The Rule of Reason in Antitrust Law
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Justice Stevens and the Rule of Reason. Spencer W
Loyola University Chicago, School of Law LAW eCommons Faculty Publications & Other Works 2009 Justice Stevens and the Rule of Reason. Spencer W. Waller Loyola University Chicago, [email protected] Follow this and additional works at: http://lawecommons.luc.edu/facpubs Part of the Law Commons Recommended Citation Waller, Spencer Weber, Justice Stevens and the Rule of Reason, 61 SMU L. Rev. xx (2009). This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Faculty Publications & Other Works by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. JUSTICE STEVENS AND THE RULE OF REASON Spencer Weber Waller* VER the past thirty-plus years, Justice Stevens has played a spe- cial role in the jurisprudence of antitrust. He came to the Su- preme Court after a successful career as an antitrust litigator, scholar, law teacher, and federal appellate judge. Justice Stevens applied the special insights this background provided to articulate a unique voice in shaping antitrust. While much of the antitrust debate since World War II has concerned the proper legal standard for assessing the competitive impact of agreements under the antitrust laws, Justice Stevens focused much of his analytical work for the Court on a more sophisticated, but no less important, question: How should a court actually determine whether an agreement unreasonably restricts competition in violation of the anti- trust laws? In antitrust terms, the question for Justice Stevens was not so much whether the per se rule or the rule of reason applied in a particular case, but what the rule of reason actually means and how should it be applied. -
Antitrust Guidelines for Collaborations Among Competitors
Antitrust Guidelines for Collaborations Among Competitors Issued by the Federal Trade Commission and the U.S. Department of Justice April 2000 ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG COMPETITORS TABLE OF CONTENTS PREAMBLE ................................................................................................................................ 1 SECTION 1: PURPOSE, DEFINITIONS, AND OVERVIEW ............................................... 2 1.1 Purpose and Definitions .................................................................................................... 2 1.2 Overview of Analytical Framework ................................................................................ 3 1.3 Competitor Collaborations Distinguished from Mergers .............................................. 5 SECTION 2: GENERAL PRINCIPLES FOR EVALUATING AGREEMENTS AMONG COMPETITORS .................................................................................. 6 2.1 Potential Procompetitive Benefits .................................................................................. 6 2.2 Potential Anticompetitive Harms .................................................................................... 6 2.3 Analysis of the Overall Collaboration and the Agreements of Which It Consists ......................................................................................................... 7 2.4 Competitive Effects Are Assessed as of the Time of Possible Harm to Competition .................................................................................. -
The Rule of Reason
University of Pennsylvania Carey Law School Penn Law: Legal Scholarship Repository Faculty Scholarship at Penn Law 2018 The Rule of Reason Herbert J. Hovenkamp University of Pennsylvania Carey Law School Follow this and additional works at: https://scholarship.law.upenn.edu/faculty_scholarship Part of the Antitrust and Trade Regulation Commons, Business Law, Public Responsibility, and Ethics Commons, Courts Commons, Economic History Commons, Industrial Organization Commons, Intellectual Property Law Commons, Law and Economics Commons, Law and Society Commons, Legal History Commons, Legal Remedies Commons, Litigation Commons, Public Economics Commons, and the Social Welfare Law Commons Repository Citation Hovenkamp, Herbert J., "The Rule of Reason" (2018). Faculty Scholarship at Penn Law. 1778. https://scholarship.law.upenn.edu/faculty_scholarship/1778 This Article is brought to you for free and open access by Penn Law: Legal Scholarship Repository. It has been accepted for inclusion in Faculty Scholarship at Penn Law by an authorized administrator of Penn Law: Legal Scholarship Repository. For more information, please contact [email protected]. THE RULE OF REASON Herbert Hovenkamp* Abstract Antitrust’s rule of reason was born out of a thirty-year Supreme Court debate concerning the legality of multi-firm restraints on competition. By the late 1920s the basic contours of the rule for restraints among competitors was roughly established. Antitrust policy toward vertical restraints remained much more unstable, however, largely because their effects were so poorly understood. This Article provides a litigation field guide for antitrust claims under the rule of reason—or more precisely, for situations when application of the rule of reason is likely. -
A Decision-Theoretic Rule of Reason for Minimum Resale Price Maintenance Thom Lambert University of Missouri School of Law, [email protected]
