Rule of Reason Law and Legal Definition

Rule of reason is a judicial doctrine of antitrust law which says a trade practice violates the Sherman Act only if the practice is an unreasonable restraint of trade, based on economic factors. In order to determine whether there is unreasonable restraint 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.

By and large, the construction of the rule of reason inquiry has remained unaltered since the Supreme Court first articulated it in Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S. Ct. 242, 244, 62 L. Ed. 683 (1918).