Select Page

Villanova University School of Law
Miller, Robert T.



· Sherman Act – 1890 – Everything anti-competitive is illegal

· Section 1 – Everyone engaged in commerce every contract or conspiracy restricting trade shall be illegal

o Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

· Section 2 – Monopoly and monopolization are illegal

· Chicago School

· Do you want to protect consumers or creditors

· Efficiency is what antitrust law protects

· Need best level of economic evaluation available

· Need rigorous empirical studies

· Basic example

· Seller Surplus = Actual price – reserve

· Buyer Surplus = Reserve – Actual

· Joint Surplus = Total Surplus

· P1*Q1=Revenue

· Dead weight loss – value that could be created but isn’t being created

· Competition

· Perfect competition

o Sellers and buyers are so numerous that no one’s action can have a perceptible impact on the market price fully known market prices

o no artificial barriers

· Cartel

· Violations “Per se” and violations of the “Rule of Reason”

· Violations “per se”: these are violations that meet the strict characterization of Section 1 (“agreements, conspiracies or trusts in restraint of trade”). A per se violation requires no further inquiry into the practice’s actual effect on the market or the intentions of those individuals who engaged in the practice. Conduct characterized as per se unlawful is that which has been found to have a “‘pernicious effect on competition’ or ‘lack[s] . . . any redeeming virtue'” Such conduct “would always or almost always tend to restrict competition and decrease output.” When a per se rule is applied, a civil violation of the antitrust laws is found merely by proving that the conduct occurred and that it fell within a per se category.(This must be contrasted with rule of reason analysis.) Conduct considered per se unlawful includes horizontal price-fixing, and horizontal market division.

· Violations of the “rule of reason”: A totality of the circumstances test, asking whether the challenged practice promotes or suppresses market competition. Unlike with per se violations, intent and motive are relevant when predicting future consequences. The rule of reason is said to be the “traditional framework of analysis” to determine if Section 1 is violated. The court analyzes “facts peculiar to the business, the history of the restraining, and the reasons why it was imposed,” to determine the effect on competition in the relevant product market. A restraint violates Section 1 if it unreasonably restrains trade.

o Quick-look: A “quick look” analysis under the rule of reason may be used when “an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets,” yet the violation is also not one considered illegal per se. Taking a “quick look,” economic harm is presumed from the questionable nature of the conduct, and the burden is shifted to the defendant to prove harmlessness or justification. The quick-look became a popular way of disposing of cases where the conduct was in a grey area between illegality “per se” and demonstrable harmfulness under the “rule of reason”.

· Horizontal Restraints

· US v. Trans-Missouri Freight – 166 US 290

o Railroads set pricing

o Need to prove

· Was a contract, combination, or conspiracy

· Need to prove in restraint of trade

o Combinations might be undesirable when they raise or lower prices

· US v. Addyston Pipe & Steel Co – 175 US 211

o Pipe industry sets price

o Look to the common law – Non-compete agreements

o To be lawful a contract must have a main purpose to which the covenant in restraint of trade is merely ancillary.

· US v. Joint Traffic Assn – 171 US 505

o Formation of corporations and partnerships not been considered restraints of trade

o Applies only to those with direct and immediate effect on restraint upon interstate commerce

· Standa

nsciousness of parallel behavior

· Plus factor

§ Infer

§ Amount to

o Four main factors

· Consensus on the price

· Observe and compare other’s prices

· Cheating must be detectable and punishable

· Producers may coordinate behavior but must collectively enjoy market power

o Copperweld Corp v. Independence Tube Corp

o Whether a parent and a subsidiary can conspire

o Independent decision makers is the key language required for conspiracy

o Section 1 – CCC + ROT = concerted anti-competitive

o Section 2 – unilateral monopolization

o Gap is unilateral AC less than monopoly

o American Needle

o NFL properties licensed multiple manufacturers to make hats

o AN sues when it gets knocked out and Reebok becomes exclusive provider

o If they do not compete with each other than they can not violate Section 1

o Facilitating Practices

o Which is bigger effect pro or anti

o American Column & Lumber

o Association requires members to submit all kinds of pricing data and stock

o Don’t agree on pricing

o Only really sellers get the info

· Anticompetitive

o Maple flooring v. US

o Information here went to everyone including government

o Shows past information

o Average prices

o Not anticompetitive

o US v. Container Corp. of America

o Easy to enter

o Case involves exchange of price information

· Agreement to exchange information

· Exchange information between buyer and seller

· Must ask the other seller if the information was correct

o Facts show CCC

· Infer

§ PF Agreement – Use Socony to reach violation