CAk1LLS AND SLC1ICN 1

CarLels are dlfflculL Lo enforce buL wlll be observed more frequenLly where buyer musL reporL honesLly
on Lhe offers of oLher seller

Deve|opment of the ku|e of keason and the er Se I||ega||ty of r|ceI|x|ng

1ransMlssourl
O no preempLlon from anLlLrusL regulaLlons [usL because also regulaLed by anoLher federal sLaLuLe
O re[ecLed common law sLandard sLaLuLe condemns every conLracL ln resLralnL of Lrade even
some LhaL mlghL saLlsfy a reasonableness LesL
4 ecLlon 1 ls Lhus broader Lhan unreasonable conLracLs under common law
O courL dld noL wanL Lo conslder Lhe reasonableness of raLes because lL would be Loo much
lnformaLlon for Lhe [udges
4 framers of AcL dld noL envlslon Lhls level of supervlslon and lnLervenLlon by Lhe courLs
!olnL 1rafflc
O tepeoteJ 1toosMlssootl buL sald LhaL cerLaln parLnershlps and buslness organlzaLlons are noL
under Lhe deflnlLlon of resLralnL of Lrade
4 llke resLrlcLlve covenanLs agreemenLs Lo promoLe buslness no purpose Lo resLraln and
doesn'L resLraln
4 lL's a recognlLlon of a seL of conLracLs ouLslde of Lhe deflnlLlon of Lrade resLralnL

1hese Lwo cases can only serve as bandalds because Lhere were many legal challenges
does Lhls mean LhaL common law declslons were acLually unreasonable? or Lhe herman acL ls now
based on reason?

Answer AddysLon lpe
O common law volds all prlceflxlng agreemenLs noL onci//ory to some /eqitimote couse
recognlzlng malnly flve Lypes of covenanLs
1) by seller of properLy noL Lo compeLe wlLh buyer
2) by a relLlrng parLner noL Lo compeLe wlLh flrm
3) by a parLner pendlng Lhe parLnershlp noL Lo lnLerfere wlLh buslness of Lhe flrm
4) by Lhe buyer of properLy noL Lo use lL ln compeLlLlon wlLh Lhe buslness reLalned by Lhe sellers
3) by an apprenLlce noL Lo compeLe wlLh Lhe masLer afLer explraLlon of hls Llme of servlce
O sLlll no reasonableness sLandard because lL would be vague and lndeLermlnaLe
oJe cooo low ooJ 5betoo Act tbe soe

C8C1 (call rule)
re[ecLlon of per se lllegallLy and sald LhaL |f the restra|nt on|y regu|ates and thereby promotes
compet|t|on we must cons|der facts of the bus|ness
purpose
power how much dld lL resLrlcL? only small parL of LoLal graln markeL
effecL effecL on markeL prlce? no
8uL Lhls ls noL a full resurrecLlon Lo common law rule of reason as ln 1renLon
courL dld noL allow [ury Lo conslder reasonableness of prlces flxed
admlnlsLraLlve cosLs would be Loo much under reasonableness of prlceflxlng uLlllLarlan
8road readlng all prlce flxlng among compeLlng flrms ls perse lllegal
narrow only among flrms LhaL contro/ the business substontio//y ln a cerLaln lLem or servlce
|f there |s substant|a| contro| over market 1nLN pr|cef|x|ng |s per se |||ega| otherw|se ru|e of
reason perhaps 1renLon ls more lenlenL Lhan C8C1 ln Lhe narrow readlng
Appalachlan ouLller case abouL sales carLel for coal
followed 1 buL ls an example of very broad reasonableness analysls dlsLlngulshed 1renLon on noL
havlng power or lnLenL Lo flx prlces

ocony
O lf a plan has effecL of sLablllzlng or lncreaslng prlce Lhen we apply perse lllegallLy
O lack of markeL power ls noL a defense
4 Lhls ls slmllar Lo consplracy docLrlne whlch does noL requlre proof LhaL consplraLors had
carrled ouL plans or had Lhe means Lo
O broader perse prlce flxlng rule Lhan 1teotoo
seLLled law no markeL power requlremenL under ecLlon 1 prlceflxlng ls per se lllegal

,odern App||cat|ons
ow to Jefloe ptlceflxloq? pet se tole
1opco (assoclaLlon of grocery sLores)
O courLs should Lake expanslve vlew of prlce flxlng even when flrms [oln LogeLher Lo markeL goods
and llmlL members Lo selllng 1opco producLs ln a geographlc markeL
O raLlonale only Congress should make a declslon Lo sacrlflce compeLlLlon ln one porLlon of Lhe
economy for greaLer compeLlLlon ln anoLher porLlon buL
4 Lhls would mean LhaL all [olnL venLures noL ln exlsLence aL Lhe Llme of herman AcL LhaL
resLrlcLs compeLlLlon would be lllegal
4 8Ml would fall under Lhls raLlonale buL C scaled back Lhe reasonlng ln 1opco ln Lhls
case
O lllusLraLes Lendency for courLs Lo apply perse rule Lo horlzonLal markeL allocaLlon

5boolJ we ollow exceptloos to pet se tole? oses tbot ove tbe pet se tole closet to tbe tole of teosoo
8Ml (ACA and 8Ml acL as llcense clearlng houses for muslc composers blankeL llcense for users no
maLLer how many Llmes song ls played)rule of reason yet tteoteJ os ptlceflxloq cose Lhe excepLlon puL
Lhls ln rule of reason buckeL
O rule of reason no vlolaLlon because markeLlng arrangemenLs were teosooobly oecessoty for
developmenL and markeLlng of rlghLs glven Lo composers under copyrlghL laws
4 reasonably necessary Lo geL Lhe new producL ouL
O oLher Lhlngs Congress had used Lhls approach before and Lhe alLernaLlve leLLlng ACA
negoLlaLe wlLh each user was prohlblLlvely cosLly
O courL could have requlred a less resLrlcLlve alLernaLlve buL generally the ru/e of reoson does not
require the /eost restrictive o/ternotive
O also excepLlon Lo perse unlawfulness of prlce flxlng (5ocooy) ls lf Lhe flxlng plans are necessary
for Lhe lottoJoctloo of o oew ptoJoct (Lhe copyrlghLed llcense of Lhe works)
4 Lhe only excepLlon Lo horlzonLal prlce flxlng
O whaL lf lL was reasonably necessary Lo sostolo tbe otket
Marlcopa (medlcal socleLy agreemenL Lo seL maxlmum fees) noL easlly dlsLlngulshable lf you focus on
new producL buL conslder tronsoction costs arLlsLs ln 8Ml had much hlgher LransacLlon cosLs Lo enforce
clalms Lo copyrlghL fees compared Lo Lhe docLors who were already geLLlng pald
eLhlcal/professlonal group excepLlon noL accepLed
4 no rule of reason even Lhough procompeLlLlve [usLlflcaLlons may be presenL
4 alLernaLlve meLhods oLher Lhan prlceflxlng could have been used LhaL mlghL ralse
fewer anLlcompeLlLlve concerns
4 assumlng LhaL oLher meLhods were less efflclenL was nC1 obvlous
4 evldence unclear LhaL efflclency galns from prlceflxlng [usLlfled poLenLlal
anLlcompeLlLlve effecLs

ole of eosoo teoJloq towotJs tbe petse tole
naLlonal ocleLy of Lnglneers (no compeLlLlve blddlng no prlce dlscusslon unLll englneer selecLed for
pro[ecL)
O rule of reason because lL wasn'L prlce flxlng more llke a regulaLlon (1)
O buL nA88CW lnLerp of C8C1 reason LesL conflnes lnqulry Lo copetltlve effecLs nC1 beneflLs
Lo Lhe organlzaLlon from reduced compeLlLlon
4 Lwo Lypes of Lrade resLralnLs
unrelaLed Lo producL buL helps org C8C1 would probably noL apply
relaLed Lo producL such as lmprovlng quallLy C8C1 probably would apply buL
Lhe courL here dld noL conslder Lhls quallLy lmprovemenL can be seen as a
lowerlng of prlce

nCAA (resLrlcLlng number of Llmes each Leam's fooLball games could be Lelevlsed)
O rule of reason applled because Lhere musL be resLrlcLlons lf Lhe producL ls Lo exlsL aL all (Ml)
and Lhe resLralnL dlfferenLlaLes producL Lo make lL a more effecLlve compeLlLor
O buL here resLralnLs LhaL have llLLle Lo do wlLh Lhe deflnlLlon form exlsLence of producL fall rule
of reason
O rule of reason applled lf rules make a dlfferenLlaLed producL LhaL compeLes wlLh oLhers
O buL here Lhere are no subsLlLuLes for Lhe unlque producL of fooLball

cal denLal
qulck look shlfLs burden Lo u
noL approprlaLe because nelLher of resLralnLs were obvlously anLlcompeLlLlve
noL prlce flxlng so per se rule noL allowed

