Justice Stevens

delivered the opinion of the Court.

The University of Oklahoma and the University of Georgia contend that the National Collegiate Athletic Association has unreasonably restrained trade in the televising of college football games. After an extended trial, the District Court found that the NCAA had violated § 1 of the Sherman Act1 and granted injunctive relief. 546 F. Supp. 1276 (WD Okla. 1982). The Court of Appeals agreed that the statute had been violated but modified the remedy in some respects. 707 F. 2d 1147 (CA10 1983). We granted certiorari, 464 U. S. 913 (1983), and now affirm.

I

The NCAA

Since its inception in 1905, the NCAA has played an important role in the regulation of amateur collegiate sports. It has adopted and promulgated playing rules, standards of amateurism, standards for academic eligibility, regulations concerning recruitment of athletes, and rules governing the size of athletic squads and coaching staffs. In some sports, such as baseball, swimming, basketball, wrestling, and track, it has sponsored and conducted national tournaments. It has not done so in the sport of football, however. With the *89exception of football, the NCAA has not undertaken any regulation of the televising of athletic events.2

The NCAA has approximately 850 voting members. The regular members are classified into separate divisions to reflect differences in size and scope of their athletic programs. Division I includes 276 colleges with major athletic programs; in this group only 187 play intercollegiate football. Divisions II and III include approximately 500 colleges with less extensive athletic programs. Division I has been subdivided into Divisions I-A and I-AA for football.

Some years ago, five major conferences together with major football-playing independent institutions organized the College Football Association (CFA). The original purpose of the CFA was to promote the interests of major football-playing schools within the NCAA structure. The Universities of Oklahoma and Georgia, respondents in this Court, are members of the CFA.

History of the NCAA Television Plan

In 1938, the University of Pennsylvania televised one of its home games.3 From 1940 through the 1950 season all of Pennsylvania’s home games were televised. App. 303. That was the beginning of the relationship between television and college football.

On January 11, 1951, a three-person “Television Committee,” appointed during the preceding year, delivered a report to the NCAA’s annual convention in Dallas. Based on preliminary surveys, the committee had concluded that “television does have an adverse effect on college football attendance and unless brought under some control threatens to seriously harm the nation’s overall athletic and physical *90system.” Id., at 265. The report emphasized that “the television problem is truly a national one and requires collective action by the colleges.” Id., at 270. As a result, the NCAA decided to retain the National Opinion Research Center (NORC) to study the impact of television on live attendance, and to declare a moratorium on the televising of football games. A television committee was appointed to implement the decision and to develop an NCAA television plan for 1951. Id., at 277-278.

The committee’s 1951 plan provided that only one game a week could be telecast in each area, with a total blackout on 3 of the 10 Saturdays during the season. A team could appear on television only twice during a season. The plan also provided that the NORC would conduct a systematic study of the effects of the program on attendance. Id., at 279. The plan received the virtually unanimous support of the NCAA membership; only the University of Pennsylvania challenged it. Pennsylvania announced that it would televise all its home games. The council of the NCAA thereafter declared Pennsylvania a member in bad standing and the four institutions scheduled to play at Pennsylvania in 1951 refused to do so. Pennsylvania then reconsidered its decision and abided by the NCAA plan. Id., at 280-281.

During each of the succeeding five seasons, studies were made which tended to indicate that television had an adverse effect on attendance at college football games. During those years the NCAA continued to exercise complete control over the number of games that could be televised. Id., at 325-359.

From 1952 through 1977 the NCAA television committee followed essentially the same procedure for developing its television plans. It would first circulate a questionnaire to the membership and then use the responses as a basis for formulating a plan for the ensuing season. The plan was then submitted to a vote by means of a mail referendum. Once approved, the plan formed the basis for NCAA’s negotiations *91with the networks. Throughout this period the plans retained the essential purposes of the original plan. See 546 F. Supp., at 1283.4 Until 1977 the contracts were all for either 1- or 2-year terms: In 1977 the NCAA adopted “principles of negotiation” for the future and discontinued the practice of submitting each plan for membership approval. Then the NCAA also entered into its first 4-year contract granting exclusive rights to the American Broadcasting Cos. (ABC) for the 1978-1981 seasons. ABC had held the exclusive rights to network telecasts of NCAA football games since 1965. Id., at 1283-1284.

The Current Plan

The plan adopted in 1981 for the 1982-1985 seasons is at issue in this case.5 This plan, like each of its predecessors, recites that it is intended to reduce, insofar as possible, the adverse effects of live television upon football game attendance.6 It provides that “all forms of television of the football *92games of NCAA member institutions during the Plan control periods shall be in accordance with this Plan.” App. 35. The plan recites that the television committee has awarded rights to negotiate and contract for the telecasting of college football games of members of the NCAA to two “carrying networks.” Id., at 36. In addition to the principal award of rights to the carrying networks, the plan also describes rights for a “supplementary series” that had been awarded for the 1982 and 1983 seasons,7 as well as a procedure for permitting specific “exception telecasts.”8

In separate agreements with each of the carrying networks, ABC and the Columbia Broadcasting System (CBS), the NCAA granted each the right to telecast the 14 live “exposures” described in the plan, in accordance with the “ground rules” set forth therein.9 Each of the networks agreed to pay a specified “minimum aggregate compensation *93to the participating NCAA member institutions” during the 4-year period in an amount that totaled $131,750,000. In essence the agreement authorized each network to negotiate directly with member schools for the right to televise their games. The agreement itself does not describe the method of computing the compensation for each game, but the practice that has developed over the years and that the District Court found would be followed under the current agreement involved the setting of a recommended fee by a representative of the NCAA for different types of telecasts, with national telecasts being the most valuable, regional telecasts being less valuable, and Division II or Division III games commanding a still lower price.10 The aggregate of all these payments presumably equals the total minimum aggregate compensation set forth in the basic agreement. Except for differences in payment between national and regional telecasts, and with respect to Division II and Division III games, the amount that any team receives does not change with the size of the viewing audience, the number of markets in which the game is telecast, or the particular characteristic of the game or the participating teams. Instead, the “ground rules” provide that the carrying networks make alternate selections of those games they wish to televise, and thereby obtain the exclusive right to submit a bid at an essentially fixed price to the institutions involved. See 546 F. Supp., at 1289-1293.11

*94The plan also contains “appearance requirements” and “appearance limitations” which pertain to each of the 2-year periods that the plan is in effect. The basic requirement imposed on each of the two networks is that it must schedule appearances for at least 82 different member institutions during each 2-year period. Under the appearance limitations no member institution is eligible to appear on television more than a total of six times and more than four times nationally, with the appearances to be divided equally between the two carrying networks. See id., at 1293. The number of exposures specified in the contracts also sets an absolute maximum on the number of games that can be broadcast.

Thus, although the current plan is more elaborate than any of its predecessors, it retains the essential features of each of them. It limits the total amount of televised intercollegiate football and the number of games that any one team may televise. No member is permitted to make any sale of television rights except in accordance with the basic plan.

Background of this Controversy

Beginning in 1979 CFA members began to advocate that colleges with major football programs should have a greater voice in the formulation of football television policy than they had in the NCAA. CFA therefore investigated the possibility of negotiating a television agreement of its own, devel*95oped an independent plan, and obtained a contract offer from the National Broadcasting Co. (NBC). This contract, which it signed in August 1981, would have allowed a more liberal number of appearances for each institution, and would have increased the overall revenues realized by CFA members. See id., at 1286.

In response the NCAA publicly announced that it would take disciplinary action against any CFA member that complied with the CFA-NBC contract. The NCAA made it clear that sanctions would not be limited to the football programs of CFA members, but would apply to other sports as well. On September 8, 1981, respondents commenced this action in the United States District Court for the Western District of Oklahoma and obtained a preliminary injunction preventing the NCAA from initiating disciplinary proceedings or otherwise interfering with CFA’s efforts to perform its agreement with NBC. Notwithstanding the entry of the injunction, most CFA members were unwilling to commit themselves to the new contractual arrangement with NBC in the face of the theatened sanctions and therefore the agreement was never consummated. See id., at 1286-1287.

Decision of the District Court

After a full trial, the District Court held that the controls exercised by the NCAA over the televising of college football games violated the Sherman Act. The District Court defined the relevant market as “live college football television” because it found that alternative programming has a significantly different and lesser audience appeal. Id., at 1297-1300.12 The District Court then concluded that the NCAA *96controls over college football are those of a “classic cartel” with an

“almost absolute control over the supply of college football which is made available to the networks, to television advertisers, and ultimately to the viewing public. Like all other cartels, NCAA members have sought and achieved a price for their product which is, in most instances, artificially high. The NCAA cartel imposes production limits on its members, and maintains mechanisms for punishing cartel members who seek to stray from these production quotas. The cartel has established a uniform price for the products of each of the member producers, with no regard for the differing quality of these products or the consumer demand for these various products.” Id., at 1300-1301.

The District Court found that competition in the relevant market had been restrained in three ways: (1) NCAA fixed the price for particular telecasts; (2) its exclusive network contracts were tantamount to a group boycott of all other potential broadcasters and its threat of sanctions against its own members constituted a threatened boycott of potential competitors; and (3) its plan placed an artificial limit on the production of televised college football. Id., at 1293-1295.

In the District Court the NCAA offered, two principal justifications for its television policies: that they protected the gate attendance of its members and that they tended to preserve a competitive balance among the football programs of the various schools. The District Court rejected the first justification because the evidence did not support the claim that college football television adversely affected gate attendance. Id., at 1295-1296. With respect to the “competitive balance” argument, the District Court found that the evidence failed to show that the NCAA regulations on matters such as recruitment and the standards for preserving amateurism were not sufficient to maintain an appropriate balance. Id., at 1296.

*97 Decision of the Court of Appeals

The Court of Appeals held that the NCAA television plan constituted illegal per se price fixing, 707 F. 2d, at 1152.13 It rejected each of the three arguments advanced by NCAA to establish the procompetitive character of its plan.14 First, the court rejected the argument that the television plan promoted live attendance, noting that since the plan involved a concomitant reduction in viewership the plan did not result in a net increase in output and hence was not procompetitive. Id., at 1153-1154. Second, the Court of Appeals rejected as illegitimate the NCAA’s purpose of promoting athletically balanced competition. It held that such a consideration amounted to an argument that “competition will destroy the market” — a position inconsistent with the policy of the Sherman Act. Moreover, assuming arguendo that the justification was legitimate, the court agreed with the District Court’s finding “that any contribution the plan made to athletic balance could be achieved by less restrictive means.” Id., at 1154. Third, the Court of Appeals refused to view the NCAA plan as competitively justified by the need to compete effectively with other types of television programming, since it entirely eliminated competition between producers of football and hence was illegal per se. Id., at 1155-1156.

Finally, the Court of Appeals concluded that even if the television plan were not per se illegal, its anticompetitive limitation on price and output was not offset by any *98procompetitive justification sufficient to save the plan even when the totality of the circumstances was examined. Id., at 1157-1160.16 The case was remanded to the District Court for an appropriate modification in its injunctive decree. Id., at 1162.16

II

There can be no doubt that the challenged practices of the NCAA constitute a “restraint of trade” in the sense that they limit members’ freedom to negotiate and enter into their own television contracts. In that sense, however, every contract is a restraint of trade, and as we have repeatedly recognized, the Sherman Act was intended to prohibit only unreasonable restraints of trade.17

*99It is also undeniable that these practices share characteristics of restraints we have previously held unreasonable. The NCAA is an association of schools which compete against each other to attract television revenues, not to mention fans and athletes. As the District Court found, the policies of the NCAA with respect to television rights are ultimately controlled by the vote of member institutions. By participating in an association which prevents member institutions from competing against each other on the basis of price or kind of television rights that can be offered to broadcasters, the NCAA member institutions have created a horizontal restraint — an agreement among competitors on the way in which they will compete with one another.18 A restraint of this type has often been held to be unreasonable as a matter of law. Because it places a ceiling on the number of games member institutions may televise, the horizontal agreement places an artificial limit on the quantity of televised football that is available to broadcasters and consumers. By restraining the quantity of television rights available for sale, the challenged practices create a limitation on output; our cases have held that such limitations are unreasonable restraints of trade.19 Moreover, the District Court found that the minimum aggregate price in fact operates to preclude any price negotiation between broadcasters and institutions, *100thereby constituting horizontal price fixing, perhaps the paradigm of an unreasonable restraint of trade.20

Horizontal price fixing and output limitation are ordinarily condemned as a matter of law under an “illegal per se” approach because the probability that these practices are anti-competitive is so high; a per se rule is applied when “the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output.” Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 19-20 (1979). In such circumstances a restraint is presumed unreasonable without inquiry into the particular market context in which it is found. Nevertheless, we have decided that it would be inappropriate to apply a per se rule to this case. This decision is not based on a lack of judicial experience with this type of arrangement,21 on the fact that the NCAA is organized as a nonprofit entity,22 or on *101our respect for the NCAA’s historic role in the preservation and encouragement of intercollegiate amateur athletics.23 Rather, what is critical is that this case involves an industry-in which horizontal restraints on competition are essential if the product is to be available at all.

As Judge Bork has noted: “[S]ome activities can only be carried out jointly. Perhaps the leading example is league sports. When a league of professional lacrosse teams is formed, it would be pointless to declare their cooperation illegal on the ground that there are no other professional lacrosse teams.” R. Bork, The Antitrust Paradox 278 (1978). What the NCAA and its member institutions market in this case is competition itself — contests between competing institutions. Of course, this would be completely ineffective if there were no rules on which the competitors agreed to create and define the competition to be marketed. A myriad of rules affecting such matters as the size of the field, the number of players on a team, and the extent to which physical violence is to be encouraged or proscribed, all must be agreed upon, and all restrain the manner in which institutions compete. Moreover, the NCAA seeks to market a particular brand of football — college football. The identification of this “product” with an academic tradition differentiates *102college football from and makes it more popular than professional sports to which it might otherwise be comparable, such as, for example, minor league baseball. In order to preserve the character and quality of the “product,” athletes must not be paid, must be required to attend class, and the like. And the integrity of the “product” cannot be preserved except by mutual agreement; if an institution adopted such restrictions unilaterally, its effectiveness as a competitor on the playing field might soon be destroyed. Thus, the NCAA plays a vital role in enabling college football to preserve its character, and as a result enables a product to be marketed which might otherwise be unavailable. In performing this role, its actions widen consumer choice — not only the choices available to sports fans but also those available to athletes — and hence can be viewed as procompetitive.24

*103 Broadcast Music squarely holds that a joint selling arrangement may be so efficient that it will increase sellers’ aggregate output and thus be procompetitive. See 441 U. S., at 18-23. Similarly, as we indicated in Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 51-57 (1977), a restraint in a limited aspect of a market may actually enhance marketwide competition. Respondents concede that the great majority of the NCAA’s regulations enhance competition among member institutions. Thus, despite the fact that this case involves restraints on the ability of member institutions to compete in terms of price and output, a fair evaluation of their competitive character requires consideration of the NCAA’s justifications for the restraints.

Our analysis of this case under the Rule of Reason, of course, does not change the ultimate focus of our inquiry. Both per se rules and the Rule of Reason are employed “to form a judgment about the competitive significance of the restraint.” National Society of Professional Engineers v. United States, 435 U. S. 679, 692 (1978). A conclusion that a restraint of trade is unreasonable may be

“based either (1) on the nature or character of the contracts, or (2) on surrounding circumstances giving rise to the inference or presumption that they were intended to restrain trade and enhance prices. Under either branch of the test, the inquiry is confined to a consideration of impact on competitive conditions.” Id., at 690 (footnotes omitted).

Per se rules are invoked when surrounding circumstances make the likelihood of anticompetitive conduct so great as to *104render unjustified further examination of the challenged conduct.25 But whether the ultimate finding is the product of a presumption or actual market analysis, the essential inquiry remains the same — whether or not the challenged restraint enhances competition.26 Under the Sherman Act the criterion to be used in judging the validity of a restraint on trade is its impact on competition.27

I — ( 1 — I I — I

Because it restrains price and output, the NCAA’s television plan has a significant potential for anticompetitive effects.28 The findings of the District Court indicate that this *105potential has been realized. The District Court found that if member institutions were free to sell television rights, many-more games would be shown on television, and that the NCAA’s output restriction has the effect of raising the price the networks pay for television rights.29 Moreover, the *106court found that by fixing a price for television rights to all games, the NCAA creates a price structure that is unresponsive to viewer demand and unrelated to the prices that would prevail in a competitive market.30 And, of course, since as a practical matter all member institutions need NCAA approval, members have no real choice but to adhere to the NCAA’s televison controls.31

The anticompetitive consequences of this arrangement are apparent. Individual competitors lose their freedom to comp*107ete.32 Price is higher and output lower than they would otherwise be, and both are unresponsive to consumer preference.33 This latter point is perhaps the most significant, since “Congress designed the Sherman Act as a ‘consumer welfare prescription.’” Reiter v. Sonotone Corp., 442 U. S. 330, 343 (1979). A restraint that has the effect of reducing the importance of consumer preference in setting price and output is not consistent with this fundamental goal of antitrust law.34 Restrictions on price and output are the paradigmatic examples of restraints of trade that the Sherman *108Act was intended to prohibit. See Standard Oil Co. v. United States, 221 U. S. 1, 52-60 (1911).35 At the same time, the television plan eliminates competitors from the market, since only those broadcasters able to bid on television rights covering the entire NCAA can compete.36 Thus, as the District Court found, many telecasts that would occur in a competitive market are foreclosed by the NCAA’s plan.37

*109Petitioner argues, however, that its television plan can have no significant anticompetitive effect since the record indicates that it has no market power — no ability to alter the interaction of supply and demand in the market.38 We must reject this argument for two reasons, one legal, one factual.

As a matter of law, the absence of proof of market power does not justify a naked restriction on price or output. To the contrary, when there is an agreement not to compete in terms of price or output, “no elaborate industry analysis is required to demonstrate the anticompetitive character of such an agreement.” Professional Engineers, 435 U. S., at 692.39 Petitioner does not quarrel with the District Court’s *110finding that price and output are not responsive to demand. Thus the plan is inconsistent with the Sherman Act’s command that price and supply be responsive to consumer preference.40 We have never required proof of market power in such a case.41 This naked restraint on price and output requires some competitive justification even in the absence of a detailed market analysis.42

*111As a factual matter, it is evident that petitioner does possess market power. The District Court employed the correct test for determining whether college football broadcasts constitute a separate market — whether there are other products that are reasonably substitutable for televised NCAA football games.43 Petitioner’s argument that it cannot obtain supracompetitive prices from broadcasters since advertisers, and hence broadcasters, can switch from college football to other types of programming simply ignores the findings of the District Court. It found that intercollegiate football telecasts generate an audience uniquely attractive to advertisers and that competitors are unable to offer programming that can attract a similar audience.44 These findings amply support its conclusion that the NCAA possesses market power.45 Indeed, the District Court’s subsidiary finding that advertisers will pay a premium price per viewer to reach audiences watching college football because of their demographic characteristics46 is vivid evidence of the uniqueness of this product.47 Moreover, the District Court’s market *112analysis is firmly supported by our decision in International Boxing Club of New York, Inc. v. United States, 358 U. S. 242 (1959), that championship boxing events are uniquely attractive to fans48 and hence constitute a market separate from that for nonchampionship events. See id., at 249-252.49 Thus, respondents have demonstrated that there is a separate market for telecasts of college football which “rest[s] on generic qualities differentiating” viewers. Times-Picayune Publishing Co. v. United States, 345 U. S. 594, 613 (1953). It inexorably follows that if college football broadcasts be defined as a separate market — and we are convinced they are — then the NCAA’s complete control over those broadcasts provides a solid basis for the District Court’s conclusion that the NCAA possesses market power with respect to those broadcasts. “When a product is controlled by one interest, without substitutes available in the market, there is monopoly power.” United States v. E. I. du Pont de Nemours & Co., 351 U. S. 377, 394 (1956).50

*113Thus, the NCAA television plan on its face constitutes a restraint upon the operation of a free market, and the findings of the District Court establish that it has operated to raise prices and reduce output. Under the Rule of Reason, these hallmarks of anticompetitive behavior place upon petitioner a heavy burden of establishing an affirmative defense which competitively justifies this apparent deviation from the operations of a free market. See Professional Engineers, 435 U. S., at 692-696. We turn now to the NCAA’s proffered justifications.

IV

Relying on Broadcast Music, petitioner argues that its television plan constitutes a cooperative “joint venture” which assists in the marketing of broadcast rights and hence is procompetitive. While joint ventures have no immunity from the antitrust laws,51 as Broadcast Music indicates, a joint selling arrangement may “mak[e] possible a new product by reaping otherwise unattainable efficiencies.” Arizona v. Maricopa County Medical Society, 457 U. S. 332, 365 (1982) (Powell, J., dissenting) (footnote omitted). The essential contribution made by the NCAA’s arrangement is to define the number of games that may be televised, to establish the price for each exposure, and to define the basic terms of each contract between the network and a home team. The NCAA does not, however, act as a selling agent for any school or for any conference of schools. The selection of individual games, and the negotiation of particular agreements, are matters left to the networks and the individual schools. Thus, the effect of the network plan is not to eliminate individual sales of broadcasts, since these still occur, albeit subject to fixed prices and output limitations. Unlike Broadcast Music’s blanket license covering broadcast rights *114to a large number of individual compositions, here the same rights are still sold on an individual basis, only in a noncompetitive market.

The District Court did not find that the NCAA’s television plan produced any procompetitive efficiencies which enhanced the competitiveness of college football television rights; to the contrary it concluded that NCAA football could be marketed just as effectively without the television plan.52 There is therefore no predicate in the findings for petitioner’s efficiency justification. Indeed, petitioner’s argument is refuted by the District Court’s finding concerning price and output. If the NCAA’s television plan produced pro-competitive efficiencies, the plan would increase output and reduce the price of televised games. The District Court’s contrary findings accordingly undermine petitioner’s position. In light of these findings, it cannot be said that “the agreement on price is necessary to market the product at all.” Broadcast Music, 441 U. S., at 23.53 In Broadcast Music, the availability of a package product that no individual could offer enhanced the total volume of music that was sold. Unlike this case, there was no limit of any kind placed on the volume that might be sold in the entire market and each individual remained free to sell his own music without restraint. Here production has been limited, not enhanced.54 *115No individual school is free to televise its own games without restraint. The NCAA’s efficiency justification is not supported by the record.

Neither is the NCAA’s television plan necessary to enable the NCAA to penetrate the market through an attractive package sale. Since broadcasting rights to college football constitute a unique product for which there is no ready substitute, there is no need for collective action in order to enable the product to compete against its nonexistent competitors.55 This is borne out by the District Court’s finding that the NCAA’s television plan reduces the volume of television rights sold.

V

Throughout the history of its regulation of intercollegiate football telecasts, the NCAA has indicated its concern with protecting live attendance. This concern, it should be noted, is not with protecting live attendance at games which are shown on television; that type of interest is not at issue in this case. Rather, the concern is that fan interest in a televised game may adversely affect ticket sales for games that will not appear on television.56

Although the NORC studies in the 1950’s provided some support for the thesis that live attendance would suffer if *116unlimited television were permitted,57 the District Court found that there was no evidence to support that theory in today’s market.58 Moreover, as the District Court found, the television plan has evolved in a manner inconsistent with its original design to protect gate attendance. Under the current plan, games are shown on television during all hours that college football games are played. The plan simply does not protect live attendance by ensuring that games will not be shown on television at the same time as live events.59

There is, however, a more fundamental reason for rejecting this defense. The NCAA’s argument that its television plan is necessary to protect live attendance is not based on a desire to maintain the integrity of college football as a distinct and attractive product, but rather on a fear that the product will not prove sufficiently attractive to draw live attendance when faced with competition from televised games. At bottom the NCAA’s position is that ticket sales for most college games are unable to compete in a free market.60 The *117television plan protects ticket sales by limiting output—-just as any monopolist increases revenues by reducing output. By seeking to insulate live ticket sales from the full spectrum of competition because of its assumption that the product itself is insufficiently attractive to consumers, petitioner forwards a justification that is inconsistent with the basic policy of the Sherman Act. “[T]he Rule of Reason does not support a defense based on the assumption that competition itself is unreasonable.” Professional Engineers, 435 U. S., at 696.

VI

Petitioner argues that the interest in maintaining a competitive balance among amateur athletic teams is legitimate and important and that it justifies the regulations challenged in this case. We agree with the first part of the argument but not the second.

Our decision not to apply a per se rule to this case rests in large part on our recognition that a certain degree of cooperation is necessary if the type of competition that petitioner and its member institutions seek to market is to be preserved.61 It is reasonable to assume that most of the regulatory controls of the NCAA are justifiable means of fostering competition among amateur athletic teams and therefore procompetitive because they enhance public interest in intercollegiate athletics. The specific restraints on football telecasts that are challenged in this case do not, however, fit into the same mold as do rules defining the conditions of the contest, the eligibility of participants, or the manner in which members of a joint enterprise shall share the responsibilities and the benefits of the total venture.

The NCAA does not claim that its television plan has equalized or is intended to equalize competition within any *118one league.62 The plan is nationwide in scope and there is no single league or tournament in which all college football teams compete. There is no evidence of any intent to equalize the strength of teams in Division I-A with those in Division II or Division III, and not even a colorable basis for giving colleges that have no football program at all a voice in the management of the revenues generated by the football programs at other schools.63 The interest in maintaining a competitive balance that is asserted by the NCAA as a justification for regulating all television of intercollegiate football is not related to any neutral standard or to any readily identifiable group of competitors.

*119The television plan is not even arguably tailored to serve such an interest. It does not regulate the amount of money that any college may spend on its football program, nor the way in which the colleges may use the revenues that are generated by their football programs, whether derived from the sale of television rights, the sale of tickets, or the sale of concessions or program advertising.64 The plan simply imposes a restriction on one source of revenue that is more important to some colleges than to others. There is no evidence that this restriction produces any greater measure of equality throughout the NCAA than would a restriction on alumni donations, tuition rates, or any other revenue-producing activity. At the same time, as the District Court found, the NCAA imposes a variety of other restrictions designed to preserve amateurism which are much better tailored to the goal of competitive balance than is the television plan, and which are “clearly sufficient” to preserve competitive balance to the extent it is within the NCAA’s power to do so.65 And much more than speculation supported the District Court’s findings on this score. No other NCAA sport employs a similar plan, and in particular the court found that in the most closely analogous sport, college basketball, competitive balance has been maintained without resort to a restrictive television plan.66

Perhaps the most important reason for rejecting the argument that the interest in competitive balance is served by the television plan is the District Court’s unambiguous and well-supported finding that many more games would be televised in a free market than under the NCAA plan. The hypothesis that legitimates the maintenance of competitive balance as a procompetitive justification under the Rule of *120Reason is that equal competition will maximize consumer demand for the product.67 The finding that consumption will materially increase if the controls are removed is a compelling demonstration that they do not in fact serve any such legitimate purpose.68

VII

The NCAA plays a critical role in the maintenance, of a revered tradition of amateurism in college sports. There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of the Sherman Act. But'consistent with the Sherman Act, the role of the NCAA must be to preserve a tradition that might otherwise die; rules that restrict output are hardly consistent with this role. Today we hold only that the record supports the District Court’s conclusion that by curtailing output and blunting the ability of member institutions to respond to consumer preference, the NCAA has restricted rather than enhanced the place of intercollegiate athletics in the Nation’s life. Accordingly, the judgment of the Court of Appeals is

Affirmed.

Justice White,

with whom Justice Rehnquist joins, dissenting.

The NCAA is an unincorporated, nonprofit, educational association whose membership includes almost 800 nonprofit public and private colleges and universities and more than *121100 nonprofit athletic conferences and other organizations. Formed in 1905 in response to a public outcry concerning abuses in intercollegiate athletics, the NCAA, through its annual convention, establishes policies and rules governing its members’ participation in college sports, conducts national championships, exerts control over some of the economic aspects of revenue-producing sports, and engages in some more-or-less commercial activities. See Note, Tackling Intercollegiate Athletics: An Antitrust Analysis, 87 Yale L. J. 655, 656-657 (1978). Although some of the NCAA’s activities, viewed in isolation, bear a resemblance to those undertaken by professional sports leagues and associations, the Court errs in treating intercollegiate athletics under the NCAA’s control as a purely commercial venture in which colleges and universities participate solely, or even primarily, in the pursuit of profits. Accordingly, I dissent.

I-H

“While it would be fanciful to suggest that colleges are not concerned about the profitability of their ventures, it is clear that other, non-commercial goals play a central role in their sports programs.” J. Weistart & C. Lowell, The Law of Sports § 5.12 (1979). The NCAA’s member institutions have designed their competitive athletic programs “to be a vital part of the educational system.” Constitution and Interpretations of the NCAA, Art. II, § 2(a) (1982-1983), reprinted in App. 216. Deviations from this goal, produced by a persistent and perhaps inevitable desire to “win at all costs,” have in the past led, and continue to lead, to a wide range of competitive excesses that prove harmful to students and institutions alike. See G. Hanford, Report to the American Council on Education, An Inquiry into the Need for and Feasibility of a National Study of Intercollegiate Athletics 74-76 (1974) (Hanford); Marco, The Place of Intercollegiate Athletics in Higher Education: The Responsibility of the Faculty, 31 J. Higher Educ. 422, 426 (1968). The fundamental policy *122underlying the NCAA’s regulatory program, therefore, is to minimize such deviations and “to maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body and, by so doing, retain a clear line of demarcation between college athletics and professional sports.” Constitution and Interpretations of the NCAA, Art. II, §2(a), reprinted in App. 216. See 546 F. Supp. 1276, 1309 (WD Okla.1982).

The NCAA, in short, “exist[s] primarily to enhance the contribution made by amateur athletic competition to the process of higher education as distinguished from realizing maximum return on it as an entertainment commodity.” Association for Intercollegiate Athletics for Women v. NCAA, 558 F. Supp. 487, 494 (DC 1983), aff’d, 236 U. S. App. D. C. 311, 735 F. 2d 577 (1984). In pursuing this goal, the organization and its members seek to provide a public good — a viable system of amateur athletics — that most likely could not be provided in a perfectly competitive market. See Hennessey v. NCAA, 564 F. 2d 1136, 1153 (CA5 1977). “Without regulation, the desire of member institutions to remain athletically competitive would lead, them to engage in activities that deny amateurism to the public. No single institution could confidently enforce its own standards since it could not trust its competitors to do the same.” Note, Antitrust and Nonprofit Entities, 94 Harv. L. Rev. 802, 817-818 (1981). The history of intercollegiate athletics prior to the advent of the NCAA provides ample support for this conclusion. By mitigating what appears to be a clear failure of the free market to serve the ends and goals of higher education, the NCAA ensures the continued availability of a unique and valuable product, the very existence of which might well be threatened by unbridled competition in the economic sphere.

In pursuit of its fundamental goal and others related to it, the NCAA imposes numerous controls on intercollegiate athletic competition among its members, many of which “are similar to those which are summarily condemned when *123undertaken in a more traditional business setting.” • Weistart & Lowell, supra, §5.12.b. Thus, the NCAA has promulgated and enforced rules limiting both the compensation of student-athletes, see, e. g., Justice v. NCAA, 577 F. Supp. 356 (Ariz. 1983), and the number of coaches a school may hire for its football and basketball programs, see, e. g., Hennessey v. NCAA, supra; it also has prohibited athletes who formerly have been compensated for playing from participating in intercollegiate competition, see, e. g., Jones v. NCAA, 392 F. Supp. 295 (Mass. 1975), restricted the number of athletic scholarships its members may award, and established minimum academic standards for recipients of those scholarships; and it has pervasively regulated the recruitment process, student eligibility, practice schedules, squad size, the number of games played, and many other aspects of intercollegiate athletics. See 707 F. 2d 1147, 1153 (CA10 1983); 546 F. Supp., at 1309. One clear effect of most, if not all, of these regulations is to prevent institutions with competitively and economically successful programs from taking advantage of their success by expanding their programs, improving the quality of the product they offer, and increasing their sports revenues. Yet each of these regulations represents a desirable and legitimate attempt “to keep university athletics from becoming professionalized to the extent that profit making objectives would overshadow educational objectives.” Kupec v. Atlantic Coast Conference, 399 F. Supp. 1377, 1380 (MDNC 1975). Significantly, neither the Court of Appeals nor this Court questions the validity of these regulations under the Rule of Reason. See ante, at 100-102, 117; 707 F. 2d, at 1153.

Notwithstanding the contrary conclusion of the District Court, 546 F. Supp., at 1316, and the majority, ante, at 117,1 do not believe that the restraint under consideration in this case — the NCAA’s television plan — differs fundamentally for antitrust purposes from the other seemingly anticompet-itive aspects of the organization’s broader program of self-*124regulation. The television plan, like many of the NCAA’s actions, furthers several complementary ends. Specifically, the plan is designed

“to reduce, insofar as possible, the adverse effects of live television . . . upon football game attendance and, in turn, upon the athletic and related educational programs dependent upon the proceeds therefrom; to spread football television participation among as many colleges as practicable; to reflect properly the image of universities as educational institutions; to promote college football through the use of television, to advance the overall interests of intercollegiate athletics, and to provide college football television to the public to the extent compatible with these other objectives.” App. 35.

See also id., at 244, 323, 640, 651, 672. More generally, in my view, the television plan reflects the NCAA’s fundamental policy of preserving amateurism and integrating athletics and education. Nor does the District Court’s finding that the plan is intended to maximize television revenues, 546 F. Supp., at 1288-1289, 1315-1316, warrant any implication that the NCAA and its member institutions pursue this goal without regard to the organization’s stated policies.

Before addressing the infirmities in the Court’s opinion, I should state my understanding of what the Court holds. To do so, it is necessary first to restate the essentials of the NCAA’s television plan and to refer to the course of this case in the lower courts. Under the plan at issue, 4-year contracts were entered into with the American Broadcasting Cos. (ABC), Columbia Broadcasting System (CBS), and Turner Broadcasting System (Turner) after competitive bidding. Every fall, ABC and CBS were to present 14 exposures of college football and Turner would show 19 evening games. The overall price for each network was stated in the contracts. The networks select the games to be telecast and pay directly to the colleges involved what has developed to be *125a uniform fee for each game telecast. Unless within one of the exceptions, only the designated number of games may be broadcast, and no NCAA member may arrange for televising its games other than pursuant to the plan. Under this scheme, of course, NCAA members must compete against one another for television appearances, although this competition is limited somewhat by the fact that no college may appear on television more than six times in any 2-year period. In 1983, 242 games were televised, 89 network games and 153 under the exceptions provided in the television plan. In 1983, 173 schools appeared on television, 89 on network games and an additional 84 teams under the exceptions. Report of the 1983 NCAA Football Television Committee to the 78th Annual Convention of the NCAA 61-65 (1984).1

The District Court held that the plan constituted price fixing and output limitation illegal per se under § 1 of the Sherman Act; it also held that the scheme was an illegal group boycott, was monopolization forbidden by § 2, and was in any event an unreasonable restraint of trade. It then entered an injunction that for all practical purposes excluded the NCAA from interfering with or regulating its members’ arrangements for televising their football games. The Court of Appeals, while disagreeing with the boycott and monopolization holdings, otherwise upheld the District Court’s judgment that the television plan violated the Sherman Act, focusing almost entirely on the price-fixing and output-limiting aspects of the television plan. The Court of Appeals, however, differed with the District Court with respect to the injunction. After noting that the injunction vested exclusive control of television rights in the individual schools, the court stated that, “[w]hile we hold that the NCAA cannot *126lawfully maintain exclusive control of the rights, how far such rights may be commonly regulated involves speculation that should not be made on the record of the instant case.” 707 F. 2d, at 1162. The court expressly stated, for example, that the NCAA could prevent its members from telecasting games on Friday night in competition with high school games, ibid., emphasized that the disparity in revenue between schools could be reduced by “[a] properly drawn system of pass-over payments to ensure adequate athletic funding for schools that do not earn substantial television revenues,” id., at 1159, and indicated that it was not outlawing “membership-wide contracts] with opt-out and pass-over payment provisions, or blackout rules.” Id., at 1162. It nevertheless left the District Court’s injunction in full force and remanded the case for further proceedings in light of its opinion. Anticipating that the Court would grant certiorari, I stayed the judgment of the Court of Appeals. 463 U. S. 1311 (1983).

In affirming the Court of Appeals, the Court first holds that the television plan has sufficient redeeming virtues to escape condemnation as a per se violation of the Sherman Act, this because of the inherent characteristics of competitive athletics and the justifiable role of the NCAA in regulating college athletics. It nevertheless affirms the Court of Appeals’ judgment that the NCAA plan is an unreasonable restraint of trade because of what it deems to be the plan’s price-fixing and output-limiting aspects. As I shall explain, in reaching this result, the Court traps itself in commercial antitrust rhetoric and ideology and ignores the context in which the restraints have been imposed. But it is essential at this point to emphasize that neither the Court of Appeals nor this Court purports to hold that the NCAA may not (1) require its members who televise their games to pool and share the compensation received among themselves, with other schools, and with the NCAA; (2) limit the number of times any member may arrange to have its games shown on *127television; or (3) enforce reasonable blackout rules to avoid head-to-head competition for television audiences. As I shall demonstrate, the Court wisely and correctly does not condemn such regulations. What the Court does affirm is the Court of Appeals’ judgment that the NCAA may not limit the number of games that are broadcast on television and that it may not contract for an overall price that has the effect of setting the price for individual game broadcast rights.2 I disagree with the Court in these respects.

