Proof of a Vertical Conspiracy under Monsanto

• Published date: 01 March 1985
• Author: James R. Mcgibbon
• DOI: 10.1177/0003603X8503000102
• Date: 01 March 1985
• Subject Matter: Article

The

Antitrust

Bulletin/Spring 1985

Proof

of

a vertical conspiracy

under Monsanto

BY JAMES R. McGIBBON*

11

While the parties and amicus curiae in the Monsanto Co. v.

Spray-Rite Service Co.1case addressed anumber

of

issues to the

Supreme Court, the Court addressed directly only one of these

issues:

".

. . the standard of

proof

required to find a vertical

price-fixing conspiracy in violation of Section 1

of

the Sherman

Act."? Specifically, the Court undertook to determine whether

evidence'

'that

amanufacturer terminated aprice-cutting distrib-

utor in response to or following complaints by other distribu-

tors"

was sufficient to support a jury finding

of

aconspiracy.'

The Supreme Court, resolving a conflict among the circuits,'

decided

that

such evidence, standing alone, should not be suffi-

cient.

The stated policy basis for Justice Powell's opinion is that

there are legitimate business reasons for manufacturers and

distributors to discuss prices and that manufacturers should not

Partner

in the Atlanta office of the firm of Sutherland, Asbill &

Brennan. Member of the Georgia and Massachusetts Bars.

_ U.S.

_,

104 S. Ct. 1464 (1984).

2[d. at 1466.

[d. at 1468.

4The conflicting views of the courts of appeal on this issue were

summarized by the Court. [d. at 1468 n.5.

i£ 1985 by Federal Legal Publications, Inc

12 The antitrust bulletin

be barred from making independent business decisions solely as

the result of such communications. Thus, while evidence

of

price-related complaints is relevant, the Court held that "some-

thing

more"

is needed:

There must be evidence that tends to exclude the possibility

that

the

manufacturer and nonterminated distributors were acting indepen-

dently. As Judge Aldisert has written, the antitrust plaintiff should

present direct or circumstantial evidence that reasonably tends to

prove

that

the manufacturer and others

"had

aconscious commit-

ment to a common scheme designed to achieve an unlawful objec-

tive.

"5

In afootnote, the Court went on to state that it is also necessary

to show more than that the terminated distributor or other

distributors conformed to suggested prices. In order to show the

necessary "meeting

of

the minds" based on such conformity,

there must be evidence

"that

the distributor communicated its

acquiescence or agreement, and that this was sought by the

manufacturer.

"6

Despite finding that the defendant's formulation

of

the

appropriate standard of

proof

on this issue was essentially cor-

rect, the Court upheld the verdict in favor

of

the plaintiff,

Spray-Rite. The Court determined that the plaintiff had intro-

duced sufficient evidence in addition to the evidence

of

price-re-

lated complaints to present the conspiracy issue to the jury. The

Court analyzed this issue in two stages. First, it determined that

there was an adequate showing, based on both direct and circum-

stantial evidence, that "Monsanto and some

of

its distributors

were parties to an 'agreement' or 'conspiracy' to maintain resale

prices and terminate price-cutters."7 Second, the Court found

adequate evidence that the termination

of

the plaintiff was

[d. at 1471.

6[d. at

1471

n.9.

7[d. at 1471.