March 9, 2017
Appeal from the United States District Court for the District
of Delaware (D.C. No. 1-14-cv-00527) District Judge:
Honorable Richard G. Andrews
M. Lockhart [Argued] James P. McCarthy Kathryn E. Wendt
Lindquist & Vennum Frederick L. Cottrell, III Jason J.
Rawnsley Chad M. Shandler Richards Layton & Finger
Counsel for Plaintiffs-Appellants.
Adra Crowell & Moring Clifton S. Elgarten Shari R. Lahlou
[Argued] Benjamin C. Wastler Crowell & Moring Kathleen F.
McDonough John A. Sensing Potter Anderson & Corroon
Counsel for Defendant-Appellee.
Richard M. Brunell American Antitrust Institute Suite Counsel
for American Antitrust Institute as Amicus Curiae in support
Before: HARDIMAN and KRAUSE, Circuit Judges, and STENGEL,
HARDIMAN, CIRCUIT JUDGE.
appeal involves an alleged conspiracy to fix prices in the
titanium dioxide industry in violation of Section 1 of the
Sherman Act. Appellant Valspar, a purchaser of titanium
dioxide, claimed Appellee DuPont conspired with other
titanium dioxide suppliers to fix prices. Valspar argued that
the price-fixing agreement was made manifest primarily by
thirty-one parallel price increase announcements issued by
the suppliers. DuPont countered that the parallel pricing was
not the product of an agreement, but rather the natural
consequence of the marketplace. Specifically, DuPont posited
that because the market for titanium dioxide is an oligopoly,
the price movement was caused by "conscious
parallelism"-an economic theory that explains
oligopolists will naturally follow a competitor's price
increase in the hopes that each firm's profits will
increase. The District Court agreed with DuPont and granted
its motion for summary judgment. We will affirm.
facts of this case were essentially undisputed in the
District Court. The parties agree that the market for
titanium dioxide is an oligopoly. Titanium dioxide is a
commodity-like product with no substitutes, the market is
dominated by a handful of firms, and there are substantial
barriers to entry.
a large-scale purchaser of titanium dioxide, alleges that a
group of titanium dioxide suppliers conspired to increase
prices. It claims that the conspiracy began when DuPont-the
largest American supplier-joined the Titanium Dioxide
Manufacturers Association (TDMA) in 2002, when the
association opened participation to non-European companies.
Shortly after joining the TDMA, DuPont announced a price
increase. Within two weeks, DuPont's price increase was
matched by Millennium, Kronos, and Huntsman (other TDMA
members and members of the alleged conspiracy). This began
what Valspar alleged to be the "Conspiracy Period"-
twelve years during which the alleged conspirators announced
price increases 31 times.
claims the conspiracy ended in late 2013 when DuPont exited
the TDMA. According to Valspar's calculations, the
conspirators inflated the cost of titanium dioxide by an
average of 16%. Because Valspar purchased $1.27 billion of
titanium dioxide from DuPont during the relevant period, it
claims it was overcharged to the tune of $176 million.
2010, a class of titanium dioxide purchasers filed a
price-fixing action against the suppliers in the United
States District Court for the District of Maryland. Valspar
opted out of that class and the remaining defendant suppliers
settled the case after they were denied summary judgment.
See In re Titanium Dioxide Antitrust Litig., 959
F.Supp.2d 799, 832 (D. Md. 2013). Valspar then filed its own
claim in the United States District Court for the District of
Minnesota, which was subsequently severed. Valspar settled
all claims except this one against DuPont, which was
transferred to the United States District Court for the
District of Delaware, where DuPont moved for summary
judgment. Although presented with "substantially the
same record . . . as in the Maryland Class Action, " the
District Court reached a "different conclusion."
Valspar Corp. v. E.I. Du Pont De Nemours, 152
F.Supp.3d 234, 252 (D. Del. 2016). Reviewing the record and
our Court's precedents, the District Court found that
"evidence of an actual agreement to fix prices" was
"lacking." Id. at 253. Reasoning that such
evidence is necessary for a plaintiff to survive summary
judgment, the District Court granted DuPont's motion.
