Document: 475 U.S. 574 106 S.Ct. 1348 89 L.Ed.2d 538 MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., et al., Petitionersv.ZENITH RADIO CORPORATION al. No. 83-2004. Argued Nov. 12, 1985. Decided March 26, 1986. Syllabus Petitioners are 21 Japanese corporations or Japanese-controlled American that manufacture and/or sell "consumer electronic products" (CEPs) (primarily television sets). Respondents and sets. In 1974, respondents brought an action in Federal District Court, alleging petitioners, over a 20-year period, had illegally conspired to drive firms from the CEP market by engaging scheme fix maintain artificially high prices for sets sold petitioners Japan and, at same time, low exported United States. claim various portions of this violated, inter alia, §§ 1 2 Sherman Act, § 2(a) Robinson-Patman 73 Wilson Tariff Act. After several years discovery, moved summary judgment on all claims. The Court then directed parties file statements listing documentary evidence would be offered if case went trial. were filed, court found bulk which relied was inadmissible, admissible did not raise genuine issue material fact as existence alleged conspiracy, any inference conspiracy unreasonable. Summary therefore granted petitioners' favor. Appeals reversed. determining much excluded admissible, held erred granting there both direct circumstantial conspiracy. Based inferences drawn evidence, concluded reasonable factfinder could find depress order out competitors, funded excess profits obtained market. Held: apply proper standards evaluating Court's decision grant motion judgment. Pp. 582-598. (a) "direct evidence" relied—petitioners' supracompetitive pricing Japan, "five company rule" each producer permitted only five distributors, "check prices" (minimum fixed agreement with Government CEPs States) insofar they established minimum States—cannot itself give cognizable against antitrust damages. P. 583-583. (b) To survive judgment, must establish is whether entered into illegal caused suffer injury. If factual context renders respondents' claims implausible, i.e., make no economic sense, offer more persuasive support their than otherwise necessary. plaintiff seeking damages violation Act present "that tends exclude possibility" conspirators acted independently. Thus, here show light competing independent collusive have harmed respondents. 585-588. (c) Predatory conspiracies nature speculative. They require sustain substantial losses recover uncertain gains. implausible. Moreover, record discloses has succeeded two decades operation. This strong does exist. possibility alter assessment. 588-593. (d) Mistaken cases such one especially costly, because chill very conduct laws designed protect. There little reason concerned where speculative ambiguous, courts will encourage conspiracies. 593-595. (e) respects: it little, any, relevance predatory failed consider absence plausible motive engage pricing. rational conspire, neither practices, market, nor agreements respecting distributions sufficed create "genuine trial" under Rule Civil Procedure 56(e). On remand, may other, unambiguous 595-598. 723 F.2d 238 (CA3 1983), reversed remanded. POWELL, J., delivered opinion BURGER, C.J., MARSHALL, REHNQUIST, O'CONNOR, JJ., joined. WHITE, filed dissenting opinion, BRENNAN, BLACKMUN, STEVENS, joined, post, p. 598. Donald J. Zoeller, petitioners. Charles F. Rule, Washington, D.C., U.S., amicus curiae, special leave Edwin Rome, Philadelphia, Pa., Justice POWELL Court. requires we again standard district when deciding case. * Stating facts daunting task. Third Circuit runs 69 pages; primary three times long. re Electronic Products Antitrust Litigation, 1983); 513 F.Supp. 1100 (ED Pa.1981). Two respected Judges authored number opinions case; published ones alone fill entire volume Supplement. addition, 40-volume appendix said contain essence based respective decisions. 3 We repeat what these many stated restated, summarize mass documents constitute appeal. Since review applied case, weight assigned particular pieces unnecessary state great detail. What follows case's long history. A. 4 Petitioners, defendants below, (CEPs)—for most part, include manufacturers firms, controlled parents, Japanese-manufactured products. Respondents, plaintiffs Zenith Radio Corporation (Zenith) National Union Electric (NUE). firm manufactures sells NUE corporate successor Emerson Company, manufactured until 1970, withdrew after sustaining losses. began lawsuit 1974,1 claiming According respondents, gist " 'scheme raise, receivers [petitioners] States.' F.2d, 251 (quoting preliminary pretrial memorandum). These "low allegedly levels produced F.Supp., 1125. early 1953, according full operation sometime late 1960's. claimed violated Antidumping 1916. 