Short title

This Act may be cited as the

Competitive Prices Act

Purpose

The purpose of this Act is to clarify and amend the law with respect to— (1)the illegality of consciously parallel pricing coordination under sections 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 3(a)); and (2)the concerted-action requirement for claimed violations of section 1 or 3(a) of the Sherman Act.

Findings

(a)

Consciously parallel pricing coordination

(1)The American economy is built on the foundations of open markets and fair competition. These core principles of economic freedom are what stimulate innovation, improve the quality of products and services, and ensure that prices are competitive. (2)The antitrust laws are designed to ensure American consumers and businesses are afforded the benefits of competition throughout the economy. The supreme evil of antitrust law is, accordingly, collusion among market rivals. Such collusion undermines competitive markets, stifles innovation, and results in degraded quality and prices that are dictated by competitors’ agreement rather than competitors’ rivalry. (3)Sections 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 3(a)) categorically prohibit—as the most pernicious types of contracts, combinations in the form of trust or otherwise, or conspiracies, in restraint of trade or commerce—naked agreements among actual or potential competitors to fix prices, rig bids, or allocate markets. An agreement to fix the quantity of products or services bought or sold is a form of agreement to fix prices. These agreements are per se unlawful. (4)Courts have been unduly hostile to claims of price fixing that are based on tacit agreement among competitors. They have, at times, declined to recognize tacit agreement as a contract, combination in the form of trust or otherwise, or conspiracy; they have held that allegations or evidence, taken as a whole, that are as consistent with conscious parallelism as with agreement are generally insufficient to survive a motion to dismiss or motion for summary judgment; and they have concluded a claimant must offer allegations or evidence tending to exclude the possibility of independent action. See, e.g., Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986); Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984). (5)Section 4 of this Act rejects the judicial decisions that have prevented meritorious price-fixing cases from advancing to trial and judgment. It does so by providing that, in civil actions, consciously parallel pricing coordination—as defined by this Act—is a contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce under sections 1 and 3(a) of the Sherman Act. (6)Section 4 of this Act does not supersede the law governing price fixing. It instead supplements and complements that law. It does not apply to criminal prosecutions. (b)

Concerted action

(1)The words contract, combination in the form of trust or otherwise, or conspiracy in sections 1 and 3(a) of the Sherman Act require some form of agreement between two or more persons, but that agreement need not be expressly made. A tacit agreement also qualifies. Accordingly, the words contract, combination in the form of trust or otherwise, or conspiracy encompass both express and tacit agreements. (2)Although consciously parallel behavior alone does not constitute a contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act, consciously parallel behavior can be evidence of an agreement. And once the consciously parallel behavior crosses the line into consciously parallel coordination, the behavior qualifies as tacit agreement—that is, a contract, combination in the form of trust or otherwise, or conspiracy. (3)In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 548–49, 553–57, 564–70 (2007), the Supreme Court held that a complaint alleging that competitors engaged in parallel, anticompetitive conduct did not do enough to exclude the possibility that the competitors engaged in independent action and therefore failed to plausibly plead the existence of a conspiracy under section 1 of the Sherman Act. In so holding, the Court understated the significance of consciously parallel behavior as evidence of agreement and left little or no room for tacit agreements in the meaning of contract, combination in the form of trust or otherwise, or conspiracy. (4)Section 5 of this Act rejects the Twombly Court’s cramped reading of the Sherman Act’s language, clarifies that the words contract, combination in the form of trust or otherwise, or conspiracy encompass tacit agreements, and specifies the standards for pleading and proving a contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act.

Consciously parallel pricing coordination

(a)

Definitions

(1)The term consciously parallel pricing coordination means a tacit agreement among two or more persons to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services. (2)The term person has the meaning given the term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)). (b)

Consciously parallel pricing coordination

Prima facie case

(1)A claimant establishes a prima facie case of consciously parallel pricing coordination by demonstrating that two or more persons— (A)engaged in substantially similar action, within a substantially similar time period, with respect to pricing for reasonably interchangeable products or services; and (B)had a substantially similar motivation to coordinate their efforts to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services. (2)A claimant asserting a claim of consciously parallel pricing coordination in violation of section 1 or 3(a) of the Sherman Act bears the burden of proving the prima facie case described in paragraph (1) by a preponderance of evidence, at which point the burden of production shifts to the defending party as set forth in subsection (d). (d)

Burden of rebutting prima facie case

The defending party bears the burden of rebutting a prima facie case of consciously parallel pricing coordination by producing evidence, sufficient to raise a genuine dispute of material fact, that the defending party’s action described in paragraph (1)(A) of subsection (c) was motivated by business judgment that is economically rational in the absence of any consciously parallel pricing coordination. Evidence of this nature may include, but is not limited to, evidence that the defending party acted rationally in response to or in anticipation of changing conditions affecting the market for or the marketability of the products or services concerned. (e)

Ultimate burden

If the defending party rebuts the prima facie case, the burden shifts back to the claimant to prove, by a preponderance of the evidence, that the defending party entered a tacit agreement among two or more persons to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services. The claimant may do so by means that include, but are not limited to, proving that— (1)the business judgment described in subsection (d) was not— (A)economically rational in the absence of consciously parallel pricing coordination; or (B)the predominant motivating factor for the defending party’s action described in paragraph (1)(A) of subsection (c); (2)the defending party, knowing that coordinated action to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services was contemplated and invited by a competitor, adhered to the scheme and participated in it; or (3)based on circumstantial evidence implying a traditional conspiracy, it is more likely than not that the defending party entered an agreement among two or more persons to raise, lower, change, maintain, or manipulate pricing for the purchase or sale of reasonably interchangeable products or services. (f)

Affirmative defense

It is an affirmative defense to a claim of consciously parallel pricing coordination, on which the defending party bears the burden of proof by a preponderance of the evidence, that any affirmative defense to price fixing applies.

Clarifying the meaning of contract, combination in the form of trust or otherwise, or conspiracy

(a)

Meaning of contract, combination in the form of trust or otherwise, or conspiracy

A tacit agreement is a form of contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 3(a)). (b)

Standards of pleading and proof

In a civil action, including an action brought by the United States or by a State attorney general, or by the Federal Trade Commission under section 5 of the Federal Trade Commission Act (15 U.S.C. 45)— (1)a complaint— (A)plausibly pleads a contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act if the complaint contains factual allegations, which may consist of allegations of consciously parallel conduct, demonstrating that the existence of the alleged contract, combination in the form of trust or otherwise, or conspiracy is among the realm of plausible possibilities; and (B)need not allege facts tending to exclude the possibility of independent action to plausibly plead the existence of a contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act; and (2)a claimant— (A)demonstrates a genuine dispute of material fact that a defending party entered a contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act by offering evidence, which may be direct or circumstantial, that is sufficient to allow a trier of fact to reasonably conclude that the defending party entered the contract, combination in the form of trust or otherwise, or conspiracy; and (B)need not offer evidence tending to exclude the possibility of independent action to demonstrate a genuine dispute of material fact that a defending party entered a contract, combination in the form of trust or otherwise, or conspiracy under sections 1 and 3(a) of the Sherman Act; although, at trial, the trier of fact may consider the existence or absence of evidence tending to exclude the possibility of independent action when determining whether a defending party entered the contract, combination in the form of trust or otherwise, or conspiracy.