Competitive Prices Act

I 118TH CONGRESS 1ST SESSION H. R. 2782 To specify the standards governing claims of consciously parallel pricing coordination in civil actions under the Sherman Act, and to clarify the meaning of contract, combination in the form of trust or otherwise, or conspiracy under the Sherman Act. IN THE HOUSE OF REPRESENTATIVES APRIL 20, 2023 Ms. PORTER (for herself, Mr. NADLER, Mr. CICILLINE, and Ms. JAYAPAL) in- troduced the following bill; which was referred to the Committee on the Judiciary A BILL To specify the standards governing claims of consciously parallel pricing coordination in civil actions under the Sherman Act, and to clarify the meaning of contract, combination in the form of trust or otherwise, or con- spiracy under the Sherman Act. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Competitive Prices 4 Act’’. 5 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2782 IH SEC. 2. PURPOSE. 1 The purpose of this Act is to clarify and amend the 2 law with respect to— 3 (1) the illegality of consciously parallel pricing 4 coordination under sections 1 and 3(a) of the Sher- 5 man Act (15 U.S.C. 1, 3(a)); and 6 (2) the concerted-action requirement for 7 claimed violations of section 1 or 3(a) of the Sher- 8 man Act. 9 SEC. 3. FINDINGS. 10 (a) CONSCIOUSLY PARALLEL PRICING COORDINA- 11 TION.— 12 (1) The American economy is built on the foun- 13 dations of open markets and fair competition. These 14 core principles of economic freedom are what stimu- 15 late innovation, improve the quality of products and 16 services, and ensure that prices are competitive. 17 (2) The antitrust laws are designed to ensure 18 American consumers and businesses are afforded the 19 benefits of competition throughout the economy. The 20 supreme evil of antitrust law is, accordingly, collu- 21 sion among market rivals. Such collusion under- 22 mines competitive markets, stifles innovation, and 23 results in degraded quality and prices that are dic- 24 tated by competitors’ agreement rather than com- 25 petitors’ rivalry. 26 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2782 IH (3) Sections 1 and 3(a) of the Sherman Act (15 1 U.S.C. 1, 3(a)) categorically prohibit—as the most 2 pernicious types of contracts, combinations in the 3 form of trust or otherwise, or conspiracies, in re- 4 straint of trade or commerce—naked agreements 5 among actual or potential competitors to fix prices, 6 rig bids, or allocate markets. An agreement to fix 7 the quantity of products or services bought or sold 8 is a form of agreement to fix prices. These agree- 9 ments are per se unlawful. 10 (4) Courts have been unduly hostile to claims of 11 price fixing that are based on tacit agreement 12 among competitors. They have, at times, declined to 13 recognize tacit agreement as a contract, combination 14 in the form of trust or otherwise, or conspiracy; they 15 have held that allegations or evidence, taken as a 16 whole, that are as consistent with ‘‘conscious par- 17 allelism’’ as with agreement are generally insuffi- 18 cient to survive a motion to dismiss or motion for 19 summary judgment; and they have concluded a 20 claimant must offer allegations or evidence tending 21 to exclude the possibility of independent action. See, 22 e.g., Brooke Grp. Ltd. v. Brown & Williamson To- 23 bacco Corp., 509 U.S. 209, 227 (1993); Matsushita 24 Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2782 IH 574, 588 (1986); Monsanto Co. v. Spray-Rite Serv. 1 Corp., 465 U.S. 752, 764 (1984). 2 (5) Section 4 of this Act rejects the judicial de- 3 cisions that have prevented meritorious price-fixing 4 cases from advancing to trial and judgment. It does 5 so by providing that, in civil actions, consciously par- 6 allel pricing coordination—as defined by this Act— 7 is a ‘‘contract, combination in the form of trust or 8 otherwise, or conspiracy, in restraint of trade or 9 commerce’’ under sections 1 and 3(a) of the Sher- 10 man Act. 11 (6) Section 4 of this Act does not supersede the 12 law governing price fixing. It instead supplements 13 and complements that law. It does not apply to 14 criminal prosecutions. 15 (b) CONCERTED ACTION.— 16 (1) The words ‘‘contract, combination in the 17 form of trust or otherwise, or conspiracy’’ in sections 18 1 and 3(a) of the Sherman Act require some form 19 of agreement between two or more persons, but that 20 agreement need not be expressly made. A tacit 21 agreement also qualifies. Accordingly, the words 22 ‘‘contract, combination in the form of trust or other- 23 wise, or conspiracy’’ encompass both express and 24 tacit agreements. 