University of Missouri School of Law Scholarship Repository Faculty Publications 2010 A Decision-Theoretic Rule of Reason for Minimum Resale Price Maintenance Thom Lambert University of Missouri School of Law, [email protected] Follow this and additional works at: http://scholarship.law.missouri.edu/facpubs Part of the Antitrust and Trade Regulation Commons, Courts Commons, and the Litigation Commons Recommended Citation Thomas A. Lambert, A Decision-Theoretic Rule of Reason for Minimum Resale Price Maintenance, 55 Antitrust Bull. 172 (2010) This Article is brought to you for free and open access by University of Missouri School of Law Scholarship Repository. It has been accepted for inclusion in Faculty Publications by an authorized administrator of University of Missouri School of Law Scholarship Repository. THE ANTITRUST BULLETIN: Vol. 55, No. 1/Spring 2010 : 167 A decision-theoreticrule of reason for minimum resale price maintenance BY THOMAS A. LAMBERT* In holding that minimum resale price maintenance (RPM) is not per se illegal but should instead be evaluated under the rule of reason, the Leegin Court directed lower courts to craft a structured liability analysis that will separate pro- from anticompetitive instances of the practice. Thus far, courts, regulators, and commentators have proposed four types of approaches for evaluating instances of RPM: (1) approaches focused on the effects on consumer prices; (2) approaches focused on the identity of the party initiating the RPM (i.e., manufacturer or dealer(s)); (3) approaches focused on whether the product at issue is sold along with dealer services that are susceptible to free-riding; and (4) an approach, favored by the Federal Trade Commission, that mechanically applies factors the Leegin Court deemed to be relevant to the liability question. -
Section 2 and the Rule of Reason: Report from the Front
Section 2 and the Rule of Reason: Report from the Front By Mark S. Popofsky & Ariel A. Martinez1 Courts remain, in the words of one observer, mired in an “exclusionary conduct ‘definition’ war.”2 Applying Section 2’s broad prohibition on “monopolizing” conduct requires courts to select a governing legal test. Section 2 legal tests run the spectrum from rules of per se legality to rules of near per se illegality.3 Courts, nonetheless, largely apply two dominant paradigms. The first consists of legal tests based on bright- line rules or safe harbors. Familiar examples include the Brooke Group4 below-cost price test for analyzing predatory pricing claims and the Aspen/Trinko5 “profit sacrifice” test for refusals to deal. Developing bright- line rules for Section 2, proponents argue, promotes business certainty and reduces the risk of chilling otherwise procompetitive conduct. The second paradigm is rule of reason balancing. Arguably the default Section 2 legal test,6 courts and commentators have described Section 2’s rule of reason in various ways: as mandating a step-wise approach, as requiring a balancing of pro- and anticompetitive effects, or (to borrow from Section 1) a framework for generating the enquiry “meet for the case.”7 However the rule of reason is expressed, its champions contend, its flexibility and fact-intensive approach permits courts to identify anticompetitive conduct without the under-inclusion that is an admitted feature of safe harbors and other bright-line rules. Recent Section 2 decisions reflect this debate and carry forward longstanding patterns in Section 2 case law. First, courts analyzing claims of predatory pricing or refusals to deal have declined invitations to cut back on the bright-line rules created by Brooke Group and the dominant interpretation of Aspen/Trinko. -
Reasoning Through the Rule of Reason for RPM
COVER STORIES Antitrust , Vol. 28, No. 1, Fall 2013. © 2013 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. Reasoning Through the Rule of Reason for RPM BY THEODORE VOORHEES, JR. HE ASCENDANCY OF THE ANTITRUST tion—that of the presence of significant unjustified anti - rule of reason continues apace. A 35-year stream competitive consequences.” 3 of U.S. Supreme Court rulings stating a strong The Actavis Court’s assurance that trial courts will be able preference for the rule of reason over per se short- to develop special litigation “structures” for rule-of-reason cuts remains steady, and the Court has expressed cases mirrored a closely similar Supreme Court finding six Tfull confidence that federal district courts are up to the task years ago in Leegin Creative Leather Products, Inc. v. PSKS, of making the rule work at trial. Inc. ,4 albeit in a case where Justice Breyer had dissented. In But where exactly does this confidence in the lower courts’ Leegin , a sharply divided court had overturned the 96-year- aptitude for handling rule of reason cases come from? Recent old Dr. Miles rule under which resale price maintenance scholarship in this area has found trends, but not ones the (RPM) had been deemed per se unlawful. Writing for the Supreme Court would find encouraging. If anything, there Leegin court majority, Justice Kennedy determined that the seems to be a marked tendency among lower courts to avoid rule of reason would thenceforward govern and expressed or simplify rather than boldly embrace full rule-of-reason confidence that: analysis. -
Remarks of Commissioner Christine S. Wilson for the U.S. Chamber Of
United States of America Federal Trade Commission The Sword of Damocles: The Slender Thread of Expanded Antitrust Conduct Claims Christine S. Wilson* Commissioner, U.S. Federal Trade Commission May 6, 2021 Remarks for the U.S. Chamber of Commerce Antitrust Webinar Series: Focus on Conduct *The views expressed in these remarks are my own and do not necessarily reflect the views of the Federal Trade Commission or any other Commissioner. Many thanks to my Attorney Advisor Adam S. Cella for his assistance in the preparation of these remarks. 1 “If the threat of [an antitrust action] is going to help us more with their programming than doing it, then keep the threat.” ~President Richard Nixon1 “[K]eeping this case in a pending status gives us one hell of a club on an economic issue that means a great deal to those three networks ... something of a sword of Damocles.” ~Charles W. Colson, advisor to President Nixon2 Many thanks to Sean Heather and the Chamber of Commerce for hosting me today. I greatly appreciate the opportunity to share my thoughts with you on proposals to alter the standards by which we assess business conduct under the antitrust laws. We gain useful perspective when we place current events within the arc of history. Today, I would like to roll back the clock several centuries. Shortly after his father died in 367 BCE, Dionysius the Younger inherited control over the ancient city of Syracuse. When Damocles, a member of his royal court, commented on the ruler’s wealth and good fortune, Dionysius offered to switch places with him. -
