Tuesday, September 9, 2014

Is "artharitis" a good excuse for price fixing?

I first heard that expression from a defendant in a price-fixing trial brought by the Justice Department against a gas station owner in Iowa.  The defendant called the gas station across the highway every morning to ask what price he was charging.  Since she had to match his price (otherwise she would sell no gasoline), she argued that a simple phone call would save her one more painful trip up the ladder to change the price on the sign. 

At first I thought it was just rural slang, but when I saw the jury foreman walk in with a pair of jeans so loose that you could see the top of his inter-gluteal crevice (one of my students who is also a surgeon gave me that expression when he saw me struggling to avoid saying “butt crack” in class), I suspected it was part of the trial strategy.   The defendant's attorney wore a rumpled white linen suit and spoke with a thick accent, which contrasted with the attorneys and economists from “the Federal Government in Washington, DC.” All of us were wearing dark suits and speaking with no accent.  Her attorney used the expression again in his closing argument to chastise us for wire-tapping an old widow who was coping with her “artharitis” as best she could.

Needless to say, we lost the trial--we got “home fried.”  But years later, when I ran this case past two second-grade classes, I got a unanimous conviction.  Of course, I first had to explain that antitrust cops (my daughter was surprised that I had been a cop) enforce laws that make it a crime to discuss prices with your competitors.  One of her classmates who almost cried when I explained to her that the Sherman Act covered conversations with her friends.  The idea that there are some things that you cannot share with your best friend was extremely upsetting to her.  

1 comment:

  1. It's not clear to me that there's any agreement, at least not in any meaningful way. If the woman waiting a few minutes, she'd have the same information, and neither party is making any commitment on price (beyond her feeble - pun intended - attempt to claim that she wouldn't change price a second time if necessary).

    However, the real reason I had to comment was the last paragraph. Reporting the opinions of second-graders? Worst appeal to authority ever.