Zenith Radio Corp. v. Matsushita Electric Industrial Co.

TABLE OF CONTENTS

(Summary Judgment Motions Related to Plaintiffs’ Sherman Act, Wilson Tariff Act, Clayton Act and Robinson-Patman Act Claims) Pretrial Order No. 307

I. PRELIMINARY STATEMENT 1117

II. THE ANATOMY OF PLAINTIFFS’ CONSPIRACY CLAIMS 1124

III. THE FPS, FINAL STAGE CASE MANAGEMENT, AND THE SUM- 1130 MARY JUDGMENT RECORD

IV. SUMMARY OF PRETRIAL EVIDENTIARY RULINGS 1135

V. STANDARDS GOVERNING SUMMARY JUDGMENT 1139

VI. LEGAL PRINCIPLES AFFECTING PLAINTIFFS’ SHERMAN ACT 1144 § 1 AND WILSON TARIFF ACT CONSPIRACY CASE A. Sherman Act § 1 1144

1. Introduction and Basic Principles 1144

2. Price Agreements 1146

a. The “Price Necessary to Get the Sale” 1147

b. Agreement to Increase Market Share 1147

c. Agreement to Fix Minimum Prices 1147

d. Agreement to Price Predatorily 1148

e. Agreement to Fix Low or Depressed Prices H48

f. Agreement to Fix Minimum Prices and a Second Agree- H48 ment to Violate the First

g. Agreement to Deceive Government Authorities With Re- 1148 spect to Price

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3. Market Allocation 1148

4. Membership in Trade Associations and Attendance at Meetings 1149

5. Exchange of Information Concerning Prices, Production and 1149 Inventory Figures, and Joint Forecasting

6. Product Standardization and Technical Research Exchange 1153

7. Secret Rebates 1154

8. Joint Activities in Promoting Public and Governmental Rela- 1155 tions and Joint Legal Action in Response to Common Problems

B. Statutory Antitrust Standing Under § 4 and § 16 of the Clayton 1157 Act

C. The Wilson Tariff Act 1162

D. The Law of Conspiracy in an Antitrust Context 1165

1. In General 1165

2. Fragmentation of the Plaintiffs’ Conspiracy Allegations 1166

3. The “Slight Evidence” Rule 1169

4. The Requisites of Circumstantial Proof of Conspiracy by Infer- 1170 ence from Consciously Parallel Business Behavior

(a) Introduction 1170

(b) General Principles Concerning Inferences from Circumstan- 1170 tial Evidence on Summary Judgment Motions

(c) Inferring Conspiracy from Parallel Conduct 1172

5. Vicarious Liability of Coconspirators: The

Pinkerton

Doctrine 1176 and Robinson-Patman Act and Clayton Act § 7 Violations

6. Requisites for Admissibility of Coconspirator Declarations 1178

VII. PLAINTIFFS’ SHERMAN ACT § 1 AND WILSON TARIFF ACT 1180 CONSPIRACY CASE AS TO TELEVISION RECEIVERS — EVIDEN-TIARY REVIEW AND DISCUSSION OF LEGAL SUFFICIENCY

A. Introduction 1180

B. The Technological Development of Consumer Electronic Products 1182 and the Industrial Organization of Japanese Electronics Firms on

the Foundation of Borrowed Technology

C. The Closed Japanese Market 1183

D. Plaintiffs’ Expert Reports 1186

E. Plaintiffs’ Allegations About the Combined Economic Power of the 1186 Defendants and their Cartel

F. The Manufacturers’ Agreements and the JMEA Rules; Operation 1187 of the Minimum Price Agreements and the “Five Company Rule”

1. General Background; Operation of the Minimum Price Provi- 1187 sions

2. Operation and Significance of the “Five Company Rule” 1189

3. The Agreements as Evidence of Conspiracy 1190

4. The Role of MITI 1191

G. Activities of Certain Groups and Associations in Japan 1195

1. Introduction; General Background 1195

2. The Sub Rosa “Conspiratorial” Meetings of Executives Re- 1196 vealed by the Six Company Case

(a) Introduction; General Background 1196

(b) Evidence of the Home Market Aspect of the “Unitary” 1202 Conspiracy; the Plaintiffs’ “War-chesting” Claims

(c) Evidence of the Export Aspect of the “Unitary” Conspiracy 1209

(d) The Six Company Case — Conclusion 1213

3. The EIAJ 1215

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4. The JMEA and the Television Export Council 1221

5. The Market Stabilization Council, The Nine Essential Points of 1223 Implementation, and the Four Associations Conference

H. The “Connection” Documents 1226

I. The “Intent” Documents 1230

J. Plaintiffs’ Allegations of Below Cost Sales 1235

K. Evidence of International Price Discrimination Between the United 1235 States and Japanese Markets

L. Plaintiffs’ Evidence of the Operation of the “Predatory Export 1241 Rebate System for Collusive Concealment of Dumping”

1. Elements of the Rebate Scheme 1241

2. Alleged Collusion in the Export Rebate System 1245

M. Plaintiffs’ Evidence Concerning the Depletion and Destruction of 1251 the United States CEP Industry

N. Plaintiffs’ Claims Concerning Defendants’ Acquisitions of U.S. 1253 Manufacturers and Their Establishment of Manufacturing Facilities

in the United States

1. Introduction 1253

2. The Quasar Acquisition 1254

3. The Warwick Acquisition 1256

4. The Sanyo-Fisher Acquisition 1258

5. The Philips-Magnavox Acquisition 1258

6. Plaintiffs’ Claims About Establishment of United States Manu- 1259 facturing Facilities by the Japanese Defendants

O. Plaintiffs’ Evidence Concerning “Defendants’ Systematic Price Dis- 1259 crimination in the U.S.”

P. Plaintiffs’ Contentions Based Upon the “Undisputed Facts and 1260 Legal Propositions” Identified by Plaintiffs’ Counsel in the Course

of Summary Judgment Argument on August 28,1980

Q. Evidence of the Participation of Individual Defendants in the Con- 1265

spiracy

1. Introduction 1265

2. The Matsushita Defendants 1266

3. The Toshiba Defendants 1271

4. The Hitachi Defendants 1274

5. The Sanyo Defendants 1275

6. The Sharp Defendants 1278

7. Melco & Melco Sales, Inc. (MSI) 1279

8. Sony 1281

9. MC and MIC 1284

10. Sears 1289

11. Motorola 1293

12. The Sales Subsidiaries 1296

R. Preliminary Determination of Sufficiency of Conspiracy Evidence 1298 under F.R.E. 104(a)

S. Summary of Conclusions as to Plaintiffs’ Sherman § 1 and Wilson 1299 Tariff Act Case as to Television Receivers

VIII. PLAINTIFF’S EVIDENCE WITH RESPECT TO NON-TELEVISION 1311 PRODUCTS

A. Radios 1311

B. Tape and Stereo Products 1314

C. Components; the Alleged Matsushita-Philips Component Complex 1315 and International “Industrial Cooperation” System

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IX. PLAINTIFFS’ SHERMAN § 2 CLAIMS — LEGAL PRINCIPLES AND 1318 APPLICATION

A. Introduction; the “Individual Monopolization” Claims 1318

B. Monopolization by Combination; Attempted Monopolization by 1319 Combination; Conspiracy to Monopolize

C. The Question of Defendants’ Aggregate U.S. Market Share of 1321 Television Receivers

X. ZENITH’S ROBINSON-PATMAN CASE — LEGAL PRINCIPLES 1323 AND APPLICATION

A. Introduction 1323

B; Zenith’s Standing to Assert Claims Under the Robinson-Patman Act 1325

C. Zenith’s Failure to Show Substantial Incipient Injury to Competition 1327

D. Conclusion 1328

XI. ZENITH’S CLAYTON § 7 CASE — LEGAL PRINCIPLES AND AP- 1329 PLICATION

XII. CONCLUSION 1331

OPINION AND ORDER

EDWARD R. BECKER, District Judge.

I.

Preliminary Statement

This opinion addresses defendants’ motions for summary judgment as to plaintiffs’ conspiracy claims under § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 , as well as their claims under § 2 of the Sherman Act, 15 U.S.C. § 2 , § 73 et seq. of the Wilson Tariff Act, 15 U.S.C. § 8 et seq., § 7 of the Clayton Act, 15 U.S.C. § 18 , and the Robinson-Patman Act, 15 U.S.C. § 13 (a). For reasons which will be set forth herein at length, we will grant defendants’ motions.

1

As will be seen, the touchstone of this decision lies in the fact that our intensive examination of the enormous record in this case has revealed that, despite years of discovery, the plaintiffs have failed to uncover any significant probative evidence that the defendants entered into an agreement or acted in concert with respect to exports to the United States in any manner which could in any way have injured the plaintiffs.

The mission of the summary judgment procedure is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Advisory Committee Note to 1963 Amendment of Fed.R.Civ.P. 56(e). In this case that mission has become a veritable odyssey, one upon which we embarked some twenty-three months ago, in April of 1979, when motions for summary judgment addressed to plaintiffs’ conspiracy claims were first

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heard. At that time consideration of the summary judgment motions was postponed because the record was as yet too amorphous to permit its meaningful consideration. That situation has now changed. Thorough scrutiny of plaintiffs’ proof has been made possible by the filing, with preclusionary effect, of plaintiffs’ voluminous Final Pretrial Statement (FPS), setting forth the facts they intend to prove at trial; by the holding of five weeks of evidentiary hearings which considered the admissibility of plaintiffs’ key evidence; and by an intensive .period of preparation for and a seven-day argument of the conspiracy summary judgment motions.

2

The pretrial evidentiary or

“in limine

” hearings were primarily designed to evaluate the admissibility of the principal evidence that plaintiffs advanced in opposition to the defendants’ motions for summary judgment respecting plaintiffs’ conspiracy claims. The hearings were necessary because a summary judgment motion must be decided upon evidence that would be admissible or usable at trial, and defendants had challenged the admissibility of much of plaintiffs’ proposed evidence.

3

In addition, the hearings were designed to afford plaintiffs the opportunity to present sufficient evidence

aliunde

of the existence of a conspiracy and its membership to permit the admission into evidence of the hearsay statements of coconspirators under F.R.E. 801(dX2)(E).

See

Part VI.D.6,

infra.

The hearings spawned a trilogy of lengthy and extremely detailed opinions. The first, filed August 7, 1980, 505 F.Supp. 1125 , addressed the admissibility of certain public records and reports under F.R.E. 803(8)(C); the second, filed September 29, 1980, 505 F.Supp. 1190 , concerned the admissibility of materials relating to activities in Japan; and the third, filed December 10, 1980, 505 F.Supp. 1313 , dealt with the admissibility of plaintiffs’ expert testimony. Because these opinions, which will be summarized in Part IV,

infra,

exclude the most critical evidence in plaintiffs’ case, they impact significantly upon the present summary judgment motion. Therefore, we consider the evidentiary trilogy an integral part of this opinion and hereby incorporate it by reference herein.

4

We shall not herein discourse upon the complexity of this case. Our opinion on the jury trial issue, 478 F.Supp. 889 (E.D.Pa. 1979), and that of the Court of Appeals, 631 F.2d 1069 (3d Cir. 1980), as well as our opinion on subject matter jurisdiction, 494 F.Supp. 1161 (E.D.Pa.1980), which served to introduce the summary judgment motions, more than adequately protray the complexity of the issues and sketch the contours of that other facet of the case’s complexity— the paper mountain which it has generated. The evidentiary trilogy expands upon that sketch and this opinion, which concentrates upon the record, completes the picture in replete detail. We shall, however, take the time in this Preliminary Statement to de

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scribe again, albeit briefly, the parties and the issues.

The plaintiffs in this action are Zenith Radio Corporation (“Zenith”) and National Union Electric Corporation (“NUE”). NUE, the corporate successor to Emerson Radio Co., one of the pioneer manufacturers in the radio and television industry, ceased all production of television receivers in February of 1970.

5

That December it filed the first of these suits,

6

alleging that the Japanese defendants and others had conspired to take over the American consumer electronic products (CEP) industry

7

and thereby to drive NUE out of business. In 1974 Zenith filed an action making similar allegations.

8

The NUE action was then transferred to this district for coordinated or consolidated pretrial proceedings with the Zenith action;

9

the transfer was later made unconditional and the actions were consolidated for trial.

10

The ten principal defendants are seven Japanese manufacturers of consumer electronic products (Matsushita Electric Industrial Co., Ltd. (“MEI”); Toshiba Corporation; Hitachi, Ltd.; Sharp Corporation; San-yo Electronic Co., Ltd.; Sony Corporation; and Mitsubishi Electric Corporation (“MEL-CO”));

11

a Japanese trading company (Mitsubishi Corporation) (“MC”); and two American companies (Sears, Roebuck & Co. and Motorola, Inc.). Fourteen other defendants are subsidiaries of the principal Japanese defendants. Of the twenty-four defendants, fifteen are defendants in both suits, seven in the Zenith action only, and two in the NUE action only.

12

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In addition to the twenty-four named defendants the plaintiffs have identified scores of alleged coconspirators whose business operations traverse the globe, ranging from small Japanese companies to such world industrial giants as N.V. Philips Gloeilampenfabrieken and General Electric. The majority of the alleged coconspirators are other Japanese manufacturers and American importers.

The particular offenses charged in the complaints span the range of the antitrust laws. The overall conspiracy is alleged to violate §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2. Plaintiffs also allege actual and attempted monopolization and conspiracy to monopolize under § 2 of the Sherman Act. Additionally, they allege that the defendants have violated § 801 of the Revenue Act of 1916, better known as the 1916 Antidumping Act, 15 U.S.C. § 72 , by “commonly and systematically,” with predatory intent, selling their products in this country for substantially less than their actual market value or wholesale price in Japan.

13

The defendants are also charged with violating the Robinson-Patman Act, 15 U.S.C. § 13 (a), by discriminating in price among American purchasers.

14

Finally, Zenith charges that Sears, Motorola, and the Matsushita and Sanyo defendants, along with their coconspirators, violated § 7 of the Clayton Act, 15 U.S.C. § 18 , in connection with the Japanese companies’ acquisitions of interests in United States consumer electronic products manufacturers.

15

The plaintiffs’ papers seek to portray a massive, continuing unitary worldwide conspiracy said to have lasted over a period of more than twenty years,

16

the purpose of which is said to be the destruction of the American consumer electronic products industry. Although plaintiffs have embellished this theme with numerous variations, to be described in Part II of this opinion, in general this objective is alleged to have been accomplished by means of a two-pronged “unitary” conspiracy: a (successful) conspiracy to charge artificially high prices to consumers in Japan which funded or “war-chested” a (successful) conspiracy to sell in the U.S. at artificially low prices.

17

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The summary judgment motion which we address herein is but one of many which have been interposed. We have already heard argument on a number of motions addressed to other discrete issues, and have disposed of most of them. We have (1) denied a motion seeking summary judgment for lack of subject matter jurisdiction,

see

Opinion (Introduction to Summary Judgment Motions; Subject Matter Jurisdiction),

Zenith Radio Corp. v. Matsushita Electric Industrial Co.,

494 F.Supp. 1161 (E.D.Pa.1980); (2) granted in major part defendants’ motion for summary judgment on those claims arising under § 801 of the Revenue Act of 1916, better known as the 1916 Antidumping Act, 15 U.S.C. § 72 ,

see

Opinion and Order (1916 Antidumping Act),

Zenith Radio Corp. v. Matsushita Electric Industrial Co.,

494 F.Supp. 1190 (E.D.Pa. 1980),

appeal pending,

No. 80-2080 (3d Cir.); (3) denied a motion for summary judgment brought by certain defendants against Zenith on the ground that Zenith was not directly injured and was therefore barred from recovery under the doctrine of

Illinois Brick Co. v. Illinois,

431 U.S. 720 , 97 S.Ct. 2061 , 52 L.Ed.2d 707 (1977),

see

Opinion and Order (Indirect

Injury

— Illinois

Brick), Zenith Radio Corp. v. Matsushita Electric Industrial Co.,

494 F.Supp. 1246 (E.D.Pa.1980); (4) denied a motion asserting that NUE lacked standing to sue under the doctrine of

Bangor Punta Operations, Inc. v. Bangor & Aroostook R. Co.,

417 U.S. 703 , 95 S.Ct. 2578 , 41 L.Ed.2d 418 (1974),

see

Opinion and Order (Antitrust Standing—

Bangor Punta), National Union Electric Corp. v. Matsushita Electric Industrial Co.,

498 F.Supp. 991 (E.D.Pa.1980); (5) denied a motion by defendant Sears, Roebuck & Co. for summary judgment based on statute of limitation grounds,

see

Pretrial Order (PTO) 263,

Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd.,

M.D.L. No. 189 (May 23, 1980); and (6) denied a motion by Sharp Electronics Corp. alleging that Zenith’s claims under the 1916 Antidumping Act are barred by the Treaty of Friendship, Commerce and Navigation between the United States and Japan, 4 U.S.T. 2063, T.I.A.S. No. 2863 (1953);

see

Memorandum and Order, (1953 Treaty of Friendship Commerce and Navigation with Japan)

Zenith Radio Corp. v. Matsushita Electric Industrial Co.,

494 F.Supp. 1263 (E.D.Pa.1980).

A summary judgment motion asserting insufficiency of the evidence of monopolization and attempted monopolization against individual defendants under § 2 of the Sherman Act (the so-called “individual monopolization claims”) has in major part dissolved.

