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Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Tuesday, March 26, 2013

Anti-Competitive Agreements: The Meaning of 'Agreement'

Posted by D. Daniel Sokol

George Alan Hay, Cornell University - School of Law discusses Anti-Competitive Agreements: The Meaning of 'Agreement'.

ABSTRACT: In the classic cartel, supposed competitors meet in the proverbial smoke-filled hotel room and agree to fix prices at supra-competitive levels. Even though the “agreement” is unlikely to be legally binding on the parties (i.e., the agreement could not be enforced against one of the cartelists that began to “cheat” by offering lower prices), virtually all modern economies would treat such a cartel as unlawful under their national antitrust laws.

Despite the effectiveness of leniency programs in encouraging confessions from cartel members, there are still cartels (both domestic and international) that operate under a cloak of secrecy, and therefore governments must continue to use more conventional tools to seek them out and prosecute them. Sometimes these traditional investigatory tools will yield the confession or the hot documents that will make prosecution easy, but not always. So the question arises: in the absence of a video-taped cartel meeting, a cooperating participant, or incriminating documents, can a cartel be successfully prosecuted based primarily on “circumstantial” evidence?

However, it is not just a question of what kind of circumstantial evidence can be used to establish the existence of a hard-core cartel – that question might best be described in these circumstances as akin to an economic detective story. A more complicated substantive question underlies the effort to describe the type and quantity of the circumstantial evidence necessary to obtain a successful prosecution, namely, what precisely do we mean to include under the category of an illegal “agreement” or “conspiracy” or “concerted practice?”

The plan of this chapter is to begin by describing how the U.S. treats classic cartel behavior when proof of the existence of a cartel agreement is not an issue. Then we turn to the task of establishing the existence of an illegal agreement primarily or entirely through circumstantial evidence. This will quickly get us into the question of what constitutes an unlawful agreement under U.S. law and in particular, the recently renewed debate about whether classic oligopoly behavior can be prosecuted as an unlawful agreement. In the process, we will refer to how similar issues are dealt with in other jurisdictions, most notably the European Union.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/03/anti-competitive-agreements-the-meaning-of-agreement.html

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