there was not a conspiracy to set prices. (Defendants' Mem. at 24; Barber Tr. at 501-502.)
A Court may not determine the credibility of these witnesses or weigh the evidence offered by the parties. Anderson, 106 S. Ct. at 2513. Giving the benefit of all favorable inferences, and assuming the facts cited by both parties are true, the inferences of rational, independent conduct appear equal to those of concerted action. "It is not unlawful for a business to take the prices charged by its competitors into account when setting its own prices, or to follow or copy the prices of a competitor, if the decision to do so is the result of a unilateral business judgment, and not the result of collusive agreement." Wilcox Development v. First Interstate Bank of Oregon, 605 F. Supp. 592, 595 (D. Or. 1985), aff'd 815 F.2d 522 (9th Cir. 1987) (citing United States v. International Harvester, 274 U.S. 693, 71 L. Ed. 1302, 47 S. Ct. 748 (1927).) However, in this case the inferences of independent action in setting prices does not outweigh the evidence of an anticompetitive objective to enter the agreement. Accordingly, defendants' motion for summary judgment on the intent issue is denied.
Plaintiffs claim "the issues of motive and intent need not be reached in order to grant summary judgment in favor of plaintiffs on liability on the issue of an anticompetitive effect on prices." (Plaintiffs' Mem. at 11, n. 20.) The plaintiffs themselves have admitted that if summary judgment is to be granted in their favor it must be based entirely on the question of the effect of the information exchange on competition. Accordingly, plaintiffs' motion for summary judgment concerning anticompetitive intent is denied.
C. Anticompetitive Effect
Both parties in this case claim they are entitled to summary judgment as a matter of law based upon the effect of the information exchange on industry prices. The plaintiffs claim the business jet industry is oligopolistic and highly concentrated with price inelastic demand; therefore, they claim the reciprocal exchange of price information most likely has an anticompetitive effect and constitutes a per se violation of section one of the Sherman Act. United States v. United States Gypsum, 438 U.S. 422, 457-458, 57 L. Ed. 2d 854, 98 S. Ct. 2864 (1978); VI P. Areeda, Antitrust Law, para. 1407e at 35 (1986). (Plaintiffs' Mem. at 45.)
Conversely, the defendants contend the business jet industry is highly competitive and non-oligopolistic. They claim the reciprocal exchange of price information among competitors does not have an anti-competitive effect in this case because the alleged co-conspirators only exchanged publicly available list price information, and the manufacturers did not adhere to these prices in making sales of business jets. (Defendants' Mem. at 18, 30-32.) Moreover, the prices exchanged were base prices which would not account for the fact that each of the jets were different in terms of range, passenger capacity, fuel consumption and standard equipment. (Defendants' Mem. at 2.)
For the reasons set forth below, neither of the moving parties has sufficiently established their position with regard to the effect of the information exchange on competition as a matter of law without a genuine dispute over the material facts. The plaintiffs have failed to show that business jets are fungible goods. (See discussion of fungibility in sub-section 1, infra.) Therefore, their per se argument must be rejected, and their cross-motion with respect to the price-fixing claims must be denied. Questions of fact regarding the relevant product market of business jets, and the concentration of the business jet industry make it impossible to determine as a matter of law the effect of the information exchange on competition. Thus, the motions of both parties must be denied with respect to the effect of the information exchange.
Plaintiffs have misguidedly relied on two inapposite cases to support their argument that they are entitled to summary judgment because the exchange of price information in this case constitutes a per se violation of Section One of the Sherman Act. United States Gypsum affirmed a reversal by the Third Circuit of criminal convictions of several officials of major gypsum board manufacturers who had engaged in interseller price verification. 438 U.S. at 465. This is a practice whereby competitors would call each other to determine the actual price currently being offered by a competing seller to a particular customer. Id. at 429. Plaintiffs also draw support for their per se argument from the Container case wherein the Supreme Court in a five page opinion struck down a scheme in which a seller of corrugated containers, upon the request of another seller, would furnish information as to the most recent price charged or quoted to an individual customer. 393 U.S. at 338. The Court found as a matter of law that this arrangement stabilized prices in violation of Section One of the Sherman Act. Id. at 336-37.
The plaintiffs have attempted to mold the instant facts into the holdings of Gypsum and Container, however both cases are distinguished from the instant case by the fact that gypsum board and corrugated containers are fungible goods. Gypsum, 438 U.S. at 426; Container, 393 U.S. at 337. That is to say, the goods of competing manufacturers are virtually identical, so the primary, if not the only, source of competition among manufacturers is in price.
Competition for sales of business jets occurs on a variety of levels of which price is only one. Range, passenger capacity and fuel efficiency are among the factors which business jet buyers take into consideration when purchasing an aircraft. (Plaintiffs' Mem. at 36; Defendants' Mem. at 14; Defendants' Reply at 12-13.) As well, it is difficult to make comparisons among different models of business jets because their characteristics vary widely. (Defendants' Reply at 14; Taylor Tr. 53-54; Roden Tr. 137; Handy Tr. 654-655, 664.) Thus, the plaintiffs concede business jet aircraft are not fungible. (Plaintiffs' Post-Hearing Summary Judgment Memorandum at 36.) Because business jets are not fungible products, an exchange of price information among manufacturers of business jets cannot be found to be a per se violation of Section One of the Sherman Act under the rules of either Container or Gypsum. Plaintiffs' cross-motion for summary judgment must be denied.
The Container Court found:
the corrugated container industry is dominated by relatively few sellers. The product is fungible and the competition for sales is price. The demand is inelastic, as buyers place orders only for immediate, short-run needs. The exchange of price data tends toward price uniformity. For a lower price does not mean a larger share of the available business but a sharing of the existing business at a lower return.
393 U.S. at 337. The Container case is plainly inapposite to plaintiffs' price fixing claims because in addition to the facts that business jets are not fungible, that competition for sales relies on many factors of which price is only one, and that there is evidence of competition over market shares, factual disputes exist concerning the number of sellers in the industry (see subsection 2, infra), and the elasticity of demand for business jets. Plaintiffs claim demand is inelastic (Plaintiffs' Mem. at 36; Barber Supplemental Report at 26-31), while defendants argue demand is elastic. (Defendants' Reply at 15-16.)
These disputes create a second ground upon which to reject plaintiffs' per se argument.
2. Market Definition
Both of the parties have devoted considerable portions of their extensive submissions to forwarding contradictory definitions of the business jet industry. As stated, this is because the nature of the industry will often determine whether the exchange of information relating to price among competitors has an anticompetitive or procompetitive effect.
The anticompetitive effect of a price information exchange in an oligopolistic industry was discussed in the Gypsum case:
"Regardless of its putative purpose, the most likely consequence of any such [reciprocal] agreement to exchange price information would be the stabilization of industry prices. . . . Especially in oligopolistic industries, . . . the exchange of price information among competitors carries with it the added potential for the development of concerted price-fixing arrangements which lie at the core of the Sherman Act's prohibitions."