Legal Definitions - consciously parallel

In antitrust law, consciously parallel describes a situation where competing businesses observe each other's actions and then independently decide to take very similar or identical steps. This means one company becomes aware of what a competitor is doing (or planning to do) and, without any direct agreement, communication, or collusion with that competitor, chooses to follow suit by taking a comparable action.

While this behavior is not illegal on its own, it can sometimes be considered by courts as circumstantial evidence that might suggest a secret agreement or conspiracy to restrict competition. Such agreements, known as cartels or trusts, *are* illegal under antitrust laws.

Here are some examples to illustrate the concept of consciously parallel conduct:

• Example 1: Product Feature Rollout

  Imagine two major smartphone manufacturers, TechCo and GadgetCorp, are fierce competitors. TechCo announces a new software update that includes a highly anticipated battery-saving feature. GadgetCorp, upon observing TechCo's announcement and the positive market reaction, conducts its own internal research and development. Without any communication or agreement with TechCo, GadgetCorp independently decides to accelerate its own development of a very similar battery-saving feature and includes it in its next software update, released shortly after TechCo's.

  This illustrates consciously parallel conduct because GadgetCorp was conscious of TechCo's action and made an independent decision to take a parallel step, driven by market competition and consumer demand rather than collusion.

• Example 2: Service Fee Adjustment

  Consider two large banks, National Bank and City Bank, operating in the same region. National Bank, facing rising operational costs, announces a new policy to charge a small fee for certain online bill payment services that were previously free. City Bank's management team, noticing National Bank's new fee structure and analyzing its own increasing costs and customer usage patterns, independently decides to implement an almost identical fee for the same online bill payment services, effective a few weeks later.

  This is an example of consciously parallel behavior because City Bank was conscious of National Bank's change and, without any coordination, made an independent, parallel business decision based on its own financial assessment and competitive landscape.

• Example 3: Marketing Campaign Strategy

  Two rival fast-food chains, Burger Palace and Fry Kingdom, compete for the same customer base. Burger Palace launches a new national advertising campaign emphasizing the use of locally sourced, fresh ingredients. Fry Kingdom's marketing team observes the success and positive public reception of Burger Palace's campaign. After internal discussions and market research, Fry Kingdom independently decides to launch its own advertising campaign a few months later, also highlighting its commitment to fresh, locally sourced ingredients, without any prior agreement or discussion with Burger Palace.

  Here, Fry Kingdom engaged in consciously parallel conduct by being conscious of its competitor's successful strategy and making an independent decision to implement a parallel marketing approach to remain competitive.