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ZENITH RADIO CORP. v. MATSUSHITA ELEC. INDUS. CO.

UNITED STATES DISTRICT COURT, EASTERN DISTRICT OF PENNSYLVANIA


March 27, 1981

ZENITH RADIO CORPORATION, Plaintiff,
v.
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., et al. Defendants. NATIONAL UNION ELECTRIC CORPORATION, Plaintiff, v. MATSUSHITA ELECTRIC INDUSTRIAL CO.., LTD., et al. Defendants. In re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION

The opinion of the court was delivered by: BECKER

[EDITOR'S NOTE: Part 1 of 3]

TABLE

 OPINION AND ORDER

 I. Preliminary Statement

 This opinion addresses defendants' motions for summary judgment as to plaintiffs' conspiracy claims under § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, as well as their claims under § 2 of the Sherman Act, 15 U.S.C. § 2, § 73 et seq. of the Wilson Tariff Act, 15 U.S.C. § 8 et seq., § 7 of the Clayton Act, 15 U.S.C. § 18, and the Robinson-Patman Act, 15 U.S.C. § 13(a). For reasons which will be set forth herein at length, we will grant defendants' motions. *fn1" As will be seen, the touchstone of this decision lies in the fact that our intensive examination of the enormous record in this case has revealed that, despite years of discovery, the plaintiffs have failed to uncover any significant probative evidence that the defendants entered into an agreement or acted in concert with respect to exports to the United States in any manner which could in any way have injured the plaintiffs.

 The mission of the summary judgment procedure is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Advisory Committee Note to 1963 Amendment of Fed.R.Civ.P. 56(e). In this case that mission has become a veritable odyssey, one upon which we embarked some twenty-three months ago, in April of 1979, when motions for summary judgment addressed to plaintiffs' conspiracy claims were first heard. At that time consideration of the summary judgment motions was postponed because the record was as yet too amorphous to permit its meaningful consideration. That situation has now changed. Thorough scrutiny of plaintiffs' proof has been made possible by the filing, with preclusionary effect, of plaintiffs' voluminous Final Pretrial Statement (FPS), setting forth the facts they intend to prove at trial; by the holding of five weeks of evidentiary hearings which considered the admissibility of plaintiffs' key evidence; and by an intensive period of preparation for and a seven-day argument of the conspiracy summary judgment motions. *fn2"

 The pretrial evidentiary or "in limine " hearings were primarily designed to evaluate the admissibility of the principal evidence that plaintiffs advanced in opposition to the defendants' motions for summary judgment respecting plaintiffs' conspiracy claims. The hearings were necessary because a summary judgment motion must be decided upon evidence that would be admissible or usable at trial, and defendants had challenged the admissibility of much of plaintiffs' proposed evidence. *fn3" In addition, the hearings were designed to afford plaintiffs the opportunity to present sufficient evidence aliunde of the existence of a conspiracy and its membership to permit the admission into evidence of the hearsay statements of coconspirators under F.R.E. 801(d)(2) (E). See Part VI.D.6, infra.

 The hearings spawned a trilogy of lengthy and extremely detailed opinions. The first, filed August 7, 1980, 505 F. Supp. 1125, addressed the admissibility of certain public records and reports under F.R.E. 803(8)(C); the second, filed September 29, 1980, 505 F. Supp. 1190, concerned the admissibility of materials relating to activities in Japan; and the third, filed December 10, 1980, 505 F. Supp. 1313, dealt with the admissibility of plaintiffs' expert testimony. Because these opinions, which will be summarized in Part IV, infra, exclude the most critical evidence in plaintiffs' case, they impact significantly upon the present summary judgment motion. Therefore, we consider the evidentiary trilogy an integral part of this opinion and hereby incorporate it by reference herein. *fn4"

 We shall not herein discourse upon the complexity of this case. Our opinion on the jury trial issue, 478 F. Supp. 889 (E.D.Pa.1979), and that of the Court of Appeals, 631 F.2d 1069 (3d Cir. 1980), as well as our opinion on subject matter jurisdiction, 494 F. Supp. 1161 (E.D.Pa.1980), which served to introduce the summary judgment motions, more than adequately portray the complexity of the issues and sketch the contours of that other facet of the case's complexity the paper mountain which it has generated. The evidentiary trilogy expands upon that sketch and this opinion, which concentrates upon the record, completes the picture in replete detail. We shall, however, take the time in this Preliminary Statement to describe again, albeit briefly, the parties and the issues.

 The plaintiffs in this action are Zenith Radio Corporation ("Zenith") and National Union Electric Corporation ("NUE"). NUE, the corporate successor to Emerson Radio Co., one of the pioneer manufacturers in the radio and television industry, ceased all production of television receivers in February of 1970. *fn5" That December it filed the first of these suits, *fn6" alleging that the Japanese defendants and others had conspired to take over the American consumer electronic products (CEP) industry *fn7" and thereby to drive NUE out of business. In 1974 Zenith filed an action making similar allegations. *fn8" The NUE action was then transferred to this district for coordinated or consolidated pretrial proceedings with the Zenith action; *fn9" the transfer was later made unconditional and the actions were consolidated for trial. *fn10"

 The ten principal defendants are seven Japanese manufacturers of consumer electronic products (Matsushita Electric Industrial Co., Ltd. ("MEI"); Toshiba Corporation; Hitachi, Ltd.; Sharp Corporation; Sanyo Electric Co., Ltd.; Sony Corporation; and Mitsubishi Electric Corporation ("MELCO")); *fn11" a Japanese trading company (Mitsubishi Corporation) ("MC"); and two American companies (Sears, Roebuck & Co. and Motorola, Inc.). Fourteen other defendants are subsidiaries of the principal Japanese defendants. Of the twenty-four defendants, fifteen are defendants in both suits, seven in the Zenith action only, and two in the NUE action only. *fn12"

  In addition to the twenty-four named defendants the plaintiffs have identified scores of alleged coconspirators whose business operations traverse the globe, ranging from small Japanese companies to such world industrial giants as N.V. Philips Gloeilampenfabrieken and General Electric. The majority of the alleged coconspirators are other Japanese manufacturers and American importers.

 The particular offenses charged in the complaints span the range of the antitrust laws. The overall conspiracy is alleged to violate §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2. Plaintiffs also allege actual and attempted monopolization and conspiracy to monopolize under § 2 of the Sherman Act. Additionally, they allege that the defendants have violated § 801 of the Revenue Act of 1916, better known as the 1916 Antidumping Act, 15 U.S.C. § 72, by "commonly and systematically," with predatory intent, selling their products in this country for substantially less than their actual market value or wholesale price in Japan. *fn13" The defendants are also charged with violating the Robinson-Patman Act, 15 U.S.C. § 13(a), by discriminating in price among American purchasers. *fn14" Finally, Zenith charges that Sears, Motorola, and the Matsushita and Sanyo defendants, along with their coconspirators, violated § 7 of the Clayton Act, 15 U.S.C. § 18, in connection with the Japanese companies' acquisitions of interests in United States consumer electronic products manufacturers. *fn15"

 The plaintiffs' papers seek to portray a massive, continuing unitary worldwide conspiracy said to have lasted over a period of more than twenty years, *fn16" the purpose of which is said to be the destruction of the American consumer electronic products industry. Although plaintiffs have embellished this theme with numerous variations, to be described in Part II of this opinion, in general this objective is alleged to have been accomplished by means of a two-pronged "unitary" conspiracy: a (successful) conspiracy to charge artificially high prices to consumers in Japan which funded or "war-chested" a (successful) conspiracy to sell in the U.S. at artificially low prices. *fn17"

  The summary judgment motion which we address herein is but one of many which have been interposed. We have already heard argument on a number of motions addressed to other discrete issues, and have disposed of most of them. We have (1) denied a motion seeking summary judgment for lack of subject matter jurisdiction, see Opinion (Introduction to Summary Judgment Motions; Subject Matter Jurisdiction), Zenith Radio Corp. v. Matsushita Electric Industrial Co., 494 F. Supp. 1161 (E.D.Pa.1980); (2) granted in major part defendants' motion for summary judgment on those claims arising under § 801 of the Revenue Act of 1916, better known as the 1916 Antidumping Act, 15 U.S.C. § 72, see Opinion and Order (1916 Antidumping Act), Zenith Radio Corp. v. Matsushita Electric Industrial Co., 494 F. Supp. 1190 (E.D.Pa.1980), appeal pending, No. 80-2080 (3d Cir.); (3) denied a motion for summary judgment brought by certain defendants against Zenith on the ground that Zenith was not directly injured and was therefore barred from recovery under the doctrine of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), see Opinion and Order (Indirect Injury Illinois Brick ), Zenith Radio Corp. v. Matsushita Electric Industrial Co., 494 F. Supp. 1246 (E.D.Pa.1980); (4) denied a motion asserting that NUE lacked standing to sue under the doctrine of Bangor Punta Operations, Inc. v. Bangor & Aroostook R. Co., 417 U.S. 703, 94 S. Ct. 2578, 41 L. Ed. 2d 418 (1974), see Opinion and Order (Antitrust Standing Bangor Punta ), National Union Electric Corp. v. Matsushita Electric Industrial Co., 498 F. Supp. 991 (E.D.Pa.1980); (5) denied a motion by defendant Sears, Roebuck & Co. for summary judgment based on statute of limitation grounds, see Pretrial Order (PTO) 263, Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd., M.D.L. No. 189 (May 23, 1980); and (6) denied a motion by Sharp Electronics Corp. alleging that Zenith's claims under the 1916 Antidumping Act are barred by the Treaty of Friendship, Commerce and Navigation between the United States and Japan, 4 U.S.T. 2063, T.I.A.S. No. 2863 (1953), see Memorandum and Order, (1953 Treaty of Friendship Commerce and Navigation with Japan) Zenith Radio Corp. v. Matsushita Electric Industrial Co., 494 F. Supp. 1263 (E.D.Pa.1980).

 A summary judgment motion asserting insufficiency of the evidence of monopolization and attempted monopolization against individual defendants under § 2 of the Sherman Act (the so-called "individual monopolization claims") has in major part dissolved. See pages 1318-1319, infra. A motion by Sony Corporation advancing its allegedly unique position as a high price, rather than a low price, seller of television sets was deferred following argument, and will be considered with the other conspiracy motions herein. We have heard argument on a motion asserting insufficiency of the evidence of price discrimination under the Robinson-Patman Act and on motions addressed to the claims under § 7 of the Clayton Act. We will decide these summary judgment issues in this opinion.

 The summary judgment motions which we have just described were relatively self-contained. The present motion, on the other hand, implicates an enormous record which may be the largest summary judgment record ever developed. The anatomy of that record will be described in Part III of this opinion. That description will be followed (in Part IV) by a summary of the rulings contained in the evidentiary opinion trilogy. We shall then turn to a discussion of the applicable law, commencing in Part V with the legal standards governing the grant or denial of summary judgment, focusing on the complex case. The major portion of the legal discussion is found in Part VI, in which we engage in a discussion of the legal principles affecting plaintiffs' Sherman § 1 and Wilson Tariff Act conspiracy case. We will begin with a discussion of the law relating to plaintiffs' principal Sherman § 1 allegations, taking up: (1) agreements affecting prices; (2) market allocation; (3) membership in trade associations; (4) exchange of information concerning prices, production and inventory figures, and joint forecasting; (5) product standardization and technical research exchange; (6) secret rebates; and (7) joint activities in promoting public and governmental relations, and joint legal action in response to common problems. This section will be followed by a discussion of statutory standing under sections 4 and 16 of the Clayton Act, and then by a description of the Wilson Tariff Act, which we conclude essentially tracks the Sherman Act in the international trade context.

 Another focal point of the legal discussion will be the law of conspiracy in the antitrust context, which will be our next order of business. Our primary emphasis will be upon the legal requisites of circumstantial proof of conspiracy, both in conspiracy cases in general and in antitrust conspiracy cases in particular. We will focus particularly upon the circumstances under which conspiracy can be inferred from parallel business behavior. We shall also consider other aspects of the law of conspiracy with special attention to plaintiffs' admonition against "fragmentation" of their "unitary" conspiracy, their invocation of the "slight evidence" rule, the viability of the doctrine of vicarious liability for the overt acts of coconspirators under the case of Pinkerton v. United States, 328 U.S. 640, 66 S. Ct. 1180, 90 L. Ed. 1489 (1946), and the requisites for admissibility of coconspirator declarations under F.R.E. 104(a) and 801(d)(2)(E).

 Having concluded our discussion of the law applicable to plaintiffs' Sherman § 1 claims, we will turn, in Part VII, to a review of the evidence offered in support of plaintiffs' Sherman Act § 1 (and Wilson Tariff Act) case as to television receivers. This is by far the longest segment of the opinion, for the evidence as to television receivers constitutes the overwhelming bulk of plaintiffs' case. That evidence will be described in detail and measured against the applicable law, which we will already have described. During the course of each phase of the discussion, conclusions as to the legal sufficiency of the evidence will be drawn. The evidentiary review will lead us through all of plaintiffs' significant admissible evidence. *fn18" In the course of this extensive evidentiary review we shall be concerned not just with plaintiffs' core allegations, but also with their discrete evidence against each of the twenty-four defendants, and we shall make a preliminary determination as to whether there is sufficient evidence of conspiracy to permit the introduction of coconspirator declarations. We will end this evidentiary review with a segment (Part VII.S) summarizing our conclusions as to plaintiffs' Sherman Act § 1 and Wilson Tariff Act case as to television receivers. Although we have some misgivings about a summary of such a detailed opinion, see p. 1299 infra, this section should be a useful reference for anyone who seeks a relatively concise summary of the major grounds of the grant of summary judgment.

 In Part VIII we shall summarize plaintiffs' evidence with respect to each of the non-television products (radio, tape, audio, and stereo equipment, and components) about which allegations have been made and shall comment upon the sufficiency of plaintiffs' Sherman Act § 1 and Wilson Tariff Act case in these areas.

 Having concluded our treatment of plaintiffs' Sherman Act § 1 (and, a fortiori, Wilson Tariff Act) claims, we shall take up, in Part IX, the applicable case law under § 2 of the Sherman Act and shall apply it to the record so as to assess plaintiffs' conspiracy to monopolize and actual and attempted monopolization claims. In similar fashion, we shall consider the summary judgment motions directed to plaintiffs' Robinson-Patman Act claims (Part X) and Clayton Act § 7 claims (Part XI). We shall conclude the opinion in Part XII with some final observations about plaintiffs' case and about the appropriate forum for the relief they seek. *fn19"

 Having commented preliminarily upon both the size of the record and the breadth of our evidentiary review, a word is in order about our methodology. We have spent months and months in the tedious process of reading in chambers the significant non-background portions of plaintiffs' FPS, reviewing the sources cited for the various allegations contained therein, usually documents contained in the document depository, *fn20" and studying the voluminous memoranda addressing the evidence and arguing about its significance, vel non. Because of the plethora of FPS allegations and documents involved, it will not be possible to comment herein on more than a fraction of the materials we have reviewed otherwise this enormously long opinion would have to be much longer. As a result, our conclusions on various points will often take the form of statements that we have reviewed various allegations and documents and find nothing therein which creates a genuine issue of material fact to support plaintiffs' allegations. *fn21"

 We feel some discomfiture about the number of subparts and the length of this opinion. However, given the plaintiffs' invocation of their entire 17,000-page FPS, see Part III, infra, and the hundreds upon hundreds of issues raised in the summary judgment briefs, it is difficult to give the motions adequate treatment in a lesser space. Moreover, even if a brief (or briefer) opinion would suffice for purposes of disposition, in view of the certainty of appeal and the enormous burden thus thrust upon the Court of Appeals, we believe it important that we give that court a comprehensive picture of the entire record and of the legal premises which undergird our determination that there is no genuine issue of material fact.

 We turn first to a description of the anatomy of the plaintiffs' conspiracy claims.

 II. The Anatomy of Plaintiffs' Conspiracy Claims

 One would expect, after ten years of litigation, *fn22" that there would be no difficulty in describing plaintiffs' conspiracy claims. Regrettably that is not true in this case, for plaintiffs' theory of defendants' alleged conspiracy has shifted on numerous occasions during the recent course of this litigation. Indeed, as we shall explain, the most recent shift occurred after the August 1980 summary judgment arguments. Plaintiffs deny that they have altered their theory, and submit that there is a core theory which they have pressed throughout, although they would at least have to admit to having played variations on the theme. We will now attempt to state their core theory and will then explain its meanderings along the way.

 Since the charter of plaintiffs' case is their FPS, we look there for a statement of their theory. We find it stated as follows:

 

In its most basic form, the combination and conspiracy consisted, in part, of a concerted scheme to raise, fix and maintain price lines for consumer electronic products sold by defendants and their co-conspirators in Japan. At the same time, defendants and their co-conspirators conspired and combined to establish and coordinate artificially-low price levels for consumer electronic products exported by them to the United States. The defendants and co-conspirators implemented their combination and conspiracy by exporting to the United States and selling therein their consumer electronic products at these concerted depressed price levels. This concerted scheme was systematically applied to each line and category of consumer electronic products manufactured by plaintiffs.

 

Defendants and their co-conspirators developed and implemented the combination and conspiracy by meetings and communications among their executives at various levels of management, and through the means of trade association activities participated in and directed by defendants and their co-conspirators. Defendants and their co-conspirators agreed upon prices, rebates, discounts and allowances and other terms and conditions of sale of consumer electronic products, and upon the allocation of customers among themselves. Defendants and their co-conspirators further combined and conspired to restrict, expand and allocate among themselves the absolute volume of production and sale of consumer electronic products and the volume of production and sale of particular products within the lines and categories of consumer electronic products manufactured by them. The defendants and their co-conspirators then did those things which they conspired and combined to do.

 S at 3453.

 Plaintiffs' style their Japanese high price-U.S. low price conspiracy as a "unitary" conspiracy, with home market and export facets, the aim of which was to effect a complete takeover of the U.S. CEP market, thereby destroying the U.S. CEP industry. The home market portion of the conspiracy is said to have been conceived at and implemented by a host of "conspiratorial" meetings among officials of the Japanese defendants and of other Japanese CEP manufacturers. It is said to have been abetted by the closed Japanese market, a function of a skein of government regulations and economic traditions, which effectively shut off foreign competition in the home market and enabled the gouging of the Japanese consumer to subsidize the export aspect of the conspiracy. The nexus between the home market and export aspects of the "unitary" conspiracy is supplied by the notion which we refer to as "war-chesting." In brief, the plaintiffs allege that the high price home market conspiracy supplied the funds with which to finance or "war-chest" the predatory export raid on the U.S. market.

 The export portion of the conspiracy is said to be composed of two essential elements. The first is the Ministry of International Trade and Industry (MITI)-related export control arrangements or Manufacturers' Agreements, referred to by plaintiffs as "cartel agreements," which were signed by the Japanese manufacturing defendants and a number of other firms and which, inter alia, established minimum or "check" prices on the shipment of various CEP's to the U.S. As an adjunct to these agreements were certain rules of the Japanese Machinery Exporters Association (JMEA), most notably the "Five Company Rule" pursuant to which the Japanese exporter was purportedly limited to five U.S. customers at a time and was required to register his customers with the Association. Plaintiffs contend that these agreements have the intention and effect of affecting prices in the U.S., thus constituting a per se violation of the Sherman Act, and that the Five Company Rule constitutes a customer allocation or "split of product" in further violation thereof.

 The second of the twin foci of plaintiffs' export conspiracy case is, mirabile dictu, an agreement by the Japanese defendant exporters and by American importers (including defendants and other alleged coconspirators) to disregard the check prices and to sell their products in the U.S. at lower prices through the vehicle of concealed rebates and discounts. The check price is thus referred to as a "reference" or "benchmark" price, although the plaintiffs never explain how one gets from the reference price to the actual selling price except by asserting that the defendants agreed to sell at "whatever prices were necessary to make the sale." *fn23" The concealment was intended both to hide from MITI the fact that the defendants were selling in the U.S. below the check prices and to deceive U.S. Customs as to the actual price. While the higher sales prices reported to Customs resulted in higher customs duty, in plaintiffs' submission defendants thereby avoided imposition of still higher dumping duties. Under plaintiffs' theory the rebate scheme was collusive, in that defendants agreed upon a program of concerted depressed pricing for the purpose of destroying the U.S. CEP industry. The scheme is said to have been aimed at the U.S. private label market and only at American manufacturers. The Japanese defendants are said to have acted as a unit and not to have competed among themselves.

 Plaintiffs assert that defendants "dumped" their goods in the U.S., selling at predatory levels and at lower levels than for comparable goods in Japan. They also make allegations of sales below cost. Plaintiffs assert that defendants' practices resulted in the sharp lowering of "pricing points" in the U.S., rendering NUE unable to compete in its lower-price market niche and resulting ultimately in the elimination of numerous U.S. CEP manufacturers and the reduction of profitability levels of the others, including Zenith. Plaintiffs assert that defendants further implemented their scheme and consolidated their gains by the acquisition of a number of U.S. manufacturers and the establishment of manufacturing facilities in the U.S.

 Although plaintiffs make some attempt to assert direct evidence of this "unitary conspiracy," for reasons which have already surfaced in our evidentiary trilogy and will further appear in this opinion, that effort has totally failed. It is plain (and essentially conceded by plaintiffs) that their case is a circumstantial one, built upon the mountain of documents referenced in their FPS. Plaintiffs seek to draw inferences of conspiracy from a plethora of sources, including those set forth in their most comprehensive and presumably definitive listing of the evidence of the alleged conspiracy, which appears at pp. 3474-77 of their FPS and includes the following:

 

1. the export control agreements entered into by the Japanese manufacturers of consumer electronic products;

 

2. the rules of the Japan Machinery Exporters' Association (JMEA), which implemented the export control agreements and included provisions allocating the U.S. market by restricting each manufacturer to five customers and requiring the registration of trademarks;

 

3. a number of speeches by high executives of Japanese defendants proclaiming the necessity of stabilizing the Japanese CEP market by cooperative action and evincing a desire to achieve preeminence in export trade with the United States and other countries;

 

4. the text of the "rationales" of various export control agreements explaining the necessity of stabilizing the export trade;

 

5. passages in a number of diaries of Japanese officials, in internal company memoranda seized by the Japanese Fair Trade Commission (JFTC), and in some other documents produced in discovery, all of which are said to be probative of agreements to fix prices or to allocate the market, hence of conspiratorial activities of a number of groups and associations to which executives of the Japanese manufacturing defendants belonged. (The allegedly offending groups include the Electronic Industries Association of Japan (EIAJ) and its committees and subdivisions; the JMEA and its committees and subdivisions; the Market Stabilization Council; the Four Associations Conference; the Okura Group; the Palace Group; the Palace Preparatory Group; the Twentieth Day Group; the Tenth Day Group; the MD Group; the TS Group; and the Television Export Council);

 

6. the mere fact of membership of various defendants in these groups, many of which concededly operated sub rosa;

 

7. the inference to be drawn from the "sharing" by groups and associations of "every vital piece of information in every phase of the business among the Japanese manufacturers of consumer electronic products";

 

8. the activities of the defendants in the Japan Light Machinery Information Center (JLMIC) in New York City;

 

9. the evidence before the JFTC in the "Six Company Case," Case No. 6, 1966, including documentary evidence, affidavits, testimony, admissions by respondents through their counsel, and findings of fact by trial examiners; *fn24"

 

10. various schemes by the defendants and their coconspirators fraudulently to conceal their conduct, including secret rebating; false submissions to United States Customs Service; plans to destroy documents, to keep from taking minutes, and to change the names of the conspiratorial groups in Japan; plans to thwart the investigation of the United States Tariff Commission by importers and private label purchasers; and the fraudulent reporting of statistics to the government of Japan;

 

11. the findings of the JFTC in 1957 against the Market Stabilization Council and its participants;

 

12. the findings of the United States government, including the dumping findings by the Treasury Department and the finding by the International Trade Commission of injury sustained by U.S. manufacturers of television receivers;

 

13. the inference to be drawn from the "parallel, interdependent rebating schemes" in which the defendants and their coconspirators participated;

 

14. the inferences to be drawn from the materials which are said to evidence the knowledge of each defendant of the operation, including rebating practices, of the export systems of each other defendant, and their resulting knowing participation in the rebate scheme;

 

15. the inferences to be drawn from what is said to be the similar conduct of defendants in selling consumer electronic products in the United States at prices substantially lower than those at which the same merchandise is sold in Japan, and at below cost;

 

16. the inference to be drawn from the supposed fact that the Japanese defendants' United States subsidiaries similarly and consistently operated at a loss, as reported in their tax returns and financial statements;

 

17. the sealing off of the Japanese home market from outside competition;

 

18. the "pattern" of take-overs and acquisitions of U.S. CEP manufacturers by Japanese defendants, including Matsushita's acquisition of Motorola just before Motorola was to begin selling its console color television receivers in Japan;

 

19. alleged discriminatory pricing by the Japanese manufacturers of consumer electronic products to customers in the United States;

 

20. the opinion of plaintiffs' experts that defendants constituted a cartel and engaged in both the home market and export facets of the alleged conspiracy; and

 

21. the notions that it "belies reality" to believe that the defendants, with so much access to each other at trade association and other meetings, did not conspire and that otherwise an American company like Emerson (NUE's predecessor), with such a good name, would not have been driven out of business.

 We will, of course review the evidentiary basis for all of these contentions, as well as others made in the FPS and in the briefs, infra. We have attached as Appendix C to this opinion the table of contents to the FPS, which lists all evidentiary areas covered therein.

 Having set forth the many facets of plaintiffs' conspiracy theory, we must turn to our analysis of their core allegations, and the metamorphosis thereof, for those are critical matters. Shortly after the assignment of the case to our docket, in search of issue definition, we required counsel (PTO 88) to file detailed statements of their respective positions in the case in the form of preliminary pretrial memoranda (PPTM). In plaintiffs' PPTM, filed in two stages and consuming some 410 pages, and in their contemporaneous comments at pretrial conferences, plaintiffs characterized this as a "simple price-fixing case," with the MITI-related export control arrangements as its "heart," "foundation," and "starting point." *fn25" The outer layers of plaintiffs' theory consisted of the allegations referenced above that, through conspiratorial meetings supposedly documented in the diaries and other documents seized by the JFTC (and certain other documents produced in discovery), the Japanese manufacturing defendants had acted in concert to fix prices at a high level in Japan in order to finance or "war chest" the predatory export raid on the U.S. market. Both the PPTM and Plaintiffs' Brief in Reply to the Motion for Summary Judgment of Melco and Melco Sales, Inc., filed October 16, 1978, are dominated by this theory. *fn26" There is but scant mention of what later came to dominate plaintiffs' theory of the case the practice by Japanese manufacturers of granting rebates to American purchasers although certain rebate transactions are mentioned.

