An Overview: The Standard of Review

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CHAPTER IV

AN OVERVIEW: THE STANDARD OF REVIEW

The antitrust analysis of joint ventures has evolved considerably over

time. Having encountered an increasing number of joint venture

arrangements in a wide variety of contexts, courts have had many

opportunities to analyze challenges to their legality. In reviewing the

legality of a joint venture, a threshold issue is whether the arrangement—

or a particular aspect of it—will be subject to per se condemnation or

rule-of-reason analysis.1

A. The Per Se Standard

A literal reading of the Sherman Act would render every competitor

collaboration unlawful.2 The Supreme Court, however, has held that only

those agreements or practices that are “plainly anticompetitive”3 and

“lack . . . any redeeming virtue”4 constitute “naked” restraints of trade,

1. Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 9 (1979) (“[I]t is

necessary to characterize the challenged conduct as falling within or

without that category of behavior to which we apply the label ‘per se

price fixing.’”).

2. See, e.g., Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S.. 717, 736-

37 (1985) (Stevens, J., dissenting) (“The plain language of § 1 of the

Sherman Act prohibits ‘every’ contract that restrains trade. Because such

a literal reading of the statute would outlaw the entire body of private

contract law, and because Congress plainly intended the Act to be

interpreted in the light of its common-law background, the Court has long

held that certain ‘ancillary’ restraints of trade may be defended as

reasonable.” (footnote omitted)); Arizona v. Maricopa Cnty. Med. Soc’y,

457 U.S. 332, 342 (1982) (“Section 1 of the Sherman Act of 1890

literally prohibits every agreement ‘in restraint of trade.’”); United States

v. Joint Traffic Ass’n, 171 U.S. 505, 568 (1898) (noting that Congress

could not have intended to render every business contract illegal).

3. National Soc’y of Prof’l En g’rs v. United States, 435 U.S. 679, 692

(1978).

4. Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958). Of course,

these statements should not be taken to mean that a restraint cannot be

condemned as unlawful just because the industry or organization is

relatively new or has not previously been before the courts. See, e.g.,