Rule of Reason
From Conservapedia
The Rule of Reason is an analysis under antitrust law that requires a court to determine whether a challenged agreement or action is promotes competition or suppresses competition. See National Society of Professional Engineers v. United States, 435 U.S. 679, 691 (1978). To prevail, the plaintiff must demonstrate that the challenged agreement or action has an adverse impact on competition in the relevant market. See Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 762 (1984). Specifically, the court must decide "whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition." Chicago Board of Trade v. United States, 246 U.S. 231, 238 (1918).
In case decided under Rule of Reason, the threshold issue is market power. Market power is defined as the ability to raise prices above the competitive level by restricting output. Wilk v. American Medical Ass'n, 895 F.2d 352, 359 (7th Cir.), cert. denied, 496 U.S. 927 (1990).
Under the rule of reason standard, the plaintiff must prove that:
- (1) that the defendants contracted, combined, or conspired;
- (2) that the scheme produced anticompetitive effects;
- (3) that the restraint affected relevant product and geographic markets;
- (4) that the object of the scheme and the conduct resulting from it was illegal; and
- (5) that the scheme was a proximate cause of the plaintiff's antitrust injury.