District Court had jurisdiction under 28 U.S.C. § 1331.
We have appellate jurisdiction under 28 U.S.C. § 1291.
Our standard of review is intertwined with substantive
antitrust law and the parties dispute its contours. We
therefore begin by reviewing the applicable law.
1 of the Sherman Act prohibits "[e]very contract,
combination in the form of trust or otherwise, or conspiracy,
in restraint of trade." 15 U.S.C. § 1. Unlike
§ 2 of the Sherman Act, which addresses monopolization
and other illegal unilateral conduct, § 1 applies only
when there is an agreement to restrain trade; so a
single firm's independent action, no matter how
anticompetitive its aim, does not implicate § 1.
Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S.
752, 761 (1984). While some offenses under § 1 are
reviewed for reasonableness, Leegin Creative Leather
Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885-86 (2007),
others have no possible competitive virtue and are therefore
per se illegal, Broad. Music, Inc. v. Columbia Broad.
Sys., Inc., 441 U.S. 1, 19-20 (1979). Horizontal price
fixing (i.e., price fixing among competitors) is one
such per se violation because it is a "threat to the
central nervous system of the economy." United
States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n.59
pose a special problem under § 1 because rational,
independent actions taken by oligopolists can be nearly
indistinguishable from horizontal price fixing. This problem
is the result of "interdependence, " which occurs
because "any rational decision [in an oligopoly] must
take into account the anticipated reaction of the other
firms." In re Flat Glass Antitrust Litig., 385
F.3d 350, 359 (3d Cir. 2004) (alteration omitted) (quoting
Philip E. Areeda & Herbert Hovenkamp, Antitrust
Law 207 (2d ed. 2000)). In a market with many firms,
"the effects of any single firm's price and output
decisions 'would be so diffused among its numerous
competitors that they would not be aware of any
change.'" Id. (quoting Areeda &
Hovenkamp, supra, at 206). The opposite is true in
an oligopoly, where any price movement "will have a
noticeable impact on the market and on its rivals."
Id. (quoting Areeda & Hovenkamp, supra,
at 206); see also In re Text Messaging Antitrust
Litig., 782 F.3d 867, 875 (7th Cir. 2015) (oligopolists
"watch each other like hawks").
"oligopolistic rationality" can cause
supracompetitive prices because it discourages price
reductions while encouraging price increases. A firm is
unlikely to lower its price in an effort to win market share
because its competitors will quickly learn of that reduction
and match it, causing the first mover's profits to
decline and a subsequent decline in the overall profits of
the industry. Flat Glass, 385 F.3d at 359.
Similarly, if a firm announces a price increase, other market
participants will know that "if they do not increase
their prices to [the first-mover's] level, [the
first-mover] may be forced to reduce its price to their
level. Because each of the other firms know this, each will
consider whether it is better off when all are charging the
old price or [the new one]. They will obviously choose [the
new price] when they believe that it will maximize industry
profits." Id. (quoting Areeda & Hovenkamp,
supra, at 207-08).
Supreme Court has explained that this behavior does not
violate antitrust laws. See Brooke Grp. Ltd. v. Brown
& Williamson Tobacco Corp., 509 U.S. 209, 227
(1993). Even though such interdependence or "conscious
parallelism" harms consumers just as a monopoly does, it
is beyond the reach of antitrust laws for two reasons. First,
some courts and scholars theorize "that interdependent
behavior is not an 'agreement' within the term's
meaning under the Sherman Act." Flat Glass, 385
F.3d at 360 (citing Donald F. Turner, The Definition
of Agreement Under the Sherman Act: Conscious
Parallelism and Refusals to Deal, 75 Harv. L. Rev. 655,
663-65 (1962)). And second, "it is close to impossible
to devise a judicially enforceable remedy for
'interdependent' pricing." Clamp-All Corp.
v. Cast Iron Soil Pipe Inst., 851 F.2d 478, 484 (1st
Cir. 1988) (Breyer, J.). The problem is this: "How does
one order a firm to set its prices without regard to
the likely reactions of its competitors?" Id.
