AAI Urges Less Restrictive Approach to Evaluating Circumstantial Evidence in Price Fixing Cases (Valspar Corp. v. DuPont)

The American Antitrust Institute (AAI) urged the Third Circuit Court of Appeals in an amicus brief to reject a district court’s overly restrictive approach for determining whether a price-fixing claim should reach a jury in a circumstantial evidence case.

The case involves allegations by a direct purchaser that titanium dioxide suppliers fixed prices over an 11-year period when they uniformly raised prices some 31 times, well over any increase in costs, despite declining demand and excess capacity.  Although the district court found the titanium dioxide industry was a “text book example” of an industry conducive to price fixing, it granted summary judgment to the defendant because the evidence of coordinated conduct was susceptible to a non-collusive interpretation.

A different federal district court judge overseeing the related class action denied summary judgment on largely the same record.

AAI’s brief explains that the district court stretched to the point of incoherence the rule that merely interdependent oligopoly pricing is not illegal.  The court adopted a misguided approach that apparently requires plaintiffs, in order to get a case to a jury, to have “smoking gun” evidence or internal documents referring to an explicit agreement.

The brief argues that the harmfulness of supracompetitive oligopoly pricing should inform the standards for inferring a price fixing agreement.  With supracompetitive oligopoly pricing becoming increasingly problematic as markets become increasingly concentrated, the “extra ingredient” beyond interdependent, noncompetitive pricing that is required to prove concerted action should not be unduly limited.

The brief points to two principal errors made by the district court.  First, the district court misapplied Matsushita by holding that “ambiguous” evidence is insufficient to defeat summary judgment.  On the contrary, the brief argues that evidence can be sufficient to defeat summary judgment if it would allow a reasonable fact finder to infer that an agreement is more probable than not.

Second, the brief argues that the district court failed to give sufficient weight to plus factors indicative of an express or tacit agreement.  In particular, the court erred in discounting evidence of sharing confidential information about production, demand, and capacity, because the data was aggregated.  Aggregated data, the brief explains, can well serve to facilitate price fixing by reducing pricing uncertainty and “cheating.”

The district court also erred in dismissing evidence that defendants used advance price announcements as signals.  The court thought this was common oligopoly behavior having a legitimate purpose.  However, the brief points out that there was evidence the announcements were intended to be used as signals, and whether there was a legitimate purpose was a disputed issue of fact.

The brief was written by AAI Vice President and General Counsel Richard Brunell, with assistance from AAI Associate General Counsel Randy Stutz, AAI Research Fellow Michael Altebrando, and AAI Intern Jonathan Wright.   The motion for leave are available here.