Main Article Content
The United States Supreme Court has decided in a number of cases how Section One 1 of the Sherman Act should apply to agreements that potentially harm competition. In recent key cases, the Court stated that the rule of reason is the default rule in antitrust. Second, per se condemnation (or some rebuttable presumption) is reserved for a limited group of practices that economics and experience show that the type of agreement under consideration is inevitably destructive of competition with little or no redeeming features. Third, reasonable people can disagree about the likely competitive effects of a particular type of agreement. Therefore, lower courts going forward should apply the rule of reason on a case by case basis to determine whether there is any likelihood of competitive harm and any likelihood of significant procompetitive benefits. However, lower courts should structure and streamline their analysis by applying one or more rules of thumb. The Supreme Court followed this basic approach in Leegin, applying the rule of reason to resale price maintenance agreements (vertical price fixing), and in Actavis, applying the rule of reason to pay-for-delay agreements involving branded and generic pharmaceutical manufacturers. This essay explores where this strategy has been successful (Actavis) and where it has not (Leegin). I focus not on the substantive law but instead on the institutions and incentives in antitrust enforcement that ensure that the pronouncements of the law on the books by the Supreme Court get translated into the law in action in the lower courts and the real world.
Blad, Leiv, and Margaret Sheer. “A look back at the attempts to repeal Leegin”. CPI Antitrust Chronicle, November 2013 (1). https://www.morganlewis.com/news/2013/11/~/media/files/docs/2013/bladsheernov-13(1).ashx.
Carrier, Michael A. “Five years after Actavis: A brief case study”. IP Watchdog, June 18th, 2018. https://www.ipwatchdog.com/2018/06/18/ftc-v-actavis-stand-5-years/id=98536/.
Carrier, Michael A. “The four-step rule of reason”. Antitrust 33, no. 2 (2019).
Carrier, Michael A. “The real rule of reason: Bridging the disconnect”. BYU Law Review 1999, no. 4 (1999).
Carrier, Michael A. “Rule of reason: An empirical update for the 21st century”. George Mason Law Review 16, no. 4 (2009).
Carrier, Michael A. “Statement by Michael A. Carrier to Health Subcommittee of House Committee on Energy & Commerce”. March 13th, 2019. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3352629.
Cha, Wan. “A new post-Leegin dilemma: Reconciliation of the third circuit’s Toledo Mack case and the second circuit’s Apple e-books case”. Rutgers Law Review 67, no. 6 (2015): 1561-1574.
Cooper, Heather M. “What baby products can teach us about successful distribution strategies”. Fed. Law 57 (2010).
Easterbrook, Frank. “The limits of antitrust”. Texas Law Review 63, no. 1 (1984).
Hovenkamp, Herbert, Mark D. Janis, Mark A. Lemley, Christopher R. Leslie, and Michal A. Carrier. IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law, 3rd edition. United States of America: Wolters Kluwer Legal & Regulatory U.S., 2017.
Kanwit, Stephanie W. Federal Trade Commission. USA: Thomson Reuters, 2019.
Kesselheim, Aaron S., Michael S. Sinha, and Jerry Avorn. “Determinants of market exclusivity for prescription drugs in the United States”. JAMA Internal Medicine Nov 1; 177(11) (2017): 1658-1664.
Lambert, Thomas A. “Dr. Miles is dead. Now what?: Structuring a rule of reason for evaluating minimum resale price maintenance”. William. & Mary Law Review 50, no. 6 (2009).
Lao, Marina. “Internet retailing and “free-riding”: A post-Leegin antitrust analysis”. Journal of Internet Law 14, no. 9 (2011).
Lunney, Jr., Glynn S. “FTC v. Actavis: The patent-antitrust intersection revisited”. North Carolina Law Review 93, no. 2 (2015).
Marietta, Stephen J. “An apple a day doesn’t keep Doctor Miles away: The second circuit’s misuse of the per se rule in United States v. Apple”. Rutgers Law Review 69, no. 1 (2016): 372-377.
Mulcahy, James, and Filemon Carillo. “Leegin, ten years later: Did vertical agreements remain unlawful per se where adopted to facilitate a price-fixing horizontal scheme?”. Franchise Law Journal 38, no. 1 (2018): 129-136.
Reynolds, William L., and Spencer Weber Waller. “Legal process and the past of antitrust”. SMU Law Review 48, no. 5 (1995).
Shapiro, Stephen M., Kenneth S. Geller, Timothy S. Bishop, Edward A. Hartnett, and Dan Himmelfarb. Supreme Court Practice, 10th edition. USA: Bloomberg BNA, 2013.
Sokol, D. Daniel, Daniel Crane, and Ariel Ezrachi. Global Antitrust Compliance Handbook. Oxford: Oxford University Press, 2014.
Stucke, Maurice E. “Does the rule of reason violate the rule of law?”. U.C. Davis Law Review 42, no. 1 (2009).
Voorhees, Jr, Theodore. “Reasoning through the rule of reason for RPM”. Antitrust 28, Fall (2013): 59-61.
Waller, Spencer Weber. “Antitrust and democracy”. Florida State University Law Review 46, no. 4 (2019): 807-860.
Waller, Spencer Weber. “Justice Stevens and the rule of reason”, SMU Law Review 62, no. 2 (2009).
Wright, Joshua D. “FTC v. Actavis and the future of reverse payment cases”. Federal Trade Commission, September 26th, 2013. https://www.ftc.gov/sites/default/files/documents/public_statements/ftc-v.actavis-future-reverse-payment-cases/130926actavis.pdf.