II

“In a competitive market,” the District Court observed, “each football-playing institution would be an independent seller of the right to telecast its football games. Each seller would be free to sell that right to any entity it chose,” and “for whatever price it could get.” 546 F. Supp., at 1318. Under the NCAA’s television plan, member institutions’ competitive freedom is restrained because, for the most part, television rights are bought and sold, not on a per-game basis, but as a package deal. With limited exceptions not particularly relevant to antitrust scrutiny of the plan, broadcasters wishing to televise college football must be willing and able to purchase a package of television rights without knowing in advance the particular games to which those rights apply. The real negotiations over price and terms take place between the broadcasters and the NCAA rather *128than between the broadcasters and individual schools. Knowing that some games will be worth more to them than others, the networks undoubtedly exercise whatever bargaining power they possess to ensure that the minimum aggregate compensation they agree to provide for the package bears some relation to the average value to them of the games they anticipate televising. Because some schools’ games contribute disproportionately to the total value of the package, see id., at 1293, the manner in which the minimum aggregate compensation is distributed among schools whose games are televised has given rise to a situation under which less prominent schools receive more in rights fees than they would receive in a competitive market and football powers like respondents receive less. Id., at 1315.

As I have said, the Court does not hold, nor did the Court of Appeals hold, that this redistributive effect alone would be sufficient to subject the television plan to condemnation under § 1 of the Sherman Act. Nor should it, for an agreement to share football revenues to a certain extent is an essential aspect of maintaining some balance of strength among competing colleges and of minimizing the tendency to professionalism in the dominant schools. Sharing with the NCAA itself is also a price legitimately exacted in exchange for the numerous benefits of membership in the NCAA, including its many-faceted efforts to maintain a system of competitive, amateur athletics. For the same reasons, limiting the number of television appearances by any college is an essential attribute of a balanced amateur athletic system. Even with shared television revenues, unlimited appearances by a few schools would inevitably give them an insuperable advantage over all others and in the end defeat any efforts to maintain a system of athletic competition among amateurs who measure up to college scholastic requirements.

The Court relies instead primarily on the District Court’s findings that (1) the television plan restricts output; and (2) the plan creates a noncompetitive price structure that is unresponsive to viewer demand. Ante, at 104-106. See, *129 e. g., 546 F. Supp., at 1318-1319. These findings notwithstanding, I am unconvinced that the television plan has a substantial anticompetitive effect.

First, it is not clear to me that the District Court employed the proper measure of output. I am not prepared to say that the District Court’s finding that “many more college football games would be televised” in the absence of the NCAA controls, id., at 1294, is clearly erroneous. To the extent that output is measured solely in terms of the number of televised games, I need not deny that it is reduced by the NCAA’s television plan. But this measure of output is not the proper one. The District Court found that eliminating the plan would reduce the number of games on network television and increase the number of games shown locally and regionally. Id., at 1307. It made no finding concerning the effect of the plan on total viewership, which is the more appropriate measure of output or, at least, of the claimed anticompetitive effects of the NCAA plan. This is the NCAA’s position, and it seems likely to me that the television plan, by increasing network coverage at the expense of local broadcasts, actually expands the total television audience for NCAA football. The NCAA would surely be an irrational “profit maximizer” if this were not the case. In the absence of a contrary finding by the District Court, I cannot conclude that respondents carried their burden of showing that the television plan has an adverse effect on output and is therefore anticompetitive.

Second, and even more important, I am unconvinced that respondents have proved that any reduction in the number of televised college football games brought about by the NCAA’s television plan has resulted in an anticompetitive increase in the price of television rights. The District Court found, of course, that “the networks are actually paying the large fees because the NCAA agrees to limit production. If the NCAA would not agree to limit production, the networks would not pay so large a fee.” Id., at 1294. Undoubtedly, this is true. But the market for television rights to college football competitions should not be equated to the markets *130for wheat or widgets. Reductions in output by monopolists in most product markets enable producers to exact a higher price for the same product. By restricting the number of games that can be televised, however, the NCAA creates a new product — exclusive television rights — that are more valuable to networks than the products that its individual members could market independently.

The television plan makes a certain number of games available for purchase by television networks and limits the incidence of head-to-head competition between football telecasts for the available viewers. Because competition is limited, the purchasing network can count on a larger share of the audience, which translates into greater advertising revenues and, accordingly, into larger payments per game to the televised teams. There is thus a relationship between the size of the rights payments and the value of the product being purchased by the networks; a network purchasing a series of games under the plan is willing to pay more than would one purchasing the same games in the absence of the plan since the plan enables the network to deliver a larger share of the available audience to advertisers and thus to increase its own revenues. In short, by focusing only on the price paid by the networks for television rights rather than on the nature and quality of the product delivered by the NCAA and its member institutions, the District Court, and this Court as well, may well have deemed anticompetitive a rise in price that more properly should be attributed to an increase in output, measured in terms of viewership.

Third, the District Court’s emphasis on the prices paid for particular games seems misdirected and erroneous as a matter of law. The distribution of the minimum aggregate fees among participants in the television plan is, of course, not’ wholly based on a competitive price structure that is responsive to viewer demand and is only partially related to the value those schools contribute to the total package the networks agree to buy. But as I have already indicated, see *131 supra, at 128, this “redistribution” of total television revenues is a wholly justifiable, even necessary, aspect of maintaining a system of truly competitive college teams. As long as the NCAA cannot artificially fix the price of the entire package and demand supercompetitive prices, this aspect of the plan should be of little concern.' And I find little, if anything, in the record to support the notion that the NCAA has power to extract from the television networks more than the broadcasting rights are worth in the marketplace.

Ill

Even if I were convinced that the District Court did not err in failing to look to total viewership, as opposed to the number of televised games, when measuring output and anti-competitive effect and in failing fully to consider whether the NCAA possesses power to fix the package price, as opposed to the distribution of that package price among participating teams, I would nevertheless hold that the television plan passes muster under the Rule of Reason. The NCAA argues strenuously that the plan and the network contracts “are part of a joint venture among many of the nation’s universities to create a product—high-quality college football— and offer that product in a way attractive to both fans in the stadiums and viewers on [television]. The cooperation in producing the product makes it more competitive against other [television] (and live) attractions.” Brief for Petitioner 15. The Court recognizes that, “[i]f the NCAA faced ‘interbrand’ competition from available substitutes, then certain forms of collective action might be appropriate in order to enhance its ability to compete.” Ante, at 115, n. 55. See Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 54-57 (1977). It rejects the NCAA’s proffered pro-competitive justification, however, on the ground that college football is a unique product for which there are no available substitutes and “there is no need for collective action in *132order to enable the product to compete against its nonexistent competitors.” Ante, at 115 (footnote omitted). This proposition is singularly unpersuasive.

It is one thing to say that “NCAA football is a unique product,” 546 P. Supp., at 1299, that “intercollegiate football telecasts generate an audience uniquely attractive to advertisers and that competitors are unable to offer programming that can attract a similar audience.” Ante, at 111 (footnote omitted). See 707 F. 2d, at 1158-1159; 546 F. Supp., at 1298-1300. It is quite another, in my view, to say that maintenance or enhancement of the quality of NCAA football telecasts is unnecessary to enable those telecasts to compete effectively against other forms of entertainment. The NCAA has no monopoly power when competing against other types of entertainment. Should the quality of the NCAA’s product “deteriorate to any perceptible degree or should the cost of ‘using’ its product rise, some fans undoubtedly would turn to another form of entertainment.... Because of the broad possibilities for alternative forms of entertainment,” the NCAA “properly belongs in the broader ‘entertainment’ market rather than in . . . [a] narrower marke[t]” like sports or football. Grauer, Recognition of the National Football League as a Single Entity Under Section 1 of the Sherman Act: Implications of the Consumer Welfare Model, 82 Mich. L. Rev. 1, 34, n. 156 (1983). See National Football League v. North American Soccer League, 459 U. S. 1074, 1077 (1982) (Rehnquist, J., dissenting from the denial of certio-rari); R. Atwell, B. Grimes, & D. Lopiano, The Money Game 32-33 (1980); Hanford, at 67; J. Michener, Sports in America 208-209 (1976); Note, 87 Yale L. J., at 661, and n. 31.

The NCAA has suggested a number of plausible ways in which its television plan might enhance the ability of college football telecasts to compete against other forms of entertainment. Brief for Petitioner 22-25. Although the District Court did conclude that the plan is “not necessary for effective marketing of the product,” 546 F. Supp., at 1307, its *133finding was directed only at the question whether college football telecasts would continue in the absence of the plan. It made no explicit findings concerning the effect of the plan on viewership and thus did not reject the factual premise of the NCAA’s argument that the plan might enhance competition by increasing the market penetration of NCAA football. See also 707 F. 2d, at 1154-1156, 1160. The District Court’s finding that network coverage of NCAA football would likely decrease if the plan were struck down, 546 F. Supp., at 1307, in fact, strongly suggests the validity of the NCAA’s position. On the record now before the Court, therefore, I am not prepared to conclude that the restraints imposed by the NCAA’s television plan are “such as may suppress or even destroy competition” rather than “such as merely regulat[e] and perhaps thereby promot[e] competition.” Chicago Board of Trade v. United States, 246 U. S. 231, 238 (1918).

<1

Finally, I return to the point with which I began — the essentially noneconomic nature of the NCAA’s program of self-regulation. Like Judge Barrett, who dissented in the Court of Appeals, I believe that the lower courts “erred by subjugating the NCAA’s educational goals (and, incidentally, those which Oklahoma and Georgia insist must be maintained in any event) to the purely competitive commercialism of [an] ‘every school for itself’ approach to television contract bargaining.” 707 F. 2d, at 1168. Although the NCAA does not enjoy blanket immunity from the antitrust laws, cf. Goldfarb v. Virginia State Bar, 421 U. S. 773 (1975), it is important to remember that the Sherman Act “is aimed primarily at combinations having commercial objectives and is applied only to a very limited extent to organizations . . . which normally have other objectives.” Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U. S. 207, 213, n. 7 (1959).

The fact that a restraint operates on nonprofit educational institutions as distinguished from business entities is as “rele*134vant in determining whether that particular restraint violates the Sherman Act” as is the fact that a restraint affects a profession rather than a business. Goldfarb v. Virginia State Bar, supra, at 788, n. 17. Cf. Community Communications Co. v. Boulder, 455 U. S. 40, 56, n. 20 (1982). The legitimate noneconomic goals of colleges and universities should not be ignored in analyzing restraints imposed by associations of such institutions on their members, and these noneconomic goals “may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently.” Goldfarb v. Virginia State Bar, supra, at 788, n. 17. The Court of Appeals, like the District Court, flatly refused to consider what it termed “noneconomic” justifications advanced by the NCAA in support of the television plan. It was of the view that our decision in National Society of Professional Engineers v. United States, 435 U. S. 679 (1978), precludes reliance on noneconomic factors in assessing the reasonableness of the television plan. 707 F. 2d, at 1154; see Tr. of Oral Arg. 24-25. This view was mistaken, and I note that the Court does not in so many words repeat this error.

Professional Engineers did make clear that antitrust analysis usually turns on “competitive conditions” and “economic conceptions.” 435 U. S., at 690, and n. 16. Ordinarily, “the inquiry mandated by the Rule of Reason is whether the challenged agreement is one that promotes competition or one that suppresses competition.” Id., at 691. The purpose of antitrust analysis, the Court emphasized, “is to form a judgment about the competitive significance of the restraint; it is not to decide whether a policy favoring competition is in the public interest, or in the interest of the members of an industry.” Id., at 692. Broadly read, these statements suggest that noneconomic values like the promotion of amateurism and fundamental educational objectives could not save the television plan from condemnation under the Sherman Act. *135But these statements were made in response to “public interest” justifications proffered in defense of a ban on competitive bidding imposed by practitioners engaged in standard, profit-motivated commercial activities. The primarily non-economic values pursued by educational institutions differ fundamentally from the “overriding commercial purpose of [the] day-to-day activities” of engineers, lawyers, doctors, and businessmen, Gulland, Byrne, & Steinbach, Intercollegiate Athletics and Television Contracts: Beyond Economic Justifications in Antitrust Analysis of Agreements Among Colleges, 52 Ford. L. Rev. 717, 728 (1984), and neither Professional Engineers nor any other decision of this Court suggests that associations of nonprofit educational institutions must defend their self-regulatory restraints solely in terms of their competitive impact, without regard for the legitimate noneconomic values they promote.

When these values are factored into the balance, the NCAA’s television plan seems eminently reasonable. Most fundamentally, the plan fosters the goal of amateurism by spreading revenues among various schools and reducing the financial incentives toward professionalism. As the Court observes, the NCAA imposes a variety of restrictions perhaps better suited than the television plan for the preservation of amateurism. Ante, at 119. Although the NCAA does attempt vigorously to enforce these restrictions, the vast potential for abuse suggests that measures, like the television plan, designed to limit the rewards of professionalism are fully consistent with, and essential to the attainment of, the NCAA’s objectives. In short, “[t]he restraints upon Oklahoma and Georgia and other colleges and universities with excellent football programs insure that they confine those programs within the principles of amateurism so that intercollegiate athletics supplement, rather than inhibit, educational achievement.” 707 F. 2d, at 1167 (Barrett, J., dissenting). The collateral consequences of the spreading of *136regional and national appearances among a number of schools are many: the television plan, like the ban on compensating student-athletes, may well encourage students to choose their schools, at least in part, on the basis of educational quality by reducing the perceived economic element of the choice, see Note, 87 Yale L. J., at 676, n. 106; it helps ensure the economic viability of athletic programs at a wide variety of schools with weaker football teams; and it “promot[es] competitive football among many and varied amateur teams nationwide.” Gulland, Byrne, & Steinbach, supra, at 722 (footnote omitted). These important contributions, I believe, are sufficient to offset any minimal anticompetitive effects of the television plan.

For all of these reasons, I would reverse the judgment of the Court of Appeals. At the very least, the Court of Appeals should be directed to vacate the injunction of the District Court pending the further proceedings that will be necessary to amend the outstanding injunction to accommodate the substantial remaining authority of the NCAA to regulate the telecasting of its members’ football games.

Justice Thomas

delivered the opinion of the Court.

From 1998 until 2002, petitioners Texaco Inc. and Shell Oil Co. collaborated in a joint venture, Equilon Enterprises, to refine and sell gasoline in the western United States under the original Texaco and Shell Oil brand names. Respondents, a class of Texaco and Shell Oil service station owners, allege that petitioners engaged in unlawful price fixing when Equilon set a single price for both Texaco and Shell Oil brand gasoline. We granted certiorari to determine whether it is per se illegal under § 1 of the Sherman Act, 15 U. S. C. § 1, for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products. We conclude that it is not, and accordingly we reverse the contrary judgment of the Court of Appeals.

I

Historically, Texaco and Shell Oil have competed with one another in the national and international oil and gasoline *4markets. Their business activities include refining crude oil into gasoline, as well as marketing gasoline to downstream purchasers, such as the service stations represented in respondents’ class action.

In 1998, Texaco and Shell Oil formed- a joint venture, Equilon, to consolidate their operations in the western United States, thereby ending competition between the two companies in the domestic refining and marketing of gasoline. Under the joint venture agreement, Texaco and Shell Oil agreed to pool their resources and share the risks of and profits from Equilon’s activities. Equilon’s board of directors would comprise representatives of Texaco and Shell Oil, and Equilon gasoline would be sold to downstream purchasers under the original Texaco and Shell Oil brand names. The formation of Equilon was approved by consent decree, subject to certain divestments and other modifications, by the Federal Trade Commission, see In re Shell Oil Co., 125 F. T. C. 769 (1998), as well as by the state attorneys general of California, Hawaii, Oregon, and Washington. Notably, the decrees imposed no restrictions on the pricing of Equilon gasoline.

After the joint venture began to operate, respondents brought suit in District Court, alleging that, by unifying gasoline prices under the two brands, petitioners had violated the per se rule against price fixing that this Court has long recognized under § 1 of the Sherman Act, ch. 647, 26 Stat. 209, as amended, 15 U. S. C. § 1. See, e. g., Catalano, Inc. v. Target Sales, Inc., 446 U. S. 643, 647 (1980) (per curiam). The District Court awarded summary judgment to Texaco and Shell Oil. It determined that the rule of reason, rather than a per se rule or the quick look doctrine, governs respondents’ claim, and that, by eschewing rule of reason analysis, respondents had failed to raise a triable issue of fact. The Ninth Circuit reversed, characterizing petitioners’ position as a request for an “exception to the per se prohibition on price-fixing,” and rejecting that request. Dagher v. *5 Saudi Refining, Inc., 369 F. 3d 1108, 1116 (2004). We consolidated Texaco’s and Shell Oil’s separate petitions and granted certiorari to determine the extent to which the per se rule against price fixing applies to an important and increasingly popular form of business organization, the joint venture. 545 U. S. 1138 (2005).

II

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” 15 U. S. C. § 1. This Court has not taken a literal approach to this language, however. See, e. g., State Oil Co. v. Khan, 522 U. S. 3, 10 (1997) (“[T]his Court has long recognized that Congress intended to outlaw only unreasonable restraints” (emphasis added)). Instead, this Court presumptively applies rule of reason analysis, under which antitrust plaintiffs must demonstrate that a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful. See, e. g., id., at 10-19. Per se liability is reserved for only those agreements that are “so plainly anti-competitive that no elaborate study of the industry is needed to establish their illegality.” National Soc. of Professional Engineers v. United States, 435 U. S. 679, 692 (1978). Accordingly, “we have expressed reluctance to adopt per se rules . . . ‘where the economic impact of certain practices is not immediately obvious.’ ” State Oil, supra, at 10 (quoting FTC v. Indiana Federation of Dentists, 476 U. S. 447, 458-459 (1986)).

Price-fixing agreements between two or more competitors, otherwise known as horizontal price-fixing agreements, fall into the category of arrangements that are per se unlawful. See, e. g., Catalano, supra, at 647. These cases do not present such an agreement, however, because Texaco and Shell Oil did not compete with one another in the relevant market — namely, the sale of gasoline to service stations in the western United States — but instead participated in that *6market jointly through their investments in Equilon.1 In other words, the pricing policy challenged here amounts to little more than price setting by a single entity — albeit within the context of a joint venture — and not a pricing agreement between competing entities with respect to their competing products. Throughout Equilon’s existence, Texaco and Shell Oil shared in the profits of Equilon’s activities in their role as investors, not competitors. When “persons who would otherwise be competitors pool their capital and share the risks of loss as well as the opportunities for profit.. . such joint ventures [are] regarded as a single firm competing with other sellers in the market.” Arizona v. Maricopa County Medical Soc., 457 U. S. 332, 356 (1982). As such, though Equilon’s pricing policy may be price fixing in a literal sense, it is not price fixing in the antitrust sense. See Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 9 (1979) (“When two partners set the price of their goods or services they are literally 'price fixing,’ but they are not per se in violation of the Sherman Act”).

This conclusion is confirmed by respondents’ apparent concession that there would be no per se liability had Equilon simply chosen to sell its gasoline under a single brand. See Tr. of Oral Arg. 34. We see no reason to treat Equilon differently just because it chose to sell gasoline under two dis*7tinct brands at a single price. As a single entity, a joint venture, like any other firm, must have the discretion to determine the prices of the products that it sells, including the discretion to sell a product under two different brands at a single, unified price. If Equilon’s price unification policy is anticompetitive, then respondents should have challenged it pursuant to the rule of reason.2 But it would be inconsistent with this Court’s antitrust precedents to condemn the internal pricing decisions of a legitimate joint venture as per se unlawful.3

The court below reached the opposite conclusion by invoking the ancillary restraints doctrine. 369 F. 3d, at 1118-1124. That doctrine governs the validity of restrictions imposed by a legitimate business collaboration, such as a business association or joint venture, on nonventure activities. See, e. g., National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 113-115 (1984); Citizen Publishing Co. v. United States, 394 U. S. 131, 135-136 (1969). Under the doctrine, courts must determine whether the nonventure restriction is a naked restraint on trade, and thus invalid, or one that is ancillary to the legitimate and competitive purposes of the business association, and thus valid. We agree with petitioners that the ancillary restraints doctrine has no application here, where the business practice being challenged involves the core activity of the joint venture itself — namely, the pricing of the very *8goods produced and sold by Equilon. And even if we were to invoke the doctrine in these cases, Equilon’s pricing policy is clearly ancillary to the sale of its own products. Judge Fernandez, dissenting from the ruling of the court below, put it well:

“In this case, nothing more radical is afoot than the fact that an entity, which now owns all of the production, transportation, research, storage, sales and distribution facilities for engaging in the gasoline business, also prices its own products. It decided to price them the same, as any other entity could. What could be more integral to the running of a business than setting a price for its goods and services?” 369 F. 3d, at 1127.

See also Broadcast Music, supra, at 23 (“Joint ventures and other cooperative arrangements are ... not usually unlawful, at least not as price-fixing schemes, where the agreement on price is necessary to market the product at all”).

* * *

Because the pricing decisions of a legitimate joint venture do not fall within the narrow category of activity that is per se unlawful under § 1 of the Sherman Act, respondents’ antitrust claim cannot prevail. Accordingly, the judgment of the Court of Appeals is reversed.

It is so ordered.

Justice Alito took no part in the consideration or decision of these cases.

Mr. Chief Justice White

delivered the opinion of the court.

The Standard Oil Company of New Jersey and 33 other corporations, John D. Rockefeller, William Rockefeller and five other individual defendants prosecute this appeal to reverse a decree of the court below. Such decree was entered upon a bill filed by the United States under authority of § 4, of the act of July 2,1890, c. 647, p. 209, known as the Anti-trust Act, and had for its object the enforcement of the provisions of that act. The record is inordinately voluminous, consisting of twenty-three volumes of printed matter, aggregating about twelve thousand- pages, containing a vast amount of confusing and conflicting testi*31mony relating to innumerable,' complex and varied business transactions, extending over a period of nearly forty years. In an effort to pave the way to reach the subjects which we are called upon to consider, we propose at the outset, following the order of the bill, to give the merest possible outline of its contents, to summarize the answer, to indicate the course of the trial, and point out briefly the decision below rendered.

The bill and. exhibits, covering one hundred and seventy pages of the printed record, was filed on November 15, 1906. Corporations known as Standard Oil Company of New Jersey, Standard Oil Company of California, Standard Oil Company of Indiana, Standard Oil Company of Iowa, Standard Oil Company of Kansas, Standard Oil Company of Kentucky, Standard Oil Company of Nebraska, Standard Oil Company of New York, Standard Oil Company of Ohio and sixty-two other corporations and partnerships, as also seven individuals were named as defendants. The bill was divided into thirty numbered sections, and sought relief upon the theory that the various defendants were engaged in conspiring “to restrain the trade and commerce in petroleum, commonly called ‘crude oil/ in refined oil, and in the other products of petroleum, among the several States and Territories of the United States and the District of Columbia and with foreign nations, and to monopolize the said commerce.” The conspiracy was alleged to have been formed in or about the year 1870 by three of the individual defendants, viz: John D. Rockefeller, William Rockefeller and Henry M. Flagler. The detailed averments concerning the alleged conspiracy were arranged with-reference to three periods, the first from 1870 to 1882, the second from 1882 to 1899, and the third from 1899 to the time of the filing of the bill.

The general charge concerning the period from 1870 to 1882 was as follows:

*32“That during said first period the said individual defendants, in connection with the Standard Oil Company of Ohio, purchased and obtained interests through stock ownership and otherwise in, and entered into agreements with, various' persons, firms, corporations, and limited partnerships engaged in purchasing, shipping, refining, and selling petroleum and its products among the various States for the purpose of fixing the price of crude and refined oil and the products- thereof, limiting the production thereof, and controlling the transportation therein, and thereby restraining trade and commerce among the several States, and monopolizing the said commerce.”

To establish this charge it was averred that John D. and William Rockefeller and several other named individuals, who, prior to 1870, composed three separate partnerships engaged in the business of refining crude oil and shipping its products in interstate commerce, organized in the year 1870, a corporation known as the Standard Oil Company of Ohio and transferred to that company the business of the said partnerships, the members thereof becoming, in proportion to their prior ownership, stockholders in the corporation. It was averred that the other individual defendants soon afterwards became participants in the illegal combination and either transferred property, to the corporation or to individuals to be held for the benefit of all parties in interest in proportion to their respective interests in the combination; that is, in proportion to their stock ownership in the Standard Oil Company of Ohio. By the means thus stated, it was charged that by the year 1872, the combination had acquired substantially all but •three or four of the thirty-five or forty oil refineries located in Cleveland, Ohio. By .reason of the power thus obtained and in further execution of the intent and purpose to restrain trade and to monopolize the commerce, interstate as well as intrastate, in petroleum and its products, the bill alleged that the combination and its mem*33bers obtained large preferential rates and rebates in many and devious ways over their competitors from various railroad companies, and that by means of the advantage thus obtained many, if not virtually all, competitors were forced either to become members of the combination or were driven out of business; and thus, it was alleged, during the period in question the following results were brought about: a. That the combination, in addition to the refineries in Cleveland which it had -acquired as previously stated, and which it had either dismantled to limit production or continued to operate, also from time to time acquired a large number of refineries of crude petroleum, situated in New York, Pennsylvania, Ohio and elsewhere. The properties thus acquired, like those previously obtained, although belonging to and being held for the benefit of the combination, were ostensibly divergently controlled, some of them being put in the name of the Standard Oil Company of Ohio, some in the name of corporations , or limited partnerships affiliated therewith, or some being left in the name of the original owners who had become stockholders in the Standard Oil Company of Ohio and thus members of the alleged illegal combination. 6. That the combination had obtained control of the pipe lines available for transporting oil from the oil fields to the refineries in Cleveland, Pittsburg, Titusville, Philadelphia, New York and New Jersey, c. That the combination during the period named had obtained a complete mastéry over the oil industry, controlling 90 per cent of the business of producing, shipping, refining and selling petroleum and its products, and thus was able to fix the price of crude and refined petroleum and to restrain and monopolize all interstate commerce in, those products.

The averments bearing upon the second period (1882 to 1899) had relation to the claim:

“ That during the said second period of conspiracy the defendants entered into a contract and trust agreement, *34by which various independent firms, corporations, limited partnerships and individuals engaged ip purchasing, transporting, refining, shipping, and selling oil and the products thereof among the various States turned over the management of their said business, corporations and limited partnerships to nine trustees, composed chiefly of certain individuals defendant herein, which said trust agreement was in restraint of trade and commerce and in violation of law, as hereinafter more partieulárly alleged:”

The trust agreement thus referred to was, set out in the bill. It was made in January, 1882. -By its terms the stock of forty corporations^ including the Standard Oil Company of Ohio, and a large quantity of'various properties which hád been previously acquired- by the alleged combination and which was held in diverse forms, as we have previously , indicated, for the benefit of the members of the combination, was vested in the trustees and their successors, “to be held for all parties" in interest jointly.” In the body of the trust agreement was contained a fist of the various individuals and corporations and limited partnerships whose stockholders and members, or a portion thereof, became parties to the agreement. This list is in the margin-.1

*35The agreement made provision for the method of controlling and managing the property by the trustees, for the formation of additional manufacturing, etc., corpora*36tions in various States, and the trust, unless terminated by a mode specified, was to continue “during the lives of the survivors and survivor of the trustees named in the agreement and for twenty-óne years thereafter.” The agreement provided for the issue of Standard Oil Trust certificates to represent the interest arising under the trust in the properties affected by the trust, which of course in view of the provisions of the agreement and the subject to which it related caused the interest in the certificates to be coincident with and the exact representative of the interest in the combination, that is, in the Standard Oil Company of Ohio. Soon afterwards it was alleged the trustees organized the Standard Oil Company of New Jersey and the Standard Oil Company of New York, the former having a capital stock of $3,000,000 and the latter a capital stock of $5,000,000, subsequently increased to $10,000,000 and $15,000,000 respectively. The bill alleged “that pursuant to said trust agreement the said trustees caused to be transferred to themselves the stocks of all corporations and limited partnerships named in said trust agreement, and caused various of the individuals and copartnerships, who owned apparently independent refineries and other properties employed in the business of refining and transporting and selling oil in and among said various States and Terri*37tories of the United States as aforesaid, to transfer .their property situated in said, several States to the respective Standard Oil Companies of said States of New York, New Jersey, Pennsylvania and Ohio, and other corporations organized or acquired by said trustees from time to time. . . .” For the stocks and property so acquired the trustees issued trust certificates. It was alleged that in 1888 the trustees “unlawfully controlled the-stock and ownership of various corporations and limited partnerships en-r gaged in such purchase and transportation, refining, selling, and shipping of oil,” as per a list which is excerpted in the ’margin.1 .

*38The bill charged that during the second period quo warranto proceedings were commenced against the Standard Oil Company of Ohio, which resulted in the entry by the Supreme Court of Ohio, on March 2, 1892, of a decree *39adjudging the trust ágreement to be void, not only because the Standard Oil Company of Ohio was a party to the same, but also because the agreement in and of itself *40was in restraint of trade and amounted to the creation of an unlawful monopoly. • It was alleged that shortly after this decision, seemingly for the purpose of complying therewith, voluntary proceedings were had apparently to dissolve the trust, but that these proceedings were a. subterfuge and a sham because they simply amounted, to a transfer of the stock held by the trust in 64 of the companies which it controlled to some of the remaining 20 companies, it having controlled before the decree 84 in all, thereby, while seemingly in part giving up it’s dominion, yet in reality preserving the same by means of . the control of the companies as to which it had retained complete authority. It was charged that:especially was this the case, as the stock in the companies selected for transfer was virtually owned by the nine trustees or the members of their immediate families or associates. The bill further alleged that in 1897 the Attorney-General of Ohio instituted contempt proceedings in the quo warranto case based upon the cláim that;-the trust had riot-been dissolved as required by the decree in that case. About the same time also proceedings in quo warranto were commenced to forfeit the charter of a pipe line known as the Buckeye Pipe Line Company, an *41Ohio corporation, whose stock, it was alleged, was owned by the members of the combination, on the ground of its connection with the trust which had been held to be. illegal.

The result of these proceedings, the bill charged, caused a resort to the alleged wrongful acts asserted to have been committed during the third period, as follows:

" That during the third period of said conspiracy and in pursuance thereof the said individual defendants operated through the Standard Oil Company of New Jersey, as a holding corporation, which corporation obtained and acquired the majority of the stocks of the various corporations engaged in purchasing, transporting, refining, shipping, and selling oil into and among the various States and Territories of the United States and the District of Columbia and with foreign nations, and thereby managed and controlled the same, in violation of the laws of the. United States, as hereinafter more particularly alleged.”

It was alleged that in or about the month of January, 1899, the individual defendants caused the charter of the Standard Oil Company of New Jersey to be amended; "so that the business and objects of said company were stated as follows, to wit: ‘To do all kinds of mining, manufacturing, and trading business; transporting goods and merchandise by land or water in any manner; to buy, sell, lease, and improve land; build houses, structures, vessels, cars, wharves, docks, and piers; to lay and operate pipe lines; to erect lines for conducting electricity; to enter into, and carry out contracts of every kind pertaining to its business; to acquire, use, sell, and grant licenses under patent rights; to purchase or otherwise acquire, hold, sell, assign, and transfer shares of capital stock and bonds or other evidences of indebtedness of corporations, and to exercise all the ‘privileges of ownership, including voting upon the stock so held; to carry on its business and have offices and agencies therefor in all parts of the world, and *42to hold, purchase, mortgage, and convey real estate and personal property oxitside the State of New Jersey.’ ”

The capital stock of the company — which since March 19, 1892, had been $10,000,000 — was increased to $110,000,000;' and the individual defendants, as theretofore, continued to be a majority of the board of directors.

Without going into detail it suffices to say that it was alleged in the bill that shortly after these proceedings the trust came to an end, the stock of the various corporations which had been' controlled by it being transferred by its holders to the- Standard Oil Company of New Jersey, which corporation issued therefor certificates of its common stock to the amount of $97,250,000. The bill contained allegations referring to the development of new oil fields, for example, in California, southeastern Kansas, northern Indian Territory, and northern Oklahoma, and made reference to the building or otherwise-acquiring by the combination of refineries and pipe lines in the new fields for the purpose of restraining and monopolizing the interstate trade in petroleum and its products.

Reiterating in substance the averments that both the Standard Gil Trust from 1882 to 1899 and the Standard Oil Company of New Jersey since 1899 had monopolized and restrained interstate commerce in petroleum and its products, the bill at great length additionally set forth various means by which during the second and third periods, in addition to the effect occasioned by the combination of alleged previously independent concerns, the monopoly and restraint complained of was continued.'' Without attempting to follow the elaborate averments on these subjects spread over fifty-seven pages of the printed record, it suffices to say that such averments may properly be groxxped under the following heads: Rebates, preferences and other discriminatory practises in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practises against com*43peting pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where íiecessary to suppress competition; espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent; the division of the United States into districts and the limiting of the operations of the various subsidiary corporations as to such disr tricts so that competition in the sale of petroleum products between such corporations had been entirely eliminated and destroyed; and finally reference was made to what was alleged to be the “enormous and unreasonable profits ” earned by the Standard Oil Trust and the Standard Oil Company as a result of the alleged monopoly; which presumably was averred as a means of réflexly inferring the scope and power acquired by the alleged combination.

Coming to the prayer of the bill, it suffices to say that in general terms the substantial relief asked was, first, that the combination in restraint of interstate'trade and commerce and which had monopolized the same, as alleged in the bill, be found to have existence and that the parties thereto be perpetually enjoined from doing any further act to give effect to it; second, that the transfer of the-stocks of the various corporations to the Standard Oil Company of New Jersey, as allegeddn the bill, be held to be in violation of the first and second sections of the Antitrust Act, and that the Standard Oil Company of New Jersey be enjoined and restrained from in any manner continuing to exert control over the subsidiary corporations by means of ownership of said stock or otherwise; third, that specific relief by injunction be awarded against further violation of the statute by any of the acts specifically complained of in the bill. There was also a prayer for general relief.

Of the. numerous defendants named in the bill, the Waters-Pierce Oil Company was the only resident of the *44district in which the suit was commenced and the only-defendant served with process therein. Contemporaneous with the filing of the bill the court made an order, under §' 5' of the Anti-trust Act, for the service of process upon all the other defendants, wherever they could be found. Thereafter the various defendants unsuccessfully moved to vacate the order for service on non-resident defendants or filed pleas to the jurisdiction. • Joint exceptions were likewise unsuccessfully filed, upon the ground of impertinence, to many of the averments of the bill of complaint, particularly those which related to acts alleged to have been done by the combination prior to the passage of the Anti-trust Act and prior to the year 1899.

Certain of the defendants filed separate answers, and a joint answer was filed on behalf of the Standard Oil Company of New Jersey and numerous of the other defendants. The spope of the answers will be adequately-indicated by' quoting a summary on the subject made in the brief for the appellants.

“It is sufficient to say that, whilst admitting many of the alleged acquisitions of property, the formation of the so-called trust .of 1882, its dissolution in 1892, and the acquisition by the Standard Oil Company of New Jersey of the stocks of the various corporations in 1899, they deny all the allegations respecting combinations or conspiracies to restrain or monopolize the oil trade; and particularly that the so-called trust of 1882, or the acquisition of the shares of the defendant companies by the Standard Oil Company of New Jersey in 1899, was a combination of independent or competing concerns or corporations. The averments of the petition respecting the means adopted to monopolize the oil trade are traversed either by a denial of the acts alleged or of their purpose, intent or effect.”

On June 24, .1907, the cause being at issue, a special examiner was appointed to take the evidence, and his report was filed March 22, 1909. It was heard on April 5 *45to 10,1909, under the expediting, act of February 11,1903, before a/Circuit Court consisting of four judges.

The court decided in favor of the United States. In the opinion delivered, all the multitude of acts of wrongdoing charged in'the bill were put aside, in so far as they were alleged to have been committed prior to the passage of the Anti-trust Act, “except as evidence of their (the defendants') purpose, of-their continuing conduct and of its effect.”. (173 Fed.'Rep. 177.)

