Review of Industrial Organization 16: 113–129, 2000.
© 2000 Kluwer Academic Publishers. Printed in the Netherlands.
The Meaning of “Agreement” under the Sherman
Act: Thoughts from the “Facilitating Practices”
GEORGE A. HAY
Cornell University Law School, Ithaca NY 14853, U.S.A.
While the Economic Policy Ofﬁce was involved in a number of interesting and
important matters during the six years I was Director (1973–1979), for the most
part my involvement in individual investigations and cases was vicarious, i.e., su-
pervising, supporting, and advising the staff economists assigned to the particular
matter. The one major exception – a matter in which I became personally involved
in an intensive way – was the General Electric (GE)-Westinghouse price signaling
matter. In what follows, I provide a brief summary of what transpired in the GE-
Westinghouse matter and then trace through some of the longer term consequences
of the Department’s efforts. I conclude with a discussion of what I regard as a still
unsettled issue in antitrust law – the precise legal meaning of “agreement” under
Section 1 of the Sherman Act and the relevance of the GE-Westinghouse matter for
trying to resolve that dilemma.
II. The GE-Westinghouse “Facilitating Practices” Case
For the true origin of the GE-Westinghouse matter,
we need to go back to 1960,
when GE, Westinghouse, Allis-Chalmers, and four individuals were indicted for
ﬁxing the prices of large turbine generators. The criminal case ultimately resulted
in the entry of guilty pleas by the corporate defendants and nolo contendere by the
four individual defendants which in turn resulted in ﬁnes and, in the case of one
individual, a jail sentence. The companion civil case led to a consent decree against
the corporate defendants generally prohibiting price ﬁxing and the kinds of direct
Edward Cornell Professor of Law and Professor of Economics, Cornell University. The author
was Director of The Economic Policy Ofﬁce 1973–1979.
This summary is taken in large part from the Justice Department’s 1977 Competitive Impact
Statement in the Ge-Westinghouse matter. United States vs. GE Co. (1977-1) Trade Cas. (CCH) 712.