The Enigma of the Single Entity

INTRODUCTION .......................................................................................... 497 I. THE EXISTENCE OF AN AGREEMENT CONTROLS WHETHER THE COMPETITIVE EFFECT OF MOST BEHAVIOR WILL BE ANALYZED ...................................................................................... 499 II. THE SUPREME COURT AND THE FICTION OF THE SINGLE ENTITY ........ 504 A. Wholly Owned Subsidiaries Are Part of the Parent Corporation .............................................................................. 504 B. Teams in a Professional Sports League Are Separate Actors ...................................................................................... 510 III. THEORIES OF THE FIRM AND THE SINGLE ENTITY CONCEPT ............... 514 A. Coase Views the Firm as Distinct From the Market .................. 515 B. The Nexus of Contracts Concept Denies the Separation of the Firm From the Market ....................................................... 519 C. The Single Entity Concept from Coasean and Nexus of Contracts Perspectives ............................................................. 524 IV. SHARING NET PROFITS AND EXERTING SIGNIFICANT CONTROL JUSTIFY SINGLE ENTITY TREATMENT ............................................ 526 A. Sharing Net Profits Induces Cost Savings Sufficient to Justify Single Entity Treatment ............................................... 527 B. When One Person Substantially Controls the Activities of Another They Will Be Considered a Single Entity ................. 534 C. The Relationship of the Sharing of Profits Test and the Control Test ............................................................................. 537 D. Partially Owned Subsidiaries: Testing the Tests ..................... 538 V. COPPERWELD AND AMERICAN NEEDLE UNDER THE SHARING OF PROFITS AND CONTROL TESTS ....................................................... 543 CONCLUSION .............................................................................................. 547