 By the time of the April 1979 summary judgment arguments, plaintiffs' theory had changed. Although the conspiratorial activities of the groups and associations were still stressed, the "rebate scheme" had emerged as a co-equal factor in the conspiracy. But when pressed as to the price or price level or price formula at which the predatory low price conspiracy operated, plaintiffs would say only that defendants sold at "whatever price was necessary to get the sale."

 By the time final summary judgment argument arrived in August 1980, emphasis on the rebates had increased while mention of the direct conspiratorial evidence and "war chesting" had decreased markedly. As plaintiffs' lead counsel, Edwin P. Rome, put it:

 

I suggest that the cartel agreements and the rebate system as a unitary entity constituted a mechanism, the mechanism which enabled the defendants to pursue a course of conduct for depressing prices in the United States, as the result of which, aided by their five-company rule, they were permitted and enabled to concentrate each particular defendant's competitive thrust against a particular mass merchandise customer in the U.S. and thereby deny the capability of an American manufacturer to do business with that customer.

 PTO 291 at 128. Under this theory, the export control arrangements and conspiratorial group meetings play an entirely different role from that alleged in the PPTM and brief in reply to Melco's motion. Now, the export control arrangements, instead of being the "heart" of the conspiracy, merely provide a forum through which defendants agreed to a "system" of secret rebates designed to nullify those very same export control arrangements so as to take over the market for sales of television receivers to private label and original equipment manufacturers (OEM) in the United States. *fn27" As Mr. Rome explained, the export control arrangements and the existence of secret rebates are now the sole ingredients of the conspiracy claim:

 

The Court: But be that as it may, I still don't see in terms of conspiracy proof what your theory is except by virtue of the conclusion that you draw as to the inextricable intertwining of the cartel agreements and the rebate system.

 

Is that what you said? Did you have another ingredient in that?

 

Mr. Rome: That is it.

 

The Court: The cartel agreements and the rebates.

 PTO 291 at 113. *fn28"

 Under this formulation, the check price becomes a "reference price" or benchmark price. Defendants are said to have sold above, at, and below the check price, but we are never told of the relationship between the check price and the actual price. Perhaps the best description of this theory, which we treat as plaintiffs' principal theory notwithstanding our comments infra, is that plaintiffs charge a conspiracy to sell in the U.S. at depressed or predatory prices. The role of the conspiratorial meetings in Japan, although not abandoned as a basis for plaintiffs' claim, is hardly mentioned. *fn29" Plaintiffs do, however, stress certain meetings in the U.S. of counsel for U.S. customers designed to formulate a common strategy to combat U.S. Treasury Department proceedings under the 1921 Antidumping Act. They also stress the alleged knowledge of each defendant and defendants' U.S.-importer customers about the rebate scheme and their alleged knowing participation in it. Little is said at this stage about "war-chesting," apparently because plaintiffs finally recognized that there is no evidence of it in the record.

 We were also told by Mr. Rome at the final summary judgment argument that the conspiracy was "protean" (PTO 291 at 115). Perhaps nothing better explains the elusive nature of plaintiffs' conspiracy claims than Mr. Rome's use of the word "protean" to describe them. According to Webster, protean means "capable of change; exceedingly variable ... readily assuming different shapes or forms ... capable of acting many different roles; ... possessed of infinite variety ..." Although the formulation itself undermines the integrity of plaintiffs' claims, its usage was fitting.

 Finally, in a post-argument submission in the form of an affidavit by their leading expert, Dr. Horace DePodwin, see Expert Testimony Opinion 505 F. Supp. 1313 at 1334 n.24, plaintiffs seem to revert to their original theory, for there is a clear emphasis upon the check price; the lower (net-net) price after deduction of rebates is said to be involved only in "selective" cases. Whether this reversion is ascribable, on the one hand, to plaintiffs' discovery of a large number of sales at check price (see DePodwin affidavit at 4.9-.10) and the fact that the check price was itself lower than NUE's price (see DePodwin affidavit at 4.11-.12), or, on the other, because the first two opinions in our evidentiary trilogy held inadmissible the critical documents upon which much of plaintiffs' theory of conspiracy as stated in their first two summary judgment briefs rests, we cannot say. We do not dwell upon this theory in the opinion because it is plainly an afterthought, because it is outside the mainstream of plaintiffs' case, and because, in any event there is no evidence that the check price was itself a low price. See discussion infra. *fn30"

  Although in the latter stages of the proceedings the emphasis on the export control arrangements was reduced, those agreements remain important, for they form the cornerstone of plaintiffs' evidence of defendants' opportunity and intention to conspire. With the agreements as background, in plaintiffs' submission, all defendants' activities take on a conspiratorial hue.

 The final facet of plaintiffs' conspiracy theory worth mentioning is a function of their approach to the burden of proof on a summary judgment motion. Plaintiffs have asserted time and again throughout the latter course of the proceedings that evidence of the existence of the alleged conspiracy is to be found in the failure of defendants to file affidavits to explain what went on at numerous meetings which defendants admit occurred and at which plaintiffs allege that conspiratorial activity took place. Indeed, in their final briefs plaintiffs set forth a litany of "critical issues" about which the defendants have been "silent," implying that defendants should have been required to produce information on these subjects even though the plaintiffs deliberately, throughout eight years of discovery, failed to take a single deposition of any individual who attended the allegedly conspiratorial meetings. See discussion at 1200-1202 infra regarding plaintiffs' litigation strategy. For reasons set forth infra, this approach is unavailing.

 Because plaintiffs are entitled to the benefit of any theory that will get them past a summary judgment motion, we will consider all the variations on their theme.

 Having described the nature and evolution of plaintiffs' conspiracy claims at least as best we can we turn to a description of the summary judgment record. This task will also require us to say something about the role of the more important case management orders we have entered.

 III. The FPS, Final Stage Case Management, and the Summary Judgment Record

 We have observed that this case is before us on what may be the most ample record for summary judgment purposes ever before a court. The keystone of this record is plaintiffs' roughly 11,500-page FPS, with its roughly 6000-page appendix, which cross-references approximately 250,000 pages of documents. In some respects, the length of the FPS is misleading. First, for reasons of convenience in preparation, plaintiffs limited many pages to a single point covering but 20 to 35 percent of the page. Second, extensive portions of the FPS are devoted to enormously detailed and generally uncontested background material which supplies historical, financial, and personnel-related detail about the various defendants. *fn31" Nonetheless, in terms of sheer size and effort of preparation, the FPS is a formidable document. Notwithstanding its domination by damning conclusory statements, which, as we shall see, are generally not substantiated by the referenced supporting documents, the FPS contains a valuable compendium of plaintiffs' allegations and of the critical documents upon which plaintiffs rely, many of them virtually rescribed in the FPS. It also contains important and useful appendices, such as model by model comparisons of T.V. receivers and certain other CEPs, originally ordered in PTO 145.

 The FPS, which has won the approbation of both parties as a necessary management tool (for this case), was required by PTO 154, our master case management order, which is reprinted at 478 F. Supp. 889, 946 (E.D.Pa.1979), and which was fashioned in collaboration with counsel. *fn32" Paragraph III.C. of PTO 154 orders the parties, both plaintiffs and defendants, to set forth:

 

each fact that the party intends to prove at trial either affirmatively or by way of defense, together with a list of: (1) the witnesses (including expert witnesses) whose testimony will be advanced to prove that fact; (2) the documents ... which will be offered to prove that fact; and (3) line by line references to any portions of depositions and to answers to interrogatories and requests to admit which will be offered to prove that fact. (footnote omitted).

 Pretrial Order 154 continues:

 

By this formulation we do not intend that the parties must provide a script for trial. We do, however, intend that the parties set forth in narrative form not just the ultimate facts, but all the facts they will prove, including all subsidiary or supporting facts. In so doing they will make, at a minimum, the kind of submission they would make if they were writing detailed requests for findings of fact setting forth what the evidence has established in a non-jury case.... In view of the primacy of the conspiracy claims in plaintiffs' case and defendants' counterclaims, the FPS shall itemize all overt acts to be proved at trial. In particular, the FPS shall enumerate with specificity the facts (i. e. the evidence aliunde) upon which they rely to prove that each defendant ... knowingly joined in the alleged conspiracy and all facts, separately as to each defendant, upon which they rely as to each defendant's participation in the alleged conspiracy. Where any facts will be offered against fewer than all parties, the FPS shall identify the parties against which the facts are or are not offered.

 The FPS was required in part as a surrogate for inadequate responses to discovery by the plaintiffs, who had theretofore failed, despite several voluminous waves of interrogatories, including so-called "contention interrogatories" which we authorized for that purpose, to set forth adequately the specifics of their claims. Plaintiffs had never made specific allegations as to how and when this conspiracy was conceived, how it operated, and when and how each defendant became a participant, and had also failed to specify what evidence they had against each defendant. The FPS was designed to fill in these gaps and, under the preclusionary provision of PTO 154, no fact not set forth in the FPS could be adduced at trial except for good cause shown. Thus we now have something cognate to a trial record. *fn33"

 No sooner had defendants' counsel commenced their reading of the FPS than they began vigorously to complain that it failed to accomplish its purpose. We thereupon, at our next regularly scheduled pretrial conference, *fn34" conducted an FPS "walk-through" a detailed spot survey of the FPS. As we found at the walk-through and in our subsequent reading of the FPS, it contained for the most part conclusory statements keyed to references to large numbers of documents. Because plaintiffs' case rests basically upon those documents, and because the conclusory statements in the FPS were not helpful, resort to the documents themselves became necessary. As a result we ordered, by PTO 219, the creation of a document depository to be located in our jury room into which the parties were to deposit all the documents which they referenced in their summary judgment papers or upon which they would rely at summary judgment argument or at trial. As many of the documents were Japanese language documents, we also ordered that an English translation be attached. *fn35"

 The parties negotiated over the manner of creating the depository and the division of the cost. Because the documents referenced in the FPS were at immediate issue, the plaintiffs assumed the onus of placing the documents in the depository, with the parties dividing the cost. The document depository was "completed" in the Spring of 1980. We surround "completed" with quotation marks because the summary judgment argument and our study of the record in conjunction with the preparation of this opinion have demonstrated that many documents relied upon by plaintiffs are not in the depository and that countless documents have not been translated. The document depository with all its contents is, both for what it contains and for what it does not, an important part of the summary judgment record. *fn36"

 Defendants' also complained, with justification, that the plaintiffs, despite the requirements of PTO 154, had failed to identify in their FPS, discretely as to each defendant, the evidence aliunde which linked it to the conspiracy. We therefore ordered plaintiffs to submit a list of their evidence aliunde, i. e., of the key documents or other materials which constituted independent evidence of the existence of a conspiracy among the defendants. Regrettably, the results of that order were disappointing. Plaintiffs indeed filed an evidence aliunde list, but it consisted of some seven volumes piled over three feet high containing nothing but 250,000 or so numbers the document numbers of virtually all the documents referenced in the FPS. Thus plaintiffs' list of evidence aliunde, intended to inform each defendant with particularity of the evidence against it, did not "advance the ball." Rather, it left the case where it had been for many years, with the plaintiffs invoking a boxcar full of documents as evidence against all defendants on the theory that they were coconspirators, but without any semblance of specificity. *fn37" The situation was complicated by the fact that, at least from the beginning of our stewardship in the case, the defendants persistently asserted not only that plaintiffs' documents were inconsequential, but also that the bulk of them were inadmissible in evidence. Melco had formally asserted these evidentiary objections in its Motion for Summary Judgment filed in March 1978.

 In sum, despite our fervent and carefully considered case management efforts, which commenced with the PPTM and were codified in PTO 154, *fn38" neither the FPS nor the evidence aliunde list was helpful in giving plaintiffs' case the kind of sharp focus necessary for dealing with a motion for summary judgment, because neither of these submissions contained the precise marshalling of the evidence which we had ordered. Rather, each was little more than a carefully organized compendium of virtually every colorably relevant document which had been produced during discovery and copied by the plaintiffs. Moreover, plaintiffs took the position (to which they apparently still adhere) that it is not their burden to detail the evidence in support of their claims, but rather that "the Court must consider the entire FPS in reaching a determination on the issue of conspiracy and in evaluating defendants' Motion for Summary Judgment." *fn39" Although we are attempting to do just that, it is fundamental that the Court should not be required to do plaintiffs' job of marshalling the evidence to demonstrate a genuine issue of material fact which would preclude summary judgment.

 Rule 56(e) requires that a party opposing a motion for summary judgment must, "by affidavits or as otherwise provided in this rule, ... set forth specific facts showing that there is a genuine issue for trial." (emphasis added). *fn40" It also ties summary judgment proceedings to admissible evidence, see note 26, supra. Mindful of those principles, we concluded early in 1980 that in order for us meaningfully to deal with the summary judgment motions, two devices would be especially helpful: (1) a pretrial evidentiary hearing; and (2) a summary judgment argument of sufficient length that plaintiffs would have an opportunity to call to the Court's attention any document in the record which would create a genuine issue of material fact. We proceeded to implement both.

 As we have suggested, it was obvious to us by this time that only by examining the actual documents could we assess the viability of plaintiffs' case. Such an examination would enable us to evaluate each document's authenticity and admissibility as well as its efficacy in creating a genuine issue of material fact. The announced charter for the evidentiary hearings was thus to aid in determination of the summary judgment motions. However, prior to their commencement we clearly stated of record that they would also have a second purpose to serve as in limine hearings pursuant to F.R.E. 104(a) so that we could make a pretrial determination whether there was sufficient independent evidence (evidence aliunde) of a conspiracy among the various defendants to permit the introduction of "coconspirator" declarations under F.R.E. 801(d) (2)(E). *fn41" See Part VI.D.6, infra. This was an important matter since it was clear to all, and tacitly acknowledged by plaintiffs' counsel, that without the introduction of alleged coconspirators' declarations, plaintiffs might not be able to make out a conspiracy case against most, if not all, of the defendants. Acknowledging that such a charter for hearings might entitle, and indeed require, plaintiffs to put on much of their case-in-chief, or at least the most important parts of it, we placed no time limitation upon the hearings. *fn42"

 The pretrial evidentiary or "in limine" hearings have been fully described in our Public Records Opinion (PTO 283). Suffice it to say that plaintiffs marshalled their key documents, assigning each a DSS (Document Submission Sheet) number, *fn43" and argued the admissibility of most of them to the Court. Defendants replied and extensive briefs were submitted by both sides. The hearings resulted in the three lengthy and extremely detailed opinions mentioned above, the results of which will be summarized in Part IV of this opinion. Since the DSS submissions are what plaintiffs have represented to be their most important documents, they are an important part of the summary judgment record.

 At the outset of the August 1980 argument on the motions for summary judgment, we informed the parties that our principal concern at that time was not with the legal aspects of the case, but rather with its factual basis. We invited counsel to take as much time as was necessary to go through the entire record and call our attention to any documents, testimony, or other evidence which bore on the existence of a genuine issue of material fact. The defendants accepted our invitation and took over four days to analyze a very large number of the important documents proffered by plaintiffs, arguing that they created no genuine issue of material fact. We found that presentation most helpful. The plaintiffs, on the other hand, declined our invitation and studiously avoided dealing with any specific documentary evidence during their oral argument. *fn44"

 The summary judgment record before us then is a "mixed bag." It includes the preclusive FPS with all its appendices, the documents referenced therein, *fn45" and all the DSS's. It also includes all the exhibits offered by plaintiffs in connection with the summary judgment proceedings in April 1979, *fn46" and it includes the various affidavits submitted to us by both plaintiffs and defendants and the various appendices thereto, some of which are not contained in the document depository. We shall also consider the voluminous depositions submitted for our consideration, along with the even more voluminous answers of defendants to plaintiffs' interrogatories, the most "visible" of which are those relating to membership in and attendance at meetings of various groups and associations. Additionally, the record includes those portions of plaintiffs' expert reports which we held admissible in our Expert Testimony Opinion.

 This description includes a veritable mountain of documents and other materials. However, not all of them have been demonstrated or even asserted to be of any significance on the summary judgment motion. Many of them relate to plaintiffs' damages and are not at issue at this stage; others are purely background material. Countless others, despite inclusion in the FPS, are plainly irrelevant, at least to our determination here. Even after elimination from consideration of those documents, there are many documents, cumulative, marginal, or otherwise, upon which plaintiffs do not seriously rely, notwithstanding their having been referenced in the FPS and placed in the depository. These documents we shall not seriously consider in our evidentiary review.

 We do not pretend to have read all 250,000 documents which plaintiffs have referenced in their FPS. We do not think it incumbent upon us to read documents whose importance plaintiffs have not in some way demonstrated. To posit the contrary would make a mockery of the litigation process and render the court hostage to any party who cavalierly sought to bury the court under a mountain of documents in a complex case. Accordingly, our attention will primarily be focused upon the documents (or categories of documents) called to our attention by plaintiffs' (and defendants') counsel in their oral arguments and extensive memoranda. However, we will also consider a considerable number of documents, not specifically relied upon, to which we were referenced by the FPS and which we found arguably germane.

  IV. Summary of Pretrial Evidentiary Rulings

  For the reasons noted above, the three opinions which arose out of the pretrial evidentiary hearings are incorporated by reference in this opinion. Because of their great length, as a matter of convenience, we summarize herein the ultimate disposition of the major categories of evidence addressed therein.

  In the first of those opinions, entitled "Admissibility of Public Records and Reports," Pretrial Order No. 283, 505 F. Supp. 1125 (filed Aug. 7, 1980), 6 Fed.Evid.Rep. 801 (cited herein as Public Records Opinion), we considered the admissibility of a number of public documents proffered principally under F.R.E. 803(8)(C). The first category of documents, promulgated by the U.S. Treasury Department and the U.S. Tariff Commission in connection with proceedings under the 1921 Antidumping Act, 19 U.S.C. § 160 et seq. (repealed 1980), included: (1) Treasury Department Determination of Sales at Less than Fair Value, 35 F.R. 18549 (1970); (2) Determination of Injury by the U.S. Tariff Commission Investigation No. AA1921-66 (undated); (3) The Treasury Department Finding of Dumping, 36 F.R. 4597 (1971); and (4) numerous Customs Forms 29's, appraising dumping duties against various defendants and other importers. The thrust of these documents as proffered by the plaintiffs was that: (1) television receivers from Japan were being sold in the United States at less than fair value; (2) an industry in the United States was being injured by reason of such sales; (3) dumping had thus occurred in violation of the 1921 Antidumping Act; and (4) dumping duties had been assessed against specific importers (on the Customs Form 29). The time frames of these documents are within the frame of reference of plaintiffs' claims. However, all of these documents were excluded: (1) as hearsay and not admissible under the relevant exception to the hearsay rule (F.R.E. 803(8)(C)); (2) as irrelevant to the present case; and (3) as at all events excludable under F.R.E. 403 on the grounds that any minimal probative value the documents may have had was far outweighed by the danger of unfair prejudice, confusion of the issues, and misleading the jury, and by considerations of undue delay, waste of time, and needless presentation of cumulative evidence.

  The second category of evidence addressed in the Public Records Opinion was composed of documents, including certain findings, promulgated by the U.S. Tariff Commission and its successor, the U.S. International Trade Commission (I.T.C.), and by the Secretaries of Labor and Commerce under §§ 301(b)(1) and (c)(1) and (2) of the Trade Expansion Act of 1962 and §§ 201(b) and 221 of the Trade Act of 1974. These documents contained various findings of injury to United States industry. All of the documents were excluded as hearsay, as irrelevant, and under F.R.E. 403.

  Third, the Public Records Opinion dealt with certain purported findings and related documents arising out of proceedings in two cases before the Japanese Fair Trade Commission (JFTC). The first was a 1957 case brought against the Home Electric Appliance Market Stabilization Council, some of whose members are defendants in this action, alleging industry-wide price fixing. The second case, brought in 1967, alleged retail price maintenance against defendant MEI. In plaintiffs' submission, these materials are probative of the role of various defendants in the alleged home market aspects of the "unitary" conspiracy. However, all of them were excluded as hearsay and inadmissible under the 803(8) (C) exception to the hearsay rule. Moreover, certain "decisions" of the JFTC were also excluded as inadmissible under F.R.E. 408 and 410.

  Plaintiffs also sought admission under F.R.E. 803(8)(C) of the findings of Judge A. Leon Higginbotham, Jr., our predecessor in this case, found at 402 F. Supp. 262 (E.D.Pa.1975), regarding personal jurisdiction and venue. However, we held that Judge Higginbotham's findings did not come within the ambit of Rule 803(8)(C) and that they were therefore inadmissible.

  Finally, we dealt in the Public Records Opinion with certain statistical data from the statistical office of the United Nations and a report of the Organization for Economic Cooperation and Development. We found this data, which is in part technological (relating to electronic components) and in part statistical (relating to television production figures of various countries), to be admissible.

  The second opinion in our evidentiary trilogy was entitled Admissibility of Materials Relating to Activities in Japan, PTO 295, 505 F. Supp. 1190 (filed September 29, 1980), 6 Fed.Evid.Rep. 1329 (cited herein as Japanese Materials Evidentiary Opinion). That opinion dealt with the admissibility of three major groups of documents: (1) materials seized by the JFTC in "raids" on the offices of several of the defendants here who were respondents in the Six Company Case; (2) testimony and statements or "protocols" given by officials of the respondent companies during the course of the JFTC proceedings in the Six Company Case; and (3) materials produced in discovery from the files of the Japanese defendants and others relating to activities in Japan of Japanese manufacturers of consumer electronic products or of associations of manufacturers. Our rulings were all predicated on either Article VIII (hearsay) or Article IX (authentication) of the Federal Rules of Evidence.

  We first dealt with the diaries or notebooks of officials of several of the Japanese defendants, which were said to contain evidence of the alleged conspiracy. *fn47" We next considered the admissibility of a number of internal memoranda of certain of the defendants, *fn48" minutes of certain EIAJ officers' meetings, supposed minutes of the TV Export Council meetings, and the so-called Japan Victor document, allegedly emanating from the EIAJ Statistics Committee. We held all of these documents to be hearsay and inadmissible under any of the exceptions to the hearsay rule. As we have noted, we also considered the admissibility of the formal testimony of executives of the Japanese companies before the JFTC, as well as of the protocols given by them to the JFTC investigators. We held the JFTC testimony admissible against the defendants in the "Six-Company Case" only, except for any so-called "export" or "war-chesting" references, which we held with minor exceptions to be inadmissible. We held that the protocols were admissible against the employer of the maker of the protocol only.

  In the third opinion in our evidentiary trilogy, entitled Admissibility of Expert Testimony, PTO 301, 505 F. Supp. 1313 (filed December 10, 1980) (cited herein as Expert Testimony Opinion) we considered the admissibility of the opinions of five of the plaintiffs' expert witnesses, as set forth in compendious reports prepared by those experts. The reports at issue were: (1) "Economic Study of the Japanese Television Industry," by Dr. Horace J. DePodwin, Dr. David Schwartzman, and Marcio Teixeira of Horace J. DePodwin Associates, Inc., an economic consulting firm (the DePodwin Report); (2) "The Pervasive Use of Collusive and Company Group (Keiretsu) Activities in Achieving the Rapid Increase of Japanese Exports of Television Receivers to the United States," by Professor Kozo Yamamura, Chairman, Japan Studies Program and Professor of Economics and East Asian Studies at the University of Washington (the Yamamura Report); (3) "Economic Analysis of Evidence Relating to Japanese Electronic Products Antitrust Litigation," by Stanley Nehmer of Economic Consulting Services, Inc. (the Nehmer Report); (4) "The Impact of Japanese Financial and Employment Practices on Japanese Production, Marketing, and Price Behavior," by Professor Gary R. Saxonhouse, Professor of Economics, University of Michigan (the Saxonhouse Report); and (5) "Vertical Restraint by Japanese Television Manufacturers: Anticompetitive Effects," by Professor John Owen Haley, Associate Professor of Law at the University of Washington (the Haley Report). *fn49"

  We did not undertake to rule upon the admissibility of these experts' reports qua reports nor upon the admissibility of all of the opinions expressed in their reports. Rather, we culled from the reports the salient opinions of the experts with possible bearing upon the outcome of the motions for summary judgment. In terms of methodology, each of the experts had reviewed the documentary materials provided him by plaintiffs' counsel, drawn upon his economic knowledge, and then in essence concluded that defendants were engaged in precisely the conspiracy posited by plaintiffs.

  In our Expert Testimony Opinion, we excluded the great bulk of these expert opinions, holding admissible only background materials relating to the structure of the Japanese market, including its trade barriers, the technological development of the consumer electronic products industry, and basic economic principles and methodology. *fn50" We reserved our ruling on one calculation of price differentials between the Japanese and American market presented in Part V of the DePodwin Report. See Expert Testimony Opinion 505 F. Supp. 1313 at 1348. Most of the remaining material is attacked by defendants on relevancy grounds, and is discussed in the pertinent sections, infra.

  Our Expert Testimony Opinion was two-pronged. To summarize, we first found that most of the experts' crucial opinions, notably those which concluded that defendants in this action were acting collusively, were so pervaded by reliance upon untrustworthy materials, including materials excluded from evidence in our two previous evidentiary opinions, as to render them inadmissible under F.R.E. 703. In addition, we concluded that the experts, by providing a narrative factual description and summary of the evidence before the court, and drawing (factual) conclusions upon which they in turn founded their opinions, were not utilizing any expertise in a manner helpful to the jury under F.R.E. 702, but were instead acting not as economists but as conspiracyologists engaged in inadmissible "oath-helping."

  Our discussion at this juncture of the numerous documents and opinions which we have excluded from evidence is important because of the necessity for perspective. First, the excluded evidence includes the most important documents in plaintiffs' original submissions and, in a very real sense, an evaluation of the plaintiffs' case is aided by an understanding of the extent to which its original integral parts are now missing. Second, because of the importance of the excluded documents, we may have occasion from time to time to observe whether the outcome would have been different had the documents not been excluded. Third, the reason for the exclusion in the Japanese Materials Evidentiary Opinion of the most critical of these documents lack of foundation reflects upon the integrity of plaintiffs' conspiracy case, a subject upon which we will comment further infra.

