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Arizona v. Maricopa Cty. Med. Soc'y - 457 U.S. 332, 102 S. Ct. 2466 (1982)

Rule:

The United States Supreme Court analyzes most restraints of trade under the so-called "rule of reason." As its name suggests, the rule of reason requires the factfinder to decide whether under all the circumstances of the case the restrictive practice imposes an unreasonable restraint on competition. 

Facts:

Respondent foundations for medical care were organized by respondent Maricopa County Medical Society and another medical society to promote fee-for-service medicine and to provide the community with a competitive alternative to existing health insurance plans. The foundations, by agreement of their member doctors, established the maximum fees the doctors may claim in full payment for health services provided to policyholders of specified insurance plans. Petitioner State of Arizona filed a complaint against respondents in Federal District Court, alleging that they were engaged in an illegal price-fixing conspiracy in violation of § 1 of the Sherman Act. The District Court denied the State's motion for partial summary judgment, but certified for interlocutory appeal the question whether the maximum-fee agreements were illegal per se under § 1 of the Sherman Act. The Court of Appeals affirmed the denial of the motion for partial summary judgment and held that the certified question could not be answered without evaluating the purpose and effect of the agreements at a full trial.

Issue:

Did agreements among competing member physicians to set maximum fees that they could claim in full payment for health services provided to policyholders violate § 1 of the Sherman Act, 15 U.S.C.S. § 1?

Answer:

Yes

Conclusion:

Section 1 prohibited every agreement in restraint of trade. Price fixing was deemed unlawful in and of itself. The rule of reason inquiry under § 1 ended once a price-fixing agreement was proven. The Court found that any combination that tampered with price structures was an unlawful activity. No inquiry into the economic justification particular to respondents' price-fixing agreements was permitted. Respondent medical societies were composed of individual practitioners who competed with one another for patients. As such, the agreements fit squarely into the horizontal price-fixing mold. Petitioner was entitled to partial summary judgment.

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