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2782 IH (2) Although consciously parallel behavior alone 1 does not constitute a contract, combination in the 2 form of trust or otherwise, or conspiracy under sec- 3 tions 1 and 3(a) of the Sherman Act, consciously 4 parallel behavior can be evidence of an agreement. 5 And once the consciously parallel behavior crosses 6 the line into consciously parallel coordination, the 7 behavior qualifies as tacit agreement—that is, a con- 8 tract, combination in the form of trust or otherwise, 9 or conspiracy. 10 (3) In Bell Atlantic Corp. v. Twombly, 550 11 U.S. 544, 548–49, 553–57, 564–70 (2007), the Su- 12 preme Court held that a complaint alleging that 13 competitors engaged in parallel, anticompetitive con- 14 duct did not do enough to exclude the possibility 15 that the competitors engaged in independent action 16 and therefore failed to plausibly plead the existence 17 of a conspiracy under section 1 of the Sherman Act. 18 In so holding, the Court understated the significance 19 of consciously parallel behavior as evidence of agree- 20 ment and left little or no room for tacit agreements 21 in the meaning of ‘‘contract, combination in the 22 form of trust or otherwise, or conspiracy’’. 23 (4) Section 5 of this Act rejects the Twombly 24 Court’s cramped reading of the Sherman Act’s lan- 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2782 IH guage, clarifies that the words ‘‘contract, combina- 1 tion in the form of trust or otherwise, or conspiracy’’ 2 encompass tacit agreements, and specifies the stand- 3 ards for pleading and proving a contract, combina- 4 tion in the form of trust or otherwise, or conspiracy 5 under sections 1 and 3(a) of the Sherman Act. 6 SEC. 4. CONSCIOUSLY PARALLEL PRICING COORDINATION. 7 (a) DEFINITIONS.— 8 (1) The term ‘‘consciously parallel pricing co- 9 ordination’’ means a tacit agreement among two or 10 more persons to raise, lower, change, maintain, or 11 manipulate pricing for the purchase or sale of rea- 12 sonably interchangeable products or services. 13 (2) The term ‘‘person’’ has the meaning given 14 the term in subsection (a) of the first section of the 15 Clayton Act (15 U.S.C. 12(a)). 16 (b) CONSCIOUSLY PARALLEL PRICING COORDINA- 17 TION.—In a civil action, including an action brought by 18 the United States or by a State attorney general, or by 19 the Federal Trade Commission under section 5 of the Fed- 20 eral Trade Commission Act (15 U.S.C. 45), consciously 21 parallel pricing coordination is a ‘‘contract, combination 22 in the form of trust or otherwise, or conspiracy, in re- 23 straint of trade or commerce’’ under sections 1 and 3(a) 24 of the Sherman Act (15 U.S.C. 1, 3(a)). 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 2782 IH (c) PRIMA FACIE CASE.— 1 (1) A claimant establishes a prima facie case of 2 consciously parallel pricing coordination by dem- 3 onstrating that two or more persons— 4 (A) engaged in substantially similar action, 5 within a substantially similar time period, with 6 respect to pricing for reasonably interchange- 7 able products or services; and 8 (B) had a substantially similar motivation 9 to coordinate their efforts to raise, lower, 10 change, maintain, or manipulate pricing for the 11 purchase or sale of reasonably interchangeable 12 products or services. 13 (2) A claimant asserting a claim of consciously 14 parallel pricing coordination in violation of section 1 15 or 3(a) of the Sherman Act bears the burden of 16 proving the prima facie case described in paragraph 17 (1) by a preponderance of evidence, at which point 18 the burden of production shifts to the defending 19 party as set forth in subsection (d). 20 (d) BURDEN OF REBUTTING PRIMA FACIE CASE.— 21 The defending party bears the burden of rebutting a prima 22 facie case of consciously parallel pricing coordination by 23 producing evidence, sufficient to raise a genuine dispute 24 of material fact, that the defending party’s action de- 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 2782 IH scribed in paragraph (1)(A) of subsection (c) was moti- 1 vated by business judgment that is economically rational 2 in the absence of any consciously parallel pricing coordina- 3 tion. Evidence of this nature may include, but is not lim- 4 ited to, evidence that the defending party acted rationally 5 in response to or in anticipation of changing conditions 6 affecting the market for or the marketability of the prod- 7 ucts or services concerned. 8 (e) ULTIMATE BURDEN.