  Perhaps the most graphic description of the impact on plaintiffs' case of our trilogy of evidentiary opinions comes from analysis of a portion of Plaintiffs' Memorandum in Reply to the Motions for Summary Judgment of Certain Defendants, *fn51" Matsushita Defendants, and Sears, Roebuck & Co. (filed April 2, 1979), 8 1/2 years after the filing of the NUE action. In Part III.B. of that memorandum the plaintiffs purported to review the evidence of the overall combination and conspiracy, advancing the view that the defendants had completely failed to rebut plaintiffs' evidence. The major categories of evidence which plaintiffs advanced at that time were:

  

1. Data on the early development of the Japanese electronics industry;

  

2. Matsushita-Philips' agreements creating Matsushita Electronics Corporation for the production, sale, and exportation of electronic components;

  

3. The formation of the defendants' trade associations, including the EIAJ and JMEA;

  

4. Excerpts from publications of the JMEA in its "Association News" and from the EIAJ's publication "Denshi";

  

5. The admission that there were meetings of the Chairmen of the Board and other officials of the defendant companies (the so-called conspiratorial groups), coupled with the evidence from the "Six-Company Case" ; and

  

6. Evidence from the JFTC Market Stabilization Council Case.

  Yet, the evidence from the Market Stabilization Council and from the "Six-Company Case" which includes the vast bulk of the evidence about the conspiratorial groups and all the "export references," have been excluded from evidence by our trilogy of evidentiary opinions. *fn52"

  We consider in this opinion such admissible or significant evidence as is left from plaintiffs' presentation.52A The short of it, however, is that the evidentiary rulings we have just described have not just narrowed markedly the scope of the viable record before us, but have virtually emasculated plaintiffs' case.

  We turn now to an explication of the legal principles which will govern our analysis of those portions of plaintiffs' case that remain.

  V. Standards Governing Summary Judgment

  The parties, principally the plaintiffs, have devoted extensive portions of their briefs to descriptions of the law governing the grant or denial of summary judgment. For example, the plaintiffs, in their August 11, 1980, brief in opposition to defendants' summary judgment motion devoted eighteen pages to the point. The thrust of plaintiffs' argument is that summary judgment has almost never been granted in complex antitrust cases where "state of mind" is an issue. We explain herein the principles in this area that we will apply.

  The general principles governing the grant or denial of summary judgment are well known. We set forth those principles, at least as they have been announced in the Third Circuit, in our Opinion and Order (1916 Antidumping Act), 494 F. Supp. 1190, 1239-40 (E.D.Pa.1980):

  

Rule 56 of the Federal Rules of Civil Procedure permits the grant of summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." F.R.Civ.P. 56(c). The burden of demonstrating that there is no genuine issue of material fact rests on the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). Summary judgment may not be granted if there is "the slightest doubt" about material facts. Tomalewski v. State Farm Life Insurance Co., 494 F.2d 882, 884 (3d Cir. 1974). Consequently, a motion for summary judgment may not be granted on the ground that if a verdict were rendered for the adverse party the court would set it aside as against the weight of the evidence. Perks v. Firestone Tire & Rubber Co., 611 F.2d 1363, 1366 (3d Cir. 1979), quoting Rosenthal v. Rizzo, 555 F.2d 390, 394 (3d Cir.) cert. denied, 434 U.S. 892, 98 S. Ct. 268, 54 L. Ed. 2d 178 (1977). Similarly, summary judgment is not appropriate if the resolution of a material issue of fact turns on the credibility of witnesses. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458 (1962); Remak v. Quinn, 611 F.2d 36 (3d Cir. 1979). All inferences from the evidence must be drawn in favor of the party opposing the motions here, the plaintiffs. Small v. Seldows Stationery, 617 F.2d 992 (3d Cir. 1980).

  (footnote omitted).

  In support of their position, plaintiffs rely mainly upon the famous decision in Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962), in which the court stated:

  

We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot.... Trial by affidavit is no substitute for trial by jury.

  368 U.S. at 473, 82 S. Ct. at 491 (footnote omitted). While Poller has never been overruled, the gloss that plaintiffs place upon it has been significantly dulled in recent years. The number of antitrust cases in which the Supreme Court and courts in the Third Circuit have granted or upheld the grant of summary judgment on the merits, either partial or complete, since the Poller decision in 1962 is extremely large. *fn53" It is now settled that summary judgment is appropriate in those antitrust cases where plaintiffs, after having engaged in extensive discovery, fail to produce "significant probative evidence" in support of the allegations in their complaint. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-90, 88 S. Ct. 1575, 1593, 20 L. Ed. 2d 569 (1968). The Cities Service Court stated:

  

Essentially all that the lower courts held in this case was that Rule 56(e) placed upon Waldron (the plaintiff) the burden of producing evidence of the conspiracy he alleged only after respondent Cities Service conclusively showed that the facts upon which he relied to support his allegation were not susceptible of the interpretation which he sought to give them. That holding was correct. To the extent that petitioner's burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations, we decline to accept it. While we recognize the importance of preserving litigant's rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

  391 U.S. at 291, 88 S. Ct. at 1593. See also Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573, 579 (3d Cir. 1979).

  The most recent case in this area is Pan-Islamic Trade Corp. v. Exxon Corp., 632 F.2d 539 (5th Cir. 1980), where the plaintiff relied heavily upon Poller to argue that summary judgment may not be granted in a complicated antitrust case. After discussing the Supreme Court's holding in Poller and ascribing to Cities Service a significance equal thereto, the court proceeded to affirm the grant of summary judgment, noting:

  

It is clear that this circuit has heeded the language in Cities Service. When faced with defendants' sworn denial of the existence of a conspiracy, it is incumbent upon the plaintiff to produce significant probative evidence demonstrating that a genuine issue of fact exists as to this element of the complaint.

  Id. at 554. We perceive the Third Circuit to be in accord.

  The interpretation which these and other antitrust plaintiffs have attempted to give to Poller was criticized by the National Commission for the Review of Antitrust Laws and Procedures in its Report to the President and the Attorney General dated January 22, 1979, 80 F.R.D. 509, 566-67:

  

Rule 56 of the Federal Rules of Civil Procedure and the accompanying Advisory Committee notes indicate a uniform summary judgment standard for all cases and no special category for antitrust or other complex actions. Some courts, however, have been much more reluctant to grant summary judgment in antitrust cases. This result, in our opinion, stems from overly restrictive interpretation of certain Supreme Court cases.... This language (quoted supra at 1139-1140) may have served at the time to correct overly eager use of summary judgment in some antitrust cases, and the Commission is not recommending a return to pre-Poller practice. Some cases since Poller, however, appear to have gone to the opposite extreme.

  

Under Poller and other Supreme Court decisions, failure by the movant to disprove conclusively a disputed material fact or factual inference requires denial of a motion for summary judgment. This formulation has led to overly strict application in some instances. Some appellate courts have stated, for example, that summary judgment should not be granted if there is the "slightest doubt" as to any material fact. This is an unwarranted gloss on the "genuine issue" requirement. Opinions relying on the slightest doubt standard have been declining, however, and some circuits, including the Second Circuit, have explicitly rejected the more restrictive language found in older cases. *fn54"

  

The Poller decision, when properly applied, should discourage the use of summary adjudication only where such action encompasses subjective evidence such as motive, intent, credibility, and the like. In assessing the contribution of summary judgment to the expedition of complex antitrust cases, the Commission does not wish to invite the sort of abuses of summary judgment that the Poller decision effectively condemned. On the other hand, the appellate courts should more realistically evaluate the availability and proper application of summary judgment.

  

Since we view the present language of Rule 56 as compatible with more effective use of summary adjudication, we do not recommend a change in the Rule. If, however, future decisions do not enhance the availability of summary judgment, an amendment to the Rule may be needed.

  (footnotes omitted). The Ninth Circuit put the point well in Zweig v. Hearst Corp., 521 F.2d 1129, 1135-1136 (9th Cir.), cert. denied, 423 U.S. 1025, 96 S. Ct. 469, 46 L. Ed. 2d 399 (1975):

  

Summary judgment has, as one of its most important goals, the elimination of waste of the time and resources of both litigants and the courts in cases where a trial would be a useless formality. Courts must, of course, proceed with caution in determining litigation by summary judgment; this is especially true where grave, important and novel questions of law are involved. However, the mere fact that the issues may be complex is not a valid reason to deny summary judgment when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.

  (emphasis added). We agree.

  Against this background, the courts have repeatedly held that when, despite adequate discovery, plaintiffs cannot come forward with admissible and probative evidence of an antitrust violation, summary judgment is appropriate. See, e.g., Comet Mechanical Contractors, Inc. v. E.A. Cowen Construction Inc., 609 F.2d 404 (10th Cir. 1980); Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102, 109-10 (2d Cir. 1975); Consolidated Farmers Mutual Insurance Co. v. Anchor Savings Ass'n, 480 F. Supp. 640 (D.Kan.1979), aff'd, 1980 Trade Cases P 63,530 (10th Cir. 1980), cert. den., 449 U.S. 1080, 101 S. Ct. 863, 66 L. Ed. 2d 804; Raitport v. General Motors Corp., 450 F. Supp. 1349, 1355 (E.D.Pa.1978) (summary judgment granted where plaintiff had "more than ample opportunity to conduct discovery" and yet "offered only unsubstantiated conspiratorial allegations in support of his claims"); Merit Motors, Inc. v. Chrysler Corp., 417 F. Supp. 263 (D.D.C.1976), aff'd, 187 U.S. App. D.C. 11, 569 F.2d 666 (D.C.Cir.1977); Chuy v. Philadelphia Eagles, 407 F. Supp. 717, 721-22 (E.D.Pa.1976) (summary judgment granted where plaintiff had three years of discovery and "ample opportunity to cross-examine hostile witnesses," but had "turned nothing up"). Indeed,

  

(w)hen it becomes plain that the allegedly unlawful acts do not exist, and the plaintiffs' claims are without merit, the Court has a duty to grant summary judgment.

  Natrona Service, Inc. v. Continental Oil Co., 435 F. Supp. 99, 106 (D.Wyo.1977), aff'd, 598 F.2d 1294 (10th Cir. 1979) (emphasis added); Capital Temporaries, Inc. v. Olsten Corp., 365 F. Supp. 888 (D.Conn.1973), aff'd, 506 F.2d 658 (2d Cir. 1974).

  As we have noted, to avoid summary judgment, plaintiffs must advance "significant probative evidence" as to each of the elements of the antitrust conspiracy claim. First National Bank of Arizona v. Cities Service Co., supra. In order to be probative, the evidence must at least be admissible. See n. 3, supra. Moreover, the term "significant probative evidence" excludes speculation. Where speculative evidence is the only support for plaintiffs' claims, courts have not hesitated to grant summary judgment. In Robin Construction Co. v. United States, 345 F.2d 610, 614 (3d Cir. 1965), the Third Circuit upheld the grant of summary judgment where the plaintiff had nothing to offer but speculation and possibilities:

  

It is not enough to rest upon the uncertainty which broods over all human affairs or to pose philosophic doubts regarding the conclusiveness of evidentiary facts. In the world of speculation such doubts have an honored place, but in the daily affairs of mankind and the intensely practical business of litigation they are put aside as conjectural. In the words of Judge Learned Hand in DeLuca v. Atlantic Refining Co., 176 F.2d 421, 423 (2d Cir. 1949), cert. denied, 338 U.S. 943 (70 S. Ct. 423, 94 L. Ed. 581) (1950), ... "(b)ut if a motion for summary judgment is to have any office whatever, it is to put an end to such frivolous possibilities when they are the only answer."

  Similarly, in Bolt Associates, Inc. v. Alpine Geophysical Associates, Inc., 365 F.2d 742, 747 n.4 (3d Cir. 1966), the Third Circuit, citing Robin Construction, stated that "counsel's speculations are not sufficient to resist a motion for summary judgment." And in British Airways Board v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978), cert. denied, 440 U.S. 981, 99 S. Ct. 1790, 60 L. Ed. 2d 241 (1979), the court stated that:

  

(a) party opposing a motion for summary judgment must introduce "sufficient evidence supporting the claimed factual dispute ... to require a jury or judge to resolve the parties' differing version of the truth at trial." First National Bank v. Cities Service Co., supra, 391 U.S. at 288-289, 88 S. Ct. at 1592... A mere scintilla of evidence will not do, for a jury is permitted to draw only those inferences of which the evidence is reasonably susceptible; it may not resort to speculation.

  See also United States v. Dibble, 429 F.2d 598, 601 (9th Cir. 1970). *fn55"

  Turning to the question of burden of proof, the law is clear that it is the burden of the moving party (in this case the defendants) to show that there is no genuine issue of material fact. On the other hand, it is clear from Cities Service that the burden of demonstrating that there is significant probative evidence is on the party opposing the motion, in this case the plaintiffs. Plaintiffs cannot attempt to shift that burden by the spurious claim that the defendants must show a lack of significant probative evidence. As will be seen, this is a case in which, despite more than adequate discovery close to a decade's worth the plaintiffs have failed to meet their burden of showing significant probative evidence of a conspiracy, as opposed to the fruits of mere speculation.

  It is also important to observe that this is an exceptionally appropriate case for summary judgment treatment for several reasons. First, our description supra of the summary judgment record before us suggests that it may well be one of the most complete summary judgment records ever put before any court. Second, the trilogy of evidentiary opinions and this opinion taken together reflect extremely intense scrutiny. Third, plaintiffs' case is based primarily on documents, rather than on testimony, a factor which further narrows the distinction between summary judgment and, for example, a directed verdict, because of the limited potential here for credibility judgments. *fn56"

  Although the plaintiffs have relied heavily upon Poller, resolution of the matters before us does not turn upon a liberal or grudging construction of the principles enunciated therein, for in this case, the plaintiffs have not come forth with sufficient evidence to put issues of motive or intent to the test. A motive or intent question does not arise simply because plaintiffs' counsel say that it does, or because plaintiffs proffer documents, statements, or expert opinions *fn57" which are inadmissible or which do not themselves put motive or intent genuinely in issue. There must be some evidence offered which will raise the motive or intent issue, and in this case there is none. *fn58"

  Having set forth the standards we will apply to our summary judgment determination, we turn to an explication of the legal principles affecting plaintiffs' Sherman § 1 and Wilson Tariff Act claims.

  VI. Legal Principles Affecting Plaintiffs' Sherman Act § 1 and Wilson Tariff Act Conspiracy Case

  A. Sherman Act § 1

  1. Introduction and Basic Principles

  We commence our discussion of the legal principles applicable to this case with Section 1 of the Sherman Act, 15 U.S.C. § 1, because the core of plaintiffs' case rests on allegations of combination or conspiracy in violation of that section. Unlike the manner in which we have detailed the applicable principles of law in our parallel series of evidentiary opinions, it is unnecessary to spell out in great detail the basic principles governing section 1 of the Sherman Act for two main reasons. First, these principles are exceedingly well-known, and have been set forth in a multitude of opinions and treatises. Second, plaintiffs' case is more notable for the extent to which it does not fit the classical Sherman § 1 mold than for the extent to which it does.

  The basic principles governing application of § 1 of the Sherman Act have been concisely stated by the Third Circuit:

  

In order to sustain a cause of action under § 1 of the Sherman Act, the plaintiff must prove: (1) that the defendants contracted, combined or conspired among each other; (2) that the combination or conspiracy produced adverse, anti-competitive effects within relevant product and geographic markets; *fn59" (3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiff was injured as a proximate result of that conspiracy....

  

Unless the particular restraint falls within a category that has been judicially determined to be illegal per se, the legality of a restraint challenged under § 1 of the Sherman Act must be assessed under the rule of reason. Under the rule of reason standard, only those restraints upon interstate commerce which are unreasonable are proscribed by § 1 of the Sherman Act.

  Martin B. Glauser Dodge Co. v. Chrysler Corp., 570 F.2d 72, 81-82 (3d Cir. 1977), cert. denied, 436 U.S. 913, 98 S. Ct. 2253, 56 L. Ed. 2d 413 (1978) (citations omitted). *fn60"

  The per se approach, by which a type of conduct is viewed as per se violative of the Sherman Act without regard to its justification, has been applied in three basic situations: (1) price-fixing, see United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S. Ct. 811, 84 L. Ed. 1129 (1940); (2) market division agreements, see United States v. Topco Associates, Inc., 405 U.S. 596, 92 S. Ct. 1126, 31 L. Ed. 2d 515 (1972); and, although less clearly, (3) group boycotts, see Silver v. New York Stock Exchange, 373 U.S. 341, 83 S. Ct. 1246, 10 L. Ed. 2d 389 (1963); Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed. 2d 741 (1959). Generally speaking, all other agreements are assessed using the rule of reason analysis. We emphasize that the core requirement of § 1 of the Sherman Act, and the one with which we are primarily concerned herein, is that there be a "contract, combination, or conspiracy" i. e., an agreement in restraint of trade.

  In this segment of the opinion, we shall explicate those facets of § 1 (as set forth in the applicable case law) which are called into play by the patterns of conduct said by plaintiffs to give rise to an inference of concerted action and therefore to constitute a basis for liability. *fn61" In Part VI.D., infra, we shall take up the related matter of the law of conspiracy in the antitrust context, explaining the means of proving an agreement in restraint of competition.

  2. Price Agreements

  It is often said that all agreements which "affect" price are per se illegal, but it is plain that such a formulation overstates the law. Socony-Vacuum, supra, explained that "(u)nder the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se." 310 U.S. at 223, 60 S. Ct. at 844. Thus, the agreement must not only affect price, but must have been entered with the purpose to affect price. Moreover, the Sherman Act by its very terms requires that the agreement, to be unlawful, must be "in restraint of trade" i. e., the agreement must in some manner inhibit competition. As expressed by Professor Sullivan, "(t)he Act is not intended to make unlawful arrangements which affect price by improving competition." L. Sullivan, Handbook of the Law of Antitrust 200 (1977). Thus, while "naked" restraints described in Socony-Vacuum are indeed per se forbidden, agreements having only an indirect or "incidental" effect on price are not, and are examined utilizing something more akin to a rule of reason approach.

  In making its determination whether conduct has the purpose or effect of restraining price competition as required by Socony-Vacuum in order to make the practice per se illegal, the court must carefully analyze the facts of the allegedly offending arrangement. Professor Sullivan has summarized the factual patterns of those cases in which such a purpose or effect to dampen price competition has been found as follows:

  

First, the practices examined are related to the market in such a way that if they have any effect at all they will have an effect on price formation. Second, they lack any significant degree of integration of functions among the competitors. Third, the arrangements are not ones which help to make or improve a market by facilitating trading, or exchanging information, or standardizing product, or the like, and which thus may aid competition. Since price formation is affected if there is any consequence at all, and since there is no improvement in the market and no integration, it is entirely fair and functionally accurate to treat arrangements like these as naked restraints.

  L. Sullivan, supra, at 201-02 (footnote omitted). See, e.g., Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S. Ct. 2004, 44 L. Ed. 2d 572 (1975); National Macaroni Manufacturers' Ass'n v. FTC, 345 F.2d 421 (7th Cir. 1965); United States v. Gasoline Retailers' Ass'n, 285 F.2d 688 (7th Cir. 1961); Plymouth Dealers' Ass'n v. United States, 279 F.2d 128 (9th Cir. 1960); Las Vegas Merchant Plumbers Ass'n v. United States, 210 F.2d 732 (9th Cir.), cert. denied, 348 U.S. 817, 75 S. Ct. 29, 99 L. Ed. 645 (1954); United States v. Nationwide Trailer Rental System, Inc., 156 F. Supp. 800 (D.Kan.), aff'd per curiam, 355 U.S. 10, 78 S. Ct. 11, 2 L. Ed. 2d 20 (1957); United States v. United Liquors Corp., 149 F. Supp. 609 (W.D.Tenn.1956), aff'd per curiam, 352 U.S. 991, 77 S. Ct. 557, 1 L. Ed. 2d 540 (1957).

  In contrast, arrangements which have some effect on price but which also may have the purpose and effect of making or improving a market are not per se illegal, even though they may indirectly affect price, and are judged under a rule of reason standard. The leading case in this area is Chicago Board of Trade, quoted at n.60 supra, which set forth the classical rule of reason formulation. *fn62" Other cases which have adopted a rule of reason approach on the grounds that the questioned conduct improves the competitive market include those dealing with regulation of tobacco auction warehouses, see, e.g., Danville Tobacco Ass'n v. Bryant-Buckner Assoc., Inc., 372 F.2d 634 (4th Cir.), cert. denied, 387 U.S. 907, 87 S. Ct. 1688, 18 L. Ed. 2d 624 (1967); Winn Ave. Warehouse, Inc. v. Winchester Tobacco Warehouse Co., 339 F.2d 277 (6th Cir. 1964), and those involving bid depositories for the building trades, see e.g., Mechanical Contractors Bid Depository v. Christiansen, 352 F.2d 817 (10th Cir. 1965), cert. denied, 384 U.S. 918, 86 S. Ct. 1365, 16 L. Ed. 2d 439 (1966).

  A second major category of cases which escape per se treatment despite having some effect on price is that in which economies of scale can be achieved through partial integration of competitors' functions. Such arrangements include joint selling agencies, see, e.g., Appalachian Coals, Inc. v. United States, 288 U.S. 344, 53 S. Ct. 471, 77 L. Ed. 825 (1933), and joint purchasing arrangements, see, e.g., Instant Delivery Corp. v. City Stores Co., 284 F. Supp. 941 (E.D.Pa.1968); Parmelee Transportation Co. v. Keeshin, 186 F. Supp. 533 (N.D.Ill.1960), aff'd, 292 F.2d 794 (7th Cir.), cert. denied, 368 U.S. 944, 82 S. Ct. 376, 7 L. Ed. 2d 340 (1961). To qualify for rule of reason treatment on this "economies of scale" theory, a price restraint must be a direct result of the integration of functions, and must not significantly reduce market-wide competition. See generally L. Sullivan, supra, at 206-10. When the integration of functions could be accomplished without the price restraint, the restraint which results will still be per se illegal. See United States v. Sealy, Inc., 388 U.S. 350, 87 S. Ct. 1847, 18 L. Ed. 2d 1238 (1967).

  Plaintiffs in this litigation have at various times espoused a number of different theories as to behavior by defendants which is alleged to be "price-fixing" and therefore per se violative of the Sherman Act. We address each of these theories, applying the foregoing principles, but we do so only briefly, for we find the result in each case to be plain.

  (a) The "Price Necessary to Get the Sale"

  As described in Part II, supra, plaintiffs have often characterized defendants' alleged conspiracy as one in which defendants agreed to charge "whatever price was necessary to make the sale." We agree with defendants that if such an agreement could be proved, it would merely be an agreement to compete, and hence would improve, rather than restrain, competition. Such an agreement would not have the purpose or effect of "raising, depressing, fixing, pegging, or stabilizing" prices, as required by Socony-Vacuum.

  (b) Agreement to Increase Market Share

  Plaintiffs have also averred that defendants are guilty of agreeing to increase their market share. We see such an agreement, if it could be shown, as little different from (a) above; a mere decision to obtain a greater share of the business by competing would not violate the Sherman Act. For example, if a group of companies "agreed" to have a price war so as to increase their market share, this would not violate the antitrust laws in the absence of some agreement to raise prices again after successful market penetration. As will be seen infra, plaintiffs have offered no evidence that defendants' prices rose after they achieved market penetration. Thus, in the absence of some other related agreement, we see an agreement to attempt to increase market share as another form of an agreement to compete.

  (c) Agreement to Fix Minimum Prices

  An agreement to fix a minimum price would also be a per se violation of section 1 of the Sherman Act. While a consumer or the government might bring an action to attack such an agreement, as we explain in Part VI.B., infra, competitors, such as the plaintiffs, have no standing to attack such agreements, for they can show no antitrust injury flowing therefrom.

  (d) Agreement to Price Predatorily

  Plaintiffs further allege that defendants agreed to engage in collusive predatory pricing, although without fixing any particular price. Such an agreement, we believe, would be a per se violation of § 1, in that it would, in Socony-Vacuum terms, have the intent and effect of depressing the price. We note, however, that in the absence of direct proof, such an agreement may be impossible to prove by indirect evidence under the standards set forth by the Third Circuit in Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309 (3d Cir. 1975) and Bogosian v. Gulf Oil Corp., 561 F.2d 434 (3d Cir. 1977), cert. denied, 434 U.S. 1086, 98 S. Ct. 1280, 55 L. Ed. 2d 791 (1978), discussed in Part VI.D., infra.

  (e) Agreement to Fix Low or Depressed Prices

  An agreement to charge "low" or depressed prices, as opposed to an agreement to fix a particular price, would nonetheless have the effect of stabilizing prices, and would, if proved, be per se illegal. Such an agreement is, of course, similar but not identical to an agreement to price predatorily.

  (f) Agreement to Fix Minimum Prices and a Second Agreement to Violate the First

  Plaintiffs allege that defendants agreed to fix minimum prices an agreement which, as we explain in Part VI.B., infra, plaintiffs have no standing to attack. They further allege, however, that defendants then agreed to violate that price-fixing agreement by engaging in a scheme of secret rebates in varying amounts which resulted in a net price lower than the minimum price. Such an agreement, if it existed, would be in intent and purpose the same as an agreement to compete, discussed in (a), supra. An agreement to violate a price-fixing agreement by returning to the competitive status quo can only enhance competition. See also Part VI.A.7, infra.

  (g) Agreement to Deceive Government Authorities With Respect to Price

  Plaintiffs finally have alleged that an agreement to commit customs fraud by misleading government authorities as to the actual price charged is violative of the Sherman Act. We do not believe such an agreement, if proved, is one that affects price. Such agreements are discussed at VI.A.7, infra.

  3. Market Allocation

  Plaintiffs contend that the Five Company Rule, promulgated by the JMEA and discussed in detail infra, which purports to restrict each Japanese exporter to five U.S. customers, is a horizontal market division which is per se illegal under section 1 of the Sherman Act. They thus invoke United States v. Topco Associates, Inc., 405 U.S. 596, 92 S. Ct. 1126, 31 L. Ed. 2d 515 (1972), in which the Supreme Court explicitly ruled that market divisions are per se illegal, whether or not they are ancillary to some price-fixing or other competition-restraining agreement. See also United States v. Sealy, Inc., 388 U.S. 350, 87 S. Ct. 1847, 18 L. Ed. 2d 1238 (1967); Timken Roller Bearing Co. v. United States, 341 U.S. 593, 71 S. Ct. 971, 95 L. Ed. 1199 (1951).

