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Like the sunspot cycle, the U.S. Supreme Court seems to take up antitrust cases in waves every few decades. While the court customarily hears an antitrust case or two each term, since the mid-1980s few decisions have strayed far from accepted doctrine. Instead, the court has been content to fine-tune principles articulated in its earlier decisions. Periodically, however, the court’s antitrust docket experiences a marked upswing in the number of cases, providing court watchers with more dots to connect in plotting the court’s trajectory. In its 2005 and 2006 terms, the court issued seven antitrust decisions, far more than usual. While no single decision is revolutionary, when analyzed as a group the decisions provide remarkable insight into the court’s thinking. Much of the early analysis of these decisions has contented itself with only a superficial conclusion � that the court seems to be increasingly hostile to antitrust plaintiffs. Some observers have attributed the court’s supposed “defendant-friendly” bias to its increasingly conservative approach in most areas. As a conservative bench, the thinking goes, the court will of course favor the interests of big business over the interests of individuals. Yet the cases making up the antitrust docket these days are not so much claims brought by individuals against businesses as they are claims brought between businesses � and many of the plaintiffs are sizable companies. It is hard to dismiss the court’s leanings as merely siding with business interests when in most antitrust cases businesses lie on both sides of the “v.” Something other than playing favorites between business and individuals is going on at the court. The nucleus of the antitrust laws is the Sherman Act, 15 U.S.C. 1, et seq. Referred to by the Supreme Court as the “Magna Carta of free enterprise,” U.S. v. Topco Associates, 405 U.S. 596, 610 (1972), the statute has remained substantially unchanged since its passage in 1890. Section 1 of the act prohibits “contracts, combinations and conspiracies in restraint of trade,” and 2 prohibits monopolization and attempted monopolization. The genesis of the statute is found in the early industrial age’s wariness regarding business conspiracies (especially those suspected of fixing prices or allocating markets) and a similar wariness regarding any single, very large enterprise. Thus, 1, which addresses multifirm conduct, is best understood as prohibiting agreements that unreasonably restrict competition, and 2, which generally addresses single-firm conduct, basically prohibits the unfair acquisition or use of substantial market power. Section 1 cases historically have provided the vast majority of antitrust filings, and they are the central focus of this analysis. While Congress’ blanket prohibition of “contracts, combinations and conspiracies in restraint of trade” was an easy drafting exercise, interpreting and applying this across-the-board prohibition has proven to be a vastly complex process. In practice, the bare-bones statutory language constituted little more than an invitation to the courts to develop a common law of competition, and the Supreme Court’s wholesale construction of competition law for a capitalist economy has been one of its most significant and enduring achievements. That process has involved some prolonged periods of dormancy or mere fine-tuning, followed by bursts of intense activity when the court moved antitrust law in dramatically new directions or to entirely new levels of sophistication. Antitrust fundamentals The first period of intense activity was in the early “trust-busting” era, when the court articulated revolutionary principles governing business competition in the rugged jungle of free enterprise. During this period, the court developed its fundamental distinction between “per se” violations (generally, price-fixing and the like) and those to be governed by the court-invented “rule of reason.” According to the court, not all business “conspiracies” (or “agreements,” to use modern terminology) are prohibited by the Sherman Act, but only those that harm the competitive system more than they advance it. Some agreements, like price-fixing and other “naked” restraints, are so clearly anti-competitive that they can be condemned outright under the per se rule; otherwise, each agreement should be evaluated under the rule of reason, rising and falling on its individual competitive merits. The court refined this amorphous standard during its second period of intense activity, from the mid-1970s to the mid-1980s, when it imported economic analysis to provide the rules for determining whether any particular agreement challenged under the rule