What Entities Are Legally Capable of Conspiring to Violate the US Antitrust Laws?
When you think about antitrust cases, you usually consider the question—often framed at the motion to dismiss stage as a Twombly inquiry—whether the defendants actually engaged in an antitrust conspiracy.
But, sometimes, the question is whether the defendants are actually capable of conspiring together.
et’s say you want to sue a corporation under the antitrust laws, but can’t find another entity they’ve conspired with so you can invoke Section 1 of the Sherman Act (which requires a conspiracy or agreement). How about this: You allege that the corporation conspired with its President, Vice-President, and Treasurer to violate the antitrust laws. Can you do that?
Probably not. In the typical case, a corporation is not legally capable of conspiring with its own officers. The group is considered, for purposes of the antitrust laws, as a “single entity,” which is incapable of conspiring with itself. Of course, the situation is complicated if we aren’t talking about the typical corporate officers, but instead analyzing a case with a corporation and corporate agents (or perhaps in a rare case, even employees) that are acting for their own self-interest and not as a true agent of the corporation. The question, often a complex one, will usually come down to whether there is sufficient separation of economic interests that the law can justify treating them as separate actors.
A lot of tricky issues can arise when dealing with companies and their subsidiaries as well. InCopperweld Corp. v. Independence Tube Corporation, for example, the United States Supreme Court held that the coordinated activities of a parent and its wholly-owned subsidiary are a single enterprise (incapable of conspiring) for purposes of Section 1 of the Sherman Act.
After Copperweld, however, it wasn’t entirely clear how to treat partially-owned corporate subsidiaries, joint ventures, and similar entities.
In 2010, the Supreme Court addressed the conspiracy-capability question in an antitrust lawsuit against a joint venture formed by each of the National Football League teams to (jointly) manage their intellectual property. The case is American Needle, Inc. v. National Football League, and I would classify it as an instant antitrust classic.
You can read the rest of this blog entry, including my discussion about the American Needle decision, at the link below.