By .the decree which was entered it was adjudged that the/C*ombining of the stocks of various companies in the hands of the. Standard Oil Company of New Jersey in 1899 constituted a combination, iff restraint; of trade and álso an attempt to monopolize and a monopolization under § 2 of the Anti-trust Act. The decree' was against seven individual defendants, the Standard Oil Company of New Jersey, thirty-six domestic companies and one foreign company which the Standard Oil Company of New Jersey controls by stock ownership; these 38 corporate .defendants being held to be parties to the combination found to exist.1

The bill was dismissed as to all other corporate defendants, 33 in number, it being adjudged by § 3 of the decree that they “have not been proved to be engaged in the operation-or carrying out of the combination.”2

*46The Standard Oil Company of New Jersey was enjoined from voting the stocksor exerting any control over the said 37 subsidiary companies, and the subsidiary companies were énjoined from paying any dividends as to the Standard Oil Company or permitting it to exercise any control over them'by virtue of the stock ownership or power acquired by means of the combination. The individuals and corporations were also enjoined from entering into or carrying into effect any like combination which would evade the decree. Further, the individual defendants, the Standard Oil Company, and the 37 subsidiary corporations were enjoined from engaging or continuing in interstate commerce in petroleum or its products during the continuance of the illegal combination.

At the outset a question of jurisdiction requires consideration, and we shall, also, as a preliminary, dispose of. another question, to the end that our attention may be completely concentrated upon the merits of the controversy when we come to consider them.

First. We are of opinion that in consequence of the presence within the district of the Waters-Pierce Oil Company, the court,' under the authority of § 5 of the Anti-trust Act, rightly took jurisdiction over the cause and properly ordered notice to be served upon the non-resident defendants.

Second. The overruling of the exceptions taken to so much of the bill as counted upon facts occurring prior to the passage of the Anti-trust Act, — whatever may be the. view as an original question of the duty to restrict the controversy to a much narrower area than that propounded by the bill, — we think by no possibility in the present stage of the case can the action of the court be treated as prejudicial error justifying reversal. We say this because the court, as we shall do, gave no weight to the testimony adduced under the averments complained of except in so far as it tended to throw light upon the jacts done after the *47passage of the Anti-trust Act and the results of which it was charged were.being participated in and enjoyed by the alleged combination at the time of the filing of the bill.

We are thus brought face to face with the merits of the controversy.

Both as to the law and as to the facts the opposing contentions pressed in the argument are numerous and in all their aspects are so irreconcilable that it is difficult to reduce them to some fundamental generalization, which by being disposed of would decide them all. For instance, as to the law. While both sides agree that the determination of the controversy rests upon the correct construction and application of the first and second sections of the Anti-trust Act, yet the views as to the meaning of the act are as wide apart as the poles, since there is no real point of agreement on any view of the act. And this also is the case as to the scope and effect of authorities relied upon, even although in some instances one and the same authority is asserted to be controlling.

So also is it as to the facts. Thus, on the one hand, with relentless pertinacity and minuteness of analysis, it is insisted that the facts establish that the assailed combination took its birth in a purpose to unlawfully acquire wealth by oppressing the public and destroying the just rights of others, and that its entire career exemplifies an inexorable carrying out of such wrongful intents, since, it is asserted, the pathway of the combination from the beginning to the time of the filing of the bill is marked with constant proofs of wrong inflicted upon the public and is strewn with the wrecks resulting from crushing out, without regard to law, the individual rights of others. Indeed, so conclusive, it is urged, is the proof on these subjects that it is asserted that the existence of the prin-' cipal corporate defendant — the Standard Oil Company of New Jersey — with the vast accumulation of property which it owns or controls, because of its infinite potency *48for harm and the dangerous example which its continued existence affords, is an open and enduring menace to all freedom of trade and is a byword and reproach to modern economic methods. On the other hand, in a powerful analysis of the facts, it is insisted that they demonstrate that the origin and development of. the vast business which the defendants control was but the result of lawful competitive methods, guided by economic genius of the highest order, sustained by courage, by a keen insight into, commercial situations, resulting in the acquisition of great wealth, but at the same time serving to stimulate and increase production, to widely extend the distribution of the products of petroleum at a cost largely below that which would have otherwise prevailed, thus proving to be. at one and the same time a benefaction to the general public as well as of enormous advantage to individuals. It is not denied that in the enormous volume of proof contained in the record in the period of almost a lifetime to which that proof is addressed, thére-may be found acts of wrongdoing, but the insistence is that they were rather-the exception than the rule, and in most cases were either the result of too great individual' zeal in the keen rivalries of business or of the methods and habits of dealing which, even if wrong, were commonly practised at. the time. And to discover and state the truth concerning these contentions both arguments call for the' analysis and weighing, as we have said at the outset, of. a jungle of. conflicting testimony covering a period of forty years, a duty difficult to rightly perform and, even-if.satisfactorily accomplished, almost impossible to state with any reasonable regard to brevity.

Duly appreciating the situation just stated, it is certain that only one point of concord between the parties is discernable, which is, that the controversy in-every aspect is controlled by a correct conception of the meaning of thé first and second sections of the Anti-trust. Act. We shall *49therefore — departing from what otherwise would be the natural'order of analysis — make this one point of har* mony the initial básis of our examination'of the contentions, relying upon the conception that, by doing so some harmonious resonance may result adequate to dominate and control 'the discord with which the case - abounds. That is to say, we shall first; come to consider'the meaning of the first and second sections of the' Anti-trust Act by the text, and after diseerning what by that proeess appears to be its true meaning wé shall proCeéd to consider the respective contentions of the parties concerning the act, the strength or weakness’df those contentions, as'well as the accuracy of the meaning of the act ás'dédüced fíbm the text in the light of the prior decisions of this Court com cerning it. When we have doné this-we-shall .then- approach the facts. Following this course we shall- make our investigation under four Separate héadings: First. The text of the first and second sections Of the act originally considered and its meaning in the'light of-the common law and .the law- of‘this country atthe time of its adoption. Second. The contentions of the parties concerning the act, and the scope and efféct of the decisions of this court upon which they rely.' Third. The application of the statute to facts, and, Fourth. The remedy, if any, to’ be afforded as the result Of such application.

First. The text of the act and its meaning.

We quote the text- Of the first and second sections of the act, as follows

“ Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint Of tráde or commerce, among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract; or engage in any such combination or conspiracy," shall be deemed guilty' of a misdemeanor, and, on conviction thereof,' shall be punished by fine not exceeding five thousand'dollars, or by *50imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

“Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.” *

The debates show that doubt ás to whether there was a common law of the United States which governed the subject in the absence of legislation was among the influences leading to the passage of the act. They conclusively show, however, that the main cause which led to the legislation was the thought that it was required by the economic condition of the times, that is, the vast accumulation of wealth in the hands of corporations and individuals, the enormous development of corporate organization, the facility for combination which such organizations afforded, the fact that the facility was being used, and that combinations known as trusts were being multiplied, and the widespread impression that their power had been and would be exerted to oppress individuals and injure the public generally. Although debates may not be used as a means for interpreting a statute (United States v. Trans-Missouri Freight Association, 166 U. S. 318, and cases cited) that rule in the nature of things is not violated by resorting to. debates as a means of ascertaining the environment at the time of the enactment of a particular law, that is, the history of the period when it was adopted.

There can be no doubt that the sole subject with which the first section deals is restraint of trade as therein contemplated, aiSd "that the attempt to monopolize and monopolization is the subject with which the second sec*51tion is concerned. It is certain that those terms, at least in their. rudimentary meaning,'took their origin in the common law, and were also familiar iii the , law of this country prior to and at the-time of the adoption of the act in questipn. . .

We shall endeavor then; first to seek their meaning, not by indulging iii an elaborate and learned analysis of the' English law and of the law of this country, but by making a very brief reference to the elementary and indisputable conceptions of both the English and American law on the subject-prior to the passage of the Anti-trust Act.

a. It is certain .that át a very remote period the words “ contract M restraint of trade ” in England came to refer to some voluntary restraint put by contract by an individual on his right to'carry on his trade or calling. Originally' all such contracts were considered to be illegal, because it was deemed they were injurious to the public as well as to the individuals who. made them. In the interest of the freedom of individuals'to contract this doctrine was modi-, fied so that it was only* when a restraint by contract .was so general as to’ be coterminous with the kingdoih that it was treated as void. That is to say, if the restraint was partial in its operation and was ótherwise. reasonable the contract was held to be valid:

b. Monopolies were, defined by Lord Coke as follows:

“ ‘A monopoly is an institution, or allowance by the king by his grant, commission, or otherwise to any person or persons, bodies politic or corporate, of or for the sole. buying, selling) making, working, or using of anything, whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before, or hindered in their, lawful trade.' (3 Inst. 181, c. 85.)”

Hawkins thus defined them:

“ ‘A monopoly is an allowance by the king to a particular person or persons of the sole buying, selling, making, *52working, or using of anything whereby the subject in general is restrained from the freedom of manufacturing or trading which he had before.’ (Hawk. P. C. bk. 1, c. 29.) ”

The frequent granting of monopolies and the struggle which led to a denial of the power to create them, that is to say,, to the establishment that, they were incompatible with the English constitution is known to all and need not be reviewed. The evils which led to the public outcry against monopolies and to the final denial of the power to make them may be thus summarily stated: 1. The power which the monopoly gave to the one who enjoyed it to fix the price and thereby injure the public; 2. The power which it engendered of enabling a limitation on production; and, 3. The danger of deterioration in quality of the monopolized article which it was deemed was the inevitable resultant of the monopolistic control over its production and sale. As monopoly as thus conceived embraced only a consequence arising from an exertion of sovereign power, no express restrictions or prohibitions obtained against the creation by an individual of a monopoly as such. But as it was considered; at least so far as the necessaries of life were concerned, «that individuals by the abuse of their right to contract might be able to usurp the power arbitrarily to enhance prices, one of the wrongs arising from monopoly, it came to be that laws were passed relating to offenses such as forestalling, regrating and engrossing by which prohibitions were placed upon the power of individuals to deal under such circumstances and conditions as, according to the conception of the times, created a presumption that the dealings were not simply the honest exertion of one’s right to contract for his own benefit unaccompanied by <a wrongful motive to injure others, but were the consequence of a contract or course of dealing of such a character as to give rise,to .the presumption- of an intent to injure others through the means, for instance, of a monopolistic increase of prices. *53This is illustrated by the definition of engrossing found in the statute, 5 and 6 Edw. VI, ch. 14, as follows:

' "Whatsoever person or persons. . . . shall engross or get into his -or their hands by buying, contracting, ór promise-taking, other than by demise, grant, or lease of land, or tithe, any corn growing in the fields, or any other corn or grain, butter, cheese, fish, or other dead victual, whatsoever/ within the realm of England, to the intent to sell the-same again/, shall be'accepted, reputed, and taken art unlawful engrosser or engrossers.”

As by the Statutes providing- against engrossing the quantity.engrossed was^not required to be the whole or a" proximate part of the whole -of' an article, it is clear that there was a wide difference between monopoly and engrossing, etc. But as the principal wrong which it was deeméd* would result from monopoly, that is, an enhancement of the price, was the same wrong to which it was thought the prohibited engrossment would give rise, it came to pass that monopoly and engrossing wefe regarded as virtually one and the same thing. In 'other words, the prohibited act of engrossing because of its inevitable accomplishment of one of the evils .deemed to be engendered by monopoly, came to be referred to as being a monopoly or constituting an attempt to monopolize. . Thus Pollexfen, in his argument in East India Company v. Sandys, Skin. 165, 169, said:

"By common law, he said that/trade is free, and for that cited 3 Inst. 81; F. B. 65; 1 Roll. 4; that the common law is as much against ‘monopoly’ as ‘engrossing;’ and that they differ only, that a ‘monopoly’ is by patent from the king, the other is by the act of the subject between party and party; but that the mischiefs are the same from both, and there is the same law against both. Moore, 673; 11 Rep. 84. The sole trade of anything is ‘engrossing’ ex rei natura,. for whosoever hath the sole trade of buying and selling hath ‘engrossed’ that trade; and who*54soever hath the sole trade to any country, hath the sole trade of buying and selling the produce of that country, at his own price, which is an ‘engrossing.’ ”

And by operation of the mental process which led to considering as a monopoly acts which although they did not constitute a monopoly were thought to produce some of its baneful effects, so also because of the impediment or burden to the due course of trade which they produced, such acts came to be referred to as in restraint of trade. This is shown by my Lord Coke’s definition of monopoly as being “an'institution or allowance . . . whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before or hindered in their lawful trade.” It is illustrated also by the definition which Hawkins gives of monopoly wherein it is said that the effect of monopoly is to restrain the citizen “from the freedom of manufacturing or trading which he had before.” And see especially the opinion of Parker, C. J., in Mitchel v. Reynolds (1711), 1 P. Williams, 181, where á classification is made of monopoly which brings it generically within the description of restraint of trade.

Generalizing these considerations, the situation is this: 1. That by the common law monopolies were unlawful because of their restriction upon individual freedom of contract and their injury to the public. 2. That as to necessaries of life the freedom of the individual to deal was restricted where the nature and character of the dealing was such as to engender the presumption of intent to bring about at least one of the injuries which it was deemed would result from monopoly, that is an undue enhancement of price. 3. That to protect the freedom of contract of the individual not only in his own interest, but principally in the interest of the common weal, a contract of an individual by which he put an unreasonable restraint upon himself as to carrying on his trade or busi*55ness was void. And that at common law the evils consequent upon engrossing, etc., caused those things to be treated as coming within monopoly and sometimes to be called monopoly and the same considerations caused monopoly because of its operation and effect, to be brought within and spoken of generally as impeding the due course of or being in restraint of trade.

From the development of more accurate economic conceptions and the changes in conditions of society it came to be recognized that the acts prohibited by the engrossing, forestalling, etc., statutes did not have the harmful tendency which they were presumed to have when the legislation concerning them was enacted, and therefore did not justify the presumption which had previously been deduced from them, but, on the contrary, such acts tended to fructify and develop trade. See the statutes of 12th George III, ch. 71, enacted in 1772, and statute of 7 and 8 Victoria, ch. 24, enacted in 1844, repealing the prohibitions against engrossing, forestalling, etc., upon the express ground that the prohibited acts had come to be considered as favorable to the development of and not in. restraint of trade. It is remarkable (that nowhere at common law can there be found a prohibition against the creation of monopoly, by an individual. This would seem to manifest, either consciously or intuitively, a profound conception as to the inevitable operation of economic forces and the equipoise or balance in favor of the protection of the rights of individuals which resulted. That is. to say, as-it was deemed that monopoly in the concrete could only arise from an act of sovereign power, and, such sovereign power being restrained, prohibitions as to individuals were directed, not against the creation of monopoly, but were only applied to such acts in relation to particular subjects as to which it was deemed, if not restrained, some of the consequences of monopoly might result. After all, this was but an instinctive recognition *56of. the truisms that the course of trade could not be made free by obstructing it, and that axi individual’s right to trade could not be protected by destroying such right.

From the review just made it clearly results that outside • Of the restrictions resulting from the want of power in an •individual"to voluntarily and unreasonably restrain his right to carry on his trade or business and outside of the want'o'f right to restrain the free course of trade by contracts or acts which implied a wrongful purpose, freedom to contract and to abstain from contracting and to exercise every reasonable right incident thereto became the rule in the English law.. The scope and effect of this freedom to trade and contract is clearly shown by the decision in Mogul Steamship Co. v. McGregor (1892), A. C. 25. While it is true that the decision of the House of Lords in the case in question was announced shortly after the passage of the Anti-trust Act, it serves reflexly to show the exact • state "of the law in England at the time the Antitrust statute was enacted.

In this country also the acts from which it was deemed there resulted a part if not all of the injurious consequences ascribed to monopoly, came to be referred to as a monopoly itself. In other words, here as had been the case in England, practical common sense caused attention to be concentrated not upon the theoretically correct name to be given to the condition or acts which gave rise to a harmful result, but to the result itself and to the remedying of the evils which it produced. The statement just made is illustrated by an early statute of the Province of Massachusetts, that is, chap. 31 of the laws of 1778-1779, by which monopoly and forestalling were expressly treated as one and the same thing.

It is also true that while the principles concerning contracts in restraint of trade, that is, voluntary restraint put by a person on his right to pursue his calling, hence only operating subjectively, came generally to be recognized *57in accordance with the English rule, it came moreover to pass that contracts or acts which it was considered had a monopolistic tendency, especially those which were thought to unduly diminish competition and hence to enhance prices — in other words, to monopolize — came also in’a generic sense to be spoken of and treated as they had been in England, as restricting the due course of trade, and therefore as being in restraint of trade. The dread of monopoly as an emanation of governmental power, while it passed at an early date out of mind in this country, as a result of the structure of our Government, did not serve to assuage the fear as to the evil consequences which might arise from the acts of individuals producing or tending to produce the consequences of monopoly. It resulted that treating such acts as we have said as amounting to monopoly, sometimes constitutional restrictions, again legislative enactments or judicial decisions, served to enforce and illustrate the purpose to prevent the occurence of the evils recognized in the mother country as consequent upon monopoly, by providing against contracts or acts of individuals or combinations of individuals or, corporations deemed to be conducive to such results. To refer to .the constitutional or legislative provisions on the subject or many judicial decisions which illustrate it would unnecessarily prolong this opinion. We append in the margin a note to treatises, &c., wherein are contained references to constitutional and statutory provisions and to numerous decisions, etc., relating to the subject.1

It will be found that as modern conditions arose-the trend of legislation and judicial decision came more and more to adapt the recognized restrictions to new manifestations of conduct or of dealing which it was thought *58justified the inference of intent to do. the wrongs which it had been the purpose to prevent from the beginning. The evolution is clearly pointed out in National Cotton Oil Co. v. Texas, 197 U. S. 115, and Shawnee Compress Co. v. Anderson, 209 U. S. 423; and, indeed, will be found to be illustrated in various aspects by the decisions of this court which have been concerned with the enforcement of the act we are now considering. ■

Without going into detail and but very briefly surveying the whole field, it may be with accuracy said that the dread of enhancement of prices and of other wrongs which it was thought would flow from the undue limitation qn competitive conditions caused by contracts or other acts of individuals or corporations, led, as a matter of public policy, to the prohibition-or treating as illegal all contracts or acts which were unreasonably restrictive of competitive conditions, either from the nature or character of the contract or act or where the surrounding circumstances were such as to justify the conclusion that they had not been entered into or performed with the legitimate purpose of reasonably forwarding personal interest and developing trade, but on the contrary were of such a character as to give rise to the inference or presumption that they had been entered into or done with the intent to do wrong to the general public and to limit the right of individuals, thus restraining the free flow of commerce and tending to bring about the evils, such as enhancement of prices, which were considered to be against public policy. It is equally true to say that the survey of the legislation in this country on this subject from the beginning will show, depending as it did upon the economic conceptions which obtained at the time when the legislation was adopted or judicial decision was rendered, ‘that contracts or acts were at one time deemed to be of such a character as to justify the inference of wrongful intent which were at another period thought not to be *59of that character. But this again, as we have seen, simply-followed the line of development of the law of England.

Let us consider the language of the firsij and second sections, guided by the principle that where words are employed in a statute which had at the time a well-known meaning at common law or in the law of this country they are presumed to have been used in that sense unless the context compels to the contrary.1

As to the first section, the words to be interpreted aré: “Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce ... is hereby declared to be illegal.” As there, is no room for dispute that the statute was intended to formulate a rule for the regulation of interstate and foreign commerce, the question is what was the rule which it adopted?

In view of the common law and the law in this country as to restraint of trade, which we have feviewed, and the illuminating effect which that history must have under the rule to which we have referred, we think it results:

а. That the context manifests that the statute was. drawn in the light of the existing practical conception of the law of restraint -of trade, because it groups as within that class, not only contracts which were in restraint of trade in the subjective sense, but all contracts or ácts which theoretically wiere attempts to monopolize, yet which in practice had come to be considered as iii restraint of trade in a broad sense.

б. That in view of the many new forms of.contracts and combinations which were being evolved from existing economic conditions, it was deemed essential by an all-embracing enumeration to make sure that no form of contract or combination by which an undue restraint of *60interstate or foreign commerce was brought about could save such restraint from condemnation. The statute under this view evidenced the intent not to restrain the right to make and enforce contracts, whether resulting from combination or otherwise, which did not unduly restrain interstate or foreign commerce, but to protect that commerce from being Restrained by methods, whether old or new, which would constitute an interference that is an undue restraint.

c. And as. the contracts or acts embraced in the provision were not expressly defined, since the enumeration addressed itself simply to classes of acts, those classes being broad enough to embrace every conceivable contract or combination which could be made concerning trade or commerce or the subjects of such commerce, and thus caused any act., done by any of the enumerated methods anywhere in the whole field of human activity to be illegal if in restraint of trade, it inevitably follows that ■ the provision necessarily called for the exercise of judgment which required that some standard should be resorted to for the purpose of determining whether the prohibitions contained in the statute had or had not in any given case been violated. Thus not specifying but indubitably contemplating and requiring a standard, it follows that it was intended that the standard of reason which had' been applied at the commo^ law and in this country in dealing with subjects of the character embraced by the statute, was intended to be the measure used for the purpose of determining whether in a given case a particular act had or had not brought about the wrong against which the statute provided.

And a consideration of the text of the second section serves to establish that it was intended to supplement the first and to make sure that by no possible guise could the public policy embodied in the first section be frustrated or evaded. The prohibitions of the second embrace *61“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons,, to monopolize any part of^the trade or commerce among the several states, or with ■ foreign nations, . •. .” By reference to the ternas of § 8 it ‘is certain that the word person'clearly implies a corporation, •as well as an individual.'.

The commerce .referred to by the words “any part” construed in the light of the manifest purpose of the statute has both a geographical, and a distributive significance, that is it includes any portion of theJJnited States and any One of the classes of things forming a part of interstate or foreign commerce.

Undoubtedly, the words “to monopolize” and.“monopolize” as used in the section reach every act bringing about the prohibited results. The ambiguity, if any, is involved in détermining'what is intended by monopolize. But.this ambiguity is readily dispelled in the light of the previous history of the law of restraint of trade to which we have referred and the indication which it .gives of the practical evolution by which monopoly and ..the acts which, produce the same result as monopoly,. that is, an undue restraint of the course of trade, all carné to be spoken of as, and to be indeed synonymous with, restraint .of trade. In other words, having by the first section forbidden all means of monopolizing trade, that is, unduly restraining it by means of every contract, combination, etc., the second section seeks, if possible, to make the prohibitions of the act all the more complete and perfect by embracing all attempts to reach the end prohibited by the first section, that is, restraints of trade, by any attempt to monopolize, or monopolization thereof, even although the acts by which such results are attempted to be brought about or are brought about be not embraced within the general-enumeration of the first section. And, of course, when the second section is thus harmonized with and made as it *62was intended to be the complement of the first, it becomes obvious that the criteria to be resorted to in any given case for the purpose of ascertaining whether violations of the section have been committed, is the rule of reason guided by the established law and by the plain duty to enforce the prohibitions of the act and thus the public policy which its restrictions were obviously enacted to subserve. And it is worthy of observation, as we have previously remarked concerning the common law, that although the statute by the comprehensiveness of the enumerations embodied in both the first and second sections makes it certain that its purpose was to prevent undue restraints of every kind or nature, nevertheless by the omission of any direct prohibition against monopoly in the concrete it indicates a consciousness that the freedom of the individual right to contract when not unduly or improperly exercised was the most efficient means for the prevention of monopoly, since the operation of the centrifugal and centripetal forces resulting from the right to freely contract was the means by which monopoly would be inevitably prevented if no extraneous or sovereign power imposed it and no right to make unlawful contracts having a monopolistic tendency were permitted. In other words that freedom to contract was the essence of freedom from undue restraint on the right to contract.

Clear as it seems to us is the meaning of the provisions of the statute in the light of the review which we have made, nevertheless before definitively applying that meaning it behooves us to consider the contentions urged on one side or the other concerning the meaning of the statute, which, if maintained, would give to it, in some aspects a much wider and in every view at least a somewhat different significance. And to do this brings us to the second question which, at the outset, we have stated it was our purpose to consider and dispose of.

*63 Second. The contentions of the parties as to the meaning of the statute and the decisions of this court relied upon concerning those contentions.

In substance, the propositions urged by the Government are reducible to this: That the language of the statute embraces every contract, combination, etc., in restraint of trade, and hence its text leaves no room for the exercise of judgment, but simply imposes the plain duty of applying its prohibitions to every case within its literal language. The error involved lies in assuming the matter to be decided. This is true because as the acts which may come under the classes stated in the first section and the restraint of trade to which thát section applies are not specifically enumerated or defined, it is obvious that judgment must in every case be called into play in order to determine whether a particular act is embraced within the statutory classes, and whether if the act is within such classes its nature or effect causes it to be a restraint of trade within the intendment of the act. To hold to the contrary would require the conclusion either that every contract, act or combination of any kind or nature, whether it operated a restraint on trade or not, was within the statute, and thus the statute would be destructive of all right to contract or agree or combine in any respect whatever, as to subjects embraced in interstate trade or commerce, or if this conclusion were not reached, then the contention would require it to be held that as the statute did not define the things to which it related and excluded resort to the only means by which the acts to which it relates could be ascertained — the light of reason — the enforcement of the statute was impossible because of its uncertainty. ■ The merely generic enumeration which the statute makes of the acts to which it refers and the absence of any definition of restraint of trade as used in the statute leaves room for but one conclusion, which is, that it was expressly designed not to unduly limit ¡the appli*64cation of the act by precise definition, but while clearly fixing a standard, that is, by defining the ulterior boundaries which could not be transgressed with impunity, to leave' it to be determined by the light of reason, guided by the principles of law and the duty to apply and enforce the public policy embodied in the statute, in every given ■case whether any particular act or contract was within the contemplation of the statute.

But, it is said, persuasive as these views may be, they may not be here applied, because the previous decisions of this court have given to the statute a meaning which expressly excludes the construction which must result from the reasoning státed. The cases are United States v. Freight Association, 166 U. S. 290, and United States v. Joint Traffic Association, 171 U. S. 505. Both the cases involved the legality of combinations or associations of railroads engaged in interstate commerce for the purpose of controlling the conduct of the parties to the association or combination iri many particulars. The association or combination was assailed in each case as being in violation of the statute. It was held that they were. It is undoubted that in the opinion in each case general language, was made use of, which, when separated from its context, would justify the conclusion that it was decided that reason could not be resorted to for the purpose of determining whether the acts complained of were within the statute. It is, however, also true that the nature and character of the contract or ágreement in each case was fully referred to and suggestipns as to their unreasonableness pointed out in order to indicate that they were within the prohibitions of the statute. As the cases cannot by any possible conception be treated as authoritative • without the certitude that reason was resorted to for the purpose of deciding them, it follows as a matter of course that it must have been held by the light of reason, since the conclusion could not have been otherwise reached, that the assailed *65contracts or agreements were within the general enumeration of the statute, and that their operation and effect brought about the restraint of trade which the statute prohibited. This being inevitable, the deduction can in reason only be this: That in the cases relied upon it having been found' that the acts complained of were within the statute and operated to produce the injuries which the statute forbade, that resort to reason was not permissible in order to allow that to be done which the statute prohibited. This being true, the rulings in the cases relied upon when rightly appreciated were therefore this and nothing more: That as considering the contracts or agreements, their necessary effect and the character of the parties by whom they were made, they were clearly restraints of trade within the purview of the statute, they could not be taken out of that category by indulging in general reasoning as to the expediency or non-expediency of having made the contracts or the wisdom or want of wisdom of the statute which prohibited their being made. That is to say, the cases but decided that the nature and character of the contracts, creating as they did a conclusive presumption which brought them within the statute, such result was not to be disregarded by the substitution of a judicial appreciation of what the law ought to be for the plain judicial duty of enforcing the law as it was made.

But aside from reasoning it is true to say that the cases relied upon do not when rightly construed sustain the doctrine contended for is established by all of the numerous decisions of this court which have applied and enforced the Anti-trust Act, since they all in the very nature of things rest upon the premise that reason was the guide by which the provisions of the act were in every case interpreted. Indeed intermediate the decision of the two cases, that is, after the decision in the Freight Association Case and before the decision in the Joint Traffic Case, the case of Hopkins v. United States, 171 U. S. 578, was de*66cided, the opinion being delivered by Mr. Justice Peck-ham, who wrote both the opinions in the Freight Association and the Joint Traffic cases. And, referring in the Hopkins Case to the broad claim made as to the rule of interpretation announced in the Freight Association Case, it was said (p.'592): “To treat as condemned by the act all agreements under which, as a result, the cost of conducting an interstate commercial business may be increased would enlarge the application of the act far beyond the fair meaning of the language used. There must be some direct and immediate effect upon interstate commerce in order to come within the act.’’ And in the Joint Traffic. Case this statement was expressly reiterated and approved and illustrated by example; like limitation on the general language used in Freight Association and Joint Traffic Cases is also the clear result of Bement v. National Harrow Co., 186 U. S. 70, 92, and especially of Cincinnati Packet Co. v. Bay, 200 U. S. 179.

If the criterion by which it is to be determined in all cases whether every contract, combination, etc., is a restraint of trade within the .intendment of the law, is the direct or indirect effect of the acts involved, then of course the rule of reason becomes the guide, and the construction which we have given the statute, instead of being refuted by the cases relied upon, is by those cakes demonstrated to be correct. This is true, because as the construction which we have deduced from the., history of the act and the analysis of its text is simply that in every case where it is claimed that an act or acts are in violation of the statute the rule of reason, in the light of the principles of law and. the public policy which the act embodies, must be applied. From this it follows, since that rule and the result of the test as to direct or indirect, in their ultimate aspect, come to one and the same thing, that the difference between the two is therefore only that which obtains •between things which do not differ at all.

*67If it be true that there is this identity of result between the rule intended to be applied in the Freight Association Case, that is, the rule of direct and indirect, and the rule of reason which under the statute as we construe it should be here applied, it may be asked how was it that in the opinion in the Freight Association Case much consideration was given to the subject of whether the agreement or combination which was involved in that case could be taken out of the prohibitions of the statute upon the theory of its reasonableness. The question is pertinent and must be fully and frankly met, for if it be now de.emed that the Freight Association Case was mistakenly decided or too broadly stated, the doctrine which it announced should be either expressly overruled or limited.

Í The confusion which gives rise to the question results from failing to distinguish between the want of power to take a case which by its terms or the circumstances which surrounded it, considering among such circumstances the character of the parties, is plainly within .the statute, out of the operation of the statute by resort to reason in effect to establish, that the contract ought not to be treated as within the statute, and the duty in every case where it becomes necessary from the nature and character of the parties to decide whether it was within the statute to pass upon that question by the light of reason. This distinction, we think, serves to point out what in its ultimate conception was the thought underlying the reference to the-rule of reason made in the Freight Association Case, especially when such reference is interpreted by the context of the opinion and in the light of the subsequent .opinion in the Hopkins Case and in Cincinnati Packet Company v. Bay, 200 U. S. 179.

And in order not in the slightest degree, to be wanting in frankness, we say that in so far, however, as by separating the general language used in the opinions in the Freight Association and Joint Traffic cases from the con*68text and the subject and parties with which the cases were concerned, it may be conceived that the language referred to conflicts with the construction which we give the statute, they are necessarily now limited and qualified. -We see no possible escape from this conclusion if we are to adhere to the many cases decided in this court in which the Anti-trust Law has been applied and enforced and if the duty to apply and enforce that law in the future is to continue to exist. The first is true, because the construction which we now give the statute does not in the slightest degree conflict with a single previous case .decided concerning the Anti-trust Law aside from the contention as to the Freight Association and-Joint Traffic cases, and because every one of those casés applied the rule of .reason for the purpose of determining whether the subject before the court was within the statute. The second is also true, since, as we have already pointed out, unaided by the light of reason it is impossible to Understand how the statute.may in the future be enforced and the public policy which it establishes be made efficaciousj

So .far as the objections of the defendants are concerned they are all embraced under two headings:—

a. That the act, even if the averments of the bill be true, cannot be constitutionally applied, because to do so would extend the power of Congress to subjects dehors the reach of its authority to regulate, commerce, by enabling that body to deal with mere questions of production of commodities within the States. But all the structure upon which this argument proceeds is based upon the decision in United States v. E. C. Knight Co., 156 U. S. 1. The view, however, which the argument takes of that case and the arguments based upon that view have been so repeatedly pressed upon this court in connection with the interpretation and enforcement of the Anti-trust Act, and have been so necessarily and expressly decided to be unsound as to cause the contentions to be plainly foreclosed and to require no ex*69.press notice. United States v. Northern Securities Co., 193 U. S. 197, 334; Loewe v. Lawlor, 208 U. S. 274; Swift & Co. v. United States, 196 U. S. 375; Montague v. Lowry, 193 U. S. 38, Shawnee Compress Co. v. Anderson, 209 U. S. 423.

. 6. Many arguments are pressed in various forms of statement which in substance amount to contending that the statute cannot be applied.under the facts of this case without impairing rights of property and destroying the freedom of contract or trade, which is essentially necessary to the well-being of society .and which it is insisted is protected by the' constitutional guaranty of due process of law. But the ultimate foundation of aíl these arguments is the assumption that reason may not be resorted to in interpreting and applying th,e statute, and therefore that the statute unreasonably restricts the right to contract and unreasonably operates upon the right to acquire and hold property. As the premise, is demonstrated to be unsound by the construction we have given the statute, of course the propositions which rest upon that premise need not be further noticed. .

So far as the arguments proceed upon the conception that in view of the generality of the statute it is not susceptible of being enforced by the courts because it cannot be carried out without a judicial exertion of legislative power, they are clearly unsound. The statute certainly genericaily enumerates the character of acts which it prohibits and the wrong which it was intended to prevent. The propositions therefore but insist that, consistently with the fundamental principles of due process of law, it never can be left to the judiciary to decide whether in a given case particular acts come within a generic statutory provision. But to reduce' the propositions, however, to this their final meaning makes it clear that in substance they deny the existence of essential legislative authority and challenge the right of the judiciary to perform duties which that department of the government has exerted from *70the beginning. This is' so clear as to require no elaboration. Yet, let us demonstrate that which needs no demonstration, by a few obvious examples. Take for-instance the familiar cases where the judiciary is called upon to determine whether a particular act or acts ¿re within a given prohibition, depending upon wrongful intent. .Take.questions of fraud. Consider the power which must be exercised in every case where the courts are called upon to determine whether particular acts are invalid which are, abstractly speaking, in and of themselves valid, but which are asserted to be invalid because of their direct effect' upon interstate commerce.

We come then to the third proposition requiring consideration, viz

Third. The facts and the application of the statute to them,.

Beyond dispute the proofs establish substantially as alleged in the bill the following facts:

1. The creation of the Standard Oil Company of Ohio;

2. The organization of the Standard Oil Trust of 1882, and also a previous one of 1879, not referred to in the bill, and the proceedings in the Supreme Court-of Ohio, culminating in a decree based upon the finding that the company was unlawfully a party to that trust; the transfer by the trustees.of stocks in certain of the companies; the contempt proceedings; and, finally, the increase of the capital'of the Standard Oil Company of New Jersey and the acquisition by that company of the shares of the stock of the other corporations in exchange for its certificates.

The vast amount of property and the possibilities of far-reaching control which resulted from the facts last stated are shown by the' statement which we have previously annexed concerning the parties to the trust agreement of 1882, and the corporations whose stock was held by The trustees under the trust and which came therefore .to be held by the New Jersey corporation. But these statements do not with accuracy convey an appreciation of the *71situation as it existed at the time of the entry of the decree below, since during the more than ten years which elapsed between the acquiring by the New'Jersey corporation of the stock and other property which was formerly held by the trustees' under the trust agreement, the situation of course had somewhat changed, a- change which when analyzed in the light of the proof, we think, establishes that the result of enlarging the capital stock of the New Jersey company and giving it the vast power to which we have' referred’produced its normal consequence, that is, it gave to the corporation, despite enormous dividends and despite the dropping out of certain corporations enumerated in the decree of the court below, an enlarged arid more perfect sway and control over the trade and commerce in petroleum and its products. The ultimate situation referred to will be made manifest by an examination of §§ 2 and 4 of the decree below, which are excerpted in the margin.1 ____;___

*72Giving to the facts just stated, the weight which it was deemed they were entitled to, in the light afforded by the *73proof of other cognate facts and circumstances, the court below, held that the acts and dealings established by the *74proof operated to destroy the “potentiality of competition” which otherwise would have existed to such an extent as to cause the transfers of stock which were made to the New Jersey corporation and the control which resulted over the many and various subsidiary corporations to be a combination or conspiracy in restraint of trade in violation of the first section of the act, but also to be an attempt to monopolize and a monopolization , bringing about a perennial violation of the second section.