1exaco lf someLhlng ls a slngle enLlLy Lhen Lhere's no agreemenL
[olnL venLure

Ca| Denta| (lower courL dld CL remanded for 8o8)
CuA ls a Lrade assoc of denLlsLs code of eLhlcs creaLes sLrlngenL req's for ads LhaL resulLs ln ban
on dlscounLs and quallLy comp ads
Lower courL dld qulck look noL per se b/c don'L lmmedlaLely condemn go furLher lnLo examlnlng
lndusLry buL less Lhan 8o8
4 Looklng for obvlous effecLs anLlcompeLlLlve greaL llkellhood of anLlcomp faclally
anLlcomp
ound rules clearly anLlcomp b/c Loo dlfflculL Lo comply w/ resulL was no one adverLlsed dlscounL
or quallLy clalm less prlce comp
CC1u remanded for full 8o8 b/c procomp [usL's mlghL be subsLanLlve noL obvlously anLlcomp
8uL courL dld acknowledge qulck look says caLegorles hard Lo separaLe dlsLlncLlons blurred
4 now lower courLs musL do all 3 caL's Lo be safe
Dagher
1exaco and hell form [olnL venLure pool resources revenues sell gas under old names buL aL
seL prlce
ArgumenL ls Lhese 2 were comp's now charglng same seL prlce
CourL says no vlolaLlon here b/c only one enLlLy alLhough sellelng under 2 names co's are fully
lnLegraLed as one
4 ee oppetwelJ
uoes Lhls glve all [olnL venLures a free pass?
4 no Lhls [olnL venLure ls speclal b/c lL was approved by LaLe ALL Cen's and 1C and was
belng monlLored
4 1hls ls dlfferenL from a carLel [usL calllng lLself a [olnL venLure b/c fully lnLegraLed re
caplLal and revenues


Jhen Does an Agreement Lx|st
hould a Consplracy LaLuLe be used Lo regulaLe consclous parallellsm?
Lvldence problem lnLersLaLe ClrculL and Amerlcan 1obacco u's found gullLy on largely clrcumsLanLlal
evldence
enforcemenL based on clrcumsLanLlal evldence lofets coospltocy fto sttoctote ooJ oevet soys wbot octs
ote poolsboble

LasLern LaLes (agreemenL noL Lo buy from wholesalers who were selllng Lo consumers vlolaLed ecLlon
1)
O consplracy lnferred from
l) dealers' clrculaLlon of llsL of offendlng wholesalers and
ll) LhaL dealers sLopped golng buslness wlLh Lhem
O assume LhaL u's wlll use lnfo ln a selflnLeresLed manner
O held LhaL Lhls klnd of evldence shows an agreemenL Lo resLraln Lrade noL [usL an agreemenL Lo
share lnformaLlon

lnLersLaLe ClrculL (flrsL run LheaLers had Lo show movles aL 40 cenLs or more)
gov'L meL proof because of Lhree elemenLs
l) shared lnformaLlon need Lo know prlce level Lhey can sLay aL wlLhouL loslng cusLomers and
LhaL new enLranLs won'L undercuL prlce level
Lhls ls Lyplcally expenslve for flrms Lo pull off
ll) lndependence mosL lmporLanL facLor
O sLrong evldence of lndependence cuLs agalnsL lnference Lo collude such as adopLlng a
domlnanL sLraLegy" llke ln prlsoner's dllemma problems flrms would have done Lhe
same Lhlng wheLher or noL Lhelr compeLlLors do
O buL absence of lndependence ls more unclear
here ev|dence of mon|tor and enforcer manager of Interstate
also evldence presenL LhaL Lhere was dlsagreemenL among LheaLers abouL pollcy of flrsL
run movles before Lhe leLLer shows less lndependence
lll) complexlLy wheLher lL's llkely LhaL Lwo flrms would have chosen Lhe same paLh or made Lhe
same declslon based on how compllcaLed Lhey are

lndependenL vs unllaLeral
O lf flrm's lncenLlves are lndependenL from oLhers Lhen acLlons A8L unllaLeral
O buL lf flrm's lncenLlves are noL lndependenL lL may sLlll acL unllaLerally
lotetstote suggesLs LhaL accepLance of offer Lo flx prlces ls vlolaLlon of ecLlon 1 oollotetol coottoct
tbeoty

Amerlcan 1obacco (u's ralsed prlces on clgareLLes durlng uepresslon aL Lhe same amounL and had hlgh
proflL marglns)
O courL supporLs unllaLeral conLracL Lheory collapses consclous parallellsm and consplracy lnLo
one vlolaLlon of ecLlon 1 expanded scope
1heaLre LnLerprlses (a bunch of fllm dlsLrlbuLors re[ecL showlng flrsLrun movles aL a locaLlon only dld lL
ln downLown 8alLlmore)
O un||atera| contract theory re[ected sLlll need some sorL of consplracy and consclous
parallellsm lLself ls noL concluslvely a vlolaLlon
O compared Lo lotetstote no evldence of dlsagreemenL among dlsLrlbuLors so lL seems LhaL
Lhere ls less evldence of lndependence

parallellsm plus"
MaLsushlLa (u 1v manufacLurers clalms LhaL !apanese rlvals undercuL Lhelr prlces so much predaLory
prlclng Lo drlve Lhe u ones ouL of buslness)
O re[ecL unllaLeral conLracL Lheory buL sald LhaL musL show LhaL lnference of consplracy ls
reasonable ln llghL of compeLlng lnferences"
4 lnference of 20year consplracy Lo suffer losses Lo drlve ouL compeLlLors was
unreasonab|e
l) Amerlcan manufacLurers sLlll had 40 markeL share
ll) noLhlng prevenLed new producers from enLerlng markeL
lll) !apanese manufacLurers had huge lncenLlves Lo cheaL on carLel
CourL used evldence of markeL sLrucLure even Lhough 5ocooy sald noL Lo
O 5ocooy says noL Lo use evldence of markeL power ofter demonsLraLlng consplracy buL here lf
only clrcumsLanLlal evldence of agreemenL exlsLs courLs Lake markeL power evldence Lo ossess
tbe plooslblllty of coospltocy

Iac|||tat|ng ract|ces more parallellsm plus

1 uaLa ulssemlnaLlon Cases

Amerlcan Column (plan LhaL requlred 363 members Lo submlL prlce llsLs sales reporLs and would
dlsLrlbuLe Lhem Lo everyone wanLed Lo encourage prlce sLablllLy) perse standard for data
d|ssem|nat|on quest|onab|e ev|dence and reason|ng p149
lnference of consplracy on only clrcumsLanLlal evldence based on
9otpose
l) sufflclenL knowledge Lo carry ouL prlceflxlng members shared lnfo on prlces and meL very
ofLen Lo dlscuss prlces and ouLpuLs
ll) Lendency of everyone Lo follow Lhelr mosL lnLelllgenL compeLlLors and pressure Lo malnLaln
soclal conLracLs and repuLaLlon Lhrough lan parLlclpaLlon enforcemenL
9owet
durlng meeLlngs offlcers would urge members Lo cuL back on producLlon
ffect
prlces rose subsLanLlally
Maple loorlng (22 corps solds 70 of LoLal ouLpuL of floorlng whlle l) dlssemlnaLlng lnfo abouL average
cosLs ll) base polnL frelghL raLe and lll) anonymous lnfo on quanLlLy and prlces by reporLlng members
and amounL of sLock also held monLhly meeLlng Lo dlscuss lndusLry problems)
O rule of reason no vlolaLlon
O dlsLlngulsh Aetlcoo oloo
dld noL esLabllsh prlce unlformlLy
dld noL use plan Lo faclllLaLe prlce flxlng lnformaLlon dealL wlLh pasL LransacLlons
lnsLead of currenL
dld noL dlscuss prlces aL monLhly meeLlngs
lmplled LhaL lacklng effecL lacklng power

conslder daLa dlssemlnaLlon may lncrease efflclencles lf lL helps producers 'dlscover' Lhe markeL prlce
could be due Lo acLual prlce changes or lnflaLlon hard Lo Lell

ConLalner Corp (18 flrms shlpped 90 of cardboard carLons suppllers would glve each oLher lnfo on
prlce charged on mosL recenL sales)
O C sald LhaL prlce lnfo exchanges may have no effecL buL tbls ls ollqopollstlc
O more resLrlcLlve rule ln ollgopollsLlc markeLs
O courL also noLed LhaL exchange seemed Lo sLablllze prlces and demand for producL was lnelasLlc
O perhaps per se applles Lo o||gopo||st|c markets w|th |ne|ast|c demand
4 makes sense because ln a colluslon compeLlLors would be less llkely Lo undercuL oLhers
wlLh lnelasLlc demand

overall perhaps we use per se when Lhere ls 1) ollgopoly and 2) exchange of lnfo on currenL prlces

ase o|nt r|c|ng

CemenL lnsLlLuLe (Lrade assoclaLlon employed mulLlple baslng polnL sysLem)
O 1C found LhaL prlclng sysLem vlolaLed secLlon 3 of 1C AcL
O C held LhaL Lhere was sufflclenL evldence Lo uphold
4 buL no evldence of expllclL agreemenL Lo flx prlces
O somewhaL used unllaLeral conLracL Lheory whlch has been phased ouL
O argumenLs for fob helps small producers
O sLrongesL suggesLlon of LaclL colluslon compeLlLors ulu nC1 uncuL prlce of flrm wlLh besL
locaLlon
4 lnference of consplracy approprlaLe only lf Lhe facL LhaL dlsadvanLaged compeLlLors
merely meeL raLher Lhan undercuL Lhe prlce of Lhe flrm wlLh Lhe locaLlon advanLage
lmplles LhaL Lhey are LaclLly consplrlng Lo flx prlces

du onL
more |en|ent on base po|nt pr|c|ng (should be vlewed ln llghL of modern lnference law)
before ollgopollsLlc lndusLry ls unfalr for ecLlon 3 you need an lndlcla of oppresslveness such as
1) evldence of anLlcompeLlLlve lnLenL or purpose
2) absence of lndependenL leglLlmaLe buslness reason for conducL

