University of Miami Business Law Review
In California Dental Ass’n v. F.T.C. (hereafter “Cal Dental”), the Supreme Court observed that there is no sharp divide separating conduct that can be summarily condemned under section one of the Sherman Act as per se unlawful from conduct that warrants a more searching factual assessment to ascertain any anticompetitive effect and hence its legality. The Court further observed that not every antitrust claim falling outside the narrow ambit of per se illegality warrants the detailed Rule of Reason analysis prescribed in Chicago Board of Trade. The Court thereby eschewed any notion that section one analysis is dichotomous, i.e., that restraints of trade fall into one of two categories: per se violations, which are condemned out of hand; or Rule of Reason violations, which are condemned only after a detailed analysis of anticompetitive effects and procompetitive benefits. Rather, it suggested that conduct be adjudged on a sliding scale and that “the quality of proof required should vary with the circumstances.”
In so ruling, the Court specifically acknowledged what it had held implicitly in three earlier decisions: that certain conduct, although falling outside of the narrow parameters of per se illegality, has such anticompetitive potential that absent proof of look” without a detailed market assessment. Accordingly, the Court acknowledged in principle the concept of a truncated Rule of Reason analysis. Ultimately, however, the Court concluded that “quick look” did not apply to the facts of the case and that a “less quick look” was necessary to assess defendant’s advertising restrictions because it was not intuitively obvious that these advertising restrictions by themselves would create anticompetitive effect and because the advertising restrictions may have actually promoted competition by eliminating unverifiable and misleading discount and quality of service advertising.
Quick look is tailor–made for restraints that bear a close family resemblance to price–fixing but are of the type with which courts have little experience or are idiosyncratic in nature. Proponents of quick look argue that quick look “improves upon the traditional dichotomous approach by reducing and enforcement and adjudication costs, enhancing the accuracy of administrative and judicial determinations and improving deterrence of harmful restraints.” Yet, notwithstanding Cal Dental’s ruling that quick look applies “[where] an observer with even rudimentary understanding of economics could conclude that the arrangements in question have anticompetitive effect on customers and markets,” quick look has not caught on in the lower courts. Indeed, with the notable exception of the D.C. Circuit’s decision in Polygram Holding, Inc. v. F.T.C. (hereafter “Three Tenors”), the lower courts appear to have largely abandoned the quick look approach.
This article analyzes the evolution of the Rule of Reason, the emergence of quick look analysis, and its precipitous decline. It argues that the traditional unstructured Rule of Reason analysis articulated in Chicago Board of Trade is unworkable in that it is costly, unpredictable, and has significant risks of error. This article further argues that the structured, nuanced, fact–specific inquiry utilized in Three Tenors would provide “more clarity, greater predictability, fewer errors and less expense in antitrust litigation” and that the lower courts should embrace—not shun—quick look. It concludes that widespread adoption of the quick look approach by lower courts is unlikely. In Cal Dental, the Supreme Court missed an opportunity to clarify how the Rule of Reason should be applied in antitrust cases. Moreover, its decisions since Cal Dental have sent mixed signals on quick look. As a result, the concept of quick look, outside a narrow range of FTC cases, has largely become a dormant doctrine.