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‘Dirty Tricks’ and Section One of the Sherman Act: Federalizing State Unfair Competition Law

Recently antitrust litigation has been characterized by the efforts of private parties to fit within section 1 of the Sherman Act conduct which normally would be triable under state law, or “garden variety” actions. However, state and federal antitrust laws do not regulate the same conduct. The federal courts apply a per se test based on the unlawful activities already determined by the Supreme Court. If not per se, then it applies the rule of reason. Under the rule of reason, liability is determined after a consideration of the various factors enumerated in Chicago Board of Trade decision. One primary consideration is the impact of the practice on competition within the relevant market. In federal courts, plaintiffs can be entitled to treble damages and attorney’s fees, which makes bringing state actions in federal court advantageous.This article examines two questions: whether Section 1 of the Sherman Act is applicable to “garden variety” competitive torts, and, if yes, then the second issue is whether the conduct should be deemed a per se violation or whether the legality of the challenged activity should be tested by the “rule of reason.” This article also adds a suggested approach for the rule of reason’s application.