5 detailed motions them. file, preclusive effect, "Final Pretrial Statements" proceeded statement, responded series challenging admissibility evidence. opinions, inadmissible.2 6 turned spanning 217 pages, At bottom, found, rested parallel markets, effects competitors. 1125-1127. reviewing category toto, unreasonable, (i) some suggested ways injure (ii) bore directly price-cutting rebut cutting compete monopolize it. Because claims, combined functionally indistinguishable dismissed them also. Finally, depended supposed favor those well.3 B 7 reversed.4 examining evidentiary rulings, determined admissible. 260-303. rulings before us. See 471 1002, 105 1863, 85 157 (1985) (limiting certiorari). 8 merits, newly enlarged record, improper. acknowledged "there legal limitations upon evidence," 304, but "the problem . different" concert action." Ibid. Here, concluded, certain kinds having tendency suggest other occurred." Id., 304-305. reasoned, concerning inferring ambiguous dispositive. 305. Turning reasonably draw following conclusions: 9 1. characterized oligopolistic behavior, small producers meeting regularly exchanging information price matters. 307. created opportunity stable combination Japan. attack imposed significant barriers entry. 10 2. relatively higher costs counterparts, needed operate something approaching capacity profit. 11 3. Petitioners' plant exceeded needs 12 4. By formal arranged cooperation Japan's Ministry International Trade Industry (MITI), 310. refer prices," agreements." 13 5. agreed distribute products States rule": distributors. 14 6. undercut own check variety rebate schemes. 311. sought conceal schemes Customs Service MITI, former avoid customs regulations well antidumping laws, latter cover up violations check-price agreements. 15 foregoing conclusions,5 apparently conclude behavior conspiratorial. 16 address liable compelled foreign sovereign. claim, essence, MITI required enter agreements, liability premised sovereign compulsion, being used "evidence export conspiracy" basis finding liability. also believed unclear mandated Government, notwithstanding statement effect itself. 315. 17 certiorari determine part (1985). reverse first issue, do reach second. II 18 begin emphasizing not. cannot solely cartelization regulate competitive conditions nations' economies. v. Aluminum Co. America, 148 416, 443 (CA2 1945) (L. Hand, J.); Areeda & D. Turner, Law ¶ 236d (1978).6 Nor can charge Such indeed violate Trenton Potteries Co., 273 392, 47 377, 71 L.Ed. 700 (1927); Socony-Vacuum Oil 310 150, 223, 60 811, 844, 84 1129 (1940), respondents: stand gain CEPs. Cf. Brunswick Corp. Pueblo Bowl-O-Mat, Inc., 429 477, 488-489, 97 690, 697, 50 701 (1977). reason, impose nonprice restraints either raising limiting output. restrictions, though harmful competition, actually benefit competitors making attractive. five-company rule limited distribution country, themselves extent injured 19 nevertheless argue conspiracies, grounds recovery damages, another cognizable: means below level.7 thrust argument monopoly fund concerted campaign predatorily thereby business. Once successful, cartelize restricting output above level fair competition produce. resulting profits, contend, compensate incurred through level. 20 allegation horizontal pricing,8 proved,9 per se 306. appeal conclusion. thus becomes adduced sufficient theory examine principles govern determination. III judgment,10 Fed.Rule Civ.Proc. 56(e);11 First Bank Arizona Cities 391 253, 288-289, 88 1575, 1592, 569 (1968). showing components. First, laws; injury conduct. whole host restraint trade. Supra, 582-583. Except pricing, "antitrust injury," 489, S.Ct., tended Therefore, unless, context, "other" raises defeat motion. 22 Second, "genuine." Fed.Rules 56(c), (e). When moving party carried its burden 56(c),12 opponent simply metaphysical doubt facts. DeLuca Atlantic Refining 176 421, 423 1949) J.), cert. denied, 338 943, 70 423, 94 581 (1950); 10A C. Wright, Miller, M. Kane, Practice 2727 (1983); Clark, Special Problems Drafting Interpreting Procedural Codes Rules, Vand.L.Rev. 493, 504-505 (1950). Sartor Arkansas Natural Gas Corp., 321 620, 627, 64 724, 728, 967 (1944). language nonmoving come forward "specific trial." 