1be ost fovoteJ costoet cloose
anLlcompeLlLlve because lL reduces lncenLlve Lo cheaL on colluslve prlce agreemenL help malnLaln sLable
prlceflxlng agreemenL
buL lL mlghL lower bargalnlng cosLs for sellers lf Lhe purchasers are concenLraLed
would reduce lncenLlves of purchaslng flrms Lo lnvesL Loo much ln bargalnlng process

Concerted kefusa|s to Dea| oycotts
l reocony

LasLern LaLes (boycoLLlng wholesalers who sold dlrecLly Lo consumers)
O reLallers can sLop Lradlng wlLh any wholesaler for any reason buL coospltloq to Jo so would harm
publlc
O lmplles LhaL ecLlon 1 boycoLL requlres proof of consplracy
CemenL ManufacLurers (free opLlon" arrangemenL arrangemenL flxed prlce of order of cemenL for
fuLure dellvery and conLracL could cancel order lf spoL prlce dropped conLracLors Look advanLage so Lhe
AssoclaLlon clrculaLed lnfo abouL [ob conLracLs Lo monlLor conLracLors)
O even Lhough Lhere ls sLrong lncenLlve Lo refuse Lhese conLracLors courL sald LhaL because
AssoclaLlon JlJot tepolte ebets to tefose Lhen lL's noL a boycoLL
4 Lhen Lhls ls llke a cholce Lo proLecL Lhemselves or noL see A9
O musL show LhaL oqteeeot to boycott exlsLs whlch does noL happen here

analysls of boycoLLs
1) agreemenL Lo boycoLL
agreemenL Lo merely share lnformaLlon ls noL enough
2) anLlcompeLlLlve purpose (1Pl prong reconclles Lhe Lwo cases no purpose ln eeot buL purpose ln
osteto)
Can be vlewed ln Lerms of a slldlng scale of evldence Lo agreemenL and evldence of purpose

ll osLocony
CCA (manufacLurers of orlglnal dress deslgns Lrled Lo sLop sLyle plracy" by refuslng Lo sell Lo reLallers
who also sold garmenLs copled from Culld members' dresses)
O boycoLL vlolaLed boLh s1 and s3
O knowledge Culld clrculaLed llsL of complylng and noncomplylng reLallers
O monlLorlng 8ulld monlLored sales of members llmposed flnes on Lhose who sold dresses Lo
offendlng reLallers
O conspirocy wos odmitted d's admlLLed Lhey comblned Lo suppress compeLlLlon from plraLes
4 so purpose |s |rre|evant even Lhough u's wanLed Lo say LhaL Lhey lncreased soclal
welfare by resLralnlng abuslve pracLlce
4 courL relles on prlceflxlng cases admlnlsLraLlve cosLs of dlsLlngulshlng good and bad
boycoLLs ouLwelghs beneflLs
O boycoLLs unlawful because Lhey are a form of prlvaLe [usLlce
O boycoLLs cannoL be held reasonable because of some lnherenL confllcL beLween unresLralned
compeLlLlon and consumer welfare
4 CourL announced perse rule reason largely based on premlse LhaL lL was a exLra
governmenLal agency seL up Lo regulaLe Lrade
4 buL perhaps Lhls can sLlll be reasonableness LesL buL a denlal of a parLlcular defense
(confllcL beLween compeLlLlon and consumer welfare)

lors (lor clalmed LhaL oLher manufacLurers and dlsLrlbuLors agreed among Lhemselves noL Lo sell Lo
lor's or sell only aL dlscrlmlnaLory prlces u's dld noL deny)
O u's showed LhaL Lhere were many oLher compeLlLors Lhus no harm Lo compeLlLlon
O buL courL sald Lhls ls per se v|o|at|on so no need Lo prove publlc harm
4 lf courL accepLed d's arg Lhere wouldn'L be enough enforcemenL
O how lL can sLlll square wlLh rule of reason d's offered no precompeLlLlve [usLlflcaLlon
O A clalm Lo many compeLlLors and much subsLlLuLlon ls noL enough Lo prove procompeLlLlveness

AssoclaLed ress (bylaws allowed newspapers Lo veLo membershlp appllcaLlon of local rlval gov'L sued)
oot cleot wbetbet lts pet se ot tole of teosoo but probob/y per se
lack of monopoly power lrrelevanL because agreemenL resLralned compeLlLlon conslsLenL wlLh per se
analysls
O CourL noLed a surrenderlng of freedom Lo comply wlLh bylaws Lhus gave up freedom Lo [oln
carLel
O from 5ocooy compleLe absence of compeLlLlon ls noL a necessary flndlng
O from A combo was an lnLergovernmenLal agency seL up Lo regulaLe Lrade noL allowed
O noLe argumenLs for u's vla Ml ooJ 5ylvoolo
4 excluslvlLy requlremenL resLrlcLed lnLrabrand compeLlLlon Lo enhance lnLerbrand
compeLlLlon
4 veLo rule proLecLed lncenLlves Lo gaLher news aL local level oLherwlse new local rlval
could freerlde off your sLuff
O 1hen can use purpose argumenL from eeot Mooo veLo rule gave each lndlvldual member
Lhe freedom Lo choose wheLher Lo allow Lhe freerldlng or noL and allowed Lhe cholce Lo
proLecL Lhemselves

osL 8Ml/ylvanla

norLhwesL Wholesale LaLloners (purchaslng coop of 100 offlce supply reLallers could purchase goods
ln large quanLlLles so members pald lower prlce for supplles Lhan nonmembers lalnLlff was expelled
afLer vlolaLlng bylaws)
O new rule unless coop possesses markeL power or excluslve access Lo elemenL essenLlal Lo
effecLlve compeLlLlon expulslon does noL auLomaLlcally merlL applylng perse rule
4 lmplles LhaL tole of teosoo ls Jefoolt stooJotJ Lo apply ln boycoLL cases
O from -AA rules are necessary ln coops and Lhey musL be enforced make new producLs
posslble Laken from ylvanla
O from Ml even lf coop possesses markeL power rule of reason approprlaLe lf Lhere are clear
efflclency galns
4 courL wlll sLlll conslder rule of reason defenses
O courL clalmed Lhls was conslsLenL wlLh old boycoLL rules buL lf applled Lo A9 resulL would prob
be dlff

lndlana uenLlsLs (pollcy Lo reslsL lnsurers' requesLs for xrays)
O CourL held LhaL lL was vlolaLlon of ecLlon 1
O appllcaLlon of -ottbwest 5totlooets rule of reason because no markeL power or excluslve access
Lo essenLlal elemenL
4 from lots ooJ A Lhe coop was merely Jlscootoqloq suppller or cusLomer from
dolng buslness wlLh compeLlLor
4 professlonal group
O from 1 u's have burden Lo come up wlLh precompeLlLlve [usLlflcaLlon cannoL say LhaL 1C
never proved markeL power
O from 9tofessloool oqloeets lnLenLlon Lo lmprove quallLy re[ecLed

Analysls of 8oycoLLs 1oday
1) parLles agree noL Lo deal wlLh anoLher parLy (same as pre5ocooy)
2) agreemenL unreasonably resLralned Lrade
generally reasonableness analysls buL per se when consorLlum as markeL power or access Lo
essenLlal faclllLy
rule of reason follows C8C1
don'L argue confllcL beLween compeLlLlon and consumer welfare

CourL's LreaLmenL of boycoLL docLrlne ls slmllar Lo prlceflxlng cases re[ecLlon of reasonableness LesL
due Lo enforcemenL cosLs movlng Loward per se Lhen back Lo reasonableness

n?nLx
slngle sellers and buyers don'L geL per se rule because Lhey aren'L concerLlng ln acLlon Lhey have a rlghL
Lo deal wlLh whomever

CredlL ulsse
exlsLence of regulaLory auLhorlLy
securlLles law dld oot preclude appllcaLlon of Lhe anLlLrusL laws Lo Lhe clalmed boycoLL losofot os tbe
xcbooqe JeoleJ tbe expelleJ Jeolet o tlqbt to folt ptoceJotes

when a courL decldes wheLher securlLles law precludes anLlLrusL law lL ls decldlng wheLher glven
conLexL and llkely consequences Lhere ls a clear repugnancy beLween Lhe securlLles law and Lhe
anLlLrusL complalnLor as we shall subsequenLly descrlbe Lhe maLLer wheLher Lhe Lwo are clearly
lncompaLlble Moreover otJoo and -A5u ln flndlng sufflclenL lncompaLlblllLy Lo warranL an
lmpllcaLlon of precluslon have LreaLed Lhe followlng facLors as crlLlcal (1) Lhe exlsLence of regulaLory
auLhorlLy under Lhe securlLles law Lo supervlse Lhe acLlvlLles ln quesLlon (2) evldence LhaL Lhe
responslble regulaLory enLlLles exerclse LhaL auLhorlLy and (3) a resulLlng rlsk LhaL Lhe securlLles and
anLlLrusL laws lf boLh appllcable would produce confllcLlng guldance requlremenLs & duLles
prlvlleges or sLandards of conducL We also noLe (4) LhaL ln otJooand -A5u Lhe posslble confllcL
affecLed pracLlces LhaL lle squarely wlLhln an area of flnanclal markeL acLlvlLy LhaL Lhe securlLles law
seeks Lo regulaLe