of reason was “net pro-competitive” (and thus “reasonable” under the rule of reason) or “net anti-competitive” (and thus “unreasonable”). The court’s reliance upon sophisticated economic analysis to resolve all but the most obvious cases provided much greater assurance that the outcomes would be correct in individual cases, but it also made these cases among the most prolonged, sophisticated and difficult disputes to litigate. And that is where the court’s recent burst of intense activity � the 2005 and 2006 terms � becomes highly relevant. The court’s docket has been shrinking dramatically in recent years. In the early 1980s, the number of cases heard by the court reached historical highs, only to drop by 50% just more than a decade later. See David M. O’Brien, “Join-3 Votes, the Rule of Four, the Cert. Pool, and the Supreme Court’s Shrinking Plenary Docket,” 13 J.L. & Pol. 779, 780 (1997). Remarkably, while its docket overall has been shrinking, the antitrust docket has mushroomed. The uptick in the court’s antitrust docket is not the product of randomness; instead, the court has decided that this area deserves greater supervision and explication. Here is a very brief summary of the individual decisions: Texaco Inc. v. Dagher, 547 U.S. 1 (2006), reversed a 9th U.S. Circuit Court of Appeals decision applying the per se rule to condemn a joint venture by Texaco and Shell to consolidate their operations in the Western states. Instead, the court said, the lower courts should apply the rule of reason to assess the pricing decisions of a legitimate joint venture. Illinois Tool Works Inc. v. Independent Ink, 547 U.S. 28 (2006) (overruling Morton Salt, 314 U.S. 488), reversed a Federal Circuit decision that had applied a well-accepted, long-standing doctrine that the existence of a patent gave rise to a presumption of market power in the patented product. Instead, said the court, even when patents exist, market power must be proven, not presumed, by individually assessing the markets in each case. Volvo Trucks North America Inc. v. Reeder-Simco GMC Inc., 546 U.S. 164 (2006), reversed an 8th Circuit finding of price discrimination under the Robinson Patman Act, holding instead that to establish a claim for price discrimination, a disfavored buyer must show that the manufacturer discriminated between the buyer and another dealer contemporaneously competing to resell the manufacturer’s products to the same retail customer. Weyerhauser Co. v. Ross-Simmons Hardwood Lumber Co. Inc., 127 S. Ct. 1069 (2007), reversed a 9th Circuit decision that incorrectly applied an eased standard to an antitrust plaintiff asserting claims of predatory bidding. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007) (overturning Conley v. Gibson, 355 U.S. 41), reversed a 2d Circuit decision that had allowed a thinly pleaded claim of conspiracy to survive a motion to dismiss. Credit Suisse Securities (USA) LLC v. Billing, 127 S. Ct. 2383 (2007), reversed a 2d Circuit decision that had allowed an antitrust class action to proceed when the claim was “clearly incompatible” with the securities laws. Leegin Creative Leather Prods. Inc. v. PSKS Inc., 127 S. Ct. 2705 (2007) (overturning Dr. Miles Medical Co., 220 U.S. 373), reversed a 5th Circuit decision that had applied the per se rule to sustain an antitrust challenge to vertical minimum-resale-price agreements. While none of these ranks among the most important antitrust decisions of all time, as a group they are highly significant and informative. First, by virtue of sheer volume, the antitrust decisions of the 2005 and 2006 terms will rank among the highest outputs of any two-year period in the court’s history. Furthermore, each of these seven decisions reversed a circuit court decision favoring an antitrust plaintiff. Three of the seven decisions overturned long-standing plaintiff-friendly precedents. For these reasons, and as noted earlier, the antitrust decisions of the 2005 and 2006 terms are popularly viewed to be the work of a conservative court erecting roadblocks to plaintiffs as part of a pro-business agenda. However, something much more sophisticated, and much more important, is going on in these cases. A closer look shows that these cases are not the product of the court’s conservative wing. In fact, the authors of the majority opinions in the seven cases are justices Anthony M. Kennedy ( Leegin); Stephen G. Breyer ( Credit Suisse); David H. Souter ( Bell Atlantic); Ruth Bader Ginsburg ( Volvo Trucks); John Paul Stevens ( Illinois Tool Works); and Clarence Thomas ( Dagher and Weyerhauser). And the traditionally “liberal” and centrist justices are the authors of the opinions overturning the court’s plaintiff-friendly precedents � Kennedy wrote