Uncertainty is a fact of life for business executives, especially when they are faced with macro-economic events such as the recent sharp decline in oil prices. In such circumstances, executives must make hard decisions regarding pricing and output, amid speculation about what their competitors will do. (“Should our company cut back on production, or should it push ahead in order to gain market share? Should our company suspend introduction of new products until the backlog of unsold products clears, and if we do, won’t competitors steal a march on us?”) 

Invitations to Conspire 

The vast majority of executives know that antitrust law forbids them from reducing uncertainty by reaching agreements with competitors on prices, production levels, customers or territories. Moreover, because the existence of an unlawful conspiracy may be inferred from circumstantial evidence, executives are counselled not to communicate on these topics with their peers at competing companies. But this advice is not always heeded: as if to confirm the adage that a bit of knowledge can be dangerous, executives sometimes seize on lawyers’ advice that violations of Section 1 of the Sherman Act require an agreement—what the U.S. Supreme Court has referred to as a “conscious commitment to a common scheme designed to achieve an unlawful objective”1— and assume that communications with competitors falling short of an agreement do not pose antitrust risk. This is mistaken; federal as well as state antitrust and unfair competition laws reach attempts to conspire, with the Federal Trade Commission being particularly aggressive in wielding Section 5 of the FTC Act, which broadly prohibits “unfair methods of competition,” against unaccepted invitations to conspire. 

Thus, in a recent matter involving three internet resellers of barcodes,2 the owner of one of the companies importuned the other two, in a series of emails, to raise prices.3 One of the two competitors responded by encouraging a continuing “dialog,” and opined (incorrectly) that an agreement “for one of us to raise prices and then have the others follow” would not constitute illegal price fixing.4 In the event, the discussed price increases did not come about; nevertheless, the FTC’s subsequent complaint challenged the invitation to collude as an unfair method of competition in violation of Section 5 of the FTC Act. The government’s complaint was settled with a consent order. 

The FTC Act is not the only statute potentially applicable to invitations to conspire. In the well-known American Airlines case, the U.S. Department of Justice brought a claim of attempted monopolization, under Section 2 of the Sherman Act, after American’s then-CEO was recorded suggesting that another airline’s CEO raise his company’s fares.5

The Special Problem of Earnings Calls and Investor Presentations 

Also mistaken is the view that antitrust is concerned only with private or secret communications, and that statements made openly on earnings calls or in presentations at investor conferences fall within some kind of “safe harbor.” On the contrary, the antitrust agencies, as well as plaintiffs’ lawyers, pay close attention to companies’ public statements and in recent years have been quick to pounce on statements that could suggest an invitation to conspire, if not a completed agreement. 

Thus, in the Valassis matter,6 the FTC charged a seller of newspaper advertising inserts with soliciting its sole competitor, through statements on earnings calls, to agree to raise prices and allocate customers. According to the FTC complaint, Valassis and News America were locked in a fierce price war. Knowing that News America listened to its earnings calls, Valassis told the analysts it would: abandon its goal of increasing market share; price at whatever level was necessary to maintain its current share; and observe higher pre-price war rates in its bids to current News America customers. Valassis’ executive added that his company would monitor the marketplace for “concrete evidence” of News America’s “reciprocity,” and would revert to its previous price-cutting strategy if News America continued to pursue Valassis’ customers. In its complaint the FTC acknowledged that companies “have many obvious and important reasons for discussing business strategies and financial results with shareholders, securities analysts, and others,” but said Valassis’ statements “went far beyond a legitimate business disclosure and presented substantial danger of competitive harm.” According to the FTC, the information Valassis disclosed was not needed by the securities community and would not have been disclosed by Valassis except to convey an offer to News America. 

Comments on earnings calls were also at the heart of the FTC’s more recent complaint against U-Haul.7 As in Valassis, U-Haul and a competitor, Budget, were engaged in robust price competition. Internal U-Haul documents discussed a strategy to convince Budget to raise prices through a two-prong approach: direct contacts with local Budget managers, and earnings calls. On one such call, U-Haul’s CEO said “we’re very, very much trying to function [as] a price leader and not give away share.” The executive also made clear that he was monitoring Budget’s earnings calls in the hope that Budget would continue to hold the line on prices. The FTC’s complaint alleged that “U-Haul acted with the specific intent to facilitate collusion and to achieve market power” and that “[e]ach and all of U-Haul’s invitations to collude, if accepted by Budget, would likely result in higher one-way truck rental rates and reduced output.” 

