Antitrust » The Antitrust Revolution

The Antitrust Revolution

By Jeffery M. Cross

March 7, 2024

antitrust revolution concept

Jeffery Cross is a columnist for Today’s General Counsel and a member of the Editorial Advisory Board. He is a partner in the Litigation Practice Group of Smith, Gambrell & Russell, LLP and a member of the firm’s Antitrust and Trade Regulation Group.

This story originally appeared in Today's General Counsel.

I taught antitrust law as an Adjunct Professor at John Marshall Law School in Chicago for twelve years. Then I taught at Loyola University Chicago for two years.

In the summer of 2016, while I was teaching at Loyola, the Federal Judicial Center (the educational arm of the federal courts), asked me to write a primer on Section 1 of the Sherman Act for new federal judges and judges without much antitrust experience, so I took a break from teaching.

The book was published in 2022, and in January 2024 I began teaching again at the University of Illinois Chicago. Because I had taken several years off, I thought it was important to read the key cases again and prepare new lesson plans.

My reading, including two cases I was deeply involved in, General Leaseways and Sulfuric Acid, made me appreciate the revolution that has occurred in the almost fifty years I have been practicing antitrust law. You have to understand that transformation to understand Section 1 today.

From 1918 through 1975, the Supreme Court applied formalistic line-drawing in the form of a per se rule: If a restraint was between horizontal competitors, and appeared to fit into certain categories of conduct, the per se rule applied. Anti-competitive effects were presumed, and no pro-competitive justifications were permitted.

The classic per se categories were price fixing, output restraints, market allegations, boycotts, and tying. The per se rule was championed by several jurists and commentators as less expansive than the Rule of Reason as articulated by the Court in the beginning of the 20th century and provided guidance to the business community.

The early treatment of the Rule of Reason to which later Courts were reacting can be traced back to the 1918 opinion by Justice Louis Brandeis in Chicago Board of Trade. The test of the Rule of Reason set forth by Brandeis was extremely broad and open-ended. One well-known antitrust jurist described it as making many facts relevant, but none dispositive.

For the next fifty years or so, the Court applied the per se shortcut as a reaction to this broad and open-ended approach.

When I began practicing antitrust law in 1975, the per se rule was being vigorously applied by the courts and litigators. However, many jurists, academics, and practitioners became concerned that under such formalistic line-drawing, a practice might be condemned when in fact it was pro-competitive.

That concern was expressly addressed by the Court in 1977 when it held that “departure from the rule-of-reason standard must be based upon demonstrable economic effect rather than . . . upon formalistic line drawing.”

But the Rule of Reason standard articulated in Chicago Board of Trade was in fact very broad and costly to litigate. So, the antitrust community, including the courts, began looking for other, more streamlined, ways to apply the Rule of Reason.

An alternative began to take shape between 1978 and 1986 when the Court determined that a full-blown Rule of Reason was not necessary in every case. It held that an anti-competitive effect could be determined by the nature of the restraint without a determination of market power through proof of the relevant market, market shares, and barriers to entry.

It also held that a restraint that had no justification, in other words, a “naked restraint,” established a violation, again without an analysis of market power; direct evidence of anti-competitive effect obviated the need to determine market power.

Then, in two seminal cases in 1999 and 2013, the Court held that the Rule of Reason was flexible and lower courts could fashion an analysis that was “meet” for the case by applying assumptions and burden-shifting.

The result was that lower appellate courts fashioned a stepwise, burden-shifting approach to the Rule of Reason that allowed the case to terminate if either of the parties failed to meet its burden at any one of the steps.

Finally, in 2018 and 2021, the Supreme Court endorsed this stepwise, burden-shifting approach. It also reiterated that the Rule of Reason is the presumptive standard and eschewed again formalistic line drawing.

These changes to antitrust law were truly revolutionary. The courts applied some of these changes to my cases, General Leaseways and Sulfuric Acid, making it very exciting to practice and teach antitrust law during this period. I look forward to this antitrust revolution continuing.

Get the free newsletter

Subscribe for news, insights and thought leadership curated for the law firm audience.