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The Supreme Court addressed a range of antitrust issues this Term and, in each of three cases, reversed an appellate court’s finding of liability. The trio of cases underscores the Court’s continuing focus on economic substance rather than legal formalism in evaluating whether business conduct gives rise to the kinds of competitive effects that the antitrust laws proscribe.

The Court clarified the application of the antitrust laws to joint ventures in Texaco, Inc. v. Dagher, 126 S. Ct. 1276, holding that a decision by joint venture partners to set the price of the joint venture product is not subject to per se liability. The opinion emphasized that the Court “presumptively applies rule of reason analysis” to any alleged violation of the Sherman Act, and that per se treatment is reserved for the narrow classes of conduct that “are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality.” The Court held that “the pricing policy challenged” in the case amounted “to little more than price setting by a single entity,” and that while this conduct “may be price fixing in a literal sense, it is not price fixing in the antitrust sense.” This decision provides joint venture partners increased confidence that per se liability will be applied only in rare cases, such as where the venture itself is a facade for illegal price-fixing or market division.

The Court addressed an important issue involving the intersection of patent and antitrust law in Illinois Tool Works, Inc. v. Independent Ink, Inc., 126 S. Ct. 1281, in which it reversed its long-criticized judicial presumption that a patent confers market power upon the patent holder. The Supreme Court did so unanimously, holding that “a patent does not necessarily confer market power on the patentee” and, therefore, “in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product.” This decision brings the law of tying in cases involving patented products into line with the rest of tying law.

In Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., 126 S. Ct. 860, the Court declined to find a violation of the Robinson-Patman Act in cases involving special-order products. The plaintiff Volvo dealer had alleged that Volvo violated the Act by offering different prices to different dealers for special-order trucks that were sold through a competitive bidding process. The Court reiterated the principle that the primary concern of antitrust law is inter-brand, not intra-brand, competition. The Court refused to accept an “interpretation [of the Robinson-Patman Act] geared more to the protection of existing competitors than to the stimulation of competition,” and ruled against the plaintiff dealer. The Court’s opinion leaves open the question whether the Robinson-Patman Act could ever be applied to sales involving special-order products sold through a customer-specific competitive bidding process, but suggests that such cases are likely to be rare.

The Court has granted certiorari in two antitrust cases for next term and issued an Invitation to the Solicitor General in a third. See “Business Cases to Watch for Next Term.”