![]() It has been pointed out that the rule of reason is, as often as not, imprecise and unpredictable: ABA Antitrust Section, Monograph No. This is not to say that the rule of reason has been immune to criticism. It is fair to say that, over the last 40 years, the rule of reason standard has become the starting point for determining whether collusive practices restrain trade in violation of section 1. Whether the firms involved have market power is a further, significant consideration: Leegin Creative Leather Products v PSKS (2007). Factors relevant to this case-by-case evaluation include the history of the restraint in question, the purpose sought to be attained and its actual and probable effects: Continental TV v GTE Sylvania (1977). Apart from restraints that would always or almost always tend to restrict competition, which are considered ‘per se’ to be in violation of section 1, the US courts apply the ‘rule of reason’ in order to decide whether collusive behaviour constitutes an unreasonable restraint on competition: Chicago Board of Trade v United States (1918). ![]() Since the earliest judgments of the US Supreme Court interpreting this provision in the 20th century, the Court held that it prohibits only unreasonable restraints of trade. Section 1 of the Sherman Act 1890 prohibits ‘every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.’ Taken literally, this wording prohibits every restraint of trade. ![]()
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