Opinion ID: 543660
Heading Depth: 3
Heading Rank: 1

Heading: Press releases

Text: 41 The appellants presented evidence indicating that at various times each of the defendants except ARCO, Union, and Gulf engaged in the practice of publicly announcing, in press releases, their decisions to withdraw dealer assistance and to restore tankwagon prices. 10 Indeed, the evidence indicates that such price increases were sometimes announced in advance of their effective date. Thus, for example, Mobil announced on March 26, 1970 that it would withdraw dealer aid effective March 30. The appellees argue that no inference of conspiracy may be drawn from such evidence because they claim that the publication of this information was perfectly lawful and an ordinary business practice. We conclude, however, that such an inference is both reasonable and permissible under Matsushita. 42 In their depositions in this case, several officers of the appellee oil companies were questioned concerning the business reasons for publicly announcing changes in tankwagon prices and in the levels of dealer assistance. Their virtually uniform response was that it was done for the purpose of quickly informing competitors of the price change, in the express hope that these competitors would follow the move and restore their prices. 43 Thus, the appellees' officers' own testimony indicates that there was essentially no purpose for publicly announcing tankwagon prices and dealer discount information other than to facilitate either interdependent or plainly collusive price coordination. Announcing such price increases publicly reduced the likelihood that the increase would fail to be detected or that it would be detected only after the price leader had been hung out to dry in the market for several days. Without a press release, a withdrawal of dealer support might not be readily detected because the retail prices of individual branded gas stations varied considerably. As one Standard Oil official put it: [S]treet pricing [was] all over the lot; so to us it was important that we set forth clearly and exactly what we had done so there would be no misunderstanding of it. Indeed, ARCO's failure publicly to announce its restoration attempts to the trade press appears to have been responsible for the failure of its January 1970 restoration. An internal ARCO memorandum explained that [t]he reason this partial restoration did not work is that our competitors obviously thought our dealers were merely overpricing and our constructive efforts went completely unnoticed at the market place. To avoid this problem, the memorandum recommended that if ARCO decided to lead a restoration in the future, it should be telegraphed to all news media as far as possible in advance as Legal will approve. 44 It was important for the appellees to reduce the uncertainties concerning restorations because the costs associated with leading a restoration were significant, and they increased with each day that a move was not detected or was not followed. An internal ARCO memorandum noted that its unsuccessful restoration attempts had been costly to us, not only in terms of volume, but more importantly in expense dollars required to recoup and serious adverse reaction with our customers and in our dealer organization. Another ARCO document noted that [p]ast experience has taught us how disastrous it can be for us to be the leader in an upward move. Even with public announcement, the costs of leading a restoration were substantial; Standard Oil's internal analysis of the effect of three restorations it led indicated an average drop in sales volume of over 19% within one week. The same Standard Oil document blamed, in part, the company's practice of leading restorations for causing a significant decline in Standard's overall market share. An ARCO document echoed this view, noting that Standard's and Shell's leading of restorations had led to their disastrous loss in market share. 45 The evidence presented by the appellants thus indicates that the publication of wholesale price increases was intended to make, and had the effect of making, restorations more effective by ensuring that competitors could quickly learn of, and respond to, any withdrawal of dealer aid. 11 The appellees' actions in announcing such information made the market more receptive to price coordination than it otherwise would have been. Although we concluded earlier that mere proof of interdependent pricing, standing alone, may not serve as proof of an antitrust violation, we believe that the evidence concerning the purpose and effect of price announcements, when considered together with the evidence concerning the parallel pattern of price restorations, is sufficient to support a reasonable and permissible inference of an agreement, whether express or tacit, to raise or stabilize prices. The inference is reasonable because at the very least, a jury could conclude that the appellees implicitly agreed to engage in practices that they knew and hoped would lead to greater price coordination, 12 with the result that when a price leader wished to initiate a restoration, it could effectively solicit tacit agreement. See United States v. Container Corp., 393 U.S. 333, 336-37, 89 S.Ct. 510, 512, 21 L.Ed.2d 526 (1969) (informal agreement to provide price information may, under appropriate market conditions, constitute circumstantial evidence of an agreement to stabilize prices); 13 King & King Enterprises v. Champlin Petroleum Co., 657 F.2d 1147, 1152 (10th Cir.1981) (Container established that exchange of price information may serve as basis for inferring price fixing where effect