1 PRICE THEORY, COMPETITION, and the RULE of REASON Alan
PRICE THEORY, COMPETITION, AND THE RULE OF REASON Alan J. Meese1 Everyone knows that antitrust law should protect and further “competition.” But what exactly is competition? A grocer might “compete” by (falsely) claiming that her rival is selling poisoned beef or (falsely) claiming that her own beef is more nutritious. She might also price below her own costs or those of her rival, driving him out of business and taking over the market, at least for a time. A firm that makes film might “compete” against its rivals by inventing a better film or by redesigning a popular camera to use only its brand of film, expanding its own market share as a result. While each of these practices is “competitive” in one sense, any rational society should distinguish among them. All would applaud the invention of a new film, but most would agree that slander and false advertising are not “competition” in any sense that society wishes to embrace. The distinction between these practices could rest on some abstract conception of (legitimate) “competition.” Most, however, would adopt a more instrumental definition, distinguishing among various practices based upon their perceived social utility. Such an approach would treat as “competitive” any practice that, under the circumstances, would seem to further society’s welfare when compared to the status quo. 1Visiting Professor of Law, The University of Virginia; Cabell Research Professor of Law, The College of William and Mary. J.D., The University of Chicago, A.B., The College of William and Mary. The author thanks George Cohen, Paul Mahoney, Steven Salop, George Triantis, and participants in a faculty workshop at the University of Virginia for helpful questions and comments on an earlier version of this article. -
The Real Rule of Reason: Bridging the Disconnect Michael A
BYU Law Review Volume 1999 | Issue 4 Article 4 11-1-1999 The Real Rule of Reason: Bridging the Disconnect Michael A. Carrier Follow this and additional works at: https://digitalcommons.law.byu.edu/lawreview Part of the Antitrust and Trade Regulation Commons Recommended Citation Michael A. Carrier, The Real Rule of Reason: Bridging the Disconnect, 1999 BYU L. Rev. 1265 (1999). Available at: https://digitalcommons.law.byu.edu/lawreview/vol1999/iss4/4 This Article is brought to you for free and open access by the Brigham Young University Law Review at BYU Law Digital Commons. It has been accepted for inclusion in BYU Law Review by an authorized editor of BYU Law Digital Commons. For more information, please contact [email protected]. CAR-FIN.DOC 4/5/00 7:24 AM The Real Rule of Reason: Bridging the Disconnect Michael A. Carrier∗ INTRODUCTION .......................................................................1267 I. NONBALANCING UNDER THE RULE OF REASON: THE SURVEY .........................................................................1272 A. Vertical Restraints .................................................1273 1. Territorial, customer, and other restrictions....1274 a. The results ...................................................1275 b. Three instances of balancing.......................1276 2. Refusal-to-deal cases.........................................1277 a. The results ...................................................1278 b. Two instances of balancing .........................1278 c. Instances of burden-shifting........................1279 -
The Rule of Reason
University of Pennsylvania Law School ILE INSTITUTE FOR LAW AND ECONOMICS A Joint Research Center of the Law School, the Wharton School, and the Department of Economics in the School of Arts and Sciences at the University of Pennsylvania RESEARCH PAPER NO. 17-28 The Rule of Reason Herbert Hovenkamp UNIVERSITY OF PENNSYLVANIA LAW SCHOOL This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection: http://ssrn.com/abstract=2885916 Hovenkamp Rule of Reason July 2017, Page 1 THE RULE OF REASON Herbert Hovenkamp* Table of Contents Introduction .................................................................................................................................................. 2 The Rule of Reason and the Courts ............................................................................................................... 5 Pleading Requirements ............................................................................................................................. 5 Question of Law ........................................................................................................................................ 8 Irrational Summary Judgment Rules ......................................................................................................... 9 Stare Decisis ............................................................................................................................................ 10 Burdens of Proof, Quality of Evidence, and the “Quick Look” ................................................................... -
The "Rule of Reason": Workable Competition Or Workable Monopoly?
