The opinion of the court was delivered by: ALESIA
In this three-count action, the plaintiff, Reserve Supply Corp. ("Reserve"), alleges horizontal price-fixing and discriminatory pricing in the residential fiberglass insulation industry. Reserve is a cooperative with a membership of approximately 379 lumber dealers. The defendants, Owens-Corning Fiberglas Corporation ("Owens-Corning") and CertainTeed Corporation ("CertainTeed"), both manufacture and sell fiberglass insulation products.
The defendants' motion for summary judgment as to Counts I and III of the complaint are before the Court. Count I alleges that Owens-Corning and CertainTeed violated the Sherman Act by conspiring with each other, as well as other unnamed manufacturers, to fix prices in the residential fiberglass insulation industry. 15 U.S.C. § 1. Count III charges the defendants with unfair competition under the Illinois Consumer Fraud and Deceptive Business Practices Act. Ill. Rev. Stat. (1984) ch. 121 1/2, para. 261 et seq. Additionally, Owens-Corning individually seeks summary judgment as to Count II of the complaint. Count II alleges that Owens-Corning violated the Robinson-Patman Act by selling fiberglass insulation products to Reserve's competitors for less than the price that Owens-Corning charged Reserve.
15 U.S.C. § 13(a). For the reasons set forth below, the court grant the defendants' motions for summary judgment.
A. Summary Judgment Standard
Summary judgment is available when the pleadings and supplemental materials present no issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265 , 106 S. Ct. 2548 (1986). The court must construe the facts alleged in the complaint in the light most favorable to the party opposing the motion for summary judgment. Oxman v. WLS-TV, 846 F.2d 448, 452 (7th Cir. 1988). Summary judgment, however, "may be especially appropriate in an antitrust case because of the chill antitrust litigation can have on legitimate price competition." Indiana Grocery. Inc. v. Super Valu Stores, Inc., 864 F.2d 1409, 1412 (7th Cir 1989), citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594-95, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Therefore, an antitrust plaintiff opposing summary judgment must present evidence that tends to exclude the possibility that the defendant's conduct was as consistent with competition as with illegal conduct. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 79 L. Ed. 2d 775 , 104 S. Ct. 1464 (1984). An antitrust plaintiff "must show that an inference of antitrust conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed the plaintiff." Matsushita, 475 U.S. at 588. Direct or circumstantial evidence should be presented which reasonably tends to prove a "meeting of the minds" or a "conscious commitment to a common scheme designed to achieve an unlawful objective" to exclude the possibility that defendants were acting independently. Monsanto, 465 U.S. at 764 (citation omitted). It is with these standards in mind that the court addresses the defendants' motions.
B. Count I Sherman Act Violations
Reserve characterizes the fiberglass building insulation industry as oligopolistic, where prices do not fluctuate purely in relation to supply and demand. Reserve alleges that only the existence of joint action by CertainTeed and Owens-Corning can explain a lack of price competition in the insulation market. Reserve further asserts that the cumulative effect of this alleged joint action resulted in Reserve paying more for its insulation than its main competitor-distributors. Reserve contends that Owens-Corning and CertainTeed allegedly adopted a "reactive pricing strategy . . . [designed] to meet, but not beat, competition." (Reserve Response, p. 2.) Parallel business behavior, or "conscious parallelism," is circumstantial evidence which a court may rely upon to infer collusion. Weit v. Continental Illinois Nat'l Bank & Trust Co., 641 F.2d 457, 462 (7th Cir. 1981) (citation omitted), cert. denied 455 U.S. 988, 71 L. Ed. 2d 847 , 102 S. Ct. 1610 (1982). "However, when defendants come forward with denials sufficient to shift the burden under Rule 56(e), plaintiffs must come forward with some significant probative evidence which suggests that conscious parallelism is the result of an unlawful agreement." Id. (citation omitted). Thus, the court examines the parties' evidence in light of these standards.
