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Simple English definitions for legal terms
rule of reason
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A quick definition of rule of reason:
The rule of reason is a legal principle that applies to antitrust cases. It means that a business practice is only considered illegal if it unreasonably restricts competition. This is determined by looking at economic factors. The rule of reason is different from the per se rule, which assumes that certain practices are always illegal without considering their specific circumstances.
A more thorough explanation:
The Rule of Reason is a legal principle used in antitrust law. It states that a trade practice only violates the Sherman Antitrust Act if it is an unreasonable restraint of trade based on economic factors.
For example, if a company decides to merge with another company, the Rule of Reason would be used to determine if the merger would create a monopoly and harm competition. If the merger is found to be an unreasonable restraint of trade, it would be illegal under the Sherman Antitrust Act.
The Rule of Reason is different from the Per Se Rule, which assumes that certain practices are always illegal without considering their economic impact. The Rule of Reason allows for a more nuanced analysis of trade practices and their effects on competition.