Per Se Violations under Antitrust Law
Per Se Violations under Antitrust Law
What Are Per Se Violations?
In antitrust law, certain business practices are considered so inherently anticompetitive that they are automatically deemed illegal, without the need for detailed analysis of their effects on the market or intent. These are called per se violations.
Per se violations do not require proof of actual harm or anticompetitive effect.
Courts apply this rule to practices that “almost always” restrict competition and decrease market efficiency.
The defendant's justification or the reasonableness of the conduct is irrelevant in these cases.
Common Examples of Per Se Violations
Price Fixing
Agreements between competitors to fix, raise, lower, or stabilize prices.
Bid Rigging
Competitors colluding to rig bids to predetermine the winner and prices.
Market or Customer Allocation
Agreements dividing markets, territories, or customers among competitors to avoid competition.
Group Boycotts
Agreements among competitors to refuse to deal with a particular person or company.
Horizontal Restraints
Agreements among competitors (horizontal relationship) that restrict competition.
Legal Significance of Per Se Rule
Simplifies litigation by bypassing complicated rule-of-reason analysis which looks into the actual effects and procompetitive justifications.
It is a strong deterrent because defendants cannot argue that the conduct was reasonable or beneficial.
Encourages businesses to avoid certain practices entirely.
Rule of Reason vs. Per Se
Rule of Reason: Courts analyze the purpose, effect, and market context of the conduct to decide if it is anticompetitive.
Per Se Rule: No inquiry into effects or intent; conduct is automatically illegal.
Courts apply per se treatment only to practices with a history of being almost always harmful.
Important Case Law on Per Se Violations
1. United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940)
Facts: Oil companies colluded to fix prices for gasoline during the Great Depression.
Issue: Whether price-fixing agreements are per se illegal.
Decision: The Supreme Court held that price-fixing is a per se violation of the Sherman Act, regardless of the reasonableness of the prices or intent.
Significance: Established that price-fixing agreements among competitors are automatically illegal.
2. NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984)
Facts: NCAA restricted television broadcasts of college football games.
Issue: Whether NCAA’s control over broadcasts was a per se violation or should be analyzed under the rule of reason.
Decision: The Court rejected per se treatment for this restraint and applied the rule of reason instead.
Significance: Clarified limits of per se rule; not all restraints among competitors are per se illegal.
3. FTC v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411 (1990)
Facts: Lawyers collectively refused to accept court appointments to demand higher fees.
Issue: Whether group boycotts are per se illegal.
Decision: The Supreme Court held that the group boycott was a per se violation of antitrust laws.
Significance: Reinforced that group boycotts among competitors are per se illegal.
4. Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979)
Facts: Concerned blanket licensing of music rights.
Issue: Whether the licensing agreement was a per se violation.
Decision: The Court applied the rule of reason, not per se.
Significance: Demonstrated that some joint ventures or collaborative agreements are not per se illegal.
Why Does the Per Se Rule Exist?
Some practices have such predictably negative effects on competition that detailed analysis is unnecessary.
Per se rule promotes efficiency in adjudication.
It prevents legal uncertainty about certain clearly illegal conduct.
Summary
Per se violations are business practices automatically illegal under antitrust law without inquiry into their actual market effects.
Includes price fixing, bid rigging, market allocation, and group boycotts.
Established and shaped by landmark cases like United States v. Socony-Vacuum Oil.
Differ from rule of reason analysis, which requires thorough market analysis.
Per se rule provides clear guidance to businesses and courts on unlawful conduct.
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