1. Communications Among Insulation Manufacturers
Reserve asserts that fiberglass insulation manufacturers exchanged pricing information through direct communication as well as advance price announcements. Reserve offers evidence of a communication between a Johns-Manville employee and an Owens-Corning employee indicating that Johns-Manville intended to restrict output. The record demonstrates, however, that the discussion, which occurred at an industry trade meeting, related to neither pricing nor to a restriction of output by either company. The Johns-Manville representative only stated that he "anticipated very little increase" in "total industry capacity." (Zinn Deposition, pp. 13-14.) Furthermore, the Owens-Corning employee testified that he did not comment about Owens-Corning's intentions concerning output. Id. The communication "may fairly be described as chit-chat among industry acquaintances in the field." American Floral Services, Inc. v. Florists' Transworld Delivery Assoc., 633 F. Supp. 201, 214 (N.D. Ill. 1986). Moreover, evidence of meetings alone is insufficient to permit a jury to infer an illegal agreement. Hanson v. Shell Oil Co., 541 F.2d 1352, 1359 (9th Cir. 1976), cert. denied, 429 U.S. 1074, 50 L. Ed. 2d 792 , 97 S. Ct. 813 (1977). The only other evidence of direct contact among insulation manufacturers involved a CertainTeed salesperson who, on two occasions, contacted a counterpart at Johns-Manville to verify the accuracy of quotes that a customer requested that CertainTeed meet. Reserve, however, does not rebut CertainTeed's testimony that the salesperson in question had no pricing authority and acted contrary to instructions not to discuss prices with competitors. The communications at issue are similar to those in Weit, 641 F.2d at 464-65, where the Seventh Circuit affirmed summary judgment in favor of five banks accused of conspiring to fix interest rates. There, like here, the defendants met the plaintiffs allegations with sworn denials, and the plaintiffs could point to only two instances where the defendants discussed interest rates. The court found that the two statements, "even when coupled with rate parallelism and an opportunity to conspire," did not constitute "significant probative evidence." Id. (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 290, 20 L. Ed. 2d 569 , 88 S. Ct. 1575 (1962)).
Reserve alleges that insulation manufacturers signalled pricing intentions to each other through advance price announcements and price lists. Reserve argues that price lists are obsolete, as no fiberglass insulation buyer pays list price and therefore, their use is probative of collusion. The Supreme Court has held, however, that "the dissemination of price information is not itself a per se violation of the Sherman Act." United States v. Citizens & Southern Nat'l Bank, 422 U.S. 86, 113, 45 L. Ed. 2d 41 , 95 S. Ct. 2099 (1975). Price announcements might be impermissible if they were exchanged privately between manufacturers, or were the product of a prior agreement. See United States v. General Motors Corp., 1974-2 Trade Cas. (CCH) para. 75,253, at 97,671 (E.D. Mich. 1974) (even a public pricing announcement "cannot be twisted into an invitation or signal to conspire"). Here, Owens-Corning and CertainTeed communicated their price lists and announcements directly to their customers. Furthermore, even though insulation manufacturers offered predictable, across the board, discounts off list price to all customers, manufacturers also offered discounts by a customer-by-customer basis in attempts to meet lower competitive offers. Reserve offers no proof that individual customer pricing was parallel, or that the defendants published price lists because of a prior agreement. Therefore, the Court considers Reserve's evidence as to the manufacturers' communications to be inadequate to establish joint action.
2. Other Circumstantial Evidence
Reserve, though, broadly contends that collusion in the fiberglass insulation industry is plausible. But "the mere opportunity to conspire, even in the context of parallel business conduct, is not necessarily probative evidence." Weit, 641 F.2d at 462 (citation omitted). Therefore, Reserve attempts, as it must, to demonstrate that "the defendants acted in such a way that, but for a hypothesis of joint action, would not be in . . . [their] own self-interest." Illinois Corporate Travel, Inc. v. American Airlines, Inc., 806 F.2d 722, 726 (7th Cir. 1986). Reserve offers four items of circumstantial evidence to raise a genuine issue of material fact that Owens-Corning and CertainTeed acted contrary to their self-interest.
First, Reserve alleges that, in a period of depressed sales and excess capacity, the defendants increased prices instead of decreasing them to attract sales. Reserve argues that this conduct "defeats the laws of economics and is probative of collusion." (Reserve Response, p. 10) The defendants' unrebutted evidence, however, demonstrates that increasing costs played a significant role in their price increases. (Owens-Corning 12(e) Stmt., para. 20-22; CertainTeed 12(e) Stmt., para. 9-51) Moreover, the demand for fiberglass building insulation is largely driven by housing starts and is accordingly inelastic, as Reserve acknowledges in its response. (Reserve Response, p. 10) A drop in insulation prices does not necessarily expand demand. Also, Owens-Corning argues that lowering prices only makes sense if price decreases result in additional sales revenue, greater than the loss in revenue resulting from lower prices. Like customers in other highly concentrated industries, buyers of fiberglass insulation promptly report price reductions by one manufacturer to other manufacturers, requesting that the price be met. See e.g. E.I. Du Pont De Nemours & Co. v. Federal Trade Commission, 729 F.2d 128, 134 (2d Cir. 1984) (immediate communication by "large, sophisticated and aggressive buyers" when one of only three gasoline additive producers changed price). The evidence submitted by the parties demonstrates that Owens-Corning, CertainTeed, and other competing manufacturers immediately match prices to prevent losses in market share. Considering the structure of the insulation market, then, the defendants' actions during ...