Forms of Joint Conduct and Collaboration

This chapter addresses the analyses employed to determine whether
concerted action involving companies related by equity ownership or other
types of control amounts to a “contract, combination or conspiracy”
subject to scrutiny under Section 1 of the Sherman Act, and the other
circumstances in which multiple entities or individuals engaged in
collaboration can be considered a single actor whose conduct is not subject
to Section 1. Agreements between or among economically related entities,
joint venturers, trade and professional associations, cooperative research
participants, standards setting organizations, members of sports leagues,
and health care providers are considered.
A determination that collaboration between market participants of the
types discussed in this chapter presents a “contract, combination or
conspiracy” does not, of course, require a conclusion that the activity
violates Section 1. As explained in Chapter I, Section 1 forbids only
“unreasonable” restraints of trade. The forms of concerted activity
discussed in this chapter can produce substantial procompetitive benefits.
They can, however, also be anticompetitive. Congress and the courts have
developed rules for evaluating the reasonableness of various forms of joint
conduct and collaboration.1 This chapter discusses when collaborative
ventures are subject to antitrust scrutiny and surveys the case law
applicable to various forms of collaboration.
A. Identifying Conspiracy Within Corporate Families
Section 1 does not apply if a “contract, combination or conspiracy”
among multiple independent economic actors is absent.2 In Copperweld
2. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768-69
134 Proof of Conspiracy Under Federal Antitrust Laws
Corp. v. Independence Tube Corp.,3 the Supreme Court held that a parent
corporation and its wholly owned subsidiary are not sufficiently
independent to have the capaci ty to conspire f or purposes of Section 1.4
The Copperweld Court did not consider whether other relationships, such
as less than complete equity ownership or control not based on equity
ownership, negate the possibility of concerted action subject to scrutiny
under Section 1.5 Under Copper weld, officers or employees of the same
firm do not provide the plurality of actors necessary to a “contract,
combination or conspiracy” subject to Section 1.6 Similarly, collaboration
between a corporation and its unincorporated division is the action of the
corporation alone, and is not sufficient to trigger potential Section 1
liability.7 But what about legally separate but related business entities? Is
there a settled threshold of common ownership required for related
corporations to constitute a single economic actor for purposes of Section
1? When, if ever, does control not strictly based on equity ownership
require a conclusion that concerted action is lacking?
1. A Company and Its Wholly Owned Subsidiary
Before Copperweld , related corporations were sometimes perceived
as separate entities capable of concerted activity, and some courts
recognized an “intra-enterprise conspiracy” doctrine.8 In Copperweld, the
Court established a bright-line rule that a corporation and its wholly owned
subsidiary are legally incapa ble of conspiring with one anot her for Section
1 purposes.9
3. 467 U.S. 752 (1984).
4. Id. at 777.
5. Id. at 767.
6. Id. at 769.
7. Id. at 770 (“A division within a cor porate structure pursue s the common
interests of the whole rather than interests separate from those of the
corporation itself”); Cliff Food Stores v. Kroger, Inc., 417 F.2d 203, 206
(5th Cir. 1969) (grocery store chain and its unincorporated division
incapable of conspiring for purposes of Section 1); see also 7 PHILLIP E.
2010) (“A corporate division has no separate legal personality; it is simply
a group of employees within the firm.”) .
8. 467 U.S. at 759; Siegel Transfer, Inc. v. Carrier Express, 54 F.3d 1125,
1131-32 (3d Cir. 1995).
9. 467 U.S. at 777.
Forms of Joint Conduct and Collaboration 135
The Copperweld Court reasoned that, given the control a parent wields
over its wholly owned subsidiary, such entities must always share “a unity
of purpose or a common design,” and, thus, cannot engage in a Section 1
conspiracy.10 The Court did not go beyond applying the rule to a company
and its wholly owned subsidiary, and instead directed the lower courts to
analyze the economic substance of a given relationship, rather than the
formalities of a given corporate structure.11
Courts have uniformly extended Copperweld to a parent corpor ation
and its subsidi ary where owner ship is very clo se to 100 perce nt, holding
that a de minimis departure from complete ownership does not erode the
unity of purpose shared by the corporations.12 For example, an ownership
interest as low as 91.9 percent has been considered a de minimis
2. A Company and Its Employees
While a corporation generally cannot conspire with itself for antitrust
purposes, an exception may occur when an employee combines with his
or her employer to restrain trade and the employee stands to personally
10. Id. at 771 (likening the corporate relationship to “a multiple team of horses
drawing a vehicle under the control of a single driver”). Significantly,
however, the Copperweld rule does not apply where an illegal acquisition
brings about the corporate affiliation, e.g., where corporations are
purchased for the purpose of effecting control of an industry. Id. at 761-62.
11. Id. at 772-73 (“The economic, legal, or other considerations that lead
corporate management to choose one structure over the other are not
relevant to whether the enterprise’s conduct seriously threatens
competition . . . . [A] business enterprise should be free to structure itself
in ways that serve effi ciency of control, economy of operatio ns, and other
factors dictated by business judgment without increasing its exposure to
antitrust liability.”).
12. See Siegel Transfer, 54 F.3d at 1133 n.7 (noting that other cour ts have
extended Copperwe ld when ownership is greater than de minimis
departure from 100 percent); Leaco Enters. v. Gen. Elec. Co., 737 F. Supp.
605, 608-09 (D. Or. 1990) (holding 91.9 percent is a de minimis departure,
but stating variety of factors court may consider in determining existence
of unity of purpose); Aspen Title & Escrow v. Jeld-Wen, Inc., 677 F. Supp.
1477, 1486 (D. Or. 1987) (97.5 percent ownership de minimis departure
but 75 percent and 60 percent not de minimis); Satellite Fin. Planning Cor p.
v. First Nat’l Bank of Wilmington, 633 F. Supp 386, 395 (D. Del. 1986)
(more than 99 percent is a de minimis departure).
13. Leaco Enters., 737 F. Supp. at 609.

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