California Civil Jury Instructions (CACI)

3411. Rule of Reason - Anticompetitive Versus Beneficial Effects

In deciding whether [name of defendant]'s challenged restraint had an anticompetitive or beneficial purpose or effect on competition, you should consider the results the restraint was intended to achieve or actually did achieve. In balancing these purposes or effects, you also may consider, among other factors, the following:

(a) The nature of the restraint;

(b) The probable effect of the restraint on the business involved;

(c) The history of the restraint;

(d) The reasonableness of the stated purpose for the restraint;

(e) The availability of less restrictive means to accomplish the stated purpose;

(f) The portion of the market affected by the restraint; [and]

(g) The extent of [name of defendant]'s market power; [and]

(h) [Insert other relevant consideration].

Sources and Authority

"The basic purpose of the antitrust laws is to prevent undue restraints upon trade which have a significant effect on competition. A contract, combination, or conspiracy is an illegal restraint of trade if it constitutes a per se violation of the statute or has as its purpose or effect an unreasonable restraint of trade. The determination of the existence of such an illegal restraint of trade turns upon findings of fact and involves 'weigh[ing] all of the circumstances of a case.' " (Corwin v. Los Angeles Newspaper Service Bur. (1978) 22 Cal.3d 302, 314-315 [148 Cal.Rptr. 918, 583 P.2d 777], internal citations omitted and footnotes.)

"Under the rule of reason, the court inquires into the nature and history of the restraint, as well as other relevant considerations." (Reynolds v. California Dental Service (1988) 200 Cal.App.3d 590, 596-597 [246 Cal.Rptr. 331], internal citations omitted.)

"The 'rule of reason' permits certain restraints upon trade to be found reasonable. In order to determine whether the restrictions are reasonable, 'the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts.' 'Whether a restraint of trade is reasonable is a question of fact to be determined at trial.' " (Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 727 [187 Cal.Rptr. 797], internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (9th ed. 1987) Contracts, §§ 575- 590

1 Antitrust Laws & Trade Regulation, Ch. 12, The Per Se Rule and the Rule of Reason, § 12.03 (Matthew Bender)

3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.168 (Matthew Bender)

49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition (Matthew Bender)

(New September 2003)