See

pages 1318-1319,

infra.

A motion by Sony Corporation advancing its allegedly unique position as a high price, rather than a low price, seller of television sets was deferred following argument, and will be considered with the other conspiracy motions herein. We have heard argument on a motion asserting insufficiency of the evidence of price discrimination under the Robinson-Patman Act and on motions addressed to the claims under § 7 of the Clayton Act. We will decide these summary judgment issues in this opinion.

The summary judgment motions which we have just described were relatively self-contained. The present motion, on the other hand, implicates an enormous record which may be the largest summary judgment record ever developed. The anatomy of that record will be described in Part III of this opinion. That description will be followed (in Part IV) by a summary of the rulings contained in the evidentiary opinion trilogy. We shall then turn to a discussion of the applicable law, commencing in Part V with the legal standards governing the grant or denial of summary judgment, focusing on the complex case. The major portion of the legal discussion is found in

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Part VI, in which we engage in a discussion of the legal principles affecting plaintiffs’ Sherman § 1 and Wilson Tariff Act conspiracy case. We will begin with a discussion of the law relating to plaintiffs’ principal Sherman § 1 allegations, taking up: (1) agreements affecting prices; (2) market allocation; (3) membership in trade associations; (4) exchange of information concerning prices, production and inventory figures, and joint forecasting; (5) product standardization and technical research exchange; (6) secret rebates; and (7) joint activities in promoting public and governmental relations, and joint legal action in response to common problems. This section will be followed by a discussion of statutory standing under sections 4 and 16 of the Clayton Act, and then by a description of the Wilson Tariff Act, which we conclude essentially tracks the Sherman Act in the international trade context.

Another focal point of the legal discussion will be the law of conspiracy in the antitrust context, which will be our next order of business. Our primary emphasis will be upon the legal requisites of circumstantial proof of conspiracy, both in conspiracy cases in general and in antitrust conspiracy cases in particular. We will focus particularly upon the circumstances under which conspiracy can be inferred from parallel business behavior. We shall also consider other aspects of the law of conspiracy with special attention to plaintiffs’ admonition against “fragmentation” of their “unitary” conspiracy, their invocation of the “slight evidence” rule, the viability of the doctrine of vicarious liability for the overt acts of coconspirators under the case of

Pinkerton v. United States,

328 U.S. 640 , 66 S.Ct. 1180 , 90 L.Ed. 1489 (1946), and the requisites for admissibility of coconspirator declarations under F.R.E. 104(a) and 801(d)(2)(E).

Having concluded our discussion of the law applicable to plaintiffs’ Sherman § 1 claims, we will turn, in Part VII, to a review of the evidence offered in support of plaintiffs’ Sherman Act § 1 (and Wilson Tariff Act) case as to television receivers. This is by far the longest segment of the opinion, for the evidence as to television receivers constitutes the overwhelming bulk of plaintiffs’ case. That evidence will be described in detail and measured against the applicable law, which we will already have described. During the course of each phase of the discussion, conclusions as to the legal sufficiency of the evidence will be drawn. The evidentiary review will lead us through all of plaintiffs’ significant admissible evidence.

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In the course of this extensive evidentiary review we shall be concerned not just with plaintiffs’ core allegations, but also with their discrete evidence against each of the twenty-four defendants, and we shall make a preliminary determination as to whether there is sufficient evidence of conspiracy to permit the introduction of coconspirator declarations. We will end this evidentiary review with a segment (Part VII.S) summarizing our conclusions as to plaintiffs’ Sherman Act § 1 and Wilson Tariff Act case as to television receivers. Although we have some misgivings about a

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summary of such a detailed opinion,

see

p. 1299

infra,

this section should be a useful reference for anyone who seeks a relatively concise summary of the major grounds of the grant of summary judgment.

In Part VIII we shall summarize plaintiffs’ evidence with respect to each of the non-television products (radio, tape, audio, and stereo equipment, and components) about which allegations have been made and shall comment upon the sufficiency of plaintiffs’ Sherman Act § 1 and Wilson Tariff Act case in these areas.

Having concluded our treatment of plaintiffs’ Sherman Act § 1 (and, a

fortiori,

Wilson Tariff Act) claims, we shall take up, in Part IX, the applicable case law under § 2 of the Sherman Act and shall apply it to the record so as to assess plaintiffs’ conspiracy to monopolize and actual and attempted monopolization claims. In similar fashion, we shall consider the summary judgment motions directed to plaintiffs’ RobinsonPatman Act claims (Part X) and Clayton Act § 7 claims (Part XI). We shall conclude the opinion in Part XII with some final observations about plaintiffs’ case and about the appropriate forum for the relief they seek.

19

Having commented preliminarily upon both the size of the record and the breadth of our evidentiary review, a word is in order about our methodology. We have spent months and months in the tedious process of reading in chambers the significant non-background portions of plaintiffs’ FPS, reviewing the sources cited for the various allegations contained therein, usually documents contained in the document depository,

20

and studying the voluminous memoranda addressing the evidence and arguing about its significance,

vel non.

Because of the plethora of FPS allegations and documents involved, it will not be possible to comment herein on more than a fraction of the materials we have reviewed — otherwise this enormously long opinion would have to be much longer. As a result, our conclusions on various points will often take the form of statements that we have reviewed various allegations and documents and find nothing therein which creates a genuine issue of material fact to support plaintiffs’ allegations.

21

We feel some discomfiture about the number of subparts and the length of this opinion. However, given the plaintiffs’ invocation of their entire 17,000-page FPS,

see

Part III,

infra,

and the hundreds upon hundreds of issues raised in the summary judgment briefs, it is difficult to give the motions adequate treatment in a lesser space. Moreover, even if a brief (or briefer) opinion would suffice for purposes of disposition, in view of the certainty of ap

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peal and the enormous burden thus thrust upon the Court of Appeals, we believe it important that we give that court a comprehensive picture of the entire record and of the legal premises which undergird our determination that there is no genuine issue of material fact.

We turn first to a description of the anatomy of the plaintiffs’ conspiracy claims.

II.

The Anatomy of Plaintiffs’ Conspiracy Claims

One would expect, after ten years of litigation,

22

that there would be no difficulty in describing plaintiffs’ conspiracy claims. Regrettably that is not true in this case, for plaintiffs’ theory of defendants’ alleged conspiracy has shifted on numerous occasions during the recent course of this litigation. Indeed, as we shall explain, the most recent shift occurred

after

the August 1980 summary judgment arguments. Plaintiffs deny that they have altered their theory, and submit that there is a core theory which they have pressed throughout, although they would at least have to admit to having played variations on the theme. We will now attempt to state their core theory and will then explain its meanderings along the way.

Since the charter of plaintiffs’ case is their FPS, we look there for a statement of their theory. We find it stated as follows:

In its most basic form, the combination and conspiracy consisted, in part, of a concerted scheme to raise, fix and maintain price lines for consumer electronic products sold by defendants and their co-conspirators in Japan. At the same time, defendants and their co-conspirators conspired and combined to establish and coordinate artificially-low price levels for consumer electronic products exported by them to the United States. The defendants and co-conspirators implemented their combination and conspiracy by exporting to the United States and selling therein their consumer electronic products at these concerted depressed price levels. This concerted scheme was systematically applied to each line and category of consumer electronic products manufactured by plaintiffs.

Defendants and their co-conspirators developed and implemented the combination and conspiracy by meetings and communications among their executives at various levels of management, and through the means of trade association activities participated in and directed by defendants and their co-conspirators. Defendants and their co-conspirators agreed upon prices, rebates, discounts and allowances and other terms and conditions of sale of consumer electronic products, and upon the allocation of customers among themselves. Defendants and their co-conspirators further combined and conspired to restrict, expand and allocate among themselves the absolute volume of production and sale of consumer electronic products and the volume of production and sale of particular products within the lines and categories of consumer electronic products manufactured by them. The defendants and their co-conspirators then did those things which they conspired and combined to do.

FPS at 3453.

Plaintiffs’ style their Japanese high price-U.S. low price conspiracy as a “unitary” conspiracy, with home market and export facets, the aim of which was to effect a complete takeover of the U.S. CEP market, thereby destroying the U.S. CEP industry. The home market portion of the conspiracy is said to have been conceived at and implemented by a host of “conspiratorial” meetings among officials of the Japanese defendants and of other Japanese CEP manufacturers. It is said to have been abetted by the closed Japanese market, a function of a skein of government regulations and economic traditions, which effectively shut off foreign competition in the home market and enabled the gouging of the Japanese

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consumer to subsidize the export aspect of the conspiracy. The nexus between the home market and export aspects of the “unitary” conspiracy is supplied by the notion which we refer to as “war-chesting.” In brief, the plaintiffs allege that the high price home market conspiracy supplied the funds with which to finance or “war-chest” the predatory export raid on the U.S. market.

The export portion of the conspiracy is said to be composed of two essential elements. The first is the Ministry of International Trade and Industry (MITI)-related export control arrangements or Manufacturers’ Agreements, referred to by plaintiffs as “cartel agreements,” which were signed by the Japanese manufacturing defendants and a number of other firms and which,

inter alia,

established minimum or “check” prices on the shipment of various CEP’s to the U.S. As an adjunct to these agreements were certain rules of the Japanese Machinery Exporters Association (JMEA), most notably the “Five Company Rule” pursuant to which the Japanese exporter was purportedly limited to five U.S. customers at a time and was required to register his customers with the Association. Plaintiffs contend that these agreements have the intention and effect of affecting prices in the U.S., thus constituting a per se violation of the Sherman Act, and that the Five Company Rule constitutes a customer allocation or “split of product” in further violation thereof.

The second of the twin foci of plaintiffs’ export conspiracy case is,

mirabile dictu,

an agreement by the Japanese defendant exporters and by American importers (including defendants and other alleged coconspirators) to

disregard

the check prices and to sell their products in the U.S. at lower prices through the vehicle of concealed rebates and discounts. The check price is thus referred to as a “reference” or “benchmark” price, although the plaintiffs never explain how one gets from the reference price to the actual selling price except by asserting that the defendants agreed to sell at “whatever prices were necessary to make the sale.”

23

The concealment was intended both to hide from MITI the fact that the defendants were selling in the U.S. below the check prices and to deceive U.S. Customs as to the actual price. While the higher sales prices reported to Customs resulted in higher customs duty, in plaintiffs’ submission defendants thereby avoided imposition of still higher dumping duties. Under plaintiffs’ theory the rebate scheme was collusive, in that defendants agreed upon a program of concerted depressed pricing for the purpose of destroying the U.S. CEP industry. The scheme is said to have been aimed at the U.S. private label market and only at American manufacturers. The Japanese defendants are said to have acted as a unit and not to have competed among themselves.

Plaintiffs assert that defendants “dumped” their goods in the U.S., selling at predatory levels and at lower levels than for comparable goods in Japan. They also make allegations of sales below cost. Plaintiffs assert that defendants’ practices resulted in the sharp lowering of “pricing points” in the U.S., rendering NUE unable to compete in its lower-price market niche and resulting ultimately in the elimination of numerous U.S. CEP manufacturers and the reduction of profitability levels of the others, including Zenith. Plaintiffs assert that defendants further implemented their scheme and consolidated their gains by the acquisition of a number of U.S. manufacturers and the establishment of manufacturing facilities in the U.S.

Although plaintiffs make some attempt to assert direct evidence of this “unitary conspiracy,” for reasons which have already surfaced in our evidentiary trilogy and will further appear in this opinion, that effort has totally failed. It is plain (and essentially conceded by plaintiffs) that their case is a circumstantial one, built upon the moun

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tain of documents referenced in their FPS. Plaintiffs seek to draw inferences of conspiracy from a plethora of sources, including those set forth in their most comprehensive and presumably definitive listing of the evidence of the alleged conspiracy, which appears at pp. 3474-77 of their FPS and includes the following:

1. the export control agreements entered into by the Japanese manufacturers of consumer electronic products;

2. the rules of the Japan Machinery Exporters’ Association (JMEA), which implemented the export control agreements and included provisions allocating the U.S. market by restricting each manufacturer to five customers and requiring the registration of trademarks;

3. a number of speeches by high executives of Japanese defendants proclaiming the necessity of stabilizing the Japanese CEP market by cooperative action and evincing a desire to achieve preeminence in export trade with the United States and other countries;

4. the text of the “rationales” of various export control agreements explaining the necessity of stabilizing the export trade;

5. passages in a number of diaries of Japanese officials, in internal company memoranda seized by the Japanese Fair Trade Commission (JFTC), and in some other documents produced in discovery, all of which are said to be probative of agreements to fix prices or to allocate the market, hence of conspiratorial activities of a number of groups and associations to which executives of the Japanese manufacturing defendants belonged. (The allegedly offending groups include the Electronic Industries Association of Japan (EIAJ) and its committees and subdivisions; the JMEA and its committees and subdivisions; the Market Stabilization Council; the Four Associations Conference; the Okura Group; the Palace Group; the Palace Preparatory Group; the Twentieth Day Group; the Tenth Day Group; the MD Group; the TS Group; and the Television Export Council);

6. the mere fact of membership of various defendants in these groups, many of which concededly operated sub rosa;

7. the inference to be drawn from the “sharing” by groups and associations of “every vital piece of information in every phase of the business among the Japanese manufacturers of consumer electronic products”;

8. the activities of the defendants in the Japan Light Machinery Information Center (JLMIC) in New York City;

9. the evidence before the JFTC in the “Six Company Case,” Case No. 6, 1966, including documentary evidence, affidavits, testimony, admissions by respondents through their counsel, and findings of fact by trial examiners;

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10. various schemes by the defendants and their coconspirators fraudulently to conceal their conduct, including secret rebating; false submissions to United States Customs Service; plans to destroy documents, to keep from taking minutes, and to change the names of the conspiratorial groups in Japan; plans to thwart the investigation of the United States Tariff Commission by importers and private label purchasers; and the fraudulent reporting of statistics to the government of Japan;

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11. the findings of the JFTC in 1957 against the Market Stabilization Council and its participants;

12. the findings of the United States government, including the dumping findings by the Treasury Department and the finding by the International Trade Commission of injury sustained by U.S. manufacturers of television receivers;

13. the inference to be drawn from the “parallel, interdependent rebating schemes” in which the defendants and their coconspirators participated;

14. the inferences to be drawn from the materials which are said to evidence the knowledge of each defendant of the operation, including rebating practices, of the export systems of each other defendant, and their resulting knowing participation in the rebate scheme;

15. the inferences to be drawn from what is said to be the similar conduct of defendants in selling consumer electronic products in the United States at prices substantially lower than those at which the same merchandise is sold in Japan, and at below cost;

16. the inference to be drawn from the supposed fact that the Japanese defendants’ United States subsidiaries similarly and consistently operated at a loss, as reported in their tax returns and financial statements;

17. the sealing off of the Japanese home market from outside competition;

18. the “pattern” of take-overs and acquisitions of U.S. CEP manufacturers by Japanese defendants, including Matsushita’s acquisition of Motorola just before Motorola was to begin selling its console color television receivers in Japan;

19. alleged discriminatory pricing by the Japanese manufacturers of consumer electronic products to customers in the United States;

20. the opinion of plaintiffs’ experts that defendants constituted a cartel and engaged in both the home market and export facets of the alleged conspiracy; and

21. the notions that it “belies reality” to believe that the defendants, with so much access to each other at trade association and other meetings, did not conspire and that otherwise an American company like Emerson (NUE’s predecessor), with such a good name, would not have been driven out of business.

We will, of course review the evidentiary basis for all of these contentions, as well as others made in the FPS and in the briefs,

infra.

We have attached as Appendix C to this opinion the table of contents to the FPS, which lists all evidentiary areas covered therein.

Having set forth the many facets of plaintiffs’ conspiracy theory, we must turn to our analysis of their core allegations, and the metamorphosis thereof, for those are critical matters. Shortly after the assignment of the case to our docket, in search of issue definition, we required counsel (PTO 88) to file detailed statements of their respective positions in the case in the form of preliminary pretrial memoranda (PPTM). In plaintiffs’ PPTM, filed in two stages and consuming some 410 pages, and in their contemporaneous comments at pretrial conferences, plaintiffs characterized this as a “simple price-fixing case,” with the MITIrelated export control arrangements as its “heart,” “foundation,” and “starting point.”

25

The outer layers of plaintiffs’ theory consisted of the allegations referenced above that, through conspiratorial meetings supposedly documented in the diaries and other documents seized by the JFTC (and certain other documents produced in discovery), the Japanese manufactur

*1128

ing defendants had acted in concert to fix prices at a high level in Japan in order to finance or “war chest” the predatory export raid on the U.S. market. Both the PPTM and Plaintiffs’ Brief in Reply to the Motion for Summary Judgment of Melco and Melco Sales, Inc., filed October 16, 1978, are dominated by this theory.

26

There is but scant mention of what later came to dominate plaintiffs’ theory of the case — the practice by Japanese manufacturers of granting rebates to American purchasers — although certain rebate transactions are mentioned.

By the time of the April 1979 summary judgment arguments, plaintiffs’ theory had changed. Although the conspiratorial activities of the groups and associations were still stressed, the “rebate scheme” had emerged as a co-equal factor in the conspiracy. But when pressed as to the price or price level or price formula at which the predatory low price conspiracy operated, plaintiffs would say only that defendants sold at “whatever price was necessary to get the sale.”

