The Third Circuit’s Scrambling of Precedent in Processed Eggs

• DOI: http://doi.org/10.1177/0003603X221149364
• Published date: 01 March 2023
• Date: 01 March 2023
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221149364

The Antitrust Bulletin

2023, Vol. 68(1) 73 –87

© The Author(s) 2023

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DOI: 10.1177/0003603X221149364

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Article

The Third Circuit’s Scrambling of

Precedent in Processed Eggs

Peter C. Carstensen*

Abstract

In 2020, the Third Circuit upheld a judge’s decision that the rule of reason applied to a conspiracy

among egg producers to limit production of eggs by agreeing on how they engaged in production and

the disposition of some eggs. A jury had found that the agreement existed and that its intent was to

restrain production, but based on the instructions from the court, it also found that these restraints

were “reasonable.” On its face, this decision upends more than a century of case law holding that

naked restraints of competition among competitors are illegal per se. One of the restraints involved

an agreement to increase the size of the cages used for the hens laying eggs. The courts appear to have

concluded that an agreement among competitors to increase cage size could be a lawful cartelistic

conspiracy, despite the jury finding that the intent was to restrict production. The jury instructions

themselves conflated the issues of whether there was a conspiracy to restrain the production of

eggs and the issue of whether the conspiracy had in fact caused any reduction in production. Hence,

although the Court of Appeals decision provides defendants a basis to claim that any justification for

collusion should be considered, the specifics of the case suggest that the jury may have found that

the conspiracy was ineffective and so caused no harm. Such a conclusion would be consistent with

existing law.

Keywords

antitrust, per se rule, rule of reason, ancillary restraints, naked restraints, output restraints, egg

production

I. Introduction

In 2020, the Third Circuit declared that the rule of reason “typically” applied to any agreement in

restraint of trade.1 Moreover, this standard “basically asked whether, in light of all the circumstances in

a case, the restraint in question is an unreasonable burden on competition.”2 As a result, it upheld a jury

verdict that found that there was a conspiracy among the leading egg producers to reduce or limit egg

*Fred W. & Vi Miller Chair in Law Emeritus, Law School, University of Wisconsin–Madison, Madison, WI, USA

Corresponding Author:

Peter C. Carstensen, Fred W. & Vi Miller Chair in Law Emeritus, Law School, University of Wisconsin–Madison, 975 Bascom

Mall, Madison, WI 53706, USA.

Email: peter.carstensen@wisc.edu

1149364ABXXXX10.1177/0003603X221149364The Antitrust BulletinCarstensen

research-article2023

1. In re Processed Eggs Products Antitrust Litigation, 962 F.3d 719, 723 (3d Cir. 2020).

2. Id.