Sherman Act, Horizontal agreements, Facilitating practices, E.I. du Pont de Nemours & Co. v. Federal Trade Comm'n, Ethyl case, Interstate Circuit v. United States, Oligopoly defense
Antitrust and Trade Regulation | Litigation
It is well established that, absent some very special circumstances, agreements on price or certain other terms of trade by otherwise competing entities (i.e., "horizontal agreements") are unlawful per se under the Sherman Act. In practical effect, once the fact of the horizontal agreement has been established, an adverse impact on competition is presumed, and therefore that the plaintiff is spared the burden of proving such an impact. The principal task for plaintiffs in such cases, therefore, is establishing the existence of an agreement.
In the ideal world (from plaintiffs' perspective), there would be "hard" evidence of a "formal" agreement. By "formal" agreement, I mean that the parties actually met or otherwise explicitly communicated agreement on a course of action, and by "hard" evidence, I mean that there is testimony from a live witness present when the communication occurred, a video or audio recording of the communication, or a document created by one of more of the parties that documents the fact of the agreement.
Of course, the world is not always ideal and most of the litigated cases involve situations in which there is no hard evidence of a formal agreement. In such cases, the plaintiff is forced to ask the court to infer an agreement from circumstantial evidence. However, as we shall see, what makes this task difficult for the plaintiff is that it may involve some complex combination of a detective story (what actually happened?), where economic analysis is often an essential ingredient, and a theoretical legal argument (does what happened constitute an unlawful agreement?). It is the possibility of this complex combination of economic evidence and legal theory that also poses challenges for the court, whether in fashioning instructions for the jury or in ruling on motions (typically by defendants) for summary judgment, directed verdict, judgment notwithstanding the verdict and, most recently, motions to dismiss the complaint for failure to state a claim. In what follows, I attempt to identify the challenges and to explain when and how economic analysis may be of assistance, but at the same time, identifying areas where the principal concerns are legal rather than economic, i.e., where legal creativity may be required for an effective solution. In that vein, the article will discuss the concept of "facilitating practices" and assess whether the concept may be useful in filling an important gap in the coverage of the Sherman Act.
Hay, George A., "Horizontal Agreements: Concept and Proof" (2006). Cornell Law Faculty Publications. 1142.
Published in: Antitrust Bulletin, vol. 51, no. 4 (Winter 2006).