Antitrust Law Section and Young Lawyers Division committee offer free 12-part series on antitrust basics

The Antitrust Committee of the ABA’s Young Lawyers’ Division and the Section of Antitrust Law are in the process of hosting a first-ever “Antitrust Basics Teleconference Series.”

The 12-part series, which launched on September 20 with a program on the “Sherman Act Section 1,” will continue through August 15, 2007, and will cover such topics as “Hart-Scott-Rodino Analysis,” “Criminal Process and Procedure” and “Vertical Constraints.” Each conference — available free online — will feature a leading academic, private practitioner or government official.

During the September program, Eric Sacks of Chicago, a partner at Jenner & Block, talked about what Section 1 of the Sherman Act says it does, outlawing “every contract, combination..., or conspiracy, in restraint of trade,” and about the Supreme Court’s interpretation that Section 1 prohibits 1) agreements that 2) restrain trade in an unreasonable manner. (Section 2 of the Sherman Act applies to unilateral action. A program on that took place on October 17.)

To ascertain whether the action took place as part of an agreement, you can look for direct evidence — a formal contract between parties, the rules of an association both parties belong to, or testimony, for example — or for circumstantial evidence that shows a conscious commitment to a common scheme, or that tends to exclude the possibility of independent action. Examples of such would be information exchange, especially at high levels of an organization, that facilitate parallel conduct (e.g., an exchange of pricing information that is not otherwise public).

When looking at an agreement, the courts will look at the kinds of parties involved to determine the level of scrutiny required — a contract between direct competitors would receive the highest scrutiny, while an agreement between corporate affiliates would receive the least — the exact level depending on the level of ownership between the entities.

If an agreement is found, the analysis turns to whether the restraint of trade is unreasonable. Certain restraints are considered to be per se unreasonable — such as price fixing between competitors, resale price maintenance and bid rigging — while others must be examined through the rule of reason, looking at whether the restraint has a detrimental effect on competition. If one or more of the parties do not have the ability to hurt competition — its market share is simply too small, for example — there is no unreasonableness. If the restraint is more pro-competitive than anti-competitive, then it is not unreasonable.

Sack noted that there is an emerging middle ground where some per se violations are being reexamined — if a “quick look” suggests that the restraint may be reasonable, then a rule of reason analysis is called for.

The PowerPoint slides for the Section 1 program are available here.

The next presentation in the Brown Bag series, “The Economics of Antitrust,” is scheduled for December 13.

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