Concerted Action under Antitrust Law
"Concerted Action" under Antitrust Law refers to a form of coordination between two or more independent entities (usually competitors) that leads to anti-competitive behavior, even if there is no formal agreement between them. It is a key concept under Section 1 of the Sherman Antitrust Act in U.S. law and has equivalents in many other jurisdictions.
đ Definition
Concerted Action is:
"A knowing participation in a common scheme with the intent to achieve an unlawful objective under antitrust laws, particularly to restrain trade or competition."
Unlike an explicit agreement (e.g. a written or oral contract), concerted action can involve informal cooperation, parallel conduct with communication, or coordinated behavior without formal agreement.
âď¸ Legal Framework (U.S. Focus)
Sherman Act, Section 1:
Prohibits â[e]very contract, combination... or conspiracy, in restraint of trade or commerce among the several States.â
Concerted Action falls under the âcombination or conspiracyâ language.
Courts interpret this broadly to include implicit coordination.
đ§ Key Elements of Concerted Action
To establish concerted action, courts often look for:
Multiple Parties: At least two independent economic actors.
Mutual Understanding or Meeting of the Minds: Doesnât require a formal agreement, but some level of coordination or communication.
Unlawful Objective: Typically, price-fixing, market allocation, or bid-rigging.
Evidence of Conduct: Can include:
Direct evidence (e.g., emails, meetings)
Circumstantial evidence (e.g., pattern of behavior inconsistent with independent action)
đ Key Cases
Theatre Enterprises, Inc. v. Paramount Film Distributing Corp. (1954)
Held: Mere parallel business behavior is not illegal unless there is evidence of agreement.
Monsanto Co. v. Spray-Rite Service Corp. (1984)
Ruled that a plaintiff must show âevidence that tends to exclude the possibility of independent action.â
Bell Atlantic Corp. v. Twombly (2007)
Raised the pleading standard: parallel conduct must be accompanied by factual context suggesting a meeting of the minds.
â Lawful vs â Unlawful Behavior
| Lawful (Independent Action) | Unlawful (Concerted Action) |
|---|---|
| Competing firms independently adopt similar business strategies | Firms communicate and agree (explicitly or implicitly) to fix prices or divide markets |
| Price matching based on public data | Agreeing to price match to avoid price wars |
| Shared industry information (through public sources) | Coordinating strategies at trade association meetings |
đ International Context
In EU Competition Law, a similar concept exists under Article 101(1) TFEU, which prohibits:
"All agreements between undertakings, decisions by associations of undertakings and concerted practices..."
Here, âconcerted practicesâ mirrors the U.S. notion of concerted actionâcoordinated behavior without formal agreement.
đĄ Summary
Concerted action captures the gray area between independent behavior and explicit conspiracy.
It allows antitrust enforcers to target tacit collusion that harms competition.
Proving concerted action often requires careful analysis of both behavior and communication between firms.
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