By the time final summary judgment argument arrived in August 1980, emphasis on the rebates had increased while mention of the direct conspiratorial evidence and “war chesting” had decreased markedly. As plaintiffs’ lead counsel, Edwin P. Rome, put it:

I suggest that the cartel agreements and the rebate system as a unitary entity constituted a mechanism, the mechanism which enabled the defendants to pursue a course of conduct for depressing prices in the United States, as the result of which, aided by their five-company rule, they were permitted and enabled to concentrate each particular defendant’s competitive thrust against a particular mass merchandise customer in the U.S. and thereby deny the capability of an American manufacturer to do business with that customer.

PTO 291 at 128. Under this theory, the export control arrangements and conspiratorial group meetings play an entirely different role from that alleged in the PPTM and brief in reply to Melco’s motion. Now, the export control arrangements, instead of being the “heart” of the conspiracy, merely provide a forum through which defendants agreed to a “system” of secret rebates designed to nullify those very same export control arrangements so as to take over the market for sales of television receivers to private label and original equipment manufacturers (OEM) in the United States.

27

As Mr. Rome explained, the export control arrangements and the existence of secret rebates are now the

sole

ingredients of the conspiracy claim:

The Court: But be that as it may, I still don’t see in terms of conspiracy proof what your theory is except by virtue of the conclusion that you draw as to the inextricable intertwining of the cartel agreements and the rebate system.

Is that what you said? Did you have another ingredient in that?

Mr. Rome: That is it.

The Court: The cartel agreements and the rebates.

PTO 291 at 113.

28

Under this formulation, the check price becomes a “reference price” or benchmark

*?

price. Defendants are said to have sold above, at, and below the check price, but we are never told of the relationship between the check price and the actual price. Perhaps the best description of this theory, which we treat as plaintiffs’ principal theory notwithstanding our comments

infra,

is that plaintiffs charge a conspiracy to sell in the U.S. at depressed or predatory prices. The role of the conspiratorial meetings in Japan, although not abandoned as a basis for plaintiffs’ claim, is hardly mentioned.

29

Plaintiffs do, however, stress certain meetings in the U.S. of counsel for U.S. customers designed to formulate a common strategy to combat U.S. Treasury Department proceedings under the 1921 Antidumping Act. They also stress the alleged knowledge of each defendant and defendants’ U.S.-importer customers about the rebate scheme and their alleged knowing participation in it. Little is said at this stage about “war-chesting,” apparently because plaintiffs finally recognized that there is no evidence of it in the record.

We were also told by Mr. Rome at the final summary judgment argument that the conspiracy was “protean” (PTO 291 at 115). Perhaps nothing better explains the elusive nature of plaintiffs’ conspiracy claims than Mr. Rome’s use of the word “protean” to describe them. According to Webster, protean means “capable of change; exceedingly variable . . . readily assuming different shapes or forms . .. capable of acting many different roles; .. . possessed of infinite variety ...” Although the formulation itself undermines the integrity of plaintiffs’ claims, its usage was fitting.

Finally, in a post-argument submission in the form of an affidavit by their leading expert, Dr. Horace DePodwin, see Expert Testimony Opinion 505 F.Supp. 1313 at 1334 n.24, plaintiffs seem to revert to their original theory, for there is a clear emphasis upon the check price; the lower (net-net) price after deduction of rebates is said to be involved only in “selective” cases. Whether this reversion is ascribable, on the one hand, to plaintiffs’ discovery of a large number of sales at check price

(see

DePodwin affidavit at 4.9-. 10) and the fact that the check price was itself lower than NUE’s price

(see

DePodwin affidavit at 4.11-.12), or, on the other, because the first two opinions in our evidentiary trilogy held inadmissible the critical documents upon which much of plaintiffs’ theory of conspiracy as stated in their first two summary judgment briefs rests, we cannot say. We do not dwell upon this theory in the opinion because it is plainly an afterthought, because it is outside the mainstream of plaintiffs’ case, and because, in any event there is no evidence that the check price was itself a low price.

See

discussion

infra.

30

*1130

Although' in the latter stages of the proceedings the emphasis on the export control arrangements was reduced, those agreements remain important, for they form the cornerstone of plaintiffs’ evidence of defendants’ opportunity and intention to conspire. With the agreements as background, in plaintiffs’ submission, all defendants’ activities take on a conspiratorial hue.

The final facet of plaintiffs’ conspiracy theory worth mentioning is a function of their approach to the burden of proof on a summary judgment motion. Plaintiffs have asserted time and again throughout the latter course of the proceedings that evidence of the existence of the alleged conspiracy is to be found in the

failure

of defendants to file affidavits to explain what went on at numerous meetings which defendants admit occurred and at which plaintiffs allege that conspiratorial activity took place. Indeed, in their final briefs plaintiffs set forth a litany of “critical issues” about which the defendants have been “silent,” implying that defendants should have been required to produce information on these subjects even though the plaintiffs deliberately, throughout eight years of discovery, failed to take a single deposition of any individual who attended the allegedly conspiratorial meetings.

See

discussion at 1200-1202

infra

regarding plaintiffs’ litigation strategy. For reasons set forth

infra,

this approach is unavailing.

Because plaintiffs are entitled to the benefit of any theory that will get them past a summary judgment motion, we will consider all the variations on their theme.

Having described the nature and evolution of plaintiffs’ conspiracy claims — at least as best we can — we turn to a description of the summary judgment record. This task will also require us to say something about the role of the more important case management orders we have entered.

III.

The FPS, Final Stage Case Management, and the Summary Judgment Record

We have observed that this case is before us on what may be the most ample record for summary judgment purposes ever before a court. The keystone of this record is plaintiffs’ roughly 11,500-page FPS, with its roughly 6000-page appendix, which cross-references approximately 250,000 pages of documents. In some respects, the length of the FPS is misleading. First, for reasons of convenience in preparation, plaintiffs limited many pages to a single point covering but 20 to 35 percent of the page. Second, extensive portions of the FPS are devoted to enormously detailed — and generally uncontested — background material which supplies historical, financial, and personnel-related detail about the various defendants.

31

Nonetheless, in terms of sheer size and effort of preparation, the FPS is a formidable document. Notwithstanding its domination by damning conclusory statements, which, as we shall see, are generally not substantiated by the referenced supporting documents, the FPS contains a valuable compendium of plaintiffs’ allegations and of the critical documents upon which plaintiffs rely, many of them virtually rescribed in the FPS. It also contains important and

*?

useful appendices, such as model by model comparisons of T.V. receivers and certain other CEPs, originally ordered in PTO 145.

The FPS, which has won the approbation of both parties as a necessary management tool (for this case), was required by PTO 154, our master case management order, which is reprinted at 478 F.Supp. 889, 946 (E.D.Pa.1979), and which was fashioned in collaboration with counsel.

32

Paragraph III.C. of PTO 154 orders the parties, both plaintiffs and defendants, to set forth:

each fact that the party intends to prove at trial either affirmatively or by way of defense, together with a list of: (1) the witnesses (including expert witnesses) whose testimony will be advanced to prove that fact; (2) the documents ... which will be offered to prove that fact; and (3) line by line references to any portions of depositions and to answers to interrogatories and requests to admit which will be offered to prove that fact, (footnote omitted).

Pretrial Order 154 continues:

By this formulation we do not intend that the parties must provide a script for trial. We do, however, intend that the parties set forth in narrative form not just the ultimate facts, but all the facts they will prove, including all subsidiary or supporting facts. In so doing they will make, at a minimum, the kind of submission they would make if they were writing detailed requests for findings of fact setting forth what the evidence has established in a non jury case.... In view of the primacy of the conspiracy claims in plaintiffs’ case and defendants’ counterclaims, the FPS shall itemize all overt acts to be proved at trial. In particular, the FPS shall enumerate with specificity the facts (i. e. the evidence

aliunde)

upon which they rely to prove that each defendant ... knowingly joined in the alleged conspiracy and all facts, separately as to each defendant, upon which they rely as to each defendant’s participation in the alleged conspiracy. Where any facts will be offered against fewer than all parties, the FPS shall identify the parties against which the facts are or are not offered.

The FPS was required in part as a surrogate for inadequate responses to discovery by the plaintiffs, who had theretofore failed, despite several voluminous waves of interrogatories, including so-called “contention interrogatories” which we authorized for that purpose, to set forth adequately the specifics of their claims. Plaintiffs had never made specific allegations as to how and when this conspiracy was conceived, how it operated, and when and how each defendant became a participant, and had also failed to specify what evidence they had against each defendant. The FPS was designed to fill in these gaps and, under the preclusionary provision of PTO 154, no fact not set forth in the FPS could be adduced at trial except for good cause shown. Thus we now have something cognate to a trial record.

33

No sooner had defendants’ counsel commenced their reading of the FPS than they began vigorously to complain that it failed to accomplish its purpose. We thereupon, at our next regularly scheduled pretrial conference,

34

conducted an FPS “walk-through” — a detailed spot survey of the FPS. As we found at the walk-through

*1132

and in our subsequent reading of the FPS, it contained for the most part conclusory statements keyed to references to large numbers of documents. Because plaintiffs’ case rests basically upon those documents, and because the conclusory statements in the FPS were not helpful, resort to the documents themselves became necessary. As a result we ordered, by PTO 219, the creation of a document depository to be located in our jury room into which the parties were to deposit all the documents which they referenced in their summary judgment papers or upon which they would rely at summary judgment argument or at trial. As many of the documents were Japanese language documents, we also ordered that an English translation be attached.

35

The parties negotiated over the manner of creating the depository and the division of the cost. Because the documents referenced in the FPS were at immediate issue, the plaintiffs assumed the onus of placing the documents in the depository, with the parties dividing the cost. The document depository was “completed” in the Spring of 1980. We surround “completed” with quotation marks because the summary judgment argument and our study of the record in conjunction with the preparation of this opinion have demonstrated that many documents relied upon by plaintiffs are not in the depository and that countless documents have not been translated. The document depository with all its contents is, both for what it contains and for what it does not, an important part of the summary judgment record.

36

Defendants’ also complained, with justification, that the plaintiffs, despite the requirements of PTO 154, had failed to identify in their FPS, discretely as to each defendant, the evidence

aliunde

which linked it to the conspiracy. We therefore ordered plaintiffs to submit a list of their evidence

aliunde, i. e.,

of the key documents or other materials which constituted independent evidence of the existence of a conspiracy among the defendants. Regrettably, the results of that order were disappointing. Plaintiffs indeed filed an evidence

aliunde

list, but it consisted of some seven volumes piled over three feet high containing nothing but 250,000 or so numbers — the document numbers of virtually all the documents referenced in the FPS. Thus plaintiffs’ list of evidence

aliunde,

intended to inform each defendant with particularity of the evidence against it, did not “advance the ball.” Rather, it left the case where it had been for many years, with the plaintiffs invoking a boxcar full of documents as evidence against all defendants on the theory that they were coconspirators, but without any semblance of specificity.

37

The situation was complicated by the fact that, at least from the beginning of our stewardship in the case, the defendants persistently as

*?

serted not only that plaintiffs’ documents were inconsequential, but also that the bulk of them were inadmissible in evidence. Melco had formally asserted these evidentiary objections in its Motion for Summary Judgment filed in March 1978.

In sum, despite our fervent and carefully considered case management efforts, which commenced with the PPTM and were codified in PTO 154,

38

neither the FPS nor the evidence

aliunde

list was helpful in giving plaintiffs’ case the kind of sharp focus necessary for dealing with a motion for summary judgment, because neither of these submissions contained the precise marshalling of the evidence which we had ordered. Rather, each was little more than a carefully organized compendium of virtually every colorably relevant document which had been produced during discovery and copied by the plaintiffs. Moreover, plaintiffs took the position (to which they apparently still adhere) that it is not their burden to detail the evidence in support of their claims, but rather that “the Court must consider the entire FPS in reaching a determination on the issue of conspiracy and in evaluating defendants’ Motion for Summary Judgment.”

39

Although we are attempting to do just that, it is fundamental that the Court should not be required to do plaintiffs’ job of marshalling the evidence to demonstrate a genuine issue of material fact which would preclude summary judgment.

Rule 56(e) requires that a party opposing a motion for summary judgment must, “by

affidavits

or as otherwise provided in this rule, ...

set forth specific facts

showing that there is a genuine issue for trial.” (emphasis added).

40

It also ties summary judgment proceedings to admissible evidence,

see

note 26,

supra.

Mindful of those principles, we concluded early in 1980 that in order for us meaningfully to deal with the summary judgment motions, two devices would be especially helpful: (1) a pretrial evidentiary hearing; and (2) a summary judgment argument of sufficient length that plaintiffs would have an opportunity to call to the Court’s attention any document in the record which would create a genuine issue of material fact. We proceeded to implement both.

As we have suggested, it was obvious to us by this time that only by examining the actual documents could we assess the viability of plaintiffs’ case. Such an examination would enable us to evaluate each document’s authenticity and admissibility as well as its efficacy in creating a genuine issue of material fact. The announced charter for the evidentiary hearings was thus to aid in determination of the summary judgment motions. However, prior to their commencement we clearly stated of record that they would also have a second purpose — to serve as

in iimine

hearings pursuant to F.R.E. 104(a) so that we could make a pretrial determination whether there was sufficient independent evidence (evidence

aliunde)

of a conspiracy among

*1134

the various defendants to permit the introduction of “coconspirator” declarations under F.R.E. 801(d)(2)(E).

41

See

Part VI.D.6,

infra.

This was an important matter since it was clear to all, and tacitly acknowledged by plaintiffs’ counsel, that without the introduction of alleged coconspirators’ declarations, plaintiffs might not be able to make out a conspiracy case against most, if not all, of the defendants. Acknowledging that such a charter for hearings might entitle, and indeed require, plaintiffs to put on much of their case-in-chief, or at least the most important parts of it, we placed no time limitation upon the hearings.

42

The pretrial evidentiary or

“in

limine” hearings have been fully described in our Public Records Opinion (PTO 283). Suffice it to say that plaintiffs marshalled their key documents, assigning each a DSS (Document Submission Sheet) number,

43

and argued the admissibility of most of them to the Court. Defendants replied and extensive briefs were submitted by both sides. The hearings resulted in the three lengthy and extremely detailed opinions mentioned above, the results of which will be summarized in Part IV of this opinion. Since the DSS submissions are what plaintiffs have represented to be their most important documents, they are an important part of the summary judgment record.

At the outset of the August 1980 argument on the motions for summary judgment, we informed the parties that our principal concern at that time was not with the legal aspects of the case, but rather with its factual basis. We invited counsel to take as much time as was necessary to go through the entire record and call our attention to any documents, testimony, or other evidence which bore on the existence of a genuine issue of material fact. The defendants accepted our invitation and took over four days to analyze a very large number of the important documents proffered by plaintiffs, arguing that they created no genuine issue of material fact. We found that presentation most helpful. The plaintiffs, on the other hand, declined our invitation and studiously avoided dealing with any specific documentary evidence during their oral argument.

44

The summary judgment record before us then is a “mixed bag.” It includes the preclusive FPS with all its appendices, the documents referenced therein,

45

and all the DSS’s. It also includes all the exhibits offered by plaintiffs in connection with the summary judgment proceedings in April

*?

1979,

46

and it includes the various affidavits submitted to us by both plaintiffs and defendants and the various appendices thereto, some of which are not contained in the document depository. We shall also consider the voluminous depositions submitted for our consideration, along with the even more voluminous answers of defendants to plaintiffs’ interrogatories, the most “visible” of which are those relating to membership in and attendance at meetings of various groups and associations. Additionally, the record includes those portions of plaintiffs’ expert reports which we held admissible in our Expert Testimony Opinion.

This description includes a veritable mountain of documents and other materials. However, not all of them have been demonstrated or even asserted to be of any significance on the summary judgment motion. Many of them relate to plaintiffs’ damages and are not at issue at this stage; others are purely background material. Countless others, despite inclusion in the FPS, are plainly irrelevant, at least to our determination here. Even after elimination from consideration of those documents, there are many documents, cumulative, marginal, or otherwise, upon which plaintiffs do not seriously rely, notwithstanding their having been referenced in the FPS and placed in the depository. These documents we shall not seriously consider in our evidentiary review.

We do not pretend to have read all 250,-000 documents which plaintiffs have referenced in their FPS. We do not think it incumbent upon us to read documents whose importance plaintiffs have not in some way demonstrated. To posit the contrary would make a mockery of the litigation process and render the court hostage to any party who cavalierly sought to bury the court under a mountain of documents in a complex case. Accordingly, our attention will primarily be focused upon the documents (or categories of documents) called to our attention by plaintiffs’ (and defendants’) counsel in their oral arguments and extensive memoranda. However, we will also consider a considerable number of documents, not specifically relied upon, to which we were referenced by the FPS and which we found arguably germane.

IV.

Summary of Pretrial Evidentiary Rulings

For the reasons noted above, the three opinions which arose out of the pretrial evidentiary hearings are incorporated by reference in this opinion. Because of their great length, as a matter of convenience, we summarize herein the ultimate disposition of the major categories of evidence addressed therein.

