Saturday, February 28, 2009

Page on the Gary Dinners

William H. Page, University of Florida College of Law, has posted a paper on an important chapter in the history of antitrust in the United States, The Gary Dinners and the Meaning of Concerted Action, forthcoming in the SMU Law Review. Here is the abstract:
Between 1907 and 1911, executives of American steel manufacturers gathered in a series of social events and meetings that became known as the Gary dinners. Their founder, Judge Elbert H. Gary, chairman of the board of the United States Steel Corporation, believed the dinners were a lawful way to stabilize steel prices by fostering information-sharing and an ethos of cooperation among manufacturers. The government agreed that the dinners stabilized prices, but took a different view of their legality. It brought suit in 1911, pointing to the dinners as one of the reasons why the court should dissolve U.S. Steel as an illegal monopoly. In 1915, a trial court composed of four members of the Third Circuit held that the dinners amounted to price fixing, but that U.S. Steel's resort to them only proved that it could not control steel prices on its own and therefore could not have monopolized the industry. In 1920, the Supreme Court affirmed.

Commentators have long questioned the Court's result on the issue of monopolization. In this essay, however, I focus on the intermediate conclusion that the dinners were concerted action, even though the participants avoided forming any verbal agreements about prices. I first describe the legal and historical circumstances in which the dinners occurred and what happened at them. I then examine the court's analysis of the dinners and extract some lessons that might help modern courts clarify the boundaries of the agreement requirement.
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