Earnings calls can also provide fodder for private antitrust suits. For example, in In re Delta/AirTran Baggage Fee Antitrust Litigation,8 a federal district court denied a motion to dismiss Sherman Act claims that were based in part on comments by two airlines’ executives on earnings calls and at an industry conference. The calls occurred during a time of rising fuel prices. AirTran led off by saying that the industry needed to reduce capacity and that it was suspending a previously announced plan to increase its capacity by 10 percent. AirTran’s CEO went on to note that carriers could “change the revenue environment” by “push[ing] up average fares” as excess capacity was cut.9 In a Delta earnings call the following day, which AirTran monitored, Delta stated that it could not achieve meaningful capacity cuts on its own and would watch competitors’ actions. Delta further stated that in its view the increased price of fuel necessitated a 10 percent reduction in capacity.10 In comments at a subsequent industry conference, Delta’s CFO said his company would take “a pause” in its capacity reductions while it “watched” its competitors’ reactions.11 Denying the airlines’ motion to dismiss, the district court held that the complaint alleged sufficient facts to show a conspiracy, in the form of public statements combined with “plus” factors suggesting agreement. The court said that reducing capacity unilaterally, without agreement, would have been contrary to each airline’s independent self-interest. This, when combined with the CEOs’ public statements and their companies’ subsequent parallel conduct, was sufficient to set forth a plausible price-fixing conspiracy claim. 

Guidelines For Earnings Calls and Investor Presentations 

Earnings calls and investor presentations must be carefully scripted. Message discipline is critical; executives should be advised on how to handle Q&A sessions and panel discussions at industry events. The following “do’s and don’ts” are offered to assist in this preparation. 


  • Remember the purpose of the call or presentation – It is appropriate for the company to provide information that is material to investors and potential investors, even if that information might also be of interest to competitors. Ask yourself whether the information the company intends to disclose serves an appropriate purpose. 
  • Understand the risk – From an antitrust perspective, statements about future business plans, including statements regarding product or region-specific pricing or changes in output, carry the most risk. Antitrust risk is reduced where information about prices, costs or capacity is general, highly aggregated, and historical in nature. 
  • Focus on your company – Executives should focus on those business conditions (e.g., demand, costs, lead times) facing the company, and should avoid speaking about the industry as a whole – e.g., “the industry will not improve until …” 
  • Treat Q&As with particular care – Statements made in response to questions from investors or analysts carry the same evidentiary weight as formal, planned comments. Executives must be careful when making unplanned, off-the-cuff remarks regarding the future of the company, its competitors and customers. 

Do Not 

  • Overshare – Avoid disclosing specific pricing or capacity information. Where discussion of either is necessary, all product and geographic information provided should be aggregated to the highest level possible. Margin and other “profit-related” information also should be aggregated across product lines, where possible. 
  • Suggest business strategy depends on competitors following your company’s lead – Do not announce or discuss business strategies that are conditioned upon the actions of the company’s competitors or the industry as a whole. Such announcements may be seen as attempts to “signal” other players in the market about the company’s own intentions. 
  • Speculate about the future behavior of others – Executives should not address what the company’s competitors “should” or “could” do going forward. Statements regarding the likely behavior of third parties could suggest a desire on the part of the company to improperly influence competitors. 
  • Provide information about specific geographies or markets – Do not discuss plans to move equipment in or out of specific areas (e.g., “if prices in the X do not improve, we’re leaving”). General discussion about introducing new products or moving equipment or productive capacity from the U.S. to other countries (or vice versa) is less sensitive. 
  • Mention specific competitors by name – When discussing product or regional specific pricing, margins or capacity, executives should not mention competitors by name – e.g., “Company X is pricing very aggressively.” More general discussion – e.g., “we had a good quarter competing against X” – is less sensitive. 
  • Take ownership of “the industry” – The company should not, even if pressed to do so by analysts, purport to speak for the “industry” or “market.” If asked to address industry conditions as a whole, do not make statements that call for specific behaviors from industry players (e.g., the need for price or capacity “discipline”). The company should also avoid statements or implications that it is “leading”. 

Finally, in case of doubt about a contemplated statement, ask: “Who is the intended audience for this statement, and what is the company’s purpose in saying this?” If the answer is that the statement is aimed at competitors, and the purpose is to send them a message about the company’s intentions (or theirs), reconsider the wisdom of the proposed comments.