California Dental Association Case

What was the reason for the creation of the 2000 US Horizontal Collaboration Guidelines?

The FTC found that the California Dental Association had violated Article 1 of the Sherman Act. In concrete terms, it issued an order that prohibited the California Dental Association (CDA) from imposing a host of restrictions on the advertising and solicitation practices of its members. At the time it was thought by the FTC that it could apply a "quick look" analysis in finding that the conduct was illegal, without having to engaging in a full rule of reason analysis of its positive and negative impacts on competition. The Supreme Court, however, by a 5-4 majority, rejected the theory of the FTC. The Supreme Court held that the rule of reason applied in this case.

The FTC created the 2000 US Horizontal Collaboration Guidelines in order to clarify its policy in the wake of the California Dental Association case.

2000 US Horizontal Collaboration Guidelines

The "new" rule of reason under the US Horizontal Collaboration Guidelines is applicable to agreements between competitors in high-tech industries, although there is some discussion about the role of dynamic efficiencies. Carl Shapiro has argued that intellectual property law and antitrust law are not in conflict but are complementary in achieving dynamic efficiencies. It is worth examining the history of the rule of reason in the United States, because antitrust law has been thought of as achieving static efficiencies by the Chicago School. In particular, until the 1979 BMI decision of the US Supreme Court, the rule of reason had remained distinct from conduct such as prixe-fixing ancillary to joint ventures which had been held illegal per se. The BMI decision was the start of the development of a "truncated" rule of reason, which evolved through the 1986 NCAA decision and more recently the California Dental Association case. Eventually, the combination of these decisions led to the adoption of the 2000 US Horizontal Collaboration Guidelines. As high-tech industries increasingly become issues for antitrust, it is important for the "new" rule of reason to be adaptable to dynamic efficiencies; despite the problem of a criteria in relation to dynamic efficiencies, there have been some solutions proposed, in particular the consumer welfare test in relation to patent settlements proposed by Carl Shapiro. These principles could be introduced into Korea through the revision of the KFTC Horizontal Collaboration Guidelines which are somewhat out of date and have falled into disuse.