We see no cause to doubt the correctness of these conclusions, considering the subject from every aspect, that .is, both in view of the facts established by the record and the necessary operation and effect of the law as we have *75construed it upon the inferences deducible from the lacts, for the following reasons:

a. Because the unification of power and control over petroleum and its products which was the inevitable result of the combining in the New Jersey corporation byr the increase of its stock and the transfer to it of the stocks of so many other corporations, aggregating so vast a capital, gives rise, in and of itself, in the absence of countervailing circumstances, to say the least, to the prima facie presumption of intent and purpose to maintain the dominancy over the oil industry, not as a result of normal methods of industrial development, but by new means of combination which were resorted to in order that greater .power might be added than would otherwise have arisen had normal methods been followed, the whole with the purpose of excluding others from the trade and thus centralizing in the combination a perpetual control. of the movements of petroleum and its products in the channels of interstate commerce.

b. Because the prima facie presumption of intent to restrain trade, to monopolize and to bring about monopolization resulting from the act of expanding the stock of the New Jersey corporation and vesting it with such vast control of the oil industry, is made conclusive by considering, 1, the conduct of the persons or corporations who were mainly instrumental in bringing about the extension of power in the New Jersey corporation before the consummation of that result and prior to the formation of the trust agreements of 1879 and 1882: 2, by,considering the proof- as to what was done under those agreements and .the acts which immediately preceded the vesting of power .in the New Jersey corporation as well as by weighing the ' modes in which the power vested in that corporation has been exerted and the results which have arisen from it.

Recurring to the acts doné by the individuals or corporations who were mainly instrumental in bringing about the *76expansion of the New Jersey corporation during the period prior to the formation of the trust agreements of 1879 and 1882, including those agreements, not for the purpose of weighing the substantial merit of the numerous charges of wrongdoing made during such period, but solely as an aid for discovering intent and purpose, we think no disinterested mind can survey the period in question without being irresistibly driven to the conclusion that the very geriius for commercial development and organization which it would seem was manifested from the beginning soon begot an intent and purpose to exclude others which was frequently manifested by acts and dealings wholly inconsistent with the theory that they were made with the single conception of advancing the development of business power by usual methods, but which on the contrary necessarily involved the intent to drive others from the field and to exclude them from their right to trade and thus accomplish the mastery which was the end in view. And, considering the period from the date of the trust agreements of 1879 and 1882, up' to the time of the expansion of the New Jersey corporation, the gradual extension of the power over the commerce in oil . which ensued, the decision of the Supreme Court of, Ohio, the tardiness or reluctance in conforming to the commands of--that decision, the method first adopted and that which finally culminated in the plan of the New Jersey corporation, all additionally serve to make manifest the continued existence of the intent which we have previously indicated and which among other things impelled the expansion of the New Jersey corporation. The exercise of the power which resulted from that organization fortifies. the foregoing conclusions, since the development which came, the acquisition here and there which ensued of every efficient means by which competition could have been asserted, the slow but. resistless methods which followed by which, means-of transportation were absorbed and brought under control, *77the system of marketing which was adopted by which the country was divided into districts and the trade in each district in oil was turned over to a designated corporation within the combination and all others were excluded, all lead the mind up to a conviction of a purpose and intent which we think is so certain as practically to cause the subject, not to be within the domain of reasonable contention.

The inference that no attempt to monopolize could have been intended, and that no monopolization resulted from the acts complained of, since it is established that a very small percentage of the crude oil produced was controlled by the combination, is unwarranted. As substantial power . ovei; the crude product was the inevitable result of the absolute control which existed over the refined product, the monopolization of the one carried with it the power to control the other, and if the inferences which this situation suggests were developed, which we deem it unnecessary to do, they might well serve to add additional cogency to the presumption of intent to monopolize which we have found arises from the unquestioned proof on other subjects.

We are thus brought to the last subject which we are called upon to consider, viz:

Fourth. The remedy to he administered.

It may be conceded that ordinarily where it was found that acts had i been done in violation of the statute, adequate measure of relief would result from restraining the doing of such acts in the future. Swift v. United States, 196 U. S. 375. But in a case like this, where the condition which has been brought about in violation of the statute, in and of itself, is not only a continued ¿ttempt to monopolize, but also a monopolization, the duty to enforce the statute requires the application of broader and more controlling remedies. As penalties which áre not authorized by law may not be inflicted by judicial authority, it follows that to meet the situation with which we are confronted *78the application of remedies two-fold in character becomes essential: 1st, To forbid the doing in the future of ácts like those which we have found to have been done in the past which would be violative of the statute. 2d. The exertion of such measure of relief as will effectually dissolve the combination found to exist in violation of the. statute, and thus neutralize the extension and continually operating force which the possession of the power unlawfully obtained has brought and will continue to bring about.

In applying remedies for this purpose, however, the fact must not- be overlooked that- injúry to the public by the prevention of an undue restraint, on, or the monopolization of trade or commerce is.the foundation upon which the prohibitions of the statute rest, and moreover that one of the fundamental purposes of the statute is to protect, not to destroy, ^fights of property. ■

Let us then, as a means of accurately determining what relief we.are to- afford, first -come to consider what relief was afforded by the court below, in order to fix how far it is necessary to take from or add to that relief, to the end that the prohibitions-of the statute.jjiay have complete and operative force.

The court below by virtue of §§ 1, 2, and 4 of its decree, which we have in part previously excerpted in the margin, adjudged that the New Jersey corporation in so far as it held the stock of the various corporations, recited in §§ 2 and 4 of the decree, or-controlled the same was a combination in violation of the first section of the act,, and an attempt to monopolize or a monopolization contrary to the second section of the act. It commanded the dissolution of the combination, and therefore in' effect, directed the transfer by the New Jersey corporation back to the stockholders of the various subsidiary corporations entitled to the same of the stock which had been turned over to the New Jersey company in exchange for its stock. To *79make this command effective § 5 of the decree forbade the New Jersey corporation from in any form Or maimer exercising any ownership or exerting any power directly or indirectly- ip virtue of its apparent title to the stocks of the subsidiary corporations, and prohibited those subsidiary corporations from paying any dividends to the New Jersey-corporation or-doing any act which would recog-' nize further power in that company, except to the extent . that it was necessary to enable that company to transfer . the stock. So far as the owners of the stock of the subsidiary corporations, and the corporations themselves were concerned after the stock had been transferred, § 6 of the decree enjoined them from in any way conspiring or combining.to violate the. act or to monopolize or attempt to monopolize in virtue of their ownership of the stock .transferred to them, and prohibited all .agreements between the .subsidiary corporations or other stockholders in the future, • tending to produce or. bring about further violations of the act.

""By §7, pending.the accomplishment of the dissolution óf the combination by the transfer of stock, and until it was consummated, thg 'defendants.named in § 2, constituting all the corporations to which we have referred, were enjoined from engaging in or carrying on interstate commerce. And by § 9-,' among other things a delay of thirty days was granted for the carrying into effect of the directions of the decree.

. So far as the decree held that the ownership of the stock of the New Jersey corporation constituted' a-combination in violation of the first section and an attempt to create a monopoly or to monopolize under the second section and commanded the dissolution of the combination, the decree was clearly appropriate. And this also is true of § 5 of the decree which restrained both the New Jersey corporation and the subsidiary corporations from doing anything which would recognize dr give effect to further ownership *80in the New Jersey corporation of the stocks which were ordered to be retransferred.

But the contention is that, in so far as the relief by way of injunction which was awarded by § 6 against the stockholders of the subsidiary corporations or the subsidiary corporations themselves after the. transfer of stock by the New Jersey corporation was completed in conformity to the decree, the relief awarded was too broad; a. Because it was not sufficiently specific and tended to cause those who were within the embrace of the order to cease to be under the protection of the law of the land and required them to thereafter conduct their business under the jeopardy of punishments for contempt for violating a general injunction. New Haven R. R. v. Interstate Commerce Commission, 200 U. S. 404. Besides it is said that the restraint imposed by § 6 — even putting out of view the consideration just stated — was moreover calculated to do injury to the public and it may be in and of itself to produce the very restraint on the due course of trade which it was intended to prevent. We say this since it does not necessarily follow because an illegal restraint of trade or an attempt to monopolize or a monopolization resulted from the combination and the transfer of the stocks of. the subsidiary corporations to the New Jersey corporation that a like restraint or attempt to monopolize or monopolization would necessarily arise from agreements between one or more of the subsidiary corporations after the transfer of the stock by the New Jersey corporation. For illustration, take the pipe lines. By the effect of the transfer of the stock the pipe lines would come under the control of various corporations' instead of being subjected to a uniform control. If various corporations, owning the lines determined in the public interests u *ó. combine as to make a continuous line, such agreement or' Combination would, not be repugnant to the act, and yet it might be restrained by the decree. As another example, take the *81Union Tank Line Company, one of the subsidiary corporations, the owner practically of all the tank cars in use by the combination. If -no possibility existed of agreements for the distribution of these cars among the subsidiary corporations,. the most serious detriment to the public interest might'result. Conceding the merit, abstractly considered, of these contentions they are irrelevant. We so think, since we construe the sixth paragraph of the decree, not as depriving the stockholders or the corporations, after the dissolution of the combination, ■ of the power to make normal and lawful contracts or agreements, but as restraining them from, by any device whatever, recreating directly or indirectly the illegal combination which the decree, dissolved. In other words we construe the sixth paragraph of the decree, not as depriving the stockholders or corporations of the right to live under the law of the land, but as compelling obedience to that law. As therefore the sixth paragraph as thus construed is not amenable to the criticism directed against it and cannot produce the harmful results which the arguments suggest it whs obviously right. We think that in view of the magnitude of the interests involved and their complexity that the delay of thirty days allowed for executing the decree was too short and should be extended so as to embrace a period of at least six months. So also, in view of the possible serious injury to result to the public from an absolute cessation of interstate commerce in petroleum and its products by such vast agencies as are embraced in the combination, a result which might arise from that portion of the decree which enjoined carrying on of interstate commerce not only by the New Jersey corporation but by all the subsidiary companies until the dissolution of the combination by the transfer of the stocks in accordance with the decree, the injunction provided for in § 7- thereof should not have been- awarded.

Our conclusion is that the decree below was right and *82should be affirmed, except as to the minor matters concerning which we have indicated the decree should be modified. Our order will therefore be one of affirmance with directions, however, to modify the decree in accordance with this opinion. The court below to retain jurisdiction to the extent necessary to compel compliance in every respect with its decree.

And it is so ordered.

Mr. Justice Harlan

concurring in part, and dissenting in part. .

A sense of duty constrains me to express the objections which I have to certain declarations in the opinion just delivered on behalf of the court.

I concur in holding that the Standard Oil Company of New Jersey and its subsidiary companies constitute a combination in restraint of interstate commerce, and that they have attempted to monopolize and have monopolized parts of such commerce — all in violation of what is known as the Anti-trust Act of 1890. 26 Stat. 209, c. 647. The evidence in this case overwhelmingly sustained that view ■and led the Circuit Court, by its final decree, to order the dissolution of the New Jersey corporation and the discontinuance of the illegal combination between that corporation and its subsidiary companies.

.In my judgment, the decree below should have been affirmed without qualification. But the court, while affirming the decree, directs some modifications in respect of what it characterizes as “minor matters.” It is to be apprehended that those modifications may prove to be mischievous. In saying this, I have particularly in view . the statement in the opinion that “it does not necessarily follow that because an illegal restraint of trade or an attempt to monopolize or a monopolization resulted from the combination and the transfer of the stocks of the subsidiary corporations to the New Jersey corporation,.. *83that a like restraint of trade or attempt to monopolize or monopolization would necessarily arise from agreements between one or more of the subsidiary corporations after the transfer of the stock by the New Jersey corporation.” Taking this language, in connection with other parts of the opinion, the subsidiary companies are thus, in effect, informed — unwisely, I think — that although the New' Jersey corporation, being an illegal combination, must go out of existence, they may join in an agreement to restrain commerce among the States if such restraint be not “undue.”

In order that my objections to certain parts of the court’s opinion may distinctly appear, I must state the circumstances under which Congress passed the Antitrust Act, and trace the course of judicial decisions as to its meaning and scope. This is the more necessary because the court by its decision, when interpreted by the language of its opinion, has not only upset the long-settled interpretation of the act, ■ but has usurped the constitutional functions of the legislative branch of the. Government. With all due respect for the opinions of others, I feel bound to say that what the court has said may well cause some alarm for the integrity of our institutions. bet us see how the .matter stands.

All who recall the condition of the country in. 1890 will' remember that there was everywhere, among the people generally, a deep feeling of unrest. The Nation had been rid of human slavery — fortunately, as all now feel — but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people, namely, the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit' and advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life. Such a danger was thought to be then *84imminent, and all felt, that it must be .met firmly and by such statutory regulations, as would adequately protect the people against oppression and wrong. Congress therefore took up the matter and gave the whole subject the fullest consideration.. All agreed that the National Government could not, by legislation, regulate the domestic trade carried.On wholly within the several States; for, power to regulate such trade remained with, because never surrendered by, the States. But, under authority expressly granted to it by the Constitution, Congress could regulate commerce among the several States and with foreign states.. Its- authority to regulate such commerce was and is paramount, due force being given to other provisions of the fundamental law devised by the fathers for the safety of the Government and for the protection '"and security of the essential rights inhering in life, liberty and property.

. Guided by these considerations, and to the end that the people,, so far as interstate commerce was concerned, might not be dominated by vast combinations , and monopolies, having power to advance their own selfish ends, regardless of. the general interests and. welfare, Congress passed the. Anti-trust Act of 1890 in these words (the italics here and'elsewhere in this-opinion are mine): •

' “Sec. sl. Every contract, combination in the form of ' trust or, otherwise, or conspiracy, in restraint of trade or commerce among the. several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make hny such CQntract or engage in any such combination or. conspiracy,, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall- be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion, of. the court. . § 2. Every person who shall monopolize, or attempt to ^monopolize, or combine or conspire with any other person or persons, *85to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. § 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade- or commerce in any Territory of the United States or in the District of Columbia, or in restraint'of trade or commerce between any such-Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by' imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.” 26 Stat. 209, c. 647.

The important inquiry in the present case is as to the meaning and scope of that act in its application to interstate commerce.

In 1896 this court had occasion to determine the meaning and scope of the act in an important case known as the Trans-Missouri Freight Case. 166 U. S. 290. The question there was as to the validity under the Anti-trust Act of a certain agreement between numerous railroad companies, whereby they formed an association for the purpose of establishing and maintaining rates, rules and regulations in respect of freight traffic over specified routes. Two questions were involved: first, whether the act applied to railroad carriers; second, whether the agreement the annulment of which as illegal was the basis of the suit which the United States brought. The court *86.held that railroad carriers were embraced by the act. In determining that question, the court, among other things, said:

“ The language of the act includes every contract, combination in the form of trust or otherwise, or conspiracy, in restraint'of trade or commerce among the several State's or with foreign nations. So far as the very terms of the statute go, they apply to any contract of the nature described. A -contract therefore that is in restraint of trade or commerce is,. by the strict language of the' act prohibited, even though such contract is entered into between competing common carriers by railroad, and only for the purposes of thereby affecting traffic rates for .the transportation of persons and property. If such an agreement restrains trade or commerce, it is prohibited by the statute, unless it can be said that an agreement, no matter what its terms, relating only to transportation cannot restrain trade or commerce. We see no escape from the conclusion that if an agreement of such a nature does restrain it, the agreement is condemned by this act.. . . . Nor is it, for the substantial interests of the country that any one commodity should be within the sole'power and subject to the sole will of one powerful combination of capital. Congress has, so far as its jurisdiction extends, prohibited all contracts or combinations in the form of trusts entered into for the purpose of restraining trade and commerce. .• ... While the statute prohibits all combinations in the form of trusts or otherwise, the limitation is not confined to that form alone. All combinations which are in' restraint of trade or commerce are prohibited, whether in the form of trusts or in any other form whatever.” United States v. Freight Assn., 166 U. S. 290, 312, 324, 326.

The court then proceeded to consider the second of the above, questions, saying: "Thf liext question to be discussed is as to wliat is the true construction of the statute, *87assuming that it applies to common carriers by railroad. What is the meaning of the languagé as used in the stat.ute, that 'every contract,- combination injthe form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States or .with foreign nations, is hereby declared to be illegal? ’ Is it confined to a contract or combination which is only in unreasonable restraint of trade or commerce, or does it include what the language of the act plainly and in terms covers, all contracts of that nature? It is now with much amplification of argument urged that the statute, in declaring illegal every combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, does not mean what the language used therein plainly imports, but that it only means to declare illegal any such contract which is in unreasonable restraint of trade, while leaving all others unaffected by the provisions of the act; that the common law meaning.of the term 'contract.in restraint of trade’ includes only such contracts as are in unreasonable restraint of trade, and when that term is used in the Federal statute it .is not intended to include all contracts, in restraint of trade, but only those which are in unreasonable restraint thereof. ... . By the simple use of the term 'contract in restraint of trade,’ all contracts of that nature, whether valid or otherwise, would be included, and not alone that kind of contract which wasr invalid and unenforceable as being in unreasonable restraint of trade. When, therefore, thé body of an act pronounces •as illegal every contract or combination in restraint of trade or commerce among the several States, etc., the plain and ordinary meaning of such language is not limited to that kind of contract alone which, is in unreasonable restraint of' trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has" been omitted by Congress. ... If only that kind of contract *88which is in unreasonable restraint of trade be within the. meaning of . the statute, and declared therein to be illegal, it is at once apparent that the subject of what is a reasonable rate is attended with great uncertainty. ■. . . To say, therefore,) that the act excludes-agreements which are not in unreasonable restraint of trade, and which tend simply to keep up reasonable rates , for transportation, is substantially to leave the question of unreasonableness to the companies themselves. . . . But assuming that agreements of this nature are not void at common law and that the various cases cited by the learned courts below show it, the answer to the statement of their validity now is to be found in the terms of the statute under consideration. . . . The arguments which have been addressed to us against the inclusion of all contracts in restraint of trade, as provided for by the language of the act, have been based upon the alleged presumption that Congress, notwithstanding the language of the act, could not have intended to embrace all contracts, but only such contracts as were in unreasonable restraint of trade. Under these circumstances we are, therefore, asked to ..hold that the act of Congress excepts contracts which áre not in unreasonable restraint of trade, and which" only keep rates up to a reasonable price, notwithstanding the language of the act makes no such exception. In other words, we are asked to read into the act by way of judicial legislation an exception that is not placed there by the lawmaking branch of the Government, and this is to be done upon the theory that the impolicy of such legislation is so clear that it cannot be supposed Congress intended the natural import of the language it used. This we cannot and ought not to do. . . .

“If the act ought to read, as contended for by defendants, Congress is the body to amend it and not this court, by a process of judicial legislation wholly unjustifiable. Large numbers do not agree that the view taken by defendants *89is sound or true in substance, and Congress may and very probably did share in that belief in passing the act. The public policy of the Government is to be found in its statutes, and when they have not directly spoken, then in the decisions of the courts and the constant practice of the government officials; but when the lawmaking power speaks upon a particular subject, over which it has constitutional power to legislate, public policy in such a case is what the statute enacts. If the law prohibit any contract or combination in restraint of trade or commerce, a contract or combination made in violation of such law is void, whatever may have been theretofore decided by the courts to have been the public policy of the country on that subject. The conclusion which we have drawn from the examination above made into the question before us is that the Anti-trust Act applies to railroads, and that it renders illegal all agreements which are in restraint of trade or commerce as we have above defined that expression, and the question then arises whether the agreement before us is of that nature.”

I have made these extended extracts from the opinion, of the court in the 'Txans-Missouri Freight Case in order to show beyond question, that the point was there urged by .counsel that'the Anti-trust Act condemned only contracts, combinations,'trusts and conspiracies that were in unreasonable restraint of interstate commerce, and that the .court in clear and decisive language met that point. It adjudged that Congress had in unequivocal words declared that “every contract, combination, in the form of trust or otherwise, or conspiracy, in restraint of commerce among the several States” shall be illegal, and that no distinction, so far as interstate commerce was concerned, was to be tolerated between restraints of such commerce as -were undue or unreasonable, and restraints that were due or reasonable. With, full knowledge of the then condition of the country and of its business, Congress- deter*90mined to meet, and did meet, the situation by an absolute, statutory prohibition of “every contract, combination in the form of trust or otherwise, in restraint of trade or commerce.” Still more; in response to the suggestion by able counse' that Congress intended only to strike down such contracts, combinations and monopolies as unreasonably restrained interstate commerce, this court, in words too clear to be misunderstood, said that to so hold was “to read into the act by way of judicial, legislation, an exception not placed there by the law-making branch of the Government.” “This,” the court said, as we have seen. “we cannot and ought not to do.”

It thus appears that fifteen years ago, when the purpose of Congress in passing the Anti-trust Act was fresh in the minds of courts, lawyers, statesmen and the general public, this court expressly declined to indulge in judicial legislation, by inserting in the act the word “unreasonable” or any other word of like import. It may be stated here that the country at large accepted this view of the act, and the Federal courts throughout the entire country enforced its provisions according to the interpretation given in the Freight Association Case. What, then, was to be done by those who questioned the soundness of the interpretation placed on the act by this court in that case? As the court had decided that to insert the word “unreasonable” in the act would be.t “judicial legislation” on its part, the only alternative left to those who opposed the decision in that case was to induce Congress to so amend the act as to recognize the right to restrain interstate commerce to a reasonable extent. The public press, magazines and law journals, the debates in Congress, speeches and addresses ..by public men and jurists, all contain abundant evidence of the general understanding that the meaning, extent and scope of the Anti-trust Act had been judicially determined by this court, and that the only question remaining open for discussion was the *91wisdom of the policy declared by the act — a matter that was exclusively within the cognizance of Congress. But at every session of Congress since the decision of 1896, the lawmaking branch of the Government, with full knowledge of that decision, has refused to change the policy it had declared or to so amend the act of 1890 as to except from its operation contracts, combinations and trusts that reasonably restrain interstate commerce..

But those who were in combinations that were illegal did not despair. They at once set up the baseless claim that the decision of 1896 disturbed the “business interests of the country,” and let it be known that they would never be content until the rule was established that would permit interstate commerce to be subjected to reasonable restraints. Finally, an opportunity came again to raise the same question which this court had, upon full consideration, determined in 1896. I now allude to the case of United States v. Joint Traffic Association, 171 U. S. 505, decided in 1898. What was that case?

It was a suit by the United States against more than thirty railroad companies to have the court declare illegal,, under the Anti-trust Act, a certain agreement between these companies. The relief asked was denied in the subordinate Federal courts and the Government brought the case here.

It is important to state the points urged in that case by the defendant companies charged with violating the Anti-trust Act, and to show that the court promptly met them. To that end Í make a copious extract from-the opinion in the Joint Traffic Case. Among other things, the court said: “Upon comparing that agreement [the one in the Joint Traffic Case, then under consideration, 171 U. S. 505] with the one set forth in the case of United States v. Trans-Missouri Freight Association, 166 U. S. 290, the great similarity between them suggests that a similar result should b.e reached in the two cases” (p. 5581. *92Learned counsel in the Joint Traffic Case urged a reconsideration of the question decided in the Trans-Missouri Case contending that “the decision in that case [the Trans-Missouri Freight Case] is quite plainly erroneous, and the consequences pf such error are far reaching and disastrous, and clearly at war with justice and sound policy, and the construction placed upon the Anti-trust statute has been received by the public with surprise and alarm.” They suggested , that the point made in the Joint Traffic Case as to the meaning and scope of the act might have been but was not made in the previous case. The court said (171 U. S. 559) that “the report of the Trans-Missouri Case clearly shows not only that the point now taken was there urged upon the attention of the court, but it was then intern-tionally and necessarily decided.”

The question whether the court should again consider the point decided in the Trans-Missouri Case, 171 U. S. 573, was disposed of in the most decisive language, as follows: “Finally, we are asked to reconsider the question decided in the Trans-Missouri Case, and to retrace the steps taken therein, because of the plain error contained in that decision and the widespread alarm with which it was received and the serious consequences which have resulted, or may soon result, from the law a»s interpreted in that case. It is proper to remark that an application for a reconsideration of a question but lately decided by this court is usually based upon a statement that some of the arguments employed on the original hearing of the question have been overlooked or misunderstood, or that some controlling authority has been either misapplied by the court or passed over without discussion or notice. While this is not strictly an application for a rehearing in the same case, yet in substance it is the same thing. The court is asked to reconsider a question but just decided after a careful investigation of the matter involved. There have heretofore been in effect two arguments of precisely the same *93questions now before the court, and the same arguments were addressed to us on both those occasions. The report of the Trans-Missouri Case shows a dissenting opinion delivered in that case, and that the opinion was concurred in by three other members of the court. That opinion, it will be seen, gives with great force and ability the arguments against the decision which was finally arrived at by the court. It was after a full discussion of the' questions involved and with the knowledge of the views entertained by the minority as expressed in the dissenting opinion, that the majority of the court came to the conclusion if did. Soon after the decision a petition for a rehearing of the case was made, supported by a printed argument in its favor, and pressed with an earnestness and vigor and at a length which were certainly commensurate with the importance of the case. This court, with care and deliberation and also with a full appreciation of their importance, again considered the questions involved in its former decision. A majority of the court once more arrived at the conclusion it had first announced, and accordingly it denied the application. ■ And now for the third time the saíne arguments are. employed^ and the court is again asked to recant its former opinion, and to 'ddcide the. same question in direct opposition. to the conclusion arrived at in the, Trans-Missouri Case. The learned counsel while making the application frankly confers that the argument in opposition to the decision in the case above named has. been so fully, so clearly and so forcibly -presented in the dissenting opinion of Mr. Justice White [in the Freight Case] that it is hardly possible to add to it, nor is it necessary to repeat it. The fact that there was so close a division of opinion in this court when the matter was first under advisement, together with the different views taken by some of the judges of the lower courts, led us to the most careful and scrutinizing examination of the arguments advanced by both sides, and it was after such an examination that the majority of *94the court came to the conclusion it did. - .It is-not now alleged that the court on the former occasion overlooked any argument for the respondents or misapplied any controlling authority. It is simply insisted that the court, notwithstanding the arguments for an opposite view, arrived at an erroneous result, which, for reasons already stated, ought to be reconsidered and reversed. As we have twice already deliberately and earnestly considered the same arguments which are now for a third time pressed upon our attention, it could hardly be expected that our opinion should now change from that already expressed.”

These utterances, taken in connection with what was previously said in the Trans-Missouri Freight Case,.show so clearly and affirmatively as to admit of no doubt that this court, many years ago, upon thg fullest consideration, interpreted the Anti-trust Act as prohibiting and making illegal not only every contract or combination, in whatever form, which was in restraint of interstate commerce, without regard to its reasonableness or unreasonableness, but all monopolies or attempts to monopolize “any part” of such trade or commerce. Let me refer to a few other cases in which the scope of the decision in the Freight Association Case was referred to: In Bement v. National Harrow Co., 186 U. S. 70, 92, the court said: “It is true that it has been held by this court that the act (Anti-trust Act) included any restraint of commerce, whether reasonable or unreasonable ” — citing United States v. Trans-Missouri Freight Asso., 166 U. S. 290; United States v. Joint Traffic Association, 171 U. S. 505; Addyston Pipe &c. Co. v. United States, 175 U. S. 211. In Montague v. Lowry, 193 U. S. 38, 46, which involved the validity, under the Anti-trust Act, of a certain association formed for the sale of tiles, mantels, and grates, the court referring to the contention that the sale of tiles in San Francisco was so small-“ as to be a negligible quantity,” held that, the association was nevertheless a combination in restraint of interstate trade or com*95merce in violation of the Anti-trust Act. In Loewe v. Lawlor, 208 U. S. 274, 297, all the members of this court concurred in saying that the Trans-Missouri, Joint Traffic arid Northern Securities cases “hold in effect that the Antitrust Law has a broad0r application than the prohibition of restraints of trade unlawful at common law.” In Shawnee Compress Co. v. Anderson (1907), 209 U. S. 423, 432, 434, all the members of the court again concurred in declaring that “it has been decided that, not only unreasonable but all direct restraints of trade are prohibited, the law being thereby distinguished from the common law.” In United States v. Addyston Pipe Company, 85 Fed. Rep. 271, 278, Judge Taft, speaking for the Circuit Court of Appeals for the Sixth Circuit, said that according to the decision of this court-iri the Freight Association Case, “contracts in restraint of interstate transportation were within the statute, whether the restraints could be regarded as reasonable at common law or not.” .In Chesapeake & Ohio Fuel Co. v. United States (1902), 115 Fed. Rep. 610, 619, the Circuit Court of Appeals for the Sixth Circuit, after referring to the right of Congress to regulate interstate commerce, thus interpreted the prior decisions of this court in the Trans-Missouri, the Joint Traffic and the Addyston Pipe and Steel Co. cases: “In the exercise of this right, Congress has seen fit to.prohibit all.contracts iri restraint of trade. It has not left to the courts the consideration of the question whether such restraint is reasonable or unreasonable, or whether the contract would have been illegal at the common law of not. The act leaves for consideration by judicial authority no question of this character, but all contracts and combinations are declared illegal if in restraint of trade or commerce among the States.” As far back as Robbins v. Shelby Taxing District, 120 U. S. 489, 497, it was held that certain local regulations, subjecting drummers engaged in both interstate and domestic trade, could not be sustained by reason of the fact that no discrimina*96tion was made among citizens of the different States. The court observed that this did not meet the difficulty, for the reason that “interstate commerce cannot be taxed at all.” Under this view Congress no doubt acted, when by the Antitrust Act it forbade any restraint whatever upon interstate commerce. It manifestly proceeded upon the theory that interstate commerce could not be restrained at all by combinations, trusts or monopolies, but must be allowed to flow in its accustomed channels, wholly unvexed and unobstructed by anything that would restrain its ordinary movement. See also Minnesota v. Barber, 136 U. S. 313, 326; Brimmer v. Rebman, 138 U. S. 78, 82, 83.

In the opinion delivered on behalf of the minority in the Northern Securities Case, 193 U. S. 197, our present Chief Justice referred to the contentions made by the defendants in the Freight Association Cade, one of which was that the agreement there involved did not unreasonably restrain interstate commerce, and said: “Both these contentions were decided against the association, the court holding that the Anti-trust Act did embrace interstate carriage by railroad corporations, and as that act prohibited any contract in restraint of interstate commerce, it hence embraced all contracts of that character, whether they were reasonable or unreasonable.” One of the Justices who dissented in the Northern Securities Case in'a separate opinion, concurred in by the minority, thus referred to the Freight and Joint Traffic cases: “For it cannot be too carefully remembered that that clause applies to ‘ every ’ contract of the forbidden kind — a consideration which was the turning point of the Trans-Missouri Freight Association case. . . . Size has nothing to do with the matter. A monopoly of ‘any part’ of commerce among the States is unlawful.”

In this connection it may be well to refer to the adverse report made in 1909, by Senator Nelson, on behalf of the Senate Judiciary Committee, in reference to á certain bill *97offered in the Senate and which proposed to amend the Anti-trust Act in various particulars. That report contains a full, careful and able-analysis of judicial decisions relating to combinations and monopolies in restraint of trade and commerce. Among other things said in it which bear on the questions involved in the present case are these: “The Anti-trust Act makes it a criminal offense, to violate the law, and provides a punishment both by fine and imprisonment. To inject into the act the question of whether an agreement or combination is reasonable or unreasonable would render the act as a criminal or penal statute indefinite and uncertain, and hence, to that extent, utterly nugatory and void, and would practically amount to a repeal of that part of the act. . . . And while the same technical objection does not apply to civil prosecutions, the injection of the rule of reasonableness or unreasonableness would lead to the greatest variableness and uncertainty in the enforcement of the law. The defense of reasonable restraint would be made in every case and there would be as many different rules of reasonableness as cases, courts and juries. What one court or jury might deem unreasonable another court or jury might deem reasonable. A court or jury in Ohio might find a given agreement or combination reasonable, while a court and jury in Wisconsin might find the same agreement and- combination unreasonable. In the case of People v. Sheldon, 139 N. Y. 264, Chief Justice Andrews remarks: ‘If agreements and combinations to prevent competition in prices are or may be hurtful to trade, the only sure remedy is to prohibit all agreements of that character. If the validity of such ah agreement was made to depend upon actual proof of public prejudice or injury, it would be very difficult in any case .to establish the invalidity, although the moral evidence might be very convincing.’ ... To amend the Anti-trust Act, as suggested by this bill, would be to entirely emasculate it,, and for all practical purposes render it nugatory as a reme*98dial statute. Criminal prosecutions would not lie and civil remedies would labor under the greatest doubt and uncertainty. The act as it exists is clear, comprehensive, certain and highly remedial. It practically covers the field of Federal jurisdiction, and is in every respect a model law. To destroy or undermine it at the present juncture, when combinations are on the increase, and appear to be as oblivious as ever of the rights of the public, would be a calamity.” The result was the indefinite postponement by the Senate of any further consideration of the proposed amendments of the Anti-trust Act.

. After what has been adjudged, upon full consideration, 'as to the meaning and scope of the Anti-trust Act, and in view of the usages of this court when attorneys for litigants have attempted to reopen questions that have been deliberately decided, I confess to no little surprise as to what has occurred in the present case. The court says that the previous cases, above cited, “cannot by any possible conception be treated as authoritative without the certitude that reason was resorted to for the purpose of deciding them.” And its opinion is full of intimations that this court proceeded in those cases, so far as the present question is concerned, without being guided by the “rule of reason,” or “the light of reason.” It is more than once intimated, if not suggested, that if the Anti-trust Act is to be construed as' prohibiting every contract or combination, of whatever nature, which is in fact in restraint of commerce, regardless of the reasonableness or unreasonableness of such restraint, that fact would show that the court had not proceeded, in its decision, according to “the light of reason,” but had disregarded the “rule of'reason.” If ■ the court, in those cases, was wrong in its construction qf the'act, it is certain that it fully apprehended the views advanced by learned counsel in previous cases and pronounced them to be untenable.. The published reports place this beyond all question. The opinion'of the court *99was delivered by a Justice of wide experience as a judicial officer, and the court had before it the Attorney General of the United States and lawyers who were recognized, on all sides, as great leaders in their profession. The same eminent jurist who delivered the opinion in the Trans-Missouri Case delivered the opinion in the Joint Traffic Association Case, and the Association in that case was represented by lawyers whose ability was universally recognized. Is it to be supposed that any point escaped notice in those cases when we think of the sagacity of the Justice who expressed the views of the court, or of the ability of the profound, astute lawyers, who sought such an interpretation of the act as would compel the court to insert words in the statute- which Congress had not put there, and the insertion of which words, would amount to “judicial legislation”? Now this court is asked to do that which it has distinctly declared it could not and would not do, and has now done what it then said it could not constitutionally do. It has, by mere interpretation, modified the act of Congress, and deprived it of practical value as a defensive measure against the evils to be remedied. On reading the opinion just delivered, the first inquiry will, be, that as the court is unanimous in holding that the particular things done by the Standard Oil Company and its subsidiary companies, in this case, were illegal under the Anti-trust Act, whether those things were in reasonable or unreasonable restraint of interstate commerce, why was it necessary to make an elaborate argument, as is done in the opinion, to show that according to the “rule of reason” the act as passed by Congress should be interpreted as if it contained the word “unreasonable” or the word “undue ” ? The only answer which, in frankness, can be given to this question is, that the court intends to decide that its deliberate judgment, fifteen years ago, to the effect .that the act permitted no restraint whatever of interstate commerce, whether reasonable or unreasonable, was not in accordance with *100the “rule of reason.”' In effect the court says, that it will now, for the first time, bring the discussion under the “light of reason” and apply the “rule of reason” .to the questions to be decided. I have the authority of this court for saying that such a course of proceeding on its part would be “judicial legislation.”

