Opinion ID: 518733
Heading Depth: 1
Heading Rank: 3

Heading: conspiracy in restraint of trade--section 1

Text: 69 The jury also found that Flygt and ITT had entered into a contract, combination or conspiracy with one or more Harvestore dealers, and that the contract, combination or conspiracy was an unreasonable restraint of trade. 9 Flygt and ITT argue that Section 1 liability is unsupported by the record. 70 Under Section 1, there is no need to prove that concerted activity threatens monopolization; concerted behavior is treated more strictly than unilateral behavior because the former is fraught with anticompetitive risk. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768-69, 104 S.Ct. 2731, 2740, 81 L.Ed.2d 628 (1984). Thus, the inquiry in Section 1 cases (contrary to Flygt's assertion in its brief) does not focus upon the definition of the relevant market which may be subject to monopolization, but upon the threat of anticompetitive effects resulting from concerted activity. 71 H.J. advances the following facts as proof of concert between the defendants and one or more Harvestore dealers to effect an unreasonable restraint of trade: the Copenhagen breakfast meeting where a Harvestore dealer voiced complaints about distributors and the distributor system; Flygt's president's subsequent tour of Harvestore dealers in Wisconsin and Illinois; the decision to terminate all its agricultural distributors soon after the tour; and the price cut in mix hoist systems soon after the termination of the distributors. 72 As a general principle, the existence of illegal conspiracies in restraint of trade is not lightly inferred, especially when the actions complained of may carry beneficial competitive results. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. at 763, 104 S.Ct. at 1470 (1984). There is nothing inherently anticompetitive about elimination of a distribution level, and it often, if not usually, benefits the consumer. See Paschall, 727 F.2d at 700-01. 73 In Monsanto, the Supreme Court affirmed the jury's finding of a conspiracy between Monsanto and some of its distributors to fix and maintain prices. In doing so, it discussed the standards of proof a plaintiff must satisfy to establish concerted action under Section 1 of the Sherman Act. The mere fact that a manufacturer received complaints from one distributor about price-cutting by another distributor, and acted on them, is not enough to base a finding of concerted action. The Court noted that 74 distributors are an important source of information for manufacturers. In order to assure an efficient distribution system, manufacturers and distributors constantly must coordinate their activities to assure that their product will reach the consumer persuasively and efficiently. To bar a manufacturer from acting solely because the information upon which it acts originated as a price complaint would create an irrational dislocation of the market. 75 465 U.S. at 763-64, 104 S.Ct. at 1470. So it is for dealers. 76 The Court concluded that something more than evidence of complaints is needed. There must be evidence that tends to exclude the possibility that the manufacturer and nonterminated distributors were acting independently. Id. The standard also entails more than a showing that the distributor conformed to the suggested price. It means as well that evidence must be presented both that the distributor communicated its acquiescence or agreement, and that this was sought by the manufacturer. 465 U.S. at 764 n. 9, 104 S.Ct. at 1471 n. 9. 10 77 Keeping in mind the Supreme Court's warning that proof of a conspiracy should not be compartmentalized or fragmented, Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S.Ct. 1404, 1410, 8 L.Ed.2d 777 (1962), the evidence in this case is still inadequate, under the standards of proof of antitrust conspiracy, to support a finding of concerted activity. 78 Under Monsanto, the complaints by the Harvestore dealer in Copenhagen, and the dealers' acquiescence in Flygt's new two-tier distribution system (and their acceptance of the lower price of the mix hoist system) are not sufficient to support a finding of concerted action. [T]he existence of dealer complaints, even when coupled with manufacturer action in response to the information originating in the complaints, does not indicate the kind of commitment to a common scheme required by section 1 of the Sherman Act. Pumps & Power Co., 787 F.2d at 1257 (reversing jury finding of conspiracy). 79 The only other evidence supporting the inference of a common scheme is the timing of the decisions to terminate the three-tier distribution system and to reduce the price of the mix-hoist system. The decisions' coming soon after the Copenhagen meeting and tour of Wisconsin and Illinois dealers is consistent with the possibility that some agreement was reached. However, there is no evidence tending to exclude the possibility of independent action, Monsanto, 465 U.S. at 764, 104 S.Ct. at 1471. Taking all the circumstances into consideration we conclude that the making of an agreement in unreasonable restraint of trade could not reasonably be inferred. 80 All the remaining evidence supports an inference of independent action. Mr. Ericson testified that when Mr. Bjernfalk was presented with the suggestion that Flygt sell directly to dealers, he was non-committal. Mr. Ericson claimed that he made the decision to terminate the distributors unilaterally. Beside the breakfast meeting and the tour, there is no evidence of communications between Flygt and dealers concerning the decision--no Harvestore dealers testified. A jury cannot reasonably infer the existence of a conspiracy merely from the opportunity to form one.