faced with whether a plaintiff has offered sufficient proof
of an agreement to preclude summary judgment, a court must
generally apply the same summary judgment standards that
apply in other contexts." Flat Glass, 385 F.3d
at 357. Accordingly, a court will enter summary judgment when
the evidence shows "no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(a). As in other summary
judgment contexts, we "review the record as a whole and
in the light most favorable to the nonmovant, drawing
reasonable inferences in its favor." In re Chocolate
Confectionary Antitrust Litig., 801 F.3d 383, 396 (3d
we have recognized there is "an important
distinction" to this general standard in antitrust
cases. Flat Glass, 385 F.3d at 357.
"[A]ntitrust law limits the range of permissible
inferences from ambiguous evidence in a § 1 case."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 588 (1986). Specifically, "conduct as
consistent with permissible competition as with illegal
conspiracy does not, standing alone, support an inference of
antitrust conspiracy." Id. The reason for
this more rigorous standard is that mistaken inferences are
especially costly in antitrust cases, since they could
penalize desirable competitive behavior and "chill the
very conduct the antitrust laws are designed to
protect." Id. at 594.
those principles informing our analysis, this Court has
developed specialized evidentiary standards at summary
judgment in antitrust cases in general and in oligopoly cases
in particular. Our analysis often begins with evidence of
parallel price movements. See Chocolate, 801 F.3d at
397. In non-oligopolistic markets, "[p]arallel behavior
among competitors is especially probative of price fixing
because it is the sine qua non of a price fixing
conspiracy." Southway Theatres, Inc. v. Ga. Theatre
Co., 672 F.2d 485, 501 (5th Cir. Unit B 1982). But in an
oligopolistic market, parallel behavior "can be a
necessary fact of life, " In re Baby Food Antitrust
Litig., 166 F.3d 112, 122 (3d Cir. 1999), and
"[a]ccordingly, evidence of conscious parallelism cannot
alone create a reasonable inference of a conspiracy, "
Chocolate, 801 F.3d at 398. Therefore, to prove an
oligopolistic conspiracy with proof of parallel behavior,
that evidence "must go beyond mere interdependence"
and "be so unusual that in the absence of an advance
agreement, no reasonable firm would have engaged in it."
Baby Food, 166 F.3d at 135.
proof of parallel behavior will rarely itself create an
inference of conspiracy, a plaintiff will often need to
"show that certain plus factors are present" in
order "[t]o move the ball across the goal line."
Chocolate, 801 F.3d at 398-99. "Plus factors
are proxies for direct evidence because they tend to ensure
that courts punish concerted action-an actual
agreement." Id. (internal formatting and
citations omitted). "Although we have not identified an
exhaustive list of plus factors, they may include (1)
evidence that the defendant had a motive to enter into a
price fixing conspiracy; (2) evidence that the defendant
acted contrary to its interests; and (3) evidence implying a
traditional conspiracy." Id. at 398.
normally all three plus factors are weighed together, in the
case of oligopolies the first two factors are deemphasized
because they "largely restate the phenomenon of
interdependence." Flat Glass, 385 F.3d at 360.
Put another way, "[e]vidence of a motive to conspire
means the market is conducive to price fixing, and evidence
of actions against self-interest means there is evidence of
behavior inconsistent with a competitive market."
Chocolate, 801 F.3d at 398. Since those qualities
are intrinsic to oligopolies, we instead focus on the third
plus factor: "evidence implying a traditional
conspiracy." Flat Glass, 385 F.3d at 360
(citation omitted). To meet this factor, we require
"proof that the defendants got together and exchanged
assurances of common action or otherwise adopted a common
plan even though no meetings, conversations, or exchanged
documents are shown." Id. at 361 (citations
evaluating the evidence through our plus factor analysis, we
then assess whether, "[c]onsidering the evidence as a
whole, " it is "more likely than not [that the
defendants] conspired to fix prices."
