Hypothetical situation: Suppose it is observed that, over a period of two years, the prices charged by rival gasoline retailers in a small, remote town never differed by more than 2 cents per gallon. Moreover, since the rival gas stations were located in close proximity to each other and prices were posted on prominently displayed signs, the proprietors obviously knew what the other was up to. Hence, the gasoline retailers behaved in parallel fashion and were conscious of this fact.

Question: Is strong evidence of consciously parallel behavior by itself sufficient to get a section 1 conviction?

Answer: Probably not.

	The Federal District Court of Northern Texas ruled that specific provisions of contracts signed between 2 large (and affiliated) theater chains and 8 film distributors amounted to illegal restraint of trade in the Texas and New Mexico film exhibition market.
	Facing stiff price competition from "second run" movie houses, Interstate and Consolidated (which together accounted for 74 percent of licensing fees paid by motion picture theaters in their market territory) threatened to foreclose Paramount et al. from important outlets in Texas and New Mexico unless they agreed to the following contract terms: (1) Distributors must agree not to license exhibition rights to "A" films to second-run houses unless theater operators agree to a minimum ticket price of 25 cents per feature (evening showings); and (2) No double feature policy for "A" films in the second-run market.
	The 8 distributors, fearing foreclosure from a lucrative market, acquiesced to the contract demands of Interstate and Texas Consolidated.
	The appeal was based on the argument that the film distributors acted independently--even though their behavior was parallel.
	Evidence of "conscious" parallelism came in the form of a letter written by the President of Interstate (O'Donnell). Each of the 8 film distributing companies knew the others received the same letter.
	Though there was no direct evidence of conspiracy, O'Donnell's letter supplied powerful circumstantial evidence. Judge Stone: "It taxes credulity to believe that the several distributors would have accepted and put into operation with substantial unanimity such far-reaching changes in business methods without some understanding that all were to join, and we reject [as being] beyond the range of probability that it was the result of mere chance."