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Court Finds Musical Instrument Antitrust Claims Out Of Tune Under Twombly

Posted  September 18, 2012

Judge Larry Burns of the U.S. District Court for the Southern District of California has granted the defendants’ motion to dismiss plaintiffs’ antitrust claim under Section One of the Sherman Act in In re: National Association of Music Merchants, Musical Instruments and Equipment Antitrust Litigation.

The plaintiffs alleged that defendants conspired to fix the prices of acoustic, electric and bass guitars, and guitar amplifiers.  Plaintiffs’ theory was that certain guitar manufacturers and retailers, faced with price competition from Internet merchants and “big box” retailers, sought ways to stabilize or increase guitar and amplifier prices.  As the court explained, defendants “allegedly did this with the support and assistance of the National Association of Music Merchants (NAMM) by requiring that dealers adhere to policies setting minimum advertised prices (MAPs).”

Last year, the court granted in part the defendants’ motion to dismiss, but allowed plaintiffs an opportunity to obtain limited discovery to find information sufficient to state their claims.  After discovery, the defendants again moved to dismiss and Judge Burns dismissed plaintiffs’ federal antitrust claim with prejudice.

The court was not convinced that the plaintiffs’ allegations that the defendants’ representatives attended meetings where MAPs were discussed met the  pleading standard set forth in Bell Atlantic v. Twombly, 550 U.S. 544 (2007).  Based on its reading of Twombly, the court stated that “unilateral advocacy, particularly in an open and public forum, is not itself an agreement or conspiracy.  And independent responses to public advocacy without an agreement, even if consciously parallel to other entities’ activity, would simply be permissible parallel conduct.”

Similarly, Judge Burns was not persuaded by the plaintiffs’ purported “plus factors,” and found such allegations insufficient to state a claim.

Tagged in: Antitrust Litigation, Price Fixing,