Chocolate, 801 F.3d at 412. This Court has at times
employed different approaches for sifting through the
proffered evidence. Compare Flat Glass, 385 F.3d
363-69 (summarizing all of plaintiff's evidence without
editorializing, and then performing an "Analytical
Summary" to decide whether the body of evidence made
conspiracy more likely than not), with Chocolate,
801 F.3d at 403-12 (looking at individual groupings of
evidence to see whether any "supported an inference of
conspiracy, " id. at 408, and then taking a
holistic view of the evidence in context and determining that
"it does not tend to exclude the possibility that
[defendants] acted lawfully, " id. at 412).
Whatever method is used, the bottom line is that "a
plaintiff relying on ambiguous evidence alone cannot raise a
reasonable inference of a conspiracy sufficient to survive
summary judgment, " Chocolate, 801 F.3d at 396,
but-like in all other summary judgment cases-that evidence
must be viewed in the context of all other evidence, Big
Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358,
1364-65 (3d Cir. 1992).
turn to the evidence of record, which we will evaluate in
light of the principles just outlined. We first consider the
parallel pricing evidence, then move to evidence under the
plus factors, and finally consider the record in
bases its case primarily on the 31 parallel price increase
announcements issued by the competitors during the alleged
conspiracy, arguing that it is "inconceivable"
that, on 31 occasions, the competitors "conduct[ed]
independent analyses . . . [and] nearly simultaneously
arrived at identical price increase amounts to be implemented
on exactly the same day." Valspar Br. 37.
argument fails for two reasons. First, its characterization
of the suppliers' price announcements neglects the theory
of conscious parallelism and flies in the face of our
doctrine that in an oligopoly "any rational decision
must take into account the anticipated reaction of
the other . . . firms." Baby Food, 166 F.3d at
122 (emphasis added) (citations omitted). Thus, DuPont does
not claim that the competitors' numerous parallel price
increases were discrete events-nor could it do so with a
straight face. But it doesn't need to. The theory of
interdependence recognizes that price movement in an
oligopoly will be just that: interdependent. And
that phenomenon frequently will lead to successive price
increases, because oligopolists may "conclude that the
industry as a whole would be better off by raising
prices." Chocolate, 801 F.3d at
Valspar does not engage this Court's demanding rule that
in order to raise an inference of conspiracy on this point,
it was required to show that the suppliers' parallel
pricing went "beyond mere interdependence [and was] so
unusual that in the absence of advance agreement, no
reasonable firm would have engaged in it." Baby
Food, 166 F.3d at 135. Valspar never cites this
important controlling precedent, nor does it attempt to show
how it might be met.
fromValspar's failure to carry its burden, DuPont
demonstrates that "market realities . . . clearly
controvert [Valspar's] contention" that these
announcements are evidence of a conspiracy. Id. at
131. First, supply contracts in the titanium dioxide industry
contained price-protection clauses requiring a notice period
to customers before a price increase, meaning that if a
supplier failed to match a competitor's announcement, it
was foregoing the possibility of negotiating a price increase
during that period. These industry-wide contractual
provisions made the benefit of matching a price increase
announcement high and the risk minimal: if a competitor later
undercut that price in an effort to take market share, the
supplier could refrain from implementing the price increase
or even respond by lowering its price. Second, DuPont
demonstrated that the market for titanium dioxide remained
competitive despite the frequent price increase
announcements. Indeed, Valspar employees testified that it
was "very common" to negotiate away a
supplier's attempt to increase price, DuPont Br. 6, and
said that "[o]ften . . . an aggressive supplier would be
interested in achieving more volume and would come in and
offer a [lower] price, " id. at 9. Across all
suppliers' attempted price increases, Valspar was able to
avoid that increase (or even negotiate a decrease) one-third
of the time. Thus, Valspar's characterization of this
evidence is controverted by market realities;
"aggressive" and "common" price
competition between firms is inconsistent with the idea that
those same firms have conspired not to compete on
also advances the related argument that the flurry of price
announcements reflects a drastic change from pre-conspiracy
behavior in the titanium dioxide market. A change in industry
practices must be "radical" or "abrupt"
to "create an inference of a conspiracy."
Chocolate, 801 F.3d at 410 (citation omitted).