  We need not discuss this principle in detail, however, for as will be seen infra, the Five Company Rule did not operate to divide the market. Rather, because each manufacturer could include its American subsidiary as one of its five customers, and because the subsidiary had no concomitant market restrictions but could sell to anyone, the rule was without practical effect. See Part VII.F.2, infra. Moreover, plaintiffs could not have been injured by an agreement such as the Five Company Rule whose effect would be to reduce competition and keep prices up. See Part VI.B., infra.

   4. Membership in Trade Associations and Attendance at Meetings

  While to our knowledge plaintiffs have never explicitly contended that mere active membership in a trade association constitutes an agreement which violates section 1 of the Sherman Act, they have, on numerous occasions, implied that such a principle obtains in the present context. Arguing almost by innuendo, they appear to be suggesting that, given the fact that virtually all the Japanese manufacturing defendants were conferees, participation in meetings of groups such as the Tenth Day Group or even the EIAJ can give rise to an inference of collusive activity on the grounds that it is impossible to imagine what else was being accomplished at such meetings. We therefore consider the potential antitrust import of such membership.

  It is plain that mere membership in a trade association, including attendance at meetings, is insufficient without more to give rise to an inference of conspiracy. See, e.g., Hanson v. Shell Oil Co., 541 F.2d 1352, 1359 (9th Cir. 1976), cert. denied, 429 U.S. 1074, 97 S. Ct. 813, 50 L. Ed. 2d 792 (1977); Kline v. Coldwell, Banker & Co., 508 F.2d 226 (9th Cir. 1974), cert. denied, 421 U.S. 963, 95 S. Ct. 1950, 44 L. Ed. 2d 449 (1975); Northern California Pharmaceutical Ass'n v. United States, 306 F.2d 379 (9th Cir.), cert. denied, 371 U.S. 862, 83 S. Ct. 119, 9 L. Ed. 2d 99 (1962); Metropolitan Bag & Paper Distributors Ass'n v. FTC, 240 F.2d 341, 344 (2d Cir. 1957), cert. denied, 355 U.S. 819, 78 S. Ct. 24, 2 L. Ed. 2d 35 (1957); Trist v. First Federal Savings & Loan Ass'n, 466 F. Supp. 578, 587 (E.D.Pa.1979); Hunt v. Mobil Oil Corp., 465 F. Supp. 195, 231 (S.D.N.Y.1978), aff'd mem., 610 F.2d 806 (2d Cir. 1979); Harlem River Consumers Cooperative, Inc. v. Associated Grocers of Harlem, Inc., 408 F. Supp. 1251, 1280 (S.D.N.Y.1976); Vandervelde v. Put & Call Brokers & Dealers Ass'n, Inc., 344 F. Supp. 118, 155 (S.D.N.Y.1972); cf. Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309, 1312-13 (3d Cir. 1975) (mere contact through phone calls insufficient).

  All of these cases, in rejecting the notion that mere membership in a trade association gives rise to an inference of conspiratorial conduct by a particular member, even when the association itself has been found to have engaged in illegal conduct, emphasize that there must be proof of knowing, intentional participation in the illegal scheme. The Ninth Circuit has stated, for example:

  

It thus clearly appears that in order for a member of a trade association to become guilty in a criminal case or liable in a treble damage case he must have "knowingly, intentionally and actively participated in an individual capacity in the scheme."

  Kline v. Coldwell, Banker & Co., supra, 508 F.2d at 232, quoting Northern California Pharmaceutical Ass'n v. United States, supra. Similarly, Judge Weinfeld stated:

  

(M)ere association with conspirators and presence at the scene of a conspiracy, even coupled with knowledge that wrongful conduct by others is being engaged in, are not by themselves sufficient to support the inference of knowing and intentional attachment to an illegal enterprise.

  Hunt v. Mobil Oil Corp., supra, 465 F. Supp. at 231.

  Nor can plaintiffs attempt to draw an inference of conspiracy from the fact that the meetings provide a forum for collusive action. "Opportunities to conspire are not probative of whether firms did in fact conspire; an opportunity to conspire will exist always." Brown v. Cameron-Brown Co., 1980-2 Trade Cases P 63,400 at p. 76,040 (E.D.Va.1980).

  These quotations typify the thrust of the case law. In the absence of proof of knowing, intentional participation in illegal activities, plaintiffs cannot draw an inference of conspiratorial conduct from the active membership by defendants in various trade associations.

  5. Exchange of Information Concerning Prices, Production and Inventory Figures, and Joint Forecasting

  Plaintiffs have stressed time and time again that, as they put it in their final post-argument brief, "one aspect of the overall conspiracy which demonstrates its pernicious effect on competition is defendants' exchange of information." In plaintiffs' submission, the various groups and associations of which defendants were members functioned as fora for the exchange of information on past, current, and future prices, production, shipments, export levels, inventory levels, and conditions of sale. The information was then used by defendants, plaintiffs' theory continues, to coordinate future production and prices. Plaintiffs contend that this information exchange is per se illegal under the Sherman Act, citing, inter alia, United States v. Container Corp. of America, 393 U.S. 333, 89 S. Ct. 510, 21 L. Ed. 2d 526 (1969).

  Plaintiffs' suggestion that defendants' information exchange is a per se violation of the Sherman Act can charitably be viewed only as disingenuous, for no case including Container Corp. has ever held mere exchange of information, without an associated price-fixing agreement (which has on occasion been inferred from certain information exchanges), to be per se illegal. *fn63" Rather, the question is whether the information exchange has a tendency unreasonably to restrain competition. Hence, the cases that address data dissemination do so employing a "rule of reason" analysis.

  The Third Circuit has succinctly summarized the case law in this area:

  

The Supreme Court has dealt several times with the limits imposed by the Sherman Act on exchanges of information among competitors. In American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S. Ct. 114, 66 L. Ed. 284 (1921), the Court held that section 1 of the Sherman Act condemned the exchange of specific price information with regard to specific customers, where the clear purpose was to stabilize prices. The Court reached the same result in United States v. American Linseed Oil Co., 262 U.S. 371, 43 S. Ct. 607, 67 L. Ed. 1035 (1923). Then in 1925, two cases upheld the exchange of information among competitors. In Maple Flooring Ass'n v. United States, 268 U.S. 563, 45 S. Ct. 578, 69 L. Ed. 1093 (1925), the Sherman Act was held to permit the exchange of average cost data relating only to closed transactions, despite an apparent stabilizing effect on price, where no intent to constrain individual competitive activity was found. And the Court in Cement Manufacturers Protective Ass'n v. United States, 268 U.S. 588, 45 S. Ct. 586, 69 L. Ed. 1104, approved the exchange of specific price information concerning specific customers, despite possible effects on prices, where the purpose of the dissemination scheme was to prevent buyers from defrauding sellers.

  

The Supreme Court has drawn a narrow line in deciding the data dissemination cases under section 1 of the Sherman Act. The difficulty derives from the fact that in competitive markets, information exchanges promote competition, while in oligopolistic markets, they depress competition. United States v. Container Corp. of America, 393 U.S. 333, 342-43, 89 S. Ct. 510 (515), 21 L. Ed. 2d 526 (1969) (Marshall, J., dissenting); P. Areeda, Antitrust Analysis 13-16 (1974). Thus, the Court has attempted to fashion rules that will reach the latter, yet not amount to broad proscriptions embracing the former.

  United States v. United States Gypsum Co., 550 F.2d 115, 122 (3d Cir. 1977), aff'd, 438 U.S. 422, 98 S. Ct. 2864, 57 L. Ed. 2d 854 (1978).

  United States Gypsum was concerned only with the exchange of pricing information. The cases discussed therein, however, also considered the exchange of other types of information. Thus, American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S. Ct. 114, 66 L. Ed. 284 (1921), invalidated a program of a trade association in the hardwood industry which called for daily reporting of not just prices, but of sales, purchases, production, shipment, and inventory data as well, all subject to audit by association representatives. The Court inferred an agreement in restraint of trade from the elaborate nature of the scheme, concluding that the "purpose and effect ... were to restrict competition ... by concerted action in curtailing production and in increasing prices." 257 U.S. at 411-12, 42 S. Ct. at 121.

  The court relied upon American Column to invalidate an even more comprehensive system of information exchange in United States v. American Linseed Oil Co., 262 U.S. 371, 43 S. Ct. 607, 67 L. Ed. 1035 (1923). But in Maple Flooring Manufacturers Ass'n v. United States, 268 U.S. 563, 45 S. Ct. 578, 69 L. Ed. 1093 (1925), the court employed a similar purpose and effect analysis to reach a contrary result, where the information exchanged was averaged and disseminated without identification of the particular member or transaction, and where the prices were not uniform. No agreement to affect production, or to fix or maintain prices, or to conform to published averages, was ever alleged. The Court explained:

  

Persons who unite in gathering and disseminating information in trade journals and statistical reports on industry, who gather and publish statistics as to the amount of production of commodities in interstate commerce, and who report market prices, are not engaged in unlawful conspiracies in restraint of trade merely because the ultimate result of their efforts may be to stabilize prices or limit production through a better understanding of economic laws and a more general ability to conform to them, for the simple reason that the Sherman Law neither repeals economic laws nor prohibits the gathering and dissemination of information.

  268 U.S. at 584, 45 S. Ct. at 585. American Column and American Linseed were distinguished on the basis that they presented situations in which the activity "necessarily" resulted in illegal concerted action. The Court recognized that information dissemination could be the basis of concerted action in restraint of trade, as in those earlier cases, but held:

  

We decide only that trade associations or combinations of persons or corporations which openly and fairly gather and disseminate information as to the cost of their product, the volume of production, the actual price which the product has brought in past transactions, stocks of merchandise on hand, approximate cost of transportation from the principal point of shipment to the points of consumption as did these defendants and who, as they did, meet and discuss such information and statistics without however reaching or attempting to reach any agreement or any concerted action with respect to prices or production or restraining competition, do not thereby engage in unlawful restraint of commerce.

  Id. at 586, 45 S. Ct. at 586. We will refer to Maple Flooring on a number of occasions in Part VII, infra, because its holding, and the quoted language, is apposite to this record.

  Maple Flooring's companion case, Cement Mfrs.' Protective Ass'n v. United States, 268 U.S. 588, 45 S. Ct. 586, 69 L. Ed. 1104 (1925), went one step further, upholding a scheme which was essentially similar, but in which specific sales were identified and which had resulted in production limitation and substantial price uniformity. The Court was persuaded that price uniformity could "inevitably result from active, free and unrestrained competition" when the product is fungible and the buyers knowledgeable. Id. at 592, 45 S. Ct. at 587. Moreover, the Court believed that when the data exchanged enabled sellers to counter the fraudulent practices of some dealers, as was the case in the Cement case, the exchange could not be held to be an unlawful restraint. Ultimately, the Court rested on its Maple Flooring reasoning: there was no agreement, and in the absence thereof, the information exchange activities were not in themselves unlawful. See also Sugar Institute, Inc. v. United States, 297 U.S. 553, 56 S. Ct. 629, 80 L. Ed. 859 (1936), in which the court reaffirmed its Maple Flooring position to the effect that

  

competition does not become less free merely because of the distribution of knowledge of the essential factors entering into commercial transactions. The natural effect of the acquisition of the wider and more scientific knowledge of business conditions on the minds of those engaged in commerce, and the consequent stabilizing of production and price, cannot be said to be an unreasonable restraint or in any respect unlawful.

  297 U.S. at 598, 56 S. Ct. at 642. The Sugar Institute Court explained the difference between the American Column cases and the Maple Flooring cases as follows:

  

(W)hile the collection and dissemination of trade statistics are in themselves permissible and may be a useful adjunct of fair commerce, a combination to gather and supply information as a part of a plan to impose unwarrantable restrictions, as, for example, to curtail production and raise prices, has been condemned.

  Id. at 599-600, 56 S. Ct. at 642-643.

  Professor Sullivan has summarized the rules of these early cases as follows:

  

Where there is no commitment to comply with published prices, where individual transactions are not identified, where information goes to buyers as well as sellers, and where no audit procedure, common analysis or suspicious exhortation is associated with price reporting, a purpose and effect analysis focused only on program details will tend to validate the program.

  L. Sullivan, supra, at 269.

  Perhaps the most troubling of the Supreme Court's opinions in this area is United States v. Container Corp. of America, 393 U.S. 333, 89 S. Ct. 510, 21 L. Ed. 2d 526 (1969), upon which plaintiffs rely heavily. Container Corp. invalidated an arrangement in the corrugated container industry whereby each defendant requested from its competitors the most recent price charged or quoted, whenever it needed such information and the information was not otherwise available. The information requested was generally provided, with an expectation that reciprocal information would be furnished when needed. The result was a downward stabilization of price. Justice Douglas' two-page opinion briefly examines the market structure, noting that defendants accounted for 90% of the market, that the product was essentially fungible and the demand inelastic, and that entry costs were low, and concludes that the "inferences are irresistible that the exchange of price information has had an anticompetitive effect in the industry, chilling the vigor of price competition." 393 U.S. at 337, 89 S. Ct. at 512. Price was held to be "too critical ... to allow it to be used in an informal manner to restrain competition." Id. at 338, 89 S. Ct. at 513. To this final statement was appended a footnote which pointed out, inter alia, that Socony-Vacuum had held all forms of price fixing to be per se violative of the Sherman Act.

  This final footnote, with its textual statement, led to confusion as to whether the Container Corp. majority was obliquely announcing a per se rule banning all exchange of pricing information. Justice Fortas, concurring, joined the majority opinion on the explicit understanding that no such rule was being enunciated. Justices Marshall, Harlan, and Stewart, however, dissented because they disagreed with what they read as the majority's use of a per se rule.

  This confusion was subsequently dispelled by the explicit statement that "the dissemination of price information is not itself a per se violation of the Sherman Act." United States v. Citizens & Southern National Bank, 422 U.S. 86, 113, 95 S. Ct. 2099, 2115, 45 L. Ed. 2d 41 (1975), citing Maple Flooring, Cement Mfrs., and Container Corp. itself. See also United States v. United States Gypsum Co., 438 U.S. 422, 441 n.16, 98 S. Ct. 2864, 2875 n.16, 57 L. Ed. 2d 854 (1978). *fn64" Thus we know, contrary to plaintiffs' suggestion, that information exchange, including the exchange of price information, remains subject to a rule of reason analysis.

  The Container Corp. opinion is, at best, opaque, and the line it draws between information exchange programs which violate the Sherman Act and those which do not is indistinct. *fn65" Plaintiffs rely on Container Corp. primarily for the per se point, which, as we have seen, has been repudiated. In any event, Container Corp. is clearly distinguishable from the case at bar on its facts, in that it involved the exchange, upon request, of specific, current, identifiable price data. Because the fact patterns are so different, and because Container Corp. plainly did not overrule Maple Flooring and Cement Mfrs., it is not helpful to plaintiffs. Accordingly, when we examine the record as to defendants' exchange of information, our focus will be on the reasonableness vel non of the conduct.

  We note in summary that cases which have found violations have either involved an exchange of detailed, individually identifiable, actual price data, a concentrated industry, and a purpose or effect to restrain competition, or some other evidence of an actual agreement to restrain competition. Exchange of aggregate data and most non-price data, such as market conditions, trends, and forecasts, has generally been permitted, at least in the absence of some evidence of an agreement to use the information to fix prices, adjust production, or allocate market shares.

  6. Product Standardization and Technical Research Exchange

  Plaintiffs have also suggested that defendants' efforts at product standardization and exchange of technical research are indicative of conspiratorial activity violative of the Sherman Act. Product standardization alone, without a related price-fixing allegation, has not been frequently litigated. Those courts that have considered the issue have found standardization programs that improve product quality or reduce costs, eliminate waste, and provide the basis for easier price comparison by consumers, thus enhancing increased price competition, to be reasonable. See, e.g., Tag Mfrs. Institute v. FTC, 174 F.2d 452 (1st Cir. 1949); Structural Laminates, Inc. v. Douglas Fir Plywood Ass'n, 261 F. Supp. 154 (D.Or.1966), aff'd, 399 F.2d 155 (9th Cir. 1968), cert. denied, 393 U.S. 1024, 89 S. Ct. 636, 21 L. Ed. 2d 569 (1969); United States v. Johns-Manville Corp., 259 F. Supp. 440 (E.D.Pa.1966).

  On the other hand, programs have been ruled unreasonable, hence illegal, when pursued for an anticompetitive purpose, or when linked with other factors to become tantamount to price-fixing. In National Macaroni Manufacturers Ass'n v. FTC, 345 F.2d 421, 426 (7th Cir. 1965), for example, the court agreed with the FTC that "where all or the dominant firms in a market combine to fix the composition of their product with the design and result of depressing the price of an essential raw material, they violate the rule against price-fixing agreements as it has been laid down by the Supreme Court." Similarly, the court in Bond Crown & Cork Co. v. FTC, 176 F.2d 974, 979 (4th Cir. 1949), explained that product standardization "would be innocent enough by itself but not when taken in connection with standardization of discounts and differentials, publication of prices with agreements not to charge less than a minimum ..., freight equalization ... and such uniformity of prices throughout the industry as to leave no price competition of any sort anywhere." See also C-O Two Fire Equipment Co. v. United States, 197 F.2d 489 (9th Cir.), cert. denied, 344 U.S. 892, 73 S. Ct. 211, 97 L. Ed. 690 (1952); Milk & Ice Cream Can Institute v. FTC, 152 F.2d 478 (7th Cir. 1946).

  7. Secret Rebates

  Plaintiffs have, at various times and by way of a number of formulations, contended that defendants' practice of granting secret rebates was illegal under the Sherman Act, noting that the rebate scheme served to circumvent the MITI-related export control agreements and the 1921 Antidumping Act, and that it furthermore engendered widespread customs fraud against the United States. The problem with this theory is that it describes in ultimate essence a pro- competitive scheme: the rebates are, if proved, in contravention of provisions expressly designed to reduce competition, at least so long as there is no evidence of concerted rebate activity. An agreement to compete, as we said supra, cannot violate the Sherman Act.

  A claim analogous to that presented by plaintiffs here was considered and rejected by the Supreme Court in United States v. Citizens & Southern National Bank, 422 U.S. 86, 95 S. Ct. 2099, 45 L. Ed. 2d 41 (1975). In that case, defendants, an Atlanta bank and its affiliated entities, embarked upon a program of de facto branching designed to circumvent the anti-competitive effect of Georgia state regulations which prohibited banks located in cities from opening branches in suburban areas. The defendants entered into de facto control arrangements with various banks in Atlanta suburbs and, after a change in state law, proceeded to acquire several of them. In response to a Justice Department challenge to the program, the Court held that the common control and sharing of information and facilities between the defendants and their de facto branches were an integral part of defendants' pro-competitive attempt to circumvent Georgia's anti-competitive regulatory scheme, and thus could not be considered unreasonable restraints of trade under the antitrust laws:

  

To characterize these relationships as an unreasonable restraint of trade is to forget that their whole purpose and effect were to defeat a restraint of trade. Georgia's antibranching law amounted to a compulsory market division....

  

... C&S devised a strategy to circumvent this statutory barrier. By providing new banking options to suburban Atlanta customers, while eliminating no existing options, the de facto branching program of C&S has plainly been procompetitive.

  422 U.S. at 118-19, 95 S. Ct. at 2117-2118.

  Plaintiffs' claims here, that defendants conspired to offer prices which allegedly were lower than, and therefore in violation of, the minimum price provisions of the export control arrangements and dutiable under the 1921 Antidumping Act, are similar to the claims rejected by the Supreme Court in Citizens & Southern National Bank. Such an agreement to circumvent government barriers to import competition would, if proved, be pro-competitive in purpose and effect and could not support plaintiffs' antitrust claims.

  Similarly, plaintiffs' attempt to cast anti-competitive aspersions upon defendants' alleged rebating is without foundation. The Supreme Court has noted the pro-competitive virtues of secret price cutting. See, e.g., United States Gypsum Co., supra, 438 U.S. at 456, 98 S. Ct. at 2883. ("Price concessions by oligopolists generally yield competitive advantages only if secrecy can be maintained; when the terms of the concession are made publicly known, other competitors are likely to follow and any advantage to the initiator is lost in the process."). Secret price cutting can be a pro-competitive strategy to be encouraged, not condemned, under the antitrust laws.

  Indeed, the contention that secret rebating to avoid anti-competitive, government-imposed regulatory schemes constitutes an antitrust violation was specifically rejected by the Third Circuit in Knuth v. Erie-Crawford Dairy Cooperative Ass'n, 463 F.2d 470 (3d Cir. 1972), cert. denied, 410 U.S. 913, 93 S. Ct. 966, 35 L. Ed. 2d 278 (1973). In that case, plaintiffs, milk producers, brought an antitrust action against the cooperative which sold their milk on consignment (of which plaintiffs were members) and the dairies which purchased the milk, on the ground that the cooperative was granting secret rebates to the dairies in order to sell the milk at prices below those established by the Pennsylvania Milk Control Commission. Despite the fact that the alleged rebates were illegal under Pennsylvania law, the court held that plaintiffs had failed to state a cause of action under the antitrust laws. Id. at 476. *fn66"

  Thus the rebating scheme alone cannot, by virtue of its character as a device to circumvent governmental regulation, support a Sherman Act violation.

  8. Joint Activities in Promoting Public and Governmental Relations and Joint Legal Action in Response to Common Problems

  Plaintiffs allege that defendants violated Section 1 of the Sherman Act by virtue of their concerted dealings with the governments of both the U.S. and Japan. For example, plaintiffs claim that defendants (1) jointly sought to influence American and Japanese legislative regulation concerning export-import duties and commodity taxes; (2) conducted publicity campaigns to promote governmental relations; (3) participated in a joint defense of their rebate practices in actions brought by the Customs Office of the Department of Treasury under the Antidumping Act of 1921; and (4) conspired to institute litigation to enjoin those actions. These allegations require that we consider the extent to which courts have considered concerted lobbying action with the legislative or executive branches of government, either by trade associations or similarly situated corporations, and concerted legal action in the courts to combat problems common to all companies in the trade or industry, as violative of Section 1 of the Sherman Act.

  Concerted action by trade associations to influence or promote legislative, judicial, or administrative action has generally been regarded as necessary under the First Amendment to safeguard the free expression of political viewpoints and the right to petition government officials, and has been regarded as an exemption from antitrust liability. This exemption, which has come to be known as the Noerr-Pennington doctrine, applies even if the ultimate governmental action sought would limit economic competition in the industry.

  In Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961), a railroad association conducted a publicity campaign that consisted of the circulation of propaganda disparaging the trucking industry and included extensive lobbying for legislation injurious to the trucking industry, with the purpose of destroying trucking as competition in the long-distance freight business. The truckers alleged that the publicity campaign amounted to an illegal conspiracy to eliminate competition in violation of the Sherman Act. The Supreme Court dismissed the truckers' complaints, holding that a concerted but genuine attempt to influence legislation, even when conducted with an anti-competitive purpose, does not give rise to Sherman Act liability. Moreover, the Court extended the protection of joint activities for governmental action even to deceptive public relations practices. The Court supported its holding on two grounds. First,

  

In a representative democracy such as this, these branches of government act on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives. To hold that the government retains the power to act in this representative capacity and yet hold, at the same time, that the people cannot freely inform the government of their wishes would impute to the Sherman Act a purpose to regulate, not business activity, but political activity, a purpose which would have no basis whatever in the legislative history of the Act.

  365 U.S. at 137, 81 S. Ct. at 529. Secondly, the Court stated:

  

The right of petition is one of the freedoms protected by the Bill of Rights, and we cannot, of course, lightly impute to Congress an intent to invade these freedoms.

  Id. at 138, 81 S. Ct. at 530.

  The Court repeated its Sherman Act exception for trade association activities aimed at influencing governmental action in United Mine Workers v. Pennington, 381 U.S. 657, 670, 85 S. Ct. 1585, 1593, 14 L. Ed. 2d 626 (1965), *fn67" declaring that:

  

Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition. Such conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act.

  Although the language of Noerr and Pennington sweeps broadly, the doctrine is not unlimited. The Court in Noerr recognized that the broad exemption from liability would not apply where trade activities purported to influence governmental action were a "mere sham," noting:

  

There may be situations in which a publicity campaign, ostensibly directed toward influencing governmental action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified.

  365 U.S. at 144, 81 S. Ct. at 533.

  The Supreme Court elaborated on this "sham" exception to the Noerr-Pennington doctrine in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S. Ct. 609, 30 L. Ed. 2d 642 (1972). In that case, several highway carriers alleged that a competing truckers' association had conspired to institute sham administrative and judicial proceedings opposing their competitors' applications for operating rights. Plaintiffs maintained that as one result of the conspiracy they had been denied unlimited access to the courts and administrative agencies. The Court declared:

  

A combination of entrepreneurs to harass and deter their competitors from having "free and unlimited access" to the agencies and courts, to defeat that right by massive, concerted, and purposeful activities of the group are ways of building up one empire and destroying another.... If these facts are proved, a violation of the antitrust laws has been established. If the end result is unlawful, it matters not that the means used in violation may be lawful.

  404 U.S. at 515, 92 S. Ct. at 614. Yet while the Court found that attempts by trade associations to effectively bar opponents from equal participation in administrative and judicial proceedings were illegal, the Court at the same time reaffirmed and broadened the Noerr-Pennington doctrine by applying it in the administrative and judicial arenas. The Court concluded that:

  

it would be destructive of rights of association and of petition to hold that groups with common interests may not, without violating the antitrust laws, use the channels and procedures of state and federal agencies and courts to advocate their causes and points of view respecting resolution of their business and economic interests vis-a-vis their competitors.

  Id. at 510-11, 92 S. Ct. at 611-612. *fn68"

  The Court thus recognized that joint litigation by trade associations, if not pursued merely as a sham, is accorded the same immunity from Sherman Act liability as is given to the expression of political views in connection with legislative and executive actions. A fortiori the doctrine should apply to joint defense of legal proceedings as well. In applying the doctrine to judicial proceedings, lower courts have protected a trade association's right to bring a lawsuit against competitors and to attack a statute favorable to competitors, so long as the litigation has not been pursued in bad faith as a sham. See e.g., Handgards, Inc. v. Ethicon Inc., 601 F.2d 986 (9th Cir. 1979), cert. denied, 444 U.S. 1025, 100 S. Ct. 688, 62 L. Ed. 2d 659 (1980); Bracken's Shopping Center, Inc. v. Ruwe, 273 F. Supp. 606 (S.D.Ill.1967).

