Opinion ID: 2936316
Heading Depth: 3
Heading Rank: 4

Heading: Departure from pre-conspiracy

Text: conduct The Plaintiffs argue further that the Chocolate Manufacturers departed from their pre-conspiracy conduct by deciding to follow price increases during the conspiracy period and that this is traditional conspiracy evidence. For a change in conduct to create an inference of a conspiracy, the shift in behavior must be a “radical” or “abrupt” change from the industry’s business practices. Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 935 (7th Cir. 2000). The Plaintiffs have failed to show such a shift here. First, the Plaintiffs’ argument is not premised on an apples-to-apples comparison. To show a shift in conduct, the Plaintiffs rely on a “failed” September 2001 price increase on packaged candy initiated by Hershey. Instead of following the price increase, Mars responded by reducing its weight on M&M packaged candy and maintaining prices, but three months later, Mars raised prices on miniatures packaged chocolate candy. J.A. 6192–93. The Plaintiffs also cite a January 2002 proposed price increase by Hershey on certain boxed chocolates that Hershey rescinded when it received pushback from customers. By contrast, the 2002 and 2007 47 parallel price increases involved only singles and kings, and the 2004 parallel price increases involved singles and kings as well as packaged candy. In fact, the Chocolate Manufacturers did not exactly follow each other on packaged products in the 2002 price increases, lending further support to the notion that different considerations factored into the pricing decisions for immediate consumption products and future consumption products. Putting aside the fact that Mars actually responded to Hershey’s 2001 price increase and did not simply stand pat, the “failed” price increases in 2001 and early 2002 involved different products at different times than the parallel price increases in 2002, 2004, and 2007. Second, the focus of the Plaintiffs’ argument is unduly narrow. Historically, parallel pricing in the U.S. chocolate market has not been at all uncommon. See J.A. 1087 (detailing parallel pricing in 1981 and 1983); J.A. 1105–06 (detailing a 1979 weight reduction on singles initiated by Hershey and matched by Mars; a 1986 price increase on singles, kings, and six packs initiated by Mars and matched by Hershey; a 1991 price increase on singles, kings, and six packs initiated by Hershey and matched by Mars; and a 1995 price increase on singles, kings, and six packs initiated by Hershey and matched by Mars and Nestlé USA). Moreover, after the alleged conspiracy period, the Chocolate Manufacturers have raised prices in parallel three other times. J.A. 2866–67. The Plaintiffs do not argue that all of these parallel price increases resulted from an unlawful conspiracy, so we fail to see why we should infer a conspiracy existed between 2002 and 2007 from behavior that is in fact consistent with how this industry has historically operated. Third, it is generally unremarkable for the pendulum in oligopolistic markets to swing from less to more interdependent and cooperative. See Areeda & Hovenkamp, 48 supra, ¶ 1431a, at 229 (noting that the degree of interdependence “may be either weak or strong and may vary from time to time within a given market”). Accordingly, the evidence presented by the Plaintiffs does not show an abrupt shift in behavior that can support a reasonable inference of a conspiracy.