Concerted Actions and Parallel Conduct in Anti-Monopoly Law
Capital Legal Services
Russian anti-monopoly law, like that of other CIS countries, does not distinguish between the concepts of “concerted actions” and “parallel conduct.” It appears reasonable then that Russian and CIS courts do not see “parallel conduct” as a separate legal concept and instead consider it to be “concerted actions.”
At the same time, practice in the United States and EU, including in courts, shows that the international implementation of anti-monopoly law continues to form an approach in which parallel conduct, in a number of cases, is not seen as concerted actions, which are so vilified in the anti-monopoly laws of many developed countries, and is therefore not subject to the relevant sanctions.
U.S. and European courts afford companies the opportunity to protect their interests if charged with breaching anti-monopoly law for concerted actions. The companies can argue their behavior on the market as being lawful parallel conduct that does not hinder the competition but instead is one of the signs of actual competition taking place.
Starting from the 1950s, U.S. courts have seen a number of anti-monopoly cases that examine defendant companies engaged in parallel conduct.
The U.S. courts, being guided by the principles of Bell Atlantic Corp. vs. Twombly, have started to turn down anti-monopoly private law claims if there are grounds for a connection between parallel conduct by companies and objective market conditions, lawful transactions or general business practice.
Capital Legal Services
In light of Bell Atlantic Corp. vs. Twombly, a whole array of material factors that U.S. courts take into account when determining concerted actions among companies has changed. Earlier such factors included the following: motive and possibility of collusion, simultaneous adjustment of prices and manufacturing specifications, degradation in quality and availability of goods. U.S. courts have lately been displaying a steady practice in which their decisions are based more on the defendants’ conduct of simultaneous actions without plausible cause and to their own economic detriment, as well as on facts directly proving concerted actions.
EU laws, as well as U.S. federal laws, do not distinguish between concerted actions and parallel conduct. This question, just as in the United States, is resolved based exclusively on court precedents.
One of the most significant resolutions on parallelism is the decision on the Dyestuffs case made by a European court in 1972. This decision recognized that direct parallel conduct by businesses is lawful and, furthermore, that every business has the right to set prices with due consideration of the present and future price policy of its competitors.
The position of the court given in the Dyestuffs case was later elaborated in another widely-known decision on the Wood Pulp case made by a European court in 1993. The court resolved that parallelism as such cannot serve as evidence of concerted actions of companies, save for cases in which prior agreement is the only possible explanation for the companies’ conduct. A ban on concerted actions, in the court’s opinion, does not deprive companies of the right to adapt to market conditions in light of actions of the competition.
This year, Russian anti-monopoly bodies and commercial arbitration courts have started voicing the possibility of delineating concerted actions and parallel conduct.
The chief of the Russian Federal Anti-Monopoly Service, Igor Artemyev, when presenting the so-called “third anti-monopoly package of laws” to members of the Russian Union of Industrialists and Entrepreneurs, assured them that the concept of concerted actions will be changed by adding certain criteria that will allow their differentiation from parallel conduct.
Additionally, proposals were voiced at a meeting of the Presidium of the Supreme Commercial Arbitration Court of the Russian Federation to provide companies with the opportunity to prove that no violation of anti-monopoly law has taken place on their part while stating objective reasons for their conduct on the commodities market and asserting that their actions were not based on actions of other parties. A proposal was also made to consider actions of companies on the relevant market to be concerted only if they are knowingly aimed at restricting the competition on a given commodities market.
We welcome the fact that the Russian legal community is holding discussions on the issue of delimiting concerted actions and parallel conduct, and we agree that not all concerted actions are in effect a conscious cooperation that replaces competition among market participants and hinders the consumer.
At the same time, the following factors may, in our view, obstruct implementation of the voiced proposals on the separate classification of parallel conduct and companies performing such conduct being released from sanctions by anti-monopoly laws:
- a fine line between parallel conduct and concerted actions;
- apprehension that market participants, having acquired the opportunity to refer to parallel conduct, will seek to avoid liability for the actual violation of anti-monopoly laws;
- no approach existing in Russian law studies for the understanding of parallel conduct in anti-monopoly law.