Question

What is a per se rule? What is rule of reason? Give an example of uncompetitive behavior that is judged under each principle. Give a graphical rationale for the difference.

Answer 1

Per se Rule are antitrust analysis in which it is used to determine the legality of agreement between competitors. It is applied on horizontal agreement (it is an agreement between the competitors at the same stage of production and product must be different) So the burden of proof on defendant.

For example Agreement regarding- price, quality,quantity,market allocation and bid rigging.

Rule of Reason

-It is an evaluation of appreciable adverse effect on competition.

-It is antitrust analysis to find the legality of agreement between competitors.

- According to rule of reason court examine both positive and negative effect of an agreement before analyze whether it violates antitrust laws.

Example of uncompetitive behavior

Patent Misuse - A automobile company buys patent that is fundamental to all cars and then refuses to license it to any competitors in an attempt to take over the entire industry.

Monopoly Price where MR- MG ATC Ave Yage totel Cost Auera to fal les Fair- Re turn Prce ML MR Marinal IATC MayKet Demand Prire Marg1'nal Cos Yevenul Mc marginal ost Ovantrty Prce MR