THE ANTITRUST LITIGATOR
Can an Antitrust Agreement Apply to Conduct in One Entity? By JEFFERY M. CROSS
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greement is one of two principal elements of a violation of Section 1 of the Sherman Act. It has been called the sine qua non of an antitrust violation. The Supreme Court has held that trial courts must first resolve whether there is an agreement actionable under the antitrust laws before turning to the other principal element of a cause of action, whether the restraint of trade is unreasonable. The requirement of an agree-
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ment is a critical requirement that distinguishes Section 1 of the Sherman Act from Section 2, which deals with unilateral conduct of a single firm. The requirement is necessary because the effect on competition from the conduct of a single firm may appear similar to the effect resulting from an agreement of two or more firms. Both may drive a rival from the market; however, to avoid courts regulating the conduct of a single firm, Section 2 also
requires that the defendant have monopoly power. The language of Section 1 is quite broad and could literally apply to all sorts of agreements including, for example, the agreement between a company’s CEO and a company employee on prices for the company’s products. The Supreme Court, however, has rejected a literal approach. To further distinguish Section 1 from Section 2, the Court has held that the agreement at issue must be between “independent centers of decision-making.” This requirement seems straightforward enough, but it can pose problems when applied to several situations, including an employment agreement between a company and employee that contains a restrictive covenant, and joint ventures between competing companies. A leading antitrust treatise has suggested a test that is helpful in determining whether there are two or more independent decision makers. This test asks whether one of the parties can effectuate the agreement by itself without any agreement of the other party. If so, there are not the plurality of two or more independent centers of decision makers colluding as required to have an antitrust agreement necessary for a Section 1 antitrust violation. There is only a single independent decision BACK TO CONTENTS