In the first of those opinions, entitled “Admissibility of Public Records and Reports,” Pretrial Order No. 283, 505 F. Supp. 1125 (filed Aug. 7, 1980), 6 Fed.Evid. Rep. 801 (cited herein as Public Records Opinion), we considered the admissibility of a number of public documents proffered principally under F.R.E. 803(8)(C). The first category of documents, promulgated by the U.S. Treasury Department and the U.S. Tariff Commission in connection with proceedings under the 1921 Antidumping Act, 19 U.S.C. § 160

et seq.

(repealed 1980), included: (1) Treasury Department Determination of Sales at Less than Fair Value, 35 F.R. 18549 (1970); (2) Determination of Injury by the U.S. Tariff Commission Investigation No. AA1921-66 (undated); (3) The Treasury Department Finding of Dumping, 36 F.R. 4597 (1971); and (4) numerous Customs Forms 29’s, appraising dumping duties against various defendants and other importers. The thrust of these documents as proffered by the plaintiffs was that: (1) television receivers

*1136

from Japan were being sold in the United States at less than fair value; (2) an industry in the United States was being injured by reason of such sales; (3) dumping had thus occurred in violation of the 1921 Anti-dumping Act; and (4) dumping duties had been assessed against specific importers (on the Customs Form 29). The time frames of these documents are within the frame of reference of plaintiffs’ claims. However, all of these documents were excluded: (1) as hearsay and not admissible under the relevant exception to the hearsay rule (F.R.E. 803(8)(C)); (2) as irrelevant to the present case; and (3) as at all events ex-cludable under F.R.E. 403 on the grounds that any minimal probative value the documents may have had was far outweighed by the danger of unfair prejudice, confusion of the issues, and misleading the jury, and by considerations of undue delay, waste of time, and needless presentation of cumulative evidence.

The second category of evidence addressed in the Public Records Opinion was composed of documents, including certain findings, promulgated by the U.S. Tariff Commission and its successor, the U.S. International Trade Commission (I.T.C.), and by the Secretaries of Labor and Commerce under §§ 301(b)(1) and (c)(1) and (2) of the Trade Expansion Act of 1962 and §§ 201(b) and 221 of the Trade Act of 1974. These documents contained various findings of injury to United States industry. All of the documents were excluded as hearsay, as irrelevant, and under F.R.E. 403.

Third, the Public Records Opinion dealt with certain purported findings and related documents arising out of proceedings in two cases before the Japanese Fair Trade Commission (JFTC). The first was a 1957 case brought against the Home Electric Appliance Market Stabilization Council, some of whose members are defendants in this action, alleging industry-wide price fixing. The second case, brought in 1967, alleged retail price maintenance against defendant MEI. In plaintiffs’ submission, these materials are probative of the role of various defendants in the alleged home market aspects of the “unitary” conspiracy. However, all of them were excluded as hearsay and inadmissible under the 803(8)(C) exception to the hearsay rule. Moreover, certain “decisions” of the JFTC were also excluded as inadmissible under F.R.E. 408 and 410.

Plaintiffs also sought admission under F.R.E. 803(8)(C) of the findings of Judge A. Leon Higginbotham, Jr., our predecessor in this case, found at 402 F.Supp. 262 (E.D.Pa. 1975), regarding personal jurisdiction and venue. However, we held that Judge Higginbotham’s findings did not come within the ambit of Rule 803(8)(C) and that they were therefore inadmissible.

Finally, we dealt in the Public Records Opinion with certain statistical data from the statistical office of the United Nations and a report of the Organization for Economic Cooperation and Development. We found this data, which is in part technological (relating to electronic components) and in part statistical (relating to television production figures of various countries), to be admissible.

The second opinion in our evidentiary trilogy was entitled Admissibility of Materials Relating to Activities in Japan, PTO 295, 505 F.Supp. 1190 (filed September 29,1980), 6 Fed.Evid.Rep. 1329 (cited herein as Japanese Materials Evidentiary Opinion). That opinion dealt with the admissibility of three major groups of documents: (1) materials seized by the JFTC in “raids” on the offices of several of the defendants here who were respondents in the Six Company Case; (2) testimony and statements or “protocols” given by officials of the respondent companies during the course of the JFTC proceedings in the Six Company Case; and (3) materials produced in discovery from the files of the Japanese defendants and others relating to activities in Japan of Japanese manufacturers of consumer electronic products or of associations of manufacturers. Our rulings were all predicated on either Article VIII (hearsay) or Article IX (authentication) of the Federal Rules of Evidence.

We first dealt with the diaries or notebooks of officials of several of the Japanese

*?

defendants, which were said to contain evidence of the alleged conspiracy.

47

We next considered the admissibility of a number of internal memoranda of certain of the defendants,

48

minutes of certain EIAJ officers’ meetings, supposed minutes of the TV Export Council meetings, and the so-called Japan Victor document, allegedly emanating from the EIAJ Statistics Committee. We held all of these documents to be hearsay and inadmissible under any of the exceptions to the hearsay rule. As we have noted, we also considered the admissibility of the formal testimony of executives of the Japanese companies before the JFTC, as well as of the protocols given by them to the JFTC investigators. We held the JFTC testimony admissible against the defendants in the “Six-Company Case” only, except for any so-called “export” or “warchesting” references, which we held with minor exceptions to be inadmissible. We held that the protocols were admissible against the employer of the maker of the protocol only.

In the third opinion in our evidentiary trilogy, entitled Admissibility of Expert Testimony, PTO 301, 505 F.Supp. 1313 (filed December 10, 1980) (cited herein as Expert Testimony Opinion) we considered the admissibility of the opinions of five of the plaintiffs’ expert witnesses, as set forth in compendious reports prepared by those experts. The reports at issue were: (1) “Economic Study of the Japanese Television Industry,” by Dr. Horace J. DePodwin, Dr. David Schwartzman, and Marcio Teixeira of Horace J. DePodwin Associates, Inc., an economic consulting firm (the DePodwin Report); (2) “The Pervasive Use of Collusive and Company Group

(Keiretsu)

Activities in Achieving the Rapid Increase of Japanese Exports of Television Receivers to the United States,” by Professor Kozo Yamamura, Chairman, Japan Studies Program and Professor of Economics and East Asian Studies at the University of Washington (the Yamamura Report); (3) “Economic Analysis of Evidence Relating to Japanese Electronic Products Antitrust Litigation,” by Stanley Nehmer of Economic Consulting Services, Inc. (the Nehmer Report); (4) “The Impact of Japanese Financial and Employment Practices on Japanese Production, Marketing, and Price Behavior,” by Professor Gary R. Saxonhouse, Professor of Economics, University of Michigan (the Saxon-house Report); and (5) “Vertical Restraint by Japanese Television Manufacturers: Anticompetitive Effects,” by Professor John Owen Haley, Associate Professor of Law at the University of Washington (the Haley Report).

49

We did not undertake to rule upon the admissibility of these experts’ reports

qua

reports nor upon the admissibility of all of the opinions expressed in their reports. Rather, we culled from the reports the salient opinions of the experts with possible bearing upon the outcome of the motions for summary judgment. In terms of methodology, each of the experts had reviewed the documentary materials provided him by plaintiffs’ counsel, drawn upon his economic knowledge, and then in essence concluded that defendants were engaged in precisely the conspiracy posited by plaintiffs.

In our Expert Testimony Opinion, we excluded the great bulk of these expert opinions, holding admissible only background materials relating to the structure of the Japanese market, including its trade barriers, the technological development of the

*1138

consumer electronic products industry, and basic economic principles and methodology.

50

We reserved our ruling on one calculation of price differentials between the Japanese and American market presented in Part V of the DePodwin Report. See Expert Testimony Opinion 505 F.Supp. 1313 at 1348 . Most of the remaining material is attacked by defendants on relevancy grounds, and is discussed in the pertinent sections,

infra.

Our Expert Testimony Opinion was two-pronged. To summarize, we first found that most of the experts’ crucial opinions, notably those which concluded that defendants in this action were acting collusively, were so pervaded by reliance upon untrustworthy materials, including materials excluded from evidence in our two previous evidentiary opinions, as to render them inadmissible under F.R.E. 703. In addition, we concluded that the experts, by providing a narrative factual description and summary of the evidence before the court, and drawing (factual) conclusions upon which they in turn founded their opinions, were not utilizing any expertise in a manner helpful to the jury under F.R.E. 702, but were instead acting not as economists but as conspiracyologists engaged in inadmissible “oath-helping.”

Our discussion at this juncture of the numerous documents and opinions which we have

excluded

from evidence is important because of the necessity for perspective. First, the excluded evidence includes the most important documents in plaintiffs' original submissions and, in a very real sense, an evaluation of the plaintiffs’ case is aided by an understanding of the extent to which its original integral parts are now missing. Second, because of the importance of the excluded documents, we may have occasion from time to time to observe whether the outcome would have been different had the documents not been excluded. Third, the reason for the exclusion in the Japanese Materials Evidentiary Opinion of the most critical of these documents— lack of foundation — reflects upon the integrity of plaintiffs’ conspiracy case, a subject upon which we will comment further

infra.

Perhaps the most graphic description of the impact on plaintiffs’ case of our trilogy of evidentiary opinions comes from analysis of a portion of Plaintiffs’ Memorandum in Reply to the Motions for Summary Judgment of Certain Defendants,

51

Matsushita Defendants, and Sears, Roebuck & Co. (filed April 2, 1979), 8V2 years after the filing of the NUE action. In Part III.B. of that memorandum the plaintiffs purported to review the evidence of the overall combination and conspiracy, advancing the view that the defendants had completely failed to rebut plaintiffs’ evidence. The major categories of evidence which plaintiffs advanced at that time were:

1. Data on the early development of the Japanese electronics industry;

2. Matsushita-Philips’ agreements creating Matsushita Electronics Corporation for the production, sale, and exportation of electronic components;

3. The formation of the defendants’ trade associations, including the EIAJ and JMEA;

4. Excerpts from publications of the JMEA in its “Association News” and from the EIAJ’s publication “Denshi”;

5. The admission that there were meetings of the Chairmen of the Board and other officials of the defendant companies (the so-called conspiratorial groups), coupled with the evidence from the “Six-Company Case” ; and

*1139

6. Evidence from the JFTC Market Stabilization Council Case.

Yet, the evidence from the Market Stabilization Council and from the “Six-Company Case” which includes the vast bulk of the evidence about the conspiratorial groups and all the “export references,” have been excluded from evidence by our trilogy of evidentiary opinions.

52

We consider in this opinion such admissible or significant evidence as is left from plaintiffs’ presentation.

52A

The short of it, however, is that the evidentiary rulings we have just described have not just narrowed markedly the scope of the viable record before us, but have virtually emasculated plaintiffs’ case.

We turn now to an explication of the legal principles which will govern our analysis of those portions of plaintiffs’ case that remain.

V.

Standards Governing Summary Judgment

The parties, principally the plaintiffs, have devoted extensive portions of their briefs to descriptions of the law governing the grant or denial of summary judgment. For example, the plaintiffs, in their August 11, 1980, brief in opposition to defendants’ summary judgment motion devoted eighteen pages to the point. The thrust of plaintiffs’ argument is that summary judgment has almost never been granted in complex antitrust eases where “state of mind” is an issue. We explain herein the principles in this area that we will apply.

The general principles governing the grant or denial of summary judgment are well known. We set forth those principles, at least as they have been announced in the Third Circuit, in our Opinion and Order (1916 Antidumping Act), 494 F.Supp. 1190, 1239-40 (E.D.Pa.1980):

Rule 56 of the Federal Rules of Civil Procedure permits the grant of summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” F.R.Civ.P. 56(c). The burden of demonstrating that there is no genuine issue of material fact rests on the moving party.

Adickes v. S.H. Kress & Co.,

398 U.S. 144 , 90 S.Ct. 1598 , 26 L.Ed.2d 142 (1970). Summary judgment may not be granted if there is “the slightest doubt” about material facts.

Tomalewski v. State Farm Life Insurance Co.,

494 F.2d 882, 884 (3d Cir. 1974). Consequently, a motion for summary judgment may not be granted on the ground that if a verdict were rendered for the adverse party the court would set it aside as against the weight of the evidence.

Perks v. Firestone Tire & Rubber Co.,

611 F.2d 1363, 1366 (3d Cir. 1979),

quoting Rosenthal v. Rizzo,

555 F.2d 390, 394 (3d Cir.)

cert. denied,

434 U.S. 892 , 98 S.Ct.

*1140

268, 54 L.Ed.2d 178 (1977). Similarly, summary judgment is not appropriate if the resolution of a material issue of fact turns on the credibility of witnesses.

Poller v. Columbia Broadcasting System, Inc.,

368 U.S. 464, 473 , 82 S.Ct. 486, 491 , 7 L.Ed.2d 458 (1962);

Remak v. Quinn,

611 F.2d 36 (3d Cir. 1979). All inferences from the evidence must be drawn in favor of the party opposing the motions— here, the plaintiffs.

Small v. Seldows Stationery,

617 F.2d 992 (3d Cir. 1980).

(footnote omitted).

In support of their position, plaintiffs rely mainly upon the famous decision in

Poller v. Columbia Broadcasting System, Inc.,

368 U.S. 464 , 82 S.Ct. 486 , 7 L.Ed.2d 458 (1962), in which the court stated:

We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot... . Trial by affidavit is no substitute for trial by jury.

368 U.S. at 473 , 82 S.Ct. at 491 (footnote omitted). While

Poller

has never been overruled, the gloss that .plaintiffs place upon it has been significantly dulled in recent years. The number of antitrust cases in which the Supreme Court and courts in the Third Circuit have granted or upheld the grant of summary judgment on the merits, either partial or complete, since the

Poller

decision in 1962 is extremely large.

53

It is now settled that summary judgment is appropriate in those antitrust cases where plaintiffs, after having engaged in extensive discovery, fail to produce “significant probative evidence” in support of the allegations in their complaint.

First National Bank of Arizona v. Cities Service Co.,

391 U.S. 253, 289-90 , 88 S.Ct. 1575, 1593 , 20 L.Ed.2d 569 (1968). The

Cities Service

Court stated:

*?

Essentially all that the lower courts held in this case was that Rule 56(e) placed upon Waldron [the plaintiff] the burden of producing evidence of the conspiracy he alleged only after respondent Cities Service conclusively showed that the facts upon which he relied to support his allegation were not susceptible of the interpretation which he sought to give them. That holding was correct. To the extent that petitioner’s burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations, we decline to accept it. While we recognize the importance of preserving litigant’s rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

391 U.S. at 291 , 88 S.Ct. at 1593 .

See also Mid-West Paper Products Co. v. Continental Group, Inc.,

596 F.2d 573, 579 (3d Cir. 1979).

The most recent case in this area is

Pan-Islamic Trade Corp. v. Exxon Corp.,

632 F.2d 539 (5th Cir. 1980), where the plaintiff relied heavily upon

Poller

to argue that summary judgment may not be granted in a complicated antitrust case. After discussing the Supreme Court’s holding in

Poller

and ascribing to

Cities Service

a significance equal thereto, the court proceeded to affirm the grant of summary judgment, noting:

It is clear that this circuit has heeded the language in

Cities Service.

When faced with defendants’ sworn denial of the existence of a conspiracy, it is incumbent upon the plaintiff to produce significant probative evidence demonstrating that a genuine issue of fact exists as to this element of the complaint.

Id.

at 554 . We perceive the Third Circuit to be in accord.

The interpretation which these and other antitrust plaintiffs have attempted to give to

Poller

was criticized by the National Commission for the Review of Antitrust Laws and Procedures in its Report to the President and the Attorney General dated January 22, 1979, 80 F.R.D. 509 , 566-67:

Rule 56 of the Federal Rules of Civil Procedure and the accompanying Advisory Committee notes indicate a uniform summary judgment standard for all cases and no special category for antitrust or other complex actions. Some courts, however, have been much more reluctant to grant summary judgment in antitrust cases. This result, in our opinion, stems from overly restrictive interpretation of certain Supreme Court cases.... This language [quoted

supra

at 1139-1140] may have served at the time to correct overly eager use of summary judgment in some antitrust cases, and the Commission is not recommending a return to

pre-Poller

practice. Some cases since

Poller ,

however, appear to have gone to the opposite extreme.

Under

Poller

and other Supreme Court decisions, failure by the movant to disprove conclusively a disputed material fact or factual inference requires denial of a motion for summary judgment. This formulation has led to overly strict application in some instances. Some appellate courts have stated, for example, that summary judgment should not be granted if there is the “slightest doubt” as to any material fact. This is an unwarranted gloss on the “genuine issue” requirement. Opinions relying on the slightest doubt standard have been declining, however, and some circuits, including the Second Circuit, have explicitly rejected the more restrictive language found in older cases.

54

*1142

The

Poller

decision, when properly applied, should discourage the use of summary adjudication only where such action encompasses subjective evidence such as motive, intent, credibility, and the like. In assessing the contribution of summary judgment to the expedition of complex antitrust cases, the Commission does not wish to invite the sort of abuses of summary judgment that the

Poller

decision effectively condemned. On the other hand, the appellate courts should more realistically evaluate the availability and proper application of summary judgment.

Since we view the present language of Rule 56 as compatible with more effective use of summary adjudication, we do not recommend a change in the Rule. If, however, future decisions do not enhance the availability of summary judgment, an amendment to the Rule may be needed,

(footnotes omitted). The Ninth Circuit put the point well in

Zweig

v.

