Law School Faculty Blog
5Oct/12

The Rule of Reason in Antitrust Cases

Courts resolve antitrust cases by applying various modes of analysis ranging from so-called “full blown” Rule of Reason analysis at one end to per se condemnation at the other. Per se rules condemn limited categories of conduct by applying a conclusive presumption of net anticompetitive effects, while Rule of Reason analysis requires a court to engage in case-specific evaluation of evidence bearing on actual or predictable competitive effects. Although the per se rules have obvious advantages of clarity, administrability, and predictability, the sorts of conduct falling under these rules have been narrowed in recent years as courts have become increasingly wary of condemning legitimate competitive conduct. Thus the Rule of Reason now applies to all antitrust matters other than hard-core cartel cases involving horizontal price fixing or market allocations.

At the same time, the broadening role for Rule of Reason analysis has been accompanied by Supreme Court decisions that have increasingly obscured the meaning and proper application of the rule, leaving lower courts to trail off in different directions. My article, “Sailing a Sea of Doubt: A Critique of the Modern Rule of Reason,” argues that the current jurisprudence of the Rule of Reason provides no set boundaries around the depth or rigor of the legal and economic analysis required to conclude an antitrust case. Instead, a court presented with an antitrust claim must decide for itself how much analysis is appropriate for the case before it: “What is required . . . is an enquiry meet for the case, looking to the circumstances, details, and logic of a restraint.” California Dental Ass’n v. Federal Trade Comm’n, 526 U.S. 756, 781 (1999). Courts are frequently overruled for having selected a level of inquiry that the reviewing court later found to be too deep or too shallow. The reasons offered for these reversals offer little to guide lower courts in future cases.

My article traces the historical development and expanding role of the Rule of Reason through the Supreme Court’s most recent explication of the rule in California Dental Association. The article then offers a critique or the modern approach to Rule of Reason analysis and explains how it is analytically incoherent. The lower courts’ diverse and inconsistent applications of the Rule of Reason are then explored to demonstrate how poorly the Rule of Reason standard has been working, and to identify the many specific areas that are remain in doubt despite the rule’s 100-year pedigree. Finally, the article offers several proposals to simplify and bring coherence to Rule of Reason cases.

Click here to read “Sailing a Sea of Doubt: A Critique of the Modern Rule of Reason.”

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