Still more, what is now done involves a serious departure from the settled usages of this court. Counsel have ■not ordinarily been allowed to discuss questions already settled by previous decisions. More than once at the present term, that rule has been applied. In St. Louis, I. M. & S. Ry. Co. v. Taylor, 210 U. S. 281, 295, the court had occasion to determine the meaning and scope of the original Safety Appliance Act of Congress passed for the protection of railroad employés and passengers on interstate trains. 27 Stat. 531, § 5, c. 196. A particular construction of that act was insisted upon by the interstate carrier which was sued under the Safety Appliance Act; and the contention was that a different construction, than the one insisted upon by the carrier, would be a harsh one. After quoting the words of the act, Mr. Justice Moody said for the court: “There is no escape from the meaning of these words. Explanation cannot clarify them, and ought not to be epiployed to confuse them or lessen their significance. The obvious purpose of the legislature was to supplant, the qualified duty of the common law with an absolute duty deemed by it more just. If the railroad does, in point of fact; use cars which do not comply with the standard, it violates the plain prohibitions of the law, and there arises from that violation the liability to make compensation to one who is injured by it. It is urged that this is a harsh construction. To this we reply that, if it be the true construction, its harshness is no concern of the courts. They have no responsibility for the justice or wisdom of legislation, and ho duty except to enforce the law as it is written, unless it is clearly beyond the constitutional power of the lawmaking *101body.....It is quite conceivable that Congress, contemplating the inevitable hardship of such injuries, and hoping to diminish the economic loss to the community resulting from them, should deem it wise to impose their burdens upon those who could measurably control their causes, instead of upon those who are in the main helpless in that regard. Such a policy would be intelligible, and, to say the least, not so unreasonable as to require us to doubt that it was intended, and to seek some unnatural interpretation of common words. We see no error in this part of the ease.” And at the present term of this court we were asked, in a case arising under the Safety Appliance Act, to reconsider.the question decided in the Taylor Case, • We declined to do so, saying in an opinion just now handed down: “In view of these facts, we are unwilling to regard the question as to the meaning and scope of the Safety Appliance Act, so far as it relates to automatic couplers on trains moving in interstate traffic, as open to further discussion here. If the court was wrong in the Taylor case the way is.open for such an amendment of the statute as Congress may, in its discretion, deem proper. - This court ought not now to disturb what has been so widely accepted and acted upon by the courts as having been decided in that case. A contrary course would cause infinite uncertainty, if not mischief, in the administration of the law in the Federal courts. To avoid misapprehension,, it is appropriate to say that we are not to be understood as questioning the soundness of the interpretation heretofore placed by this court upon the Safety Appliance Act. We only mean to say that until Congress, by an amendment of the statute, changes the rule announced in the Taylor Case, this court will adhere to and apply that rule.” C., B. & Q. Ry. Co. v. United States, 220 U. S. 559. When counsel in the present case insisted upon a reversal of the former rulings of this court, and asked such an interpretation of the Anti-trust Act as would allow reasonable restraints of interstate commerce, this *102court, in deference to established practice, should, I submit, have said to. them: “That question, according to our practice,-is not open for further discussion here. This court long ago deliberately held (1) that the act, interpreting its words in their ordinary acceptation, prohibits all restraints of interstate commerce by combinations in whatever form, and whether reasonable or unreasonable; (2) the question relates to matters of public policy in reference to commerce among the States and with foreign nations, and Congress alone can deal with the subject; (3) this--court would en.croach upon the authority of Congress if, under the guise of construction, it should assume to determine a matter of public policy; (4) the parties must go to Congress and obtain an amendment of the Anti-trust Act if they think this court was wrong in its former decisions'; and (5) this court cannot, and will not judicially legislate, since its function is to declare the law, while it belongs to the legislative department to make the law. Such á course, I am sure, would not have offended the “rule of reason.”

But my brethren, in their wisdom, have deemed it best to pursue a different course. They have now said to those who condemn our former decisions and who object to-all legislative prohibitions of contracts, combinations and trusts in restraint.of interstate commerce, “You may now'. restrain such commerce, provided yon are reasonable about it; only take care that the restraint in not undue.” The disposition of the case under consideration, according to' the views of the defendants, will, it- is claimed, quiet and give rest to “the business of the country.” On the contrary, I have a strong conviction that it will throw the business of the country into confusion and invite widely-extended and harassing- litigation; the injurious effects of which will be felt for many years to come. When Congress prohibited every contract, combination or monopoly, in restraint of commerce, it prescribed a simple, definite rule that all could understand, and which could be easily ap*103plied by everyone wishing to obey the law, and not to conduct their business in violation of law. But now, it is to be feared, we are to have, in cases without number, the constantly ..recurring inquiry — difficult to solve by proof — whether the particular contract, combination, or trust involved in each case is or is not an "unreasonable” or "undue” restraint of trade. Congress, in effect, said that there should be no restraint df trade, in any form, and this court solemnly adjudged many years ago that Congress meant" what it thus said in clear and explicit words, and that it could not add to the words of the act. But those who condemn the action of Congress are now, in effect, informed that the courts will allow such restraints . of interstate commerce as are shown not to be unreasonable or undue.

It remains for me to refer, more fully than I have heretofore done, to another, and, in my judgment — if we .look to the future — the most important aspect of this case. That aspect concerns the usurpation by the judicial branch of the Government of the functions of the legislative department. The illustrious men who laid the foundations of bur institutions, deemed no part of the National Constitution of more consequence or more essential to the per-, manancy of our form of government, than the provisions under which were distributed the powers of Government among three separate, equal and coordinate departments —legislative, executive, and judicial. This was at that, time a new feature of governmental regulation among the nations of the earth, and it is deemed by the people of every section of our own country as most vital in the workings of a representative republic whose Constitution was ordained and established in order to accomplish the objects stated in its Preamble by the means, but only by the means, provided either expressly or by necessary implication, by the instrument itself. No department of that government can constitutionally exercise the *104powers committed strictly to another and separate department. '

I said at the outset that the action of the court in this case might well alarm thoughtful men who revered Jhe Constitution. I meant by this that many things are intimated and said in the court’s opinion which will not be regarded otherwise than as sanctioning an invasion by the judiciary of the constitutional domain of Congress — an attempt by interpretation to soften or modify what some regard as a harsh public policy. This court, let me repeat, solemnly adjudged many years ago that it could not,.except by “judicial legislation,” read words into the Antitrust Act.not püt. there by Congress, and which, being inserted, give it a meaning which the words of the Act, as passed, if' properly interpreted, would not justify. The court has decided that it could not thus change a public policy formulated and declared by Congress; that Congress has paramount authority to regulate interstate commerce, and that it alone can change a policy once inaugurated by legislation. The courts have nothing to do with the wisdom or policy of an act of Congress. Their duty is to ascertain. the will of Congress, and if the statute embodying the expression of that will is constitutional, the courts must respect it. They have no function to declare a public policy, nor to amend legislative enactments. “What is termed the policy of the Government with reference to any particular legislation,” as this court has said, “ is generally a very uncertain thing, upon' which all sorts of opinions, each variant from the other, may be formed by different persons. It is a ground much too unstable upon which to rest the judgment of the court in the interpretation of statutes.” Hadden v. Collector, 5 Wall. 107. Nevertheless, if I do not misapprehend its opinion, the court has now read into the act of Congress words which are not to be found there, and has thereby done that which.it adjudged in 1896 and 1898 could not be done without violating *105the Constitution, namely, by interpretation of a statute, changed a public policy declared by the legislative department.

After many years of public service at the National Capital, and after a somewhat close observation of the conduct of public affairs, I am impelled to say that there is abroad, in our land, a most harmful tendency to bring about the amending of constitutions and legislative enactments by means alone of judicial construction. As a public policy has been declared by the legislative department in respect of interstate commerce, over which Congress has entire control, under the Constitution, all concerned must patiently submit to what has been lawfully done, until the People of the United States — the source-of all National power — shall, in their own time, upon reflection and through the legislative department of thé Government, require a change of that policy. There are some who say that it . is a part of one’s liberty to. conduct commerce among the States without being subject to governmental authority. But that would not be liberty, regulated by law, and liberty, which cannot be regulated by law, is not to be desired. The Supreme Law of the Land — which is binding alike upon all — upon Presidents, Congresses, the Courts'and the People — gives to Congress, and to Congress alone, authority to regulate interstate commerce, and when Congress forbids any restraint of such commerce, in any form, all must obey its mandate. To overreach the action nf Congress merely by judicial construction, that is, by indirection, is a blow: at the integrity of our governmental system, and in the end will prove most dangerous to all. Mr. Justice. Bradley wisely said, when on this Bench, that illegitimate and unconstitutional practices get their first footing by silent approaches and slight deviations from legal modes of legal procedure. Boyd v. United States, 116 U. S. 616, 635. We shall do well to heed the warnings of that great jurist.

*106I do not stop to discuss the merits of the policy embodied in the Anti-trust Act of 1890; for, as has been often adjudged, the courts, under our constitutional system, have no rightful concern with the wisdom or policy of legislation enacted by that branch of the Government which alone can make laws. •

For the reasons stated, .while concurring in the general affirmance of the decree of the Circuit Court, I dissent from that part of the judgment of this court which directs the modification of the decree of the Circuit Court, as well as from those parts of the opinion which, in effect, assert authority, in this court, to insert words in the Anti-trust Act which Congress did not . put there, and which, being inserted, Congress is made to declare, as part of the public policy of the country, what it has not chosen to declare.

Mr. Justice Rutledge

delivered the opinion of the Court.

The action is for treble damages incurred by virtue of alleged violation of the Sherman Act, §§ 1 and 2. 26 Stat. 209, 38 Stat. 731,15 U. S. C. §§ 1,2, 7,15. The case comes here on certiorari, 331 U. S. 800, from affirmance by the Circuit Court of Appeals, 159 F. 2d 71, of a judgment of the District Court, 64 F. Supp. 265. That judgment dismissed the amended complaint as insufficient to state a cause of action arising under the Act. In this posture of the case, the legal issues are to be determined upon the allegations of the amended complaint.1

The main question is whether, in the circumstances pleaded, California sugar refiners who sell sugar in interstate commerce may agree among themselves to pay a uniform price for sugar beets grown in California without incurring liability to the local beetgrowers under the Act. Narrowly the question is whether the refiners’ agreement *222together with the allegations made concerning its effects shows a conspiracy to monopolize and to restrain interstate trade and commerce or one thus affecting only purely local trade and commerce.

The material facts pleaded, which stand admitted as if they had been proved for the purposes of this proceeding, may be summarized as follows: Petitioners’ farms are located in northern California, within the area lying north of the thirty-sixth parallel. The only practical market available to beet growers in that area was sale to one of three refiners.2 Respondent was one of these. Each season growers contract with one of the refiners to grow beets and to sell their entire crops to the refiner under standard form contracts drawn by it. Since prior to 1939 petitioners have thus contracted with respondent.

The refiners control the supply of sugar beet seed. Both by virtue of this fact and by the terms of the contracts, the farmers are required to buy seed from the refiner. The seed can be planted only on land specifically covered by the contract. Any excess must be returned to the refiner in good order at the end of the planting season.

The standard contract gives the refiner the right to supervise the planting, cultivation, irrigation and harvest*223ing of the beets, including the right to ascertain quality during growing and harvesting seasons by sampling and polarizing. Before delivering beets to the company, the farmers must make preliminary preparations for processing them into raw sugar.3 The refiner has the option to reject beets if the contract conditions are not complied with and if the beets are not suitable in its judgment for the manufacture of sugar.

Prior to 1939 the contract fixed the grower’s price by a formula combining two variables, a percentage of the refiner’s net returns per hundred pounds from sales of sugar and the sugar content of the individual grower’s beets determined according to the refiner’s test.4

Sometime before the 1939 season the three refiners entered into an agreement to pay uniform prices for sugar beets. The mechanics of the price-fixing arrangement were simple. The refiners adopted identical form contracts and began to compute beet prices on the basis of the average net returns of all three rather than the separate returns of the purchasing refiner. Inevitably all would pay the same price for beets of the same quality.

Since the refiners controlled the seed supply and the only practical market for beets grown in northern California, when the new contracts were offered to the farmers, they had the choice of either signing or abandoning sugar beet farming. Petitioners accordingly contracted with respondent under this plan during the 1939, 1940 and 1941 seasons. The plan was discontinued after the 1941 *224season. Because beet prices were determined for the three seasons with reference to the combined returns of the three refiners, the prices received by petitioners for those seasons were lower than if respondent, the most efficient of the three, had based its prices on its separate returns.

The foregoing allegations set forth the essential features of the contractual arrangements between the refiners and the growers and of the agreement among the refiners themselves. Other allegations were made to complete the showing of violation and injury. They relate specifically to the peculiarly integrated character of the industry, effects of the arrangements upon interstate commerce, and the relation between the violations charged and the injuries suffered by petitioners.

With reference to the industry in general, it was stated that sugar beets were grown during the seasons 1938 to 1942 on large acreages not only in northern California but also in Utah, Colorado, Michigan, Idaho, Illinois and other states. The crops so grown, when harvested, were not “sold in central markets as were potatoes, onions, corn, grain, fruit and berries, but were produced by growers under contract with manufacturers or processors and immediately upon being harvested were delivered to these manufacturers and taken to their beet sugar refineries where the sugar beets were manufactured by an elaborate process into raw sugar by the said manufacturers, who thereafter sold the resulting sugar in interstate commerce.” Then follow the allegations summarized above in note 2 concerning the bulky and semiperishable nature of sugar beets, the impossibility of transporting them over long distances or of storing them cheaply or safely, their rapid deterioration when ripe, and the necessity for prompt harvesting and marketing. These allegations must be taken as intended and effective to put the agreements complained of in the general setting of *225the industry’s unique structure and special mode of operation.

The specific allegation is added that the sugar manufactured by respondent and the other northern California refiners from beets grown in the region “was, during all of said period [1938 to 1942], sold in interstate commerce throughout the United States.”

By way of legal as well as ultimate factual conclusions the amended complaint charged that respondent had unlawfully conspired with the other northern California refiners to “monopolize and restrain trade and commerce5 among the several states and to unlawfully fix prices to be paid the growers ... all in violation of the anti-trust laws . . and that each refiner no longer competed against the others as to the price to be paid the growers, but paid the same price on the agreed uniform basis of average net returns.

There were further charges that prior to 1939 the northern California refiners had “competed in interstate commerce with each other as to the performance, ability and efficiency of their manufacturing, sales and executive departments, and each strove to increase sales return and decrease expenses,” with the result that for 1938 respondent secured substantially greater “net gross receipts of sales of sugar” than the other refiners. These in turn were reflected in the payment of 29% to 52% cents per ton more to petitioners and other growers dealing with respondent than was paid by the other refiners to their growers.

*226However, for the seasons 1939, 1940 and 1941, under the new uniform contracts and prices, “there was no longer any such competition . . . Instead it was alleged upon information and belief that, as a result of the alleged conspiracy, respondent did not conduct its interstate operations as carefully and efficiently as previously or “as it would have had said conspiracy not existed.” In consequence, respondent received less in sales returns for raw sugar and incurred greater expenses than if competition had been free, and petitioners “did not receive the reasonable value of their sugar beets.”

Further charges were that as “a direct, expected and planned result of said conspiracy, the free and natural flow of commerce in interstate trade was intentionally hindered and obstructed,” so that instead of the refiners “producing and selling raw sugar in interstate commerce ... in competition with each other . . . they became illegally associated in a common plan wherein they pooled their receipts and expenses and frustrated the free enterprise system . . .”; all incentive to efficiency, economy and individual enterprise disappeared; and the refiners operated, “in so far as the growers were concerned,” as if they were one corporation owning and controlling all factories in the area, but with three completely separated overheads and with none of the efficiency that consolidation into one corporation might bring.6

*227We are not concerned presently with the allegations relating to the injuries and amounts of damages inflicted upon petitioners,7 except to say that they are sufficient to present those questions for support by proof, if the allegations made to show a cause of action arising under the statute are sufficient for that purpose.

In our judgment the amended complaint states a cause of action arising under the Sherman Act, §§ 1 and 2, and the complaint was improperly dismissed.

I.

Broadly petitioners regard the entire sequence of growing the beets, refining them into sugar and distributing it, under the arrangements set forth, as a chain of events so integrated and taking place in interstate commerce or in such close and intimate connection with it that, for purposes of applying the Sherman Act, the complete sequence is an entirety and no part of it can be segregated from the remainder so as to put it beyond the statute’s grasp.

Respondent, on the contrary, broadly severs the phase or phases of growing and selling beets from the later ones of refining them and of marketing the sugar. The initial growing process together with sale of the beets, and it would seem also the intermediate stage of refining, are taken to be “purely local,” since all occurred entirely *228within California; therefore were wholly intrastate events; and consequently were beyond the Sherman Act’s reach.

Connected with this severance is the assertion that the complaint alleges no monopolistic or restrictive effects upon interstate commerce, but only such effects in the intrastate phases of the industry.

Much stress is laid upon the so-called interruption of the sequence at the refining stage. Prior to the interruption only beets are involved, afterward only sugar. Since the two commodities are different and all that affects the beets takes place in California, including the restraints alleged upon their sale, the trade and commerce in beets is wholly distinct from that in sugar and is entirely local, as are therefore the restraint and monopolization of that trade. Admittedly once the beets are converted into sugar and the sugar starts on its interstate journey to the tables of the nation, interstate commerce becomes involved. But only then is it affected, and nothing occurring before the journey begins or at any rate before the beets become sugar substantially affects or, for purposes of the statute’s application, has relevance to that commerce.

Thus sugar together with its interstate sale and transportation is absolutely divorced from sugar beets, their production, sale and delivery to the refiner. Manufacture breaks the relationship and with it all consequences growing out of the restraints for the interstate processes and the purposes of the statute. In other words, since the restraints precede the interstate marketing of the sugar and immediately affect only the local marketing of the beets, they have no restrictive effect upon the trade and commerce in sugar.

This very nearly denies that sugar beets contain sugar. It certainly denies that the price of beets and restrictions upon it have any substantial relation in fact or in legal *229significance for the statute’s purposes to the price of sugar sold interstate, when the restrictions take place within the confines of a single state and before the interstate marketing process begins.

II.

The broad form of respondent’s argument cannot be accepted. It is a reversion to conceptions formerly held but no longer effective to restrict either Congress’ power, Wickard v. Filburn, 317 U. S. Ill, or the scope of the Sherman Act’s coverage. The artificial and mechanical separation of “production” and “manufacturing” from “commerce,” without regard to their economic continuity, the effects of the former two upon the latter, and the varying methods by which the several processes are organized, related and carried on in different industries or indeed within a single industry, no longer suffices to put either production or manufacturing and refining processes beyond reach of Congress’ authority or of the statute.

It is true that the first decision under the Sherman Act applied those mechanical distinctions with substantially nullifying effects for coverage both of the power and of the Act. United States v. E. C. Knight Co., 156 U. S. 1. Like this one, that case involved the refining and interstate distribution of sugar. But because the refining was done wholly within a single state, the case was held to be one involving “primarily” only “production” or “manufacturing,” although the vast part of the sugar produced was sold and shipped interstate,8 and this was the main end of the enterprise. The interstate distributing phase, *230however, was regarded as being only “'incidentally,” “indirectly,” or “remotely” involved; and to be “incidental,” “indirect,” or “remote” was to be, under the prevailing climate, beyond Congress’ power to regulate, and hence outside the scope of the Sherman Act. See Wickard v. Filburn, supra, at 119 et seq.

The Knight decision made the statute a dead letter for more than a decade and, had its full force remained unmodified, the Act today would be a weak instrument, as would also the power of Congress, to reach evils in all the vast operations of our gigantic national industrial system antecedent to interstate sale and transportation of manufactured products. Indeed, it and succeeding decisions, embracing the same artificially drawn lines, produced a series of consequences for the exercise of national power over industry conducted on a national scale which the evolving nature of our industrialism foredoomed to reversal.9

*231We do not stop to review again in detail the familiar story of the progression of decision to that end, perhaps not told elsewhere more succinctly or pertinently than in Wickard v. Filburn, supra. 10 Suffice it to say that after coming back to life again in the Northern Securities case, 193 U. S. 197, for matters of transportation, the Sherman Act had a second rebirth in 1911 with the decisions in Standard Oil Co. v. United States, 221 U. S. 1, and United States v. American Tobacco Co., 221 U. S. 106. Cf. United States v. South-Eastern Underwriters Assn., 322 U. S. 533, 553 et seq.

Not thereafter could it be foretold with assurance that application of the labels of “production” and “manufacture,” “incidental” and “indirect,” would throw protective covering over those processes against the Act’s consequences. Very soon also came the Shreveport Rate Cases, 234 U. S. 342, again in the field of transportation, but inevitably to add force and scope to the Standard Oil and American Tobacco rulings that manufacturing companies lay within the reach of the power and of the *232statute, deriving no immunity for their conduct violative of the prohibitions merely from the fact of engaging in that character of activity.

With extension of the Shreveport influence to general application,11 it was necessary no longer to search for some sharp point or line where interstate commerce ends and intrastate commerce begins, in order to decide whether Congress’ commands were effective. For the essence of the affectation doctrine was that the exact location of this line made no difference, if the forbidden effects flowed across it to the injury of interstate commerce or to the hindrance or defeat of congressional policy regarding it.

The formulation of the Shreveport doctrine was a great turning point in the construction of the commerce clause, comparable in this respect to the landmark of Cooley v. Board of Wardens, 12 How. 299. For, while the latter gave play for state power to work in the field of commerce, the former broke bonds confining Congress’ power and made it an effective instrument for fulfilling its purpose. The Shreveport doctrine cut Congress loose from the haltering labels of “production” and “manufacturing” and *233gave it rein to reach those processes when they were used to defy its purposes regarding interstate trade and commerce. In doing so the decision substituted judgment as to practical impeding effects upon that commerce for rubrics concerning its boundaries as the basic criterion of effective congressional action.

The transition, however, was neither smooth nor immediately complete, particularly for applying the Sherman Act. The old ideas persisted in specific applications as late as the 1930’s. But after the historic decisions of 1911, and even more following the Shreveport decision, a constantly growing number of others rejected "the idea that production and manufacturing are “purely local” and hence beyond the Act’s compass, simply because those phases of a combination restraining or monopolizing trade were carried on within the confines of a single state or, of course, of several states.12 The struggle for supremacy between the conflicting approaches was long continued. But more and more until the climax came in the late 1930’s, this Court refused to decide those issues of power and coverage merely by asking whether the restraints or monopolistic practices, shown to have the forbidden effects on commerce, took place in a phase or phases of the total economic process which, apart from other phases and from the outlawed effects, occurred only in intrastate activities.13

*234In view of this evolution, the inquiry whether the restraint occurs in one phase or another, interstate or intrastate, of the total economic process is now merely a preliminary step, except for those situations in which no aspect of or substantial effect upon interstate commerce can be found in the sum of the facts presented.14 For, given a restraint of the type forbidden by the Act, though arising in the course of intrastate or local activities, and a showing of actual or threatened effect upon interstate commerce, the vital question becomes whether the effect is sufficiently substantial and adverse to Congress’ paramount policy declared in the Act’s terms to constitute a forbidden consequence. If so, the restraint must fall, and the injuries it inflicts upon others become remediable under the Act’s prescribed methods, including the treble damage provision.

The Shreveport doctrine did not contemplate that restraints or burdens become or remain immune merely because they take place as events prior to the point in time when interstate commerce begins. Exactly the contrary is comprehended, for it is the effect upon that commerce, not the moment when its cause arises, which the doctrine was fashioned to reach.

Obviously therefore the criteria respondent would have us follow furnish no basis for reaching the result it seeks. *235Only by returning to the Knight approach, and severing the intrastate events relating to the beets, including the price restraints, from the later events relating to the sugar, including its interstate sale, could we conclude there were no forbidden restraints or practices touching interstate commerce here. At this late day we are not willing to take that long backward step.

III.

We turn then to consider the questions posed upon the amended complaint that are relevant under the presently controlling criteria. These are whether the allegations disclose a restraint and monopolistic practices of the types outlawed by the Sherman Act; whether, if so, those acts are shown to produce the forbidden effects upon commerce; and whether the effects create injury for which recovery of treble damages by the petitioners is authorized.

It is clear that the agreement is the sort of combination condemned by the Act,15 even though the price-fixing was by purchasers,16 and the persons specially injured under the treble damage claim are sellers, not customers or consumers.17 And even if it is assumed that the final aim of the conspiracy was control of the local sugar beet market, it does not follow that it is outside the scope of the Sherman Act. For monopolization of local business, when achieved by restraining interstate commerce, is con*236demned by the Act. Stevens Co. v. Foster & Kleiser, 311 U. S. 255, 261. And a conspiracy with the ultimate object of fixing local retail prices is within the Act, if the means adopted for its accomplishment reach beyond the boundaries of one state. United States v. Frankfort Distilleries, 324 U. S.293.

The statute does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers. Nor does it immunize the outlawed acts because they are done by any of these. Cf. United States v. Socony-Vacuum Oil Co., 310 U. S. 150; American Tobacco Co. v. United States, 328 U. S. 781. The Act is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated. Cf. United States v. South-Eastern Underwriters Assn., supra, at 553.

Nor is the amount of the nation’s sugar industry which the California refiners control relevant, so long as control is exercised effectively in the area concerned, Indiana Farmer’s Guide v. Prairie Farmer, 293 U. S. 268, 279, United States v. Yellow Cab Co., 332 U. S. 218, 225, the conspiracy being shown to affect interstate commerce adversely to Congress’ policy. Congress’ power to keep the interstate market free of goods produced under conditions inimical to the general welfare, United States v. Darby, 312 U. S. 100, 115, may be exercised in individual cases without showing any specific effect upon interstate commerce, United States v. Walsh, 331 U. S. 432, 437-438; it is enough that the individual activity when multiplied into a general practice is subject to federal control, Wickard v. Filburn, supra, or that it contains a threat to the interstate economy that requires preventive regulation. Consolidated Edison Co. v. Labor Board, 305 U.S. 197, 221-222.

Moreover, as we said in the Frankfort Distilleries case, “. . . there is an obvious distinction to be drawn between *237a course of conduct wholly within a state and conduct which is an inseparable element of a larger program dependent for its success upon activity which affects commerce between the states.” 324 U. S. 293, 297. That statement is as true of the situation now presented as of the one then before us, although instead of restraining trade in order to control a local market petitioners control a local market in which they purchase. For this is not a case involving only “a course of conduct wholly within a state”; it is rather one involving “conduct which is an inseparable element of a larger program dependent for its success upon activity which affects commerce between the states,” and in such a case it is not material that the source of the forbidden effects upon that commerce arises in one phase or another of that program.

In view of all this, it is difficult to understand respondent’s argument that the complaint does not allege that the conspiracy had any effect on interstate commerce, except on the basis of the discarded criteria discussed in Part II above. The contention ignores specific allegations which we have set forth. But apart from that fact it rests only on a single grounding, which in the circumstances of this case is little, if any, more than a different phrasing of the criteria supplanted by the Shreveport approach.

This is that the change undergone in the manufacturing stage when the beets are converted into sugar makes the case different, for the Sherman Act’s objects, than it would be if the identical commodity were concerned from the planting stage through the phase of interstate distribution, e. g., if the commodity were wheat, as was true in Wickard v. Filburn, supra, or raisins purchased by packers from growers and shipped interstate after packing, cf. Parker v. Brown, 317 U. S. 341, 350.

*238We do not stop to consider specific and varied situations in which a change of form amounting to one in the essential character of the commodity takes place by manufacturing or processing intermediate the stages of producing and disposing of the raw material intrastate and later interstate distribution of the finished product; or the effects, if any, of such a change in particular situations unlike the one now presented.18 For mere change in the form of the commodity or even complete change in essential quality by intermediate refining, processing or manufacturing does not defeat application of the statute to practices occurring either during those processes or before they begin, when they have the effects forbidden by the Act.19 Again, as we have said, the vital thing is the effect on commerce, not the precise point at which the restraint occurs or begins to take effect in a scheme as closely knit as this in all phases of the industry. Hence in this case the mere fact that the price fixing related directly to the beets did not sever or render insubstantial its effect subsequently in the sale of sugar.

Indeed that severance would not necessarily take place if the manufacturing stage had produced a much greater change in commodities than was effected here. But under the facts characterizing this industry’s operation and the tightening of controls in this producing area by the new agreements and understandings, there can be no question that their restrictive consequences were projected substantially into the interstate distribution of the sugar, as the amended complaint repeatedly alleges. Indeed *239they permeated the entire structure of the industry in all its phases, intrastate and interstate.

We deal here, as petitioners say, with an industry tightly interwoven from sale of the seed through all the intermediate stages to and including interstate sale and distribution of the sugar. In the middle of all these processes and dominating all of them stand the refiners. They control the supply and price of seed, the quantity sold and the volume of land planted, the processes of cultivation and harvesting, the quantity of beets purchased and rejected, the refining, and the distribution of sugar both interstate and local.

Some of these controls have been built up by taking advantage of the opportunities afforded by the industry’s unique character, both natural and in its general pattern and habits of organization; 20 others by utilizing the key positions these advantages give the refiners to put contractual restraints upon the growers by their separate actions; 21 and still greater ones by the refiners’ ability, *240by virtue of their central and dominating place thus achieved, to agree among themselves upon further restrictions.

Even without the uniform price provision and with full competition among the three refiners, their position is a dominating one. The growers' only competitive outlet is the one which exists when the refiners compete among themselves. There is no other market. The farmers’ only alternative to dealing with one of the three refiners is to stop growing beets. They can neither plant nor sell except at the refiners’ pleasure and on their terms. The refiners thus effectively control the quantity of beets grown, harvested and marketed, and consequently of sugar sold from the area in interstate commerce, even when they compete with each other. They dominate the entire industry. And their dominant position, together with the obstacles created by the necessity for large capital investment and the time required to make it productive, makes outlet through new competition practically impossible. Upon the allegations, it is absolutely so for any single growing season. A tighter or more all-inclusive monopolistic position hardly can be conceived.

When therefore the refiners cease entirely to compete with each other in all stages of the industry prior to marketing the sugar, the last vestige of local competition is removed and with it the only competitive opportunity for the grower to market his product. Moreover it is inconceivable that the monopoly so created will have no effects for the lessening of competition in the later interstate phases of the over-all activity or that the effects in those phases will have no repercussions upon the prior ones, including the price received by the growers.

There were indeed two distinct effects flowing from the agreement for paying uniform growers’ prices, one immediately upon the price received by the grower rendering *241it devoid of all competitive influence in amount; the other, the necessary and inevitable effect of that agreement, in the setting of the industry as a whole, to reduce competition in the interstate distribution of sugar.

The idea that stabilization of prices paid for the only raw material consumed in an industry has no influence toward reducing competition in the distribution of the finished product, in an integrated industry such as this, is impossible to accept. By their agreement the combination of refiners acquired not only a monopoly of the raw material but also and thereby control of the quantity of sugar manufactured, sold and shipped interstate from the northern California producing area. In substance and roughly, if not precisely, they allocated among themselves the market for California beets substantially upon the basis of quotas competitively established among them at the time the uniform price arrangement was agreed upon. It is hardly likely that any refiner would have entered into an agreement with its only competitors, the effect of which would have been to drive away its growers, or therefore that many of the latter would have good reason to shift their dealings within the closed circle. Thus control of quantity in the interstate market was enhanced.

This effect was further magnified by the fact that the widely scattered location of sugar beet growing regions and their different accessibilities to market22 give the refiners of each region certainly some advantage over growers and refiners in other regions, and undoubtedly large ones over those most distant from the segment of the interstate market served by reason of being nearest to hand.

Finally, the interdependence and inextricable relationship between the interstate and the intrastate effects *242of the combination and monopoly are shown perhaps most clearly by the provision of the uniform price agreement which ties in the price paid for beets with the price received for sugar. The percentage factor of interstate receipts from sugar which the grower’s contract specifies shall enter his price for beets makes that price dependent upon the price of sugar sold interstate. The uniform agreement’s effect, when added to this, is to deprive the grower of the advantage of the individual efficiency of the refiner with which he deals, in this case the most efficient of the three, and of the price that refiner receives. It is also to reflect in the grower’s price the consequences of the combination’s effects for reducing competition among the refiners in the interstate distribution of sugar.

In sum, the restraint and its monopolistic effects were reflected throughout each stage of the industry, permeating its entire structure. This was the necessary and inevitable effect of the agreement among the refiners to pay uniform prices for beets, in the circumstances of this case. Those monopolistic effects not only deprived the beet growers of any competitive opportunity for disposing of their crops by the immediate operation of the uniform price provision; they also tended to increase control over the quantity of sugar sold interstate; and finally by the tie-in provision they interlaced those interstate effects with the price paid for the beets.

These restrictive and monopolistic effects, resulting necessarily from the practices allegedly intended to produce them, fall squarely within the Sherman Act’s prohibitions, creating the very injuries they were designed to prevent, both to the public and to private individuals.

It does not matter, contrary to respondent’s view, that the growers contracting with the other two refiners may have been benefited, rather than harmed, by the combi*243nation's effects, even if that result is assumed to have followed. It is enough that these petitioners have suffered the injuries for which the statutory remedy is afforded. For the test of the legality and immunity of such a combination, in view of the statute’s policy, is not that some others than the members of the combination have profited by its operation. It is rather whether the statute’s policy has been violated in a manner to produce the general consequences it forbids for the public and the special consequences for particular individuals essential to the recovery of treble damages. Both types of injury are present in this case, for in addition to the restraints put upon the public interest in the interstate sale of sugar, enhancing the refiner’s controls, there are special injuries affecting the petitioners resulting from those effects as well as from the immediate operation of the uniform price arrangement itself.

The fact that that arrangement is the source of both effects cannot be taken to mean that neither is outlawed by the statute, in view of their interdependence and the completely unified and comprehensive nature of the scheme as respects its interstate and intrastate phases. The policy of the Act is competition. It cannot be flouted, as has been done here, by artificial nomenclatural severance of the plan’s forbidden effects, any more than by such a segmentation of the integrated industry into legally unrelated phases. Nor can the severance be made in such a case merely by virtue of the fact that a refining or manufacturing process constitutes an intermediate stage in the whole.

To compare an industry so completely interlocked in all its stages, by all-inclusive contract as well as by industrial structure and organization, with one like producing, processing, and marketing fruits, vegetables, corn, or other products, susceptible of various uses and under con*244ditions affording varied outlets for market, both local and interstate, in the raw or refined state, in which neither such a contractual nor such an industrial integration exists, is to ignore the facts of industrial life. So is it also to make conclusive comparisons with other industries in which the manufacturing process requires and has available a greater variety of raw materials for making the finished product, and involves a longer and more extensive process of change, than does extracting the sugar content of beets to make raw sugar.

We deal with the facts before us. With respect to others which may be significantly different, for purposes of violating the statute’s terms and policy, we await another day.23

IV.

Little more remains to be said concerning the amended complaint. The allegations comprehend all that we have set forth. We do not stop to restate them, leaving their substance at this point for reference to the summary made at the beginning of this opinion.

Respondent has presented its argument as if the amended complaint omitted all reference to restraint or effects upon interstate trade in sugar and confined these allegations to the trade in beets. It is true that at the *245hearing which followed filing of the amended complaint, petitioners at one point, apparently in response to some intimation from the court, eliminated the words “sugar and sugar beets” from one of the allegations that the refiners had conspired to “monopolize and restrain trade and commerce among the several states . . . .” 24

Respondent takes this elision as effective to constitute an express disavowal by petitioners of any charge of restraint of trade in sugar, the only interstate commodity. *246The amendment did not eliminate or affect numerous other allegations which in effect repeated the charge in various forms and with reference to various specific effects upon interstate as well as local phases of the commerce. Some of these explicitly specified trade or commerce in sugar,25 others designated the trade affected as interstate, which on the facts could mean only sugar. Moreover, petitioners deny the disavowal, both in intent and in effect. They say the elision was insubstantial, since in the clause from which it was made the allegation of conspiracy to monopolize and restrain interstate commerce remained, and the only interstate trade was in sugar. We think the amendment, for whatever reason made, was not effective to constitute a disavowal, disclaimer or waiver.

The allegations are comprehensive and, for the greater part, specific concerning both the restraints and their effects. They clearly state a cause of action under the Sherman Act.

The judgment of the Circuit Court of Appeals is reversed, and the cause is remanded to the District Court for further proceedings in conformity with this opinion.

Reversed and remanded.

Mr. Justice Jackson,

with whom Mr. Justice Frankfurter joins,

dissenting.

It appears to me that the Court's opinion is based on assumptions of fact which the petitioner disclaimed in the court below. These assumptions are permissible inferences from the amended complaint only if we disregard the way in which the amendments came about.

*247On hearing, the trial judge apparently considered that a cause of action would be stated only if the complaint alleged that the growing contracts affected the price of sugar in interstate commerce. But the contracts accompanying the pleadings indicated that the effects ran in the other direction. The market price of interstate sugar was the base on which the price of beets was to be figured. The latter price was derived from the income which respondent and others received from sugar sold in the open market over the period of a year. The trial judge therefore suggested that the references to restraint of trade in sugar in interstate commerce created an ambiguity in the complaint. Accordingly, the plaintiff, at the suggestion of the court and for the specific purpose of this appeal, filed an amended complaint which completely eliminated the charge that the agreements complained of affected the price of sugar in interstate commerce, and eliminated the two other counts “to enable the Court herein to pass upon the sufficiency of the first count on its merits and, further, to make possible a speedy and inexpensive review by appeal if the Court held that the first count was insufficient.” 1 The District Court then held that since no beets *248whatever moved in interstate commerce and since there was no charge in the amended complaint that the cost or quality of the product which did move in interstate commerce was in any way affected, no cause of action was *249stated. The appeal was taken and the Circuit Court of Appeals affirmed.

This Court, however, decides the case as though the original complaint as it related to sugar had not only remained unchanged but had been proved by evidence. Despite the deletion from the complaint of the allegation concerning the price of sugar, the Court assumes, without allegation or evidence, that the price of sugar is affected and on that basis builds its thesis that the Sherman Act has been violated. I think in fairness to the litigants and the District Court, the petitioner’s case should be disposed of here on the same basis on which it was pleaded to the courts below.

On the proceedings in the courts below, I would affirm the judgment of the District Court.

Justice Thomas

delivered the opinion of the Court.