Hearst Corp.,

521 F.2d 1129, 1135-1136 (9th Cir.),

cert. denied,

423 U.S. 1025 , 96 S.Ct. 469 , 46 L.Ed.2d 399 (1975):

Summary judgment has, as one of its most important goals, the elimination of waste of the time and resources of both litigants and the courts in cases where a trial would be a useless formality. Courts must, of course, proceed with caution in determining litigation by summary judgment; this is especially true where grave, important and novel questions of law are involved.

However, the mere fact that the issues may be complex is not a valid reason to deny summary judgment when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.

(emphasis added). We agree.

Against this background, the courts have repeatedly held that when, despite adequate discovery, plaintiffs cannot come forward with admissible and probative evidence of an antitrust violation, summary judgment is appropriate.

See, e. g., Comet Mechanical Contractors, Inc. v. E.A. Cowen Construction Inc.,

609 F.2d 404 (10th Cir. 1980);

Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co.,

513 F.2d 102, 109-10 (2d Cir. 1975);

Consolidated Farmers Mutual Insurance Co. v. Anchor Savings Ass’n,

480 F.Supp. 640 (D.Kan.1979),

aff’d,

1980 Trade Cases ¶ 63,530 (10th Cir. 1980),

cert.

den.,-U.S.-, 101 S.Ct. 863 , 66 L.Ed.2d 804 ;

Raitport

v.

General Motors Corp.,

450 F.Supp. 1349, 1355 (E.D.Pa.1978) (summary judgment granted where plaintiff had “more than ample opportunity to conduct discovery” and yet “offered only unsubstantiated conspiratorial allegations in support of his claims”);

Merit Motors, Inc. v. Chrysler Corp.,

417 F.Supp. 263 (D.D. C.1976),

aff’d,

569 F.2d 666 (D.C.Cir.1977);

Chuy v. Philadelphia Eagles,

407 F.Supp. 717, 721-22 (E.D.Pa.1976) (summary judgment granted where plaintiff had three years of discovery and “ample opportunity to cross-examine hostile witnesses,” but had “turned nothing up”). Indeed,

[w]hen it becomes plain that the allegedly unlawful acts do not exist, and the plaintiffs’ claims are without merit, the Court has a

duty

to grant summary judgment.

Natrona Service, Inc. v. Continental Oil Co.,

435 F.Supp. 99, 106 (D.Wyo.1977),

aff’d,

598 F.2d 1294 (10th Cir. 1979) (emphasis added);

Capital Temporaries, Inc. v. Olsten Corp.,

365 F.Supp. 888 (D.Conn.1973),

aff’d,

506 F.2d 658 (2d Cir. 1974).

As we have noted, to avoid summary judgment, plaintiffs must advance “significant probative evidence” as to each of the elements of the antitrust conspiracy claim.

First National Bank of Arizona v. Cities Service Co., supra.

In order to be probative, the evidence must at least be admissible.

See

n. 3,

supra.

Moreover, the term “significant probative evidence” excludes speculation. Where speculative evidence is the only support for plaintiffs’ claims, courts have not hesitated to grant summary judgment. In

Robin Construction Co.

v.

United States,

345 F.2d 610, 614 (3d Cir. 1965), the Third Circuit upheld the grant of summary judgment where the plaintiff had nothing to offer but speculation and possibilities:

It is not enough to rest upon the uncertainty which broods over all human affairs or to pose philosophic doubts regarding the conclusiveness of evidentiary

*?

facts. In the world of speculation such doubts have an honored place, but in the daily affairs of mankind and the intensely practical business of litigation they are put aside as conjectural. In the words of Judge Learned Hand in

DeLuca v. Atlantic Refining Co.,

176 F.2d 421, 428 (2d Cir. 1949),

cert. denied,

338 U.S. 943 [ 70 S.Ct. 423 , 94 L.Ed. 581 ] (1950), . . . “[b]ut if a motion for summary judgment is to have any office whatever, it is to put an end to such frivolous possibilities when they are the only answer.”

Similarly, in

Bolt Associates, Inc. v. Alpine Geophysical Associates, Inc.,

365 F.2d 742 , 747 n.4 (3d Cir. 1966), the Third Circuit, citing

Robin Construction,

stated that “counsel’s speculations are not sufficient to resist a motion for summary judgment.” And in

British Airways Board v. Boeing Co.,

585 F.2d 946, 952 (9th Cir. 1978),

cert. denied,

440 U.S. 981 , 99 S.Ct. 1790 , 60 L.Ed.2d 241 (1979), the court stated that:

[a] party opposing a motion for summary judgment must introduce “sufficient evidence supporting the claimed factual dispute ... to require a jury or judge to resolve the parties’ differing version of the truth at trial.”

First National Bank v. Cities Service Co., supra,

391 U.S. at 288-289 , 88 S.Ct. at 1592 ... A mere scintilla of evidence will not do, for a jury is permitted to draw only those inferences of which the evidence is reasonably susceptible; it may not resort to speculation.

See also United States v. Dibble,

429 F.2d 598, 601 (9th Cir. 1970).

55

Turning to the question of burden of proof, the law is clear that it is the burden of the moving party (in this case the defendants) to show that there is no genuine issue of material fact. On the other hand, it is clear from

Cities Service

that the burden of demonstrating that there is significant probative evidence is on the party opposing the motion, in this case the plaintiffs. Plaintiffs cannot attempt to shift that burden by the spurious claim that the defendants must show a lack of significant probative evidence. As will be seen, this is a case in which, despite more than adequate discovery — close to a decade’s worth- — the plaintiffs have failed to meet their burden of showing significant probative evidence of a conspiracy, as opposed to the fruits of mere speculation.

It is also important to observe that this is an exceptionally appropriate case for summary judgment treatment for several reasons. First, our description

supra

of the summary judgment record before us suggests that it may well be one of the most complete summary judgment records ever put before any court. Second, the trilogy of evidentiary opinions and this opinion taken together reflect extremely intense scrutiny. Third, plaintiffs’ case is based primarily on documents, rather than on testimony, a factor which further narrows the distinction between summary judgment

*1144

and, for example, a directed verdict, because of the limited potential here for credibility judgments.

56

Although the plaintiffs have relied heavily upon

Poller ,

resolution of the matters before us does not turn upon a liberal or grudging construction of the principles enunciated therein, for in this case, the plaintiffs have not come forth with sufficient evidence to put issues of motive or intent to the test. A motive or intent question does not arise simply because plaintiffs’ counsel say that it does, or because plaintiffs proffer documents, statements, or expert opinions

57

which are inadmissible or which do not themselves put motive or intent genuinely in issue. There must be some evidence offered which will raise the motive or intent issue, and in this case there is none.

58

Having set forth the standards we will apply to our summary judgment determination, we turn to an explication of the legal principles affecting plaintiffs’ Sherman § 1 and Wilson Tariff Act claims.

VI.

Legal Principles Affecting Plaintiffs’ Sherman Act § 1 and Wilson Tariff Act Conspiracy Case

A.

Sherman Act § 1

1.

Introduction and Basic Principles

We

commence our

discussion of the legal principles applicable to this case with Section 1 of the Sherman Act, 15 U.S.C. § 1 , because the core of plaintiffs’ case rests on allegations of combination or conspiracy in violation of that section. Unlike the manner in which we have detailed the applicable principles of law in our parallel series of evidentiary opinions, it is unnecessary to spell out in great detail the basic principles governing section 1 of the Sherman Act for two main reasons. First, these principles are exceedingly well-known, and have been set forth in a multitude of opinions and

*?

treatises. Second, plaintiffs’ case is more notable for the extent to which it does not fit the classical Sherman § 1 mold than for the extent to which it does.

The basic principles governing application of § 1 of the Sherman Act have been concisely stated by the Third Circuit:

In order to sustain a cause of action under § 1 of the Sherman Act, the plaintiff must prove: (1) that the defendants contracted, combined or conspired among each other; (2) that the combination or conspiracy produced adverse, anti-competitive effects within relevant product and geographic markets;

59

(3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiff was injured as a proximate result of that conspiracy....

Unless the particular restraint falls within a category that has been judicially determined to be illegal per se, the legality of a restraint challenged under § 1 of the Sherman Act must be assessed under the rule of reason. Under the rule of reason standard, only those restraints upon interstate commerce which are unreasonable are proscribed by § 1 of the Sherman Act.

Martin B. Glauser Dodge Co. v. Chrysler Corp.,

570 F.2d 72, 81-82 (3d Cir. 1977),

cert. denied,

436 U.S. 913 , 98 S.Ct. 2253 , 56 L.Ed.2d 413 (1978) (citations omitted).

60

The per se approach, by which a type of conduct is viewed as per se violative of the Sherman Act without regard to its justification, has been applied in three basic situations: (1) price-fixing,

see United States v. Socony-Vacuum Oil Co.,

310 U.S. 150 , 60 S.Ct. 811 , 84 L.Ed. 1129 (1940); (2) market division agreements,

see United States v. Topco Associates, Inc.,

405 U.S. 596 , 92 S.Ct. 1126 , 31 L.Ed.2d 515 (1972); and, although less clearly, (3) group boycotts,

see Silver v. New York Stock Exchange,

373 U.S. 341 , 83 S.Ct. 1246 , 10 L.Ed.2d 389 (1963);

Klor’s, Inc. v. Broadway-Hale Stores, Inc.,

359 U.S. 207 , 75 S.Ct. 705 , 3 L.Ed.2d 741 (1959). Generally speaking, all other agreements are assessed using the rule of reason analysis. We emphasize that the core requirement of § 1 of the Sherman Act, and the one with which we are primarily concerned herein, is that there be a “contract, combination, or conspir

acy”

— i.

e.,

an agreement — in restraint of trade.

In this segment of the opinion, we shall explicate those facets of § 1 (as set forth in the applicable case law) which are called into play by the patterns of conduct said by plaintiffs to give rise to an inference of concerted action and therefore to constitute a basis for liability.

61

In Part VI.D.,

infra,

we shall take up the related matter of the law of conspiracy in the antitrust context,

*1146

explaining the means of proving an agreement in restraint of competition.

2.

Price Agreements

It is often said that all agreements which “affect” price are per se illegal, but it is plain that such a formulation overstates the law.

Socony-Vacuum, supra,

explained that “[u]nder the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.” 310 U.S. at 223 , 60 S.Ct. at 844 . Thus, the agreement must not only affect price, but must have been entered with the

purpose

to affect price. Moreover, the Sherman Act by its very terms requires that the agreement, to be unlawful, must be “in restraint of

trade”

— i.

e.,

the agreement must in some manner inhibit competition. As expressed by Professor Sullivan, “[t]he Act is not intended to make unlawful arrangements which affect price by improving competition.” L. Sullivan,

Handbook of the Law of Antitrust 200 (1977).

Thus, while “naked” restraints described in

Socony-Vacuum

are indeed per se forbidden, agreements having only an indirect or “incidental” effect on price are not, and are examined utilizing something more akin to a rule of reason approach.

In making its determination whether conduct has the purpose or effect of restraining price competition as required by

Socony-Vacuum

in order to make the practice per se illegal, the court must carefully analyze the facts of the allegedly offending arrangement. Professor Sullivan has summarized the factual patterns of those cases in which such a purpose or effect to dampen price competition has been found as follows:

First, the practices examined are related to the market in such a way that if they have any effect at all they will have an effect on price formation. Second, they lack any significant degree of integration of functions among the competitors. Third, the arrangements are not ones which help to make or improve a market by facilitating trading, or exchanging information, or standardizing product, or the like, and which thus may aid competition.’ Since price formation is affected if there is any consequence at all, and since there is no improvement in the market and no integration, it is entirely fair and functionally accurate to treat arrangements like these as naked restraints.

L. Sullivan,

supra,

at 201-02 (footnote omitted).

See, e. g., Goldfarb v. Virginia State Bar,

421 U.S. 773 , 95 S.Ct. 2004 , 44 L.Ed.2d 572 (1975);

National Macaroni Manufacturers’ Ass’n v. FTC,

345 F.2d 421 (7th Cir. 1965);

United States v. Gasoline Retailers’ Ass'n,

285 F.2d 688 (7th Cir. 1961);

Plymouth Dealers’ Ass’n v. United States,

279 F.2d 128 (9th Cir. 1960);

Las Vegas Merchant Plumbers Ass’n v. United States,

210 F.2d 732 (9th Cir.),

cert. denied,

348 U.S. 817 , 75 S.Ct. 29 , 99 L.Ed. 645 (1954);

United States v. Nationwide Trailer Rental System, Inc.,

156 F.Supp. 800 (D.Kan.),

aff’d per curiam,

355 U.S. 10 , 78 S.Ct. 11 , 2 L.Ed.2d 20 (1957);

United States v. United Liquors Corp.,

149 F.Supp. 609 (W.D.Tenn. 1956),

aff’d per curiam,

352 U.S. 991 , 77 S.Ct. 577 , 91 L.Ed. 884 (1957).

In contrast, arrangements which have some effect on price but which also may have the purpose and effect of making or improving a market are not per se illegal, even though they may indirectly affect price, and are judged under a rule of reason standard. The leading case in this area is Chicago Board of Trade, quoted at n.60

supra,

which set forth the classical rule of reason formulation.

62

Other cases which

*?

have adopted a rule of reason approach on the grounds that the questioned conduct improves the competitive market include those dealing with regulation of tobacco auction warehouses, see, e.

g., Danville Tobacco Ass’n v. Bryant-Buckner Assoc., Inc.,

372 F.2d 634 (4th Cir.),

cert. denied,

387 U.S. 907 , 87 S.Ct. 1688 , 18 L.Ed.2d 624 (1967);

Winn Ave. Warehouse, Inc. v. Winchester Tobacco Warehouse Co.,

339 F.2d 277 (6th Cir. 1964), and those involving bid depositories for the building trades, see e.

g., Mechanical Contractors Bid Depository v. Christiansen,

352 F.2d 817 (10th Cir. 1965),

cert. denied,

384 U.S. 918 , 86 S.Ct. 1365 , 16 L.Ed.2d 439 (1966).

A second major category of cases which escape per se treatment despite having some effect on price is that in which economies of scale can be achieved through partial integration of competitors’ functions. Such arrangements include joint selling agencies,

see, e. g., Appalachian Coals, Inc. v. United States,

288 U.S. 344 , 53 S.Ct. 471 , 77 L.Ed. 825 (1933), and joint purchasing arrangements,

see, e. g., Instant Delivery Corp. v. City Stores Co.,

284 F.Supp. 941 (E.D.Pa.1968);

Parmelee Transportation Co. v. Keeshin,

186 F.Supp. 533 (N.D.Ill.1960),

aff'd,

292 F.2d 794 (7th Cir.),

cert. denied,

368 U.S. 944 , 82 S.Ct. 376 , 7 L.Ed.2d 340 (1961). To qualify for rule of reason treatment on this “economies of scale” theory, a price restraint must be a direct result of the integration of functions, and must not significantly reduce market-wide competition.

See generally

L. Sullivan,

supra,

at 206-10. When the integration of functions could be accomplished without the price restraint, the restraint which results will still be per se illegal.

See United States v. Sealy, Inc.,

388 U.S. 350 , 87 S.Ct. 1847 , 18 L.Ed.2d 1238 (1967).

Plaintiffs in this litigation have at various times espoused a number of different theories as to behavior by defendants which is alleged to be “price-fixing” and therefore per se violative of the Sherman Act. We address each of these theories, applying the foregoing principles, but we. do so only briefly, for we find the result in each case to be plain.

(a)

The “Price Necessary to Get the Sale”

As described in Part II,

supra,

plaintiffs have often characterized defendants’ alleged conspiracy as one in which defendants agreed to charge “whatever price was necessary to make the sale.” We agree with defendants that if such an agreement could be proved, it would merely be an agreement to compete, and hence would improve, rather than restrain, competition. Such an agreement would not have the purpose or effect of “raising, depressing, fixing, pegging, or stabilizing” prices, as required by

Socony-Vacuum.

(b)

Agreement to Increase Market Share

Plaintiffs have also averred that defendants are guilty of agreeing to increase their market share. We see such an agreement, if it could be shown, as little different from (a) above; a mere decision to obtain a greater share of the business by competing would not violate the Sherman Act. For example, if a group of companies “agreed” to have a price war so as to increase their market share, this would not violate the antitrust laws in the absence of some agreement to raise prices again after successful market penetration. As will be seen

infra,

plaintiffs have offered no evidence that defendants’ prices rose after they achieved market penetration. Thus, in the absence of some other related agreement, we see an agreement to attempt to increase market share as another form of an agreement to compete.

(c)

Agreement to Fix Minimum Prices

An agreement to fix a minimum price would also be a per se violation of section 1 of the Sherman Act. While a consumer or the government might bring an action to attack such an agreement, as we explain in Part VLB.,

infra,

competitors,

*1148

such as the plaintiffs, have no standing to attack such agreements, for they can show no antitrust injury flowing therefrom.

(d)

Agreement to Price Predatorily

Plaintiffs further allege that defendants agreed to engage in collusive predatory pricing, although without fixing any particular price. Such an agreement, we believe, would be a per se violation of § 1, in that it would, in

Socony-Vacuum

terms, have the intent and effect of depressing the price. We note, however, that in the absence of direct proof, such an agreement may be impossible to prove by indirect evidence under the standards set forth by the Third Circuit in

Venzie Corp. v. United States Mineral Products Co.,

521 F.2d 1309 (3d Cir. 1975) and

Bogosian v. Gulf Oil Corp.,

561 F.2d 434 (3d Cir. 1977),

cert. denied,

434 U.S. 1086 , 98 S.Ct. 1280 , 55 L.Ed.2d 791 (1978), discussed in Part VI.D.,

infra.