—If the defending party re- 9 buts the prima facie case, the burden shifts back to the 10 claimant to prove, by a preponderance of the evidence, 11 that the defending party entered a tacit agreement among 12 two or more persons to raise, lower, change, maintain, or 13 manipulate pricing for the purchase or sale of reasonably 14 interchangeable products or services. The claimant may do 15 so by means that include, but are not limited to, proving 16 that— 17 (1) the business judgment described in sub- 18 section (d) was not— 19 (A) economically rational in the absence of 20 consciously parallel pricing coordination; or 21 (B) the predominant motivating factor for 22 the defending party’s action described in para- 23 graph (1)(A) of subsection (c); 24 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 2782 IH (2) the defending party, knowing that coordi- 1 nated action to raise, lower, change, maintain, or 2 manipulate pricing for the purchase or sale of rea- 3 sonably interchangeable products or services was 4 contemplated and invited by a competitor, adhered 5 to the scheme and participated in it; or 6 (3) based on circumstantial evidence implying a 7 traditional conspiracy, it is more likely than not that 8 the defending party entered an agreement among 9 two or more persons to raise, lower, change, main- 10 tain, or manipulate pricing for the purchase or sale 11 of reasonably interchangeable products or services. 12 (f) AFFIRMATIVE DEFENSE.—It is an affirmative de- 13 fense to a claim of consciously parallel pricing coordina- 14 tion, on which the defending party bears the burden of 15 proof by a preponderance of the evidence, that any affirm- 16 ative defense to price fixing applies. 17 SEC. 5. CLARIFYING THE MEANING OF CONTRACT, COM- 18 BINATION IN THE FORM OF TRUST OR OTH- 19 ERWISE, OR CONSPIRACY. 20 (a) MEANING OF CONTRACT, COMBINATION IN THE 21 FORM OF TRUST OR OTHERWISE, OR CONSPIRACY.—A 22 tacit agreement is a form of ‘‘contract, combination in the 23 form of trust or otherwise, or conspiracy’’ under sections 24 1 and 3(a) of the Sherman Act (15 U.S.C. 1, 3(a)). 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 2782 IH (b) STANDARDS OF PLEADING AND PROOF.—In a 1 civil action, including an action brought by the United 2 States or by a State attorney general, or by the Federal 3 Trade Commission under section 5 of the Federal Trade 4 Commission Act (15 U.S.C. 45)— 5 (1) a complaint— 6 (A) plausibly pleads a ‘‘contract, combina- 7 tion in the form of trust or otherwise, or con- 8 spiracy’’ under sections 1 and 3(a) of the Sher- 9 man Act if the complaint contains factual alle- 10 gations, which may consist of allegations of con- 11 sciously parallel conduct, demonstrating that 12 the existence of the alleged contract, combina- 13 tion in the form of trust or otherwise, or con- 14 spiracy is among the realm of plausible possi- 15 bilities; and 16 (B) need not allege facts tending to ex- 17 clude the possibility of independent action to 18 plausibly plead the existence of a ‘‘contract, 19 combination in the form of trust or otherwise, 20 or conspiracy’’ under sections 1 and 3(a) of the 21 Sherman Act; and 22 (2) a claimant— 23 (A) demonstrates a genuine dispute of ma- 24 terial fact that a defending party entered a 25 VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2782.IH H2782 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 2782 IH ‘‘contract, combination in the form of trust or 1 otherwise, or conspiracy’’ under sections 1 and 2 3(a) of the Sherman Act by offering evidence, 3 which may be direct or circumstantial, that is 4 sufficient to allow a trier of fact to reasonably 5 conclude that the defending party entered the 6 contract, combination in the form of trust or 7 otherwise, or conspiracy; and 8 (B) need not offer evidence tending to ex- 9 clude the possibility of independent action to 10 demonstrate a genuine dispute of material fact 11 that a defending party entered a ‘‘contract, 12 combination in the form of trust or otherwise, 13 or conspiracy’’ under sections 1 and 3(a) of the 14 Sherman Act; although, at trial, the trier of 15 fact may consider the existence or absence of 16 evidence tending to exclude the possibility of 17 independent action when determining whether a 18 defending party entered the contract, combina- 19 tion in the form of trust or otherwise, or con- 20 spiracy. 21 Æ VerDate Sep 11 2014 22:16 Apr 26, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 [Text truncated for display. 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