Respondent Ross-Simmons, a sawmill, sued petitioner Weyerhaeuser, alleging that Weyerhaeuser drove it out of *315business by bidding up the price of sawlogs to a level that prevented Ross-Simmons from being profitable. A jury returned a verdict in favor of Ross-Simmons on its monopolization claim, and the Ninth Circuit affirmed. We granted certiorari to decide whether the test we applied to claims of predatory pricing in Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U. S. 209 (1993), also applies to claims of predatory bidding. We hold that it does. Accordingly, we vacate the judgment of the Court of Appeals.

I

This antitrust case concerns the acquisition of red alder sawlogs by the mills that process those logs in the Pacific Northwest. These hardwood-lumber mills usually acquire logs in one of three ways. Some logs are purchased on the open bidding market. Some come to the mill through standing short- and long-term agreements with timberland owners. And others are harvested from timberland owned by the sawmills themselves. The allegations relevant to our decision in this case relate to the bidding market.

Ross-Simmons began operating a hardwood-lumber sawmill in Longview, Washington, in 1962. Weyerhaeuser entered the Northwestern hardwood-lumber market in 1980 by acquiring an existing lumber company. Weyerhaeuser gradually increased the scope of its hardwood-lumber operation, and it now owns six hardwood sawmills in the region. By 2001, Weyerhaeuser’s mills were acquiring approximately 65 percent of the alder logs available for sale in the region. App. 754a, 341a.

From 1990 to 2000, Weyerhaeuser made more than $75 million in capital investments in its hardwood mills in the Pacific Northwest. Id., at 159a. During this period, production increased at every Northwestern hardwood mill that Weyerhaeuser owned. Id., at 160a. In addition to increasing production, Weyerhaeuser used “state-of-the-art technology,” id., at 500a, including sawing equipment, to increase the amount of lumber recovered from every log, id., at 500a, *316549a. By contrast, Ross-Simmons appears to have engaged in little efficiency-enhancing investment. See id., at 438a-441a.

Logs represent up to 75 percent of a sawmill’s total costs. See id., at 169a. And from 1998 to 2001, the price of alder sawlogs increased while prices for finished hardwood lumber fell. These divergent trends in input and output prices cut into the mills’ profit margins, and Ross-Simmons suffered heavy losses during this time. See id., at 155a (showing a negative net income from 1998 to 2000). Saddled with several million dollars in debt, Ross-Simmons shut down its mill completely in May 2001. Id., at 156a.

Ross-Simmons blamed Weyerhaeuser for driving it out of business by bidding up input costs, and it filed an antitrust suit against Weyerhaeuser for monopolization and attempted monopolization under § 2 of the Sherman Act. See 26 Stat. 209, as amended, 15 U. S. C. §2 (2000 ed., Supp. IV). Ross-Simmons alleged that, among other anticompetitive acts, Weyerhaeuser had used “its dominant position in the alder sawlog market to drive up the prices for alder sawlogs to levels that severely reduced or eliminated the profit margins of Weyerhaeuser’s alder sawmill competition.” App. 135a. Proceeding in part on this “predatory-bidding” theory, Ross-Simmons argued that Weyerhaeuser had overpaid for alder sawlogs to cause sawlog prices to rise to artificially high levels as part of a plan to drive Ross-Simmons out of business. As proof that this practice had occurred, Ross-Simmons pointed to Weyerhaeuser’s large share of the alder purchasing market, rising alder sawlog prices during the alleged predation period, and Weyerhaeuser’s declining profits during that same period.

Prior to trial, Weyerhaeuser moved for summary judgment on Ross-Simmons’ predatory-bidding theory. Id., at 6a-24a. The District Court denied the motion. Id., at 58a-69a. At the close of the 9-day trial, Weyerhaeuser moved for judgment as a matter of law, or alternatively, for a new *317trial. The motions were based in part on Weyerhaeuser’s argument that Ross-Simmons had not satisfied the standard this Court set forth in Brooke Group, supra. App. 940a-942a. The District Court denied Weyerhaeuser’s motion. Id., at 720a, App. to Pet. for Cert. 46a. The District Court also rejected proposed predatory-bidding jury instructions that incorporated elements of the Brooke Group test. App. 725a-730a, 978a. Ultimately, the District Court instructed the jury that Ross-Simmons could prove that Weyerhaeuser’s bidding practices were anticompetitive acts if the jury concluded that Weyerhaeuser “purchased more logs than it needed, or paid a higher price for logs than necessary, in order to prevent [Ross-Simmons] from obtaining the logs they needed at a fair price.” Id., at 978a. Finding that Ross-Simmons had proved its claim for monopolization, the jury returned a $26 million verdict against Weyerhaeuser. Id., at 967a. The verdict was trebled to approximately $79 million.

Weyerhaeuser appealed to the Court of Appeals for the Ninth Circuit. There, Weyerhaeuser argued that Brooke Group's standard for claims of predatory pricing should also apply to claims of predatory bidding. The Ninth Circuit disagreed and affirmed the verdict against Weyerhaeuser. Confederated Tribes of Siletz Indians of Ore. v. Weyerhaeuser Co., 411 F. 3d 1030, 1035-1036 (2005).

The Court of Appeals reasoned that “buy-side predatory bidding” and “sell-side predatory pricing,” though similar, are materially different in that predatory bidding does not necessarily benefit consumers or stimulate competition in the way that predatory pricing does. Id., at 1037. Concluding that “the concerns that led the Brooke Group Court to establish a high standard of liability in the predatory pricing context do not carry over to this predatory bidding context with the same force,” the Court of Appeals declined to apply Brooke Group to Ross-Simmons’ claims of predatory bidding. 411 F. 3d, at 1038. The Court of Appeals went on to con-*318elude that substantial evidence supported a finding of liability on the predatory-bidding theory. Id., at 1045. We granted certiorari to decide whether Brooke Group applies to claims of predatory bidding. 548 U. S. 903 (2006). We hold that it does, and we vacate the Court of Appeals’ judgment.

II

In Brooke Group, we considered what a plaintiff must show in order to succeed on a claim of predatory pricing under §2 of the Sherman Act.1 In a typical predatory-pricing scheme, the predator reduces the sale price of its product (its output) to below cost, hoping to drive competitors out of business. Then, with competition vanquished, the predator raises output prices to a supracompetitive level. See Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U. S. 574, 584-585, n. 8 (1986) (describing predatory pricing). For the scheme to make economic sense, the losses suffered from pricing goods below cost must be recouped (with interest) during the supracompetitive-pricing stage of the scheme. Id., at 588-589; Cargill, Inc. v. Monfort of Colo., Inc., 479 U. S. 104, 121-122, n. 17 (1986); see also R. Bork, The Antitrust Paradox 145 (1978). Recognizing this economic reality, we established two prerequisites to recovery on claims of predatory pricing. “First, a plaintiff seeking to establish competitive injury resulting from a rival’s low prices must prove that the prices complained of are below an appropriate measure of its rival’s costs.” Brooke Group, 509 U. S., at 222. Second, a plaintiff must demonstrate that “the competitor had ... a dangerous probability] *319of recouping its investment in below-cost prices.” Id., at 224.

The first prong of the test — requiring that prices be below cost — is necessary because “[a]s a general rule, the exclusionary effect of prices above a relevant measure of cost either reflects the lower cost structure of the alleged predator, and so represents competition on the merits, or is beyond the practical ability of a judicial tribunal to control.” Id., at 223. We were particularly wary of allowing recovery for above-cost price cutting because allowing such claims could, perversely, “chil[l] legitimate price cutting,” which directly benefits consumers. See id., at 223-224; Atlantic Richfield Co. v. USA Petroleum Co., 495 U. S. 328,340 (1990) (“Low prices benefit consumers regardless of how those prices are set, and so long as they are above predatory levels, they do not threaten competition”). Thus, we specifically declined to allow plaintiffs to recover for above-cost price cutting, concluding that “discouraging a price cut and ... depriving consumers of the benefits of lower prices ... does not constitute sound antitrust policy.” Brooke Group, supra, at 224.

The second prong of the Brooke Group test — requiring that there be a dangerous probability of recoupment of losses — is necessary because, without a dangerous probability of recoupment, it is highly unlikely that a firm would engage in predatory pricing. As the Court explained in Matsushita, a firm engaged in a predatory-pricing scheme makes an investment — the losses suffered plus the profits that would have been realized absent the scheme — at the initial, below-cost-selling phase. 475 U. S., at 588-589. For that investment to be rational, a firm must reasonably expect to recoup in the long run at least its original investment with supracompetitive profits. Ibid.; Brooke Group, 509 U. S., at 224. Without such a reasonable expectation, a rational firm would not willingly suffer definite, short-run losses. Recognizing the centrality of recoupment to a predatory-pricing scheme, we required predatory-pricing plaintiffs to “demon*320strate that there is a likelihood that the predatory scheme alleged would cause a rise in prices above a competitive level that would be sufficient to compensate for the amounts expended on the predation, ineluding the time value of the money invested in it.” Id., at 225.

We described the two parts of the Brooke Group test as “essential components of real market injury” that were “not easy to establish.” Id., at 226. We also reiterated that the costs of erroneous findings of predatory-pricing liability were quite high because “ ‘[t]he mechanism by which a firm engages in predatory pricing — lowering prices — is the same mechanism by which a firm stimulates competition,’” and, therefore, mistaken findings of liability would “ ‘ “chill the very conduct the antitrust laws are designed to protect.”’” Ibid, (quoting Cargill, supra, at 122, n. 17).

III

Predatory bidding, which Ross-Simmons alleges in this case, involves the exercise of market power on the buy side or input side of a market. In a predatory-bidding scheme, a purchaser of inputs “bids up the market price of a critical input to such high levels that rival buyers cannot survive (or compete as vigorously) and, as a result, the predating buyer acquires (or maintains or increases its) monopsony power.” Kirkwood, Buyer Power and Exclusionary Conduct, 72 Antitrust L. J. 625, 652 (2005) (hereinafter Kirkwood). Monopsony power is market power on the buy side of the market. Blair & Harrison, Antitrust Policy and Monopsony, 76 Cornell L. Rev. 297 (1991). As such, a monopsony is to the buy side of the market what a monopoly is to the sell side and is sometimes colloquially called a “buyer’s monopoly.” See id., at 301,320; Piraino, A Proposed Antitrust Approach to Buyers’ Competitive Conduct, 56 Hastings L. J. 1121,1125 (2005).

A predatory bidder ultimately aims to exercise the monopsony power gained from bidding up input prices. To that end, once the predatory bidder has caused competing buyers *321to exit the market for purchasing inputs, it will seek to “restrict its input purchases below the competitive level,” thus “reduc[ing] the unit price for the remaining input[s] it purchases.” Salop, Anticompetitive Overbuying by Power Buyers, 72 Antitrust L. J. 669,672 (2005) (hereinafter Salop). The reduction in input prices will lead to “a significant cost saving that more than offsets the profit[s] that would have been earned on the output.” Ibid. If all goes as planned, the predatory bidder will reap monopsonistic profits that will offset any losses suffered in bidding up input prices.2 (In this case, the plaintiff was the defendant’s competitor in the input-purchasing market. Thus, this case does not present a situation of suppliers suing a monopsonist buyer under § 2 of the Sherman Act, nor does it present a risk of significantly increased concentration in the market in which the monopsonist sells, i. e., the market for finished lumber.)

IV

A

Predatory-pricing and predatory-bidding claims are analytically similar. See Hovenkamp, The Law of Exclusionary Pricing, 2 Competition Policy Int’l, No. 1, pp. 21, 35 (Spring 2006). This similarity results from the close theoretical connection between monopoly and monopsony. See Kirkwood 653 (describing monopsony as the “mirror image” of monopoly); Khan v. State Oil Co., 93 F. 3d 1358, 1361 (CA7 1996) (“Monopsony pricing... is analytically the same as monopoly or cartel pricing and [is] so treated by the law”), vacated and remanded on other grounds, 522 U. S. 3 (1997); Vogel v. *322 American Soc. of Appraisers, 744 F. 2d 598, 601 (C A7 1984) (“[M]onopoly and monopsony are symmetrical distortions of competition from an economic standpoint”); see also Hearing on Monopsony Issues in Agriculture: Buying Power of Processors in Our Nation’s Agricultural Markets before the Senate Committee on the Judiciary, 108th Cong., 1st Sess., 13 (2004). The kinship between monopoly and monopsony suggests that similar legal standards should apply to claims of monopolization and to claims of monopsonization. Cf. Noll, “Buyer Power” and Economic Policy, 72 Antitrust L. J. 589, 591 (2005) (“[A]symmetric treatment of monopoly and monopsony has no basis in economic analysis”).

Tracking the economic similarity between monopoly and monopsony, predatory-pricing plaintiffs and predatory-bidding plaintiffs make strikingly similar allegations. A predatory-pricing plaintiff alleges that a predator cut prices to drive the plaintiff out of business and, thereby, to reap monopoly profits from the output market. In parallel fashion, a predatory-bidding plaintiff alleges that a predator raised prices for a key input to drive the plaintiff out of business and, thereby, to reap monopsony profits in the input market. Both claims involve the deliberate use of unilateral pricing measures for anticompetitive purposes.3 And both claims logically require firms to incur short-term losses on the chance that they might reap supracompetitive profits in the future.

*323B

More importantly, predatory bidding mirrors predatory pricing in respects that we deemed significant to our analysis in Brooke Group. In Brooke Group, we noted that “ ‘predatory pricing schemes are rarely tried, and even more rarely successful.’ ” 509 U. S., at 226 (quoting Matsushita, 475 U. S., at 589). Predatory pricing requires a firm to suffer certain losses in the short term on the chance of reaping supracompetitive profits in the future. Id., at 588-589. A rational business will rarely make this sacrifice. Ibid. The same reasoning applies to predatory bidding. A predatory-bidding scheme requires a buyer of inputs to suffer losses today on the chance that it will reap supracompetitive profits in the future. For this reason, “[s]uccessful monopsony predation is probably as unlikely as successful monopoly predation.” R. Blair & J. Harrison, Monopsony 66 (1993).

And like the predatory conduct alleged in Brooke Group, actions taken in a predatory-bidding scheme are often “ ‘ “the very essence of competition.’”” 509 U. S., at 226 (quoting Cargill, 479 U. S., at 122, n. 17, in turn quoting Matsushita, supra, at 594). Just as sellers use output prices to compete for purchasers, buyers use bid prices to compete for scarce inputs. There are myriad legitimate reasons — ranging from benign to affirmatively proeompetitive — why a buyer might bid up input prices. A firm might bid up inputs as a result of miscalculation of its input needs or as a response to increased consumer demand for its outputs. A more efficient firm might bid up input prices to acquire more inputs as a part of a proeompetitive strategy to gain market share in the output market. A firm that has adopted an input-intensive production process might bid up inputs to acquire the inputs necessary for its process. Or a firm might bid up input prices to acquire excess inputs as a hedge against the risk of future rises in input costs or future input shortages. See Salop 682-683; Kirkwood 655. There is nothing illicit about these bidding decisions. Indeed, this sort of high bidding is *324essential to competition and innovation on the buy side of the market.4

Brooke Group also noted that a failed predatory-pricing scheme may benefit consumers. 509 U. S., at 224. The potential benefit results from the difficulty an aspiring predator faces in recouping losses suffered from below-cost pricing. Without successful recoupment, “predatory pricing produces lower aggregate prices in the market, and consumer welfare is enhanced.” Ibid. Failed predatory-bidding schemes can also, but will not necessarily, benefit consumers. See Salop 677-678. In the first stage of a predatory-bidding scheme, the predator’s high bidding will likely lead to its acquisition of more inputs. Usually, the acquisition of more inputs leads to the manufacture of more outputs. And increases in output generally result in lower prices to consumers.5 Id., at 677; Blair & Harrison, supra, at 66-67. Thus, a failed predatory-bidding scheme can be a “boon to consumers” in the same way that we considered a predatory-pricing scheme to be. See Brooke Group, supra, at 224.

In addition, predatory bidding presents less of a direct threat of consumer harm than predatory pricing. A predatory-pricing scheme ultimately achieves success by charging higher prices to consumers. By contrast, a predatory-bidding scheme could succeed with little or no effect on consumer prices because a predatory bidder does not necessarily rely on raising prices in the output market to recoup its losses. Salop 676. Even if output prices remain constant, a predatory bidder can use its power as the pre*325dominant buyer of inputs to force down input prices and capture monopsony profits. Ibid.

C

The general theoretical similarities of monopoly and monopsony combined with the theoretical and practical similarities of predatory pricing and predatory bidding convince us that our two-pronged Brooke Group test should apply to predatory-bidding claims.

The first prong of Brooke Group’s test requires little adaptation for the predatory-bidding context. A plaintiff must prove that the alleged predatory bidding led to below-cost pricing of the predator’s outputs. That is, the predator’s bidding on the buy side must have caused the cost of the relevant output to rise above the revenues generated in the sale of those outputs. As with predatory pricing, the exclusionary effect of higher bidding that does not result in below-cost output pricing “is beyond the practical ability of a judicial tribunal to control without courting intolerable risks of chilling legitimate” procompetitive conduct. 509 U. S., at 223. Given the multitude of procompetitive ends served by higher bidding for inputs, the risk of chilling pro-competitive behavior with too lax a liability standard is as serious here as it was in Brooke Group. Consequently, only higher bidding that leads to below-cost pricing in the relevant output market will suffice as a basis for liability for predatory bidding.

A predatory-bidding plaintiff also must prove that the defendant has a dangerous probability of recouping the losses incurred in bidding up input prices through the exercise of monopsony power. Absent proof of likely recoupment, a strategy of predatory bidding makes no economic sense because it would involve short-term losses with no likelihood of offsetting long-term gains. Cf. id., at 224 (citing Matsushita, supra, at 588-589). As with predatory pricing, making a showing on the recoupment prong will require *326“a close analysis of both the scheme alleged by the plaintiff and the structure and conditions of the relevant market.” Brooke Group, supra, at 226.

Ross-Simmons has conceded that it has not satisfied the Brooke Group standard. Brief for Respondent 49; Tr. of Oral Arg. 49. Therefore, its predatory-bidding theory of liability cannot support the jury's verdict.

V

For these reasons, we vacate the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.

It is so ordered.

*955OPINION OF THE COURT

[560 U.S. 186]

Justice Stevens

delivered the opinion of the Court.

“Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade” is made illegal by § 1 of the Sherman Act, ch. 647, 26 Stat. 209, as amended, 15 U.S.C. § 1. The question whether an arrangement is a contract, combination, or conspiracy is different from and antecedent to the question whether it unreasonably restrains trade. This case raises that antecedent question about the business of the 32 teams in the National Football League (NFL) and a corporate entity that they formed to manage their intellectual property. We conclude that the NFL’s licensing activities constitute concerted action that is not categorically beyond the coverage of § 1. The legality of that concerted action must be judged under the Rule of Reason.

[560 U.S. 187]

I

Originally organized in 1920, the NFL is an unincorporated association that now includes 32 separately owned professional football teams.1 Each team has its own name, colors, and logo, and owns related intellectual property. Like each of the other teams in the league, the New Orleans Saints and the Indianapolis Colts, for example, have their own distinctive names, colors, and marks that are well known to millions of sports fans.

Prior to 1963, the teams made their own arrangements for licensing their intellectual property and marketing trademarked items such as caps and jerseys. In 1963, the teams formed National Football League Properties (NFLP) to develop, license, and market their intellectual property. Most, but not all, of the substantial revenues generated by NFLP have either been given to charity or shared equally among the teams. However, the teams are able to and have at times sought to withdraw from this arrangement.

Between 1963 and 2000, NFLP granted nonexclusive licenses to a number of vendors, permitting them to manufacture and sell apparel bearing team insignias. Petitioner, American Needle, Inc., was one of those licensees. In December 2000, the teams voted to authorize NFLP to grant exclusive licenses, and NFLP granted Reebok International Ltd. an exclusive 10-year license to manufacture and sell trademarked headwear for all 32 teams. It thereafter declined to renew American Needle’s nonexclusive license.

American Needle filed this action in the Northern District of Illinois, alleging that the agreements between the NFL, its teams, NFLP, and Reebok violated §§ 1 and 2 of the Sherman Act. In their answer to the complaint, the defendants

[560 U.S. 188]

averred that the teams, the NFL, and NFLP were incapable of conspiring within the meaning of § 1 “because they are a single economic enterprise, at least with respect to the conduct challenged.” App. 99. After limited discovery, the District Court granted summary judgment on the question “whether, with regard to the facet of their operations *956respecting exploitation of intellectual property rights, the NFL and its 32 teams are, in the jargon of antitrust law, acting as a single entity.” American Needle, Inc. v. New Orleans La. Saints, 496 F. Supp. 2d 941, 943 (2007). The court concluded “that in that facet of their operations they have so integrated their operations that they should be deemed a single entity rather than joint ventures cooperating for a common purpose.” Ibid.

The Court of Appeals for the Seventh Circuit affirmed. The panel observed that “in some contexts, a league seems more aptly described as a single entity immune from antitrust scrutiny, while in others a league appears to be a joint venture between independently owned teams that is subject to review under § 1.” 538 F.3d 736, 741 (2008). Relying on Circuit precedent, the court limited its inquiry to the particular conduct at issue, licensing of teams’ intellectual property. The panel agreed with petitioner that “when making a single-entity determination, courts must examine whether the conduct in question deprives the marketplace of the independent sources of economic control that competition assumes.” Id., at 742. The court, however, discounted the significance of potential competition among the teams regarding the use of their intellectual property because the teams “can function only as one source of economic power when collectively producing NFL football.” Id., at 743. The court noted that football itself can only be carried out jointly. See ibid. (“Asserting that a single football team could produce a football game ... is a Zen riddle: Who wins when a football team plays itself”). Moreover, “NFL teams share a vital economic interest in collectively promoting

[560 U.S. 189]

NFL football . . . [to] compet[e] with other forms of entertainment.” Ibid. “It thus follows,” the court found, “that only one source of economic power controls the promotion of NFL football,” and “it makes little sense to assert that each individual team has the authority, if not the responsibility, to promote the jointly produced NFL football.” Ibid. Recognizing that NFL teams have “license [d] their intellectual property collectively” since 1963, the court held that § 1 did not apply. Id., at 744.

We granted certiorari. 557 U.S. 933, 129 S. Ct. 2859, 174 L. Ed. 2d 575 (2009).

II

As the case comes to us, we have only a narrow issue to decide: whether the NFL respondents are capable of engaging in a “contract, combination ..., or conspiracy” as defined by § 1 of the Sherman Act, 15 U.S.C. § 1, or, as we have sometimes phrased it, whether the alleged activity by the NFL respondents “must be viewed as that of a single enterprise for purposes of § 1.” Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771, 104 S. Ct. 2731, 81 L. Ed. 2d 628 (1984) (1984).

Taken literally, the applicability of § 1 to “every contract, combination .. . , or conspiracy” could be understood to cover every conceivable agreement, whether it be a group of competing firms fixing prices or a single firm’s chief executive telling her subordinate how to price their company’s product. But even though, “read literally,” § 1 would address “the entire body of private contract,” that is not what the statute means. National Soc. of Professional Engineers v. United States, 435 U.S. 679, 688, 98 S. *957Ct. 1355, 55 L. Ed. 2d 637 (1978); see also Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S. Ct. 1276, 164 L. Ed. 2d 1 (2006) (“This Court has not taken a literal approach to this language”); cf. Board of Trade of Chicago v. United States, 246 U.S. 231, 238, 38 S. Ct. 242, 62 L. Ed. 683 (1918) (reasoning that the term “restraint of trade” in § 1 cannot possibly refer to any restraint on competition because “[e]very agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence”). Not every instance

[560 U.S. 190]

of cooperation between two people is a potential “contract, combination . . . , or conspiracy, in restraint of trade.” 15 U.S.C. § 1.

The meaning of the term “contract, combination . . . , or conspiracy” is informed by the “ ‘basic distinction’ ” in the Sherman Act “ ‘between concerted and independent action’ ” that distinguishes § 1 of the Sherman Act from § 2. Copperweld, 467 U.S., at 767, 104 S. Ct. 2731, 81 L. Ed. 2d 628 (quoting Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761, 104 S. Ct. 1464, 79 L. Ed. 2d 775 (1984)). Section 1 applies only to concerted action that restrains trade. Section 2, by contrast, covers both concerted and independent action, but only if that action “monopolize [s],” 15 U.S.C. § 2, or “threatens actual monopolization,” Copperweld, 467 U.S., at 767, 104 S. Ct. 2731, 81 L. Ed. 2d 628, a category that is narrower than restraint of trade. Monopoly power may be equally harmful whether it is the product of joint action or individual action.

Congress used this distinction between concerted and independent action to deter anticompetitive conduct and compensate its victims, without chilling vigorous competition through ordinary business operations. The distinction also avoids judicial scrutiny of routine, internal business decisions.

Thus, in § 1 Congress “treated concerted behavior more strictly than unilateral behavior.” Id., at 768, 104 S. Ct. 2731, 81 L. Ed. 2d 628. This is so because unlike independent action, “[c]oncerted activity inherently is fraught with anticompetitive risk” insofar as it “deprives the marketplace of independent centers of decision-making that competition assumes and demands.”Id., at 768-769, 104 S. Ct. 2731, 81 L. Ed. 2d 628. And because concerted action is discrete and distinct, a limit on such activity leaves untouched a vast amount of business conduct. As a result, there is less risk of deterring a firm’s necessary conduct; courts need only examine discrete agreements; and such conduct may be remedied simply through prohibition.2 See Areeda & Hovenkamp

[560 U.S. 191]

¶ 1464c, at 206. Concerted activity is thus “judged more sternly than unilateral activity under *958§2,” Copperweld, 467 U.S., at 768, 104 S. Ct. 2731, 81 L. Ed. 2d 628. For these reasons, § 1 prohibits any concerted action “in restraint of trade or commerce,” even if the action does not “threate[n] monopolization,” ibid. And therefore, an arrangement must embody concerted action in order to be a “contract, combination . . . , or conspiracy” under § 1.

Ill

We have long held that concerted action under § 1 does not turn simply on whether the parties involved are legally distinct entities. Instead, we have eschewed such formalistic distinctions in favor of a functional consideration of how the parties involved in the alleged anticompetitive conduct actually operate.

As a result, we have repeatedly found instances in which members of a legally single entity violated § 1 when the entity was controlled by a group of competitors and served, in essence, as a vehicle for ongoing concerted activity. In United States v. Sealy, Inc., 388 U.S. 350, 87 S. Ct. 1847, 18 L. Ed. 2d 1238 (1967), for example, a group of mattress manufacturers operated and controlled Sealy, Inc., a company that licensed the Sealy trademark to the manufacturers, and dictated that each operate within a specific geographic area. Id., at 352-353, 87 S. Ct. 1847, 18 L. Ed. 2d 1238. The Government alleged that the licensees and Sealy were conspiring in violation of § 1, and we agreed. Id., at 352-354, 87 S. Ct. 1847, 18 L. Ed. 2d 1238. We explained that “[w]e seek the central substance of the situation” and

[560 U.S. 192]

therefore “we are moved by the identity of the persons who act, rather than the label of their hats.” Id., at 353, 87 S. Ct. 1847, 18 L. Ed. 2d 1238. We thus held that Sealy was not a “separate entity, but ... an instrumentality of the individual manufacturers.” Id., at 356, 87 S. Ct. 1847, 18 L. Ed. 2d 1238. In similar circumstances, we have found other formally distinct business organizations covered by § 1. See, e.g., Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S. Ct. 2613, 86 L. Ed. 2d 202 (1985); National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U.S. 85, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (1984) (NCAA); United States v. Topco Associates, Inc., 405 U.S. 596, 609, 92 S. Ct. 1126, 31 L. Ed. 2d 515 (1972); Associated Press v. United States, 326 U.S. 1, 65 S. Ct. 1416, 89 L. Ed. 2013 (1945); id., at 26, 65 S. Ct. 1416, 89 L. Ed. 2013 (Frankfurter, J., concurring); United States v. Terminal Railroad Assn. of St. Louis, 224 U.S. 383, 32 S. Ct. 507, 56 L. Ed. 810 (1912); see also Rock, Corporate Law Through an Antitrust Lens, 92 Colum. L. Rev. 497, 506-510 (1992) (discussing cases). We have similarly looked past the form of a legally “single entity” when competitors were part of professional organization3 or trade groups.4

*959Conversely, there is not necessarily concerted action simply because more than one legally distinct entity is involved. Although, under a now-defunct doctrine known as the “intraenterprise conspiracy doctrine,” we once treated cooperation between legally separate entities as necessarily covered by § 1, we now embark on a more functional analysis.

The roots of this functional analysis can be found in the very decision that established the intraenterprise conspiracy doctrine. In United States v. Yellow Cab Co., 332 U.S. 218, 67 S. Ct. 1560, 91 L. Ed. 2010 (1947), we observed that “corporate interrelationships . . .

[560 U.S. 193]

are not determinative of the applicability of the Sherman Act” because the Act “is aimed at substance rather than form.” Id., at 227, 67 S. Ct. 1560, 91 L. Ed. 2010. We nonetheless held that cooperation between legally separate entities was necessarily covered by § 1 because an unreasonable restraint of trade “may result as readily from a conspiracy among those who are affiliated or integrated under common ownership as from a conspiracy among those who are otherwise independent.” Ibid.; see also Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 215, 71 S. Ct. 259, 95 L. Ed. 219 (1951).

The decline of the intraenterprise conspiracy doctrine began in Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19, 82 S. Ct. 1130, 8 L. Ed. 2d 305 (1962). In that case, several agricultural cooperatives that were owned by the same farmers were sued for violations of § 1 of the Sherman Act. Id., at 24-25, 82 S. Ct. 1130, 8 L. Ed. 2d 305. Applying a specific immunity provision for agricultural cooperatives, we held that the three cooperatives were “in practical effect” one “organization,” even though the controlling farmers “have formally organized themselves into three separate legal entities.” Id., at 29, 82 S. Ct. 1130, 8 L. Ed. 2d 305. “To hold otherwise,” we explained, “would be to impose grave legal consequences upon organizational distinctions that are of de minimis meaning and effect” insofar as “use of separate corporations had [no] economic significance.” Ibid.

Next, in United States v. Citizens & Southern Nat. Bank, 422 U.S. 86, 95 S. Ct. 2099, 45 L. Ed. 2d 41 (1975), a large bank, Citizens and Southern (C&S), formed a holding company that operated de facto suburban branch banks in the Atlanta area through ownership of the maximum amount of stock in each local branch that was allowed by law, “ownership of much of the remaining stock by parties friendly to C, use by the suburban banks of the C logogram and all of C’s banking services, and close C oversight of the operation and governance of the suburban banks.” Id., at 89, 95 S. Ct. 2099, 45 L. Ed. 2d 41 (footnote omitted). The Government challenged the cooperation between the banks. In our analysis, we observed that “ ‘corporate interrelationships

[560 U.S. 194]

. . . are not determinative,’ ” id., at 116, 95 S. Ct. 2099, 45 L. Ed. 2d 41, “looked to economic substance,” and observed that “because the sponsored banks were not set up to be competitors, § 1 did not compel them to compete.” Areeda & Hovenkamp ¶1463g, at 200-201; see also Citizens & Southern, 422 U.S., at 119-120, 95 S. Ct. 2099, 45 L. Ed. 2d 41; Areeda, In-traenterprise Conspiracy in Decline, 97 Harv. L. Rev. 451, 461 (1983).

We finally reexamined the intraen-terprise conspiracy doctrine in Copperweld Corp. v. Independence Tube *960 Corp., 467 U.S. 752, 104 S. Ct. 2731, 81 L. Ed. 2d 628 (1984), and concluded that it was inconsistent with the “ ‘basic distinction between concerted and independent action.’ ” Id., at 767, 104 S. Ct. 2731, 81 L. Ed. 2d 628. Considering it “perfectly plain that an internal agreement to implement a single, unitary firm’s policies does not raise the antitrust dangers that § 1 was designed to police,” id., at 769, 104 S. Ct. 2731, 81 L. Ed. 2d 628, we held that a parent corporation and its wholly owned subsidiary “are incapable of conspiring with each other for purposes of § 1 of the Sherman Act,” id., at 777, 104 S. Ct. 2731, 81 L. Ed. 2d 628. We explained that although a parent corporation and its wholly owned subsidiary are “separate” for the purposes of incorporation or formal title, they are controlled by a single center of deci-sionmaking and they control a single aggregation of economic power. Joint conduct by two such entities does not “depriv[e] the marketplace of independent centers of decisionmaking,” id., at 769, 104 S. Ct. 2731, 81 L. Ed. 2d 628, and as a result, an agreement between them does not constitute a “contract, combination . . . , or conspiracy” for the purposes of § 1.5

[560 U.S. 195]

IV

As Copperweld exemplifies, “substance, not form, should determine whether a[n] . . . entity is capable of conspiring under § 1.” 467 U.S., at 773, n. 21, 104 S. Ct. 2731, 81 L. Ed. 2d 628. This inquiry is sometimes described as asking whether the alleged conspirators are a single entity. That is perhaps a misdescription, however, because the question is not whether the defendant is a legally single entity or has a single name; nor is the question whether the parties involved “seem” like one firm or multiple firms in any metaphysical sense. The key is whether the alleged “contract, combination ... , or conspiracy” is concerted action—that is, whether it joins together separate de-cisionmakers. The relevant inquiry, therefore, is whether there is a “contract, combination ... , or conspiracy” amongst “separate economic actors pursuing separate economic interests,” id., at 769, 104 S. Ct. 2731, 81 L. Ed. 2d 628, such that the agreement “deprives the marketplace of independent centers of decisionmak-ing,” ibid., and therefore of “diversity of entrepreneurial interests,” Fraser v. Major League Soccer, L. L. C., 284 F.3d 47, 57 (CA1 2002) (Boudin, C. J.), and thus of actual or potential competition, see Freeman v. San Diego Assn. of Realtors, 322 F.3d 1133, 1148-1149 (CA9 2003) (Kozinski, J.); Rothery Storage & Van Co. v. Atlas Van Line, Inc., 792 F.2d 210, 214-215 (CADC 1986) (Bork, J.); see also Areeda & Hovenkamp ¶ 1462b, at 193-194 (noting that the “central evil addressed by Sherman Act § 1” is the “elimin[ation of] competition that would otherwise exist”).

Thus, while the president and a vice president of a firm could (and regularly do) act in combination, their joint action generally is not the sort of “combination” that § 1 is intended to *961cover. Such agreements might be described as “really unilateral behavior flowing from decisions of a single enterprise.” Copperweld, 467 U.S., at 767, 104 S. Ct. 2731, 81 L. Ed. 2d 628. Nor, for this reason, does § 1 cover “internally coordinated conduct of a corporation and one of its unincorporated divisions,” id., at 770, 104 S. Ct. 2731, 81 L. Ed. 2d 628, because

[560 U.S. 196]

“[a] division within a corporate structure pursues the common interests of the whole,” ibid.., and therefore “coordination between a corporation and its division does not represent a sudden joining of two independent sources of economic power previously pursuing separate interests,” id., at 770-771, 104 S. Ct. 2731, 81 L. Ed. 2d 628. Nor, for the same reasons, is “the coordinated activity of a parent and its wholly owned subsidiary” covered. See id.., at 771, 104 S. Ct. 2731, 81 L. Ed. 2d 628. They “have a complete unity of interest” and thus “[w]ith or without a formal ‘agreement,’ the subsidiary acts for the benefit of the parent, its sole shareholder.” Ibid.

Because the inquiry is one of competitive reality, it is not determinative that two parties to an alleged § 1 violation are legally distinct entities. Nor, however, is it determinative that two legally distinct entities have organized themselves under a single umbrella or into a structured joint venture. The question is whether the agreement joins together “independent centers of decisionmaking.” Id., at 769, 104 S. Ct. 2731, 81 L. Ed. 2d 628. If it does, the entities are capable of conspiring under § 1, and the court must decide whether the restraint of trade is an unreasonable and therefore illegal one.

V

The NFL teams do not possess either the unitary decisionmaking quality or the single aggregation of economic power characteristic of independent action. Each of the teams is a substantial, independently owned, and independently managed business. “[T]heir general corporate actions are guided or determined” by “separate corporate consciousnesses,” and “[t]heir objectives are” not “common.” Copperweld, 467 U.S., at 771, 104 S. Ct. 2731, 81 L. Ed. 2d 628; see also North American Soccer League v. NFL, 670 F.2d 1249, 1252 (CA2 1982) (discussing ways that “the financial performance of each team, while related to that of the others, does not . . . necessarily rise and fall with that of the others”). The teams compete with one another, not only on the playing field, but to attract fans, for

[560 U.S. 197]

gate receipts, and for contracts with managerial and playing personnel. See Brown v. Pro Football, Inc., 518 U.S. 231, 249, 116 S. Ct. 2116, 135 L. Ed. 2d 521 (1996); Sullivan v. NFL, 34 F.3d 1091, 1098 (CA1 1994); Mid-South Grizzlies v. NFL, 720 F.2d 772, 787 (CA3 1983); cf. NCAA, 468 U.S., at 99, 104 S. Ct. 2948, 82 L. Ed. 2d 70.

