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Sherman Act §1

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Overview Edit

Section 1 of the Sherman Antitrust Act (15 U.S.C. §1) provides in pertinent part:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

To state a claim under Section 1, a plaintiff must allege facts that, if true, will prove: (1) the existence of a conspiracy, (2) intention on the part of the co-conspirators to restrain trade, and (3) actual injury to competition.[1]

To state injury to competition, plaintiff must allege conduct that “actually causes injury to competition, beyond the impact on the claimant.”[2] Concerted action between co-conspirators to eliminate competitive bidding for a contract is an actionable harm to competition.[3]

The Sherman Act does not condemn every restraint of trade; instead, the law “was intended to prohibit only unreasonable restraints of trade.”[4] Some restraints are so manifestly anticompetitive and without redeeming value that they are deemed illegal per se under Section 1.[5] Only horizontal price-fixing agreements between competitors are considered per se illegal.[6] Likewise, group boycotts could be subject to a per se rule of illegality. However, “precedent limits the per se rule in the boycott context to cases involving horizontal agreements among direct competitors.”[7]

Other restraints are evaluated under the rule of reason, allowing consideration of the parties’ market power and any procompetitive justifications,[8] as well as the restraint’s anticompetitive effects.

References Edit

  1. Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008) (citing Les Shockley Racing, Inc. v. National Hot Rod Ass’n, 884 F.2d 504, 507 (9th Cir. 1989)).
  2. Austin v. McNamara, 979 F.2d 728, 738 (9th Cir. 1992).
  3. Harkins Amusement Enters., Inc. v. Gen. Cinema Corp., 850 F.2d 477, 487 (9th Cir. 1988).
  4. NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85, 98 (1984).
  5. Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007).
  6. Texaco, Inc. v. Dagher, 547 U.S. 1, 5 (2006).
  7. NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 135-36 (1998).
  8. NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85, 100 (1984).

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