Rule or Reason? The Role of Balancing in Antitrust Law

In this Essay, we argue that the proper test for antitrust’s rule of reason is a four-step, burden-shifting framework that ends with a balancing of the likely harms and benefits of particular conduct. One reason balancing has become rare even in circuits that permit it is that it seems hard. Antitrust is shot through with economic theory and evidence, and courts aren’t experts in economics. So they tend to look for shortcuts that allow them to resolve the case without having to apply that economic evidence to assess the likely net effect of a defendant’s conduct.

But those shortcuts themselves reflect (often implicit) economic judgments, and those judgments are frequently wrong, or at least contestable. Further, the entire project of the Chicago School approach to antitrust has been to reject a prior set of shortcuts (in the form of the per se rule) on the grounds that the economic effects of many sorts of conduct were too complicated for simple rules. But that logic cuts both ways. If we are to ground antitrust analysis in the rule of reason because simple rules get it wrong, that analysis needs to employ reason, not just rules.