  Thus we see that a trade association's joint lobbying and legal activities are protected under the Noerr-Pennington doctrine unless those activities can be found to constitute a sham, even if they have an anticompetitive intent or effect. We turn now to a discussion of the requisites for standing under §§ 4 and 16 of the Clayton Act.

  B. Statutory Antitrust Standing Under § 4 and § 16 of the Clayton Act

  The statutory source of the antitrust treble-damage remedy is Section 4 of the Clayton Act, which specifically limits this remedy to "(a)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." 15 U.S.C. § 15 (emphasis added). This statute, by its terms, limits recovery to those plaintiffs who can show that their injury was caused by the defendants' violations. As the Supreme Court has recently stated, plaintiffs must show that their injury "flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S. Ct. 690, 697, 50 L. Ed. 2d 701 (1977). Plaintiffs cannot prevail unless they can demonstrate, by direct or circumstantial evidence, that this "necessary causal relation" exists. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 125, 89 S. Ct. 1562, 1577, 23 L. Ed. 2d 129 (1969); Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 697-700, 82 S. Ct. 1404, 1409-1411, 8 L. Ed. 2d 777 (1962). See also Bowen v. New York News, Inc., 522 F.2d 1242, 1255-56 (2d Cir. 1975), cert. denied, 425 U.S. 936, 96 S. Ct. 1667, 48 L. Ed. 2d 177 (1976); Rea v. Ford Motor Co., 497 F.2d 577, 589 (3d Cir.), cert. denied, 419 U.S. 868, 95 S. Ct. 126, 42 L. Ed. 2d 106 (1974).

  The Third Circuit has recently summarized the controlling principles of law:

  

Section 4 of the Clayton Act, 15 U.S.C. § 15 (1976), allows recovery only to a plaintiff who is injured "by reason of" a violation of the antitrust laws. The plaintiff has the burden of proving that the established illegality was a material cause of injury. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n.9 (89 S. Ct. 1562, 1571-1572 n.9, 23 L. Ed. 2d 129) (1969). As we said in Sound Ship Building Corp. v. Bethlehem Steel Co., 533 F.2d 96 (3d Cir.), cert. denied, 429 U.S. 860 (97 S. Ct. 161, 50 L. Ed. 2d 137) (1976), "(e) ven if a defendant's acts are shown to be violative of the statute, ... a plaintiff may not recover unless a nexus to its own injury is also demonstrated." Id. at 98. Similarly, in Deaktor v. Fox Grocery Co., 475 F.2d 1112 (3d Cir.), cert. denied, 414 U.S. 867 (94 S. Ct. 65, 38 L. Ed. 2d 86) (1973), the district court directed a verdict for the defendant at the conclusion of the plaintiff's case because the evidence demonstrating the connection between the alleged antitrust violations and the damages was too speculative to submit to the jury. Id. at 1114. We affirmed, agreeing that although there was testimony about various reasons that might have caused the plaintiff's losses, no specific cause was assigned by the plaintiff's expert. Id. at 1117.

  

.... It is not enough that the public has been harmed by a violation of the antitrust laws. The plaintiff seeking to recover treble damages must further establish as a matter of proof that the illegal conduct was a material cause of its injury. Rea v. Ford Motor Co., 497 F.2d 577, 589-90 (3d Cir.), cert. denied, 419 U.S. 868 (95 S. Ct. 126, 42 L. Ed. 2d 106) (1974); L. Sullivan, Handbook of the Law of Antitrust § 251 (1978).

  Van Dyk Research Corp. v. Xerox Corp., 631 F.2d 251, 254-55 (3d Cir. 1980). *fn69"

  Plaintiffs in this case seek treble damages, but they also seek injunctive relief under § 16 of the Clayton Act, 15 U.S.C. § 26, which authorizes such relief for any person who demonstrates "threatened loss or damage by a violation of the antitrust laws." This provision imposes a lower threshold requirement than § 4 of the Clayton Act, which requires a showing of actual injury to "business or property." Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S. Ct. 885, 31 L. Ed. 2d 184 (1972); Bogus v. American Speech & Hearing Ass'n, 582 F.2d 277 (3d Cir. 1978). Cf. NAACP v. New York Clearing House Ass'n, 431 F. Supp. 405 (S.D.N.Y.1977). However, § 16 requires a plaintiff at least to demonstrate that any threatened loss or damage has been or will be proximately caused by the alleged violations, within the traditional legal concept of proximate cause. Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573, 591-92 (3d Cir. 1979). The causation and standing issues which we consider herein involve basic concepts of proximate causation, rather than niceties in the interpretation of any particular statute. Accordingly, our discussion of standing issues in this opinion is fully as applicable to plaintiffs' standing to seek injunctive relief under § 16 as it is to their standing to seek damage relief under § 4 of the Clayton Act. *fn70"

  Defendants attack plaintiffs' standing under § 4 of the Clayton Act with respect to three different issues. First, they claim that the plaintiffs have no standing to attack the Manufacturers' Agreements and JMEA Rules, which set minimum prices for exports to the U.S. and purportedly limited the number of U.S. customers to which Japanese exporters could sell, because as competing manufacturers, plaintiffs could not have been injured by an agreement to set minimum prices or to limit the number of customers. Second, they claim that Zenith's failure to identify any damages flowing specifically from the defendants' alleged violations of the Robinson-Patman Act, except insofar as it claims to have been injured by the alleged "unitary conspiracy" as a whole, is fatal to Zenith's claims under the Robinson-Patman Act. Finally, defendants reiterate the latter argument with respect to Zenith's claim under § 7 of the Clayton Act, contending that Zenith has failed to identify any injury to it as a result of the two acquisitions which it challenges under § 7. We discuss the first of these issues here, but defer our discussion of Zenith's standing to assert its claims under the Robinson-Patman Act and § 7 of the Clayton Act until our separate discussion of those claims in Parts X and XI infra, respectively.

  Plaintiffs have aimed much of their rhetorical fire at the Manufacturers' Agreements and JMEA Rules, which they have characterized as "written cartel agreements." Defendants rejoin that plaintiffs have no standing to attack these agreements because the agreements set minimum prices for exports to the U.S. and limit the number of U.S. customers of the signatory companies. *fn71" Defendants contend that neither of these provisions could conceivably injure the plaintiffs who, as competing manufacturers, could only be benefitted by higher prices and fewer competitors. We turn to the customer-limitation provision first.

  The customer-limitation provision of the JMEA Rules, the so-called Five Company Rule, apparently limited a Japanese exporter of television receivers to a total number of five U.S. customers. As we explain in our more extensive discussion of the Rule in Part VII.F.2, infra, it was in practice wholly ineffective because each of the defendants was able under the rule to register as one of its five customers its U.S. subsidiary, which could in turn resell to any customer without limitation. Even if the Rule had operated effectively, however, we believe the plaintiffs would lack standing to attack it.

  The economic effect of a customer limitation provision is inevitably to keep prices up by reducing competition; accordingly, antitrust decisions which condemn horizontal market division speak in terms of injury to consumers because of reduced price competition. See, e.g., Burke v. Ford, 389 U.S. 320, 321-22, 88 S. Ct. 443, 444, 19 L. Ed. 2d 554 (1967); United States v. Sealy, Inc., 388 U.S. 350, 356, 87 S. Ct. 1847, 1852, 18 L. Ed. 2d 1238 (1967); L. Sullivan, Handbook of the Law of Antitrust, § 82 (1978). In Bowen v. New York News, Inc., 522 F.2d 1242, 1255-56 (2d Cir. 1975), cert. denied, 425 U.S. 936, 96 S. Ct. 1667, 48 L. Ed. 2d 177 (1976), the Second Circuit held that the plaintiff had no standing to attack an exclusive territory arrangement among some of its competitors because the only possible effect of that arrangement was to reduce competition, to the plaintiffs' benefit. See also Dahl, Inc. v. Roy Cooper Co., 448 F.2d 17, 20 (9th Cir. 1971); Seago v. North Carolina Theatres, Inc., 42 F.R.D. 627 (E.D.N.C.1966), aff'd, 388 F.2d 987 (4th Cir. 1967), cert. denied, 390 U.S. 959, 88 S. Ct. 1039, 19 L. Ed. 2d 1153 (1968). The same principle precludes plaintiffs' standing here to attack the Five Company Rule.

  Plaintiffs' lead counsel, Mr. Rome, faced with this analysis during final summary judgment argument, sought to fend the point as follows:

  

Now, with that as a factor in connection with it, I suggest that the cartel agreements and the rebate system as a unitary entity constituted a mechanism, the mechanism which enabled the defendants to pursue a course of conduct for depressing prices in the United States, as the result of which, aided by their five-company rule, they were permitted and enabled to concentrate each particular defendant's competitive thrust against a particular mass merchandise customer in the U.S. and thereby deny the capability of an American manufacturer to do business with that customer.

  Pretrial Order No. 291 at 128. And again:

  

Since under the five-company rule they really were not competing for a particular customer against each other and Your Honor will recall that only Toshiba and Sanyo dealt with Sears as an example there was no need to agree upon an amount of rebate. As a practical matter, there was only the need to focus the attention of the competition against any potential U.S. manufacturer who was not a member of the cartel. As long as a particular defendant could come in at a depressed price below that which the U.S. manufacturer was proffering to try to get the business, that was enough.

  Pretrial Order No. 291 at 120. The problem with the argument is that, where there is less competition, prices are inevitably kept up. We know of no rational explanation, and, although we pressed for it, plaintiffs have offered us none, why decreased competition would tend to bring prices down; rather, it is only increased competition, which the plaintiffs maintain the Japanese manufacturing defendants were attempting to avoid by the Rule, which could bring prices down, the low price being the evil about which plaintiffs are complaining. *fn72" While a consumer, or the attorney general, would have standing to object to high prices brought about by a limitation rule, these plaintiffs cannot be injured thereby, and accordingly lack standing to attack the Rule.

  Turning to matters of price, the plaintiffs, in effect, concede that they would have no standing to bring an action based solely on the so-called "cartel agreements." It is self-evident that an agreement which places a floor under the price one's competition can charge keeps the price up, leaving one free to compete above that price. While injuring the consumer, such an agreement cannot injure the competitor.

  In Kearney & Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579 (7th Cir. 1971), cert. denied, 405 U.S. 1066, 92 S. Ct. 1500, 31 L. Ed. 2d 796 (1972), for example, the Seventh Circuit, per Judge (now Justice) Stevens, upheld the defendants' antitrust counterclaim against the plaintiff under § 2 of the Sherman Act, but remanded on the question whether the plaintiffs' illegal conduct had injured the defendant so as to permit it to maintain a claim under § 4 of the Clayton Act, 15 U.S.C. § 15. 452 F.2d at 597-600. Notwithstanding the remand for further factual development as to several claims of injury, the court summarily rejected the defendants' claim that, as a competing manufacturer, it could have been injured by the plaintiffs' increased prices. Judge Stevens wrote:

  

Defendant has also argued that plaintiff's dominant position, coupled with its restrictive licensing practices, has enabled it to enhance the price level. If this be so, defendant, as a competing manufacturer of machines, would not have been injured.

  Id. at 600 (footnote omitted). Accord, Bendix Corp. v. Balax, Inc., 471 F.2d 149 (7th Cir. 1972), cert. denied, 414 U.S. 819, 94 S. Ct. 43, 38 L. Ed. 2d 51 (1973); Kemp Pontiac-Cadillac, Inc. v. Hartford Automobile Dealers' Ass'n, 380 F. Supp. 1382, 1386 (D.Conn.1974).

   Plaintiffs have never articulated any theory as to how the minimum-price provisions of the agreements injured them. Instead, they make three arguments in response to defendants' attack on their standing. First, they contend that the minimum price level set by the agreements was itself unduly low. Second, they say that the minimum prices were not actually minima, but were "benchmark" or "reference" prices which were used by the defendants as points of reference for some lower figure arrived at by deducting a rebate or discount. Finally, they argue that the agreements are only one part of a "unitary conspiracy," and that it is pointless to quibble over their standing to attack one piece of a vast conspiracy.

  Plaintiffs' argument that they have standing to attack the agreements because of the allegedly low level at which the minimum prices were set is without merit. No matter at what level the prices were set, the parties to the agreements remained free to sell at any price which equalled or exceeded the minimum price. Thus, the agreements curtailed each signatory's independent freedom of action only insofar as it prohibited prices below the minima. The agreements had no impact on prices except in those instances when the signatories, if they had exercised their independent judgment, would have charged prices lower than the minima. In those instances, the agreements had the effect of raising prices. Since nothing in the agreements had the effect of lowering prices, no matter at what level the minimum prices were set, plaintiffs' contention that the minimum prices were unduly low is of no significance.

  Nor can the plaintiffs derive standing to attack the agreements from the contention that the prices set in accordance therewith were not actually minimum prices at all. As we have indicated, the evidence shows that many of the defendants, although they were parties to the Manufacturers' Agreements or the JMEA Rules, paid rebates to their U.S. customers so that the actual transaction prices, taking the rebates into account, were lower than the official minimum prices set under those agreements. We will consider infra whether there is any significant probative evidence to support plaintiffs' contention that these rebates were made as the result of concerted action among the defendants. *fn73" In any case, the fact that some defendants, whether independently or in concert, violated the written minimum-price agreements does not affect the narrow issue which we are now considering: whether the plaintiffs have standing to base an antitrust action on the written agreements themselves. The agreements on their face plainly set only minimum prices, and plaintiffs produced no evidence that, despite their language, the intent and purpose of the agreements was to require each signatory to sell at or below the minimum. Thus, plaintiffs' suggestion that they have standing to attack the agreements themselves because some of the signatories violated them is without merit.

  The plaintiffs' third and most vociferous ground of opposition to the challenge to their standing is based on their theory of "unitary" conspiracy. Plaintiffs argue that the written agreements are only one element of proof in their conspiracy case, and that it makes no sense to discuss their "standing" with respect to a single piece of the pie. Moreover, any such analysis of one part of their conspiracy case, they submit, is "fragmentation" forbidden by Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S. Ct. 1404, 8 L. Ed. 2d 777 (1962).

  Because plaintiffs' "fragmentation" argument is interposed with respect to their entire case, we have treated it separately in Part VI.D.2, infra. In that discussion, we conclude that Continental Ore does not bar a detailed analysis of plaintiffs' conspiracy case and supporting evidence. Accordingly, we hold that plaintiffs have no standing to attack the minimum price agreements or the Five Company Rule because it is inconceivable that they could be injured thereby. Since plaintiffs have no standing to attack the minimum-price agreements, those agreements cannot form the "core" of their conspiracy case. The essence of the case must instead (as plaintiffs themselves now assert) lie in the alleged conspiracy to violate the agreements. Yet it is obvious that the agreements themselves cannot be evidence of a conspiracy to violate those same agreements. While the agreements may be admissible to provide background on the defendants' conduct, they are of no probative force in establishing the existence of the entirely different conspiracy which might indeed have injured the plaintiffs, if it existed, and which plaintiffs do have standing to attack.

  C. The Wilson Tariff Act

  In addition to plaintiffs' claims under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, plaintiffs allege that certain defendants' conduct in importing electronic products into the United States violated § 73 of the Wilson Tariff Act, 15 U.S.C. § 8. Section 73 of the Wilson Tariff Act provides in relevant part that

  

Every combination, conspiracy, trust, agreement, or contract is declared to be contrary to public policy, illegal and void when the same is made by or between two or more persons or corporations, either of whom, as agent or principal, is engaged in importing any article from any foreign country into the United States and when such combination, conspiracy, trust, agreement, or contract is intended to operate in restraint of lawful trade, or free competition in lawful trade or commerce, or to increase the market price in any part of the United States of any article or articles imported or intended to be imported into the United States, or of any manufacture into which such imported article enters or is intended to enter.

  15 U.S.C. § 8. Plaintiffs have never clearly stated the nature of their claim under the Wilson Tariff Act. However, given the tenor of what the parties have written on the point, we appear to be confronted with the constructional question whether the Wilson Tariff Act is broader than, narrower than, or co-extensive with the Sherman Act's antitrust provisions.

  Plaintiffs intimate, though they do not clearly state, that the Wilson Tariff Act may have protectionist aspects, and hence a broader scope than the Sherman Act. In their scores of briefs, they devote only one short segment to explication of their interpretation of the Wilson Tariff Act. There they emphasize the remarks of the sponsor of Section 73 of the Wilson Tariff Act that the provision punishes "the intent to abuse the importation laws of the United States." 26 Cong.Rec. 7118 (1894). Defendants take a polar position, asserting that the Wilson Tariff Act is narrower in scope than the Sherman Act and applies only to high price conspiracies. They argue that Congress established in the Wilson Tariff Act its own per se rule as to price fixing conspiracies designed to increase the price of imports to the United States. This provision, they continue, only demonstrated the intention of the 1894 Congress to prevent unreasonably high import prices and not, as plaintiffs would have it, "unreasonably" low prices.

  Although the position advocated by plaintiffs has been advanced before, the defendants' argument is novel. However, we have no difficulty with the points and reject both contentions in favor of the view that the Wilson Tariff Act is co-extensive with Sherman Act § 1 (in the international context).

  We address plaintiffs' claims first. The legislative history of the Wilson Tariff Act confirms that the purpose of Section 73 was substantively identical to the Sherman Act. The Senate Reports on the bill designate Section 73 as an antitrust provision by referring to it as "a substitute" for Sections 1-3 of the Sherman Act. S.Rep.No.698, 53rd Cong. 2d Sess. (Aug. 20, 1894); S.Rep.No.707, 53rd Cong. 2d Sess. (Aug. 28, 1894). Senator Morgan of Alabama, sponsor of the amendments to the tariff bill that eventually became Sections 73-76 of the Wilson Tariff Act, repeatedly emphasized that the language of the amendments clearly and effectively accomplished "the end that is desired that is to say, the repression of trusts, as they are called, in respect of the importation of goods from foreign countries." 26 Cong.Rec. 7117, 53rd Cong. 2d Sess. (July 3, 1894). Senator Morgan went on to elaborate:

  

So under the bill we are now considering is afforded distinct opportunity for the formation of thousands of trusts. You can not exclude them from this country except by means of direct and positive legislation which reaches the abuse of the importing right and prevents it from entering into such combinations with capital as will enable the importer or the person interested in imports to control the prices in the market; in other words, in common parlance, to monopolize the market.

  Id., 26 Cong.Rec. 7118 (1894). This is, of course, antitrust language. Nowhere in his speeches on the Senate floor did Senator Morgan mention any protectionist intent to aid American manufacturers.

  The case law has been consistent in treating the Wilson Tariff Act as an antitrust statute, and as nothing more than that. Judge Schwartz gave an accurate description of prior case law under the Wilson Tariff Act in Outboard Marine Corp. v. Pezetel, 461 F. Supp. 384 (D.Del.1978). The plaintiff in Pezetel, an American manufacturer of electric golf carts, noting that the defendants, the manufacturer, importer, and distributors of golf carts made in Poland, had set prices for the carts in the American market against which most American manufacturers were unable to compete, alleged inter alia a violation of the Wilson Tariff Act. The plaintiffs argued that "since the Sherman Act by its terms applies to foreign trade, the scope of the Wilson Tariff Act is rendered superfluous unless it is interpreted independently of the Sherman Act." Id. at 407. Apparently this claim, like plaintiffs' claim in this case, was vague enough to imply that the Wilson Tariff Act was more than an antitrust statute, containing an intent to protect American manufacturers by outlawing conduct which the Sherman Act did not. The court dismissed plaintiffs' contention that the Wilson Tariff Act be given a wider scope than the Sherman Act:

  

(Although) superficially attractive, the argument is without the support of either the legislative history or case law. Rather it appears that the Wilson Tariff Act sought to make clear that import trade was subject to the scrutiny of the antitrust laws a subject on which the Sherman Act was silent.

  Id. *fn74"

  Judge Schwartz' opinion reflects the consensus among the commentators and in the case law that the Wilson Tariff Act is not broader than the Sherman Act. *fn75" Where courts have found sufficient allegations of violations of the Sherman Act in the import context, they have invariably found sufficient allegations of violation of the Wilson Tariff Act as well. *fn76" If allegations are insufficient to maintain an antitrust claim, the Wilson Tariff Act provisions also fail. *fn77"

   Having concluded that the Wilson Tariff Act is not broader in scope than the Sherman Act, the second question presented, and not addressed in previous cases, is whether the Wilson Tariff Act applies only to alleged high price conspiracies and hence is narrower than the Sherman Act. Defendants bottom their argument that the purpose of the Wilson Tariff Act was only to prevent "unreasonably high import prices" and not "unreasonably low prices" upon certain observations by Judge Frank in his dissenting opinion in Adams-Mitchell Co. v. Cambridge Distributing Co., 189 F.2d 913, 920 (2d Cir. 1951). Judge Frank therein stated:

  

(The Wilson Tariff Act) was pro-consumer legislation, designed to cut the cost of living by lowering the high protective tariffs on imported goods. But if foreign monopolists could fix high prices on their products, manifestly the Act would fail of its purpose, for high prices, whether due to monopoly or tariffs, would permit domestic producers to charge non-competitive prices, far above cost, for their wares, thereby obtaining higher profits at the expense of the consumer.

  The majority in Adams-Mitchell had held that the Miller-Tydings Amendment, which exempts from the Sherman Act retail price maintenance agreements when permitted by state law, superseded the Wilson Tariff Act as well, because "the Sherman Act and the Tariff Act each embraced like prohibitions on restraint of foreign commerce." Id. at 916. Judge Frank was alone in contending that the Wilson Tariff Act should apply to such resale price maintenance agreements when the Sherman Act would not.

  Judge Frank's construction of the legislative history is buttressed by the following statement by Senator Morgan in the Senate debates on the amendments:

  

This amendment relates to preventive justice. It prevents men, by penalties imposed upon their transactions, from abusing the revenues of the United States, its dignity, its honor, its peace, and prevents them also from imposing heavy burdens upon those who must consume either imported articles or those which are made under the shelter of this law of taxation and of importation.

  26 Cong.Rec. 7118 (1894). Care, however, must be taken to assure that Senator Morgan's comments are not used out of context or to offend the plain meaning of the statute. It is true that the text of the statute explicitly outlaws high price conspiracies, prohibiting importers from conspiring "to increase the market price in any part of the United States, of any article or articles imported ... into the United States, or of any manufacture into which such imported article enters or is intended to enter." 15 U.S.C. § 8. But that does not carry the negative implication that low price conspiracies are permissible, for the referenced clause is joined to the immediately preceding language by the disjunctive "or" which, closely paralleling the Sherman Act, prohibits conspiracies "intended to operate in restraint of lawful trade, or free competition in lawful trade or commerce." That language reaches, as does the Sherman Act, conspiracies that result in both low and high prices in the American market.

  We thus reach the conclusion that the Wilson Tariff Act is of the same scope as the Sherman Act, neither broader as plaintiffs would like, nor narrower as defendants claim. Plaintiffs' claims under Section 73 of the Wilson Tariff Act will therefore be treated in the same manner as their claims under the Sherman Act. If plaintiffs' Sherman Act § 1 claims are sufficient to survive summary judgment, then defendants' motions addressed to the Wilson Tariff Act claims should be denied. However, if plaintiffs' Sherman Act § 1 claims cannot so survive, neither can their Wilson Tariff Act case. Given this construction, we shall refer discretely to the Wilson Tariff Act in this opinion only occasionally; for the most part we shall speak in Sherman Act terms.

   D. The Law of Conspiracy in an Antitrust Context

  1. In General

  One of the essential elements of a cause of action under section one of the Sherman Act is proof of a "contract, combination, or conspiracy" in restraint of trade. (Similarly, the Wilson Tariff Act requires proof of a "combination, conspiracy, trust, agreement, or contract.") In addition, for reasons described more fully infra, because of the fashion in which they are stated, plaintiffs' claims under § 2 of the Sherman Act, § 7 of the Clayton Act, and the Robinson-Patman Act all require proof of the underlying conspiracy which plaintiffs attack in their Sherman Act § 1 claim. *fn78"

  It is the agreement among competitors itself which § 1 of the Sherman Act condemns, and no overt act need be proved in order to establish a violation. *fn79" United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n.59, 60 S. Ct. 811, 845 n.59, 84 L. Ed. 1129 (1940); Nash v. United States, 229 U.S. 373, 378, 33 S. Ct. 780, 782, 57 L. Ed. 1232 (1913). Moreover, as the Supreme Court has stated, "(n)o formal agreement is necessary to constitute an unlawful conspiracy.... The essential combination or conspiracy in violation of the Sherman Act may be found in a course of dealings or other circumstances as well as in any exchange of words." American Tobacco v. United States, 328 U.S. 781, 809-10, 66 S. Ct. 1125, 1139, 90 L. Ed. 1575 (1946). See Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939). However, the fact which must be proved, whether circumstantially or directly, before any violation of the Sherman Act § 1 prohibition can be established is that two or more business firms reached some kind of agreement:

  

The crucial question is whether respondents' conduct toward petitioner stemmed from independent decision or from an agreement, tacit or express. To be sure, business behavior is admissible circumstantial evidence from which the fact finder may infer agreement. But this Court has never held that proof of parallel business behavior conclusively establishes agreements or, phrased differently, that such behavior itself constitutes a Sherman Act offense. Circumstantial evidence of consciously parallel behavior may have made heavy inroads into the traditional judicial attitude toward conspiracy; but "conscious parallelism" has not yet read conspiracy out of the Sherman Act entirely.

  Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 540-41, 74 S. Ct. 257, 259, 98 L. Ed. 273 (1954) (citations and footnote omitted). See Turner, The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal, 75 Harv.L.R. 655 (1962).