(e)

Agreement to Fix Low or Depressed Prices

An agreement to charge “low” or depressed prices, as opposed to an agreement to fix a particular price, would nonetheless have the effect of stabilizing prices, and would, if proved, be per se illegal. Such an agreement is, of course, similar but not identical to an agreement to price predatorily.

(f)

Agreement to Fix Minimum Prices and a Second Agreement to Violate the First

Plaintiffs allege that defendants agreed to fix minimum prices — an agreement which, as we explain in Part VLB.,

infra,

plaintiffs have no standing to attack. They further allege, however, that defendants then agreed to violate that price-fixing agreement by engaging in a scheme of secret rebates in varying amounts which resulted in a net price lower than the minimum price. Such an agreement, if it existed, would be in intent and purpose the same as an agreement to compete, discussed in (a),

supra.

An agreement to violate a price-fixing agreement by returning to the competitive

status quo

can only enhance competition.

See also

Part VI.A.7,

infra.

(g)

Agreement to Deceive Government Authorities With Respect to Price

Plaintiffs finally have alleged that an agreement to commit customs fraud by misleading government authorities as to the actual price charged is violative of the Sherman Act. We do not believe such an agreement, if proved, is one that affects price. Such agreements are discussed at VI.A.7,

infra.

3.

Market Allocation

Plaintiffs contend that the Five Company Rule, promulgated by the JMEA and discussed in detail

infra,

which purports to restrict each Japanese exporter to five U.S. customers, is a horizontal market division which is per se illegal under section 1 of the Sherman Act. They thus invoke

United States v. Topco Associates, Inc.,

405 U.S. 596 , 92 S.Ct. 1126 , 31 L.Ed.2d 515 (1972), in which the Supreme Court explicitly ruled that market divisions are per se illegal, whether or not they are ancillary to some price-fixing or other competition-restraining agreement.

See also United States v. Sealy, Inc.,

388 U.S. 350 , 87 S.Ct. 1847 , 18 L.Ed.2d 1238 (1967);

Timken Roller Bearing Co. v. United States,

341 U.S. 593 , 71 S.Ct. 971 , 95 L.Ed. 1199 (1951).

We need not discuss this principle in detail, however, for as will be seen

infra,

the Five Company Rule did not operate to divide the market. Rather, because each manufacturer could include its American subsidiary as one of its five customers, and because the subsidiary had no concomitant market restrictions but could sell to anyone, the rule was without practical effect.

See

Part VII.F.2,

infra.

Moreover, plaintiffs could not have been injured by an agreement such as the Five Company Rule whose effect would be to reduce competition and keep prices up.

See

Part VLB.,

infra.

*?

4.

Membership in Trade Associations and Attendance at Meetings

While to our knowledge plaintiffs have never explicitly contended that mere active membership in a trade association constitutes an agreement which violates section 1 of the Sherman Act, they have, on numerous occasions, implied that such a principle obtains in the present context. Arguing almost by innuendo, they appear to be suggesting that, given the fact that virtually all the Japanese manufacturing defendants were conferees, participation in meetings of groups such as the Tenth Day Group or even the EIAJ can give rise to an inference of collusive activity on the grounds that it is impossible to imagine what else was being accomplished at such meetings. We therefore consider the potential antitrust import of such membership.

It is plain that mere membership in a trade association, including attendance at meetings, is insufficient without more to give rise to an inference of conspiracy.

See, e. g., Hanson v. Shell Oil Co.,

541 F.2d 1352, 1359 (9th Cir. 1976),

cert. denied,

429 U.S. 1074 , 97 S.Ct. 813 , 50 L.Ed.2d 792 (1977);

Kline v. Coldwell, Banker & Co.,

508 F.2d 226 (9th Cir. 1974),

cert. denied,

421 U.S. 963 , 95 S.Ct. 1950 , 44 L.Ed.2d 449 (1975);

Northern California Pharmaceutical Ass’n v. United States,

306 F.2d 379 (9th Cir.),

cert. denied,

371 U.S. 862 , 83 S.Ct. 119 , 9 L.Ed.2d 99 (1962);

Metropolitan Bag & Paper Distributors Ass’n v. FTC,

240 F.2d 341, 344 (2d Cir. 1957),

cert. denied,

355 U.S. 819 , 78 S.Ct. 24 , 2 L.Ed.2d 35 (1957);

Trist v. First Federal Savings & Loan Ass’n,

466 F.Supp. 578, 587 (E.D.Pa.1979);

Hunt v. Mobil Oil Corp.,

465 F.Supp. 195, 231 (S.D. N.Y.1978),

aff’d mem.,

610 F.2d 806 (2d Cir. 1979);

Harlem River Consumers Cooperative, Inc. v. Associated Grocers of Harlem, Inc.,

408 F.Supp. 1251, 1280 (S.D.N.Y.1976);

Vandervelde v. Put & Call Brokers & Dealers Ass’n, Inc.,

344 F.Supp. 118, 155 (S.D.N. Y.1972);

cf. Venzie Corp. v. United States Mineral Products Co.,

521 F.2d 1309, 1312-13 (3d Cir. 1975) (mere contact through phone calls insufficient).

All of these cases, in rejecting the notion that mere membership in a trade association gives rise to an inference of conspiratorial conduct by a particular member, even when the association itself has been found to have engaged in illegal conduct, emphasize that there must be proof of knowing, intentional participation in the illegal scheme. The Ninth Circuit has stated, for example:

It thus clearly appears that in order for a member of a trade association to become guilty in a criminal case or liable in a treble damage case he must have “knowingly, intentionally and actively participated in an individual capacity in the scheme.”

Kline v. Coldwell, Banker & Co., supra,

508 F.2d at 232 ,

quoting Northern California Pharmaceutical Ass’n v. United States, supra.

Similarly, Judge Weinfeld stated:

[M]ere association with conspirators and presence at the scene of a conspiracy, even coupled with knowledge that wrongful conduct by others is being engaged in, are not by themselves sufficient to support the inference of knowing and intentional attachment to an illegal enterprise.

Hunt v. Mobil Oil Corp., supra,

465 F.Supp. at 231 .

Nor can plaintiffs attempt to draw an inference of conspiracy from the fact that the meetings provide a forum for collusive action. “Opportunities to conspire are not probative of whether firms did in fact conspire; an opportunity to conspire will exist always.”

Brown v. Cameron-Brown Co.,

1980-2 Trade Cases ¶ 63,400 at p. 76,040 (E.D.Va.1980).

These quotations typify the thrust of the case law. In the absence of proof of knowing, intentional participation in illegal activities, plaintiffs cannot draw an inference of conspiratorial conduct from the active membership by defendants in various trade associations.

5.

Exchange of Information Concerning Prices, Production and Inventory Figures, and Joint Forecasting

Plaintiffs have stressed time and time again that, as they put it in their final

*1150

post-argument brief, “one aspect of the overall conspiracy which demonstrates its pernicious effect on competition is defendants’ exchange of information.” In plaintiffs’ submission, the various groups and associations of which defendants were members functioned as fora for the exchange of information on past, current, and future prices, production, shipments, export levels, inventory levels, and conditions of sale. The information was then used by defendants, plaintiffs’ theory continues, to coordinate future production and prices. Plaintiffs contend that this information exchange is per se illegal under the Sherman Act, citing,

inter alia, United States v. Container Corp. of America,

393 U.S. 333 , 89 S.Ct. 510 , 21 L.Ed.2d 526 (1969).

Plaintiffs’ suggestion that defendants’ information exchange is a per se violation of the Sherman Act can charitably be viewed only as disingenuous, for no case — including

Container Corp.

— has ever held mere exchange of information, without an associated price-fixing agreement (which has on occasion been inferred from certain information exchanges), to be per se illegal.

63

Rather, the question is whether the information exchange has a tendency unreasonably to restrain competition. Hence, the cases that address data dissemination do so employing a “rule of reason” analysis.

The Third Circuit has succinctly summarized the case law in this area:

The Supreme Court has dealt several times with the limits imposed by the Sherman Act on exchanges of information among competitors. In

American Column & Lumber Co. v. United States,

257 U.S. 377 , 42 S.Ct. 114 , 66 L.Ed. 284 (1921), the Court held that section 1 of the Sherman Act condemned the exchange of specific price information with regard to specific customers, where the clear purpose was to stabilize prices. The Court reached the same result in

United States v. American Linseed Oil Co.,

262 U.S. 371 , 43 S.Ct. 607 , 67 L.Ed. 1035 (1923). Then in 1925, two cases upheld the exchange of information among competitors. In

Maple Flooring Ass’n v. United States,

268 U.S. 563 , 45 S.Ct. 578 , 69 L.Ed. 1093 (1925), the Sherman Act was held to permit the exchange of average cost data relating only to closed transactions, despite an apparent stabilizing effect on price, where no intent to constrain individual competitive activity was found. And the Court in

Cement Manufacturers Protective Ass’n v. United States,

268 U.S. 588 , 45 S.Ct. 586 , 69 L.Ed. 1104 , approved the exchange of specific price information concerning specific customers, despite possible effects on prices, where the purpose of the dissemination scheme was to prevent buyers from defrauding sellers.

The Supreme Court has drawn a narrow line in deciding the data dissemination cases under section 1 of the Sherman Act. The difficulty derives from the fact that in competitive markets, information exchanges promote competition, while in oligopolistic markets, they depress competition.

United States v. Container Corp. of America,

393 U.S. 333, 342-43 , 89 S.Ct. 510 [515], 21 L.Ed.2d 526 (1969) (Marshall, J., dissenting); P. Areeda, Antitrust Analysis 13-16 (1974). Thus, the Court has attempted to fashion rules that will reach the latter, yet not amount to broad proscriptions embracing the former.

United States v. United States Gypsum Co.,

550 F.2d 115, 122 (3d Cir. 1977),

aff’d,

438 U.S. 422 , 98 S.Ct. 2864 , 57 L.Ed.2d 854 (1978).

United States Gypsum

was concerned only with the exchange of pricing information. The cases discussed therein, however, also considered the exchange of other types of information. Thus,

American Column & Lumber Co. v. United States,

257 U.S. 377 , 42 S.Ct. 114 , 66 L.Ed. 284 (1921), invalidated a program of a trade association in the hardwood industry which called for daily reporting of not just prices, but of sales,

*?

purchases, production, shipment, and inventory data as well, all subject to audit by association representatives. The Court inferred an agreement in restraint of trade from the elaborate nature of the scheme, concluding that the “purpose and effect . .. were to restrict competition ... by concerted action in curtailing production and in increasing prices.” 257 U.S. at 411-12 , 42 S.Ct. at 121 .

The court relied upon

American Column

to invalidate an even more comprehensive system of information exchange in

United States v. American Linseed Oil Co.,

262 U.S. 371 , 43 S.Ct. 607 , 67 L.Ed. 1035 (1923). But in

Maple Flooring Manufacturers Ass’n v. United States,

268 U.S. 563 , 45 S.Ct. 578 , 69 L.Ed. 1093 (1925), the court employed a similar purpose and effect analysis to reach a contrary result, where the information exchanged was averaged and disseminated without identification of the particular member or transaction, and where the prices were not uniform. No agreement to affect production, or to fix or maintain prices, or to conform to published averages, was ever alleged. The Court explained:

Persons who unite in gathering and disseminating information in trade journals and statistical reports on industry, who gather and publish statistics as to the amount of production of commodities in interstate commerce, and who report market prices, are not engaged in unlawful conspiracies in restraint of trade merely because the ultimate result of their efforts may be to stabilize prices or limit production through a better understanding of economic laws and a more general ability to conform to them, for the simple reason that the Sherman Law neither repeals economic laws nor prohibits the gathering and dissemination of information.

268 U.S. at 584, 45 S.Ct. at 585.

American Column

and

American Linseed

were distinguished on the basis that they presented situations in which the activity “necessarily” resulted in illegal concerted action. The Court recognized that information dissemination could be the basis of concerted action in restraint of trade, as in those earlier cases, but held:

We decide only that trade associations or combinations of persons or corporations which openly and fairly gather and disseminate information as to the cost of their product, the volume of production, the actual price which the product has brought in past transactions, stocks of merchandise on hand, approximate cost of transportation from the principal point of shipment to the points of consumption as did these defendants and who, as they did, meet and discuss such information and statistics without however reaching or attempting to reach any agreement or any concerted action with respect to prices or production or restraining competition, do not thereby engage in unlawful restraint of commerce.

Id.

at 586, 45 S.Ct. at 586. We will refer to

Maple Flooring

on a number of occasions in Part VII,

infra,

because its holding, and the quoted language, is apposite to this record.

Maple Flooring’s

companion case,

Cement Mfrs.' Protective Ass’n v. United States,

268 U.S. 588 , 45 S.Ct. 586 , 69 L.Ed. 1104 (1925), went one step further, upholding a scheme which was essentially similar, but in which specific sales were identified and which had resulted in production limitation and substantial price uniformity. The Court was persuaded that price uniformity could “inevitably result from active, free and unrestrained competition” when the product is fungible and the buyers knowledgeable.

Id.

at 592 , 45 S.Ct. at 587. Moreover, the Court believed that when the data exchanged enabled sellers to counter the fraudulent practices of some dealers, as was the case in the

Cement

case, the exchange could not be held to be an unlawful restraint. Ultimately, the Court rested on its

Maple Flooring

reasoning: there was no agreement, and in the absence thereof, the information exchange activities were not in themselves unlawful.

See also Sugar Institute, Inc. v. United States,

297 U.S. 553 , 56 S.Ct. 629 , 80 L.Ed. 859 (1936), in which the court reaffirmed its

Maple Flooring

position to the effect that

*1152

competition does not become less free merely because of the distribution of knowledge of the essential factors entering into commercial transactions. The natural effect of the acquisition of the wider and more scientific knowledge of business conditions on the minds of those engaged in commerce, and the consequent stabilizing of production and price, cannot be said to be an unreasonable restraint or in any respect unlawful.

297 U.S. at 598 , 56 S.Ct. at 642 .

The Sugar Institute

Court explained the difference between the

American Column

cases and the

Maple Flooring

cases as follows:

[W]hile the collection and dissemination of trade statistics are in themselves permissible and may be a useful adjunct of fair commerce, a combination to gather and supply information as a part of a plan to impose unwarrantable restrictions, as, for example, to curtail production and raise prices, has been condemned.

Id.

at 599-600 , 56 S.Ct. at 642-643 .

Professor Sullivan has summarized the rules of these early cases as follows:

Where there is no commitment to comply with published prices, where individual transactions are not identified, where information goes to buyers as well as sellers, and where no audit procedure, common analysis or suspicious exhortation is associated with price reporting, a purpose and effect analysis focused only on program details will tend to validate the program.

L. Sullivan, supra,

at 269.

Perhaps the most troubling of the Supreme Court’s opinions in this area is

United States v. Container Corp. of America,

393 U.S. 333 , 89 S.Ct. 510 , 21 L.Ed.2d 526 (1969), upon which plaintiffs rely heavily.

Container Corp.

invalidated an arrangement in the corrugated container industry whereby each defendant requested from its competitors the most recent price charged or quoted, whenever it needed such information and the information was not otherwise available. The information requested was generally provided, with an expectation that reciprocal information would be furnished when needed. The result was a downward stabilization of price. Justice Douglas’ two-page opinion briefly examines the market structure, noting that defendants accounted for 90% of the market, that the product was essentially fungible and the demand inelastic, and that entry costs were low, and concludes that the “inferences are irresistible that the exchange of price information has had an anticompetitive effect in the industry, chilling the vigor of price competition.” 393 U.S. at 337 , 89 S.Ct. at 512 . Price was held to be “too critical ... to allow it to be used in an informal manner to restrain competition.”

Id.

at 338 , 89 S.Ct. at 513 . To this final statement was appended a footnote which pointed out,

inter alia,

that

Socony-Vacuum

had held all forms of price fixing to be per se violative of the Sherman Act.

This final footnote, with its textual statement, led to confusion as to whether the

Container Corp.

majority was obliquely announcing a per se rule banning all exchange of pricing information. Justice Fortas, concurring, joined the majority opinion on the explicit understanding that no such rule was being enunciated. Justices Marshall, Harlan, and Stewart, however, dissented because they disagreed with what they read as the majority’s use of a per se rule.

This confusion was subsequently dispelled by the explicit statement that “the dissemination of price information is not itself a per se violation of the Sherman Act.”

United States v. Citizens & Southern National Bank,

422 U.S. 86, 113 , 95 S.Ct. 2099, 2115 , 45 L.Ed.2d 41 (1975), citing

Maple Flooring, Cement Mfrs.,

and

Container Corp.

itself.

See also United States v. United States Gypsum Co.,

438 U.S. 422 , 441 n.16, 98 S.Ct. 2864 , 2875 n.16, 57 L.Ed.2d 854 (1978).

64

Thus we know, contrary to

*?

plaintiffs’ suggestion, that information exchange, including the exchange of price information, remains subject to a rule of reason analysis.

The

Container Corp.

opinion is, at best, opaque, and the line it draws between information exchange programs which violate the Sherman Act and those which do not is indistinct.

