United States v. United States Gypsum Company

Supreme Court of the United States · 1978 · Criminal Law

Criminal LawAntitrustSherman ActMens reaJury instructionsmens reacriminal antitrustSherman Act § 1

Facts

Respondents, major gypsum board manufacturers and corporate officials, were indicted for a long-running conspiracy to raise, fix, maintain, and stabilize gypsum board prices and related sales terms. The Government's case centered on interseller price verification, in which competitors telephoned one another to confirm prices being offered to specific customers. Respondents argued that any such exchanges were undertaken to comply with the Robinson-Patman Act and to prevent customer fraud. The trial court instructed the jury that if the exchanges had the effect of stabilizing prices, the law presumed the parties intended that result, limited proof of withdrawal to notice to every coconspirator or disclosure to law enforcement, and later held an ex parte meeting with the jury foreman during deadlocked deliberations.

Issue

Whether a criminal Sherman Act conviction may rest on proof that exchanges of price information had an effect on prices without proof of intent, whether price verification undertaken for Robinson-Patman compliance is exempt from Sherman Act scrutiny, whether the jury was properly instructed on withdrawal from the conspiracy, and whether the trial judge's ex parte communication with the jury foreman required reversal.

Rule

A criminal antitrust offense under the Sherman Act includes intent as an element. In cases where anticompetitive effects are shown, the Government may satisfy that element by proving the defendant acted with knowledge of the probable consequences of the conduct, but the jury may not be instructed to conclusively presume intent from proof of price effects. Exchanges of price information remain subject to Sherman Act scrutiny even when purportedly undertaken to facilitate the Robinson-Patman Act's meeting-competition defense. Withdrawal from a conspiracy may be shown by affirmative acts inconsistent with the conspiracy's object that are communicated in a manner reasonably calculated to reach coconspirators.

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

Three competing drywall distributors in Phoenix regularly shared current customer-specific quotes. In a criminal Sherman Act prosecution, the government proved the exchanges made prices more stable across the market, but offered no evidence about what the managers knew or intended when they made the calls.

Which is the strongest argument for acquittal?

Explanation. The majority held that intent is an element of a criminal Sherman Act offense. Proof that conduct had anticompetitive effects is not enough by itself for criminal conviction. The government must prove the required mental state through evidence and permissible inferences. The Court did not require proof of a specific desire to violate the law, and it did not say a written agreement is necessary.