Proof of the Existence of a Conspiracy

• Pages: 61-107

61

CHAPTER III

PROOF OF THE EXISTENCE OF A CONSPIRACY

This chapter addresses the question of what proof may be offered to

show the existence of an agreement. The simple answer is that the

existence of an agreement, just like any fact in a case, can be proven by

any relevant evidence, whether direct or circumstantial. While as a legal

matter, an agreement can be established by either direct or circumstantial

evidence, those two types of proof can present very different procedural

requirements and practical challenges. This chapter addresses direct

evidence of a Sherman Act agreement and then focuses on the types of

circumstantial evidence courts have found persuasive in proving such an

agreement.

A. Proving an Agreement

Direct evidence proves an asserted fact without the need to draw

inferences or conclusions.1 Circumstantial evidence requires the finder of

fact to infer the truth of an asserted fact.

One court explained the difference between direct and circumstantial

proof as follows: “The former is evidence tantamount to an

acknowledgment of guilt; the latter is everything else including ambiguous

statements.”2 Of course, in any particular case, an agreement—and the

participation in that agreement by different coconspirators—can be proven

through a combination of direct and circumstantial evidence.3

1. “Direct evidence in a Section 1 conspiracy must be evidence that is explicit

and requires no inferences to establish the proposition or conclusion being

asserted.” In re Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir.

1999); see also Rossi v. Standard Roofing, 156 F.3d 452, 466 (3d Cir.

1998) (direct evidence is evidence for which “the fact finder is not required

to make inferences to establish facts”).

2. In re High Fructose Cor n Syrup Antitrust Lit ig., 295 F.3d 651, 662 (7th

Cir. 2002) (emphasis in original).

3. For example, in Petruzzi’s IGA Supermark ets v. Darling-Delaware Co.,

998 F.2d 1224, 1234 (3d Cir. 1993), the plaintiff offered both direct and

circumstantial evidence against various defendants.

62 Proof of Conspiracy Under Federal Antitrust Laws

B. Using Direct Evidence to Prove an Agreement

Direct evidence is powerful. Any evidence that directly establishes the

existence of an agreementi.e., a conscious commitment to a common

scheme designed to achieve an unlawful objectivewithout the need for

an inference constitutes direct proof.4 Direct evidence speaks for itself,

and, while a factfinder may reject such evidence,5 there should otherwise

be little room for interpretation.6

Direct evidence of an agreement is different from the concept of an

express agreement. It is well settled that, for purposes of Section 1, an

agreement can be express—that is, explicitly stated or written.7 An

example of an express agreement is the “fully worked out paper plan” in

American Column & Lumber Co. v. United States.8 An express agreement

can be proven by direct or circumstantial evidence. By contrast, implied

or tacit agreements are typically proven through circumstantial evidence.

Direct evidence of a conspiracy is often present in criminal cases in

which there has been a successful amnesty applicant or plea bargain that

4. See, e.g., Baby Food Antitrust Litig., 166 F.3d at 118 (“[W]ith direct

evidence ‘the fact finder is not required to make inferences to establish

facts’” (quoting Ros si, 156 F.3d at 466)).

5. For example, the court rejected a recording as direct evidence of an

unlawful agreement i n United States v. American Airlines, 743 F.2d 1114

(5th Cir. 1984). Dur ing the recorded conve rsation, one airline executive

told a competitor’s executive: “Raise your . . . [expletive deleted] fares

twenty percent. I’ll raise mine the ne xt morning . . . . You’ ll make more

money and I will too.” Id. at 1116. The district court found that the recorded

conversation evinced a solicitation, not an agreement; on appeal, the Fifth

Circuit held, however, that an agreement was not a required element of

attempted monopolization. Id. at 1118-21.

6. Direct evidence of agreement has been offered occasionally in cases in

which competitors banded together to combat a perceived common enemy

or problem. For example, in Fashion Originators’ Guild v. FTC, 312 U.S.

457, 461 (1941), fashion designers admittedly combined to boycott

clothing manufacturers who were believed to be engaging in “style piracy”

(that is, copying the defendants’ designs). The defendants led an effort that

resulted in 12,000 retailers signing express agreements to cooperate with

the boycott. Id. at 461-62.

7. See Chapter II.B.2.a for a discussion of express agreements.

8. 257 U.S. 377, 394 (1921).

Proof of the Existence of a Conspiracy 63

supplies testimony from a coconspirator.9 As a number of courts have

noted, however, in civil cases and criminal cases without a cooperating

witness, direct evidence of an illegal agreement is “frequently difficult for

antitrust plaintiffs to come by.”10 In hard-core price-fixing conspiracies, it

is understandable that coconspirators would avoid creating paper trails or

other direct evidence of their illegal conduct. But the rarity of direct

evidence in the reported cases may be explained by defendants choosing

to litigate where direct evidence is lacking and settle where direct evidence

is both abundant and obvious.

Direct evidence of agreement may take various forms. Examples

include the following:

Witness testimony. Although it may be difficult to obtain, the

concession by a witnesseither in deposition or trial testimonythat he

or she participated in an unlawful conspiracy is powerful direct evidence.

Such evidence has been obtained in a number of noteworthy cases. For

example, in United States v. AU Optronics Corp., employees of several

manufacturers of liquid crystal display manufactuers testified about a

series of meetings called “crystal meetings” where price agreements were

reached.11 The meetings extended over a period of approximately five

9. See United States v. AU Optronics Corp., United States’ Sente ncing

Memorandum, at 32 (filed Sept. 11, 2012), available at

http://www.justice.gov/atr/cases/auopt.htm (evidence against AU

Optronics and its employees also included testimony from the defendants’

coconspirators regarding meetings at which the defendants agreed to set

TFT-LCD prices and to impose price increases).

10. Rossi, 156 F.3d at 465; see also ES Dev. v. RWM Enters., 939 F.2d 547,

553-54 (8th Cir. 1991) (explaining that conspiracy is “rarely evidenced by

explicit agreements” and must almost always be proved by “inferences that

may be drawn from the be havior of the alleged conspirators” (quoting H.L.

Moore Drug Exch. V. Eli Lilly & Co., 662 F.2d 935 (2d Cir. 1981));

Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1456 (11th Cir. 1991)

(noting that only in rare cases are conspiracies proven by direct evidence);

United States v. Middlebrooks, 618 F.2d 273, 278 (5th Cir.) (noting that

there is rarely direct evidence of a conspiracy in context of criminal

conspiracy case), modified on other grounds, 624 F.2d 36 (5th Cir. 1980);

United States v. Washin gton, 586 F.2d 1147, 1153 (7th Cir. 1978) (“By its

nature conspiracy is conceived and carried out clandestinely, and direct

evidence of the crime is rarely available”); Paladin Assocs. v. Mont. Power

Co., 97 F. Supp. 2d 1013, 1030 (D. Mont. 2000) (calling direct evidence

the “proverbial ‘smoking gun’”), aff’d, 328 F.3d 1145 (9th Cir. 2003).

11. Supra note 9.