Distribution, Competition, and Antitrust / IP Law

What You Need to Know About the Four Basic Types of Pricing Claims (Part 1)

To every even casual reader of this blog, it is obvious that antitrust and competition law apply to the pricing behavior of competing firms. But what exactly are the danger zones, and what sorts of claims can be brought? In the next few posts, I will provide some basic information about pricing issues and claims. I will focus on horizontal pricing issues (i.e., pricing between and among “horizontally” situated firms which compete with each other).

We can consider four basic types of claims: (i) an actual price-fixing claim, (ii) a claim for a price information exchange that impacts pricing, (iii) a claim regarding a price information exchange that does not impact pricing, and (iv) a claim for parallel pricing behavior. This discussion focuses on the federal Sherman Act, but the California Cartwright Act (and many other states’ laws) is largely similar.

An actual price-fixing claim. This type of claim requires allegation and proof of an actual agreement to fix or set prices. An agreement need not be formal and written; it can be oral and informal. A “wink and a nod” are enough. But there needs to be a meeting of the minds. If competitors enter into such an agreement, it is per se illegal. Pro-competitive justifications, lack of impact, etc. are irrelevant. (Though to get damages in a private suit, you still need to prove damages.)

An agreement can be proven up directly or through circumstantial evidence. If proven circumstantially, the evidence must essentially exclude the possibility that the defendants’ actions are as consistent with independent action as they are with conspiracy. This is the Matsushita summary judgment rule.

Evidence of a price information exchange (next post) can tend to support the inference of a price-fixing agreement, because price information exchange can help defendants to implement, monitor, and enforce a price-fixing agreement. But price information exchange alone does not prove a price-fixing agreement. It is one of several “plus factors” that can help move permissible parallel pricing over the line into the zone of impermissible agreement.

Compare In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 906 F.2d 432 (9th Cir. 1990) (evidence of parallel pricing in a relatively concentrated market, plus evidence that defendants publicly announced, in press releases, their advance pricing decisions, in order to facilitate either interdependent or plainly collusive price coordination, is sufficient to survive a defense motion for summary judgment on a price-fixing claim) with Reserve Supply Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37 (7th Cir. 1992) (defendants’ practices of maintaining price lists for products and of announcing price increases 30 to 60 days before their effective date did not amount to an improper information exchange; discounts were widely used in the industry, making the price lists a poor candidate to coordinate pricing; publicly pre-announcing price increases served a legitimate purpose because customers, who were mostly rehandlers and contractors, needed to be able to inform their customers of price increases or to figure such increases into their bidding).

Next post: price information exchanges that impact pricing.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.


  1. […] This is the second in a series of posts.  The first can be found here. […]

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