Home / Summaries / Ch 5: An Introduction to SA 1 (Conspiracies in Restraint of Trade) / reason-market-effect

An Introduction to SA 1 (Conspiracies in Restraint of Trade)

Q: Determining which rule applies [per se, quick-look, or full rule of reason]: CA Dental (US 1999)

There should be an 'enquiry meet for the case, looking to the circumstances, details, and logic of the restraint. The object is to see whether the experience of the market has been so clear, or necessarily will be, that a confident conclusion about the principal tendency of a restriction will follow from quick (or at least quicker) look, in place of a more sedulous one.

Q: When is Quick-Look Applicable, generally?

The quick-look standard has been applied in cases in which 'an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and the markets.' CA Dental (US 1999)

17 important questions on An Introduction to SA 1 (Conspiracies in Restraint of Trade)

Broad Music (US 1989): On the Category Approach

[I]t is not a question of simply determining whether two or more competitors have literally "fixed" a price. As generally used in the antitrust field, "price-fixing is a shorthand way of describing certain categories of business behavior to which the per se rule has been been held applicable. [A] literal approach does not alone establish that this particular practices one of those types that is "plainly anticompetitive" and very likely without "redeeming virtue."

How to Courts determine whether a case is per se, quick look, or RoR?

Absent naked horizontal collusion as to price or output, courts typically accord the defendants some opportunity to explain how any seemingly per se restraint actually poses pro-competitive virtues. In reality, there can be something of a miniature trial on the question of whether the challenged restraint is so obviously anti-competitive to excuse proof of anti-competitive effect (ordinarily this will occurring during pre-trial dispositive motion practice, i.e., a summary judgment hearing).

NCAA v. Oklahoma Regents (US 1984): On the Category Approach

There is often no bright-line separating per se from rule of reason analysis, since considerable inquiry into market conditions may be required before the application of any so-called "per se" condemnation is justified.

Determining which rule applies [per se, quick-look, or full rule of reason]: CA Dental (US 1999)

There should be an "enquiry meet for the case, looking to the circumstances, details, and logic of the restraint. The object is to see whether the experience of the market has been so clear, or necessarily will be, that a confident conclusion about the principal tendency of a restriction will follow from quick (or at least quicker) look, in place of a more sedulous one.

Determining which rule applies [per se, quick-look, or full rule of reason]: Conceptual Idea

In what appears to be something of a case-by-base, fact-specific, and uncertain inquiry, the court must situate every case on a continuum: Per Se - - - Quick Look - - - Rule of Reason.

SA 1: Multilateral Conduct required

There must be an agreement between 2 or more legally distinct entities, which re subject to the Sherman Act.

What is Quick-Look Analysis under SA 1

In a small, but less clearly defined, class of cases, the quick-look standard of review of multilateral restrains will be applied.

When is Quick-Look Applicable, generally?

The quick-look standard has been applied in cases in which "an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and the markets." CA Dental (US 1999)

Under QL, what is the plaintiff's evidentiary burden

There is no crystal clear guidance as to what P must prove, BUT there must be some evidence showing LIKELY ANTICOMPETITIVE EFFECT (which may consist of theoretical arguments from expert witnesses or evidence from similar industries of actual effect). . . Critically, the plaintiff is not required to make a full demonstration of market power in the market through the market share proxy test.

Under the full-blown Rule of Reason, what is the plaintiff's evidentiary burden?

The plaintiff must show: (1) That the challenged conduct could cause either price to increase or output to decrease, assuming that D has market power; AND (2) either that (A) D has market power or (b) direct evidence of anticompetitive effect

What is the standard mode of analysis under SA 1

The rule of reason. Indeed, SCOTUS has said that the rule of reason is the presumptive/default standard. Texaco (US 2006).

What is the plaintiff's primary burden in a full-blown rule of reason case

The plaintiff must establish an anti-competitive effect, through either direct or circumstantial evidence. Because direct evidence is often not available, proof of anticompetitive effect by circumstantial evidence is necessary. This often requires proof of a relevant market (geographic + product) and proof of market power (which is inferred from market shares).

When can a per se rule NOT apply

IF either (A) the defendant can proffer plausible pro-competitive justifications for the restraint or (B) the trial court does not have sufficient experience with a restraint, THEN trial court can longer say with confidence that the restraint will always or almost always have a net anti-competitive effect. In such cases, the rule of reason must apply.

Policy Advantages of Per Se Rule (v RoR)

The per se rule is considered less expensive to administer and provides both courts and the business community with clear guidance as to what is lawful and what is unlawful.

Policy: Disadvantages of Per Se Rule (v RoR)

There is concern that the per se rule may result in many false positives, condemning conduct that would be found lawful upon application of the full rule of reason.

Policy Disadvantages of Rule of Reason (v Per se)

The full rule of reason is considered expense, time-consuming to administer, and does not give the business community much guidance.

SCOTUS on the "Category Approach." California Dental (US 1999)

SCOTUS said that the categories of analysis of anti-competitive effect are less fixed than the terms "per se," "quick look," and "rule of reason" tend to make them appear. The approach for a case must reflect the purpose of determining whether the experience of the market has been so clear that a confident conclusion can be made about the tendency of a restriction after a quick look, or if a more complete analysis is necessary.

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Ch 5: An Introduction to SA 1 (Conspiracies in Restraint of Trade)

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An Introduction to SA 1 (Conspiracies in Restraint of Trade)

17 important questions on An Introduction to SA 1 (Conspiracies in Restraint of Trade)

Broad Music (US 1989): On the Category Approach

How to Courts determine whether a case is per se, quick look, or RoR?

NCAA v. Oklahoma Regents (US 1984): On the Category Approach

Determining which rule applies [per se, quick-look, or full rule of reason]: CA Dental (US 1999)

Determining which rule applies [per se, quick-look, or full rule of reason]: Conceptual Idea

SA 1: Multilateral Conduct required

What is Quick-Look Analysis under SA 1

When is Quick-Look Applicable, generally?

Under QL, what is the plaintiff's evidentiary burden

Under the full-blown Rule of Reason, what is the plaintiff's evidentiary burden?

What is the standard mode of analysis under SA 1

What is the plaintiff's primary burden in a full-blown rule of reason case

When can a per se rule NOT apply

Policy Advantages of Per Se Rule (v RoR)

Policy: Disadvantages of Per Se Rule (v RoR)

Policy Disadvantages of Rule of Reason (v Per se)

SCOTUS on the "Category Approach." California Dental (US 1999)

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