Restraints of Trade

A. Introduction
This chapter examines the impact of Section 1 of the Sherman Act
on actors in the telecommunications industry. Section 1 makes illegal
“[e]very contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce.” 1 Despite its broad
language, the act does not prohibit every restraint of trade, but rather
prohibits only unreasonable restraints of trade.2 As the Supreme Court
noted in Chicago Board of Trade v. United States,3 “[e]very agreement
concerning trade, every regulation of trade, restrains. To bind, to restrain,
is of their very essence.”4 Such agreements are not necessarily illegal;
the Sherman Act only proscribes restraints of trade that are
anticompetitive. Furthermore, the object of the Sherman Act is to protect
competition, not competitors.5 [add sentence re: what this chapter covers
and then make a section called “Elements of a Section I case” that
includes sections below]
Requirement of Contract, Combination, or Conspiracy
Unilateral actions are outside the scope of Section 1 and are
addressed in Section 2 of the Sherman Act.6 Under Section 1, a court
must find evidence of a contract, combination or conspiracy before
finding a violation.7
1. 15 U.S.C. §1.
2. Standard Oil Co. v. United States, 221 U.S. 1 (1911).
3. 246 U.S. 231 (1918).
4. Id. at 238.
5. “The antitrust laws... were enacted for the protection of competition, not
competitors.’Brunswick Corp. v. Pueblo B owl-O-Mat, Inc., 429 U.S.
477, 488 (1977) (quoting Brown Shoe Co. v. Unite d States, 370 U.S. 294,
320 (1962) (emphasis in original).
6. See Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761 (1984).
7. Courts generally view the terms combination and conspiracy as
ANTITRUST LAW, ¶ 1403 (4th ed. 2017). All three terms are generally
158 Telecom Antitrust Handbook
A conspiracy is a “conscious commitment to a common scheme
designed to achieve an unlawful objective.”8 Courts do not necessarily
require direct proof of an agreement to find that two companies have
engaged in a conspiracy or combination in restraint of trade. They can
infer a conspiracy or agreement from the conduct of the defendants.9 “A
§1 agreement may be found when ‘the conspirators had a unity of
purpose or a common design and understanding, or a meeting of minds
in an unlawful arrangement.’”10 If a company does not formally accept a
competitors invitation to restrain trade, but nevertheless acts as if a
formal arrangement is in place, a conspiracy may still be found.11
Pleading Conspiracy
To state a claim under Section 1, the plaintiffs must allege “enough
factual matter (taken as true) to suggest that an agreement was made.”12
In some cases an agreement is easily established through specific
evidence, in which case this element is easily established, but there are
other instances where a complaint is filed that alleges parallel conduct as
evidence of an agreement. In Bell Atlantic Corp. v. Twombly, the
Supreme Court held that an allegation of parallel conduct, without more,
cannot state a claim for conspiracy.13 To state a Section 1 conspiracy
claim, the plaintiffs must allege “some further factual enhancement”
sufficient to “nudge[] their claims across the line from conceivable to
plausible.”14 The Court explained: “Asking for plausible grounds to infer
an agreement... simply calls for enough fact to raise a reasonable
considered synonymo us with “agreement,” a nd require a “meeting of t he
minds.” See Monsanto, 465 U.S. at, 764.
8. Id. at 764.
9. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940);
Interstate Circuit, Inc. v. United States, 306 U.S. 208, 221 (1939)
(holding that “[i]n order to establish agreement,” the go vernment can
“rely on inferences drawn from the course of conduct of the alleged
10. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984)
(quoting American Tobacco Co. v. United States, 328 U.S. 781, 810
11. See Socony-Vacuum Oil, 310 U.S. at 150.
12. Bell Atl. Corp. v. Twombly, 550 U.S.544, 556 (2007).
13. Id. at 556-57 (“Lawful parallel conduct fails to bespe ak unlawful
agreement,” and a “conclusory allegation of agreement at some
unidentified point does not supply facts adequate to show ille gality.”).
14. Id. at 557, 570.
Restraints of Trade 159
expectation that discovery will reveal evidence of illegal agreement.”15
This “plausibility” standard replaced the rule from Conley v. Gibson,16
which called for courts to dismiss cases only where a “plaintiff can prove
no set of facts in support of his claim which would entitle him to
relief.”17 The plausibility standard may permit dismissal of a claim even
where the factual allegations suggest a “possibility” the plaintiff would
be entitled to relief, if that possibility falls short of “plausibility.”18 But
complaints grounded on plausible allegations, “even if it strikes a savvy
judge that actual proof of those facts is improbable,” are not subject to
The Supreme Court clarified its new “plausibility” standard in
Ashcroft v. Iqbal.20 The Court explained that ascertaining whether a
complaint states a plausible claim for relief is a “context-specific task.”21
It invited lower courts to “begin by identifying pleadings that, because
they are no more than conclusions, are not entitled to the assumption of
truth,” and emphasized that “[w]hile legal conclusions can provide the
framework of a complaint, they must be supported by factual
allegations.”22 Properly alleged factual allegations must be accepted as
true by the court; and then, drawing on “judicial experience and common
sense,” the court must determine whether the claim is plausible.23
Twombly it self offered few specifics on exactly what types of
allegations suffice to render allegations of a Section 1 conspiracy
“plausible,” except in a footnote where it cited “several examples”
offered by “[c]ommentators [of] parallel conduct allegations that would
state a § 1 claim under this standard.”24 Those examples consisted of:
(1) “parallel behavior that would probably not result from chance,
15. Id. at 556.
16. 355 U.S. 41 (1957).
17. Twombly, 550 U.S. at 561, 563 (citing Conley, 355 U.S. at 45-46, and
finding that “[t]he [no set of facts] phrase is best forgotten as an
incomplete, negative gloss on an accepted pleading standard: once a
claim has been stated adequately, it may be supported by showing any set
of facts consistent with the allegations in the complaint.”).
18. See id. at 557 (distinguishing “between possibility and plausibility of
entitle[ment] to relief”) (brackets in original).
19. Id. at 556.
20. 556 U.S. 662 (2009) (involving a civil claim against U.S. government
officials for prisoner abuse and discrimination).
21. Id. at 679.
22. Id.
23. Id. at 678-79.
24. Twombly, 550 U.S. at 556 n.4.

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