Directly relevant to this case, the teams compete in the market for intellectual property. To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks. When each NFL team licenses its intellectual property, it is not pursuing the “common interests of the whole” league but is instead pursuing interests of each “corporation itself,” Copperweld, 467 U.S., at 770, 104 S. Ct. 2731, 81 L. Ed. 2d 628; teams are acting as “separate economic actors pursuing separate economic interests,” and each team therefore is a potential “independent cente[r] of decisionmaking,” id., at 769, 104 S. Ct. 2731, 81 L. Ed. 2d 628. Decisions by NFL teams to license *962their separately owned trademarks collectively and to only one vendor are decisions that “depriv[e] the marketplace of independent centers of deci-sionmaking,” ibid., and therefore of actual or potential competition. See NCAA, 468 U.S., at 109, n. 39, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (observing a possible § 1 violation if two separately owned companies sold their separate products through a “single selling agent”); cf. Areeda & Hovenkamp 111478a, at 318 (“Obviously, the most significant competitive threats arise when joint venture participants are actual or potential competitors”).

In defense, respondents argue that by forming NFLP, they have formed a single entity, akin to a merger, and market their NFL brands through a single outlet. But it is not dispositive that the teams have organized and own a legally separate entity that centralizes the management of their intellectual property. An ongoing § 1 violation cannot evade § 1 scrutiny simply by giving the ongoing violation a name and label. “Perhaps every agreement and combination in restraint of trade could be so labeled.” Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598, 71 S. Ct. 971, 95 L. Ed. 1199 (1951).

[560 U.S. 198]

The NFL respondents may be similar in some sense to a single enterprise that owns several pieces of intellectual property and licenses them jointly, but they are not similar in the relevant functional sense. Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned. See generally Hovenkamp, Exclusive Joint Ventures and Antitrust Policy, 1995 Colum. Bus. L. Rev. 1, 52-61 (1995); Shishido, Conflicts of Interest and Fiduciary Duties in the Operation of a Joint Venture, 39 Hastings L. J. 63, 69-81 (1987). Common interests in the NFL brand “partially unit[e] the economic interests of the parent firms,” Broadley, Joint Ventures and Antitrust Policy, 95 Harv. L. Rev. 1521, 1526 (1982) (emphasis added), but the teams still have distinct, potentially competing interests.

It may be, as respondents argue, that NFLP “has served as the ‘single driver’ ” of the teams’ “promotional vehicle, ‘pursuing] the common interests of the whole.’ ” Brief for NFL Respondents 28 (quoting Copperweld, 467 U.S., at 770-771, 104 S. Ct. 2731, 81 L. Ed. 2d 628; brackets in original). But illegal restraints often are in the common interests of the parties to the restraint, at the expense of those who are not parties. It is true, as respondents describe, that they have for some time marketed their trademarks jointly. But a history of concerted activity does not immunize conduct from § 1 scrutiny. “Absence of actual competition may simply be a manifestation of the anticompetitive agreement itself.” Freeman, 322 F.3d, at 1149.

Respondents argue that nonetheless, as the Court of Appeals held, they constitute a single entity because without their cooperation, there would be no NFL football. It is true that “the clubs that make up a professional sports league are not completely independent economic competitors, as they depend upon a degree of cooperation for economic survival.” Brown, 518 U.S., at 248, 116 S. Ct. 2116, 135 L. Ed. 2d 521. But the Court of Appeals’ reasoning is unpersuasive.

[560 U.S. 199]

The justification for cooperation is not relevant to whether that coop*963eration is concerted or independent action.6 A “contract, combination . . . , or conspiracy,” § 1, that is necessary or useful to a joint venture is still a “contract, combination . . . , or conspiracy” if it “deprives the marketplace of independent centers of deci-sionmaking,” Copperweld, 467 U.S., at 769, 104 S. Ct. 2731, 81 L. Ed. 2d 628. See NCAA, 468 U.S., at 113, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (“[J]oint ventures have no immunity from antitrust laws”). Any joint venture involves multiple sources of economic power cooperating to produce a product. And for many such ventures, the participation of others is necessary. But that does not mean that necessity of cooperation transforms concerted action into independent action; a nut and a bolt can only operate together, but an agreement between nut and bolt manufacturers is still subject to § 1 analysis. Nor does it mean that once a group of firms agree to produce a joint product, cooperation amongst those firms must be treated as independent conduct. The mere fact that the teams operate jointly in some sense does not mean that they are immune.7

[560 U.S. 200]

The question whether NFLP decisions can constitute concerted activity covered by § 1 is closer than whether decisions made directly by the 32 teams are covered by § 1. This is so both because NFLP is a separate corporation with its own management and because the record indicates that most of the revenues generated by NFLP are shared by the teams on an equal basis. Nevertheless we think it clear that for the same reasons the 32 teams’ conduct is covered by § 1, NFLP’s actions also are subject to § 1, at least with regards to its marketing of property owned by the separate teams. NFLP’s licensing decisions are made by the 32 potential competitors, and each of them actually owns its share of the jointly managed assets. Cf. Sealy, 388 U.S., at 352-354, 87 S. Ct. 1847, 18 L. Ed. 2d 1238. Apart from their agreement to cooperate in exploiting those assets, including their decisions as the NFLP, there would be nothing to prevent each of the teams from making its own market decisions relating to purchases of apparel and headwear, to the sale of such items, and to the granting of licenses to use its trademarks.

We generally treat agreements within a single firm as independent action on the presumption that the components of the firm will act to *964maximize the firm’s profits. But in rare cases, that presumption does not hold. Agreements made within a firm can constitute concerted action covered by § 1 when the parties to the agreement act on interests separate from those of the firm itself,8 and the intrafirm agreements may simply be a formalistic shell for ongoing concerted action.

[560 U.S. 201]

See, e.g., Topco Associates, Inc., 405 U.S., at 609, 92 S. Ct. 1126, 31 L. Ed. 2d 515; Sealy, 388 U.S., at 352-354, 87 S. Ct. 1847, 18 L. Ed. 2d 1238.

For that reason, decisions by NFLP regarding the teams’ separately owned intellectual property constitute concerted action. Thirty-two teams operating independently through the vehicle of NFLP are not like the components of a single firm that act to maximize the firm’s profits. The teams remain separately controlled, potential competitors with economic interests that are distinct from NFLP’s financial well-being. See generally Hovenkamp, 1995 Colum. Bus. L. Rev., at 52-61. Unlike typical decisions by corporate shareholders, NFLP licensing decisions effectively require the assent of more than a mere majority of shareholders. And each team’s decision reflects not only an interest in NFLP’s profits but also an interest in the team’s individual profits. See generally Shusido, 39 Hastings L. J., at 69-71. The 32 teams capture individual economic benefits separate and apart from NFLP profits as a result of the decisions they make for NFLP. NFLP’s decisions thus affect each team’s profits from licensing its own intellectual property. “Although the business interests of’ the teams “will often coincide with those of’ NFLP “as an entity in itself, that commonality of interest exists in every cartel.” Los Angeles Memorial Coliseum Comm’n v. NFL, 726 F.2d 1381, 1389 (CA9 1984) (emphasis added). In making the relevant licensing decisions, NFLP is therefore “an instrumentality” of the teams. Sealy, 388 U.S., at 352-354, 87 S. Ct. 1847, 18 L. Ed. 2d 1238; see also Topco Associates, Inc., 405 U.S., at 609, 92 S. Ct. 1126, 31 L. Ed. 2d 515.

If the fact that potential competitors shared in profits or losses from a venture meant that the venture was immune from § 1, then any cartel “could evade the antitrust laws simply by creating a joint venture’ to serve as the exclusive seller of their competing products.” Major League Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290, 335 (CA2 2008) (Sotomayor, J., concurring in judgment). “So long as no agreement,” other than one made by the cartelists sitting

[560 U.S. 202]

on the board of the joint venture, “explicitly listed the prices to be charged, the companies could act as monopolies through the joint venture.’ ” Ibid. (Indeed, a joint venture with a single management structure is generally a better way to operate a cartel because it decreases the risks of a party to an illegal agreement defecting from that agreement.) However, competitors “cannot simply get around” antitrust liability by acting “through a *965third-party intermediary or ‘joint venture’.” Id., at 336.9

VI

Football teams that need to cooperate are not trapped by antitrust law. “[T]he special characteristics of this industry may provide a justification” for many kinds of agreements. Brown, 518 U.S., at 252, 116 S. Ct. 2116, 135 L. Ed. 2d 521 (Stevens, J., dissenting). The fact that NFL teams share an interest in making the entire league successful and profitable, and that they must cooperate in the production and scheduling of games, provides a perfectly sensible justification for making a host of collective decisions. But the conduct at issue in this case is still concerted

[560 U.S. 203]

activity under the Sherman Act that is subject to § 1 analysis.

When “restraints on competition are essential if the product is to be available at all,” per se rules of illegality are inapplicable, and instead the restraint must be judged according to the flexible Rule of Reason.10 NCAA, 468 U.S., at 101, 104 S. Ct. 2948, 82 L. Ed. 2d 70; see id., at 117, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (“Our decision not to apply a per se rule to this case rests in large part on our recognition that a certain degree of cooperation is necessary if the type of competition that petitioner and its member institutions seek to market is to be preserved”); see also Dagher, 547 U.S., at 6, 126 S. Ct. 1276, 164 L. Ed. 2d 1. In such instances, the agreement is likely to survive the Rule of Reason. See Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 23, 99 S. Ct. 1551, 60 L. Ed. 2d 1 (1979) (“Joint ventures and other cooperative arrangements are also not usually unlawful. . . where the agreement ... is necessary to market the product at all”). And depending upon the concerted activity *966in question, the Rule of Reason may not require a detailed analysis; it “can sometimes be applied in the twinkling of an eye.” NCAA, 468 U.S., at 110, n. 39, 104 S. Ct. 2948, 82 L. Ed. 2d 70.

[560 U.S. 204]

Other features of the NFL may also save agreements amongst the teams. We have recognized, for example, “that the interest in maintaining a competitive balance” among “athletic teams is legitimate and important,” id., at 117, 104 S. Ct. 2948, 82 L. Ed. 2d 70. While that same interest applies to the teams in the NFL, it does not justify treating them as a single entity for § 1 purposes when it comes to the marketing of the teams’ individually owned intellectual property. It is, however, unquestionably an interest that may well justify a variety of collective decisions made by the teams. What role it properly plays in applying the Rule of Reason to the allegations in this case is a matter to be considered on remand.

Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Opinion for the Court filed by Circuit Judge BORK.

Concurring Opinion filed by Circuit Judge WALD.

BORK, Circuit Judge:

Appellants, plaintiffs below, seek review of the district court’s decision dismissing their antitrust action against Atlas Van Lines, Inc. (“Atlas”). See Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 597 F.Supp. 217 (D.D.C.1984). Appellants are five present and three former agents of Atlas. For convenience, we will frequently refer to them by the name of the first-named appellant, Rothery Storage & Van Co. (“Rothery”). Rothery claims that Atlas and several of the carrier agents affiliated with Atlas adopted a policy constituting a “group boycott” in violation of section 1 of the Sherman Act, 15 U.S.C. § 1 (1982), which prohibits “[e]very contract, combination ... or conspiracy ... in restraint of trade.” The trial court granted Atlas’ motion for summary judgment on several alternative grounds. See infra pp. 213-14. Because we find that Atlas’ policy is designed to make the van line more efficient rather than to decrease the output of its services and raise rates, we affirm.

I.

Atlas operates as a nationwide common carrier of used household goods under authority granted by the Interstate Commerce Commission. It contracts to provide moving services to individuals and to businesses transferring employees. Like most national moving companies, Atlas exercises its interstate authority by employing independent moving companies throughout the country as its agents. These companies execute a standard agency contract with Atlas, agreeing to adhere, when making shipments on Atlas’ authority, to such things as standard operating procedures, maintenance and painting specifications, and uniform rates. Typically, such an agreement will contain a provision barring an agent affiliated with a particular van line from dealing with any other line. The agency agreement is supplemented by Atlas’ bylaws, rules, and regulations govern- . ing the agents’ interstate operations.

Some of these independent moving companies, the “non-carrier agents,” have no interstate authority of their own and can move goods interstate only on Atlas’ authority. Until recently, other companies, the “carrier agents,” possessed their own interstate authority and could move goods to the extent of that independent authority *144as principals for their own accounts. Both types of agent may engage in intrastate carriage without Atlas’ permission or governance. A carrier agent, however, could act in interstate commerce both as an agent of the van line it serves and as a competitor of that van line. The carrier agents could, and some did, use Atlas equipment, training, and the like for interstate carriage under their own authorities and pay Atlas nothing.

A van line and its agents constitute an enterprise on a scale not easily obtainable by a single carrier. Atlas, which is the sixth largest van line in the nation, provides a network of 490 agents capable of carrying household goods between any two points in the nation. Atlas coordinates and supports the agents’ operations. The use of agents spares a van line the necessity of obtaining enormous amounts of capital to perform the same services and, quite possibly, avoids diseconomies of scale, i.e., the inefficiencies of a single management large and complex enough to perform all the functions that are now divided between the van line and its agents. The agents find customers and do the packing, loading, hauling, and storage. Atlas sets the rates, dispatches shipments, chooses routes, arranges backhauls so the agent’s truck need not return empty, arranges services at the origin and destination of shipments, collects all revenues and pays the agents, establishes uniform rules for the appearance and quality of equipment, trains salespeople and drivers, purchases and finances equipment for use by the agents, and maintains insurance on all shipments made under Atlas’ authority. In addition, Atlas conducts national advertising and promotional forums. With the assistance of agents, it handles customer claims. In short, Atlas, and its agents make up an enterprise or firm intergrated by contracts, one which is indistinguishable in economic analysis from a complex partnership.

The ability of the carrier agents to exercise their independent authority traditionally has been governed by “pooling agreements” that dictate the business relationship between a van line and a carrier agent affiliated with it. The van line could, of course, set the rates at which its agents carried goods on its authority. ICC regulations required that carrier agents use the same rates as their van line principal when carrying shipments under independent authority. Because the relationship between a carrier agent and a van line constitutes an agreement between competitors, Congress provided antitrust immunity for any such relationship governed by a pooling agreement approved by the ICC. See 49 U.S.C. §§ 11341-11342 (1982). In 49 U.S.C. § 10934(d) (1982), Congress also allowed agents to sit on the boards of their van lines without antitrust liability.

The deregulation of the moving industry, beginning in 1979, produced changes that had a profound impact on the relationship between van lines and their agents. Prior to the regulatory changes, independent moving companies had little ability to obtain their own interstate transportation authority. The ICC’s Policy Statement on Motor Carrier Regulation, 44 Fed.Reg. 60-296 (1979), and the Motor Carrier Act of 1980, Pub.L.No. 96-296, 94 Stat. 793, greatly increased the ability of common carriers to obtain interstate moving authority. In 1981, moreover, the ICC repealed its requirement that carrier agents charge the same rate for agency shipments and shipments carried on their own accounts. See North American Van Lines, Inc. v. ICC, 666 F.2d 1087, 1094-96 (7th Cir.1981). Thus, agents could obtain interstate authority and could cut prices to attract business for their own accounts that otherwise might have constituted agency shipments for the van line’s account.

This increased potential for the diversion of interstate business to its carrier agents posed two potential problems for Atlas. Each of these problems is a version of what has been called the “free ride.” A free ride occurs when one party to an arrangement reaps benefits for which another party pays, though that transfer of wealth is not part of the agreement between them. The free ride can become a serious problem for a partnership or joint *145venture because the party that provides capital and services without receiving compensation has a strong incentive to provide less, thus rendering the common enterprise less effective. The first problem occurs because, by statute, a van line incurs strict liability for acts of its agents exercising “actual or apparent authority.” 49 U.S.C. § 10934(a) (1982). Thus, an increase of shipments made on the agents’ independent authority, but using Atlas’ equipment, uniforms, and services would create the risk of increased liability for Atlas although Atlas received no revenue from those shipments. Second, because carrier agents could utilize Atlas services and equipment on non-Atlas interstate shipments, the possible increase of such shipments meant that Atlas might make large outlays for which it received no return. We return to the free-ride problem in Part IV of this opinion.

To meet these problems, Atlas could have amended its pooling agreement to redefine the terms on which it allowed its carrier agents to compete with the principal company. Had Atlas chosen this course and obtained ICC approval of its amended pooling agreement, the new agreement would have enjoyed antitrust immunity under 49 U.S.C. §§ 11341-11342 (1982). Instead, on February 11, 1982, Atlas announced that it would exercise its statutory right to cancel its pooling agreement and would terminate the agency contract of any affiliated company that persisted in handling interstate carriage on its own account as well as for Atlas. Under the new policy, any carrier agent already affiliated with Atlas could continue to exercise independent interstate authority only by transferring its independent interstate authority to a separate corporation with a new name. These new entities could not use the facilities or services of Atlas or any of its affiliates.

II.

Because Atlas and its affiliates refuse to deal with any carrier agent that does not comply, several Atlas carrier agents, appellants here, charged that Atlas’ new policy constitutes a “group boycott.” They filed this action, and after the completion of discovery on the issue of liability, both sides filed cross motions for summary judgment.

The district court granted summary judgment to Atlas on alternative grounds. First, relying on Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 2741 n. 15, 81 L.Ed.2d 628 (1984), the court held that, because the challenged policy was promulgated by Atlas’ board of directors, the plurality of actors essential to a finding of conspiracy did not exist. See 597 F.Supp. at 225. The court rejected Rothery’s argument that Copperweld did not apply because some of the directors represented carrier agents and, therefore, might have a separate interest in adopting the new policy. See id. at 227-29; see also Greenville Publishing Co. v. Daily Reflector, Inc., 496 F.2d 391, 399 (4th Cir.1974) (stating that when a corporation’s officers have an “independent personal stake in achieving the corporation’s illegal objective,” it constitutes an exception to the rule that a corporation cannot conspire with its own officers) (citations omitted).

Second, the court rested on 49 U.S.C. § 10934(d)(4)(1982), which provides antitrust immunity for “discussions or agreements between a motor common carrier ... and its agents ... related solely to ... ownership of a motor common carrier ... by an agent or membership on the board of directors of any such motor common carrier by an agent.” See 597 F.Supp. at 226. Because the “[djiscussions, voting, and agreement” leading up to the challenged policy involves the terms under which Atlas agents themselves can own independent motor common carriers in interstate service, the court found that policy immune from antitrust liability. See id. at 227-28.

The court’s third reason went to the merits of the antitrust claim. In the absence of “ ‘[considerable’ and ‘unambiguous’ ” experience with relationships between carrier agents and van lines and the impact of deregulation on those relationships, the *146court declined to treat the Atlas policy as illegal per se. See 597 F.Supp. at 231. Shifting to a rule-of-reason analysis, the court held that Atlas acted reasonably in adopting a policy that ended the carrier agents’ ability to benefit from the “diversion” of Atlas’ “business infrastructure” to shipments made on their own accounts. See id. at 233. The court found it significant that Atlas adopted the less restrictive alternative of forcing affiliated carrier agents to exercise their independent authority through a separate company, rather than prohibiting any exercise of such authority by carrier agents. See id. at 234. The court also noted that any reduction in competition between Atlas and its carrier agents had to be weighed against procompetitive effects the new policy would have on inter-brand competition. See id. at 235.

While we do not agree that the challenged arrangement lacks the elements of a horizontal agreement, we uphold the trial judge’s conclusion that Atlas’ new policy does not offend the antitrust laws. The challenged restraint is ancillary to the economic integration of Atlas and its agents so that the rule of per se illegality does not apply. Neither are the other tests of the rule of reason offended since Atlas’ market share is far too small for the restraint to threaten competition or to have been intended to do so. Because the reasonableness of the restraint is so clear, we do not reach the question of whether the challenged arrangement falls within the statutory exemption from antitrust liability contained in 49 U.S.C. § 10934(d) (1982).

III.

Before turning to considerations we think dispositive, we deal with arguments that Atlas and Rothery each consider decisive. Atlas contends that there is no agreement between actual or potential competitors and hence no violation of section 1 of the Sherman Act. Rothery argues that Atlas’ policy constitutes a boycott that is per se illegal. We think neither argument well-founded.

A.

Section 1 of the Sherman Act condemns only those restraints of trade achieved by contracts, combinations, or conspiracies. Thus, only agreements between legally separate entities are covered. The argument that the Atlas board of directors was incapable of conspiring for Sherman Act purposes depends on the legal principle, laid down in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 725, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), that an agreement within a single enterprise is not an agreement contemplated by the Act. That principle is inapplicable here.

When the Atlas policy challenged in this case went into effect, every agent in the system was an actual or potential competitor of Atlas. The carrier agents were actual competitors and the non-carrier agents, because of the ICC’s increased willingness to grant interstate moving authority, were potential competitors. Every carrier that stayed in the Atlas network adhered to a policy of ending or lessening its competition with Atlas (by abandoning its interstate authority or transferring that authority to a separate company with a new trade name) or of not entering into full competition with Atlas (by not obtaining interstate authority). Agents required to ship on Atlas’ interstate authority must, of course, abide by Atlas’ rates. Thus, all of these legally separate corporations agreed to a policy that restricted competition.

The Supreme Court dealt with an analogous arrangement in National Collegiate Athletic Association v. Board of Regents, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984) (“NCAA ”). In order to remain members of the NCAA in good standing, universities had to adhere to the NCAA's policy with respect to the televising of football games. The Court said:

By participating in an association which prevents member institutions from competing against each other on the basis of price or kind of television rights that can be offered to broadcasters, the NCAA member institutions have created a horizontal restraint — an agreement among *147competitors on the way in which they will compete with one another.

Id. at 2959 (footnote omitted). That reasoning controls here.

If it is deemed important, it may be noted that the Atlas Board of Directors consisted of actual or potential competitors of Atlas and that is also sufficient to take this case out of the Copperweld rule. See United States v. Sealy Corp., 388 U.S. 350, 87 S.Ct. 1847, 18 L.Ed.2d 1238 (1967); see also Topco Associates, Inc. v. United States, 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). The two non-carrier agents represented on the eleven-person Board when Atlas adopted the policy were capable of competing by acquiring interstate authority. The four carrier agents represented on the Board at the time were actual competitors of Atlas. Three of the remaining members of the board were officers of Atlas. Thus, all but two members of the board represented separate legal entities that competed in interstate commerce. This brings the case within the rule of Sealy and Topeo and shows the existence of a horizontal restraint. That conclusion does not mean, however, that the restraint is illegal.

B.

Since the restraint on competition within the Atlas system involves an agreement not to deal with those who do not comply with Atlas’ policy, and so may be characterized as a boycott, or a concerted refusal to deal, Rothery contends that Supreme Court decisions require a holding of per se illegality. It cannot be denied that the Court has often enunciated that broad proposition. See, e.g., Arizona v. Maricopa County Medical Society, 457 U.S. 332, 344 n. 15, 102 S.Ct. 2466, 2473 n. 15, 73 L.Ed.2d 48 (1982); Klor’s, Inc. v. Broadway-Hale Stores, 359 U.S. 207, 212, 79 S.Ct. 705, 709, 3 L.Ed.2d 741 (1959); Northern Pacific R.R. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958); Fashion Originators’ Guild of America v. FTC, 312 U.S. 457, 468, 61 S.Ct. 703, 708, 85 L.Ed. 949 (1941). Other cases, such as Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), seem to indicate that not even the presence of a joint venture or economic integration to which the agreement against competition is ancillary can save a boycott from per se illegality.

Despite the seeming inflexibility of the rule as enunciated by the Court, it has always been clear that boycotts are not, and cannot ever be, per se illegal. To apply so rigid and simplistic an approach would be to destroy many common and entirely beneficial business arrangements. As one commentator put it, “[a]ll agreements to deal on specified terms mean refusal to deal on other terms,” and the literal application of per se illegality to any situation involving a concerted refusal to deal would mean in practical effect “that every restraint is illegal.” See Rahl, PerSe Rules and Boycotts Under the Sherman Act: Some Reflections and the Klor’s Case, 45 Va.L.Rev. 1165, 1172 (1959). For that reason, “any comprehensible per se rule for [group] boycotts ... is out of the question.” Id. at 1173.1 Lower courts have long agreed with that assess*148ment. See Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers’ Advertising Association, 672 F.2d 1280 (7th Cir.1982) (excluding an auto dealer from membership in an advertising association lacking market power did not constitute a per se violation of section 1 of the Sherman Act); United States Trotting Association v. Chicago Downs Association, Inc., 665 F.2d 781 (7th Cir.1981) (en banc) (finding that it was not per se unlawful for an organization of rival harness racing operations to prevent free riding on its informational and standard-promulgation services by sanctioning members who allowed their horses to participate in events sponsored by non-affiliates of the organization); United States v. Realty Multi-List, 629 F.2d 1351 (5th Cir.1980) (refusing to apply the per se rule where membership requirements had served to foreclose plaintiff from participating with rival realtors in a service providing multiple listing of properties); Smith v. Pro Football, Inc., 593 F.2d 1173 (D.C.Cir.1978) (eschewing a per se approach in a challenge to the NFL player draft because of a lack of “purpose to exclude competition”); E.A. McQuade Tours, Inc. v. Consolidated Air Tour Manual Committee, 467 F.2d 178 (5th Cir. 1972) (rejecting per se analysis of the refusal of airlines to list plaintiff air tour operator in air tour manual after plaintiff failed to meet listing criteria), cert. denied, 409 U.S. 1109, 93 S.Ct. 912, 34 L.Ed.2d 690 (1973); Deesen v. Professional Golfers’ Association, 358 F.2d 165 (9th Cir.) (upholding the exclusion of a professional golfer with poor scores from tournament participation), cert. denied, 385 U.S. 846, 87 S.Ct. 72, 17 L.Ed.2d 76 (1966); Molinas v. National Basketball Association, 190 F.Supp. 241 (S.D.N.Y.1961) (holding that a league could adopt and enforce a rule prohibiting any of its teams from employing a player suspended for gambling).2

The Supreme Court has now made explicit what had always been understood. In Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S.Ct. 2613, 86 L.Ed.2d 202 (1985), the plaintiff, a stationer, challenged as per se illegal its expulsion from a wholesale purchasing cooperative for violating the group’s bylaws. The Court said that “not all concerted refusals to deal should be accorded per se treatment.” Id. at 2621. We analyze Pacific Stationery below at somewhat greater length. See infra pp. 228-29. It is sufficient for present purposes to note that appellants’ contention about the per se illegality of all boycotts has now been squarely rejected by the Supreme Court.

IV.

Appellants contend, however, that Atlas’ restraints include horizontal price maintenance since the agents must ship on *149rates established by Atlas. We take this to be a claim that the horizontal elimination of competition within the system is illegal per se or, failing that, is nevertheless unlawful under a rule-of-reason analysis.

Before turning to the case law, we analyze the economic nature and effects of the system Atlas has created. It will be seen to be a system of a very familiar type, one commonly used in many fields of commercial endeavor.

Atlas has required that any moving company doing business as its agent must not conduct independent interstate carrier operations. Thus, a carrier agent, in order to continue as an Atlas agent, must either abandon its independent interstate authority and operate only under Atlas’ authority or create a new corporation (a “carrier affiliate”) to conduct interstate carriage separate from its operation as an Atlas agent. Atlas’ agents may deal only with Atlas or other Atlas agents.

The result of this is an interstate system for the carriage of household goods in which legally separate companies integrate their activities by contract. In this way the participants achieve many of the same benefits or efficiencies that would be available if they were integrated through ownership by Atlas. At the outset of this opinion, supra pp. 211-12, we set out the functions performed by Atlas and by the agents and stated that the system is a contract integration, one identical, in economic terms, to a partnership formed by agreement. Analysis might begin and end with the observation that Atlas and its agents command between 5.1 and 6% of the relevant market, which is the interstate carriage of used household goods.3 It is impossible to believe that an agreement to eliminate competition within a group of that size can produce any of the evils of monopoly. See, e.g., 3 J. Von Kalinowski, Antitrust Laws and Trade Regulation § 8.02[3], at 8-34 to 8-34.2 & n. 71 (1986). A monopolist (or those acting together to achieve monopoly results) enhances its revenues by raising the market price. It can do that only if its share of the market is so large that by reducing its output of goods or services the amount offered by the industry is substantially reduced so that the price is bid up. If a group of Atlas’ size reduced its output of services, there would be no effect upon market price because firms making up the other 94% of the market would simply take over the abandoned business. The only effect would be a loss of revenues to Atlas. Indeed, so impotent to raise prices is a firm with a market share of 5 or 6% that any attempt by it to engage in a monopolistic restriction of output would be little short of suicidal.

Appellants argue that Atlas’ 6% national market share understates the market power of Atlas and its agents to impose an anticompetitive result because appellants introduced evidence of the existence of distinct product geographic submarkets and because of evidence that the national market “approximates a tight oligopoly.” Reply Brief of Appellants at 19-20. Each of these propositions is wrong. With respect to the existence of submarkets, plaintiffs conceded the existence of a nationwide market and did not offer the district court any evidence that created a genuine issue of material fact as to the existence of sub-markets. The district judge, therefore, had only the national market before him. Indeed, so clear is the state of the evidence that we would affirm on this basis even if we thought it was not the rationale of the district court’s decision. See Jaffke v. Dunham, 352 U.S. 280, 281, 77 S.Ct. 307, 308, 1 L.Ed.2d 314 (1957) (per curiam); *150 United States v. General Motors Corp., 518 F.2d 420, 441 (D.C.Cir.1975) (Leventhal, J.); 10 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil 2d § 2716, at 658 (1983).

The criteria for defining markets are well-known. Because the ability of consumers to turn to other suppliers restrains a firm from raising prices above the competitive level, the definition of the “relevant market” rests on a determination of available substitutes. As Professor Sullivan has stated:

To define a market in product and geographic terms is to say that if prices were appreciably raised or volume appreciably curtailed for the product within a given area, while demand held constant, supply from other sources could not be expected to enter promptly enough and in large enough amounts to restore the old price and volume.

L. Sullivan, Antitrust § 12, at 41 (1977); see United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395, 76 S.Ct. 994, 1007, 100 L.Ed. 1264 (1956); Satellite Television & Associated Resources, Inc. v. Continental Cablevision of Virginia, Inc., 714 F.2d 351, 356 (5th Cir.1983), cert. denied, 465 U.S. 1027, 104 S.Ct. 1285, 79 L.Ed.2d 688 (1984). The degree to which a similar product will be substituted for the product in question is said to measure the cross-elasticity of demand, while the capability of other production facilities to be converted to produce a substitutable product is referred to as the cross-elasticity of supply. The higher these cross-elasticities, the more likely it is that similar products or the capacity of production facilities now used for other purposes are to be counted in the relevant market.

Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), introduced into merger law the concept of submarkets within the relevant market. The Supreme Court identified several “practical indicia” that may be used to delineate submarkets, such as “industry or public recognition of the submarket as a separate economic entity, the product’s peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors.” Id. at 325, 82 S.Ct. at 1524. These indicia seem to be evidentiary proxies for direct proof of substitutability. Brown Shoe said as much: “Because § 7 of the Clayton Act prohibits any merger which may substantially lessen competition ‘in any line of commerce’ (emphasis supplied), it is necessary to examine the effects of a merger in each such economically significant submarket to determine if there is a reasonable probability that the merger will substantially lessen competition.” Id. at 325, 82 S.Ct. at 1524.4 That view of submarket analysis is also mandated by the purpose of the antitrust laws: the promotion of consumer welfare. *151 See Reiter v. Sonotone Corp., 442 U.S. 330, 343, 99 S.Ct. 2326, 2333, 60 L.Ed.2d 931 (1979). When submarket indicia are viewed as proxies for cross-elasticities they assist in predicting a firm’s ability to restrict output and hence to harm consumers.

Under no recognized definition of sub-markets did appellants offer evidence sufficient to raise an issue of material fact. Plaintiffs did not offer evidence that prices in alleged submarkets move independently of prices in surrounding areas or that, if prices were appreciably raised or volume appreciably curtailed in some areas, supply from other sources would not promptly restore the original price and volume. Nor did plaintiffs offer any evidence that any of the Brown Shoe “practical indicia” of sub-markets are present. Plaintiffs offered instead only assertions that Atlas had high shares of the market in a few cities. Such testimony does not show low cross-elasticities of demand or supply. It does not serve as evidence that these cities were segregable markets in which Atlas could raise prices appreciably without attracting competitors’ trucks from adjacent territories. Aside from this, plaintiffs offered only two casual remarks by carrier agents, one stating that its various offices constitute “distinct market area[s]” and the other merely alluding to “geographic and product markets and submarkets.” These general comments were not evidence of anything, and, in particular, they were certainly not evidence that the industry recognized some specific submarket as a “separate economic entity.”5 It is clear that these conclusory remarks, which are all plaintiffs offered, would not suffice to create an issue for a jury, and the trial judge would have to direct a verdict for defendant on the question of submarkets. See 10 C. Wright, A. Miller, & M. Kane, supra, § 2713.1, at 616. The plaintiffs in this case simply did not furnish any evidence “ ‘fairly arguable and of a substantial character,’ ” General Motors Corp., 518 F.2d at 442, of Brown Shoe factors indicating the existence of distinct submarkets.6

All that was before the district court, and all that is before us, therefore, is a nationwide market. Atlas, it is agreed, did 6% of the business in that market. And the relevance of this figure as a measure of market power is in no way diminished by appellants’ fanciful claims of “tight oligopoly” in the national market.

Given the fact, shown in note 3, that this industry consists of 1100 to 1300 interstate carriers, employing about 8000 agents, it would seem to be impossible to entertain any notion of market power. What plaintiffs offered to support their theory of “tight oligopoly” was a list of van lines and market shares that affirmatively proved their market power contention to be chimerical. Market concentration, and hence *152presumed power, is commonly measured according to the Herfindahl-Hirschman Index (“HHI”). As the U.S. Department of Justice Merger Guidelines explain, “[t]he HHI is calculated by summing the squares of the individual market shares of all the firms included in the market____ Unlike the traditional four-firm concentration ratio, the HHI reflects both the distribution of the market shares of the top four firms and the composition of the market outside the top four firms.” U.S. Department of Justice Merger Guidelines at 13-14 (1984) (footnote omitted) (“Merger Guidelines”).

The Department of Justice divides market concentration into three categories and characterizes a market with an HHI below 1000 as “unconcentrated.” Merger Guidelines at 15. When the HHI is between 1000 and 1800, the market is “moderately concentrated,” and above 1800, “highly concentrated.” Id. One would suppose that a “tight oligopoly” is a market that is “highly concentrated.” In fact, when the market shares plaintiffs provided are squared, the van line market has an HHI of approximately 520.7 It is thus low on the range of unconcentrated markets. The Guidelines state that “the Department will not challenge mergers falling in this region [below 1000], except in extraordinary circumstances.” Id. No extraordinary circumstances have been shown, or even suggested, in this case.

We do not mean to suggest that if the HHI were higher and within one of the more concentrated categories, the arrangement would necessarily be illegal. It must be recalled that the Guidelines apply to mergers tested under section 7 of the Clayton Act, a statute aimed at halting “incipient monopolies and trade restraints outside the scope of the Sherman Act,” Brown Shoe, 370 U.S. at 318 n. 32, 82 S.Ct. at 1520 n. 32, and which therefore applies a much more stringent test than does rule-of-reason analysis under section 1 of the Sherman Act. It must also be recalled that the Guidelines apply to mergers between firms that ordinarily have no internal competition. Here we are dealing with firms that are merely limiting internal competition and are not merging to eliminate competition between firms. Indeed, if every van line in this industry eliminated all internal competition and then the largest two van lines merged, the resulting HHI would be only 868, still well below the top border for “unconcentrated markets.”8 Plaintiffs did *153not offer evidence that this market approximates a tight oligopoly. They offered evidence that makes such a characterization merely absurd and which demonstrates the absence of market power in any van line, much less in Atlas, the sixth largest van line.

We might well rest, therefore, upon the absence of market power as demonstrated both by Atlas’ 6% national market share and by the structure of the market. If it is clear that Atlas and its agents by eliminating competition among themselves are not attempting to restrict industry output, then their agreement must be designed to make the conduct of their business more effective. No third possibility suggests itself. But we need not rely entirely upon that inference because the record made in the district court demonstrates that the challenged agreement enhances the efficiency of the van line. The chief efficiency, as already noted, is the elimination of the problem of the free ride.

A carrier agent can attract customers because of Atlas’ "national image” and can use Atlas’ equipment and order forms when undertaking carriage for its own account. Plaintiffs’ Statement of Genuine Issues H 26, at 40 (“PSGI”). The carrier agents “benefit from use of the services of moving and storage firms affiliated with Atlas, for origin or destination work at remote locations, when operating independently of Atlas.” Id. ¶ 27, at 41. This benefit involves not only the availability of a reliable network of firms providing such services, but also includes the benefit of Atlas’ “mediating collection matters” among its affiliates. Id. ¶ 27, at 42. To the degree that a carrier agent uses Atlas’ reputation, equipment, facilities, and services in conducting business for its own profit, the agent enjoys a free ride at Atlas’ expense. The problem is that the van line’s incentive to spend for reputation, equipment, facilities, and services declines as it receives less of the benefit from them. That produces a deterioration of the system’s efficiency because the things consumers desire are not provided in the amounts they are willing to pay for. In the extreme case, the system as a whole could collapse.