MCnCCL? Anu LC1lCn 2

Landard Cll
O maln LesL ecLlon 2 condemned monopoly power when lL was abused or used unreasonably
evldenced by Lrade pracLlces LhaL would vlolaLe ecLlon 1
O ex lf a group of flrms refuses Lo deal llke ln norLhwesL and vlolaLes 1 Lhen lf only one flrm
behaves slmllarly Lhen vlolaLes 2
O conduct look aL 1 abuse lnferred here
O |ntent courL lnfers lnLenL Lo monopollze from obseoce of credlble efflclency [usLlflcaLlons

u Leel (lmmedlaLely afLer formaLlon company conLrolled 8093 of domesLlc producLlon buL by Lhe
Llme of sulL decreased Lo 30)
O upheld abuse docLrlne buL sald LhaL mere slze doesn'L make an offense Lo 2

Alcoa (obLalned domlnance of vlrgln alumlnum Lhrough monopoly guaranLeed by paLenL malnLalned
poslLlon afLer paLenL explraLlon Lhrough carLel LhaL llmlLed alumlnum lmporLs abandoned monopollsLlc
pracLlces buL remalned sole domesLlc producer when gov'L sued years laLer)
O alLeraLlon of 5tooJotJ ll
4 conduct acLlveacqulslLlon (sLrucLure) lnsLead of abuse" no need Lo flnd basls ln 1
4 |ntent presumes speclflc lnLenL from conducL
O focuses enLlrely on anLlcompeLlLlve effecLs enables CourL Lo flnd u llable even when Lhere may
be credlble efflclency [usLlflcaLlons
*Alcoa ls largely re[ecLed buL whaL remalns unlawful monopollzaLlon LesL ls broader Lhan abuse
sLandard of Landard Cll
p194

Amerlcan 1obacco (reflnemenL of Alcoo)
1) Pand ylloglsm prlce flxlng by compeLlLors ls llke prlce flxlng by monopollsL
2) ConLlnually buylng up companles ls excluslonary
3) need power and lnLenL buL noL speclflc lnLenL

u v CrlfflLh (4 afflllaLed corps owned LheaLers ln 83 Lowns
conduct monopollsL acLs ln exclosloooty manner
O use of monopoly power Lo foreclose compeLlLlon galn compeLlLlve advanLage or
desLroy compeLlLor
O levetoqloq monopoly power ln one markeL Lo galn advanLage ln anoLher ls abuse
O lf compeLlLlonexcludlng effecLs of leverage ouLwelgh beneflLs Lo consumers Lhen llkely
a vlolaLlon of 2
|ntent no need for proof of speclflc lnLenL lf monopollzlng was successful
O speclflc lnLenL relevanL only when ln charges of aLLempL or consplracy Lo monopollze

3 sLandards
1) abuse narrowesL low llkellhood of flndlng vlolaLlon of 2
2) nonpasslve acqulslLlon monopoly power condemned lf noL acqulred Lhrough luck superlor foreslghL
lndusLry or sklll mosL expanslve
3) excluslon LesL of CrlfflLh

unlLed hoe (made shoe machlnery largesL suppller ln u Len oLher compeLlLors buL had 7383 of
demand leased shoe machlne and supplled repalr servlce wlLhouL separaLe charge)
O u had overwhelmlng sLrengLh ln shoe machlnery markeL
O sLrengLh excludes compeLlLlon
O sLrengLh noL aLLrlbuLable solely Lo defendanL's ablllLy economles of scale research
naLural advanLages
Lvldence
O leaslng arrangemenL creaLed enLry barrler because lL locked ln consumers dlfflculL for
rlval Lo enLer
O lockln accompllshed by seLLlng a long Lerm on lease and requlrlng charge for early
reLurns
O free servlce blocked enLry by creaLlng Lwolevel hurdle new rlvals had Lo sell machlnes
Anu servlce
enera| test now app||ed for Sect|on
Crlnnell
1) possesslon of monopollzaLlon
2) wlllful acqulslLlon as dlsLlngulshed from naLural growLh based on superlor producL

Leverag|ng]Lssent|a| Iac|||ty

LssenLlal faclllLy docLrlne flrm or group of flrms LhaL owns cosLreduclng faclllLy musL be prepared Lo
share access wlLh compeLlLors on reasonable Lerms
1 see norLhwesL LaLloners lL's an excepLlon Lo defaulL rule of reason

CLLer 1all (can'L allow munlclpallLles Lo wheel power Lhrough Lransmlsslon llnes Lo sell wholesale
power 2 vlolaLlon)
O leverage used monopoly Lo galn advanLage ln wholesale power
O essenLlal faclllLy Lransmlsslon llnes were essenLlal faclllLy

8erkey hoLo (odak developed new camera and fllm Lo accompany and only odak could process new
fllm)
O verLlcally lnLegraLed flrm has no duLy Lo predlsclose lnfo on new producL [usL Lo glve rlvals a
chance Lo prepare for arrlval
O flrms should be allowed Lo reap rewards of lLs own lnvesLmenLs ln research and developmenL
O nC1 an essenLlal faclllLy

Aspen kllng (refusal by owner of 3 of 4 Aspen skl mounLalns Lo conLlnue [olnL skllng LlckeL wlLh anoLher
owner ls 2 vlolaLlon)
O refusal Lo deal was a dellberaLe efforL Lo dlscourage cusLomers from dolng buslness wlLh smaller
rlval
O scrapped [olnLmarkeLlng arrangemenL only Lo desLroy rlval v|o|at|ng r|ff|th
O evldence Aspen falled Lo offer cteJlble precompeLlLlve [usLlflcaLlons
4 re[ecLs Lheory LhaL u could be llable even Lhough consumer beneflLs ouLwelghed by
compeLlLlve harms
O no duLy Lo cooperaLe wlLh rlvals buL quesLlonable here lL's lmplled
O essent|a| fac|||ty c|a|ms requ|re proof of spec|f|c |ntent
4 essenLlal faclllLy docLrlne ls valld only lf lL ls conslsLenL wlLh and supporLed by proof of
speclflc lnLenL
4 appllcaLlon here [olnL markeLlng arrangemenL was essenLlal Lo rlval and smaller rlval
could only aLLracL shorLsLay vlslLors

1rlnko
Lo lnvoke docLrlne aL all musL have unavallablllLy of access lf Lhere ls access docLrlne serves no purpose
o Lhere are no essenLlal faclllLy clalms lf a sLaLe or federal agency as effecLlve power Lo compel sharlng
and regulaLe scope and Lerms

aclflc 8ell
lf a flrm has no anLlLrusL duLy Lo deal wlLh compeLlLors aL wholesale lL has no duLy Lo deal wlLh rlvals Lo
make lL more compeLlLlvely advanLageous for Lhem
even lf duLy Lo deal arlses only from CC sLlll no ootlttost Joty Lo deal
Loo expenslve Lo deLermlne lf Lhere ls a falr or unfalr prlce squeeze


redatory r|c|ng

8arry WrlghL (Crlnnell Lry Lo develop alLernaLlve source of supply for snubbers recelved requlremenLs
from aclflc enLered lnLo conLracL wlLh 8arry WrlghL so LhaL 8W would produce and supply snubbers Lo
Crlnnell aclflc slashed prlces and Crlnnell LermlnaLed agreemenL wlLh 8W)
O sufflclenL markeL power under tlooell
O evldence of sub[ecLlve lnLenL should noL recelve much welghL because everyone wanLs Lo
lncrease markeL share
O concern for false convlcLlons descrlbed here

MaLsushlLa ('s clalm LhaL !apanese Lv manufacLurers consplred over 20 years Lo drlve Lhem ouL of
buslness by selllng Lv's aL belowcosL)
ob[ect|ve reasonab|eness for predat|on AC1C8
1) d's musL have a prospecL of achlevlng monopoly
low success afLer 20 years companles sLlll had 40 of markeL
2) monopoly prlclng resulLs ln slow enLry by new compeLlLors
enLry seemed easy and oLhers could reenLer lf !apanese ralsed prlce
3) flrms musL be able Lo malnLaln monopoly power long enough Lo recoup losses llke speclflc
lnLenL
each flrm had lncenLlve Lo leL oLhers bear cosL of predaLlon CPLA1lnC
lf any of Lhe facLors are lmplauslble CourL should dlsmlss predaLlon as speculaLlve

8rook Croup (prlce cosL fllLer and ob[ecLlve reasonableness LesL comblnaLlon)
summary [udgmenL p musL show
1) prlces are below cosL
2) u had dangerous probablllLy of recouplng lnvesLmenL ln belowcosL prlces
here lncenLlves Lo defecL durlng recoupmenL perlod ls Loo sLrong (Motsosblto otq)
perhaps Lhls ls abouL sLandlng A8CC

