Rule of Reason: Sliding Scale

1
Rule of Reason Sliding Scale

• Cal Dental Assn To stop false/misleading cant
  advertise low, reasonable, or affordable rates,
  across-the-board discounts, and quality claims on
  pain of censure/ expulsion reqd quantitative
  disclosures
• (6-3) quick look not enough do plenary R of R
  no burden shift without harm theory
• Anticompetitive harm not obvious quality
  claims may be impossible to verify
• Rejects burden shift to Pet. w/o harm theory

2
Section 1 Requires Agreement

• Conscious Parallelism Interstate Circuit
• Legitimate inference of concerted action when (1)
  common awareness (multiple addressees) (2)
  unanimity essential (exclusion leverage) (3)
  lockstep implementation (not entirely the case
  there) (4) confirmation (easily checked by so
  few Defs) (5) solidarity (no one jumps ship)
• But Theater Enterprises says is not conclusive
  permissible inference cant override jury
• See also Wilcox Develop. v. 1st Interstate

3
More Economics

• Efficient Mkt assumptions full info, fungible
  products, many sellers, easy entry
• Marginal Cost cost to produce the nth unit
• Lateral shifts of demand and supply curves
• Monopolists are price seekers not price takers
  and restrict output to lowest point on their
  marginal cost curves.
• Intersection of marginal revenue/marginal cost
• deadweight welfare loss economic rent

4
Concentration and Collusion

• Structuralists v. Chicago School
• Oligopoly price leadership, disciplining,
  umbrella pricing, limit pricing (minimum
  efficient size for entry)
• innevitable (game theory) outcome? Cozy
  corner? Less innovation?
• GE consent decree re detailed price books
• Delivered pricing systems pro competition?
• High profit, stable shares, excess capacity