the Leegin opinion overturning Dr. Miles; Stevens authored the Illinois Tool Works opinion overturning Morton Salt; and Souter wrote the Bell Atlantic opinion overturning Conley v. Gibson. Moreover, the court was remarkably unified in virtually all of these cases; three were decided unanimously and, aside from Leegin, which was the court’s only 5-4 antitrust decision in either term, the remainder of these cases have had at most two dissenters. So what is to be made of a fairly unified court, speaking largely through its center-left, jettisoning well-established precedent and consistently reversing to create rules that, without exception, favor antitrust defendants? Some have seen this as the death knell for antitrust, but that is wishful thinking or high anxiety speaking, depending on the analyst’s source of income. Overlooked in this discussion is something quite significant. Leaving Credit Suisse aside for the moment, none of the remaining decisions changes the law to make conduct that was previously unlawful suddenly lawful. Put another way, every antitrust claim that was cognizable under the law as it stood before these decisions remains cognizable afterward. Even Credit Suisse does not go so far as to give the court’s blessing to conduct that was previously unlawful. Instead, that case holds that the securities markets are best regulated, and are adequately regulated, under the securities laws, and the court withholds an antitrust remedy in this area because it finds that remedy to be incompatible with the regime created under the securities laws. Thus, in the 2005 and 2006 terms, the court has moved some conduct from the per se category into the rule of reason category and eliminated presumptions that might distort outcomes in some or all cases. Notably, conduct that historically has been seen as unlawful remains unlawful, even though per se treatment has been withheld and the standard of proof may have been changed. Precision and reliability Perhaps the best way to understand this fascinating group of cases as a unified phenomenon is to recall that the court first developed antitrust law by constructing simple rules (the per se rule and the rule of reason) to differentiate lawful from unlawful conduct. Eventually realizing that these rules were blunt instruments, the court then adopted principles of economic analysis to provide much more precise and reliable (although complicated) means for assessing antitrust claims on their individual merits. Because these tools are much more precise and reliable, courts need no longer utilize rigid rules and presumptions, which are rapidly disappearing in antitrust jurisprudence. The present difficulty is that the Supreme Court has created a complicated legal and economic machine that, although at least theoretically capable of resolving every dispute with perfect accuracy, has become exceptionally difficult to operate. To address the operational difficulty inherent in applying an economics-centric analytical model, the court has done three things. First, whenever possible and desirable, the court has consigned operation of this complicated analytical machine to expert regulators it deems better situated to get things right than would-be nonexpert judges and untutored juries. See Credit Suisse. Second, the court has articulated heightened pleading and proof requirements that make it easier to weed out nonmeritorious claims during the initial stages of litigation, before such claims can distort the competitive system or develop artificially high settlement value. See Bell Atlantic, Volvo Trucks and Weyerhauser. Third, the court has stripped out presumptions that in earlier years might have fueled nonmeritorious claims (and by definition an antitrust claim lacks merit if it would fail when assessed on its facts but could have prevailed by relying on a presumption). See Illinois Tool Works. Fourth, the court has rejected a per se approach as painting with too broad a brush. See Texaco and Leegin. All of these decisions drill down to the same bedrock principle: Because antitrust claims by virtue of their scope and magnitude can constitute a significant drag on the competitive system, courts need sufficient analytical tools to weed out false positives sooner rather than later in the litigation process. And that’s exactly what the court provides in this very important set of cases. Thane D. Scott is a partner in the Boston office of Bingham McCutchen and is a member of the firm’s antitrust and trade regulation practice group. Scott actively litigates in both state and federal courts and has served as lead or liaison counsel in numerous multidistrict, complex and class action cases.

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