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Re: Deja vu all over again?
Could the cigarette makers be explicitly conspiring to raise prices to pay
for the announced and possible settlements?
On Wed, 3 Sep 1997 BOWENJ@acad.ripon.edu wrote:
> In 1946, the Supreme Court, in a ruling hailed by some as
> proclaiming a "new" Sherman Act, used the doctrine of "conscious
> parallelism" to find that the then Big Three cigarette companies
> had violated antitrust law. Though there was no direct evidence
> of conspiracy to fix prices, the Court found the use of price
> leadership to drive low-cost brands from the market persuasive.
> The leader, Reynolds, had lowered its price; American and Liggett
> & Myers had followed. Smaller firms lost most of their market,
> and Reynolds, again immediately followed by the other two, then
> put the price back up.
> Today's newspaper reports the second cigarette price
> increase of the year, announced by Phillip Morris and matched by
> Reynolds and Brown & Williamson. This increase follows, and
> accelerates, the industry price hikes that have occurred since
> the major firms slashed prices in 1993, a measure taken to limit
> the market inroads then being made by cheaper discount brands.
> The similarities here seem evident enough. But we would, I
> think, be quite surprised were the Antitrust Division to question
> the price behavior of the 1990's.
> What accounts for the change?