65

Plaintiffs rely on

Container Corp.

primarily for the per se point, which, as we have seen, has been repudiated. In any event,

Container Corp.

is clearly distinguishable from the case at bar on its facts, in that it involved the exchange, upon request, of specific, current, identifiable price data. Because the fact patterns are so different, and because

Container Corp.

plainly did not overrule

Maple Flooring

and

Cement Mfrs.,

it is not helpful to plaintiffs. Accordingly, when we examine the record as to defendants’ exchange of information, our focus will be on the reasonableness

vel non

of the conduct.

We note in summary that cases which have found violations have either involved an exchange of detailed, individually identifiable, actual price data, a concentrated industry, and a purpose or effect to restrain competition, or some other evidence of an actual agreement to restrain competition. Exchange of aggregate data and most non-price data, such as market conditions, trends, and forecasts, has generally been permitted, at least in the absence of some evidence of an agreement to use the information to fix prices, adjust production, or allocate market shares.

6.

Product Standardization and Technical Research Exchange

Plaintiffs have also suggested that defendants’ efforts at product standardization and exchange of technical research are indicative of conspiratorial activity violative of the Sherman Act. Product standardization alone, without a related price-fixing allegation, has not been frequently litigated. Those courts that have considered the issue have found standardization programs that improve product quality or reduce costs, eliminate waste, and provide the basis for easier price comparison by consumers, thus enhancing increased price competition, to be reasonable.

See, e. g., Tag Mfrs. Institute v. FTC,

174 F.2d 452 (1st Cir. 1949);

Structural Laminates, Inc. v. Douglas Fir Plywood Ass’n,

261 F.Supp. 154 (D.Or.1966),

aff’d,

399 F.2d 155 (9th Cir. 1968),

cert. denied,

393 U.S. 1024 , 89 S.Ct. 636 , 21 L.Ed.2d 569 (1969);

United States v. Johns-Manville Corp.,

259 F.Supp. 440 (E.D. Pa.1966).

On the other hand, programs have been ruled unreasonable, hence illegal, when pursued for an anticompetitive purpose, or when linked with other factors to become tantamount to price-fixing. In

National Macaroni Manufacturers Ass’n v. FTC,

345 F.2d 421, 426 (7th Cir. 1965), for example, the court agreed with the FTC that “where all or the dominant firms in a market combine to fix the composition of their product with the design and result of depressing the price of an essential raw material, they violate the rule against price-fixing agreements as it has been laid down by the Supreme Court.” Similarly, the court in

*1154

Bond Crown & Cork Co. v. FTC,

176 F.2d 974, 979 (4th Cir. 1949), explained that product standardization “would be innocent enough by itself but not when taken in connection with standardization of discounts and differentials, publication of prices with agreements not to charge less than a minimum . . ., freight equalization ... and such uniformity of prices throughout the industry as to leave no price competition of any sort anywhere.”

See also C-O Two Fire Equipment Co. v. United States,

197 F.2d 489 (9th Cir.),

cert. denied,

344 U.S. 892 , 73 S.Ct. 211 , 97 L.Ed. 690 (1952);

Milk & Ice Cream Can Institute v. FTC,

152 F.2d 478 (7th Cir. 1946).

7.

Secret Rebates

Plaintiffs have, at various times and by way of a number of formulations, contended that defendants’ practice of granting secret rebates was illegal under the Sherman Act, noting that the rebate scheme served to circumvent the MITI-related export control agreements and the 1921 Antidumping Act, and that it furthermore engendered widespread customs fraud against the United States. The problem with this theory is that it describes in ultimate essence a pro-competitive scheme: the rebates are, if proved, in contravention of provisions expressly designed to reduce competition, at least so long as there is no evidence of concerted rebate activity. An agreement to compete, as we said

supra,

cannot violate the Sherman Act.

A claim analogous to that presented by plaintiffs here was considered and rejected by the Supreme Court in

United States v. Citizens & Southern National Bank,

422 U.S. 86 , 95 S.Ct. 2099 , 45 L.Ed.2d 41 (1975). In that case, defendants, an Atlanta bank and its affiliated entities, embarked upon a program of

de facto

branching designed to circumvent the anti-competitive effect of Georgia state regulations which prohibited banks located in cities from opening branches in suburban areas. The defendants entered into

de facto

control arrangements with various banks in Atlanta suburbs and, after a change in state law, proceeded to acquire several of them. In response to a Justice Department challenge to the program, the Court held that the common control and sharing of information and facilities between the defendants and their de

facto

branches were an integral part of defendants’ pro-competitive attempt to circumvent Georgia’s anti-competitive regulatory scheme, and thus could not be considered unreasonable restraints of trade under the antitrust laws:

To characterize these relationships as an unreasonable restraint of trade is to forget that their whole purpose and effect were to

defeat

a restraint of trade. Georgia’s antibranching law amounted to a compulsory market division....

. . . C&S devised a strategy to circumvent this statutory barrier. By providing new banking options to suburban Atlanta customers, while eliminating no existing options, the

de facto

branching program of C&S has plainly been procompetitive.

422 U.S. at 118-19 , 95 S.Ct. at 2117-2118.

Plaintiffs’ claims here, that defendants conspired to offer prices which allegedly were lower than, and therefore in violation of, the minimum price provisions of the export control arrangements and dutiable under the 1921 Antidumping Act, are similar to the claims rejected by the Supreme Court in

Citizens & Southern National Bank.

Such an agreement — to circumvent government barriers to import competition —would, if proved, be pro-competitive in purpose and effect and could not support plaintiffs’ antitrust claims.

Similarly, plaintiffs’ attempt to cast anti-competitive aspersions upon defendants’ alleged rebating is without foundation. The Supreme Court has noted the pro-competitive virtues of secret price cutting.

See, e. g., United States Gypsum Co., supra,

438 U.S. at 456 , 98 S.Ct. at 2883 . (“Price concessions by oligopolists generally yield competitive advantages only if secrecy can be maintained; when the terms of the concession are made publicly known, other competitors are likely to follow and any advantage to the initiator is lost in the process.”). Secret price cutting can be a pro-competi

*?

tive strategy to be encouraged, not condemned, under the antitrust laws.

Indeed, the contention that secret rebating to avoid anti-competitive, government-imposed regulatory schemes constitutes an antitrust violation was specifically rejected by the Third Circuit in

Knuth v. Erie-Crawford Dairy Cooperative Ass’n,

463 F.2d 470 (3d Cir. 1972),

cert. denied,

410 U.S. 913 , 93 S.Ct. 966 , 35 L.Ed.2d 278 (1973). In that case, plaintiffs, milk producers, brought an antitrust action against the cooperative which sold their milk on consignment (of which plaintiffs were members) and the dairies which purchased the milk, on the ground that the cooperative was granting secret rebates to the dairies in order to sell the milk at prices below those established by the Pennsylvania Milk Control Commission. Despite the fact that the alleged rebates were illegal under Pennsylvania law, the court held that plaintiffs had failed to state a cause of action under the antitrust laws.

Id.

at 476 .

66

Thus the rebating scheme alone cannot, by virtue of its character as a device to circumvent governmental regulation, support a Sherman Act violation.

8.

Joint Activities in Promoting Public and Governmental Relations and Joint Legal Action in Response to Common Problems

Plaintiffs allege that defendants violated Section 1 of the Sherman Act by virtue of their concerted dealings with the governments of both the U.S. and Japan. For example, plaintiffs claim that defendants (1) jointly sought to influence American and Japanese legislative regulation concerning export-import duties and commodity taxes; (2) conducted publicity campaigns to promote governmental relations; (3) participated in a joint defense of their rebate practices in actions brought by the Customs Office of the Department of Treasury under the Antidumping Act of 1921; and (4) conspired to institute litigation to enjoin those actions. These allegations require that we consider the extent to which courts have considered concerted lobbying action with the legislative or executive branches of government, either by trade associations or similarly situated corporations, and concerted legal action in the courts to combat problems common to all companies in the trade or industry, as violative of Section 1 of the Sherman Act.

Concerted action by trade associations to influence or promote legislative, judicial, or administrative action has generally been regarded as necessary under the First Amendment to safeguard the free expression of political viewpoints and the right to petition government officials, and has been regarded as an exemption from antitrust liability. This exemption, which has come to be known as the Noerr-Pennington doctrine, applies even if the ultimate governmental action sought would limit economic competition in the industry.

In

Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc.,

365 U.S. 127 , 81 S.Ct. 523 , 5 L.Ed.2d 864 (1961), a railroad association conducted a publicity campaign that consisted of the circulation of propaganda disparaging the trucking industry and included extensive lobbying for legislation injurious to the trucking industry, with the purpose of destroying trucking as competition in the long-distance freight business. The truckers alleged that the publicity campaign amounted to an illegal conspiracy to eliminate competition in violation of the Sherman Act. The Supreme Court dismissed the truckers’ complaints, holding that a concerted but genuine attempt to influence legislation, even when conducted with an anti-competitive purpose, does not give rise to Sherman Act liability. Moreover, the Court extended the protec

*1156

tion of joint activities for governmental action even to deceptive public relations practices. The Court supported its holding on two grounds. First,

In a representative democracy such as this, these branches of government act on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives. To hold that the government retains the power to act in this representative capacity and yet hold, at the same time, that the people cannot freely inform the government of their wishes would impute to the Sherman Act a purpose to regulate, not business activity, but political activity, a purpose which would have no basis whatever in the legislative history of the Act.

365 U.S. at 137 , 81 S.Ct. at 529 . Secondly, the Court stated:

The right of petition is one of the freedoms protected by the Bill of Rights, and we cannot, of course, lightly impute to Congress an intent to invade these freedoms.

Id.

at 138 , 81 S.Ct. at 530 .

The Court repeated its Sherman Act exception for trade association activities aimed at influencing governmental action in

United Mine Workers v. Pennington,

381 U.S. 657, 670 , 85 S.Ct. 1585, 1593 , 14 L.Ed.2d 626 (1965),

67

declaring that:

Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition. Such conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act.

Although the language of

Noerr

and

Pennington

sweeps broadly, the doctrine is not unlimited. The Court in

Noerr

recognized that the broad exemption from liability would not apply where trade activities purported to influence governmental action were a “mere sham,” noting:

There may be situations in which a publicity campaign, ostensibly directed toward influencing governmental action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified.

365 U.S. at 144 , 81 S.Ct. at 533 .

The Supreme Court elaborated on this “sham” exception to the Noerr-Pennington doctrine in

California Motor Transport Co. v. Trucking Unlimited,

404 U.S. 508 , 92 S.Ct. 609 , 30 L.Ed.2d 642 (1972). In that case, several highway carriers alleged that a competing truckers’ association had conspired to institute sham administrative and judicial proceedings opposing their competitors’ applications for operating rights. Plaintiffs maintained that as one result of the conspiracy they had been denied unlimited access to the courts and administrative agencies. The Court declared:

A combination of entrepreneurs to harass and deter their competitors from having “free and unlimited access” to the agencies and courts, to defeat that right by massive, concerted, and purposeful activities of the group are ways of building up one empire and destroying another. . . . If these facts are proved, a violation of the antitrust laws has been established. If the end result is unlawful, it matters not that the means used in violation may be lawful.

404 U.S. at 515 , 92 S.Ct. at 614. Yet while the Court found that attempts by trade associations to effectively bar opponents from equal participation in administrative and judicial proceedings were illegal, the Court at the same time reaffirmed and broadened the

Noerr-Pennington

doctrine by applying it in the administrative and judicial arenas. The Court concluded that:

it would be destructive of rights of association and of petition to hold that groups

*?

with common interests may not, without violating the antitrust laws, use the channels and procedures of state and federal agencies and courts to advocate their causes and points of view respecting resolution of their business and economic interests vis-a-vis their competitors.

Id at 510-11, 92 S.Ct. at 611-612.

68

The Court thus recognized that joint litigation by trade associations, if not pursued merely as a sham, is accorded the same immunity from Sherman Act liability as is given to the expression of political views in connection with legislative and executive actions.

A fortiori

the doctrine should apply to joint defense of legal proceedings as well. In applying the doctrine to judicial proceedings, lower courts have protected a trade association’s right to bring a lawsuit against competitors and to attack a statute favorable to competitors, so long as the litigation has not been pursued in bad faith as a sham.

See e. g., Handgards, Inc. v. Ethicon Inc.,

601 F.2d 986 (9th Cir. 1979),

cert. denied,

444 U.S. 1025 , 100 S.Ct. 688 , 62 L.Ed.2d 659 (1980);

Bracken’s Shopping Center, Inc.

v.

Ruwe,

273 F.Supp. 606 (S.D. Ill.1967).

Thus we see that a trade association’s joint lobbying and legal activities are protected under the

Noerr-Pennington

doctrine unless those activities can be found to constitute a sham, even if they have an anticompetitive intent or effect. We turn now to a discussion of the requisites for standing under §§ 4 and 16 of the Clayton Act.

B.

Statutory Antitrust Standing Under § 4 and § 16 of the Clayton Act

The statutory source of the antitrust treble-damage remedy is Section 4 of the Clayton Act, which specifically limits this remedy to “[a]ny person who shall be

injured

in his business or property

by reason of

anything forbidden in the antitrust laws.” 15 U.S.C. § 15 (emphasis added).

This statute, by its terms, limits recovery to those plaintiffs who can show that their injury was caused by the defendants’ violations. As the Supreme Court has recently stated, plaintiffs must show that their injury “flows from that which makes defendants’ acts unlawful.”

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,

429 U.S. 477, 489 , 97 S.Ct. 690, 697 , 50 L.Ed.2d 701 (1977). Plaintiffs cannot prevail unless they can demonstrate, by direct or circumstantial evidence, that this “necessary causal relation” exists.

Zenith Radio Corp. v. Hazeltine Research, Inc.,

395 U.S. 100, 125 , 89 S.Ct. 1562, 1577 , 23 L.Ed.2d 129 (1969);

Continental Ore Co. v. Union Carbide & Carbon Corp.,

370 U.S. 690, 697-700 , 82 S.Ct. 1404, 1409-1411 , 8 L.Ed.2d 777 (1962).

See also Bowen v. New York News, Inc.,

522 F.2d 1242, 1255-56 (2d Cir. 1975),

cert. denied,

425 U.S. 936 , 96 S.Ct. 1667 , 48 L.Ed.2d 177 (1976);

Rea v. Ford Motor Co.,

497 F.2d 577, 589 (3d Cir.),

cert. denied,

419 U.S. 868 , 95 S.Ct. 126 , 42 L.Ed.2d 106 (1974).

The Third Circuit has recently summarized the controlling principles of law:

Section 4 of the Clayton Act, 15 U.S.C. § 15 (1976), allows recovery only to a plaintiff who is injured “by reason of” a violation of the antitrust laws. The plaintiff has the burden of proving that the established illegality was a material cause of injury.

Zenith Radio Corp.

v.

Hazeltine Research, Inc.,

395 U.S. 100 , 114 n.9 [ 89 S.Ct. 1562 , 1571-1572 n.9, 23 L.Ed.2d 129 ] (1969). As we said in

Sound Ship Building Corp.

v.

Bethlehem Steel Co.,

533 F.2d 96 (3d Cir.),

cert. denied,

429 U.S. 860 [ 97 S.Ct. 161 , 50 L.Ed.2d 137 ] (1976), “[e]ven if a defendant’s acts are shown to be violative of the statute, ... a plaintiff may not recover unless a nexus to its own injury is also demonstrated.”

Id.

at 98. Similarly, in

Deaktor

v.

Fox Grocery Co.,

475 F.2d 1112 (3d Cir.),

cert. denied,

414 U.S. 867 [ 94 S.Ct. 65 , 38 L.Ed.2d 86 ] (1973), the district court di

*1158

rected a verdict for the defendant at the conclusion of the plaintiff’s case because the evidence demonstrating the connection between the alleged antitrust violations and the damages was too speculative to submit to the jury.

Id.

at 1114 . We affirmed, agreeing that although there was testimony about various reasons that might have caused the plaintiff’s losses, no specific cause was assigned by the plaintiff’s expert.

Id.

at 1117 .

.... It is not enough that the public has been harmed by a violation of the antitrust laws. The plaintiff seeking to recover treble damages must further establish as a matter of proof that the illegal conduct was a material cause of its injury.

Rea v. Ford Motor Co.,

497 F.2d 577, 589-90 (3d Cir.),

cert. denied,

419 U.S. 868 [ 95 S.Ct. 126 , 42 L.Ed.2d 106 ] (1974); L. Sullivan, Handbook of the Law of Antitrust § 251 (1978).

Van Dyk Research Corp. v. Xerox Corp.,

631 F.2d 251, 254-55 (3d Cir. 1980).

69

Plaintiffs in this case seek treble damages, but they also seek injunctive relief under § 16 of the Clayton Act, 15 U.S.C. § 26 , which authorizes such relief for any person who demonstrates “threatened loss or damage by a violation of the antitrust laws.” This provision imposes a lower threshold requirement than § 4 of the Clayton Act, which requires a showing of actual injury to “business or property.”

Hawaii v. Standard Oil Co.,

405 U.S. 251 , 92 S.Ct. 885 , 31 L.Ed.2d 184 (1972);

Bogus v. American Speech & Hearing Ass’n,

582 F.2d 277 (3d Cir. 1978).

Cf. NAACP v. New York Clearing House Ass’n,

431 F.Supp. 405 (S.D.N.Y. 1977). However, § 16 requires a plaintiff at least to demonstrate that any threatened loss or damage has been or will be proximately caused by the alleged violations, within the traditional legal concept of proximate cause.

