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Polygram Holding, Inc. v. Federal Trade Commission

United States Court of Appeals for the District of Columbia Circuit
416 F. 3D 29 (D.C. CIR. 2005)


Facts

The Three Tenors put on extremely popular concerts in 1990, 1994, and 1998. PolyGram Holding, Inc. (PolyGram) (defendant) distributed the recording of the 1990 concert, and Warner Communications, Inc. (Warner) (defendant) distributed the recording of the 1994 concert. PolyGram and Warner signed an agreement to distribute the recording of the 1998 concert jointly. The companies also agreed to a moratorium on any advertising or discounting of recordings of the 1990 and 1994 concerts in order to prevent recordings of the older concerts from eating into sales of the 1998 recording. The Federal Trade Commission (FTC) (plaintiff) brought an enforcement action against PolyGram and Warner and found that moratorium agreement violated antitrust law. PolyGram and Warner appealed the FTC’s order, arguing that the agreement benefitted the long-term sales prospects of recordings of all three concerts.

Rule of Law

Issue

Holding and Reasoning (Ginsburg, C.J.)

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Questions & Answers


Why is Rule of Reason used after finding anticompetitive effect under quick look?

I was under the impression that Quick Look was used in order to determine if facially anticompetitive restraints were violations of the Sherman Act. If a person with rudimentary understanding of economics found anticompetitive effect, that was the end of the inquiry. Only raising the inquiry to full Rule of Reason where it was not readily apparent that there was anti-competitive effect. Here it seems Ginsburg is saying if anticompetitive effect is found in Quick Look, move onto Rule of Reason... am I mistaken?

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