or vertical is not of consequence in this case because plaintiff must still prove an agreement to fix the price or price levels 10 No. 06-1992 after termination. Therefore, the appropriate analysis is not whether this agreement is vertical or horizontal, but rather whether the plaintiff has provided sufficient evidence of an agreement to fix price or price levels to withstand a motion for summary judgment. Miles Distribs., Inc. v. Specialty Constr. Brands, Inc., 417 F. Supp. 2d 1030, 1036 (N.D. Ind. 2006). In fact, the classification of the alleged conspiracy is of consequence, because it determines what evidence Miles must produce in order to survive summary judgment. To prove a vertical conspiracy that is per se illegal, Miles must show an agreement to fix prices. See Bus. Elecs., 485 U.S. at 73536. However, certain horizontal conspiracies, like horizontal group boycotts,6 are illegal regardless of price fixing. See NYNEX Corp., 525 U.S. at 134. If, as Miles has suggested, its competitor tile stores conspired together to force TEC to terminate Miles, then the conspiracy constitutes an antitrust violation.7 See, e.g., Klor’s, Inc. v. 6 Horizontal restraints that are per se illegal usually involve boycotts by a group of competitors against a joint supplier in order to disadvantage another competitor. 7 The characterization of the offense as a horizontal conspiracy, given that it is a lawsuit between a supplier and a distributor, might strike some as odd. Although the sole defendant in this case is a supplier, the alleged boycott also includes retailers, i.e., conspirators at different levels of distribution. Miles notes that a facially vertical restraint imposed by a manufacturer can be horizontal if caused by a “horizontal cartel” among distributors, citing Business Electronics, 485 U.S. at 730, n. 4 (“A restraint is horizontal not because it has horizontal effects, but because it is a product of a horizontal agreement.”). Though the idea that an apparent vertical restraint may in fact be horizontal comes from dicta that the Supreme Court relegated to a footnote, at least one circuit has followed that dicta. See Rossi v. Standard (continued...) No. 06-1992 11 Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959) (noting that horizontal group boycotts have long been forbidden). We therefore consider whether Miles has shown that a genuine issue of material fact remains under either a horizontal or vertical conspiracy analysis.