Read the 10 best academic and business antitrust articles published in 2012!

Nominated by Julie Brill, Alexander Italianer, Frédéric Jenny, Bill Kovacic, Bruno Lasserre

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Moving Beyond Caricature and Characterization: The Modern Rule of Reason in Practice

Andrew I. Gavil, Southern California Law Review, Vol. 85, No. 3, 2012.

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Antitrust law’s "rule of reason," first endorsed by the Supreme Court in its 1911 Standard Oil decision, has evolved from a potentially wide-ranging and relatively unstructured inquiry limited in application to cases brought under Section 1 of the Sherman Act into a group of "rules of reason" that are used today to evaluate many different kinds of competitively sensitive conduct. Although still derided by critics as unstructured and error-prone, these rules of reason are instead structured and guided by core economic principles that focus on specific conduct’s pro and anti-competitive effects. The burdens imposed on plaintiffs, public and private are demanding, and defendants win the overwhelming proportion of the time. Indeed, today’s antitrust rules are the most business-friendly in the history of American antitrust law. In this article, I trace the intellectual history of the modern rule of reason from Standard Oil and Chicago Board of Trade to the more contemporary Supreme Court and appellate court decisions. Under the modern rule of reason that emerges, the instinct to categorize conduct as fitting into seemingly distinct categories subject to either the "per se rule" or the "rule of reason" has been supplanted by the view that the rule of reason is a single standard that is subject to varying modes of application — a sliding-scale continuum that is focused on the nature and extent of the evidence of competitive effects. The article specifically revisits the origins of the "quick look" approach to applying the rule of reason and finds fault in the association of the quick look with evidence of "actual" anti-competitive effects. The quick look was rooted in a confidence that courts could, through rudimentary economic reasoning, easily discern the anti and pro-competitive potential of conduct in many cases short of "elaborate inquiry." "Economic reasoning" not "actual effects" is the foundation of a useful quick look. The article concludes by suggesting three reforms that might improve the application of the modern rules of reason, including a revitalized quick look that would integrate a more symmetrical plausibility screen. That screen would simultaneously evaluate the economic basis for both the plaintiff’s case of anti-competitive effect and the defendant’s assertion of efficiencies or other cognizable justifications.

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