56(e) (emphasis added). Advisory Committee Note 1963 Amendment 56(e), 28 U.S.C.App., 626 (purpose "pierce pleadings assess proof see need trial"). Where taken lead trier non-moving party, Service, supra, 289, 1592. 23 It settled implausible—if makes sense—respondents instructive. defendant's refusal deal supported defendant willingly joined boycott. Economic factors strongly join 278-279, 1587. that, isolation, might triable issue. 277, 1586. But evaluated context. lacked boycott, since consistent interest, 280, 1588. 24 correctly note "[o]n underlying viewed favorable opposing motion." Diebold, 369 654, 655, 82 993, 994, (1962). law limits range permissible Monsanto Spray-Rite 465 752, 104 1464, 79 775 (1984), not, standing alone, 764, 1470. verdict, 1471. words, 25 fully economically irrational practically infeasible. Consequently, conspiracy; indeed, conspire manner allege. apparent charged existed. us practical obstacles implementation. IV 26 A Any forgo free forgone considered investment future. For rational, expectation recovering, form later suffered. As then-Professor Bork, discussing single firm, explained: 27 "Any realistic predation recognizes predator his victims incur during fighting, supposes calculation view future (where rivals killed) undisturbed disciplined). flow appropriately discounted, exceed size losses." R. Paradox 145 (1978). McGee, Pricing Revisited, J.Law Econ. 295-297 (1980). explanation shows, success inherently uncertain: short-run loss definite, long-run depends successfully neutralizing competition. enough achieve power, breed quick entry new eager share profits. maintaining power recoup predator's harvest additional gain. Absent assurance hoped-for materialize, sustained period "[t]he pay off." Easterbrook, Strategies Counterstrategies, 48 U.Chi.L.Rev. 263, 268 (1981). consensus among commentators rarely tried, even successful. See, e.g., 149-155; Related Practices Under Section Harv.L.Rev. 699 (1975); supra; Koller, Myth Pricing—An Empirical Study, Econ.Rev. (1971); Price Cutting: Standard (N.J.) Case, 137 (1958); Econ., 292-294. Northeastern Telephone Telegraph 651 76, 1981) ("[N]owhere recent outpouring literature subject [predatory] common likely increase"), 455 102 1438, 654 (1982). 29 observations power. allege large below-market stifle incalculably difficult execute analogous plan undertaken predator. allocate conspiracy's operation, gains realized success. Precisely willingness endure indefinite conspirator incentive cheat, letting partners necessary destroy while sharing succeeds. allocation accomplish. Yet cheat extent, fail, depressing buyers too few goods satisfy demand, would-be continue "real" price, purpose. 30 generally unlikely occur, so where, here, prospects attaining seem slight. losses, obtain set prices, earn earlier gave below-cost prices. 89; Harv.L.Rev., 698. commenced,13 appear far achieving goal: largest shares retail RCA respondent Zenith, App. Brief Appellant 81-2331 (CA3), pp. 2575a-2576a. shares, together approximate 40% sales, decline appreciably 1970's. collective rose rapidly one-fifth less relevant markets close 50%. 316.14 Neither however, presently allows prices; contrary, contend ongoing—that still data goal yet distant.15 31 failure ends asserted accrue gains, "repaid" interest. And accrued course decades, correspondingly time recoup. Maintaining turn continued conspirators, inability (not incidentally) conspirators' ability escape price-fixing cartel.16 Each weighs heavily grows. been substantial—as competition17 —petitioners cartel break even. 32 change calculation. Whether country absent likelihood eventually off. success, and—as indicated above—the contrary: hold color More important, nothing relationship between amount expect possible overcome ultimate conspiracy.18 33 Monsanto, emphasized should permit factfinders infer practices often deter procompetitive 762-764, seek cut indirectly, combinations (such rule) whose natural rebates activities tend prove suppress prices.19 increase business mistaken 763-764, "[W]e lest precedent authorizes search type undesirable end discouraging legitimate competition." Barry Wright ITT Grinnell 724 227, 234 (CA1 1983). 34 cases, concern balanced desire identified punished. That balance is, unusually one-sided one. explained, 588-593, realize gains; moreover, depend uncertainties, fail succeed. realities self-deterring: unlike violates costly conspirators. Limits Antitrust, 63 Texas L.Rev. 1, (1984). successful involving punished once succeed, reap benefits predation. V 35 our discussion Part IV-A presumably businesses, every charged, generate corresponding 279, take account focused instead 304. 