Difference between revisions of "Rule of reason"

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The '''rule of reason''' is the most difficult test in [[antitrust law]] for a plaintiff to prove that a restraint of trade violates Section One of the [[Sherman Act]] (the other two are "per se" and "quick look").  "Under this rule, the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreason-able restraint on competition." <ref>''Continental T. V., Inc. v. GTE Sylvania Inc.'', 433 U.S. 36, 49 (1977)</ref>. Appropriate factors to take into account include "specific information about the relevant business" and "the restraint's history, nature, and effect." <ref>''State Oil Co. v. Khan'', 522 U.S. 3, 10 (1997)</ref>. Whether the businesses involved have market power is a further, significant consideration. <ref>''See, e.g., [[Copperweld Corp. v. Independence Tube Corp.]]'', 467 U.S. 752, 768 (1984) (equating the rule of reason with "an inquiry into market power and market structure designed to assess [a restraint's] actual effect")</ref> <ref>''See also Illinois Tool Works Inc. v. Independent Ink, Inc.'', 547 U.S. 28, 45-46 (2006).</ref> In its design and function the rule distinguishes between restraints with anticompetitive effect that are harmful to the consumer and restraints stimulating competition that are in the consumer's best interest.
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#REDIRECT [[Rule of Reason]]
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Under the "rule of reason" test, a plaintiff must show:
 
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:(1) concerted action by the defendants; (2) that produced anticompetitive effects within the relevant product and geographic markets; (3) that the objects of the conduct pursuant to the concerted action were illegal; and (4) that it was injured as a proximate result of the concerted action.
 
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''See Petruzzi's IGA v. Darling-Delaware'', 998 F.2d 1224, 1229 (3d Cir.), ''cert. denied sub nom Moyer Packing Co. v. Petruzzi's IGA Supermarkets, Inc.'', 114 S. Ct. 554 (1993) (citations omitted); ''see also Tunis Bros. Co., Inc. v. Ford Motor Co.'', 952 F.2d 715, 722 (3d Cir. 1991), ''cert. denied'', 112 S. Ct. 3034 (1992). "Without proof of all of these elements, a plaintiff cannot maintain a section 1 claim." ''Petruzzi's IGA'', 998 F.2d at 1229.
 
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The "rule of reason" test does not govern all restraints.  The [[per se]] rule, treating categories of restraints as necessarily illegal, eliminates the need to study the reasonableness of an individual restraint in light of the real market forces at work <ref>''Business Electronics Corp. v. Sharp Electronics Corp.'', 485 U.S. 717, 723 (1988)</ref>; and, it must be acknowledged, the per se rule can give clear guidance for certain conduct. Restraints that are per se unlawful include horizontal agreements among competitors to fix prices, or to divide markets.<ref> ''see Palmer v. BRG of Ga., Inc.'', 498 U.S. 46, 49-50 (1990) (per curiam)</ref>.
 
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==References==
 
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<references />
 
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[[category:United States Supreme Court Cases]]
 
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[[category:antitrust]]
 

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