In re Text Messaging Antitrust Litig. - 782 F.3d 867 (7th Cir. 2015)

Rule:

Tacit collusion, also known as conscious parallelism, does not violate Sherman Act § 1, 15 U.S.C.S. § 1. Collusion is illegal only when based on agreement. Agreement can be proved by circumstantial evidence.

Facts:

Plaintiffs instituted a class action against defendants AT&T, Verizon, Sprint, and T-Mobile, alleging that the defendants, in violation of section 1 of the Sherman Act, 15 U.S.C. §§ 1 et seq., conspired with each other to increase one kind of price for text messaging service—price per use (PPU), each "use" being a message, separately priced. The district court granted defendants’ motion for summary judgment. The plaintiffs appealed. 

Issue:

By implementing similar price increases, could the defendants be held liable for collusion under section 1 of the Sherman Act? 

Answer:

No.

Conclusion:

The court affirmed the judgment of the district court, holding that evidence that competitors in a highly concentrated market had implemented similar price increases and that an executive at one of the companies had written emails criticizing the price increases as collusive and as gouging consumers did not, as a matter of law, suffice to establish express collusion under Sherman Act § 1, 15 U.S.C.S. § 1, because there was no evidence showing an actual agreement to fix prices and competing firms reasonably might be expected to keep close track of each other's pricing and to imitate their market behavior. Tacit collusion, also known as conscious parallelism, was not an antitrust violation because the companies had no duty to compete on price or to refrain from raising their prices in ways that might be viewed as gouging consumers; thus, the companies were entitled to summary judgment.