Peter C. Carstensen, Function Versus Consequence in Restraint of Trade Analysis, 53 U. Balt. L. Rev. 387 (2024).
Abstract
The conventional interpretation of the Sherman Act’s prohibition of agreements in restraint of trade is, at best, ambiguous and uncertain. Conduct such as price fixing among competitors is per se illegal, except when it is not. Although the stated basis for the distinction is unclear, the function of the agreement embodying the restraint explains the apparently conflicting results. Regrettably, courts and commentators usually employ this conventional classification framework that focuses on desirability of the putative consequences of specific agreements. These categories have intuitive appeal but lack substantive coherence. In contrast, the functional approach focuses on the nature of the agreement in restraint of trade itself. The core of this approach is the distinction between naked and ancillary restraints. The policy goal is the preservation of the market process rather than a primary concern for the consequences of specific restraints on any measure of economic welfare. It is the thesis of this essay that the functional approach provides a better method to explain and predict the results of specific cases. It is more consistent with the language and meaning of the Sherman Act. It is also a better method for the analysis of restraints of trade. Because, like the conventional framework, the functional approach necessarily must employ presumptions, its normative merit is contingent on the scope and application of those presumptions.
