The Rule of Reason + the Doctrine of Ancillary Restraints (SA 1: Conspiracies in Restraint of Trade)

9 important questions on The Rule of Reason + the Doctrine of Ancillary Restraints (SA 1: Conspiracies in Restraint of Trade)

Doctrine of Ancillary Restraints: Overview

If D proves that the ancillary restraint doctrine applies, then the challenged restraint will be judged only under the full-blown RoR even if , standing alone, the restraint would otherwise be per set illegal (i.e., horizontal price-fixing, market allocations, or boycotts)

The Ancillary Restraints Doctrine: Rule

IF (1) a small, seemingly anti-competitive part of an arrangement is reasonably related  to the overall purposes of the larger, pro-competitive agreement AND (2) is not unreasonably harmful to competition, THEN the restoration will be subject only to the RoR, not the per se rules.

Classic example of an arrangement subject to the ancillary restraints doctrine?

A convenient not to compete contained in a contract for the sale of a business
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Ancillary Restraints Rule: The Two Elements

For a restraint to be "ancillary" to a beneficial agreement, the restraint must be (1) Reasonably Related to it and (2) Reasonably Necessary for its purposes.

Ancillary Restraints Rule: Element (1) Reasonably Related

Means that the restraint cannot merely be some unrelated price-fixing agreement, etc between two parties who happen to also be in a joint venture

Ancillary Restraints Rule: Element (2) Reasonably Necessary

Even if the restraint is closely related to the overall pro-competitive purpose, it cannot be such that it achieves those aims in a way that is unnecessarily harmful

When will a court find that a restraint is not "reasonably necessary," but instead is "unnecessarily harmful"

A court is likely to hold that a restraint is unnecessarily harmful if there are fairly obvious, feasible alternative ways of achieving the same results without causing as much of a limitation on health price and output.

What is the ultimate question under the rule of reason?

Whether the anti-competitive effects of the challenged restraint outweigh the pro-compeitive benefits.

Ancillary Restraint Doctrine & Professional Associations

Restraints on conduct imposed by trade associations or professional groups have not usually been considered "ancillary," because they are not reasonably related to the group's existence or reasonably necessary to achieve its benefits.

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