  The U.S. Court of Appeals for the Third Circuit has recently reiterated these basic propositions of Sherman Act law. Edward J. Sweeney & Sons v. Texaco, Inc., 637 F.2d 105, 110-11 (3d Cir. 1980). In affirming the district court's grant of a directed verdict for the defendant under the Sherman Act, the Court of Appeals said:

  

Unilateral action, no matter what its motivation, cannot violate § 1. United States v. Colgate & Co., 250 U.S. 300, 307 (39 S. Ct. 465, 468, 63 L. Ed. 992) (1919); Harold Friedman, Inc. v. Kroger Co., 581 F.2d 1068, 1072 (3d Cir. 1978); Tripoli Co. v. Wella Corp., 286 F. Supp. 264, 266 (E.D.Pa.1968), aff'd, 425 F.2d 932 (3d Cir.), cert. denied, 400 U.S. 831 (91 S. Ct. 62, 27 L. Ed. 2d 62) (1970). By its terms, § 1 requires proof of a "contract, combination ... or conspiracy." 15 U.S.C. § 1. We have noted that the statutory language presents a single concept about common action, not three separate ones: " "contract ... combination or conspiracy' becomes an alliterative compound noun, roughly translated to mean "concerted action.' " Bogosian v. Gulf Oil Corp., 561 F.2d 434, 445-46 (3d Cir. 1977), cert. denied, 434 U.S. 1086 (98 S. Ct. 1280, 55 L. Ed. 2d 791 ) (1978) (quoting L. Sullivan, Law of Antitrust 312 (1977)).

  

To establish the existence of concerted action, appellants had to submit evidence from which a jury could reasonably infer that Texaco and others had a conscious commitment to a common scheme designed to achieve an unlawful objective. Klein v. American Luggage Works, Inc., 323 F.2d 787, 791 (3d Cir. 1963); United States v. Standard Oil Co., 316 F.2d 884, 890 (7th Cir. 1963). Direct proof of an express agreement is not required. On the contrary, the plaintiff may rely on an inference of a common understanding drawn from circumstantial evidence: "The picture of conspiracy as a meeting by twilight of a trio of sinister persons with pointed hats close together belongs to a darker age." William Goldman Theatres v. Loew's, Inc., 150 F.2d 738, 743 n.15 (3d Cir. 1945). Nevertheless, appellants had the burden of adducing sufficient evidence from which the jury could find illegal concerted action on the basis of reasonable inferences and not mere speculation. Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309, 1312 (3d Cir. 1975).

  In this case, plaintiffs have attempted to prove the existence of a conspiracy both by circumstantial evidence and by putative direct proof.

  There are several legal issues in dispute between the parties which relate specifically to the law of conspiracy in an antitrust context. First, the parties disagree on the significance of the Supreme Court's warning in Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S. Ct. 1404, 8 L. Ed. 2d 777 (1962), against "fragmentation" of a plaintiff's proof of conspiracy. Second, the plaintiffs and defendants disagree on the meaning of the rule in this and other circuits which in plaintiffs' submission requires only "slight evidence" of a defendant's participation in an alleged conspiracy to make him liable for conspiratorial activity. Third, there is a dispute concerning the requisites of proof of conspiracy by inference from circumstantial evidence, and, in particular, on the requirements for proving conspiracy by means of consciously parallel business behavior. Fourth, there is a dispute concerning the vicarious liability of all members of the purported conspiracy for Robinson-Patman Act and Clayton Act § 7 violations committed by one or more members of the conspiracy, under the doctrine of vicarious liability of coconspirators which Zenith finds in Pinkerton v. United States, 328 U.S. 640, 66 S. Ct. 1180, 90 L. Ed. 1489 (1946). Fifth, the parties disagree as to the requisites for admissibility of coconspirator declarations. We address these five issues in the order stated.

  2. Fragmentation of the Plaintiffs' Conspiracy Allegations

  Repeatedly throughout this litigation, the plaintiffs have resisted attacks on the legal sufficiency of their conspiracy allegations by quoting the Supreme Court's admonition in Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S. Ct. 1404, 1410, 8 L. Ed. 2d 777 (1962):

  

In cases such as this, plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each. "... (T)he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole. United States v. Patten, 226 U.S. 525, 544, 33 S. Ct. 141 (145-146), 57 L. Ed. 333 ...; and in a case like the one before us, the duty of the jury was to look at the whole picture and not merely at the individual figures in it." American Tobacco Co. v. United States, 147 F.2d 93, 106 (C.A.6th Cir.)

  For example, the plaintiffs oppose the defendants' claim that plaintiffs lack standing to attack the Manufacturers' Agreements, arguing that defendants should not be permitted to isolate one part of what plaintiffs claim is a "unitary" conspiracy, thereby fragmenting plaintiffs' conspiracy case and denying them "the full benefit of their proof" in contravention of Continental Ore. As we shall explain, it is clear from the facts and reasoning of Continental Ore itself that the Supreme Court never intended the quoted language to bar a probing analysis of antitrust conspiracy claims. Accordingly, we reject plaintiffs' interpretation of the quoted language.

  In Continental Ore, the Supreme Court reversed the decision of the Ninth Circuit, which had held that a verdict for the defendants should have been directed because the plaintiff failed to prove that the defendants were members of a conspiracy which was actionable under the Sherman Act. The plaintiffs in Continental Ore claimed that six defendants and others conspired to restrain and to monopolize trade and commerce in ferrovanadium and vanadium oxide, two compounds used chiefly in the manufacture of steel. Specifically, the complaint in Continental Ore alleged that the defendants' conspiracy had frustrated four different efforts which plaintiffs had made to enter and maintain themselves in the vanadium business, largely by obstructing plaintiffs' access to raw materials, and had also excluded the plaintiffs from the Canadian market.

  The Court of Appeals had affirmed a jury verdict for the defendants, holding that the trial court should have directed a verdict for the defendants because there was insufficient evidence to justify a jury finding that the defendants' alleged illegal acts were in fact the cause of Continental's failure in the vanadium business. The Court of Appeals had analyzed separately each of the four incidents upon which the plaintiffs based their claim, finding that in each case the plaintiffs had failed to show that their failures in the vanadium business were causally connected to the defendants' obstruction of access to supplies. With respect to the fifth incident involving alleged interference with plaintiffs' Canadian sales, the Court of Appeals ruled that the claim was not "within the purview of the Sherman Act" because of the involvement of the Canadian government. 289 F.2d at 94.

  The Supreme Court commented:

  

It is apparent ... that the Court of Appeals approached Continental's claims as if they were five completely separate and unrelated lawsuits. We think this was improper.

  370 U.S. at 698-99, 82 S. Ct. at 1410. Immediately following this comment, the Court stated the warning against "compartmentalizing" a conspiracy case which we have previously quoted. The import of that admonition, read against the background of the Continental Ore decision, is that the jury, which "weighs the contradictory evidence and inferences," id. at 701, 82 S. Ct. at 1411, was entitled to give whatever weight it chose to the repetitive nature of the alleged injuries to the plaintiffs. We, of course, accept the import of that teaching here.

  However, the Continental Ore warning plainly was not intended to preclude analysis of the legal basis of the conspiracy allegations of an antitrust plaintiff. In Continental Ore itself, the Supreme Court engaged in a detailed analysis of the record with respect to three of the four ventures which the Court of Appeals had addressed on their facts, concluding with respect to each of the three considered separately that there was enough evidence of causation to preclude a directed verdict. Id. at 702-08, 82 S. Ct. at 1412-1415. If the warning against "compartmentalizing" an antitrust conspiracy case were meant to prevent a court from breaking down a plaintiff's allegation of a "unitary" conspiracy into its component parts for purposes of analysis, the Court would not have engaged in the "forbidden" analysis in the very same opinion in which it issued the warning. We conclude that the Continental Ore admonition against fragmentation of a conspiracy case does not preclude our analysis of the alleged "unitary" conspiracy.

  Our conclusion is supported by the reasoning of other courts which have interpreted the Continental Ore warning. The most recent case is California Computer Products, Inc. v. International Business Machines Corp., 613 F.2d 727 (9th Cir. 1979), in which the Ninth Circuit upheld the grant of a directed verdict against an antitrust plaintiff which claimed that it was injured by the defendant's violations of § 2 of the Sherman Act. After analyzing the evidence with respect to each of the acts upon which the plaintiff based his claim, and concluding that the district judge was correct in taking the case from the jury, the court commented:

  

Nor does viewing the various acts of IBM collectively change our conclusion. The number of legal and evidentiary issues has required us to consider each instance of IBM's alleged monopolizing conduct separately for purposes of analytical clarity. However, we are mindful of the fact that "plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each." Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S. Ct. 1404, 1410, 8 L. Ed. 2d 777 (1962); see Knutson v. Daily Review, Inc., 548 F.2d 795, 814 (9th Cir. 1976). But there can be no synergistic result such as CalComp claims from a number of acts none of which show causal antitrust injury to CalComp.

  613 F.2d at 746. We will have occasion to echo these comments infra.

  In Overseas Motors, Inc. v. Import Motors Ltd., 375 F. Supp. 499 (E.D.Mich.1974), aff'd, 519 F.2d 119 (6th Cir.), cert. denied, 423 U.S. 987, 96 S. Ct. 395, 46 L. Ed. 2d 304 (1975), the district court directed a verdict against the plaintiff, which alleged that it was injured by a conspiracy in violation of § 1 of the Sherman Act. That court observed:

  

Establishing conspiracy as a permissible inference, like any empirical inquiry, is merely an exercise in inductive reasoning inference based upon the cumulation of consistent data. It is true, as plaintiff points out, that the evidence should not be compartmentalized but should be viewed as a whole when making this determination. Certainly each fact is meaningful primarily as part of a pattern, and the total pattern is the most important datum of all. But for the system to be workable the units of cumulation must begin at a less ambitious and more manageable level than the "totality of the evidence" which plaintiff has so often urged to be the only proper measure of its case.

  375 F. Supp. at 531-32 (footnote omitted). The Sixth Circuit affirmed the grant of a directed verdict, without specific discussion of "compartmentalization." 519 F.2d 119.

  In United States v. FMC Corp., 306 F. Supp. 1106 (E.D.Pa.1969), Judge Higginbotham analyzed the government's allegations and evidence in a civil conspiracy case under § 1 of the Sherman Act, finding after trial that some but not all of the alleged conspiratorial price increases were the result of an illegal conspiracy among competitors. Judge Higginbotham commented:

  

The Government argued forcefully that the several incidents which it sought to establish as evidence of the conspiracy should not be viewed in isolation, but rather should be considered as "tiles in the mosaic of an over-all plan or conspiracy." And the Supreme Court has held that in cases involving alleged conspiracies in violation of the Sherman Act, "plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each.... (T)he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole." Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S. Ct. 1404, 1410, 8 L. Ed. 2d 777 (1962). Nevertheless, because of the episodic nature of the incidents, separated in space and time; and the disparity of their respective elements, linked only by the cast of characters common to most of them; it is necessary to consider some of these incidents separately to define precisely the nature of the conspiracy.

  306 F. Supp. at 1135.

  Like Judge Higginbotham in the FMC case, we deem it necessary to analyze plaintiffs' conspiracy allegations in order "to define precisely the nature of the conspiracy." Consonant with the observations quoted above by the court in Overseas Motors, it is impossible in this case to begin with the "totality of the evidence."

  In addition to the precedents discussed above, our construction of Continental Ore is also supported by reason and common sense. To give the Continental Ore warning the talismanic quality which the plaintiffs propose would be to permit any antitrust plaintiff to foreclose critical analysis of his allegations, merely by intoning the magic words "unitary" conspiracy and "totality of the evidence." Lawsuits in the federal courts are decided by proof, not sorcery. We cannot allow plaintiffs to erect such a barrier to probing examination of their claims.

  Since Continental Ore does not prevent us from analyzing the plaintiffs' conspiracy allegations, we proceed to consider another specialized issue of conspiracy law which confronts us on these motions: the so-called "slight evidence" rule.

  3. The "Slight Evidence" Rule

  Plaintiffs contend that under the law of the Third Circuit, once the existence of a conspiracy is established only "slight evidence" is required to connect any given defendant with it. This so-called "slight evidence" rule has been stated as follows: "Where the government has established the existence of a conspiracy ..., "slight evidence may be sufficient to connect a defendant with it.' " United States v. Kates, 508 F.2d 308, 310 (3d Cir. 1975), quoting United States v. DeCavalcante, 440 F.2d 1264, 1273 (3d Cir. 1971). An examination of the cases readily shows that, as followed in the Third Circuit, this principle is merely an application of the standard for appellate review of jury verdicts, and has no application to a district court determination of a summary judgment motion.

  Once a jury has returned a guilty verdict on a conspiracy charge, the reviewing court's role is to determine whether there was sufficient evidence to sustain the conviction of conspiracy. The court will view the evidence in the light most favorable to the prosecution. See, e.g., United States v. Allard, 240 F.2d 840 (3d Cir.), cert. denied, 353 U.S. 939, 77 S. Ct. 814, 1 L. Ed. 2d 761 (1957). The Third Circuit recently clarified the meaning of the slight evidence rule in light of these principles:

  

The reference to "slight evidence" ... is no more than a shorthand expression of the rule that, after a guilty verdict by a jury or a finding of guilt by a trial court, an appellate tribunal may not substitute its inferences from the evidence for those drawn by the factfinder, if there was sufficient evidence to submit to the factfinder in the first place.

  United States v. Cooper, 567 F.2d 252, 253 (3d Cir. 1977). In fact, Judge Gibbons, writing for the court in Cooper, a criminal case, commented:

  

Clearly, it would be reversible error to charge a jury that, once the government has shown the existence of a conspiracy, it may connect a particular defendant to it by "slight evidence," rather than by evidence proving the connection beyond a reasonable doubt.

   Id. See also United States v. Schoenhut, 576 F.2d 1010, 1027 (3d Cir.), cert. denied, 439 U.S. 964, 99 S. Ct. 450, 58 L. Ed. 2d 421 (1978); United States v. Provenzano, 620 F.2d 985, 999 (3d Cir.), cert. denied, 449 U.S. 899, 101 S. Ct. 267, 66 L. Ed. 2d 129 (1980). The Ninth Circuit has also attempted recently to clarify the slight evidence rule, United States v. Dunn, 564 F.2d 348, 356-57 (9th Cir. 1977), and the Fifth Circuit has repudiated the rule entirely, United States v. Malatesta, 590 F.2d 1379 (5th Cir.) (en banc), cert. denied, 440 U.S. 962, 99 S. Ct. 1508, 59 L. Ed. 2d 777 (1979).

  Since the Third Circuit explained clearly and unambiguously in Cooper, supra, that the "slight evidence" rule is "no more than a shorthand expression" for the standards of appellate review of a jury verdict of guilt, which assumes sufficient probative evidence to go to the jury initially, that rule has no place here. *fn80" Accordingly, when we consider the evidence purportedly connecting particular defendants to the alleged conspiracy, we will do so under the pertinent evidentiary standards: whether there is a genuine issue of material fact, for purposes of our ruling on the summary judgment motions, see Part IV, supra ; and whether that connection is established by the preponderance of the evidence, for purposes of our F.R.E. 104(a) determination on evidence aliunde, see Part VI.D.6, infra.

  4. The Requisites of Circumstantial Proof of Conspiracy by Inference from Consciously Parallel Business Behavior

  a. Introduction

  Part of plaintiffs' purported proof that the defendants conspired with one another is evidence that the Japanese manufacturing defendants each charged significantly lower prices in the United States than in Japan for allegedly comparable products. See Part VII.J, infra. Thus plaintiffs' conspiracy case is premised in part on evidence of parallel price discrimination between two separate national markets. The plaintiffs also rely on other evidence of parallel conduct, such as the granting of rebates from the invoice price by many of the defendants, as circumstantial evidence of conspiracy.

  The defendants contend that this and other evidence of parallel conduct offered by plaintiffs does not suffice to create a genuine issue of material fact with respect to the existence of conspiracy under the leading cases of First National Bank of Arizona v. Cities Service, Co., 391 U.S. 253, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968) and Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309 (3d Cir. 1975). The plaintiffs reply that the choice between inferences which might flow from a showing of parallel price discrimination is properly a matter for the trier of fact, and cannot be made by the court in ruling on summary judgment motions. The defendants rejoin that the leap from a showing of parallel price discrimination to the ultimate fact of conspiracy is speculation, not inference, and is not permissible as a matter of law.

  b. General Principles Concerning Inferences From Circumstantial Evidence on Summary Judgment Motions

  In order to withstand defendants' summary judgment motions, plaintiffs must come forward with "significant probative evidence," Cities Service, supra, that the defendants had a "conscious commitment to a common scheme." Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 111 (3d Cir. 1980); Klein v. American Luggage Works, Inc., 323 F.2d 787, 791 (3d Cir. 1963). The circumstances under which evidence of parallel behavior is probative of conspiracy depend upon principles of general application governing the permissibility of factual inferences. If those principles preclude the trier of fact from inferring the ultimate fact of conspiracy from plaintiffs' evidence of parallel behavior, then plaintiffs' evidence is not probative of the conspiracy alleged in their complaint. If the evidence is not probative, then it cannot raise a genuine issue of material fact so as to defeat a Rule 56 summary judgment motion. In other words, in order to determine whether or not plaintiffs' circumstantial evidence is sufficient to create a genuine issue of material fact, we must determine whether or not the inference from the circumstantial evidence to the ultimate fact of conspiracy is permissible as a matter of law.

  The Court of Appeals discussed the law of inferences in a recent case upholding a directed verdict for the defendant on a Sherman Act § 1 antitrust claim. Although the circumstantial evidence which the plaintiff offered in that case was not evidence of parallel business behavior, the principles governing permissible inferences are of general application. The Court of Appeals stated:

  

When a trial court grants a directed verdict in a circumstantial evidence case, the court makes a legal determination that the narrative or historical matters in evidence allow no permissible inference of the ultimate fact urged by the opposing party. It decides that no reasonable person could reach the suggested conclusion on the basis of the hard evidence without resorting to guesswork or conjecture. To permit a jury to draw an inference of the ultimate fact under these circumstances is to substitute the experience of logical probability for what the courts describe as "mere speculation." Galloway v. United States, 319 U.S. (372) at 395 (63 S. Ct. 1077 at 1089, 87 L. Ed. 1458); Columbia Metal Culvert Co. v. Kaiser Aluminum & Chemical Corp., 579 F.2d (20) at 25.

  Sweeney, supra, 637 F.2d at 116. In an earlier case, also affirming a directed verdict for Sherman Act § 1 defendants, the Third Circuit said:

  

A jury is permitted to draw only those inferences of which the evidence is reasonably susceptible, and may not be permitted to resort to speculation. Therefore, we hold that the evidence was insufficient to support the claim that the distributors rejected superior bids of the plaintiff in furtherance of a common plan.

  Viking Theatre Corp. v. Paramount Film Distributing Corp., 320 F.2d 285, 296 (3d Cir. 1963), aff'd by an equally divided court, 378 U.S. 123, 84 S. Ct. 1657, 12 L. Ed. 2d 743 (1964).

  Although these rulings were made in the context of appeals from directed verdicts, they were based upon general principles of the law of inferences, which apply equally to a motion for summary judgment, to a motion for a directed verdict, to a Rule 104(a) evidentiary determination, or to any other situation in which a party seeks to meet his evidentiary burden by means of an inference. "Mere speculation," in the form of an inference which is not supported by logic, is not sufficient to withstand a motion for summary judgment. *fn81" In British Airways Board v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978), cert. denied, 440 U.S. 981, 99 S. Ct. 1790, 60 L. Ed. 2d 241 (1979), for example, the Ninth Circuit affirmed a grant of summary judgment, holding that "a jury is permitted to draw only those inferences of which the evidence is reasonably susceptible; it may not resort to speculation."

  Similarly, in American Telephone & Telegraph Co. v. Delta Communications Corp., 590 F.2d 100, 101-02 (5th Cir.), cert. denied, 444 U.S. 926, 100 S. Ct. 265, 62 L. Ed. 2d 182 (1979), the Fifth Circuit upheld the grant of summary judgment in an antitrust conspiracy case, stating:

  

In passing on a motion for summary judgment, even where the underlying facts are undisputed, it is hornbook law that the court must indulge every reasonable inference from those facts in favor of the party opposing the motion. Insofar as any weighing of inferences from given facts is permissible, the task of the court is not to weigh these against each other but rather to cull the universe of possible inferences from the facts established by weighing each against the abstract standard of reasonableness, casting aside those which do not meet it and focusing solely on those which do. If a frog be found in the party punch bowl, the presence of a mischievous guest but not the occurrence of spontaneous generation may reasonably be inferred.

  (emphasis in original). And in Miller v. Schweickart, 413 F. Supp. 1062 (S.D.N.Y.1976), a securities case, in granting summary judgment Judge Weinfeld commented:

  

It is true that the inference to be drawn from an established fact must be left to the fact finder. But a precondition is that "the inference, to qualify as a fact found, must be reasonable, and, in the context of the known facts, be one that springs readily and logically to mind and ... not one of two or more inferences, both or all of which are about equally probable."

  Id. at 1066, quoting NLRB v. Martin A. Gleason, Inc., 534 F.2d 466, 474 (2d Cir. 1976). See also Eastern Engineering & Elevator Co. v. NLRB, 637 F.2d 191, 199-200 (3d Cir. 1980); Neely v. St. Paul Fire & Marine Insurance Co., 584 F.2d 341 (9th Cir. 1978); Southern Distributing Co. v. Southdown, Inc., 574 F.2d 824, 826 (5th Cir. 1978); Natrona Service Inc. v. Continental Oil Co., 435 F. Supp. 99, 106-07 (D.Wyo.1977), aff'd, 598 F.2d 1294 (10th Cir. 1979). See generally Part V, supra.

  Thus to withstand a summary judgment motion, any inference from circumstantial evidence must be made "on the basis of the hard evidence without resorting to guesswork or conjecture." Sweeney, supra. We turn to the application of this principle to the special context of inferring a conspiracy in violation of the Sherman Act § 1 from circumstantial evidence of parallel business behavior.

  c. Inferring Conspiracy From Parallel Conduct

  It is clear as a matter both of logic and of controlling precedent that evidence of consciously parallel conduct alone is not sufficient to support an inference of conspiracy. The reasons for this rule of inference were stated by Professor Donald Turner in an influential law review article:

  

The point is that conscious parallelism is never meaningful by itself, but always assumes whatever significance it might have from additional facts. Thus, conscious parallelism is not even evidence of agreement unless there are some other facts indicating that the decisions of the alleged conspirators were interdependent, that the decisions were consistent with the individual self-interest of those concerned only if they all decided the same way....

  

Even the fact that competitors have knowingly charged identical prices is a neutral fact in the absence of evidence which would lead one to expect that the prices would have been different if truly independent decisions had been made. Identical prices may be consistent with independent competitive decisions. A large number of producers of a standardized commodity selling under stable market conditions might be expected to charge the same price, a price set not by agreement but by market conditions. None could charge more and make any sales, and there would be no point in charging less because, under competitive assumptions, each could sell at the established market price all that his costs made it profitable to sell.

  Turner, The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal, 75 Harv.L.Rev. 655, 658-59 (1962) (emphasis in original).

  The requirement that interdependence of business behavior be shown before an inference of conspiracy from consciously parallel conduct is legally permissible is well established in the case law under the Sherman Act. In First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968), the Supreme Court upheld the grant of summary judgment in favor of an antitrust defendant on the issue of whether the defendant was a member of the conspiracy alleged in the complaint. The case arose from a dispute over the marketing of Iranian oil following the nationalization of Iran's oilfields by the Mossadegh government in 1951. The original plaintiff, Waldron, obtained a contract to purchase some of the output of the nationalized oilfields, but allegedly was unable to market the oil. He alleged that the defendants other than Cities Service Co. ("Cities") had conspired to prevent him from selling any of the Iranian oil; and that Cities, which initially had conducted extensive negotiations with him, broke off dealing and joined the conspiracy as the result of receiving a contract for the purchase of Kuwaiti oil at a favorable price from other conspirators. Waldron sought to prove Cities' membership in the alleged conspiracy by circumstantial evidence of Cities' refusal to deal with him, after breaking off the initial negotiations, and of its receipt of the Kuwaiti oil contract. After extensive discovery, Cities moved for summary judgment; after additional extensive discovery, the motion was granted.

  In the Supreme Court, the plaintiff abandoned his argument relating to the award of a contract for Kuwaiti oil to Cities, as undisputed evidence showed that that contract was unrelated to the alleged conspiracy. His case against Cities was thus premised on Cities' alleged refusal to deal with him, conduct which was allegedly parallel with that of the other defendants. The Court found that parallel conduct insufficient to withstand Cities' motion for summary judgment. It distinguished a previous decision on conscious parallelism, Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939):

  

In Interstate Circuit a group of motion picture distributors, at the request of two large first-run exhibitors, simultaneously imposed identical restrictions on subsequent showings of the films they distributed ... There was no direct evidence showing that the distributors agreed with one another to impose the identical restrictions, but it was shown that each distributor knew that all the other distributors had been approached with the same proposal and that the imposition of the restrictions would be feasible only if adhered to by all distributors. Finally, it was shown that the identical action taken had the effect of creating a likelihood of increased profits for each distributor. This Court held that on the foregoing facts a tacit agreement to restrain competition between the distributors could properly be inferred.

  391 U.S. at 286-87, 88 S. Ct. at 1591-1592. Thus in Interstate Circuit, in addition to consciously parallel conduct, the plaintiffs had shown the essential elements of interdependence. First, they had shown that each of the alleged coconspirators knew that the restrictions "would be feasible only if adhered to by all distributors " (emphasis added). Second, they had shown that if all the distributors adhered to a common scheme, their adherence created "a likelihood of increased profits for each distributor." The Cities Service Court found these elements absent in the case against Cities:

  

Interstate Circuit differs from the case at hand ... in the inferences of motive that can reasonably be drawn from the facts. The reason that the absence of direct evidence of agreement in Interstate Circuit was not fatal is that the distributors all had the same motive to enter into a tacit agreement. Adherence to such an agreement would enable them to increase their royalties by forcing a rise in admission prices without the danger of competitors enlarging their share of the subsequent-run market by refusing to impose similar restrictions....

  

Here Waldron is unable to point to any benefits to be obtained by Cities from refusing to deal with him and, therefore, the inference of conspiracy sought to be drawn from Cities' "parallel refusal to deal" does not logically follow.

   Id. at 287, 88 S. Ct. at 1592 (footnote omitted). Since the inference of conspiracy did not logically follow, the Supreme Court affirmed the grant of summary judgment for Cities.

