The Per se violation

Q: Does the per se rule apply to all anti-competitive agreements?

No. The per se rule is reserved for only the most clearly anti-competitive actions, such as price fixing and market allocation among competitors. Most other agreements are evaluated under the more flexible Rule of Reason.

Q: If my company engaged in price fixing but it failed, are we still liable?

Yes. Under the per se rule, the attempt or agreement to fix prices is the violation, regardless of whether the scheme successfully raised prices or harmed consumers. The violation is complete upon the formation of the agreement.

Meta Description:

Understand the ‘Per Se Violation’ rule in U.S. Antitrust Law. This guide explains how certain anti-competitive agreements, like price fixing, are deemed illegal without proof of market harm, covering key case types and their implications for businesses.

Understanding the Per Se Violation Rule in Antitrust Law

Navigating the complexities of competition law, particularly in the United States, requires a solid grasp of key legal concepts. One of the most critical doctrines is the ‘Per Se Violation’ rule. This rule dramatically simplifies the prosecution of certain anti-competitive agreements, holding that some actions are inherently illegal, regardless of their actual effect on the market or their purported justification.

For businesses, especially those involved in collaborations, joint ventures, or competitor agreements, understanding what constitutes a per se violation is vital for compliance and risk management. This post provides a clear overview of this strict rule within U.S. Antitrust Law.

What Exactly is a Per Se Violation?

In U.S. Antitrust Law, specifically under the Sherman Act, agreements that unreasonably restrain trade are illegal. Courts traditionally analyze restraints using one of two standards: the Rule of Reason or the Per Se Rule.

💡 Legal Expert Tip:

The Latin term “per se” means “by itself” or “in itself.” A per se violation is one where the mere existence of the agreement constitutes the offense, making it instantly illegal without a deep dive into its economic consequences.

The Rule of Reason vs. The Per Se Rule

Standard	Analysis Required	Burden of Proof
Rule of Reason (Standard Approach)	A detailed, fact-intensive inquiry into the pro-competitive benefits versus the anti-competitive harms of the agreement.	Plaintiff must prove the net anti-competitive effect.
Per Se Rule (Strict Approach)	None. The agreement is deemed illegal per se because it is “manifestly anti-competitive.”	Plaintiff only needs to prove the existence of the agreement.

The Supreme Court reserves the per se rule for agreements that “experience has shown to be manifestly anti-competitive” and lack any redeeming competitive virtue. When an action is classified as a per se violation, courts will not consider evidence of the defendants’ good intentions or that the agreement actually benefited consumers or the market.

Key Agreements Classified as Per Se Violations

The per se rule is typically applied to agreements among competitors (horizontal agreements) that fall into clear categories of anti-competitive behavior. These are generally considered the most egregious forms of antitrust violations.

The most common types of per se violations include:

Price Fixing: An agreement among competitors to raise, lower, maintain, or stabilize prices. This is the quintessential per se violation.
Bid Rigging: Competitors agree on who will win a bid and at what price, often submitting sham bids to create the appearance of competition.
Market or Customer Allocation: Competitors agree to divide up territories, customers, or product lines among themselves, eliminating competition within those assigned areas.
Group Boycotts (or Refusals to Deal): Agreements among competitors to exclude other competitors from the market. While not all boycotts are per se illegal, those that are nakedly anti-competitive and lack any plausible efficiency justification often are.

Case Scenario Snapshot (Anonymized)

A group of regional plumbing contractors met secretly and agreed to increase their standard service call fee by 15% across the board. They also agreed that Contractor A would only bid on jobs in the North District, and Contractor B would only bid in the South District.

Legal Classification: This scenario involves both Price Fixing and Market Allocation. Both elements would be treated as per se violations under U.S. Antitrust Law. The contractors’ defense that they needed to raise prices to cover rising supply costs would be irrelevant under the strict per se rule.