Valspar claims to have met this standard because there were
only three parallel price increase announcements before the
alleged conspiracy period (as compared to the thirty-one
during the conspiracy period).
disagree. In Chocolate, the plaintiffs advanced a
similar argument, relying on an increased frequency in
parallel pricing activity from pre-conspiracy behavior.
There, we explained that "the focus of the
Plaintiffs' argument is unduly narrow" because
"[h]istorically, parallel pricing in the U.S. chocolate
market has not been at all uncommon."
Chocolate, 801 F.3d at 410. Here too, public
parallel price increase announcements are "consistent
with how this industry has historically operated."
Valspar, 152 F.Supp.3d at 252 (quoting
Chocolate, 801 F.3d at 410). Similarly, when other
courts have found a radical or abrupt change to indicate
conspiracy, that change has generally been more than just an
uptick in frequency of a pre-established industry practice.
See Toys "R" Us, Inc. v. FTC, 221 F.3d
928, 935 (7th Cir. 2000) (group of toy distributors
unanimously stopped dealing with warehouse clubs after years
of that being an industry norm). That logic rings
particularly true in this context because "it is
generally unremarkable for the pendulum in oligopolistic
markets to swing from less to more interdependent and
cooperative." Chocolate, 801 F.3d at 410
(citing Areeda & Hovenkamp, supra, at 229).
found that the pattern of parallel price increases does not
raise an inference of conspiracy, we next turn to
Valspar's argument that the plus factors evidence a
conspiracy. As explained above, this Court has developed a
specialized rule that in oligopolistic markets,
"'the first two factors largely restate the
phenomenon of interdependence, ' . . . [which] leaves
traditional non-economic evidence of a conspiracy as the most
important plus factor." Chocolate, 801 F.3d at
398 (citation omitted). Tellingly, Valspar ignores this
important point and instead emphasizes why the first two plus
factors are met. Valspar's "victory . . . is a
hollow one, " however, having succeeded in showing
interdependence but not conspiracy. Id. at 400.
first factor relates to motive to enter a conspiracy,
i.e., that "the market is conducive to price
fixing." Id. at 398. There is little doubt that
this highly concentrated market for a commodity-like product
with no viable substitutes and substantial barriers to entry
was conducive to price fixing.
second plus factor looks for evidence of action against
self-interest, i.e., "evidence that the market
behaved in a noncompetitive manner." Flat
Glass, 385 F.3d at 361 (citation omitted). Valspar
presents evidence that there was "a 16% overcharge"
and that "price increases were not correlated to
supply-and-demand principles." Valspar Br. 57. While
true, this is largely irrelevant because it ignores the fact
that "firms in a concentrated market may maintain their
prices at supracompetitive levels, or even raise them to
those levels, without engaging in any overt concerted
action." Flat Glass, 385 F.3d at
Valspar's other economic expert evidence addresses the
first two plus factors as well. See Flat Glass, 385
F.3d at 361 (explaining that the third plus factor is where
"non-economic evidence" should be
considered (emphasis added)). For example, Valspar notes that
its expert "concluded there was economic evidence of
ability to enforce their price-fixing agreement, " and
"found from an economic point of view the markets were
relatively stable." Valspar Br. 41, 43. From findings
like these, Valspar argues that "the district court
should have accepted [the expert's] economic
conclusions" that the competitors could not have acted
independently. Valspar Br. 42. This gets things backwards.
There is no dispute that the market was primed for
anticompetitive interdependence and that it operated in that
manner. Valspar's expert evidence confirming these facts
mastered the obvious.
finally reach Valspar's evidence under our third plus
factor: traditional conspiracy evidence, where we look for
"proof that the defendants got together and exchanged
assurances of common action or otherwise adopted a common
plan even though no meetings, conversations, or exchanged
documents are shown." Flat Glass, 385 F.3d
at 361 (citation omitted). We approach the third plus factor
as this Court did in Chocolate, first considering
individual groups of evidence to see whether any raise an
inference of conspiracy, before evaluating all of the proof
in context. See 801 F.3d at 403-12. Here, we agree
with the District Court that Valspar failed to raise an
inference of conspiracy. Each strand of evidence is weaker
than similar evidence in cases where this Court has affirmed
summary judgment in favor of companies that operate in an
Valspar shows that DuPont and the other competitors took part
in a data sharing program offered by the Titanium Dioxide
Manufacturers Association. As part of this program (the
Global Statistics Program, or GSP) the competitors provided
production, inventory, and sales-volume data (but never price
data) to the TDMA, which then aggregated, anonymized, and
redistributed the data.
