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San Diego Law Review



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Sherman Antitrust Act, rule of reason, antitrust court history, antitrust court rulings


The requirement that an antitrust plaintiff show market power in rule of reason cases has an uninspiring history and unconvincing justifications. Such a requirement has never been adopted by the Supreme Court, and is currently imposed by only the Seventh and Fourth Circuits. Indeed, the requirement was never imposed very widely, despite frequent claims to the contrary. More significantly, the Seventh Circuit cases that initially established the requirement, and that continue to be cited for it, did so with misleading citations to cases from other circuits. Furthermore, the justifications that have been offered for the requirement have generally been either theoretically valid but unconnected to litigation, or empirically based but both implausible and unsupported. Still, the imposition of a market power requirement responds to valid concerns about antitrust litigation. Weak cases are brought, and it would be desirable to dismiss them at an early stage, without the expense of a full-blown rule of reason analysis. In this respect, the market power approach's theoretical justification-that cases in which a defendant cannot injure competition should be dismissed-may have a role to play. But that role must take into account the variety of contexts in which the rule of reason is applied; it does not mandate the indiscriminate application of a single market power test. Some efforts have been made in the direction of a more context sensitive approach, but one that would still allow the dismissal of weak antitrust cases. For example, shortly after the Supreme Court's decision in Sylvania, several commentators proposed approaches that recognized the "sharp differences in competitive effect among the different 'justifications' for vertical restrictions."" These articles, however, appear to have been swept away by the Valley Liquors I and II-led focus on market power, and more recent efforts along the same line seem to have had little effect. Perhaps recognition of the deficiencies in the development of the market power requirement will serve to encourage a more discriminating approach to the rule of reason.