CORE Metadata, citation and similar papers at core.ac.uk Provided by Yale Law School Legal Scholarship Repository THE "RULE OF REASON": WORKABLE COMPETITION OR WORKABLE MONOPOLY? WALTER ADAMSt "Vice is a monster of such frightful mien That to be hated needs but to be seen, But seen too oft, familiar with her face We first endure, then pity, then embrace." ALEXANDER POPE As part of the currently fashionable and pervasive revisionism, there have been numerous attempts to formulate a new approach to the monopoly prob- lem. Two of these efforts deserve special attention-the report by the Busi- ness Advisory Council of the Secretary of Commerce 1 and the monumental study by Professor S. Chesterfield Oppenheim3 They reach strikingly similar conclusions and offer parallel recommendations. Both find that recent judicial interpretation of the antitrust laws has been shifting, vague, confusing, and uncertain; that a unifying standard 'for judging antitrust violations is impera- tive; and that such a standard can be achieved through revitalization of the "Rule of Reason" and acceptance of "Workable Competition." Both studies concur in Professor Oppenheim's assurance that "the broad discretion dele- gated by Congress in the Rule of Reason and Workable Competition rule need not be feared as an erosion of antitrust administration and enforce- ment."'3 While this may at first blush appear to be old wine in new bottles, the new approach represents a significant departure in the antitrust field. Its importance lies in the combination of legal and economic pragmatism into an instrument for attacking the traditional philosophy of antitrust. It is the thesis of this article that the new approach is subject to severe limitations, if not fatal defects; that the interpretation of the Sherman Act is far less uncertain than its critics imply; that a "Rule of Reason," as these critics use the phrase, would mean judicial emasculation of Section 1 of the Act ;4 and tAssociate Professor of Economics, Michigan State College. -
Antitrust Liability for the Exchange of Price Information Among Competitors
COMMENTS THE CREATION OF A SEPARATE RULE OF REASON: ANTITRUST LIABILITY FOR THE EXCHANGE OF PRICE INFORMATION AMONG COMPETITORS In cases brought under the Sherman Act,' the courts have devel- oped a two-tier standard for evaluating the legality of the challenged business practice. The "per se" test is reserved for certain oft-encoun- tered practices that are presumed to be illegal without further inquiry. The rule of reason is a more extensive test that seeks to find whether the particular practice, on balance, tends to promote or suppress com- petition.2 According to standard antitrust analysis, the exchange of price information among competitors should be viewed under the rule of reason unless a specific agreement to fix prices is disclosed. For an accurate determination of the effect of price information exchanges on competition,3 it would seem that the rule of reason analysis should in- dude an examination of the economic characteristics of the market in which the price information dissemination occurs.4 Recent decisions by the Supreme Court, however, have refused to include an investigation of market structure in the rule of reason analy- sis. By so doing they have abandoned the standard of an earlier deci- THE FOLLOWING CITATION WILL BE USED IN THIS COMMENT: R. POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE (1976) [hereinafter cited as R. POSNER]. 1. 15 U.S.C. §§ 1-7 (1976). 2. L. SULLIVAN, HANDBOOK OF THE LAW OF ANTITRUST § 73 (1977). 3. In this Comment, the term "price information exchange" includes all exchanges of prices between competitors, except agreements or conspiracies with the specific intent to fix prices.