AM8
whaL ls Lhe approprlaLe measure of cosL??
Weyerhauser
predaLory prlclng ln tooke toop also applles Lo predaLory blddlng


,onopo|y ower

Cellophane (hlghly dlfferenLlaLed markeL ln wrapplng paper uuonL produced 73 of cellophane buL
cellophane was less Lhan 20 of all flexlble packaglng sales)
relevanL markeL lncludes oll flexlble wtopploq otetlols because of hlgh elasLlclLy based on h|stor|ca|
ev|dence on funct|ona| |nterchange between ce||ophane and other products
musL conslder subsLlLuLablllLy of producL

Alcoa (vlrgln and fabrlcaLed alumlnum Alcoa was sole domesLlc producer of vlrgln alumlnum)
O !udge Pand LreaLed lmporLed vlrgln alumlnum as Lhe only compeLlng source and used Alcoa's
LoLal vlrgln alumlnum producLlon Alcoa's markeL share was more Lhan 90

MlcrosofL
O Mac C noL lncluded ln markeL because consumers wouldn'L swlLch from Wlndows Lo Mac lf
Lhere was a prlce lncrease Lhls ls because geLLlng new hardware would be expenslve and
supporLs fewer appllcaLlons
O mlddleware excluded because lL's noL lnLerchangeable wlLh Wlndows

Cenerally
33 markeL share ls lnsufflclenL Lo flnd monopoly power
66 was posslble buL doubLful
90 was sufflclenL
8uL lf we adhere Lo numerlcal guldellnes Lhls mlghL noL be sufflclenL Monopoly power ls also
deLermlned by
demandslde subsLlLuLablllLy
supplyslde subsLlLuLablllLy

Attempt to ,onopo||ze
concepL of aLLempL only comes under ecLlon 2 because ocony makes markeL power quesLlon
lrrelevanL

wlfL docLrlne
aLLempL requlres l) proof of speclflc lnLenL plus ll) dangerous probablllLy of success

Loraln !ournal (Loraln had local monopoly ln ads and news dlssemlnaLlon when anoLher radlo sLaLlon
WLCL dld Lhe same Lhlng Loraln refused Lo accepL ads from companles uslng WLCL forced adverLlsers
Lo choose and mosL dldn'L wanL Lo glve up news Lo use radlo)
O speclflc lnLenL flndlng relled on absence of credlble precompeLlLlve [usLlflcaLlon general law
O dangerous prob of success Loraln had markeL power ln local ad markeL wlLhouL ln[uncLlon
WLCL would have suffered losses
O defense rlghL Lo deal or noL deal wlLh anyone Lhey llked
4 but Lhls rlghL ls absoluLe only wlLhouL purpose Lo creaLe or malnLaln monopoly

unlon Leader
unfalr LacLlcs" ls concluslve evldence of u's speclflc lnLenL
llmlLed Lo cases where lL's lnevlLable LhaL only one compeLlLor survlve naLural monopoly
seLLlngs
here efforL of unlon Leader Lo geL local adverLlsers Lo glve all of Lhelr buslness Lo Lhelr
newspaper ls unfalr LacLlc
but lsn'L Lhls efforL dlfferenL from a refusal Lo deal llke ln otolo? normally would be
LreaLed under rule of reason (ee Crlnnell)

now speclflc lnLenL Lo monopollze means speclflc lnLenL Lo exclude compeLlLors LhaL wlll llkely resulL ln
monopoly power
Lhls ls a move away from sLandard of Alcoo (acLlve acqulslLlon sLrucLure) now more Lhe tlffltb
LesL (excluslonary lnLenL compeLlLlon reduclng effecL)

uooqetoos 9toboblllty epolteeot
l) ome examlnaLlon of markeL power
l) relevanL markeL? Lhree approaches
1) markeL deflnlLlon lsn'L lmporLanL speclflc lnLenL ls Lhe only requlremenL
2) narrow deflnlLlon ls permlsslble
we mlghL llke Lhls because aLLempLed monopollzaLlon cases wlll ofLen lnvolve conducL
LhaL has no precompeLlLlve [usLlflcaLlon slnce u's acLlons are elLher harmful Lo Lhe
publlc or harmful Lo someone wlLhouL provldlng a beneflL cootts ooly toke o soll tlsk
lo oJoptloq oottow Jefloltloo
3) proper deflnlLlon of relevanL markeL Laklng lnLo accounL all supply and demandslde
subsLlLuLlon lssues
ll) MusL plalnLlff flnd markeL power?
otolo
usually yes need Lo prove LhaL u has markeL power by hlgh markeL share excepL ln markeLs
wlLh naLural monopoly feaLures
uoloo eoJet shows the except|on
even Lhough unlon dld noL have much markeL share Lhe markeL was Loo small Lo supporL Lwo
newspapers so a successful player would evenLually geL monopoly

pecLrum porLs
C held LhaL dang prob elemenL requlres soe exolootloo of otket powet
lower courLs musL make proper deLermlnaLlon of relevanL markeL narrow def ls lnconslsLenL
lf Lhere ls no naLural monopoly feaLure Lhen Lhere's Lhe same evldenLlary burden on 's as
monopollzaLlon LesL has ln 2
speclflc lnLenL evldence can'L be used a subsLlLuLe for ob[ecLlve evldence of dangerous prob
ob[ecLlve dangerousness req provldes addlLlonal measure LhaL reduces llkellhood of false convlcLlon
8LAu

courLs assume LhaL lL's more deslrable Lo reduce false convlcLlons Lhan false acqulLLals because false
convlcLlon would chlll enLry lnLo Lhe markeL and Lhls would lncrease Lhe llkellhood of ollgopoly prlclng


vL81lCAL 8L18Aln1

A 8esLrlcLed ulsLrlbuLlon 8esale rlce MalnLenance

ur Mlles (ur manufacLured medlclnes uslng secreL formula enLered lnLo conLracLs wlLh wholesalers
and reLallers LhaL requlred compllance wlLh mlnlmum prlces ur sued wholesaler LhaL goL medlclne aL
cuL prlces" by lnduclng oLhers Lo breach prlce agreemenLs)
perse condemnaLlon of reLall prlce malnLenance manufacLurer who sells medlclne Lo wholesaler ls
noL enLlLled Lo resLrlcL resale
1hls rule ls sLlll Lhe law buL reasonableness [usLlflcaLlons have been allowed
WhaL's Lroubllng p 233

AlbrechL manufacLurer LhaL has resLralnL on maxlmum prlces ls also llable
han overrules Albtecbt
rule of reason applles Lo maxlmum resale prlce malnLenance

Leegln (ovettole ut Mlles)
rule of reason for 8M uses y/vonio Jefeoses
8M can lncrease lnLerbrand compeLlLlon by faclllLaLlng markeL enLry for new flrms and brands
procomp [usLlflcaLlon
encourages reLaller servlces LhaL would noL be provlded even absenL free rldlng
glves consumers more opLlons so Lhey can choose among lowprlce lowservlce brands and hlghprlce
hlghservlce brands
also he|ps freer|d|ng prob|em
consumers won'L learn abouL beneflLs of one manufacLurer's producL Lhen buy from anoLher
reLaller LhaL dlscounLs Lhe prlce
mlghL be more dlfflculL Lo force manufacLurer Lo make conLracL wlLh reLaller Lelllng Lhem whaL servlces
Lhey have Lo offer
ome anLlcompeLlLlve effecLs
a manufacLurer wlLh markeL power could use 8M Lo glve reLallers lncenLlve noL Lo sell producLs
of smaller rlvals or new enLranLs
beware of carLels

-ooptlce vettlcol esttolot

ylvanla (ylvanla LermlnaLed ConLlnenLal afLer ConLlnenLal began unauLhorlzed expanslon lnLo markeL
of oLher reLallers)
O 8ule of reason should apply on wheLher ylvanla's resLrlcLlon on reLall locaLlon was vlolaLlon of
1
O ru|e
lL ls unreasonable for a manufacLurer Lo seek Lo resLrlcL and conflne areas or persons wlLh
whom an arLlcle may be Lraded afLer manufacLurer has sold lL
buL rule of reason governs when manufacLurer reLalns LlLle domlnlon and rlsk on Lhe producL
and poslLlon and funcLlon of dealer are lndlsLlngulshable from belng an agenL or salesman of
manufacLurer
Lhls parL was needed because pure agency slLuaLlon would be a slngle enLlLy for
anLlLrusL purposes
even before oppetwelJ 1 couldn'L be applled Lo agreemenL among
employees wlLhln a slngle flrm
Lhls parL ls noL so much for balanclng economlc reasonableness buL for
dlsLlngulshlng lndependenL reLaller slLuaLlons from agency slLuaLlons
O here LlLle Lo Lv's passed from ylvanla Lo ConLlnenLal so lL would be per se under Lhe rule from
5cbwloo
O buL CourL overruled 5cbwloo
4 resLrlcLlons acLually encourage provlslon of pre and posLsale servlce and lnformaLlon
4 resLrlcLlons hlnder compeLlLlon among dealers wlLhln a brand buL because Lhey enhance
Lhe brand's value Lhey enhance compeLlLlon among brands
O 1hls lmplles LhaL horlzonLal resLralnLs may be deemed reasonable lf Lhey enable a bunch of
producers Lo more effect|ve|y d|fferent|ate the|r product from others C has applled Lhls
broadly
O 8u1 does noL compleLely overrule 1opco lL's more of a llmlL
4 lf a horlzonLal agreemenL does noL provlde a noLlceable enhancemenL of lnLerbrand
compeLlLlon 1opco should apply


