AGREEMENTS BETWEEN COMPETITORS. III. AGREEMENTS AMONG SMALL GROUPS
In Chapter I it was shown that all price-fixing agreements between competitors, including agreements designed to 'manipulate' pricelevels by keeping surplus supplies off the market, are illegal per se under the Sherman Act, so long as they have or are meant to have a significant effect on competition. Most cases reaching the courts are in practice straightforward, so that the Trenton Potteries case, for example, is an adequate model for settling them. But sometimes, as was seen, difficult borderline questions of fact arise. If businessmen are fully informed of all the factors in the market situation, may it not happen that they independently and quite rationally refrain from cutting each other's throats, so that an absence of price-competition is explained without postulating agreement or conspiracy? How is this situation, which is beyond the reach of the law,1 to be distinguished from that which arises from illegal agreement? The 'open competition' and basingpoint cases illustrating this point showed, however, that it is very difficult, at least for large groups of competitors, to avoid pricecompetition without to some extent 'organizing' the requisite mutual restraint; in practice, collusion is often present and, if present, is usually detected. But it still seemed possible that among small groups of competitors an absence of price-competition might escape legal penalty, either because it arose from a genuinely 'oligopolistic' mutual restraint or because, if there were a common understanding among the group, it might be successfully concealed.
Chapter II reached much the same point in respect to agreements between competitors to exclude outsiders from the market or to divide the market and avoid competition among themselves. Once again the majority of cases are in practice straightforward and easily decided by reference to such precedents as the Addyston Pipe case or that of the Fashion Originators Guild. Once again there comes a point at which____________________