Less Restrictive Alternatives and the Ancillary Restraints Doctrine

97 Pages Posted: 3 Nov 2020 Last revised: 3 Apr 2021

See all articles by Thomas Nachbar

Thomas Nachbar

University of Virginia School of Law

Date Written: February 2, 2021

Abstract

In Ohio v. American Express, both the majority and dissent injected into Supreme Court jurisprudence a new test for evaluating restraints under the rule of reason: a less restrictive alternatives test. Occasionally appearing in circuit court cases, less restrictive alternatives tests have not been a part of Supreme Court’s approach to the rule of reason, which generally balances the procompetitive and anticompetitive effects of a restraint. No previous Supreme Court case has offered less restrictive alternatives as part of its formulation of the rule of reason.

Nevertheless, by virtue of its adoption by the Ninth Circuit, a less restrictive alternatives test is now the subject of a pending Supreme Court case: Alston v. NCAA. Alston provides a rare opportunity for the Court to clarify the role that less restrictive alternatives should play in rule of reason analysis.

Although it has not explicitly mentioned less restrictive alternatives prior to American Express, the Supreme Court has discussed alternatives in antitrust cases, and many find in those cases a less restrictive alternatives test as a distinct step within the rule of reason. Careful analysis of the cases shows that the Court does not use a less restrictive alternatives test within the rule of reason. Nor should it. The boundaries of the less restrictive alternatives inquiry are not just vague, they are indescribable, and the test is likely to draw antitrust courts into increasingly strict review of restraints. Lessons drawn from other areas of law show that any real approach to “less” restrictive alternatives is likely to lead to a “least” restrictive alternatives test. Rigorous consideration of alternatives will chill innovation, with outsized effects on particular industries and restraints, particularly in two-sided platform markets and more generally in recently highly scrutinized “big tech” markets.

This paper considers the development of the less-restrictive means test in antitrust scholarship and commentary and consider how consideration of alternatives actually does, and should, inform antitrust analysis. The injection of less restrictive alternatives in rule of reason analysis reflects the need for increased attention to whether restraints are ancillary to productive transactions and highlights the need for a reinvigorated approach to the ancillary restraints doctrine.

Keywords: antitrust; rule of reason; ancillary restraints

JEL Classification: K21

Suggested Citation

Nachbar, Thomas, Less Restrictive Alternatives and the Ancillary Restraints Doctrine (February 2, 2021). Seattle University Law Review, Vol. 45, 2021, Virginia Public Law and Legal Theory Research Paper No. 2020-76, Virginia Law and Economics Research Paper No. 2020-18, Available at SSRN: https://ssrn.com/abstract=3723807 or http://dx.doi.org/10.2139/ssrn.3723807

Thomas Nachbar (Contact Author)

University of Virginia School of Law ( email )

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HOME PAGE: http://www.law.virginia.edu/fac/tbn4n

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