of such exchange is to stabilize prices), cert. denied, 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320 (1982); Penne v. Greater Minneapolis Area Bd. of Realtors, 604 F.2d 1143, 1148-49 (8th Cir.1979) (summary judgment was erroneously granted where evidence indicated possible connection between price information exchanges and alleged conspiracy to fix brokerage fees); see also Posner, Information and Antitrust: Reflections on the Gypsum and Engineers Decisions, 67 Geo.L.J. 1187, 1199 (1979) ([I]f the effect of the information exchange were to raise the level [of] prices, one could infer that the motive was price fixing.); id. at 1203 (a jury should be allowed to consider exchanges of information, other communications among the parties to an alleged conspiracy, and such other relevant circumstances as the effect on the price level ..., as circumstantial evidence of alleged price fixing.). 46 We reject the appellees' circular argument that the publication of dealer discount and price information cannot support an inference of conspiracy because the information was publicly available. The information was publicly available only because the appellees chose to make it so; without such dissemination, price moves were not always readily and easily detected. Furthermore, we agree with Professor (now Judge) Posner that the form of the exchange--whether through a trade association, through private exchange as in Container, or through public announcements of price changes--should not be determinative of its legality. R. Posner, Antitrust Law: An Economic Perspective 146 (1976). The fact that it is feasible for the appellees to communicate the necessary price information through press releases does not immunize the exchange of price information from legal sanction [where] the conditions of the market suggest that the exchange promotes collusive rather than competitive pricing. Id. at 147. 47 We do not believe that permitting such an inference poses any problem under Matsushita. The district court concluded that the inference could not be permitted, reasoning that the hope of imitation was a proper business purpose for the announcements, and that the publication of such information was in the legitimate individual interest of each company. Petroleum Prods., 656 F.Supp. at 1304-05. We agree that it is plausible to contend that independent considerations of self-interest would have led a company to choose to publish a price increase that it had decided to make. That does not settle the inquiry, however; the question remains whether permitting an inference of conspiracy from the fact of such publication would significantly deter important legitimate conduct. Given the market conditions present in this case, we conclude that it would not. 48 It is important to recognize that, given the system of branded franchising, the tankwagon prices or dealer discounts are not of immediate significance to anyone other than the oil companies and their franchised dealers. Retail purchasers do not care what the dealer paid for the oil; they are concerned only with the price at the pump. Moreover, the public dissemination of information concerning dealer tankwagons and discounts could hardly be described as fostering the efficient or rational operation of the market inasmuch as there simply was no wholesale market to rationalize; the branded dealers were not free to shop around for their oil. Accordingly, the district court's reliance on Maple Flooring Mfrs. Ass'n v. United States, 268 U.S. 563, 582-84, 45 S.Ct. 578, 584-85, 69 L.Ed. 1093 (1925) (noting that certain types of price information exchanges may help to avoid the waste which inevitably attends the unintelligent conduct of economic enterprise), quoted in Petroleum Prods., 656 F.Supp. at 1304, is wholly inapposite. 49 The uncontested record evidence indicates that the dealers were individually notified concerning any changes in the tankwagon price or in the level of dealer discount. In light of this fact, it appears that the public dissemination of such information served little purpose other than to facilitate interdependent or collusive price coordination. Under these circumstances, there is no significant probability that permitting the proffered inference would deter important legitimate conduct. 14 The Matsushita balance is particularly one-sided in this case. 50 Nothing in our earlier discussion concerning mere proof of parallel pricing is to the contrary. Simple interdependent pricing does not violate the Sherman Act, not because it is desirable (it is not), but because permitting proof of conspiracy solely on the basis of price parallelism is undesirable. The appellants, however, have offered evidence indicating that the appellees in this case did more than simply price interdependently. A jury could conclude that the oil companies agreed, either implicitly or explicitly, to create market conditions that would facilitate tacit or express price coordination. The evidence would support a conclusion that the appellees strove to make such coordination possible where it otherwise might not have been. To paraphrase Professor Areeda, One may reluctantly tolerate interdependent pricing behavior as such and still condemn [those agreements involving] practices which unjustifiably facilitate interdependent pricing and which can be readily identified and enjoined. P. Areeda, Antitrust Analysis p 325, at 381 (3d ed. 1981). We think that a jury should decide whether the appellees' actions were undertaken pursuant to an agreement or understanding concerning prices or whether their activities were simply noncollusive and independent. 15