Mid-West Paper Products Co. v. Continental Group, Inc.,

596 F.2d 573, 591-92 (3d Cir. 1979). The causation and standing issues which we consider herein involve basic concepts of proximate causation, rather than niceties in the interpretation of any particular statute. Accordingly, our discussion of standing issues in this opinion is fully as applicable to plaintiffs’ standing to seek injunctive relief under § 16 as it is to their standing to seek damage relief under § 4 of the Clayton Act.

70

Defendants attack plaintiffs’ standing under § 4 of the Clayton Act with respect to three different issues. First, they claim that the plaintiffs have no standing to attack the Manufacturers’ Agreements and JMEA Rules, which set minimum prices for exports to the U.S. and purportedly limited the number of U.S. customers to which Japanese exporters could sell, because as competing manufacturers, plaintiffs could not have been injured by an agreement to set minimum prices or to limit the number of customers. Second, they claim that Zenith’s failure to identify any damages flowing specifically from the defendants’ al

*?

leged violations of the Robinson-Patman Act, except insofar as it claims to have been injured by the alleged “unitary conspiracy” as a whole, is fatal to Zenith’s claims under the Robinson-Patman Act. Finally, defendants reiterate the latter argument with respect to Zenith’s claim under § 7 of the Clayton Act, contending that Zenith has failed to identify any injury to it as a result of the two acquisitions which it challenges under § 7. We discuss the first of these issues here, but defer our discussion of Zenith’s standing to assert its claims under the Robinson-Patman Act and § 7 of the Clayton Act until our separate discussion of those claims in Parts X and XI

infra,

respectively.

Plaintiffs have aimed much of their rhetorical fire at the Manufacturers’ Agreements and JMEA Rules, which they have characterized as “written cartel agreements.” Defendants rejoin that plaintiffs have no standing to attack these agreements because the agreements set

minimum

prices for exports to the U.S. and

limit

the number of U.S. customers of the signatory companies.

71

Defendants contend that neither of these provisions could conceivably injure the plaintiffs who, as competing manufacturers, could only be benefitted by higher prices and fewer competitors. We turn to the customer-limitation provision first.

The customer-limitation provision of the JMEA Rules, the so-called Five Company Rule, apparently limited a Japanese exporter of television receivers to a total number of five U.S. customers. As we explain in our more extensive discussion of the Rule in Part VII.F.2,

infra,

it was in practice wholly ineffective because each of the defendants was able under the rule to register as one of its five customers its U.S. subsidiary, which could in turn resell to any customer without limitation. Even if the Rule had operated effectively, however, we believe the plaintiffs would lack standing to attack it.

The economic effect of a customer limitation provision is inevitably to keep prices up by reducing competition; accordingly, antitrust decisions which condemn horizontal market division speak in terms of injury to consumers because of reduced price competition.

See, e. g., Burke v. Ford,

389 U.S. 320, 321-22 , 88 S.Ct. 443, 444 , 19 L.Ed.2d 554 (1967);

United States v. Sealy, Inc.,

388 U.S. 350, 356 , 87 S.Ct. 1847, 1852 , 18 L.Ed.2d 1238 (1967); L. Sullivan,

Handbook of the Law of Antitrust,

§ 82 (1978). In

Bowen v. New York News, Inc.,

522 F.2d 1242, 1255-56 (2d Cir. 1975),

cert. denied,

425 U.S. 936 , 96 S.Ct. 1667 , 48 L.Ed.2d 177 (1976), the Second Circuit held that the plaintiff had no standing to attack an exclusive territory arrangement among some of its competitors because the only possible effect of that arrangement was to reduce competition, to the plaintiffs’ benefit.

See also Dahl, Inc. v. Roy Cooper Co.,

448 F.2d 17, 20 (9th Cir. 1971);

Seago v. North Carolina Theaters, Inc.,

42 F.R.D. 627 (E.D.N.C.1966),

aff’d,

388 F.2d 987 (4th Cir. 1967),

cert. denied,

390 U.S. 959 , 88 S.Ct. 1039 , 19 L.Ed.2d 1153 (1968). The same principle precludes plaintiffs’ standing here to attack the Five Company Rule.

Plaintiffs’ lead counsel, Mr. Rome, faced with this analysis during final summary judgment argument, sought to fend the point as follows:

Now, with that as a factor in connection with it, I suggest that the cartel agreements and the rebate system as a unitary entity constituted a mechanism, the mechanism which enabled the defendants to pursue a course of conduct for depressing prices in the United States, as the result of which, aided by their five-company rule, they were permitted and enabled to concentrate each particular defendant’s competitive thrust against a particular mass merchandise customer in the U.S. and thereby deny the capability

*1160

of an American manufacturer to do business with that customer.

Pretrial Order No. 291 at 128. And again:

Since under the five-company rule they really were not competing for a particular customer against each other — and Your Honor will recall that only Toshiba and Sanyo dealt with Sears as an example — there was no need to agree upon an amount of rebate. As a practical matter, there was only the need to focus the attention of the competition against any potential U.S. manufacturer who was not a member of the cartel. As long as a particular defendant could come in at a depressed price below that which the U.S. manufacturer was proffering to try to get the business, that was enough.

Pretrial Order No. 291 at 120. The problem with the argument is that, where there is less competition, prices are inevitably kept up. We know of no rational explanation, and, although we pressed for it, plaintiffs have offered us none, why decreased competition would tend to bring prices down; rather, it is only increased competition, which the plaintiffs maintain the Japanese manufacturing defendants were attempting to avoid by the Rule, which could bring prices down, the low price being the evil about which plaintiffs are complaining.

72

While a consumer, or the attorney general, would have standing to object to high prices brought about by a limitation rule, these plaintiffs cannot be injured thereby, and accordingly lack standing to attack the Rule.

Turning to matters of price, the plaintiffs, in effect, concede that they would have no standing to bring an action based solely on the so-called “cartel agreements.” It is self-evident that an agreement which places a floor under the price one’s competition can charge keeps the price up, leaving one free to compete above that price. While injuring the consumer, such an agreement cannot injure the competitor.

In

Kearney & Trecker Corp. v. Giddings & Lewis, Inc.,

452 F.2d 579 (7th Cir. 1971),

cert. denied,

405 U.S. 1066 , 92 S.Ct. 1500 , 31 L.Ed.2d 796 (1972), for example, the Seventh Circuit, per Judge (now Justice) Stevens, upheld the defendants’ antitrust counterclaim against the plaintiff under § 2 of the Sherman Act, but remanded on the question whether the plaintiffs’ illegal conduct had injured the defendant so as to permit it to maintain a claim under § 4 of the Clayton Act, 15 U.S.C. § 15 . 452 F.2d at 597-600 . Notwithstanding the remand for further factual development as to several claims of injury, the court summarily rejected the defendants’ claim that, as a competing manufacturer, it could have been injured by the plaintiffs’ increased prices. Judge Stevens wrote:

Defendant has also argued that plaintiff’s dominant position, coupled with its restrictive licensing practices, has enabled it to enhance the price level. If this be so, defendant, as a competing manufacturer of machines, would not have been injured.

Id.

at 600 (footnote omitted).

Accord, Bendix Corp. v. Balax, Inc.,

471 F.2d 149 (7th Cir. 1972),

cert. denied,

414 U.S. 819 , 94 S.Ct. 43 , 38 L.Ed.2d 51 (1973);

Kemp Pontiac-Cadillac, Inc. v. Hartford Automobile Dealers’ Ass’n,

380 F.Supp. 1382, 1386 (D.Conn.1974).

*1161

Plaintiffs have never articulated any theory as to how the minimum-price provisions of the agreements injured them. Instead, they make three arguments in response to defendants’ attack on their standing. First, they contend that the minimum price level set by the agreements was itself unduly low. Second, they say that the minimum prices were not actually minima, but were “benchmark” or “reference” prices which were used by the defendants as points of reference for some lower figure arrived at by deducting a rebate or discount. Finally, they argue that the agreements are only one part of a “unitary conspiracy,” and that it is pointless to quibble over their standing to attack one piece of a vast conspiracy.

Plaintiffs’ argument that they have standing to attack the agreements because of the allegedly low level at which the minimum prices were set is without merit. No matter at what level the prices were set, the parties to the agreements remained free to sell at any price which equalled or exceeded the minimum price. Thus, the agreements curtailed each signatory’s independent freedom of action only insofar as it prohibited prices below the minima. The agreements had no impact on prices except in those instances when the signatories, if they had exercised their independent judgment, would have charged prices lower than the minima. In those instances, the agreements had the effect of raising prices. Since nothing in the agreements had the effect of lowering prices, no matter at what level the minimum prices were set, plaintiffs’ contention that the minimum prices were unduly low is of no significance.

Nor can the plaintiffs derive standing to attack the agreements from the contention that the prices set in accordance therewith were not actually minimum prices at all. As we have indicated, the evidence shows that many of the defendants, although they were parties to the Manufacturers’ Agreements or the JMEA Rules, paid rebates to their U.S. customers so that the actual transaction prices, taking the rebates into account, were lower than the official minimum prices set under those agreements. We will consider

infra

whether there is any significant probative evidence to support plaintiffs’ contention that these rebates were made as the result of concerted action among the defendants.

73

In any case, the fact that some defendants, whether independently or in concert, violated the written minimum-price agreements does not affect the narrow issue which we are now considering: whether the plaintiffs have standing to base an antitrust action on the written agreements themselves. The agreements on their face plainly set only minimum prices, and plaintiffs produced no evidence that, despite their language, the intent and purpose of the agreements was to require each signatory to sell at or below the minimum. Thus, plaintiffs’ suggestion that they have standing to attack the agreements themselves because some of the signatories violated them is without merit.

The plaintiffs’ third and most vociferous ground of opposition to the challenge to their standing is based on their theory of “unitary” conspiracy. Plaintiffs argue that the written agreements are only one element of proof in their conspiracy case, and that it makes no sense to discuss their “standing” with respect to a single piece of the pie. Moreover, any such analysis of one part of their conspiracy case, they submit, is “fragmentation” forbidden by

Continental Ore Co. v. Union Carbide & Carbon Corp.,

370 U.S. 690 , 82 S.Ct. 1404 , 8 L.Ed.2d 777 (1962).

Because plaintiffs’ “fragmentation” argument is interposed with respect to their entire case, we have treated it separately in Part VI.D.2,

infra.

In that discussion, we conclude that

Continental Ore

does not bar a detailed analysis of plaintiffs’ conspiracy case and supporting evidence. Accordingly, we hold that plaintiffs have no standing to attack the minimum price agreements or the Five Company Rule because it is inconceivable that they could be injured thereby. Since plain

*1162

tiffs have no standing to attack the minimum-price agreements, those agreements cannot form the “core” of their conspiracy case. The essence of the case must instead (as plaintiffs themselves now assert) lie in the alleged conspiracy to violate the agreements. Yet it is obvious that the agreements themselves cannot be evidence of a conspiracy to violate those same agreements. While the agreements may be admissible to provide background on the defendants’ conduct, they are of no probative force in establishing the existence of the entirely different conspiracy which might indeed have injured the plaintiffs, if it existed, and which plaintiffs do have standing to attack.

C.

The Wilson Tariff Act

In addition to plaintiffs’ claims under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, plaintiffs allege that certain defendants’ conduct in importing electronic products into the United States violated § 73 of the Wilson Tariff Act, 15 U.S.C. § 8 . Section 73 of the Wilson Tariff Act provides in relevant part that

Every combination, conspiracy, trust, agreement, or contract is declared to be contrary to public policy, illegal and void when the same is made by or between two or more persons or corporations, either of whom, as agent or principal, is engaged in importing any article from any foreign country into the United States and when such combination, conspiracy, trust, agreement, or contract is intended to operate in restraint of lawful trade, or free competition in lawful trade or commerce, or to increase the market price in any part of the United States of any article or articles imported or intended to be imported into the United States, or of any manufacture into which such imported article enters or is intended to enter.

15 U.S.C. § 8 . Plaintiffs have never clearly stated the nature of their claim under the Wilson Tariff Act. However, given the tenor of what the parties have written on the point, we appear to be confronted with the constructional question whether the Wilson Tariff Act is broader than, narrower than, or co-extensive with the Sherman Act’s antitrust provisions.

Plaintiffs intimate, though they do not clearly state, that the Wilson Tariff Act may have protectionist aspects, and hence a broader scope than the Sherman Act. In their scores of briefs, they devote only one short segment to explication of their interpretation of the Wilson Tariff Act. There they emphasize the remarks of the sponsor of Section 73 of the Wilson Tariff Act that the provision punishes “the intent to abuse the importation laws of the United States.” 26 Cong.Rec. 7118 (1894). Defendants take a polar position, asserting that the Wilson Tariff Act is narrower in scope than the Sherman Act and applies only to high price conspiracies. They argue that Congress established in the Wilson Tariff Act its own per se rule as to price fixing conspiracies designed to

increase

the price of imports to the United States. This provision, they continue, only demonstrated the intention of the 1894 Congress to prevent unreasonably

high

import prices and not, as plaintiffs would have it, “unreasonably”

low

prices.

Although the position advocated by plaintiffs has been advanced before, the defendants’ argument is novel. However, we have no difficulty with the points and reject both contentions in favor of the view that the Wilson Tariff Act is co-extensive with Sherman Act § 1 (in the international context).

We address plaintiffs' claims first. The legislative history of the Wilson Tariff Act confirms that the purpose of Section 73 was substantively identical to the Sherman Act. The Senate Reports on the bill designate Section 73 as an antitrust provision by referring to it as “a substitute” for Sections 1-3 of the Sherman Act. S.Rep.No.698; 53rd Cong. 2d Sess. (Aug. 20,1894); S.Rep. No.707, 53rd Cong. 2d Sess. (Aug. 28,1894). Senator Morgan of Alabama, sponsor of the amendments to the tariff bill that eventually became Sections 73-76 of the Wilson Tariff Act, repeatedly emphasized that the language of the amendments clearly and effectively accomplished “the end that is

*?

desired — that is to say, the repression of trusts, as they are called, in respect of the importation of goods from foreign countries.” 26 Cong.Rec. 7117, 53rd Cong. 2d Sess. (July 3, 1894). Senator Morgan went on to elaborate:

So under the bill we are now considering is afforded distinct opportunity for the formation of thousands of trusts. You can not exclude them from this country except by means of direct and positive legislation which reaches the abuse of the importing right and prevents it from entering into such combinations with capital as will enable the importer or the person interested in imports to control the prices in the market; in other words, in common parlance, to monopolize the market.

Id.,

26 Cong.Rec. 7118 (1894). This is, of course, antitrust language. Nowhere in his speeches on the Senate floor did Senator Morgan mention any protectionist intent to aid American manufacturers.

The case law has been consistent in treating the Wilson Tariff Act as an antitrust statute, and as nothing more than that. Judge Schwartz gave an accurate description of prior case law under the Wilson Tariff Act in

Outboard Marine Corp. v. Pezetel,

461 F.Supp. 384 (D.Del.1978). The plaintiff in

Pezetel ,

an American manufacturer of electric golf carts, noting that the defendants, the manufacturer, importer, and distributors of golf carts made in Poland, had set prices for the carts in the American market against which most American manufacturers were unable to compete, alleged

inter alia

a violation of the Wilson Tariff Act. The plaintiffs argued that “since the Sherman Act by its terms applies to foreign trade, the scope of the Wilson Tariff Act is rendered superfluous unless it is interpreted independently of the Sherman Act.”

Id.

at 407 . Apparently this claim, like plaintiffs’ claim in this case, was vague enough to imply that the Wilson Tariff Act was more than an antitrust statute, containing an intent to protect American manufacturers by outlawing conduct which the Sherman Act did not. The court dismissed plaintiffs’ contention that the Wilson Tariff Act be given a wider scope than the Sherman Act:

[Although superficially attractive, the argument is without the support of either the legislative history or case law. Rather it appears that the Wilson Tariff Act sought to make clear that import trade was subject to the scrutiny of the antitrust laws — a subject on which the Sherman Act was silent.

Id.

74

Judge Schwartz’ opinion reflects the consensus among the commentators and in the case law that the Wilson Tariff Act is not broader than the Sherman Act.

75

Where courts have found sufficient allegations of violations of the Sherman Act in the import context, they have invariably found sufficient allegations of violation of the Wilson Tariff Act as well.

76

If allegations are insufficient to maintain an antitrust claim, the Wilson Tariff Act provisions also fail.

77

*1164

Having concluded that the Wilson Tariff Act is not broader in scope than the Sherman Act, the second question presented, and not addressed in previous cases, is whether the Wilson Tariff Act applies only to alleged high price conspiracies and hence is narrower than the Sherman Act. Defendants bottom their argument that the purpose of the Wilson Tariff Act was only to prevent “unreasonably high import prices” and not “unreasonably low prices” upon certain observations by Judge Frank in his dissenting opinion in

Adams-Mitchell Co. v. Cambridge Distributing Co.,

189 F.2d 913, 920 (2d Cir. 1951). Judge Frank therein stated:

[The Wilson Tariff Act] was pro-consumer legislation, designed to cut the cost of living by loweri

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