A violation of Section 1 of the Sherman Act requires an agreement between two or more separate economic entities. In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), the Supreme Court of the United States addressed the question of whether a parent corporation and its wholly owned subsidiary were capable of conspiring in violation of Section 1. Generally, Copperweld stands for the principle that no legally actionable antitrust agreement can exist between a parent and subsidiary that structurally and continuously serve a common interest. In Copperweld, the Court described a wholly owned subsidiary’s “general corporate actions [as] guided or determined not by two separate corporate consciousnesses, but one.” In concluding its analysis on this point, the Court stated that, in such a relationship, “whether or not the parent keeps a tight rein over the subsidiary[,] the parent may assert full control at any moment if the subsidiary fails to act in the parent’s best interests.” In other words, if the ultimate economic interests of the subsidiary and the parent are identical, then the fact that the enterprise chooses to do business through separate corporations does not create a potential for antitrust conspiracies.
The principles applicable to the evaluation of not-for-profit, non-stock organizations are essentially no different than the evaluation of stock corporations. In determining whether a subsidiary can conspire with its parent, the inquiry necessarily focuses on whether the parent “controls” the subsidiary. Courts, in analyzing whether the requisite control exists, consider the parent’s ownership interest and/or its ability to exercise operational control over its subsidiary. When ownership is complete (i.e., 100 percent), we can simply look to Copperweld and conclude that the parties are incapable of conspiring. However, when the ownership is something less than 100 percent, courts will likely consider evidence of both common control and common purpose under a “facts and circumstances” analysis in order to determine whether the entity in question is a single enterprise for purposes of Section 1 of the Sherman Act. Simple majority ownership alone does not necessarily equate to control for antitrust purposes.