  Subsequent decisions have refined the test of interdependence. The leading case in the Third Circuit is Venzie Corp. v. United States Mineral Products, 521 F.2d 1309, 1314 (3d Cir. 1975), which plainly controls our decision here. In Venzie the Court of Appeals, speaking through Chief Judge Seitz, affirmed a directed verdict for the defendants in a Sherman Act § 1 conspiracy case. The Court of Appeals ruled:

  

(Plaintiffs') evidence does not, however, include two elements generally considered critical in establishing conspiracy from evidence of parallel business behavior: (1) a showing of acts by defendants in contradiction of their own economic interests, Delaware Valley Marine Supply Co. v. American Tobacco Co., 297 F.2d 199 (3d Cir. 1961), cert. denied, 369 U.S. 839, 82 S. Ct. 867, 7 L. Ed. 2d 843 (1962); and (2) satisfactory demonstration of a motivation to enter an agreement, First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 287, 88 S. Ct. 1575 (1592), 20 L. Ed. 2d 569 (1968).

  

The absence of action contrary to one's economic interests renders consciously parallel business behavior "meaningless, and in no way indicates agreement...." Turner, (supra, 75 Harv.L.Rev. at 681).

  521 F.2d at 1314.

  Also important is Bogosian v. Gulf Oil Corp., 561 F.2d 434 (3d Cir. 1977), cert. denied, 434 U.S. 1086, 98 S. Ct. 1280, 55 L. Ed. 2d 791 (1978), in which the Court of Appeals, again speaking through Chief Judge Seitz, vacated and remanded the district court's grant of pre-discovery summary judgment for the defendants on a complaint which alleged "a course of interdependent consciously parallel action." The Court of Appeals determined that the lower court had treated the summary judgment motion as the functional equivalent of a Rule 12(b)(6) motion to dismiss for failure to state a claim, and reviewed the lower court's order on the standard applicable to a motion to dismiss. 561 F.2d at 444. The Court of Appeals determined that the complaint was sufficient to state a cause of action under § 1 of the Sherman Act, and stated the law concerning inferring a conspiracy from consciously parallel interdependent action as follows:

  

The law is settled that proof of consciously parallel business behavior is circumstantial evidence from which an agreement, tacit or express, can be inferred but that such evidence, without more, is insufficient unless the circumstances under which it occurred make the inference of rational independent choice less attractive than that of concerted action. Compare Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939), with First National Bank v. Cities Service Co., 391 U.S. 253, 274-88, 88 S. Ct. 1575 (1585-1592), 20 L. Ed. 2d 569 (1968). We recently articulated those circumstances in Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309 (3d Cir. 1975):

  

"(1) a showing of acts by defendants in contradiction of their own economic interests; and

  

(2) satisfactory demonstration of a motivation to enter an agreement ..."

  561 F.2d at 446. *fn82" Under this formulation, if the inferences of rational independent choice and concerted action are equally drawable, the proof is insufficient. We shall apply this formulation, which is an exercise in logical analysis, in Part VII, infra.

  More recently, in Sweeney, supra, the Third Circuit upheld the grant of a directed verdict in favor of a defendant charged with participation in a conspiracy in violation of § 1 of the Sherman Act. In that case, the defendant, Texaco, Inc., had terminated the plaintiff, Edward J. Sweeney & Sons, Inc., as a distributor of Texaco products. The plaintiff alleged that the termination was the result of Texaco's combination with competing Texaco retailers. Texaco claimed that the plaintiff's agreement was terminated because Texaco was incurring a $ 58,000 annual loss by supplying the plaintiff with its products. The Court of Appeals found that the $ 58,000 figure was undisputed, and held that no conspiracy could be inferred because Texaco's action was in Texaco's own independent self-interest. The court stated:

  

Putting aside the testimony of Rodden, Doherty, Murray and the others on which appellants rely, appellants have failed to show that Texaco's actions contradicted the refiner's economic self-interest. Speaking through Chief Judge Seitz, our court has isolated "two elements generally considered critical in establishing conspiracy from evidence of parallel business behavior: (1) a showing of acts by defendants in contradiction of their own economic interests ... and (2) satisfactory demonstration of a motivation to enter an agreement." Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309, 1314 (3d Cir. 1975) (citations omitted). Venzie sets forth one means of establishing a conspiracy circumstantially. Clearly by lowering the hauling allowance, Texaco acted in its self interest, and was not proceeding contrary to its "own economic interests." The change saved it $ 58,000 per year on sales to Sweeney. This undisputed fact negates an inference of concerted action that might exist if both factors of Venzie were satisfied.

  637 F.2d at 114 (footnote omitted). *fn83" See also Schoenkopf v. Brown & Williamson Tobacco Corp., 637 F.2d 205 (3d Cir. 1980); Columbia Metal Culvert Co. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20, 35 n.54 (3d Cir.), cert. denied, 439 U.S. 876, 99 S. Ct. 214, 58 L. Ed. 2d 190 (1978).

  If the plaintiffs are unable to meet the Venzie test for circumstantial evidence of conspiracy, mere proof of parallel behavior added to evidence of meetings among the defendants will not suffice as proof of conspiracy. The defendants admit that they held meetings among themselves on various issues, ranging from discussions of price and demand in the domestic Japanese market, see Part VII.G, infra, to a common legal defense to the U.S. administrative proceedings under the 1921 Antidumping Act, see Part VII.L, infra. The plaintiffs have placed great weight on the existence of these admitted meetings among defendants, contending that the meetings offered the defendants an opportunity to engage in the low-price export conspiracy charged in their complaint. However, as we explained in Part VI.A.4, supra, proof of an "opportunity to conspire" is insufficient to give rise to an inference of conspiracy.

  Although Venzie and Sweeney were decisions upholding the grant of directed verdicts, rather than summary judgment, and Bogosian merely announced the applicable rules of law, the principles of inference announced therein are fully applicable on a motion for summary judgment. First, as we have observed, principles governing the permissibility as a matter of law of inferences from circumstantial evidence apply at the summary judgment stage just as they do on motions for a directed verdict, or at or after trial. See p. 1171, supra. Furthermore, the Supreme Court upheld the grant of summary judgment in Cities Service because of the failure of plaintiff's evidence there of parallel conduct to support an inference of conspiracy. In addition, many other courts have granted or upheld the grant of summary judgment on the basis of the plaintiffs' inability to support an inference of conspiracy by proof of parallel conduct. E. g., Pan-Islamic Trade Corp. v. Exxon Corp., 632 F.2d 539 (5th Cir. 1980); Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102 (2d Cir. 1975); Gold Fuel Service, Inc. v. Esso Standard Oil Co., 306 F.2d 61 (3d Cir. 1962), cert. denied, 371 U.S. 951, 83 S. Ct. 506, 9 L. Ed. 2d 500 (1965); Southway Theatres, Inc. v. Buena Vista Distribution Co., 1980-2 Trade Cases P 63,546 (N.D.Ga.1980); Weit v. Continental Illinois National Bank & Trust Co., 478 F. Supp. 285 (N.D.Ill.1979); Harlem River Consumers Cooperative, Inc. v. Associated Grocers of Harlem, Inc., 408 F. Supp. 1251 (S.D.N.Y.1976). Thus we must apply the rules of antitrust inference of Venzie, Bogosian, and Sweeney in our consideration of the instant summary judgment motions.

  As we examine plaintiffs' evidence to determine whether or not plaintiffs have met the Bogosian/Venzie test for the inference of conspiracy from consciously parallel conduct, we will most often be applying the first part of the Venzie test: whether the defendants' parallel behavior is inconsistent with their own independent economic interests. Put differently, in ruling on the present motions for summary judgment, our inquiry will most often be whether the plaintiffs have adduced significant probative evidence sufficient to create a genuine issue of material fact as to this element of their proof. If the plaintiffs have not made such a showing, then the inference of conspiracy which they propose from what they assert to be consciously parallel behavior is not permissible as a matter of law, and their evidence of parallel conduct provides no support for their opposition to these summary judgment motions. We will, from time to time, also address the question in terms of the more fundamental Bogosian formulation whether the circumstances make the inference of rational independent choice less attractive than that of concerted action, applying the same "showing of a genuine issue" standard.

  To recapitulate, in applying the Bogosian/Venzie test to the evidence alleged by plaintiffs to be probative of conspiracy through consciously parallel interdependent action, we shall utilize one of the following formulations:

  (1) whether the circumstances under which the behavior occurred "make the inference of rational independent choice less attractive than that of concerted action," Bogosian, 561 F.2d at 446;

  (2) whether the inferences of rational independent choice and concerted action are equally drawable, in which case the Bogosian test has not been met;

  (3) whether the conduct is contrary to defendants' economic self-interests and whether a motivation to enter an anti-competitive agreement has been shown. Venzie, supra.

  We note that the Bogosian/Venzie test applies to situations in which plaintiff is attempting to prove collusion through evidence of consciously parallel business behavior. When we review evidence other than that which is alleged to show parallel behavior the broader general principles of the law of inferences will apply, and we shall draw all reasonable non-speculative inferences in favor of the plaintiffs. *fn84"

  5. Vicarious Liability of Coconspirators: The Pinkerton Doctrine and Robinson-Patman Act and Clayton Act § 7 Violations

  Zenith has sought to establish the liability of all the members of the purported conspiracy for Robinson-Patman Act and Clayton Act § 7 violations committed by one or more of the members of the conspiracy under the doctrine of vicarious liability of coconspirators which it finds in Pinkerton v. United States, 328 U.S. 640, 66 S. Ct. 1180, 90 L. Ed. 1489 (1946). Neither the Robinson-Patman Act nor § 7 of the Clayton Act refers to conspiracy, as does section 1 of the Sherman Act, and plaintiffs concede, as they must, that there is no separate antitrust violation for conspiracy to violate the Robinson-Patman Act or § 7 of the Clayton Act as such.

  Pinkerton was a criminal case in which the Supreme Court held that a conspirator could be punished not only for the offense of conspiracy itself, but also for substantive offenses committed by his coconspirator in furtherance of their common conspiracy. Zenith admits that this principle has never been applied in a civil case, but argues forcefully that it should be so applied, and in this case. Zenith also relies upon a pre-Pinkerton case, Sidney Morris & Co. v. National Association of Stationers, 40 F.2d 620 (7th Cir. 1930), a civil treble-damage action under § 2 of the Clayton Act (the forerunner of the Robinson-Patman Act) which, in its submission, applied a rule of vicarious coconspirator liability.

  The defendants, on the other hand, maintain that Pinkerton is inapplicable to civil cases in general and to civil antitrust cases such as this one in particular. Their position is best expressed in one of the memoranda filed by the Matsushita defendants, *fn85" which concludes that Pinkerton is inapplicable in a civil context on historical, conceptual, and policy grounds, and that only where the coconspirators wilfully participate in the conspiracy with knowledge of their coconspirators' acts can vicarious liability be imposed in a civil case. *fn86" The memorandum rejects Sidney Morris as being wrongly decided or aberrational and contrasts that decision with Palmer News, Inc. v. ARA Services, Inc., 476 F. Supp. 1176 (D.Kan.1979), in which the court refused to hold coconspirators vicariously liable for acquisitions violative of § 7 of the Clayton Act. The memorandum suggests that, in light of the long history and sophisticated level of antitrust jurisprudence, the almost total absence of cases in which vicarious liability or aiding and abetting principles have been applied demonstrates their inapplicability in actions under Sections 2(a) or 7.

  The defendants also advance a statutory construction argument. First, they say that neither the language of the Robinson-Patman Act nor § 7 of the Clayton Act nor their legislative history even hint that Congress intended to extend liability to persons other than the primary wrongdoers identified in each section sellers who unlawfully discriminate in price and companies which unlawfully acquire others. They argue that if Congress had intended to have aiders and abetters and conspirators drawn into the net of treble damage liability under those laws, it could have easily found the words to express that intent, as it did in Sections 1 and 2 of the Sherman Act. The Matsushita defendants find further support for their argument that liability under § 7 of the Clayton Act and the Robinson-Patman Act should not be extended to persons other than the primary wrongdoers in what they describe as the "well established rule" that the antitrust laws "are to be strictly construed and not to be enlarged by construction." Image and Sound Service Corp. v. Altec Service Corp., 148 F. Supp. 237, 239 (D.Mass.1956). Defendants also invoke the historical fact that actions for treble damages were unknown at common law and the principle that a "(plaintiff) has no right to sue for treble damages ... unless a federal statute has created that right." *fn87" While such matters may add force to their anti-vicarious liability arguments, the particular argument which they construct on this point appears to be flawed. *fn88"

  Finally, the memorandum challenges the fabric of the present plaintiffs' conspiracy claims in the Pinkerton setting, asserting that it is unreasonable to consider the conspiracy alleged by plaintiffs as the equivalent of an agreement among defendants to participate in acquisitions violative of § 7 of the Clayton Act or to engage in specific acts of price discrimination violative of the Robinson-Patman Act. They posit a hypothetical which, in their submission, demonstrates the "absurdity" of Zenith's position on vicarious liability:

  

For example, under Zenith's theory, Sears, as an alleged participant in the general conspiracy, would be vicariously liable for allegedly discriminatory sales which favored one of its direct competitors, such as Montgomery Ward or J. C. Penney. To take another example, under Zenith's theory, Toshiba, a supplier to Sears, would be vicariously liable for Sanyo's acquisition of the television business of Warwick, another supplier to Sears.

  The foregoing arguments are well-considered and forceful. On the other hand, however it may have been ignored in recent years, and despite its never having been applied in a civil context, Pinkerton is a Supreme Court decision which has not been overruled. Under these circumstances, and because there is an alternative ground for dismissal of the plaintiffs' Clayton Act § 7 and Robinson-Patman Act claims, see Parts X and XI, infra, it is best that the question of the applicability of the Pinkerton doctrine in a civil antitrust context await another case and another day. We have extended the opinion to include this discussion of the vicarious liability issue so that the Court of Appeals will have the matter clearly set out before it without the necessity of rummaging through the huge record should it choose to reach an issue which we avoid.

  6. Requisites for Admissibility of Coconspirator Declarations

  The determination whether the plaintiffs have adduced sufficient evidence to raise a genuine issue of material fact with respect to the various defendants requires that we consider all the evidence, including any coconspirator statements which might be admissible under F.R.E. 801(d)(2)(E). As we have noted above, our pretrial evidentiary or in limine hearings were also intended as a vehicle for the making of a preliminary determination, pursuant to F.R.E. 104(a), of the admissibility of coconspirator statements. *fn89" That procedure accords with our view, that of a number of cases, and that of Professor Saltzburg that 104(a) is the appropriate device for making the preliminary determination of the existence, vel non, of independent evidence of a conspiracy required by the cases, described infra. See generally S. Saltzburg and K. Redden, Federal Rules of Evidence Manual at 43-45 (2d ed. 1977), and cases cited therein. *fn90" We now address the legal principles applicable to that admissibility determination.

  Rule 801(d)(2)(E) *fn91" codifies the traditional rule, which admits into evidence statements of one coconspirator against another coconspirator as long as those statements were made during the course of and in furtherance of the conspiracy. There are two controversial questions in this area. The first, generated by the proviso of F.R.E. 104(a) that in making its determination the court is not bound by the Rules of Evidence (except with respect to privileges), is whether the coconspirator (hearsay) statements may, themselves, be used to establish the existence of the conspiracy. The second is whether the standard of proof required in making the preliminary determination is a "prima facie" or a "preponderance" standard. While there is a conflict in the circuits on these points, the Third Circuit's position is clear.

  Notwithstanding the facial appeal of the proviso to Rule 104(a), the Third Circuit holds firmly to the view that the admissibility of coconspirator statements against the nondeclarant depends upon the determination by the trial judge whether it has been proved, by a clear preponderance of the evidence independent of the hearsay statement, that a joint undertaking existed at the time of the statement or action. This position was first embraced in the case of United States v. Bey, 437 F.2d 188, 191 (3d Cir. 1971), and has been reiterated in a line of cases including: United States v. Trotter, 529 F.2d 806 (3d Cir. 1976); United States v. Trowery, 542 F.2d 623 (3d Cir. 1976), cert. denied, 429 U.S. 1104, 97 S. Ct. 1132, 51 L. Ed. 2d 555 (1977); and United States v. Continental Group, Inc., 603 F.2d 444 (3d Cir. 1979), cert. denied, 444 U.S. 1032, 100 S. Ct. 703, 62 L. Ed. 2d 668 (1980). *fn92" Thus, unless plaintiffs can show by independent evidence (evidence aliunde ), that the conspiracy they have pleaded exists and that the declarants and the defendant against whom the statement is offered are members of that conspiracy, the hearsay statements of alleged coconspirators are inadmissible. As we shall see in Part VII.R., infra, this standard has not been met.

  The second controversial question is whether the "prima facie" or "preponderance" standard is the proper standard of proof to be required of the proponent of coconspirator declarations. Under the prima facie test, the judge takes the evidence in the light most favorable to the offering party. As Professor Saltzburg explains, Federal Rule of Evidence Manual at 465, the preponderance standard differs from the prima facie test in that the preponderance test requires the judge to actually find facts, i. e., to judge the credibility of witnesses and to make a finding based on a fair assessment of the evidence. In Professor Saltzburg's words: "in other words, before the test is satisfied, the Judge decides not whether some jury might believe the independent evidence, but whether he believes it." Although none of the courts adopting the preponderance test have expressly embraced the Saltzburg exemplar, the credibility judgment would appear to be an essential part of the factfinder's role, that role to be exercised under F.R.E. 104(a). At all events, whatever its contours, the Third Circuit has plainly adopted the preponderance test in the line of cases from Bey to Continental Group, cited supra. For example, in United States v. Trowery, supra, the court stated:

  

To determine whether the evidence is competent against the nondeclarant, the trial judge determines whether it has been proved, by a preponderance of the evidence, that a joint undertaking existed at the time of the statement or action. (emphasis added)

  542 F.2d at 627. *fn93"

  In accordance with the foregoing discussion, in making the preliminary determination in Part VII.R of the admissibility of coconspirator declarations, we shall make factual findings as to whether plaintiffs have established the existence of the alleged "unitary" conspiracy and the membership therein of the declarant and each individual defendant against whom the statement is sought to be introduced by a preponderance of evidence independent of the coconspirators' statements sought to be introduced.

  Having concluded our review of the applicable law, we now turn to the evidence of record.

  VII. Plaintiffs' Sherman Act § 1 And Wilson Tariff Act Conspiracy Case As to Television Receivers Evidentiary Review and Discussion of Legal Sufficiency

  A. Introduction

  This segment of the opinion analyzes the materials which constitute the sinews of plaintiffs' Sherman Act § 1 and Wilson Tariff Act conspiracy case with respect to television receivers. We will commence this evidentiary review with a discussion of plaintiffs' allegations about: (1) the technological development of consumer electronic products; (2) the industrial organization of Japanese electronics firms on the foundation of borrowed technology; (3) the "closed Japanese market"; and (4) "the combined economic power of the defendants and their cartel." The facts in these areas, supplied largely through the admissible portions of plaintiffs' expert reports, constitute background or "climate" material for the plaintiffs' subsequent presentation.

  Our first major substantive discussion will be a description of plaintiffs' evidence respecting the Japanese manufacturers' export control arrangements, including their check price agreements and the associated JMEA Rules. We will then turn to a description of the activities of certain groups and associations in Japan. In the course of that discussion we will address both the home market and export aspects of the alleged "unitary" conspiracy, i. e., the alleged high price home market "war-chesting" aspect and the alleged predatory low price export aspect thereof. The review will include a description of the evidence of the activities of certain trade associations and of certain "sub rosa" groups to which a number of defendants belonged, as well as consideration of a number of what plaintiffs style "connection" and "intent" documents. We will also consider what inferences may be drawn from this "Japan-side" evidence.

   We will then turn to plaintiffs' allegations about below cost sales and about international price discrimination between the United States and Japanese markets, together with a discussion of what, if any, inferences may be drawn therefrom. This is followed by our review of another major component of plaintiffs' case their allegations about the defendants' "predatory export rebate system for the collusive concealment of dumping" and the inferences to be drawn therefrom. Next we consider plaintiffs' allegations that an inference of conspiracy can be drawn from the alleged depletion and destruction of the U.S. CEP industry, followed by a discussion of the significance, vel non, of plaintiffs' allegations about certain acquisitions of various U.S. CEP manufacturers and manufacturing facilities by defendants. Additionally, we will consider plaintiffs' allegations about "defendants' systematic price discrimination in the U.S.," and we will deal extensively with the evidence of the participation of each individual defendant in the alleged conspiracy. In order to determine the admissibility of coconspirator declarations under F.R.E. 801(d)(2)(E), we shall then make a preliminary determination of the sufficiency of plaintiffs' conspiracy evidence pursuant to F.R.E. 104(a). We will end our review of plaintiffs' Sherman § 1 and Wilson Tariff Act case regarding television receivers in Part VII.S with a summary of our conclusions with respect thereto.

  The evidentiary review which we have previewed will be in the nature of a summary of all categories of plaintiffs' important evidence, linked to an analysis of the evidence and a discussion of its legal sufficiency for summary judgment purposes as measured against the standards set forth in Parts V and VI, supra. A significant portion of this discussion will focus specifically on the question whether the Third Circuit standards for proof of conspiracy by circumstantial evidence have been met.

  During the course of our evidentiary review we shall, as is required on a motion for summary judgment, consider the evidence and all reasonable inferences to be drawn therefrom in the light most favorable to the plaintiffs. *fn94" Except as is expressly indicated, nothing set forth as a fact in the evidentiary review is disputed of record. While plaintiff may contend that the true state of affairs is otherwise there are no facts to the contrary in the voluminous record, except as we have stated them.

  As we explained in the Preliminary Statement, this review emanates from our tedious in-chambers review of the FPS and its supporting, or supposedly supporting, documents, *fn95" along with the voluminous briefs of the parties. Our insertion of the word "supposedly" is a function of three factors. First, numerous documents do not support the conclusory propositions for which they are cited in the FPS. Second, many documents cited in support of damning conclusory statements regarding conspiratorial activities were in the document depository only in Japanese. This is the case not only with numerous documents cited in the FPS, but even with documents submitted to us in the latest full-dress memorandum filed by the plaintiffs, their post-summary judgment argument memorandum, and with still later submissions in the nature of letter memoranda. Third, a number of other documents cited by plaintiffs as important could not even be found in the depository. These include matters which were commented on extensively by defendants' counsel in the final summary judgment argument. *fn96"

   We cannot consider in this evidentiary review documents that plaintiffs have not thought important enough to translate or to place in the depository. Nor have we considered the countless documents that are plainly irrelevant or cumulative. Repeating what we said in the Preliminary Statement, we can address herein only a fraction of the documents we have reviewed, covering the others by general reference, and choose to focus herein upon those documents called to our attention by counsel in their presentations and memoranda. We turn now to our review of the evidence on which plaintiffs rely to defeat summary judgment.

  B. The Technological Development of Consumer Electronic Products and the Industrial Organization of Japanese Electronics Firms on the Foundation of Borrowed Technology

  The plaintiffs have devoted some 232 pages of their FPS to a mini-exegesis of the technological development of consumer electronic products and to a description of how the Japanese electronic industry was built on the basis of borrowed primarily American technology. Although these materials may seem peripheral to the reader, we do not begin here arbitrarily, for this is where plaintiffs initiate their case.

  Plaintiffs commence with a list of the prominent scientists and inventors who contributed to the development of television; all are American or European. *fn97" Although both the National Broadcasting Co. and the Columbia Broadcasting System operated experimental television stations as early as 1931, the British Broadcasting Co. was the leader in the commercialization of television. Plaintiffs explain that after 1946 most major technological developments in the television industry involved semiconductors, and provide a list of major inventions in that industry. All but one (originating with Sony) are by American or European firms. By the mid-1960's, according to plaintiffs' FPS, the U.S. was the world leader in television production, with worldwide technological superiority in the production of electronic components. Moreover, from 1963 to 1978, the vast majority of improvements in television receiver technology were made by U.S. companies, including a number by Zenith. Plaintiffs provide similar background for the radio and other CEP industries. *fn98"

  Plaintiffs then go on to explain that by 1953 RCA had licensed over sixty Japanese manufacturers in the various fields, primarily in the television receiver field, and from that base extended its licensing arrangements and technical assistance so widely as virtually to give birth to the Japanese CEP industry. Plaintiffs proceed to demonstrate that the Japanese CEP industry rests almost entirely upon the foundation of patent licenses from RCA, Westinghouse, GE, Western Electric, and other American firms, and from a number of European firms including N.V. Philips. The FPS documents the vast royalties paid by Japanese manufacturers to American firms under patent licensing agreements which are still in effect. Finally, plaintiffs represent that in recent years the patent licensing agreements between the Japanese manufacturers and foreign patent licensors have been jointly negotiated under the aegis of the Foreign Patent License Committee of the EIAJ.

  This is all very interesting, but hardly of value to the case. *fn99" Defendants do not dispute that their technology is American in origin, nor do they dispute that they manufacture under licensing agreements with American (and European) firms. But those facts have no bearing upon the predatory low-price export conspiracy which plaintiffs have alleged. Plaintiffs have not pleaded a conspiracy to injure American patent holders through collusive patent license negotiations. The technological evidence is purely background, and does not tend to establish any ingredient in the "unitary" conspiracy.

  C. The Closed Japanese Market

  An important ingredient contributing to plaintiffs' theory of defendants' alleged conspiracy is the role played by Japanese trade barriers, which, in plaintiffs' submission, permitted the Japanese defendants to avoid competition in their home market. In plaintiffs' submission, this home market, effectively closed to competition by foreign imports and investment, provided the climate wherein defendants could successfully fix high prices, thereby facilitating their low-priced entry into the U.S. market by providing the necessary financial cushion.

