Evolving the Rule of Reason for Legacy Business Conduct


In administering the antitrust laws, is it relevant what a firm’s market power was when a business practice was first implemented? Relatedly, should the commonness of a practice — in terms of use by other firms in a market or industry — be a consideration when assessing its legality? This article proposes that, under certain, well-specified conditions, the legacy of a business practice and its commonness within a market can be used as a “marginally procompetitive presumption” under the rule of reason framework. Specifically, if a practice was implemented before a firm obtained substantial market power or a practice is commonly used by other firms across the market power spectrum, then the burden placed on defendants to demonstrate the practice is procompetitive should be lessened in proportion to the strength of the legacy and commonality.

Read at SSRN.