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Interference with the setting of price by free market forces is unlawful per se.
A civil antitrust action charging a price-fixing agreement in violation of 1 of the Sherman Act was instituted in the United States District Court for the Middle District of North Carolina against corrugated container manufacturers who accounted for about 90 percent of the shipments in a certain area. Under the challenged agreement, the defendants exchanged information concerning current prices involved in specific sales to identified customers, each defendant usually furnishing such data on request with the expectation that he would be furnished reciprocal information when he wanted it. The District Court dismissed the government's complaint. The United States appealed.
Did the agreement in question, under which, defendants exchanged information concerning current prices involved in specific sales to identified customers, violate the Sherman Act?
The Court held that the agreement violated the Sherman Act, since the exchange of price information had an anticompetitive effect in the industry by stabilizing prices even though at a downward level, it appearing that the industry was dominated by relatively few sellers, and involved a fungible product and an inelastic demand therefor. According to the Court, competition for sales was based on price, and although there was continuation of some price competition, the exchange of price information tended toward uniformity of price, and the knowledge of a competitor's price usually meant matching that price, the limitation or reduction of price competition bringing the case within the statutory ban, since interference with the setting of price by free market forces was unlawful per se.