  Plaintiffs' evidence of the closed Japanese market is primarily contained in sections of their experts' reports which we have found to be admissible under the "or otherwise" clause of F.R.E. 702, which permits an expert to "give a dissertation or exposition of scientific or other principles relevant to the case, leaving the trier of fact to apply them to the facts." *fn100" Advisory Committee Note to Rule 702. Plaintiffs' theory is explained in "Economic Analysis of Evidence Relating to Japanese Electronic Products Antitrust Litigation" by Economic Consulting Services, Inc. (the Nehmer Report) as follows:

  

A tightly "closed" Japanese consumer electronics market would indeed be essential to the success of Defendants' scheme in at least several important ways. First, by keeping foreign suppliers out of the high-priced Japanese market, the price-maximizing policies of the cartel in the domestic market could be maintained more easily. Second, the absence of foreign competition would make it easier for the members of the cartel to coerce Japanese distributors and retailers by threatening to restrict their sources of supply. Finally, the absence of foreign competition meant that the enforcement of the cartel's policies among the cartel's members would be simplified, and that the financial benefits of monopoly profits in Japan and the rewards of their anti-competitive activities abroad would be shared among fewer cartel members. In short, the fact that the Japanese market was effectively closed to foreign competition throughout the 1957-1977 period acted to "segment" the higher-priced Japanese market from the lower-priced and open U.S. market, thereby making the execution of discriminatory pricing policies, as well as other aspects of the cartel's anti-competitive behavior, possible, while excluding U.S. competition from the higher-priced Japanese market.

  Nehmer Report at IV-1 & 2.

  The Nehmer, DePodwin, and Yamamura Reports, and to a somewhat lesser extent the Haley Report, all set forth narrative descriptions of Japanese barriers to foreign imports and investment. Among them are such governmentally-imposed or supervised financial barriers as high tariff rates, *fn101" discriminatory ocean freight rates, *fn102" the Japanese commodity tax, *fn103" import deposits, *fn104" the "Japanese Standard Method of Settlement," *fn105" and strict limitations on foreign investment in Japan, *fn106" which, in Nehmer's submission, act together to impose an onerous financial burden on foreign competitors seeking to sell in Japan. *fn107"

  In addition to these financial barriers, the reports detail a number of "subtle, non-financial means that can be highly effective in severely restricting foreign competition." Nehmer Report at IV-7. First, and probably most important, is the Japanese government's practice of providing "administrative guidance" over business activities. While such informal guidance does not have the force of law, it does tend to have an important influence on private business behavior. Other non-financial barriers include an elaborate system of quantitative restrictions, which in earlier years operated together with a foreign exchange licensing program; safety and design standards which implicate cumbersome inspection and testing procedures; barriers to the importation of samples; and the Japanese government's procurement practice, which has been to solicit bids only from domestic firms. In addition to these governmental regulatory practices, the structure of the Japanese market adds another layer of difficulty to U.S. firms attempting to enter the Japanese market.

  As described in detail in the Yamamura Report, the Japanese economy is dominated by company groups, called keiretsu, which are groups of companies in various industries, perhaps best described as "cliques" of associated companies. The historical roots of keiretsu are to be found in the prewar zaibatsu, which were family organizations that controlled particular industries, with strong central control through a holding company. These conglomerates were called upon during World War II to assist in the war effort. As a result, after the defeat of Japan, the leaders of the Allied occupation blamed much of Japan's militarism on these industrial conglomerates, and were determined to eradicate them from the Japanese business system to prevent future combinations of economic or military strength. Accordingly, during the period of occupation under General MacArthur, and in full consultation with the United States Department of Justice, the Mitsui Holding Company, the Sumitomo Holding Company, the Yasuda Holding Company, the Mitsubishi Holding Company, and 28 other holding companies were sold to the general public and the linkages were dissolved. In their place, the lesser groups emerged, with links dependent upon mutual interest and convenience, though based in part upon the traditional family linkages. *fn108" Unlike the zaibatsu, the keiretsu has no central control; holding companies remain illegal.

  There are two main species of keiretsu : horizontal *fn109" and vertical (or distribution network) *fn110" keiretsu. Professor Yamamura goes on to describe the international significance of keiretsu. He suggests that to the extent that the keiretsu's market power can limit domestic competition, the situation is similar to a cartelized market. The firms act together to prevent foreign entry into the Japanese market, constituting, in Yamamura's terms, an "invisible trade barrier." *fn111"

  The first priority following World War II was rapid industrial growth. Accordingly, the government's monetary policy was designed to promote rapid growth of the largest firms. The antitrust laws, enacted by the occupation forces, were weakened and were only weakly enforced. Moreover, certain cartel activities were exempted, and a large number of "authorized cartels" arose. In the submission of the experts, these policies, linked with the close governmental cooperation described above, fostered the growth of keiretsu and created a "climate" which encourages "cartel capitalism" in the Japanese market.

  We have been brief in our discussion of the Japanese market because defendants virtually concede that much of the information presented by plaintiffs' experts is true. They argue, however, that the facts we have set forth are totally irrelevant to the existence of a conspiracy to export to the U.S. at predatorily low prices. They argue further that Professor Yamamura's description of the Japanese market is an attempt to describe the Japanese "propensity to conspire," and as such that it is impermissible character evidence under F.R.E. 404(a). Plaintiffs, on the other hand, argue that they are showing a climate in which collusive behavior is commonly accepted, and that this evidence therefore bears upon opportunity, motive, and intent.

  While conceding that plaintiffs have adduced evidence of a "climate," we accept defendants' position. No amount of evidence about keiretsu activities of Japanese companies or even about these specific defendants, who were for the most part not aligned in the same keiretsu can suffice to create an inference that these particular defendants combined to take over the U.S. market in consumer electronic products. The only inference a jury could draw from the experts' dissertations on trade barriers is that the Japanese domestic market is tightly closed to foreign trade and investment. But a climate which might nurture or even condone collusive behavior is simply not probative of any actual conspiracy.

  D. Plaintiffs' Expert Reports

  We described plaintiffs' expert reports in detail in our Expert Testimony Opinion, and in capsule form in Part IV, supra; we need not repeat that description herein. The critical opinions regarding the existence of a conspiracy were held inadmissible in evidence in that opinion, leaving in only explanatory materials as to the closed nature of the Japanese market, the technological development of the consumer electronic products industry, and economic principles and methodology. These matters we held to be admissible, when purged of their occasional lapses into inflammatory rhetoric, under the "or otherwise" clause of Federal Rule of Evidence 702, which permits an expert to "give a dissertation or exposition of scientific or other principles relevant to the case, leaving the trier of fact to apply them to the facts." Advisory Committee Note to F.R.E. 702. In addition, we reserved ruling on one comparison of prices in the domestic and export markets, presented in the DePodwin Report at V-32 to 36. See Expert Testimony Opinion, 505 F. Supp. 1313 at 1347-1348.

  We have already discussed in Part VII.B, supra, the technological development of the CEP industry and the organization of Japanese firms on the foundation of borrowed technology, and in Part VII.C, supra the nature of the Japanese market. In light of our discussion of plaintiffs' evidence of international price discrimination, Part VII.K, infra, we need not further consider the admissibility of the reserved calculation. The only admissible materials in the expert reports which we have not discussed are those sections outlining economic principles and methodology. Such matters plainly do not raise a factual issue sufficient to defeat defendants' summary judgment motions.

  E. Plaintiffs' Allegations About the Combined Economic Power of the Defendants and their Cartel

  Plaintiffs devote a segment of their FPS to detailing the "combined economic power of the defendants and their cartel." Attaching data taken from the annual reports of MEI, Melco, Hitachi, Sanyo, Sharp, Sony, and Toshiba, plaintiffs first allege that:

  

"The seven Japanese defendants are among the world's largest corporations. During fiscal year 1973-1974, for example, the seven defendants had aggregate sales of $ 20.8 billion and aggregate net income of $ .7 billion. In the fiscal year 1966-1967, the seven Japanese defendants had sales of $ 4.9 billion and net income of $ .2 billion. Over the seven year period, therefore, the defendants enjoyed an increase in sales of 324 percent and an increase in net income of 250 percent."

  S at 3139.

  Citing MC's annual report, plaintiffs state that MC is the world's largest trading company, with sales ranging from $ 17.3 billion in 1971 to $ 44.0 billion in 1978, and net income growing from $ 17.3 million in 1971 to $ 100 million in 1978. They also state that MC employs more than 19,000 people, has a worldwide network of 260 offices, handles some 10,000 commodities, and so forth. Id. at 3147-50.

  Then, without supporting documentation, the plaintiffs allege that the financial strength of the Japanese "cartel" arises from the close affiliations of the defendants with companies and banks in their "respective groups" and from the participation in the cartel of "several other financially strong companies," including Japan Victor, General Corporation, Nippon Columbia, Ltd., and Nippon Electric Company, Ltd. They explain:

  

"In 1978, for example, eight selected companies in the Mitsubishi Group which consists of over 40 companies, had aggregate sales of $ 21.9 billion and net income of $ 199.7 million.... Moreover, the Mitsubishi Group owned two banks ... whose combined assets of $ 96.7 billion in 1978 placed them as the world's largest banking group."

  S at 3157. Apparently intoxicated with these figures, the plaintiffs point out that "the groups which control the defendant companies" had sales of at least $ 58.9 billion in 1977-1978, and at least $ 38 billion in 1974-1975; that these groups employed at least 654,668 workers in 1977-1978, etc. They then contrast Zenith and NUE as being considerably smaller in terms of sales, net income and employment than the "groups which controlled" the defendants. Id. at 3157-58.

  While this approach is symptomatic or perhaps symbolic of plaintiffs' approach in this litigation, we will not labor the point. It is clear beyond peradventure that plaintiffs' allegations about the combined economic power of the defendants and their cartel is "bootstrapped" and is in any event utterly of no probative value in drawing an inference of the conspiracy alleged by plaintiffs.

  F. The Manufacturers' Agreements and the JMEA Rules; Operation of the Minimum Price Agreements and the "Five Company Rule"

  1. General Background; Operation of the Minimum Price Provisions

  From 1963 until 1973, the seven principal Japanese manufacturers of television receivers that are defendants in this litigation, along with a large number of non-party Japanese manufacturing companies, were signatories to formal written agreements which established minimum prices for television receivers sold for export to the United States. *fn112" In addition, many defendants were members of the Japan Machinery Exporters' Association (JMEA), an exporters' trade association which, during the same period, required its members to register the names of all customers who purchased television receivers for the U.S. market and, after 1967, limited the number of customers so registered to five. *fn113" The plaintiffs characterize these arrangements as "formal written cartel agreements," involving both price-fixing and customer allocation.

  As we have noted in Part II, supra, at various times plaintiffs have asserted that these agreements formed the "heart" of the alleged conspiracy. *fn114" The defendants, on the other hand, contend that these arrangements were mandated by the Japanese government Ministry of International Trade and Industry (MITI) in response to actual or anticipated pressure from U.S. industry and government to limit the effects of Japanese television exports on the U.S. television industry, and that the defendants are immunized from antitrust scrutiny by the act of state and sovereign compulsion doctrines and principles of international comity.

  The written agreements in question bear the title "Agreements on Manufacturers' Domestic Transactions Relating to Exportation of Television Sets," and we refer to them herein as the "Manufacturers' Agreements." There were seventeen different agreements, covering consecutive time periods which varied in length from one month to two years. Each of the agreements was accompanied by a written "Rationale" setting forth reasons for the agreement. *fn115" Although there were minor variations in the provisions of the agreements, none of those variations is significant for the issues before us. A copy of the full text of the first Manufacturers' Agreement, covering the period from October 1963 to March 1964, and the accompanying Rationale, is attached to this opinion as Appendix A. While the first agreement applied only to black-and-white television receivers, all subsequent agreements applied to color television receivers as well, and the attached agreement is fairly representative of the others.

  The Agreements applied on their face only to television receivers sold by the manufacturers for export to the United States. Article III of the Agreements created an entity called the "Television Export Council," consisting of all the parties to the Agreements. The Agreements contained other administrative provisions relating to the eligibility of parties to enter into the agreements, the procedure for joining the Television Export Council, and the procedure for withdrawing from the agreements.

  The Manufacturers' Agreements set minimum prices below which the signatories were not permitted to sell. The operative provision, in Article 8 of the Agreements, states:

  

The parties to this agreement shall not offer for sale, make a contract for sale or deliver to export businessmen goods at prices lower than the prices specified in attached Schedule 2.

  (emphasis added). *fn116" Thus, the agreements left the signatories free to sell at or above the minimum prices set therein. In addition to minimum sales prices, the agreements also imposed other controls on exports. Manufacturers were: (1) required to register in advance with the Television Export Council the names of all customers to whom they wished to sell goods and prohibited from trading with unregistered customers; (2) required to register with the Television Export Council the brand names which were to be affixed to goods sought to be exported; (3) prohibited from selling or delivering television receivers which did not conform to specified quality standards; (4) required to submit to the Television Export Council an "Application for Confirmation of Shipment" with respect to each sale; and (5) subjected to fines for violations of any provision of the agreements.

  During the same years that the Manufacturers' Agreements were in force, 1963 to 1973, the JMEA adopted rules which, in the plaintiffs' submission, "parallel and dovetail with the Manufacturers' Agreements." FPS at 5191. While the Manufacturers' Agreements operated through the governance of sales by manufacturers to exporters, the JMEA rules applied directly to sales of television receivers by exporters in Japan to United States customers and importers. A copy of the JMEA rules for the period corresponding to the first Manufacturers' Agreement, along with the accompanying Rationale, is attached to this opinion as Appendix B. *fn117"

  Like the Manufacturers' Agreements, the JMEA Rules created an entity to administer its provisions. The administrative organ set up by the JMEA Rules was called the "Television Export Examination Committee" and consisted of ten members appointed by the chairman of the JMEA Board of Trustees. With respect to prices, the JMEA Rules did not set forth specific minimum export prices, but required that export prices for televisions of the categories subject to the minimum price provisions of the Manufacturers' Agreements be higher than the prices established under those Agreements. Thus, the JMEA Rules echoed the minimum-price provisions of the Manufacturers' Agreements. In addition, the Rules required that export prices on all television sets, not just the categories subject to those minimum provisions, be reported to the JMEA.

  We need not labor the impact of these minimum price provisions on the case at this juncture, for we have explained in detail in Part VI.B, supra that plaintiffs cannot have been injured by the minimum price agreements, and that they therefore lack standing to attack them. We incorporate that discussion by reference here and conclude on the basis thereof that the agreements and accompanying rules are of no significance in the case and cannot create a genuine issue of material fact.

  2. Operation and Significance of the "Five Company Rule"

  In terms of distribution, the JMEA Rules contain customer and brand name registration provisions similar to those contained in the Manufacturers' Agreements. *fn118" In addition, from 1967 on, the Rules limited the number of export customers that could, as a rule, be registered each year by individual JMEA members. This restriction was accomplished by means of the "Gosha Waku" or "Five-Company Rule," which limited the total number of export customers to five companies in the United States for each exporter:

  

Article 6

  

The members of the Association, when they are going to export applicable goods to an applicable area, shall register in advance the export customer with the Association in conformity to attached Form (1), and shall also notify the Association of the trademark (expressed by means of letters, symbols or a combination of both, and hereinafter referred to as "trademark') to be used for the applicable goods in conformity to attached Form (1).

  

2. Application for registration pursuant to the provisions of the above paragraph must be such that the export transaction referred to in the application satisfies each of the following conditions:

  

(1) An export contract has been concluded or a long-term, continuous trading relationship has been maintained; and, as a principle, the number of such customers shall not be more than 5 companies for the First Zone....

  The terms of the so-called Five Company Rule embodied in the Manufacturers' Agreements and the JMEA regulations do not limit any defendant to selling only to a particular customer or customers. Nor do they allocate particular customers to particular manufacturers, or prevent a particular manufacturer from changing the registration of a particular customer if the need should arise. Thus, the agreements themselves do not provide direct evidence or any basis for inferring a customer allocation agreement. Indeed, plaintiffs have in effect admitted that a number of defendants competed for the business of the same U.S. customer and themselves demonstrated that individual registered customers changed from time to time during the time period applicable to this litigation.

  According to plaintiffs' FPS and the report of their expert, Horace J. DePodwin, at different points in time, certain American customers were dealing with several Japanese suppliers. Thus, for example, J. C. Penney Corp. purchased CEP merchandise from Hitachi, Toshiba, and Matsushita; W. T. Grant purchased from Matsushita and Melco; Montgomery Ward purchased from Sharp and Matsushita; General Electric purchased from Hitachi and Sanyo; Midland (Western Auto) purchased from Melco, Sharp, and Sanyo; and Sears purchased from Toshiba and Sanyo. See Exhibit F to Plaintiffs' FPS and the DePodwin Report, Tables V-10 and V-11 at pp. V-50 through V-53. *fn119"

  Plaintiffs have compiled a list of each of defendants' customers who were registered pursuant to the Five Company Rule in Exhibit F to plaintiffs' FPS. While this list is not a complete list of all companies with which defendants did business in the United States it does not include customers who purchased goods manufactured by defendants in countries other than Japan, nor does it include customers who purchased merchandise from defendants' United States sales subsidiaries the exhibit demonstrates the fact that no defendant limited its sales to any five customers and that the Five Company Rule was not a "customer allocation." In fact, at one time, Sanyo had thirteen customers.

  Of equal significance is the fact that nothing in the Five Company Rule prohibited the members of the JMEA from registering their United States subsidiaries as export customers, and nothing in the Rule prohibited those subsidiaries from reselling products in the United States, free from the restriction of the Five Company Rule. In fact, most of the Japanese manufacturing defendants followed this pattern by listing their U.S. subsidiaries as export customers with the JMEA. PTO 289 at 231-36 (August 21, 1980); plaintiffs' FPS at 7631-7759 and 10741-47. Dr. DePodwin's own summary of the export validation forms filed by the defendants to comply with the JMEA Rules shows that each of them listed its U.S. subsidiary as an export customer during all or nearly all of the years for which information is available. DePodwin Report, Table V-10 at V-52. See also FPS at 5234-35. In plaintiffs' own submission, each of these American sales subsidiaries sold products to hundreds of customers in the U.S. FPS at 7631-7759 and 10741-47. *fn120" In view of the foregoing, the impact of the Five Company Rule was entirely illusory.

  However, even if the Five Company Rule were not illusory in character, it would be unavailing to the plaintiffs, suffering the same fate as the minimum price agreements. That is because, as we have explained in Part VI.B, supra, an agreement to allocate customers runs precisely contrary to a "low price export conspiracy," for such an agreement would limit competition and have the tendency to keep prices up, not push prices down. That result could not possibly cause injury to plaintiffs.120A Plaintiffs thus have failed to show how a customer allocation could have injured them and, therefore, how they have standing to press this claim.

  3. The Agreements as Evidence of Conspiracy

  Notwithstanding plaintiffs' lack of standing to attack the Manufacturers' Agreements, they can still proffer those agreements as evidence of climate and opportunity for collusive activity by the defendants. Indeed, plaintiffs depict the negotiations surrounding the Manufacturers' Agreements as quintessential evidence of defendants' opportunity and intention to conspire, in the shadow of which all of defendants' activities take on a conspiratorial hue.

  We explained in Part VI.A.4, supra why opportunity to conspire does not give rise to an inference of actual conspiratorial behavior on the part of particular defendants. To the extent that plaintiffs argue that one can infer an agreement to fix prices at less than the check price level via concerted rebate activity or an agreement to take over the U.S. CEP market by charging depressed prices from the fact that another agreement the export control arrangements existed among some of these defendants, that effort must also fail. That is because evidence of one alleged conspiracy is not a basis for drawing an inference of the existence of some other conspiracy.

  In Golf City, Inc. v. Wilson Sporting Goods Co., 555 F.2d 426 (5th Cir. 1977), the plaintiff obtained a verdict under Section 1 of the Sherman Act by proving the uniform practice of restricting the sale of pro-line equipment to pro shops. In addition, the plaintiff proved that officials of the Professional Golfers Association had joined with representatives of the manufacturers in an effort to prevent "leakage," which refers to the practice of some professional golfers of buying pro-line equipment for their own shops and then reselling it to retailers such as the plaintiff. On appeal, defendants attacked the trial court's findings of fact on the grounds that they did not make clear the basis for the court's finding of liability and apparently confused the question of the conspiracy to prevent leakage with the question of a possible conspiracy to restrict direct sales. The Fifth Circuit reversed and remanded for the entry of more precise findings of fact, rejecting any "intuitive link" between the anti-leakage conspiracy and a conspiracy to restrict direct sales, stating:

  

Clearly there is a link between the fact of antileakage and the fact of pro only sales policies. The two share the object of restricting to pro shops the sale of pro-line golf equipment. We do not understand, however, the nature of the link between antileakage and the question of whether the pro only sales policies were born or maintained in conspiracy. If the inference is based only on the notion that persons who engage in one conspiracy probably engaged in another, then the inference is improper.... We have trouble understanding why antileakage efforts would not be just as compatible with the scenario urged by appellants that the pro only sales policies were formulated unilaterally and were prompted by the utility of the policies as a form of non-price competition.

  We find Golf City to be well-reasoned, and adopt it in this context. Plaintiffs' use of the export control arrangements as evidence of a low-price export conspiracy is unavailing.

  4. The Role of MITI

  It is not disputed that the Manufacturers' Agreements and the JMEA Rules were formulated with significant participation by the Ministry of International Trade and Industry ("MITI"), a cabinet-level ministry of the Japanese government. The defendants urge that the MITI involvement in the arrangements was so substantial as to render them immune from attack in United States courts by reason of the doctrines of act of state and sovereign compulsion, and principles of international comity. The plaintiffs, while conceding a MITI presence and an active MITI role, as they must under the facts, dispute the substantiality of MITI's role and vigorously assert that these defenses are inapplicable as a matter of law.

  It is plain that application of the doctrines of act of state and sovereign compulsion, as well as principles of international comity, would require a detailed analysis of the factual patterns of the various cases which have implicated those doctrines, cited in note 123, infra. It is equally plain that a decision on these issues would have enormous implications for U.S. trade policy. Therefore, since our injury and standing analysis makes it unnecessary to reach these issues, we prefer not to do so. Our approach does not eradicate the enormous amount of time and briefing devoted to the issue, nor can we gainsay that if defendants are correct in their contentions many of the points that we have in fact reached are mooted. In order that the Court of Appeals might have an adequate record should they decide to address these issues on appeal, it is appropriate that we summarize the record with respect to MITI's role. In fact, an understanding of the defendants' contentions in this area is essential to an understanding of the case.

  The keystone of the defendants' position in this area is a written statement which was transmitted to this court by MITI through diplomatic channels ("the MITI statement"). *fn121" The statement sets forth the role and responsibilities of MITI under Japanese law, explaining its authority under Japanese law to direct Japanese manufacturers and exporters to enter into agreements and adopt trade association regulations like those we have described above, in order to implement the foreign trade policy of the Japanese government.

  The MITI statement then turns to the genesis of the particular agreements and rules involved in this litigation:

  

With respect to the export of television sets to the United States, in 1962 MITI accurately recognized, in view of the importance of televisions as one of Japan's export products, the need for assuring their orderly exportation to avoid the possibility of trade conflicts.

  

Thus, MITI directed Japanese television manufacturers including the present Japanese defendants to enter into an agreement under Article 5-3 of the Export and Import Trading Law with respect to minimum prices and other matters concerning domestic transactions relating to exports to the United States, and further, directed the exporters to establish a new regulation to be observed by the members of the export association with respect to filing of export prices and other related matters, pursuant to the association's functions under Article 11, Subparagraph 2 of the same law regarding the same exports. MITI supervised the preparation of such agreements and regulation so that MITI's intention was correctly reflected. Such direction and supervision concerning minimum prices at which televisions could be sold for exportation to the United States and other matters were exercised continuously from 1963 until February 28, 1973 when such exporting arrangements were terminated.

  

Had the Japanese television manufacturers and exporters failed to comply with MITI's direction to establish such an agreement or regulation, MITI would have invoked its powers provided for in the Export Trade Control Order under the Foreign Exchange and Foreign Trade Control Law in order to unilaterally control television sales for export to the United States and carry out its established trade policy.

  

Therefore, when MITI decided the above-mentioned policy with respect to such sales and directed the television manufacturers and exporters to conclude, under the Export and Import Trade Law, such agreement and regulation relating to the minimum prices at which televisions could be sold for the United States market and other matters, the Japanese television manufacturers and exporters had no alternative but to establish the agreement and regulation in compliance with the said direction.

  The evidence in this record is uncontroverted that the MITI role included the attendance of a MITI representative at meetings of the JMEA; participation by MITI in the drafting of the Manufacturers' Agreements, including the establishment of the check-price level; MITI supervision of the agreements, in the form of various reporting requirements; and MITI approval power, in the form of licensing, over manufacturers' exports. MITI's overriding purpose was to promote "orderly marketing" through these means.

  The defendants contend that the MITI statement should be afforded conclusive effect as the statement of a foreign sovereign, and submit that the statement conclusively establishes the defenses of act of state, sovereign compulsion, and comity. The plaintiffs challenge the conclusivity of the statement, *fn122" and argue further that even if it were afforded conclusive effect, it would not be sufficient to establish these defenses. *fn123"

  In addition to contending that the MITI statement is insufficient to establish any of the defenses for which it is offered, the plaintiffs also challenge the accuracy of the statement. Their factual position is based primarily on the testimony of their expert witness, Prof. John O. Haley, PTO 264 (June 24, 1980), and his earlier affidavit. According to Professor Haley and the plaintiffs, MITI lacks the authority under Japanese law to compel Japanese companies to enter into the kind of arrangements described supra, and instead can only make non-binding recommendations. Plaintiffs point, in particular, to Article 7 of the Manufacturers' Agreements, which permits any party to the agreement to withdraw from it upon notice to the Television Export Council (a provision that has been dubbed in this litigation the "opt-out clause") and to pertinent provisions of Japanese law which, in their view, are to the same effect. They also note that the Japanese statute which authorizes agreements among manufacturers and exporters speaks in terms of MITI approval of agreements entered into by the companies themselves, rather than in terms of MITI ordering the companies to enter into agreements, and that the language of the Agreements themselves is consistent with this statutory scheme.

  In sum, plaintiffs contend that MITI's role in the formulation of the export control arrangements amounted, at most, to informal encouragement and subsequent approval of activities initiated by the defendants themselves. They submit that none of the defendants were under any compulsion to engage in the export trade at all, and that they could have avoided any governmental compulsion simply by declining to export their products to the United States. Defendants, relying inter alia on the cases cited in n.123, supra, rejoin that plaintiffs' arguments are not sufficient to overcome these defenses.

  Since we do not reach the act of state, sovereign compulsion, or comity defenses, we have no occasion to make findings on these disputed points, nor to determine whether or not a genuine issue of material fact exists as to them so as to preclude summary judgment on the defenses. *fn124" We trust, however, that the foregoing discussion has served to introduce the points, without which the mosaic of this case would be incomplete, and thus to inform the deliberations of the Court of Appeals.


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