36 combinations, Evidence provides claims: another. (through agreements) works favor, suggests place floor rather lower true limit distributors so-called rule. practice facilitated territorial allocation, Topco Associates, 405 596, 92 1126, 515 (1972), reduce them.20 collateral says anything, about decades. 37 highly exists within meaning Lack bears conclusions evidence: equally explanations, rise 278-280, 1587-1588. question consists largely taking away arrangements (and kept going lower). behaved competitively, companies levels. sense: calls larger better themselves, remains distant birth. Even obtaining monopoly, along way. sum, suffice 56(e).21 38 sufficiently despite so. "ten[d] underpriced implement senseless entitled reinstated. VI 39 Our compulsion heart agency States, immune integral part. discussed II, suffered raised all, distinct Solicitor General urge decide presented here. 40 reversed, remanded further proceedings opinion. 41 ordered. 42 whom STEVENS join, dissenting. 43 remarkable face careful Appeals, reaches result does. faithfully followed precedents, including (1968), firmly mind principle fragmented, Continental Ore Carbide Carbon 370 699, 1404, 1410, 777 surveying massive erroneously excluded, creates engaged my view, Appeals' adequately supports 44 today, identifying reversible error, muddies waters. place, confusing inconsistent appropriate assumptions invade factfinder's province. Third, faults nonexistent errors remands although plain issues fact. 45 initial appears doctrine. I agree "[w]here 'genuine trial.' Ante, 587 1592). '[o]n motion.' (1962)). departure traditional gives critique Circuit's opinion: 46 "[T]he conspiratorial." 581. similar vein, summarizes holding "courts ." 593. judge hearing go beyond inquiry himself favors plaintiff. proposition. piece insufficiently probative justify sending jury.1 holdings way undermine doctrine construed intends job probable overturning law. intend pronouncement, refrain using unnecessarily broad language. 49 defining recover, states "petitioners products, measure cost." 585, n. 8. assumption "[a]n without features position forces prices." assumption, ignores contrary expert DePodwin, report DePodwin Report, material, indicates priced Report explains price-raising resulted consumption exporting occurred Increasing exports depressed respondents.2 exchanged confidential proprietary avoiding intragroup restrictions lose lost competed another.3 51 regarding harm country. No prefers theorizing Dr. DePodwin's, deny DePodwin's views how collusion respondents.4 52 unlikelihood consistently assumes valued profit-maximization growth. ante, 595. III-B, infra, believe argued factfinder, decided 53 reversing identifies errors: "(i) [T]he 'direct evidence' [Court Appeals] pricing." substance. 54 error treated fixing respondents." 583 (citing Electronics 238, 304-305 1983)). passage locates quite simple correct observation, namely, distinguishable "conscious parallelism" implies, jump unthinkingly observation conclusion respondents.5 twice specifically noted allocating customers, illegal, ordinarily agreeing parties. 306, 310-311. However, activity establishment dumping long-term, device: 55 "[A] customers intended concentration eliminating market." 56 erroneous reasoning. 57 second skeptical academic discussions predation; job, remanding pointless. 58 considers sales tries whittle suggesting "expert value comparison irrational." 594, 19. finds experts persuasive, analysis; whether, viewing jury sales. answer "yes." 59 misleading "did disturb analysis substantially [evidence sales]." exclusion portion trial ignored uncontradicted affidavit field rely." 282. short, correctness cost time. Having made determination, saw need—nor I—to point point. criticisms methods arguments consider. demonstrated fact, affirm remand complaint four earlier, New Jersey. Zenith's separately Eastern Pennsylvania. consolidated Pennsylvania 1974. inadmissible included government records reports, Matsushita Industrial 505 1125 Pa.1980), pursuant hearsay exceptions, 1190 testimony proposed introduce. 1313 ruled 494 Pa.1980). appealed ruling, separate issued day 319 ask rest mammoth mentioned questions petition certiorari, independently 21.1(a). invitation defendants, affirmed who remain addition inferences, "generally twenty-five percent sales." identify pricing; particularly heavy reliance aspect 19, infra. outside borders, commerce. 