Court rulings on anti-trust ca
Court rulings on anti-trust cases tend to follow one of twoprinciples, the rule of reason or the per se rule. Which of thesetwo principles do you believe should guide courts in ruling on ananti-trust case. Write a 250 word posting in which you state andjustify your selection.
Answer:
Solution
As said above,the anti-trust cases tend to follow one of twoprinciples, the rule of reason (or) the per se rule.
The rule ofreason – According to this principle,the courts /authorities which monitor the competition in the market evaluatethe pro-competitive features of the business decision of the firmagainst it’s anti-competitive features inorder to arrive at adecision whether to not to prohibit (or) to prohibit the firm’sdecision.
Example:For Example,in a telecom industry,if a player A withdeep pockets plans to acquire an another ailing player B whose isunable to provide the consumers with good services due to lack ofcapital but having a very good presence in some markets (say oneamong top 2 players).So,here there are both positive and negativeimpact associated with the acquisition.Positive effect is byacquiring the company B, A can provide quality services to thecustomers in all the markets in which B is presently existing.
Negative effect is that it elimiating competition in themarkets,causing the market to become monoplistic in nature.
So the court will take the dedcision where to say yes (or) no tothis business decison of company A
Theper-se-rule:
This is completely in contrast with the rule of reason.Here,theauthorities will not consider the positives and negatives of thebusiness decision but simply see whether the decision is in linewith pre-set rules and regulations defined to say whether a decisonis legal (or) illegal.
Example:Consider the same situation as above.So, the court /regulatory authority while decide that this decision of the firm isillegal if it is mentioned the same in the pre-setrules/regualtions regardless of whether this decison is benefittingthe customer.(Say) will declare the firm’s decision as illegal eventhough the acquistion is benefitting the customers and industry asa whole since according to the regulation,acquiring a competitorwho is having a consderable market is anti-competitive.
I would preferrule of reason principle as it is reasonable :
The rules/ regulations are not always up-to date withthe present market conditions.So,what may be true when the rule isframed may not be reasonable / relevant now as the marketconditions have changed – markets have become dynamic and volatilethese days.
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