Relevance

• Pages: 47-75

47

CHAPTER II

RELEVANCE

A. Overview of Relevance

1. Liberal Policy of the Federal Rules of Evidence

The Federal Rules of Evidence empower the trial judge with great

latitude to determine whether evidence is relevant: Evidence is relevant if

“(a) it has any tendency to make a fact more or less probable than it

would be without the evidence; and (b) the fact is of consequence in

determining the action.” FED. R. EVID. 401. The Federal Rules encourage

liberal admission of relevant evidence at trial. See FED. R. EVID. 402

(“Relevant evidence is admissible” unless otherwise provided by the

U.S. Constitution, a federal statute, the Federal Rules of Evidence or

other rules prescribed by the Supreme Court); Daubert v. Merrell Dow

Phar ms., Inc., 509 U.S. 579, 587 (1993) (reasoning that the basic

standard of relevance under Rule 402 is a liberal one).

A district court may properly exclude relevant evidence, however, “if its

probative value is substantially outweighed by a danger of one or more

of the following: unfair prejudice, confusing the issues, misleading the

jury, undue delay, wasting time, or needlessly presenting cumulative

evidence.” FED. R. EVID. 403; see Huddleston v. United States, 485 U.S.

681, 687 (1988) (“Rules 401 and 402 establish the broad principle that

relevant evidence—evidence that makes the existence of any fact at issue

more or less probable—is admissible unless the Rules provide otherwise.

Rule 403 allows the trial judge to exclude relevant evidence if, among

other things, ‘its probative value is substantially outweighed by the

danger of unfair prejudice.’”). The Commentary to Rule 403 notes that

the court’s determination of whether to exclude relevant evidence calls

“for balancing the probative value of and need for the evidence against

the harm likely to result from its admission.” FED. R. EVID. 403 advisory

committee’s note. For evidence to be unfairly prejudicial within the

meaning of Rule 403, it must have “‘an undue tendency to suggest

decision on an improper basis, commonly, though not necessarily, an

emotional one.’” Old Chief v. United States, 519 U.S. 172, 180 (1997)

(quoting Advisory Committee Notes on Fed. R. Evid. 403). Rather than

exclusion in such cases, however, courts are often willing to issue a

limiting jury instruction to minimize the risk of potential prejudice. “[I]t

is the law, pure and simple, that jury instructions can sufficiently protect

48 Antitrust Evidence Handbook

a defendant’s interest in being free from undue prejudice.” United States

v. P erholtz, 842 F.2d 343, 361 (D.C. Cir.), cert. denied, 488 U.S. 821

(1988) (citation omitted).

2. Liberal Policy in Antitrust Cases

The liberal policy of admitting relevant evidence also applies to federal

antitrust actions. Courts have reasoned that a “general rule favoring

admissibility of evidence is particularly applicable to antitrust cases

where the liberal reception of evidence is necessary for the just

determination of singularly complex disputes.” Commonwealth Edison

Co. v. Allis-Chalmers Mfg. Co., 40 F.R.D. 96, 100 (N.D. Ill. 1966); see

also City of Cleveland v. Cleveland Elec. Illuminating Co., 538 F. Supp.

1257, 1264 (N.D. Ohio 1980) (recognizing that “the general rule

favoring admissibility of evidence is particularly important in antitrust

cases where liberal reception of evidence may be necessary for the just

determination of particularly complex disputes”).

B. Evidence of Other Conduct

An antitrust litigant may want to proffer evidence that its adversary

engaged in certain anticompetitive conduct in contexts outside the

parameters of the pertinent action. Federal Rule of Evidence 404(b)

permits admission of “evidence of other crimes, wrongs, or acts” to

prove a material issue other than character, such as “motive, opportunity

intent, preparation, plan, knowledge, identity and absence of mistake or

accident.” FED. R. EVID. 404(b). For instance, a plaintiff may want to

proffer evidence of a defendant’s prior anticompetitive conduct in the

same or comparable product markets. Likewise, in a merger case, a party

opposing a merger may want to show that the acquiring party artificially

altered market conditions (e.g., by raising prices or reducing capacity) in

prior mergers in the same or similar product markets when it previously

combined with competitors (a “natural experiment”). Under the Rule 403

balancing test, a court will determine the admissibility of that evidence

by weighing its probative value against the danger of unfair prejudice.

1. Other Conduct and Relevancy in Merger Cases

In cases alleging anticompetitive conduct or which challenge mergers,

evidence of prior alleged anticompetitive activities in the same or similar

product markets may be relevant. For example, although not judicially

binding, the 2010 Horizontal Merger Guidelines state that the U.S.

antitrust enforcement agencies “consider any reasonably available and

reliable evidence to address the central question of whether a merger