Some Micro Points About 1 of the Sherman Act

Some Micro Points About § 1 of the Sherman Act

Section 1 of the Sherman Act: Per se violations

Agreements among sellers to fix, stabilize, or maintain prices; Agreements among sellers to allocate markets, such as two competitors agreeing you sell to this group of buyers , and Ill sell to another group and we will not compete with each other; Joint boycotts, i.e., two competitors agreeing not to sell to or buy from a particular third party.

These types of agreements carry with them the potential for a criminal felony conviction , although only price fixing and market-allocation actually result in criminal prosecution . It is always surprising to learn that otherwise sensible , sound, successful business people sometimes forget that these are potentially criminal activities.

For example, very recently a 78-year-old billionaire , who made his fortune in the shopping-center business, was convicted of price fixing in connection with his ownership of a major auction house in July 2002 and coordinating its commission practices with another major auction house.

There is a fourth activity known as tie-ins, about which courts are somewhat inconsistent. While tie-in agreements are usually regarded as per se violations, they require proof of an adverse effect in a market. Other per se violations do not require proof of an adverse market impact. Price fixing or market allocation agreements are conclusively presumed to have adversely affected the market, no proof of market impact (or lack thereof) is needed or relevant.