citing any precedent to show why this type of information
sharing was illegal, Valspar argues that the GSP allowed each
conspirator to calculate its own market share and thus deduce
whether it was getting its fair share of the conspiracy's
profits. This argument suffers from the loaded question
fallacy. Instead of setting out to prove: "Does the GSP
show that a conspiracy existed?, " Valspar attempts to
answer: "How did the GSP further the conspiracy?"
This approach cannot satisfy Valspar's burden. "[A]
litigant may not proceed by first assuming a conspiracy and
then explaining the evidence accordingly." Blomkest
Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203
F.3d 1028, 1033 (8th Cir. 2000).
our prior decisions undermine Valspar's argument that the
GSP supports an inference of conspiracy For example, in
Baby Food, we affirmed summary judgment despite the
fact that the alleged conspirators' sales representatives
had "exchang[ed] pricing information, " explaining
that there was no evidence these exchanges had any effect
over the companies' final pricing decisions, 166 F.3d
117, and observing, in any event, that "[t]he exchange
of price data . . . can in certain circumstances increase
economic efficiency and render markets more, rather than
less, competitive." Id. at 125 (quoting
United States v. U.S. Gypsum Co., 438 U.S. 422, 443
n.16 (1978)). And in Flat Glass, the alleged
conspirators each provided price data to a business that
would use those inputs to set recommended prices for the
industry. 385 F.3d at 355. The alleged conspirators knew how
the recommended prices were calculated, so "were able to
calculate backwards" and determine the price inputs
used. Id. at 370. We explained that although this
would rightfully "raise suspicion, " the
"publication of pricing information can have a
pro-competitive effect" and, with little other evidence
supporting the inference of a conspiracy, affirmed summary
judgment on that claim. Id.
data exchanged as part of the GSP looks innocuous when
compared to the information in Baby Food and
Flat Glass. The GSP aggregated and blinded
"members' monthly sales, production, and inventory
data worldwide, " but never collected price information.
Valspar Br. 47. Valspar argues that "the co-conspirators
partially disaggregated the data to track individual
firms." Valspar Br. 48. But as the District Court noted,
"the evidence provided by Valspar does not support this
conclusion" and Valspar's own expert conceded that
the GSP merely allowed each firm to calculate its
own market share. Valspar, 152 F.Supp.3d at
Valspar claims that the alleged conspirators "used the
TDMA meetings to communicate their pricing plans, coordinate
price increases, and confirm that each competitor would
follow the leader on price increases." Valspar Br. 50.
Valspar's argument essentially begins and ends with
opportunity: the TDMA meetings brought the competitors
together, so one should assume that they used the meetings to
conspire. But as the District Court noted, "[t]here is
no evidence that there was any discussion of prices during
these meetings and certainly no evidence of an
agreement." Valspar, 152 F.Supp.3d at 246.
Consequently, Valspar's argument falls short under our
precedents. Chocolate, 801 F.3d at 409
("[E]vidence . . . that the executives from the [alleged
conspirators] were in the same place at the same time . . .
is insufficient to support a reasonable inference of
concerted activity."); Petruzzi's IGA
Supermarkets, Inc. v. Darling-Del. Co., 998 F.2d 1224,
1235 (3d Cir. 1993) ("Proof of opportunity to conspire,
without more, will not sustain an inference that a conspiracy
has taken place." (citation omitted)).
Valspar suggests that the competitors used industry
consultants as conduits to funnel information. For example,
Valspar points to an e-mail from a Kronos employee to a
consultant noting that the employee had heard rumors of an
impending Huntsman price increase, but thought it
"sound[ed] weird" and wanted to know if the