01-3565 In re High Fructose Corn Syrup Antitrust Litigation

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“We shall now summarize the evidence of explicit agreement, first noting however that the district judge refused to consider any of this evidence because he thought its character was such as to ‘require that a substantial inference be drawn in order to have evidentiary significance.’ This is correct in the sense that no single piece of the evidence that we’re about to summarize is sufficient in itself to prove a price-fixing conspiracy. But that is not the question. The question is simply whether this evidence, considered as a whole and in combination with the economic evidence, is sufficient to defeat summary judgment. The judge may have been confused by the language found in cases such as In re Baby Food Antitrust Litigation, 166 F.3d 112, 118 (3d Cir. 1999), that ‘direct evidence in a Section 1 conspiracy must be evidence that is explicit and requires no inferences to establish the proposition or conclusion being asserted.’ We tried in Troupe v. May Department Stores Co., 20 F.3d 734, 736- 37 (7th Cir. 1994), to straighten out the confusing (and, as it seems to us, largely if not entirely superfluous) distinction between direct and circumstantial evidence. The former is evidence tantamount to an acknowledgment of guilt; the latter is everything else including ambiguous statements. These are not to be disregarded because of their ambiguity; most cases are constructed out of a tissue of such statements and other circumstantial evidence, since an outright confession will ordinarily obviate the need for a trial.

“Here at any rate is the plaintiffs’ evidence, which the district judge should not have disregarded, that there was an explicit agreement to fix prices: One of Staley’s HFCS plant managers was heard to say: ‘We have an understanding within the industry not to undercut each other’s prices.’ … A Staley document states that Staley will ‘support efforts to limit [HFCS] pricing to a quarterly basis.’ Presumably the reference is to efforts by its competitors. The president of ADM stated that ‘our competitors are our friends. Our customers are the enemy.’ This sentiment, which will win no friends for capitalism, was echoed by a director of Staley’s parent company who said in a memo to Staley executives that ‘competitors[‘] happiness is at least as important as customers[‘] happiness.’ … Andreas, a principal figure in the lysine and citric acid price-fixing conspiracies, also referred to Cargill’s president as a ‘friendly competitor’ and mentioned an ‘understanding between the companies that . . . causes us not to . . . make irrational decisions.’ In a discussion with a Japanese businessman indicted along with Andreas for fixing the price of lysine, Andreas compared the relations between ADM and Cargill to those between Mitsubishi and Mitsui, two Japanese conglomerates widely believed to fix prices and allocate markets… A handwritten Cargill document refers under the heading ‘competitors’ to ‘entry of new entrants (barriers) and will they play by the rules (discipline).’ A price-fixing conspiracy increases the attractiveness of entry into a market by creating a wedge between price and cost. And so conspirators will naturally worry whether, if there is entry, the new entrant will join rather than compete with the conspiracy and, if he refuses to join, whether the conspirators can punish him in some way. This is not the only possible interpretation of the document, but it is a plausible one.

“Shortly after the FBI raided ADM’s headquarters seeking evidence of the company’s involvement in the lysine and citric-acid conspiracies, Terrence Wilson, the head of ADM’s corn processing division-the division responsible for HFCS as well as for the other two products-said he didn’t know ‘what other companies [the FBI] hit. . . . I don’t know . . . if they hit Staley or not.’ Since Staley did not manufacture lysine or citric acid, but did of course manufacture HFCS, Wilson may have been expressing a concern that the FBI would uncover evidence of an HFCS pricefixing conspiracy as well… There may be an answer (pure coincidence, perhaps, or a change in the structure of the HFCS industry that suddenly made tacit collusion more attractive)-a point with general application to our review of the evidence that favors the plaintiffs-but its adequacy presents a genuine issue of material fact and therefore cannot be determined on summary judgment. And in a civil case price fixing need be proved only by a preponderance of the evidence.”

Reversed and remanded.

Appeal from the United States District Court for the Central District of Illinois, Mihm, J., Posner, J.