The Fourth Circuit recently held in United States v. Brewbaker that a bid-rigging agreement between horizontal competitors who also interacted with each other vertically as manufacturer and distributor must be analyzed under the Sherman Act using the rule of reason, not the per se rule. This holding is incorrect. The general rule is that bid-rigging agreements are analyzed using the per se rule, and the vertical interaction between the Brewbaker parties outside the scope of their bid-rigging agreement should not have altered this general rule. By looking at the entire relationship between the parties to ascertain whether the per se rule or the rule of reason applied, rather than just the relationship between the parties within the allegedly anticompetitive agreement, the court ignored decades’ worth of analogous precedent from other circuits and the United States Supreme Court. Further, the court ignored the fact that any procompetitive effects from the vertical interaction between the parties did not mitigate the anticompetitive effects from the horizontal bid-rigging agreement between the parties. The government typically only criminally prosecutes per se illegal schemes, so, in practice, the Brewbaker decision will lead to lower prosecution rates within the Fourth Circuit. This, in turn, will harm consumers and taxpayers who often bear the financial burden of increased costs resulting from bid rigging. Considering the country’s recent antagonism towards the per se rule more broadly, there is a plausible chance that this holding will be adopted by other circuits, leading to a reckoning for the government’s criminal antitrust enforcement.
