Question
Cement manufacture contributes substantially to CO2 emissions and global climate change. Sherman Prescott is worried about the future of the planet and committed to stopping
Cement manufacture contributes substantially to CO2 emissions and global climate change. Sherman Prescott is worried about the future of the planet and committed to stopping climate change. As president of a leading cement manufacturer, he has recruited the 15 leading U.S. cement manufacturers to form the Climate Change Cement Manufacturers Association (CCCMA). Together they control 90% of cement manufacture in the country. Increasing capacity takes many years. Only a negligible amount of cement is imported because it is very heavy and costly to transport. At the first meeting of the CCCMA in January 2023, the president of one cement manufacturer proposed that CCCMA should require every member of the CCCMA to reduce cement production by 20% in 2023. Sherman Prescott rose to speak and said "I will vote against that resolution, because my general counsel has warned me that such an agreement would violate the antitrust laws, and, although I can make no promises about my cement output and do not want to discuss output here, I will voluntarily and unilaterally pledge to cut my CO2 emissions by 20%. I hope that other firms follow my lead and make a similar decision as the fate of mankind is at stake in global climate change. I also fear that if they don't, I may go out of business fulfilling this pledge." Cement manufacture is energy intensive and there is no known technology to reduce the CO2 emitted per ton of cement manufactured. After Mr. Prescott spoke, each of the other executives in attendance said that his firm planned to reduce CO2 emissions in 2023 by 20% as well. The proposal to require a 20% reduction in output was voted down. Shortly after the meeting, each member of CCCMA reduced cement production by roughly 20%. Each of their CO2 emissions fell by 20% and the price of cement soared. The 2022 price of cement was sufficient to just cover each firm's cost, including a substantial fixed cost. After the price soared in January 2023 all the firms made substantial profits. The cement manufacturers are sued under Section One of the Sherman Act, alleging a per see violation. How would you defend the cement firms and how likely are you to win? Why?
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