Horizontal market allocation Boycotts/refusal to deal Justifications resulting in quick look or rule of reason where observer with even a rudimentary understanding of economics “an could conclude that the arrangements in question would have en anticompetitive effect on customers and markets” (California RoR) Dental Assn. New Product Defense (BMI RoR) Agreements that are otherwise but under the circumstances, the court lacks per se, confidence that it is invariably harmful (NCAA on competition are – “restraints essential if the product is to be made available at all” Quick look) Agreements to limit advertising, particularly prices (California Dental) Agreements not to negotiate price/limit price negotiation (Professional Engineers) Agreement to refrain from doing something rational competitors would do under free competition (Indiana x-ray to insurance) Federation of Dentists – Some likelihood of anticompetitive effects, but no need to show market power Rule of Reason must show the conduct would cause price to go up/output to go down assuming Π has market power and Δ Either has market power or direct proof of anticompetitive effects Δ Factors See also Board of Trade of Chicago Rationales Policy Must be administrable Justifications like price,” is – “fair “competition bad” are invalid because changed circumstances easily change the outcome of actual detrimental effects, such as a Indiana Federation of Dentists – “Proof reduction in output, can obviate the need for an inquiry into market power” Still consider justification despite price-fixing Maricopa County Medical per se – Industry distress sufficient justification for otherwise Appalachian Coal per se – output restraint unlawful output restraint Sacony Vacuum Per se – Social utility of the restraint is irrelevant Superior Court Lawyers – Cases Addison Pipe Illegal cartel of pipe manufacturers that set prices and bids Allowable restraints Seller of business to not compete (increases value of sale price) Retiring partner non-compete Partner pending partnership agreement to not interfere with firm Buyer non-compete with business retained by seller Assistant/servant/agent non-compete after service Court must find they are necessary to
Horizontal market allocation Boycotts/refusal to deal Justifications resulting in quick look or rule of reason where “an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have en anticompetitive effect on customers and markets” (California Dental Assn. RoR) New Product Defense (BMI RoR) Agreements that are otherwise per se, but under the circumstances, the court lacks confidence that it is invariably harmful (NCAA – “restraints on competition are essential if the product is to be made available at all” Quick look) Agreements to limit advertising, particularly prices (California Dental) Agreements not to negotiate price/limit price negotiation (Professional Engineers) Agreement to refrain from doing something rational competitors would do under free competition (Indiana Federation of Dentists – x-ray to insurance) Some likelihood of anticompetitive effects, but no need to show market power Rule of Reason Π must show the conduct would cause price to go up/output to go down assuming Δ has market power and Either Δ has market power or direct proof of anticompetitive effects See also Board of Trade of Chicago Factors Rationales Policy – Must be administrable Justifications like “fair price,” “competition is bad” are invalid because changed circumstances easily change the outcome Indiana Federation of Dentists – “Proof of actual detrimental effects, such as a reduction in output, can obviate the need for an inquiry into market power” Maricopa County Medical – Still consider justification despite per se price-fixing Appalachian Coal – Industry distress sufficient justification for otherwise per se output restraint Sacony Vacuum – Per se unlawful output restraint Superior Court Lawyers – Social utility of the restraint is irrelevant Cases Addison Pipe Illegal cartel of pipe manufacturers that set prices and bids Allowable restraints Seller of business to not compete (increases value of sale price) Retiring partner non-compete Partner pending partnership agreement to not interfere with firm Buyer non-compete with business retained by seller Assistant/servant/agent non-compete after service Court must find they are necessary to
Antitrust%20First%20Fall%202012.docx