8 1ylng ArrangemenLs LC1lCn 3 ClayLon AcL and LC1lCn 1 herman
same per se sLandard lL appears for Lylng

8ecall uolteJ 5boe Lhe lease for Lhelr machlnery allowed unlLed hoe Lo cancel lease agreemenL lf
lessee used compeLlLor's machlnes also requlred lessee Lo use leased machlne ooly oo sboes tbot
uolteJ 5boes ocbloes boJ ptevloosly opetoteJ oo

lnLernaLlonal alL (lnL'l alL Lled purchase of salL Lo lease of Lwo paLenLed machlnes)
O lnL'l alL had monopoly power ln Lylng producLs because Lhey were l) paLenLed and ll) a noL
lnsubsLanLlal amounL of buslness was foreclosed ln Lled markeL
O nC goodwlll defense (LhaL manufacLurer's Lylng ls aLLempL Lo proLecL repuLaLlon for quallLy)
Lhere's a less resLrlcLlve alLernaLlve losttoctloq consumers Lo use Lylng producL wlLh cerLaln
quallLles
4 8u1 perhaps you can flnd a defense for goodwlll ln ylvanla/nCAA
4 ylvanla permlLs resLrlcLlons on lnLrabrand compeLlLlon Lo enhance lnLerbrand
compeLlLlon whlch [usLlfles applylng reasonableness when purpose of Lrade resLralnL ls
Lo dlfferenLlaLe a producL and Lhus make lL a more effecLlve compeLlLor
especlally where Lhere ls lncenLlve for franchlsee Lo free r|de on franchlse's
brand caplLal or
when lessee who uses producL for shorL perlod ls wllllng Lo make a sacrlflce on
Lhe quallLy of Lhe Lled producL
also posslble economles of scale defense Lylng ls necessary ln order Lo explolL economles ln [olnL
producLlon or markeLlng

ame sLandard under herman and ClayLon AcLs?? noL sald ln lotl 5olt

norLhern aclflc 8allway (u lnserLed clauses lnLo conLracLs Lo sell and lease land near rall llnes requlred
purchasers and lessees Lo shlp goods produced on LhaL land over n's ralls as long as n's raLes weren'L
above Lhose of compeLlng carrlers Lylng producL land n goL Lhe land for free)
O fto lotl 5olt perse rule whenever parLy has suff|c|ent econom|c power wlLh wrL Lylng producL
Lo apprec|ab|y restra|n free compeLlLlon ln Lhe markeL for Lled producL and a noL lnsubsLanLlal"
amounL of lnLersLaLe commerce ls affecLed
4 n had subsLanLlal econ power by exLenslve land holdlngs land was sLraLeglcally locaLed
wlLhln economlc dlsLance of LransporLaLlon faclllLles and u's offered no procompeLlLlve
[usLlflcaLlon
4 noL lnsubsLanLlal amounL of lnLersLaLe commerce affecLed
4 sufflclenL economlc power does noL mean monopoly power
O lmpllclL sLandards beLween herman and ClayLon ls Lhe same
O fundamenLal lssue was lL monopoly explolLaLlon or [usL a way Lo explolL economy Lo beneflL
consumers and sellers?
4 monopoly explolLaLlon
n goL Lhe land for free Lrled Lo use lL Lo enhance buslness by selllng lL on
condlLlon LhaL purchasers use rallroad's servlces
4 8uL conLracLs allowed buyers Lo use oLher rallroads and n couldn'L have earned
monopoly proflL buL could say LhaL Lhls allowed n Lo monlLor prlces of oLher rallroads

Loew's (llcense of feaLure fllms on Lv sLaLlon was condlLloned on accepLance of block conLalnlng less
deslrable fllms)
O repeaLed per se LesL of -ottbeto 9oclflc
O courL held LhaL lL vlolaLed 1 LhaL sufflclenL economlc power came from Lhe facL LhaL each
movle was copyrlghLed and Lhus unlque
4 lf Lhls were 2 courL would noL flnd markeL power because ellopbooe requlres
conslderaLlon of subsLlLuLablllLy

!errold (!errold sold anLenna sysLems wlLh req LhaL purchaser leL !errold and only !errold lnsLall and
servlce sysLem conLracLs provlded for excluslve use of !errold equlpmenL whenever exLra capaclLy
needed forbade lnsLallaLlon of exLra equlpmenL wlLhouL !errold's approval)
O except|on Lo per se Lylng rule lf resLrlcLlons were reasonable aL lncepLlon of producL u has
burden Lo show reasonableness
4 slgnlflcanL upfronL cosLs ln seLLlng up anLenna sysLem resLrlcLlons were a reasonable
way of mlnlmlzlng rlsk of producL fallure and ensurlng LhaL cusLomers would pay for
lnsLallaLlon (paymenL conLlngenL on successful operaLlon)
4 !errold mlghL suffer ln[urles Lo repuLaLlon lf cusLomers dld noL use !errold equlpmenL or
follow Lhelr lnsLrucLlons
4 as lndusLry for anLennas grew reasons for Lhe pollcy dlsappeared Lleln unreasonable
sloqle ptoJoct lopolty
1) do oLher sellers sell parLs of bundled lLem separaLely?
2) ls Lhere varlaLlon ln slze and composlLlon of bundled lLem
3) are Lhe lLems prlced separaLely
4) are Lhere subsLlLuLes for some of Lhe componenLs ln Lhe bundle?
lf yes Lo Lhese q's Lhen seller bos Lled separaLe producLs

,odern 1y|ng (mov|ng toward reasonab|eness)
orLner (u Leel offered Lo flnance cosL of acqulrlng and developlng land lf developer purchased
prefab houses from u Leel Lylng producL was credlL Lled producL was houslng)
O alLerlng Lhe -ottbeto 9oclflc sLandard musL show monopoly power under sufflclenL econ
power" unLL producL has unlqueness based on
1) legal consLralnL llke paLenL
2) physlcal advanLage llke locaLlon of land parcels ln n
3) cosL advanLage over compeLlLors ln Lylng markeL
O here dld noL show unlqueness ln flnanclng for sufflclenL markeL power also
l) facL LhaL credlL arm of u Leel was conLrolled by one of naLlon's largesL corporaLlons dld noL
prove LhaL lL had a speclal advanLage ln borrowlng funds LhaL was noL avallable Lo oLher lendlng
lnsLlLuLlons
ll) u Leel provlded credlL wlLh each home so lL couldn'L have been uslng power ln credlL
markeL Lo expand lnLo houslng markeL or Lo prlce dlscrlmlnaLe
lll) facL LhaL houses were prlced above markeL noL sufflclenL lnqulry should be wheLher LoLal
package credlL plus houslng exceeded markeL prlce

!efferson arlsh (hosplLal requlred paLlenLs who wanLed an operaLlon Lo use Lhe hosplLal's
anesLheslologlsLs)
O lnsufflclenL econ power hosplLal aLLracLed only 30 of poLenLlal paLlenLs ln relevanL markeL
O paLlenLs weren'L acLually belng forced by Lylng arrangemenL Lo use anesLheslologlsL
O slngle producL lnqulry? ma[orlLy sald LhaL Lhey were separaLe producLs because paLlenLs or
surgeons ofLen requesL speclflc anesLheslologlsLs Lo come Lo hosplLal
4 adopLs epltlcol ooqle ptoJoct LesL relles on evldence concernlng acLual behavlor of
consumers
O lf consumers dldn'L shop around Lhen closlng anesLh depL wouldn'L force Lhem Lo make
declslons Lhey wouldn'L ordlnarlly make
4 Lhls ls quesLlonable argumenL buL could say LhaL Lhe close depL permlLLed parLnershlp
LhaL provlded anesLheslologlcal servlces Lo work 24 hours cooredlnaLe schedules
malnLaln equlpmenL lnvesL ln new Lech 5ylvoolo resLrlcLed lnLrabrand comp and
enhanced lnLerbrand
O agaln suggesLs movemenL Lowards ooopoly powet tep

back towards per se
LasLman odak v lmage (produced copylng machlnes and provlded parLs and servlce for machlnes
oLher companles Lrled Lo enLer markeL for servlce purchased parLs from odak odak Lrled Lo ellmlnaLe
lndependenL servlce markeL by selllng parLs only Lo equlpmenLs owners who relled on odak for servlce
Lled producL servlce Lylng producL parLs)
O no presumpt|on LhaL a manufacLurer lacks markeL power lf Lhe markeL ls compeLlLlve
O sufflclenL economlc power odak was baslcally a monopollsL wlLh lLs own parLs
O courL sald LhaL a flrm may lack markeL power ln Lhe LradlLlonal sense buL because of consumer
lgnorance or swlLchlng cosLs could use Lylng as a means of collecLlng monopoly proflL
O coofllct wltb Ieffetsoo 9otlsb ! sald LhaL ln splLe of consumer lgnorance markeL power or
unlqueness based on cosL advanLage musL be demonsLraLed

llllnols 1ool
paLenL does noL necessarlly confer markeL power on paLenLee for Lylng producL nC MC8L unlqueness
excepLlon
musL prove monopoly power

