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Matsushita Electric Industrial Co. v. Zenith Radio Corp.

Supreme Court of the United States · 1986 · Civil Procedure

summary judgmentantitrustplausibilityimplausible inferenceRule 56summary judgmentSherman Act § 1antitrust injury

Facts

Respondents Zenith and NUE alleged that petitioners conspired over many years to monopolize the American consumer electronics market by charging artificially high prices in Japan and low prices in the United States. The District Court concluded that the admissible evidence did not create a genuine issue of material fact as to the alleged conspiracy, finding the inference of conspiracy unreasonable because the evidence was more consistent with competitive price cutting than with a scheme to monopolize. The Court of Appeals, relying on evidence of Japanese market coordination, export check-price agreements, the five company rule, and rebate schemes, held that a factfinder could infer a conspiracy to depress American prices and reversed. The Supreme Court reviewed only the standard governing summary judgment, not the evidentiary rulings or the weight of particular evidence.

Issue

When plaintiffs in an antitrust conspiracy case oppose summary judgment with circumstantial evidence, must they produce evidence that makes the inference of conspiracy reasonable in light of competing lawful explanations? More specifically, where the alleged predatory pricing conspiracy is economically implausible, can ambiguous evidence and evidence of other price-raising arrangements suffice to create a genuine issue for trial?

Rule

To survive summary judgment, an antitrust plaintiff must show a genuine issue of material fact both as to an illegal conspiracy and as to injury cognizable under the antitrust laws. In a Sherman Act § 1 case, conduct that is as consistent with permissible competition as with illegal conspiracy does not alone support an inference of conspiracy; the plaintiff must present evidence that tends to exclude the possibility that the alleged conspirators acted independently. When the factual context renders the claim implausible or economically senseless, the plaintiff must come forward with more persuasive evidence than would otherwise be necessary.

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Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Four smartphone accessory makers in Phoenix sue seven rival importers, alleging a conspiracy to drive them out by selling charging cables at loss-making prices for a decade. The plaintiffs offer evidence that the defendants all cut prices within weeks of each other, but the record also shows that demand surged, shelf space was limited, and each defendant had separate negotiations with retailers. No evidence links the firms to any agreement beyond the parallel pricing moves.

If the defendants move for summary judgment, how should the court rule?

Explanation. The court should grant summary judgment. In a § 1 case, conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of conspiracy. The nonmoving plaintiff must present evidence that tends to exclude the possibility of independent action. Here, the plaintiffs show only ambiguous parallel pricing in a market context that also supports lawful competition for retailer business.