Implications for Businesses and Enforcement

The application of the per se rule has profound consequences for legal proceedings:

Simplified Proof: Prosecutors or plaintiffs need only prove the existence of the agreement and that it fits the per se category. They are relieved of the difficult task of proving actual economic harm to the market.
Deterrence: The strictness of the rule serves as a powerful deterrent. Businesses know that engaging in these core anti-competitive acts automatically exposes them to liability.
Criminal Penalties: Price fixing, bid rigging, and market allocation are often pursued as criminal felonies by the Department of Justice, leading to substantial fines for companies and prison sentences for individuals.
Civil Liability: Victims of per se violations can sue for damages, which are subject to mandatory trebling (tripling) under the Clayton Act, significantly increasing the financial risk for violators.

⚠️ Cautionary Note

Even informal discussions or ‘gentlemen’s agreements’ that appear to restrain trade can be interpreted as illegal conspiracies. Businesses must implement robust compliance programs to prevent employees from engaging in any communication with competitors regarding pricing, bids, or customer assignments.

Summary of the Per Se Rule

Key Takeaways on Per Se Violations

A per se violation is an anti-competitive agreement that is considered inherently illegal in U.S. Antitrust Law, such as Price Fixing, Bid Rigging, and Market Allocation.
The primary difference from the Rule of Reason is that no market analysis or proof of harm is required; the agreement itself is sufficient evidence of illegality.
The rule is applied only to agreements that have been shown through experience to be manifestly anti-competitive and without redeeming value.
Violations carry severe civil consequences (treble damages) and potential criminal penalties (fines and imprisonment).

Card Summary: The Per Se Rule

The Per Se Rule is a cornerstone of U.S. Antitrust Law. It classifies a narrow group of anti-competitive horizontal agreements—chiefly Price Fixing and Market Allocation—as illegal “by itself.” This means courts assume these actions always harm competition, bypassing the extensive economic analysis required by the Rule of Reason. The consequence for violators is swift liability and severe punishment, underscoring the need for strict business compliance.

Frequently Asked Questions (FAQ)

Q1: Does the per se rule apply to all anti-competitive agreements?

A: No. The per se rule is reserved for only the most clearly anti-competitive actions, such as price fixing and market allocation among competitors. Most other agreements are evaluated under the more flexible Rule of Reason.

Q2: What is the primary benefit of the per se rule for prosecutors?

A: The primary benefit is procedural efficiency. Prosecutors do not have to conduct a complex, time-consuming market analysis to prove anti-competitive effects, needing only to prove the agreement itself.

Q3: If my company engaged in price fixing but it failed, are we still liable?

A: Yes. Under the per se rule, the attempt or agreement to fix prices is the violation, regardless of whether the scheme successfully raised prices or harmed consumers. The violation is complete upon the formation of the agreement.

Q4: Are vertical agreements (between a supplier and a retailer) subject to the per se rule?

A: Generally, no. Most vertical restraints (e.g., minimum resale price maintenance or territorial restrictions) are now evaluated under the Rule of Reason, though some, like maximum resale price maintenance, may have varying treatment depending on jurisdiction and context.

Q5: Where can I find the statutes related to per se violations?

A: The core statutes are the Sherman Act (Section 1), the Clayton Act, and the Federal Trade Commission Act, which form the basis of U.S. Antitrust Law.

Legal Disclaimer: This post provides general information on the per se violation rule in U.S. Antitrust Law and is automatically generated by an AI assistant based on professional sources. It does not constitute specific legal advice or legal counsel. For complex legal matters or interpretation of specific case law, you should consult with a qualified Legal Expert.

Closing Statement: Understanding the non-negotiable nature of per se violations is the first step toward robust antitrust compliance. Protect your business by ensuring your competitive actions remain within the bounds of the law.

Civil, Contract, Fraud, Filing & Motions, Compliance, How-to Guides, Supreme Court, Federal Courts, Case Law, Statutes & Codes, Legal Procedures, Trials & Hearings, Appeals, Legal Resources

geunim