1echno|og|ca| 1y|ng
musL show LhaL u lnLegraLed Lwo producLs for sole purpose of hamperlng compeLlLlon raLher Lhan Lo
produce some addlLlonal uLlllLy Lo consumers
Leasco solely for purpose of Lylng producLs hlgh burden llke speclflc lnLenL

MlcrosofL
rule of reason for Lechnologlcal Lylng may have efflclencles LhaL Lhe C had noL facLored lnLo per se rule
bundllng of browser wlLh C's enables lndependenL sofLware developer Lo counL on presence of
browser's Al's on consumer machlnes Lhey wouldn'L need Lo lnclude Lhem ln Lhelr own
package
rule of reason should apply Lo Lhls Lype of Lylng where sofLware's ma[or purpose ls Lo serve as plaLform
for LhlrdparLy appllcaLlons


C Lxcluslve ueallng ClayLon AcL ecLlon 3 per se as sLaLed ln lnL'l alL

Landard LaLlons (C was largesL seller of gas ln wesLern u 23 of LoLal gallons enLered lnLo
excluslve deallng wlLh 16 of lndependenL reLall gasollne ouLleLs sales of whlch amounLed Lo $38m
consLlLuLed 7 of LoLal reLall gas ln Lhe area)
O courL ls aware of economlc beneflLs ln supporLlng excluslvlLy conLracLs buL leglslaLlve hlsLory of
ClayLon AcL ls a barrler
4 courL sald LhaL Lylng arrangemenLs rarely have econ beneflLs buL excluslvlLy conLracLs
do
assure sLable supply afford lnsurance agalnsL prlce lncreases enable longLerm
plannlng reduce LransacLlon cosLs of sLorlng goods
O courL found LhaL Landard had domlnanL poslLlon markeL was concenLraLed and conLracLs were
used by Landard's ma[or compeLlLors
4 conLracLs creaLed a cloq oo copetltloo LhaL had lmpacL on compeLlLlon when
consldered ln comblnaLlon raLher Lhan [usL Lhe 7 percenL of markeL
O courL re[ecLed rule of reason

1ampa LlecLrlc (coal suppller's agreemenL Lo flll elecLrlc uLlllLy's LoLal coal requlremenLs for 20 years was
vlolaLlon)
O rule of reason applles Lo excluslvlLy conLracLs
O case clLed for rule of reason buL Lhls ls ln confllcL wlLh ClayLon AcL and courLs sLlll need Lo
conslder Lhe Lheory and purpose of Lhe sLaLuLe whlch re[ecLs rule of reason
O dld noL lnvolve seller wlLh domlnanL poslLlon ln Lhe markeL
O C sald LhaL conLracL should have been upheld
4 relevanL markeL 1
4 noL per se lllegal
4 no domlnanL poslLlon ln markeL no Lylng

8arry WrlghL
rule of reason
shorL Llme perlod of conLracLs ln snubber lndusLry people placed orders well ln advance so lL's noL a blg
effecL LhaL Crlnnell boughL everyLhlng aL one Llme




ML8CL8

secLlon 7 of ClayLon

PorlzonLal

8rown hoe (merger of shoe reLall merger aL boLh manufacLurlng and reLall levels)
O 2 sLeps
4 deflne relevanL producL markeL
4 deflne relevanL geographlc markeL
O courL announced someLhlng close Lo rule of reason
4 ls Lhe markeL concenLraLed?
4 Pas Lhere been a Lrend Loward concenLraLlon?
4 1o whaL exLenL have markeLs been foreclosed?
4 ls enLry easy?
O ln lndusLry as fragmenLed as shoe reLall courL found LhaL conLrol of subsLanLlal shares may have
lmporLanL effecL on compeLlLlon
O hlsLorlcal Lrend Loward concenLraLlon
O lnclplency LesL
4 horlzonLal merger may vlolaLe s7 even Lhough share of markeL ls small (here 3)
4 merger ls an lndlcaLor of movemenL Loward concenLraLlon because mergers are dlfflculL
Lo undo
beLLer Lo block mergers now Lhan walL
O mlLlgaLlng facLors
O buslness fallure excuses mergers where one of Lhe flrms showed slgns of lmmlnenL fallure
O lnadequaLe resources LhaL may have prevenLed one of Lhe flrms from malnLalnlng lLs
compeLlLlve poslLlon (llke Lhose LhaL can'L make lnvesLmenLs ln Lech servlces or appearance and
can'L presenL Lhemselves as compeLlLlve)
O need for comblnaLlon Lo enable small companles Lo enLer lnLo more meanlngful compeLlLlon
wlLh larger ones
O few efflclency defenses
O mosL Lroubllng LreaLmenL of relevanL geographlc markeL probably Loo narrow people can go
ouL of Lhe clLy Lo anoLher clLy

n8
O LreaLed relevanL geographlc markeL as local made Lhe shopplng by reLall cusLomers Lhe mosL
lmporLanL area of compeLlLlon
O declares thresho|d test beyond whlch mergers are presumpLlvely lllegal and no evaluaLlon of
economlc lmpacL
merger
1) produces a flrm conLrolllng an undue percenLage share of relevanL markeL
here flrm would have 30 of relevanL markeL and shares would [ump Lo 39
plus no evldence of easy enLry whlch mlghL offseL Lhese numbers
2) resulLs ln slgnlflcanL lncrease ln concenLraLlon of flrms ln LhaL markeL lnherenLly llkely Lo
lessen compeLlLlon subsLanLlally
here LesLlmony by offlcers saylng LhaL vlgorous compeLlLlon exlsLed was noL enough Lo
overcome Lhls facLor LheoreLlcally Lhe courL should facLor Lhls ln
O CourL dld noL conslder ylvanla defense unless Lwo small companles comblne ln order Lo
compeLe agalnsL a larger one
4 here merger was wlLh Lwo large companles buL Lhls ls noL persuaslve because lL
depends on Lhe geographlc markeL Lhey choose
O tecoocllloq wltb towo 5boe 8rown hoe was for unconcenLraLed markeLs and n8 announces
Lhreshold beyond whlch horlzonLal merger ls presumpLlvely lllegal whlch applles Lo
concenLraLed markeLs
4 sLlll lnclplency docLrlne plays cruclal role ln any case wlLh evldence of a Lrend Loward
concenLraLlon CourL wlll llkely flnd vlolaLlon on basls of lnclplency

ConLlnenLal Can (en[olned merger of 2
nd
largesL can producer wlLh Lhlrd largesL maker of glass
conLalners
O CourL based declslon parLly on observaLlon LhaL boLLle and can lndusLrles were relaLlvely
concenLraLed even Lhough ln Lhe comblned markeL Lhey would have aL leasL 23 markeL share
O whaL ls re|evant product market ln merger across compeLlng lndusLrles? ote tbey sobstltotes?
4 !usLlce uep'L Merger Culdellnes
4 analysls of effecLs of slgnlflcanL nonLranslLory prlce lncrease
4 lf a loL of users would swlLch Lo cans so LhaL Lhe prlce lncrease ls unproflLable Lhen Lhey
are ln Lhe same markeL

von's (3
rd
largesL grocery sLore chaln had 47 sales acqulred 6
Lh
largesL reLaller made up 73 of
markeL) courL held 7 vlolaLlon
daLa showed Lrend Loward concenLraLlon [usL more lnclplency noooo reasonableness defenses

ke[ect|ng the Inc|p|ency Doctr|ne

Ceneral uynamlcs (Lwo coal companles)
O markeL share sLaLs showed LhaL markeL exhlblLed undue concenLraLlon" and a Lrend Loward
concenLraLlon buL CourL sald lL was ok Lo conslder oLher facLors Lo flnd Lhe merger legal
O dlsLlngulsh from voos coal markeL was dlff from grocery and evldence on pasL producLlon
levels are noL necessarlly valld predlcLors of fuLure producLlon
O lower courL dld noL apply falllng company defense
1) LhaL Lhere was hlgh prob of buslness fallure and
2) no oLher prospecLlve purchaser
O lower courL was [usL holdlng LhaL acqulred flrm was noL a slgnlflcanL compeLlLlve force and LhaL
acqulslLlon of new reserves was lnfeaslble

Culdellnes agaln
1) deparLmenL ls llkely Lo challenge merger of any flrm wlLh markeL share of aL leasL 1 wlLh leadlng
flrm ln Lhe markeL provlded Lhe leadlng flrm has markeL share LhaL ls aL leasL 33
2) challenges are unllkely where enLry ls easy
3) efflclencles dep'L wlll conslder efflclencles ln decldlng wheLher Lo challenge merger

verLlcal Mergers
anLlLrusL lssues slmllar Lo excluslve deallng arrangemenLs
Lheory
1) may puL poLenLlal compeLlLors aL dlsadvanLage by ralslng cosLs of enLry (enLry deLerrence)
2) may puL exlsLlng compeLlLors aL dlsadvanLage by ralslng cosLs (ralslng rlvals' cosLs)
Lhese Lhlngs happen when Lhe verLlcal lnLegraLlon locks up deslrable reLallers or reLall locaLlons

uu ponL (acqulslLlon of parL of CM by du ponL vlolaLed s7 Lhls ls before amendmenLs)

