Antitrust Claim Rejected: Parent Company Cannot “Conspire” with Majority-Owned and Controlled Subsidiary

A private-equity firm and its majority-owned subsidiary preserved a defense summary judgment on antitrust conspiracy and monopolization claims in OJ Commerce, LLC v. KidKraft, Inc., 34 F.4th 1232 (11th Cir. May 24, 2022). Building on the Supreme Court’s holding that a parent company cannot engage in unlawful “concerted activity” with a wholly owned subsidiary, Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 767 (1984), the Eleventh Circuit held that the same rule applies to parent companies and the subsidiaries that they control through simply majority ownership. As long as the parent company and subsidiary do not compete with each other in the relevant market, they share a single “corporate consciousness” and “are incapable of conspiring for purposes of section one” of the Sherman Act.

The court also rejected the plaintiffs’ monopolization claim under section two of the Sherman Act. That claim was based on refusal-to-deal and monopoly-maintenance allegations that the court concluded were not supported by the evidence. The court explained that because “an antitrust plaintiff cannot rely on evidence of reduced intrabrand competition alone but must offer evidence connecting that reduction to ‘marketwide’—that is, interbrand—‘increased prices or reduced output,’” showing that the defendants had cut off one of the plaintiffs from selling a defendant’s specific brand was not enough. Nor had the plaintiffs shown that the defendants’ alleged exclusive dealing had substantially foreclosed competition in the relevant market.

Posted by Lee Peifer.

Back to top