Conscious Parallelism and Price Fixing: Defining the Boundary
![handle is hein.journals/uclr52 and id is 522 raw text is: Conscious Parallelism and Price Fixing:
Defining the Boundary
Section 1 of the Sherman Antitrust Act' has eliminated most
overt price-fixing arrangements. In order to avoid sanctions under
this law, firms wishing to engage in collusive,2 anticompetitive
practices are forced to enter into secret agreements to fix prices.3
The detection of these covert agreements has become the central
focus of section 1 enforcement.4 Direct evidence of such agree-
ments is difficult to obtain, however, and courts must often rely on
indirect or circumstantial evidence of conspiracies to fix prices.
Frequently, an important factor in establishing the existence of
such a conspiracy is similar conduct by rival firms that suggests
they are attempting to set prices or carve up the market for a par-
ticular product.5 Such conscious parallelism by itself does not
constitute concerted action in violation of the Sherman Act,' how-
ever, and courts have disagreed over what additional evidence
(plus factors) must be produced in order to permit a trier of fact
to infer the existence of a price-fixing agreement.7
1 Every contract, combination in the form of trust or otherwise, or conspiracy, in re-
straint of trade or commerce among the several States, or with foreign nations, is declared
to be illegal. 15 U.S.C. § 1 (1982).
2 Professor, now Judge, Richard Posner noted the difference between a cartel and a
collusive arrangement: Although sometimes the term 'cartel' is used to refer to any collu-
sive arrangement, it is more often limited to the kind of formal, above-board agreement
among firms to limit their competition that one finds in markets, here and abroad, not sub-
ject to the Sherman Act. RICHARD POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE 39
(1976). The most notable example of an overt cartel is the Organization of Petroleum Ex-
porting Countries (OPEC).
I Posner, Oligopolistic Pricing Suits, the Sherman Act, and Economic Welfare: A Re-
ply to Professor Markovits, 28 STAN. L. REV. 903, 904 (1970).
4 Posner argues that this focus has virtually emptied [the rule against price fixing] of
any economic content, to become in effect a branch of the criminal law of conspiracies and
attempts. Id.
5 See Delaware Valley Marine Supply Co. v. American Tobacco Co., 297 F.2d 199, 202
(3d Cir. 1961), cert. denied, 369 U.S. 839 (1962).
0 See, e.g., Theatre Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 541
(1954).
7 Compare In re Plywood Antitrust Litig., 655 F.2d 627, 634, 637 (5th Cir. 1981) (al-
lowing the inference of conspiracy from parallel conduct and evidence of opportunity to
conspire), cert. dismissed sub nom. Lyman Lamb v. Weyerhauser, 462 U.S. 1125 (1983),
with Weit v. Continental Ill. Nat'l Bank & Trust Co., 641 F.2d 457, 463 (7th Cir. 1981)
(holding that parallel conduct plus opportunity to conspire did not permit the inference of](ViewImageLocal?handle=hein.journals/uclr52&div=29&collection=&method=preview&ext=.png&size=3)
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Conscious Parallelism and Price Fixing: Defining the Boundary
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