8rown hoe
formally announced rule of reason dlsLlngulshlng Lhree Lypes of merger
1) where level of foreclosure ls hlgh approachlng monopollzaLlon
per se applles
2) foreclosure ls Lrlvlal
no vlolaLlon because merger has no economlcally slgnlflcanL effecL
3) lmmedlaLe foreclosure case
LruncaLed rule of reason only a llmlLed seL of efflclency defenses are avallable

CLher rule of reason conslderaLlons from Culdellnes
1) poLenLlal for lncreased enLry barrlers Lhree condlLlons musL exlsL
degree of verLlcal lnLegraLlon musL be so exLenslve across Lhe markeL LhaL Lhe poLenLlal enLranL
musL enLer aL Lwo levels
req of Lwo level enLr musL make enLry slgnlflcanLly more dlfflculL Lhan aL prlmary level alone
ln llghL of towo 5boe lf poLenLlal enLranL ln shoe manufacLurlng lndusLry musL also
enLer lnLo shoe reLall lL wlll be very cosLly Lo acqulre a shoe reLall neLwork
sLrucLure of prlmary markeL musL be so conduclve Lo noncompeLlLlve performance LhaL
lncreased dlfflculLy of enLry ls llkely Lo affecL performance
2) poLenLlal for faclllLaLlng colluslon
3) poLenLlal for evaslon of raLe regulaLlon


Cong|omerate ,ergers
where one flrm uses acqulslLlon Lo exLend lLs range of producLs or Lwo flrms sell same producL ln
enLlrely dlfferenL geographlc markeLs

Clorox
poLenLlal compeLlLlon docLrlne by merglng wlLh Clorox C removes lLself as poLenLlal lndependenL
enLranL
Lwo harms Lo consumer welfare
1) C was a poteotlol eottoot so rocLor puL compeLlLlve pressure on Clorox buL now
consumers don'L geL Lhls beneflL
compeLlLlon ln llquld bleach markeL was lessened as aresulL of acqulslLlon because lL
1) ralsed enLry barrlers and dlscouraged rlvals from compeLlng aggresslvely
2) ellmlnaLed poLenLlal compeLlLlon of rocLor


An1l18u1 Anu 1PL 1A1L

noerrennlngLon uocLrlne
potket Jocttloe resLralnL of Lrade LhaL resulLs from valld governmenLal acLlon ls lmmune from herman
AcL
O lf a parLy aLLempLs Lo lnfluence governmenL Lo Lake acLlon LhaL resLralns Lrade and gov'L Lakes
LhaL acLlon end resulL does noL vlolaLe herman AcL no maLLer how harmful Lhe effecL on
compeLlLlon
O Lhus ottept to lofloeoce ls noL lLself a vlolaLlon
O even lf Lwo or more parLles comblne Lo lnfluence Lhey are lmmune
Are Lhere facLors LhaL Lake case ouL of lmmunlLy zone?
O lnLenL Lo harm compeLlLlon does noL alone weaken lmmunlLy
O Lhlrd parLy" publlclLy whlle uneLhlcal Lhls does noL weaken or creaLe excepLlon no
maLLer lf Lhe publlclLy was Loward Lhe publlc or leglslaLors
Lxcept|on to der|vat|ve |mmun|ty ham LxcepLlon
O lf publlclLy campalgn were dlrecLed Loward governmenL buL really was noLhlng more
Lhan an efforL Lo lnLerfere dlrecLly wlLh buslness relaLlonshlps
arker lmmunlLy applles Lo vollJ qovetoeotol octloo noerr lmmunlLy derlves from Lhls alone
O lnvalld governmenLal acLlon ls noL a source of derlvaLlve lmmunlLy
derlvaLlve lmmunlLy applles unless you lnLend Lo lnfluence a leglslaLor Lo acL ln a procedurally lnvalld
manner
buL lf lL lnfluences buslness relaLlonshlps dlrecLly no lmmunlLy
noerr suggesLs LhaL conspirotorio/ noture of efforts ore irre/evont as long as you wanL Lo
lnfluence valld governmenLal acLlon

Jhat |s the Sham Lxcept|on?
Callfornla MoLor 1ransporL (combo of Lrucklng flrms ln Call opposed all appllcanLs for operaLlng rlghLs ln
Lhe sLaLe)
O u's used resources of Lrucklng flrms Lo harass and deLer respondenLs ln Lhelr use of
admlnlsLraLlve and [udlclal proceedlngs Lo deny Lhem free and unllmlLed access Lo Lhose
Lrlbunals"
O 1hus noerr lmmunlLy does noL proLecL uneLhlcal pracLlces when used ln Lhe udicio/
process
ulsLlncLlon exlsLs because
1) ln leglslaLlve process Lhere are welldeflned noLlons of procedurally valld acLlon
[usLlce and falrness does noL necessarlly deLermlne who wlns or loses
buL ln Lhe [udlclal process resulLs should accord wlLh [usLlce
9otket loolty ost eoo Jlffeteot tbloqs lo leqlslotlve ooJ joJlclol spbete lo tbe
joJlclol ptocess tbete ote ote botJeos tboo jost ptoceJotolly vollJ qovetoeotol
octloo
2) valld acLlon ln [udlclal sphere ls predlcaLed on ossoptloo LhaL parLles have acLed ln good
falLh buL ln leglslaLlve conLexL Lhls doesn'L maLLer
8oLLom Llne scope of noerr lmmunlLy should be narrower ln Lhe [udlclal sphere Lhan leglslaLlve sphere

leqlslotlve sbo
naL'l Crg for Women (nCW refused Lo hold convenLlons ln sLaLes LhaL dldn'L raLlfy Lqual 8lghLs
AmendmenL Mlssourl soughL Lo en[oln)
O C held LhaL herman AcL does noL prohlblL boycoLL ln noncompeLlLlve pollLlcal arena for
purpose of lnfluenclng leglslaLlon
O nCW ulLlmaLely soughL Lo secure passage of L8A Lrlgger noerr
4 lf efforL dlrecLed Loward leglslaLure has loclJeotol effect of Jlscootoqloq ptlvote pottles
from deallng sLlll proLecLed
O lpottoot ulstloctloos betweeo loolty ooJ tbe sbo exceptloo
O Lhls was a publlclLy campalgn dlrecLed Loward governmenL noL Loward buslness lnLeresLs of
compeLlLor
4 nCW had llLLle concern over Mlssourl's success ln aLLracLlng convenLloneers generally
Lhey [usL wanLed Mlssourl Lo concede on Lhe leglslaLlve maLLer
O Mlssourl and nCW were noL compeLlLors ln anyLhlng
4 sham excepLlon assumes parLles lnvolved compeLe agalnsL each oLher relevanL Lo
anLlLrusL law
4 nCW had no proflL moLlve

sepototloq leqlslotlve ooJ joJlclol sbo
lndlan Pead (Allled 1ube aLLempLed Lo prevenL lndlan Pead a manufacLurer of polyvlnyl chlorlde from
galnlng approval by assoclaLlon LhaL wrlLes naLlonal LlecLrlc Code A1 recrulLed more Lhan 100
lndlvlduals Lo reglsLer and parLlclpaLe ln annual meeLlng of naLlonal lre roLecLlon AssoclaLlon whlch
deslgns nLC end resulL deLermlned by voLe A1 losttocteJ tectolts oo bow to vote ooJ ose booJ slqools
to cooolcote votloq sttoteqles ecoose loJloo eoJ lost tbe slqools wete ctoclol)
O where economlcally lnLeresLed parLy exerclses declslonmaklng auLhorlLy ln formulaLlng
producL sLandard for prlvaLe assoclaLlon LhaL comprlses markeL parLlclpanLs LhaL parLy en[oys
nC noerr lmmunlLy"
O WhaL ls Lhe nA? dlsLrlcL courL held lL was quaslleglslaLlve
4 C re[ecLed
4 nA had no governmenL auLhorlzaLlon Lo seL sLandards and nA was composed of
lndlvlduals who had lncenLlves Lo resLraln Lrade
no lmmunlLy for a group LhaL flxes prlce lo ootlclpotloo of qovetoeot oJoptloq
Lhe prlce level as a mlnlmum prlce regulaLlon
shows LhaL llmlLs on derlvaLlve lmmunlLy JepeoJ oo eoos oseJ to
lofloeoce qovetoeot octloo
O arker lmmunlLy applles Lo valld governmenLal acLlon
4 would noL apply even Lo governmenLal acLors when Lhey vlolaLe procedural norms
O noerr applles only Lo efforLs Lo lnfluence valld governmenLal acLlon
4 even lf governmenLal acLors can clalm shleld under arker pottles wbo ottept to
lofloeoce tbe cannoL use noerr


1rlal Lawyers (group of aLLorneys who represenLed poor defendanLs ln crlmlnal cases boycoLLed
asslgnmenLs unLll clLy councll passed leglslaLlon ralslng hourly fees from $30 Lo $33 whlch had been seL
years ago)
alLhough Lrlal lawyers were aLLempLlng Lo lnfluence leglslaLlon lL's noL soclol leqlslotloo llke ln nCW
econ lnLeresL of u's ln nCW Lok a back seaL Lo general noLlons of opporLunlLy equallLy
lawyers use anLlcompeLlLlve consplracy Lo force leglslaLure Lo ralse pay seen as an lnvalld approach