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79 Antitrust L.J. 713 (2013-2014)
Antitrust's Rule of Reason: Only Competition Matters

handle is hein.journals/antil79 and id is 725 raw text is: ANTITRUST'S RULE OF REASON:
The rule of reason is the accepted standard for testing whether a practice
restrains trade in violation of' Section 1 of the Sherman Act.' Although the
express language of Section 1 contains no such limitation, the Supreme Court
has repeated time and again that § 1 'outlaw[s] only unreasonable re-
straints.2 And the Court has consistently distinguished the unreasonable re-
straints on the basis of impact on competition. My thesis in this article is that
the rule of reason focuses solely on how a challenged restraint affects the
competitive process. I also explain that commentators either have merely as-
serted that a welfare standard must be applied or mistakenly claimed that the
Supreme Court has endorsed a welfare standard.
Because antitrust commentary employs the argot of welfare economics, I
begin by reviewing relevant terms and concepts. Part I of this article also
clarifies the contributions of Professor Robert Bork on the primacy of con-
sumer welfare and its meaning. I explain that Bork's views are misunder-
stood and unfairly criticized in large part because consumer welfare has a
different meaning now than the one he ascribed to it. Finally, Part I highlights
major themes and points of contention in the long-running welfare debates. I
explain that much commentary either conflates the goal of the Sherman Act
with its liability standard or proceeds from the false premise that the policy
choice is between two welfare measures, neither being what Professor Bork
called consumer welfare.
The rule of reason was developed by the Supreme Court,3 and Part II of this
article reviews the Court's relevant decisions. It first recapitulates ways in
* Senior Economic Counsel, Antitrust Division, U.S. Department of Justice. The views ex-
pressed herein are not purported to represent those of the U.S. Department of Justice.
I Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885 (2007).
2 Id. (quoting State Oil Co. v. Khan, 522 U.S. 3, 10 (1997)).
3 See Phillip Areeda, The Rule of Reason A Catechism on Competition, 55 ANTITRUST L.J.
571, 571-72 (1986).


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