Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 6

Gerber, Heinz, and Beech-Nut, manufacturers of baby food, account for essentially the entire market in the United States. A number of retail stores filed an antitrust class action against the companies alleging that they had violated section 1 of the Sherman Act by engaging in an unlawful conspiracy to fix prices. The class presented evidence that sales representatives employed by the three companies exchanged price information about their products, including, on occasion, sending each other advance notice of price increases. The class of store owners also introduced evidence of e-mails indicating that the companies were aware of anticipated price increases before they were announced in the market. One memo stated that Heinz would not try to secure a majority base of distribution in a sales area because it had agreed to a "truce" with Gerber. Did the companies violate the antitrust laws? Would you need any additional evidence to make this determination? [ In re Baby Food Antitrust Litigation , 166 F.3d 112 (3d Cir. 1999).]