Rule of reason

A doctrine in antitrust law which states that only unreasonable restraints of trade are prohibited. Thus, in most cases of alleged anticompetitive behavior, the specific facts must be examined to decide whether an antitrust violation has occurred. For example, an exclusive contract between a hospital and a group of radiologists is anticompetitive on its face; that is, it precludes other radiologists from practicing in the hospital. However, courts have decided, by applying the Rule of Reason, that such arrangements may be upheld for reasons of quality of care, administrative efficiency, or other valid institutional goals. By contrast, if the per se standard were applied, the exclusive contract would be illegal regardless of its purpose. In health care cases, courts have been more likely to apply the Rule of Reason analysis than they have been in other industries.


 


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