The Per Se Legality of Some Naked Restraints: A (Re)Conceptualization of the Antitrust Analysis of Cartelistic Organizations

Abstract

Cartels are generally per se illegal, but the Supreme Court has rejected the per se label for cartels involving various kinds of private regulatory organizations and instead applied a "rule of reason." This suggests that traditional analysis of conspiracies is inconsistent or illogical because there is no clear or coherent statement of when or why some cartels get the benefit of a different rule nor is the standard of reasonableness articulated with any precision. This article offers a positive analysis of this apparent conflict. It advances the thesis that assumes the courts are concerned with the function of a restraint in the sense that Taft used the concept. This approach would condemn all naked restraints (cartels) as per se illegal unless an appropriate level of government has expressly or implicitly authorized the conduct. Such authorized restraints are "per se legal." The cases suggest a three step analysis of any restraint seeking per se legality: are the parties authorized to impose some restraints on competition, is the particular restraint within the scope of that authorization, is the process used to adopt and implement the restraint appropriate in the circumstances. This framework both explains the decisions in a variety of apparently unrelated cases and provides a consistent explanation for a variety of doctrinal areas including state action, express and implied exclusive jurisdiction, constitutional immunity, professional self regulation, private safety standard setting and regulation of amateur sports. A brief Postscript discusses the implications for this thesis of the California Dental Association decision which on its face is inconsistent with the framework advanced, but which may not in fact be entirely inconsistent.

JEL Classification: K21