Concerted action can take as many forms as human imagination and ingenuity permit and does not require a formal agreement. And parallel action, coupled with other evidence of collusion (e.g., secret meetings or other suspicious conduct) can be the basis of an antitrust violation.

That said, normally, the mere fact of parallel action is not problematic unless there is more to show suspicious activities. The venture financing industry has many customs and patterns of long-standing, and its participants will happen to conform to them for a variety of reasons having nothing to do with collusion aimed at suppressing competition.

So essentially the red flag here is the secret meeting, right? That is, if they had acted in exactly the same way but openly, with a contract and a trade association and so on, this would not be illegal?

My impression is that the Supreme Court's significantly pared that back in further cases. Copperweld Corp. v. Independence Tube (1984) held that parallel action was inconclusive evidence of antitrust violations, though it could serve as circumstantial evidence. In Bell Atlantic v. Twombly (2007), the Court quoted that approvingly, and held that an allegation of parallel action, without a further plausible allegation of a conspiracy to engage in the parallel action consciously, wasn't even enough to state an antitrust claim sufficient to survive immediate dismissal, let alone prevail.

I'm hardly a legal expert, but I do recall some law-prof bloggers around 2007 claiming that it was confirmation that the parallel-action-suggests-conspiracy rule was dead and buried, even if not explicitly overturned.

I find this somewhat dubious; I wasn't there, but if I was one of those guys, I'm not sure I'd continue the "evil meeting" after Michael stumbled in uninvited. If he came after the meeting ended, why weren't they all "just about to leave."

Having said that, I'm sorry if my confusion gives a way my ignorance of the subject, but are these angels selling anything to a marketplace? I thought angels invested their money. If that's the case, aren't they colluding to the terms of their buying, as a group? Or at least to loosely manage the terms of buying? If that is illegal, why does it apply to angel investing but not, say, Groupon? What I don't understand is what is their "price" that they are colluding to "fix"? I thought antitrust was for the collusion for the price asked, not price willing to pay.

Interesting questions... IANAL, but I imagine they're colluding to bring down the valuations of startups, therefore essentially fixing the "price" of their money, to be paid for in startup equity.

If I, and others, say your company is worth a million dollars, then I'm fixing the price of my $500,000 at 50% of your company.

IANAL(E), but this scenario would seem to be more of a concern if startups in Silicon valley got together over dinner to deny deals that didn't offer similar terms and prices in dollars for securities of all startups represented at said dinner simultaneously.

As for angels fixing the "price of their money" I don't understand how antitrust applies to this anymore than it would to, say, how LIBOR is determined.

If antitrust applies to colluding on the dollar amount to be paid OUT instead of price asked for money coming in, then if I start a boycott of something (colluding to pay $0) am I guilty of violating antitrust laws?

As I understand it (not much, I admit), antitrust applies to goods and services, not cost of money. If antitrust applied to cost of money, the Federal Reserve would not exist since it's basically an extension of the member banks that make up its institutional board of directors (not board of governers). All they do is get together and fix the price of money to be printed and lent out to member banks.

Also, this whole "I stumbled in on a secret meeting of powerful men conspiring to start a revolution" thing is somewhat suspect; throughout history this gambit, if it actually happened that way, is usually either desperate grab at 15 minutes of fame (which seems unlikely given Michael's popularity), an attempt to gain instant credibility on some esoteric but useful new subject ("I was the only outsider privvy to what happened there, so you can trust me") or, unfortunately, a cynical move feigned by the men in the room to inspire hasty and possibly faulty reactionary stances by the supposed target of their "envy".

I could be wrong though. I just can't believe guys who are careful enough to get to such a position in life would all simultaneously get so careless. On the same day. In the same place.

I don't know if care has a lot to do with it. A lot of these folks got successful by taking risks without deep consideration of the consequences (for better or worse). That's why they pay lawyers to tell them when they're pushing the boundaries too much, but in this case the lawyers obviously weren't in on the proceedings.

> if I start a boycott of something (colluding to pay $0)

http://j.mp/dividedby0

(Unless of course you actually get them to give it to you for nothing, which is generally not the point of a boycott…)

Think of the stock market. That's certainly a marketplace. It's made up of investors seeking to earn a return on their money by investing in companies. Think of the illegalities involved in collusion to manipulate the stock market. Now think of Silicon Valley as a less formal/regulated stock market...

With Groupon nobody is asked to not buy or otherwise participate in the market unless done through Groupon. Instead, it's like a grocery store co-op; members pool their money to get more buying power. This doesn't mean they agree to refrain from shopping elsewhere, as that would be collusion/conspiring to produce a market effect. IANAL

If I have an investing club and we come to define an investment approach, say, what stocks we like and what we think they should be valued at, are we colluding to price fix the market? If I think a company is over priced and I am in charge of executing trades for my investing club, whose members unanimously agreed not to buy the stock in question until it fell down say, $20 more in price - are we colluding? Yes. Colluding to price fix? No. We're simply colluding not to participate in the buy side. That may or may not lead to sellers slowly changing their asking price. But that's a two-way street. I don't see the illegality according to anti-trust. Now if every major instututional house/hedge/mutual/pension fund that owned that stock got together and colluded to refuse to SELL us any stock until we agreed to their higher price, that I understand is illegal. They are fixing the price literally. But I don't see how us refusing to participate in a transaction on the buy side is illegal whether we have 5 members or 5 million.

Saying that the angels are colluding to price fix buys into Michael's assertion that "together, the men in that room account for nearly 100% of all angel deals". That means that their "deals" are the commodity in question, and they are free to do as they wish. If it's their money, then it's hard to make the claim that their money is the market. There's certainly more money in the world than theirs.

"Look, you and I both know your company is worth $50 million. But I only want to pay $10 million, and I've already worked out a deal with my competitors so they won't bid any more than that either. We own the market for investment, so you can take it or your company can die for lack of funding."

You don't see a problem with this kind of artificial market manipulation? This is no longer a market; it short circuits true capitalism and only serves to siphon gains from the seller (in this case, the company's founders) to the buyer, who will turn around and effectively try to resell (or otherwise exit) the company for profit.

Everyone seems to be convinced that price fixing only applies to sellers. That's wrong. It firmly applies to both selling and buying. It's fundamentally about market manipulation; taking steps to undermine the economy of the system for direct personal gain. That kind of behavior destroys wealth and erodes confidence in the marketplace.

I'm ignorant enough to have the same question in my mind.