Antitrust 101: Tacit Collusion

• Published date: 08 December 2022
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Law Firm: Winston & Strawn LLP
• Author: Jeffrey J. Amato and Thomas J. Neuner

Whether tacit collusion'where firms effectively behave as though they are colluding without any direct communication expressing agreement'should give rise to an antitrust violation has long been a contested issue in the United States, with legal opinions varying and evolving over time. Under current U.S. law, tacit collusion does not give rise to an antitrust violation without additional conduct evidencing an agreement between competitors. Indeed, the Supreme Court has defined "tacit collusion, sometimes called oligopolistic price coordination or conscious parallelism" as "the process, not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at a profit-maximizing, supracompetitive level by recognizing their shared economic interests and their interdependence with respect to price and output decisions." Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993) (emphasis added).

Today's treatment of tacit collusion follows decades of evolving debate in academia and courts. Particularly illustrative of this is famed antitrust jurist Richard Posner's opinion in 2015 holding that tacit collusion is not a violation of the Sherman Act and "probably shouldn't be." In re Text Messaging Antitrust Litigation, 782 F.3d 867, 874 (7th Cir. 2015). That Text Messaging opinion is now one of the most widely cited cases on tacit collusion in U.S. law.

And the debate continues. Technological advances, such as algorithmic pricing, have facilitated new forms of tacit collusion. And amid increased interest in aggressive antitrust enforcement and nontraditional theories of harm, there are open questions as to how legislators, enforcers, and courts will consider and treat claims of tacit collusion and conscious parallelism in the future.

Treatment of Tacit Collusion in U.S. Courts

In the 1954 Supreme Court case addressing conscious parallelism in relation to Sherman Act claims, Theatre Enterprises v. Paramount Film Distribution Corp., a suburban theater owner brought an action against Paramount, alleging violations of Sections 4 and 16 of the Clayton Act based on claims that Paramount conspired with Twentieth Century-Fox, Warner Brothers, and other movie producers and distributors to restrict "first run" movie pictures to downtown Baltimore and leave suburban theaters with only "subsequent runs." 346 U.S. 537, 538 (1954). The Court determined the "crucial question" was whether the conduct "stemmed from independent decision" by Paramount or "from an agreement, tacit or express" among Paramount and...