Rule of reason
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Rule of reason has been vandalized by Willy on Wheels!
Rule of reason has been vandalized by Willy on Wheels!
The rule of reason is the accepted standard in antitrust law for testing whether a practice restrains trade in violation of Section One of the Sherman Act. "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.".[1] Appropriate factors to take into account include "specific information about the relevant business" and "the restraint's history, nature, and effect.".[2] Whether the businesses involved have market power is a further, significant consideration.[3][4] 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.
The rule of reason 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;[5] 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.[6]
References
- â Continental T. V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49 (1977)
- â State Oil Co. v. Khan, 522 U.S. 3, 10 (1997)
- â 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")
- â See also Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28, 45-46 (2006).
- â Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 723 (1988)
- â see Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49-50 (1990) (per curiam)