Opinion ID: 760949
Heading Depth: 1
Heading Rank: 2

Heading: The Underlying Legal Concepts

Text: 10 The legal fulcrum for the plaintiffs' complaint is Section 1 of the Sherman Act. Section 1 provides: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. 15 U.S.C. § 1. The existence of an agreement is the hallmark of a Section 1 claim. Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 999 (3d Cir.1994). Liability is necessarily based on some form of concerted action. Id. 3 Indeed, we have defined a conspiracy as a conscious commitment to a common scheme designed to achieve an unlawful objective. Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 111 (3d Cir.1980). In other words,  'unity of purpose or a common design and understanding or a meeting of the minds in an unlawful arrangement' must exist to trigger Section 1 liability. Alvord-Polk, 37 F.3d at 999, (quoting Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984)). 11 In determining whether certain concerted action amounts to an unreasonable restraint this court applies one of two methods of analysis. See e.g. Rossi v. Standard Roofing, 156 F.3d 452, 461 (3d Cir.1998). The concerted action is either analyzed (1) through the per se standard, which presumes that the questionable conduct has anticompetitive effects without comprehensive inquiry into whether the concerted action produced adverse, anticompetitive effects, or (2) through the so-called rule of reason, a case-by-case method that involves consideration of all of the circumstances of a case to decide whether certain concerted action should be prohibited because it amounts to an anti-competitive practice. The analysis to be applied depends on the essence of concerted action in dispute. Id. 12 Generally, price-fixing agreements are considered a per se violation of the Sherman Act. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). Per se violations include those types of restraints on competition that are in and of themselves considered unreasonable because their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable. United States v. Cargo Service Stations, Inc., 657 F.2d 676, 682 n. 4 (5th Cir. Unit B 1981) (quoting Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958)). However, when the evidence consists of mere exchanges of information the presumption vanishes. See United States v. United States Gypsum Co., 438 U.S. 422, 441 n. 16, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978). Exchanges of information are not considered a per se violation because such practices can in certain circumstances increase economic efficiency and render markets more, rather than less, competitive. Gypsum, Id. at 441 n. 16, 98 S.Ct. 2864. Therefore, such exchanges of information are evaluated under a rule of reason analysis. 13 This court has previously articulated what Section 1 rule of reason analysis entails. We laid down four steps of proof that a plaintiff must present: (1) that the defend ants contracted, combined or conspired among each other; (2) that the combination or conspiracy produced ad verse anti-competitive effects within the relevant product and geographic markets; (3) that the objects of and conduct pursuant to the contract or conspiracy were illegal; and (4) that the plaintiffs were injured as a proximate result of that conspiracy. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1541 (3d Cir.1990). 4 Under the rule of reason, all the evidence presented must be weighed to determine whether the defendants' purported price fixing practices violated the Sherman Act.