704, 1413, (1962) ("A restrain domestic commerce just complained occurs countries"). rely decided, allege, option producing fewer selling markets. chose profitable former. choice perfectly choose overseas, profit expectations. rule, includes monopolization mistaken. However decides describe contours conspiracy—whether several—respondents provide relief. Associated Contractors California, Inc. Carpenters, 459 519, 538-540, 103 897, 908-909, 74 (1977); Note, Standing, Injury, Per Se Standard, 93 Yale L.J. 1309 involved Throughout "predatorily." term chiefly dominant cuts force perhaps potential entrants coming in. E.g., Southern Pacific Communications U.S.App.D.C. 309, 331-336, 740 980, 1002-1007 470 1005, 1359, 380 "predatory pricing" cost. 232-235 Utah Pie Baking 386 685, 698, 701, 702, 14, 87 1326, 1333, 1335, 1336, 406 (1967). good debate, reviews, "cost" cases. resolve debate cited above, purposes unless An complain example, maximum levels, ever available incremental 709-718 (1975) (discussing cost-based test use cases). matter, businesses IV-A, carry 56(c) demonstrating Adickes S.H. Kress 398 144, 157, 90 1598, 1608, 142 (1970). Catrett Johns-Manville Sales 244 160, 756 181, granted, 474 944, 342, 285 resolved provides, part: "When provided adverse mere allegations denials pleading, response, affidavits forth specific he respond, appropriate, shall him." 10, supra. NUE's alleges 1960; starting date 1953. Complaint 52; 39. During manufacturing declined 13. 1961a. trend least 1960, negligible. &Par; 35, 37. suppose difficult, impossible extended Judge commenting article, offers sensible assessment: "The [in case] last fifteen ten TV possibly produce harming however. business, Fifteen (The like investments, recovered compound interest.) try level, attract electronics, proliferation computer audio shows. resurgent (Korea nations sets), themselves. recoup, plaintiffs' theory, thirty years, longer history, cartels illegal. None sanguine cartel, given firm's shave expand predation-recoupment story left place. hard 26-27 (1984) (footnotes omitted). sense driving would, course, (1940). predators' nears objective: greater share, predators sell; sale brings loss, production possessed. exceeds demand abroad. sales; explain why willing money prospect recouping investment. study actual data; rather, mathematical construction rests costs. analyzed detail implausible 1356-1363. Although 277-282. persuasive. Accordingly, factors, irrational. reasoned insulate other. irrelevant predatorily. underprice already goods. customer conspiring Respondents—petitioners' competitors—suffer seems kind, "rule" subsidiaries, subsidiaries resell. 1190. imply establishes more, 588. fact-specific Service. 587. manufacturer's termination distributor receiving question. understand holding, important Colgate 250 300, 465, 992 (1919), manufacturer announce advance terminate comply, Miles Medical John Park Sons 220 373, 376, 502 (1911), impermissible lawful Colgate, shared understanding enforcement resale maintenance scheme. holds Miles, distributor's exercise prerogatives Colgate. "[t]here nonterminated acting independently." terminated dealer produces bare postcomplaint termination, pointing toward action. follows: injuries inflicted producers, look manufacturers' embracing well. increased supply proportion devoted Domestic higher. differential diminished vanishing reducing risen. industry increased. was, influx rates return receiver facilities uneconomic. "We severe manufacturers, Corporation, preponderance screen sizes nineteen inches lower, Appellants 1629a-1630a. this, things, say summarizing exchange data, coordination, anti-competitive petitioners: impact evident competitive, pit resources attempt secure individual customers. collude, basic tenet act confronted collusively relationships. targeted service fellow members become involved. importantly, assured actions associates. phenomenal growth exports, Concurrently, particular, investments equipment expanded capacity. obvious, therefore, cartel's added enabled encouraged penetrate deeply lawfully." 1628a-1629a. complete operated, harms id., 1609a-1642a. summarized chart 1633a. Parts improperly said: expertise reaching participated cartel. 1342-46. examined admitted portions, clearly erroneous. result, unhelpful factfinder. eliminate parts economist, describing opportunities collusion, terms undisputed expressed theory. Considering complexity involved, help issue." 280 VII. example; played actionable 303-311. mean validity defense. addressing

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