By their own assertions, appellants establish that the carrier agents in the Atlas organization have benefited from Atlas’ business infrastructure in carrying shipments made for their own accounts. Rothery suggests free riding does not occur, and that the district court erred in concluding that it did. See Brief for Rothery at 29-30. That argument, however, cannot withstand scrutiny, for Rothery has conceded that the carrier agents associated with Atlas do derive significant benefits from Atlas in dealing with customers for their own profit.9 We find the district *154court’s conclusion that free riding existed to be amply supported and by no means clearly erroneous.

A few examples will suffice. Plaintiff-appellants conceded below that the carrier agents “benefited” from their association with Atlas’ “national image.” PSGI 1126, at 40. We cannot rationally infer that this consumer identification advantage did not benefit the carrier agents in operating on their own accounts while using Atlas equipment and personnel trained by Atlas. Rothery also allowed that, while the carrier agents bore the bulk of costs associated with their operations, Atlas did make “some small contributions” to the group advertising programs and “some contributions” to the painting of trucks on which the Atlas logo appeared. See Statement of Material Undisputed Facts in Support of Plaintiffs’ Motion for Partial Summary Judgment as to Liability H V-C, at 15 (“Plaintiffs’ Statement of Material Undisputed Facts”).

Rothery also credited Atlas with providing a dispatching service, a clearinghouse service for the settlement of accounts among its affiliates, assistance in settling claims among affiliates, certain written forms, sales meetings to provide exposure to national customers, driver and employee training programs, and the screening of the quality and reliability of affiliated firms that provided origin and destination services for the carrier agents. See Plaintiffs’ Statement of Material Undisputed Facts ¶ V-D, at 15-17.

Rothery did not assert in its Statement of Material Undisputed Facts, nor may we infer, that the carrier agents could not avail themselves of the .benefits derived from these services when operating for their own accounts. Many of these services confer intangible advantages that redound to the benefit of the carrier agent as a whole, and do not admit of easy segregation as between shipments on Atlas’ interstate authority and shipments on the carrier agent’s authority. For example, if Atlas provides superior training to the employees of its carrier agents, that training improves the quality of work not only on shipments undertaken for Atlas but also on shipments made on the carrier agent’s own interstate authority. And because carrier agents may elect to use their own or Atlas’ interstate authority for a given shipment, see Plaintiffs’ Statement of Material Undisputed Facts III-E, at 3, exposure to national clients at Atlas’ sales meetings can provide them with interstate customers for their own, as well as for Atlas’, accounts.

These examples are not exhaustive, but they illustrate the point. Even though entitled to every favorable inference, see United States v. General Motors Corp., 565 F.2d 754 (D.C.Cir.1977), Rothery, in light of the facts it deemed undisputed below, could not seriously contend that the carrier agents’ association with Atlas did not provide them with benefits that aided them in conducting business in competition with Atlas. Thus, because the plaintiff-appellants asserted that the carrier agents paid Atlas only for its clearinghouse service and for the provision of written forms, we agree with the district court’s finding that many of the services supplied as part of Atlas’ arrangement with the carrier agents’ arrangement resulted in Atlas subsidizing its competitors. See 597 F.Supp. at 233.

If the carrier agents could persist in competing with Atlas while deriving the advantages of their Atlas affiliation, Atlas might well have found it desirable, or even essential, to decrease or abandon many such services. See Continental T. V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 55, 97 S.Ct. 2549, 2560, 53 L.Ed.2d 568 (1977) (“Because of market imperfections such as the so-called ‘free rider’ effect, [certain] services might not be provided ... in a purely competitive situation ____”). Of that tendency there can be no doubt. When a person or business providing goods or services begins to receive declining revenues, then, other things being equal, that person or firm will provide fewer goods or *155services. As marginal revenue drops, so does output. Thus, when Atlas’ centralized services, equipment, and national image amount to a subsidy of competing carrier agents, this cuts down the marginal revenue derived from the provision of such things so that less will be offered than the market would reward.

On the other side, the firm receiving a subsidized good or service will take more of it. As cost declines, then, other things being equal, demand increases. Carrier agents, that is, will increase the use of Atlas’ services, etc., on interstate carriage for their own accounts, over-consuming that which they can obtain at less than its true cost. In this way, free riding distorts the economic signals within the system so that the van line loses effectiveness in serving consumers. The restraint at issue in this case, therefore, is a classic attempt to counter the perceived menace that free riding poses. By compelling carrier agents to transfer their interstate authority to a separate entity, Atlas can continue providing services at optimal levels, confident that it will be paid for those services.

The Atlas agreements thus produce none of the evils of monopoly but enhance consumer welfare by creating efficiency. There seems no reason in the rationale of the Sherman Act, or in any comprehensible policy, to invalidate such agreements. Nevertheless, at one, intermediate, point in the history of antitrust, Supreme Court decisions seemed to require just that result. It seems clear, however, that the law has returned to the original understanding so that the agreements before us are plainly lawful. Current decisional law is best understood if placed in historical context.

V.

The law concerning contract integrations and the restraints of trade that augment their effectiveness has been a variable growth. At times, courts have thought integrations or partnerships with restraints like Atlas’ obviously not only lawful but desirable. At other times, courts have treated the restraints as illegal per se, beyond any possibility of justification. The question is the state of the law today. We begin with the law’s earliest analysis of such restraints, then discuss later cases that implicitly repudiated that analysis, and, finally, seek to discover the degree to which the law has now returned to its original formulation.

A.

From the inception of antitrust policy, the Supreme Court has recognized that the elimination of rivalry by the joinder of rivals into a larger economic unit is not, per se, an unlawful restraint of trade. After framing a rule of per se illegality for naked price fixing among competitors in United States v. Trans-Missouri Freight Association, 166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007 (1897), the Supreme Court in United States v. Joint Traffic Association, 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259 (1898), responded to the objection that condemning every restraint would destroy the most ordinary and indispensable contracts and integrations since they restrained the competition of the parties. The Court majority replied that neither the formation of a corporation or a contract of partnership had ever “been regarded in the nature of a contract in restraint of trade or commerce.” 171 U.S. at 567, 19 S.Ct. at 31. Though the verbal formulation of the law has changed, it remains true that the lessening of actual or potential rivalry inherent in the formation of every corporation and every partnership has never been held or said to be illegal per se by the Supreme Court. As Justice Holmes put it in dissent in Northern Securities Co. v. United States, 193 U.S. 197, 411, 24 S.Ct. 436, 472, 48 L.Ed. 679 (1904) (misconstruing the rule applied by the majority), any such interpretation of the Sherman Act “would make eternal the bellum omnium contra omnes and disintegrate society so far as it could into individual atoms.” No such construction of the Act is thinkable.

Appellants here do not challenge the formation or existence of the Atlas system. They complain only of the agreement that *156prevents them from maintaining an independent interstate carrier operation in the same corporation that acts as an agent of Atlas. The law has had more difficulty with agreements of this sort than it has had with the underlying integration or partnership. We begin by examining the Sherman Act’s earliest position with respect to such agreements.

In United States v. Addyston Pipe & Steel Co., 85 F. 271 (6th Cir.1898), aff'd, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136 (1899), Judge (later Chief Justice) William Howard Taft framed a rule of per se illegality for “naked” price-fixing and market-dividing agreements, i.e., agreements between competitors who cooperated in no other integrated economic activity. But Taft recognized that such a rule would not do where fusions or integrations of economic activity occurred and, further, that agreements eliminating rivalry within such an enterprise were means of enhancing the firm’s efficiency. He explained the reasons for the validity of an agreement “by a partner pending the partnership not to do anything to interfere, by competition or otherwise, with the business of the firm”:

[W]hen two men became partners in a business, although their union might reduce competition, this effect was only an incident to the main purpose of a union of their capital, enterprise, and energy to carry on a successful business, and one useful to the community. Restrictions in the articles of partnership upon the business activity of the members, with a view of securing their entire effort in the common enterprise, were, of course, only ancillary to the main end of the union, and were to be encouraged.

United States v. Addyston Pipe & Steel Co., 85 F. at 280.

To be ancillary, and hence exempt from the per se rule, an agreement eliminating competition must be subordinate and collateral to a separate, legitimate transaction. The ancillary restraint is subordinate and collateral in the sense that it serves to make the main transaction more effective in accomplishing its purpose. Of course, the restraint imposed must be related to the efficiency sought to be achieved. If it is so broad that part of the restraint suppresses competition without creating efficiency, the restraint is, to that extent, not ancillary. Taft added the further obvious qualification that even restraints ancillary in form are illegal if they are part of a general plan to gain monopoly control of a market. 85 F. at 282-83.

If Taft’s formulation is the law today, it is obvious that the Atlas agreements are legal, for Addyston Pipe & Steel’s analysis of ancillary restraints fits this case exactly.10 The Atlas network involves a union of the parties’ enterprise to carry on a useful business, the challenged agreements are ancillary in that they enhance the efficiency of that union by eliminating the problem of the free ride, and, given Atlas’ small market share, the agreements cannot be part of a plan to gain monopoly control of the market.

B.

The argument that horizontal eliminations of competition among legally independent persons or companies are automatically illegal, even though the restraint is ancil*157lary to a partnership or a joint venture, rests primarily upon United States v. Topeo Associates, Inc., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). The business arrangement in Topeo very closely resembles Atlas’ policy.

Topeo was a cooperative association of twenty-five small and medium-sized regional supermarket chains operating stores in thirty-three states. Topeo functioned as a purchasing agent for its members, ensured quality control on purchased products, developed specifications for certain types of products, and performed other tasks that gave members the efficiencies usually attainable only by large chains. Topco’s stock was owned by its member chains. They were geographically dispersed and, in their various areas, had market shares ranging from 1.5% to 16%, with the average being about 6%.

The legal challenges centered on Topco’s private-label program. Topeo members had difficulty competing with larger chains and this problem was to some degree attributable to the larger chain’s ability to develop their own private labels. The Court’s opinion set out some of the efficiencies of private labeling:

Private-label products differ from other brand-name products in that they are sold at a limited number of easily ascertainable stores. A&P, for example, was a pioneer in developing a series of products that were sold under an A&P label and that were only available in A&P stores. It is obvious that by using private-label products, a chain can achieve significant cost economies in purchasing, transportation, warehousing, promotion, and advertising. These economies may afford the chain opportunities for offering private-label products at lower prices than other brand-name products. This, in turn, provides many advantages of which some of the more important are: a store can offer national-brand products at the same price as other stores, while simultaneously offering a desirable, lower priced alternative; or, if the profit margin is sufficiently high on private-brand goods, national-brand products may be sold at reduced price. Other advantages include: enabling a chain to bargain more favorably with national-brand manufacturers by creating a broader supply base of manufacturers, thereby decreasing dependence on a few, large national-brand manufacturers; enabling a chain to create a “price-mix” whereby prices on special items can be lowered to attract customers while profits are maintained on other items; and creation of general goodwill by offering lower priced, higher quality goods.

United States v. Topco Associates, 405 U.S. at 599 n. 3, 92 S.Ct. at 1129 n. 3.

Thus, Topeo, like Atlas, was a contractual integration of legally independent businesses designed to achieve efficiencies unavailable to its members separately. Also like Atlas, however, Topeo had an ancillary horizontal restraint designed to make the integration more effective. Members could sell Topco-brand products only in designated, and usually exclusive, territories. Member chains were free to expand into each other’s territories, and did, but they could not sell the Topeo brand in the new territory if another member held the rights there. This restraint had a clear relationship to marketing effectiveness. As Topeo said, “ ‘[pjrivate label merchandising is a way of economic life in the food retailing industry, and exclusivity is the essence of a private label program; without exclusivity, a private label would not be private.’ ” 405 U.S. at 604, 92 S.Ct. at 1132. It noted that every national and large regional chain had its own exclusive private-label products. “ ‘Each such chain relies upon the exclusivity of its own private label line to differentiate its private products from those of its competitors and to attract and retain the repeat business and loyalty of consumers.’” Id. at 604-05, 92 S.Ct. at 1132. Smaller chains had to have their own lines to compete with larger chains, which accounted for the Topeo program, and needed similar exclusivity for advertising and promotional purposes, which accounted for the market division with respect to the Topeo label.

*158The Supreme Court said, however, “[w]e think that it is clear that the restraint in this case is a horizontal one, and, therefore, a per se violation of § 1 [of the Sherman Act].” 405 U.S. at 608, 92 S.Ct. at 1134. The Topeo opinion also clarified United States v. Sealy Corp., 388 U.S. 350, 87 S.Ct. 1847, 18 L.Ed.2d 1238 (1967), which had appeared to hold illegal a very similar set of restraints among mattress manufacturers that wished to market a national brand because both price fixing and market division were involved. Sealy was now said to hold that horizontal territorial limitations by themselves were per se unlawful. See 405 U.S. at 609, 92 S.Ct. at 1134.

If Topco and Sealy, rather than Addyston Pipe & Steel, state the law of horizontal restraints, the restraints imposed by Atlas would appear to be a per se violation of the Sherman Act. An examination of more recent Supreme Court decisions, however, demonstrates that, to the extent that Topeo and Sealy stand for the proposition that all horizontal restraints are illegal per se, they must be regarded as effectively overruled.

C.

The Supreme Court reformed the law of horizontal restraints in Broadcast Music, Inc. v. Columbia Broadcasting System, 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979) (“BMI”), National Collegiate Athletic Association v. Board of Regents, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984) (“NCAA ”), and Northern Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S.Ct. 2613, 86 L.Ed.2d 202 (1985) (“Pacific Stationery ”).

In BMI, CBS brought suit to challenge the blanket licenses to perform copyrighted musical compositions issued by BMI and by the American Society of Composers, Authors and Publishers (“ASCAP”). Each blanket license gave the licensee the right to perform any and all of the compositions owned by members and affiliates of the performing rights organization for a stated period of time. Since BMI and ASCAP negotiated the price of their blanket licenses and distributed royalties to the copyright owners, the charge, upheld by the court of appeals, was that the blanket license was a form of price fixing between the copyright owners and so was a horizontal restraint illegal per se under the Sherman Act.

The Supreme Court rejected a “literal approach” to price-fixing because that approach, by itself, does not establish whether a particular practice is of a type that is plainly anticompetitive and very likely without redeeming virtue.

Literalness is overly simplistic and often overbroad. When two partners set the price of their goods or services they are literally “price fixing,” but they are not per se in violation of the Sherman Act. See United States v. Addyston Pipe & Steel Co., 85 F. 271, 280 (CA6 1898), aff’d 175 U.S. 211 [20 S.Ct. 96, 44 L.Ed. 136] (1899).

BMI, 441 U.S. at 9, 99 S.Ct. at 1557. That observation is significant for it shows that the BMI Court recognized that partnerships, one form of integration by contract, involve horizontal restraints that are not per se illegal. It also demonstrates, contrary to appellants’ claims here, that “price fixing” within a contract integration does not necessarily violate the antitrust law. But the Court’s analysis of whether the per se label was appropriate in BMI has even more significance for the present case.

The Court began by noting the existence of consent decrees the government had worked out with ASCAP and BMI, said the decrees, though they did not immunize the blanket license from third parties’ suits, did indicate that “the challenged practice may have redeeming competitive virtues,” so that the decrees could not be ignored completely in analyzing the practice of blanket licensing. See 441 U.S. at 13, 99 S.Ct. at 1559. Moreover, Congress, albeit in other performances contexts, had created compulsory blanket licenses, reflecting an opinion that blanket licenses “are economically beneficial in at least some circumstances.” Id. at 16, 99 S.Ct. at 1560.

*159These observations have their analogues in the present case. That the challenged practice of agent exclusivity “may have redeeming competitive virtues” is shown by the fact that all van lines use the practice, see 597 F.Supp. at 222, and that the Interstate Commerce Commission routinely approves the practice, without even requiring a hearing. See Three Way Corp. v. United States, 792 F.2d 232 (D.C.Cir. 1986). The constraints the consent decrees placed on ASCAP, BMI, 441 U.S. at 24, 99 S.Ct. at 1564, which has a great majority of the most desired music played in the United States, are analogous to the restraints the free market places on Atlas, which does less than 6% of the business in its market. Moreover, just as Congress recognized the utility of the blanket license, so Congress recognized the utility of restraints of the sort Atlas imposes. That is shown by the congressional provision of antitrust immunity for ICC-approved pooling agreements containing such restrictions and is further evidenced by the Senate Committee on Commerce, Science and Transportation statements concerning restrictions imposed outside a pooling agreement:

During the course of its deliberations, the Committee considered a proposal to include within the immunity section [49 U.S.C. § 10934(d) ] language that would grant immunity to agreements concerning exclusive agency representation, or the fiduciary duty of loyalty of an agent not to compete with the principal concerning the subject matter of the agency. The Committee determined that this type of relationship is not a violation of the antitrust laws and is standard agency law as expressed in Section 393 of the Restatement of the Law of Agencies section. The Committee felt that inclusion of such language could imply that such relationships are a violation of the antitrust laws in the absence of immunity. Thus, the Committee determined not to include such language in the bill.

S.Rep. No. 497, 96th Cong., 1st Sess. 8 (1979) (emphasis added). Though, like the Court in BMI, we are not bound by Congress’ opinion, it does suggest that agency exclusivity is “economically beneficial in at least some circumstances.”

These parallels between BMI and Atlas’ practice are specific to the two cases. They may be enough to take this particular practice out of the category of per se illegality. But there is in BMI reasoning of more general application which indicates that Topeo does not state the modern rule as to horizontal restraints. There is, first, the Court’s favorable citation of Addyston Pipe & Steel’s example of partners who eliminate price competition between themselves. If Topeo meant, as it seemed to, that the existence of a joint venture could not justify an agreement eliminating competition between the joint venturers, the BMI Court must be read as overruling Topeo to that extent.

The opinion pointed out that the practices of ASCAP and BMI were necessary to secure for copyright owners the right to control and profit from the public performance of their musical compositions. The Court said, “we would not expect that any market arrangements reasonably necessary to effectuate the rights that are granted would be deemed a per se violation of the Sherman Act.” BMI, 441 U.S. at 19, 99 S.Ct. at 1562. In the present case, there is authority to conduct interstate carriage granted by the ICC. Atlas holds that authority but would have a difficult time using it but for its arrangements with its agents. Atlas is not in a position to conduct all of the carriage involved itself. The restraints it imposes are reasonably necessary to the business it is authorized to conduct. One may quibble about whether the ASCAP blanket license is more necessary to the conduct of that business than the agent exclusivity arrangement is to the conduct of Atlas’ business. We do not believe, however, that, in choosing the words it did, the Supreme Court intended that lower courts should calibrate degrees of reasonable necessity. That would make the lawfulness of conduct turn upon judgments of degrees of efficiency. There is no reason in logic *160why the question of degree should be important.

That conclusion is buttressed by the Court’s next observation, that

inquiry must focus on whether the effect and, here because it tends to show effect, ... the purpose of the practice are to threaten the proper operation of our predominantly free-market economy — that is, whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output ... or instead one designed to “increase economic efficiency and render markets more, rather than less, competitive.”

BMI, 441 U.S. at 19-20, 99 S.Ct. at 1562 (emphasis added) (citations omitted). This inquiry implements the Court’s designation of consumer welfare as the policy goal of the Sherman Act. Reiter v. Sonotone Corp., 442 U.S. 330, 343, 99 S.Ct. 2326, 2333, 60 L.Ed.2d 931 (1979). The Court concluded that the blanket license, though it involved price fixing in a literal sense, was not per se unlawful and remanded the case for further rule-of-reason analysis.

The Supreme Court’s NCAA decision confirms the analytical approach adopted in BMI. The NCAA, as part of its regulation of intercollegiate athletics, adopted a plan for the televising of member institutions’ football games. The plan limited the number of intercollegiate contests that could be televised and the number of times any one college could televise. No college could sell television rights independently. NCAA negotiated with two networks and arranged a specified price for categories of games. Colleges dissatisfied with the plan’s limitations on their ability to sell television rights brought suit, challenging the restraints under section 1 of the Sherman Act. The Supreme Court ruled that section 1 was violated but, significantly for the present case, refused to apply a per se rule.

In language we have already quoted, supra p. 215, the Court held that the NCAA plan created a horizontal restraint on price competition, 104 S.Ct. at 2959, but nevertheless explicitly refused to apply the per se rule, id. at 2960. It did so on the ground that horizontal restraints were necessary if the product was to be available. Id. at 2961. Moreover, the Court cited Continental T. V, Inc. v. GTE Sylvania Inc., 433 U.S. 36, 51-57, 97 S.Ct. 2549, 2558-61, 53 L.Ed.2d 568 (1977), for the proposition that “a restraint in a limited aspect of a market may actually enhance marketwide competition.” 104 S.Ct. at 2961-62. Sylvania held a rule of per se illegality inappropriate to a manufacturer’s division of its dealers’ territories. The Court reasoned that the restraint addressed the problem of the free ride, see 433 U.S. at 55, 97 S.Ct. at 2560 — if dealers could locate in each other’s territories, those who spent on advertising and promotion might not be able to recover their investment. Some dealers, with no advertising and promotion costs, could charge lower prices and capture the customers created by others’ expenditures. By applying GTE Sylvania in a horizontal case as “requiring] consideration of the NCAA’s justifications for the restraints, 104 S.Ct. at 2962, the Supreme Court made it clear that elimination of the free ride is an efficiency justification available to horizontal restraints that are ancillary to a contract integration. Following BMI, the Court reserved the per se rule for practices that, on their face, appear to be of the type that “ ‘would always or almost always tend to restrict competition and decrease output.’ ” Id. at 2960 (citing BMI, 441 U.S. at 19-20, 99 S.Ct. at 1562). When per se treatment is inappropriate, the court must consider the justifications advanced for the restraint. 104 S.Ct. at 2962. After noting that consumer welfare is the goal of the Sherman Act, the Court said:

A restraint that has the effect of reducing the importance of consumer preference in setting price and output is not consistent with this fundamental goal of antitrust law. Restrictions on price and output are the paradigmatic examples of restraints of trade that the Sherman Act was intended to prohibit.

*161 Id. at 2964 (footnote omitted). Upon considering the justifications advanced by the NCAA, the Court concluded that the restraint did not increase efficiency but decreased output and so violated section 1 of the Sherman Act.

Pacific Stationery applies to boycotts the general formula stated in BMI and NCAA — that the per se rule is confined to practices of the type that almost always decrease output rather than increasing efficiency — and so confirms, if confirmation were needed, that the formula applies to all horizontal restraints. Pacific Stationery, as already noted, involved the expulsion of a stationer from a wholesale purchasing cooperative for violation of the bylaws. The Court noted the efficiencies attainable through such cooperative ventures and said that a joint venture “must establish and enforce reasonable rules in order to function effectively.” 105 S.Ct. at 2620. This is a recognition that ancillary restraints are essential to the efficiency of a contract integration. An anticompetitive effect is to be presumed only if the plaintiff makes a “threshold showing” that the group “possesses market power or exclusive access to an element essential to effective competition.” Id. This statement of the law of ancillary restraints is so close to that of Addyston Pipe & Steel as to be virtually indistinguishable.

BMI, NCAA, and Pacific Stationery dictate the result in this case. All horizontal restraints are alike in that they eliminate some degree of rivalry between persons or firms who are actual or potential competitors. This similarity means that the rules applicable to all horizontal restraints should be the same. At one time, as we have seen, the Supreme Court stated in Topeo and Sealy that the rule for all horizontal restraints was one of per se illegality. The difficulty was that such a rule could not be enforced consistently because it would have meant the outlawing of very normal agreements (such as that of law partners not to practice law outside the firm) that obviously contributed to economic efficiency. The alternative formulation was that of Judge Taft in Addyston Pipe & Steel: a naked horizontal restraint, one that does not accompany a contract integration, can have no purpose other than restricting output and raising prices, and so is illegal per se; an ancillary horizontal restraint, one that is part of an integration of the economic activities of the parties and appears capable of enhancing the group’s efficiency, is to be judged according to its purpose and effect. In BMI, NCAA, and Pacific Stationery, the Supreme Court returned the law to the formulation of Addyston Pipe & Steel and thus effectively overruled Topeo and Sealy as to the per se illegality of all horizontal restraints.

The application of these principles to Atlas’ restraints is obvious because, as we have seen, supra pp. 211-12, 221-23, these restraints are ancillary to the contract integration or joint venture that constitutes the Atlas van line. The restraints preserve the efficiencies of the nationwide van line by eliminating the problem of the free ride. There is, on the other hand, no possibility that the restraints can suppress market competition and so decrease output. Atlas has 6% or less of the relevant market, far too little to make even conceivable an adverse effect upon output. If Atlas should reduce its output, it would merely shrink in size without having any impact upon market price. See supra p. 217. Under the rule of Addyston Pipe & Steel, BMI, NCAA, and Pacific Stationery, therefore, it follows that the Atlas agreements do not violate section 1 of the Sherman Act.11

*162A joint venture made more efficient by ancillary restraints, is a fusion of the productive capacities of the members of the venture. That, in economic terms, is the same thing as a corporate merger. Merger policy has always proceeded by drawing lines about allowable market shares and these lines are based on rough estimates of effects because that is all the nature of the problem allows. If Atlas bought the stock of all its carrier agents, the merger would not even be challenged under the Department of Justice Merger Guidelines because of inferences drawn from Atlas’ market share and the structure of the market. We can think of no good reason not to apply the same inferences to Atlas’ ancillary restraints.

The judgment of the district court is

Affirmed.

WALD, Circuit Judge,

concurring:

I concur in the result and in much of the reasoning of the panel’s opinion. I write separately, however, to point out several concerns that I have about the panel’s analysis once it establishes that no per se violation existed and the restraint should be looked at under the rule of reason. I believe that the District Court correctly undertook, in the traditional way, to “carefully balance” the “anticompetitive evils of the challenged practice ... against its pro-competitive virtues.” Smith v. Pro Football, Inc., 593 F.2d 1173, 1183 (D.C.Cir.1978). In fact, at one point the panel concedes that the record made in the District Court demonstrates, even without reliance on inferences drawn from market power, “that the challenged agreement enhances the efficiency of the van lines.” Pan. op. at 221. I am uncomfortable, therefore, with the panel’s suggestions that the District Court’s balancing was unnecessary, and indeed a useless exercise.

The panel concludes that no balancing was required here since a defendant lacking significant market power cannot act anticompetitively by reducing output and increasing prices. If, as the panel assumes, the only legitimate purpose of the antitrust laws is this concern with the potential for decrease in output and rise in prices, reliance on market power alone might be appropriate.1 But, I do not believe that the debate over the purposes of *163antitrust laws has been settled yet.2 Until the Supreme Court provides more definitive instruction in this regard,31 think it premature to construct an antitrust test that ignores all other potential concerns of the antitrust laws except for restriction of output and price raising.

The panel also suggests that even if some kind of balancing4 were appropriate, the only feasible way of doing it would be to use market share as a surrogate for anticompetitive effects. See Pan. op. at 229 n. 11 (“Though it is sometimes said that in cases of restrictions like these, it is necessary to weigh procompetitive effects against anticompetitive effects, we do not think that a usable formula____ Weighing effects in any direct sense will usually be beyond judicial capabilities but predictions about effects may be reflected in rules about allowable size.”). I acknowledge that traditional rule of reason balancing does not lend itself to neat equations, or percentages, or even Herfindahl-Hirschman indices providing a definitive answer. Nonetheless, to my knowledge, the Supreme Court has so far not decided rule of reason cases solely by looking at market shares. Instead, it has looked to the totality of circumstances surrounding a restraint to determine whether, on balance, it constitutes an unreasonable restraint of trade. See, e.g., N.C.A.A. v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 104 S.Ct. 2948, 2967, 82 L.Ed.2d 70 (1984) (looking at asserted procompetitive virtues even after determining that defendant had monopoly power); Broadcast Music Industries v. CBS, 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979) (instructing lower court to take procompetitive virtues of blanket licensing into account even though defendants had huge market shares).5

Until the Supreme Court indicates that the only goal of antitrust law is to promote efficiency, as the panel uses that term, I think it more prudent to proceed with a pragmatic, albeit nonarithmetic and even untidy rule of reason analysis, than to adopt a market power test as the exclusive filtering-out device for all potential violators who do not command a significant *164market share. Under any analysis, market power is an important consideration; I am not yet willing to say it is the only one.6

EASTERBROOK, Circuit Judge.

In 1972 Polk Bros., which owned some land in Burbank, Illinois, discussed with Forest City Enterprises the possibility of building a store large enough for both firms. Polk sells appliances and home furnishings; Forest City sells building materials, lumber, tools, and related products. Both have substantial chains of stores. They reached an agreement. Polk built a single building on a large parcel of land. The building is partitioned internally; Polk and Forest City have separate entrances; Polk’s store contains 64,000 square feet, Forest City’s 68,000 square feet. One parking lot serves both businesses. Forest City became Polk’s lessee in 1973. The stores opened in 1975. In 1978 Forest City exercised its option to buy, and Polk took back a mortgage for some $1.4 million.

The attraction of the arrangement was the complementary nature of the firms’ products. The two stores together could offer a full line of goods for furnishing and maintaining a home. Both Polk and Forest City were concerned, however, that competition might replace cooperation. They negotiated a covenant restricting the products each could sell. Forest City promised not to sell “major appliances and furniture”, although it reserved the right to sell “built-in appliances in connection with Kitchen-Build-In business.” Polk Bros, promised not to “stock or sell Toro and Lawnboy products including lawn mowers, building materials, lumber and related products, tools, paints and sundries, hardware, garden supplies, automotive supplies or plumbing supplies.” The parties agreed on a long list of things that both could sell, including “Gas & Electric Heatersf,] Built-In-Ranges[,] ... Snow Blowers[,] Lawn Mowers[,] ... [and] Hardware/Garden Mdse”. When Forest City became an owner in 1978 the parties agreed that the restrictions in the lease would become covenants running with the land for 50 years.

Forest City’s management changed in 1982. The new managers were concerned about declining profits from its three stores near Chicago. Two stores sold some major appliances; the one at Burbank did not. Forest City found it uneconomical to advertise the large appliances when one of the three outlets could not sell them. Forest City asked to be relieved of its covenant at Burbank. Polk said no. In January 1983 Forest City informed Polk that it considered the covenant invalid; Polk respond*188ed with a suit in state court seeking an injunction. Forest City removed the action to the district court under 28 U.S.C. § 1441, where it could have been filed initially under the diversity jurisdiction.

While the case was pending, Forest City started selling appliances. Polk sought emergency relief, and the district court referred the matter to a magistrate. The magistrate held an evidentiary hearing, made extensive findings of fact, and recommended that relief be granted. The district court, however, denied Polk’s request, concluding both that the covenant is a per se violation of the antitrust law of Illinois and that Polk, having violated the covenant itself, may not obtain equitable relief. The district court then took additional evidence and denied Polk’s request for a permanent injunction. We discuss the district court’s two reasons in turn. The last portion of the opinion takes up some procedural matters, including a suggestion of mootness.

I

The district court held the covenant invalid under § 3(l)(c) of the antitrust law of Illinois, Ill.Rev.Stat. ch. 38 § 60-3(l)(c), which declares unlawful contracts “allocating or dividing customers, territories, supplies, sales or markets, functional or geographical, for any commodity.” That state’s antitrust law, however, refers courts to federal antitrust law as a guide to questions of interpretation. See Ill.Rev. Stat. ch. 38 § 60-11; People ex rel. Scott v. College Hills Corp., 91 Ill.2d 138, 154, 61 Ill.Dec. 766, 773-775, 435 N.E.2d 463, 470-72 (1982); Maywood Sportservice, Inc. v. Maywood Park Trotting Association, Inc., 14 Ill.App.3d 141, 302 N.E.2d 79, 85-87 (1973). In order to find out what Illinois law forbids, we inquire what federal antitrust law forbids. Cf. Marrese v. American Academy of Orthopaedic Surgeons, 726 F.2d 1150, 1155 (7th Cir.1984) (en banc), rev’d on other grounds, - U.S. -, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985).

Like federal law, Illinois law recognizes a difference between contracts unlawful per se and those that must be assessed under a Rule of Reason. College Hills, supra. Although federal law treats almost all contracts allocating products and markets as unlawful per se, see Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 2740, 81 L.Ed.2d 628 (1984); United States v. Capitol Service, Inc., 756 F.2d 502 (7th Cir.1985); General Leaseways, Inc. v. National Truck Leasing Association, 744 F.2d 588 (7th Cir.1984), the per se rule is designed for “naked” restraints rather than agreements that facilitate productive activity. Any firm involves cooperation among people who could otherwise be competitors. Polk Bros, and Forest City each comprise many stores. The managers of each store could set prices independently, competing against each other, but antitrust law does not require this. See Copperweld, supra.

Cooperation is the basis of productivity. It is necessary for people to cooperate in some respects before they may compete in others, and cooperation facilitates efficient production. See Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 1470, 79 L.Ed.2d 775 (1984). Joint ventures, mergers, systems of distribution — all these and more require extensive cooperation, and all are assessed under a Rule of Reason that focuses on market power and the ability of the cooperators to raise price by restricting output. The war of all against all is not a good model for any economy. Antitrust law is designed to ensure an appropriate blend of cooperation and competition, not to require all economic actors to compete full tilt at every moment. When cooperation contributes to productivity through integration of efforts, the Rule of Reason is the norm. National Collegiate Athletic Association v. Board of Regents of University of Oklahoma, - U.S. -, 104 S.Ct. 2948, 2960-62, 82 L.Ed.2d 70 (1984) (NCAA).

A court must distinguish between “naked” restraints, those in which the restriction on competition is unaccompanied by new production or products, and “ancil*189lary” restraints, those that are part of a larger endeavor whose success they promote. See NCAA, supra. If two people meet one day and decide not to compete, the restraint is “naked”; it does nothing but suppress competition. If A hires B as a salesman and passes customer lists to B, then B’s reciprocal covenant not to compete with A is “ancillary.” At the time A and B strike their bargain, the enterprise (viewed as a whole) expands output and competition by putting B to work. The covenant not to compete means that A may trust B with broader responsibilities, the better to compete against third parties. Covenants of this type are evaluated under the Rule of Reason as ancillary restraints, and unless they bring a large market share under a single firm’s control they are lawful. See United States v. Addyston Pipe & Steel Co., 85 F. 271, 280-83 (6th Cir.1898) (Taft, J.), aff'd, 172 U.S. 211 (1899).

The evaluation of ancillary restraints under the Rule of Reason does not imply that ancillary agreements are not real horizontal restraints. They are. A covenant not to compete following employment does not operate any differently from a horizontal market division among competitors — not at the time the covenant has its bite, anyway. The difference comes at the time people enter beneficial arrangements. A legal rule that enforces covenants not to compete, even after an employee has launched his own firm, makes it easier for people to cooperate productively in the first place. Knowing that he is not cutting his own throat by doing so, the employer will train the employee, giving him skills, knowledge, and trade secrets that make the firm more productive. Once that employment ends, there is nothing left but restraint — but the aftermath is the wrong focus.

A court must ask whether an agreement promoted enterprise and productivity at the time it was adopted. If it arguably did, then the court must apply the Rule of Reason to make a more discriminating assessment. “[I]t is sometimes difficult to distinguish robust competition from conduct with long-run anti-competitive effects” (Copperweld, supra, 104 S.Ct. at 2740), and so a court must be very sure that a category of acts is anti-competitive before condemning that category per se. See Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979) (BMI), and NCAA, supra, both of which assess under the Rule of Reason horizontal agreements that also involve cooperation among rivals that might produce larger output and more desirable products. Both BMI and NCAA emphasize that condemnation per se is an unusual step, one that depends on confidence that a whole category of restraints is so likely to be anticompetitive that there is no point in searching for a potentially beneficial instance. See also, e.g., Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 47-51, 97 S.Ct. 2549, 2556-58, 53 L.Ed.2d 568 (1977).

A restraint is ancillary when it may contribute to the success of a cooperative venture that promises greater productivity and output. See Addyston; BMI; and NCAA; see also Robert H. Bork, The Antitrust Paradox 26-30 (1978). If the restraint, viewed at the time it was adopted, may promote the success of this more extensive cooperation, then the court must scrutinize things carefully under the Rule of Reason. Only when a quick look reveals that “the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output” (BMI, supra, 441 U.S. at 19-20, 99 S.Ct. at 1562) should a court cut off further inquiry. See also General Leaseways, supra, 744 F.2d at 593-96; Vogel v. American Society of Appraisers, 744 F.2d 598, 603-04 (7th Cir.1984).

Polk Bros, and Forest City were deciding in 1972-73 whether to embark on a new venture — the building of a joint facility— that would expand output. The endeavor not only would increase the retail selling capacity in Burbank but also would provide a convenience to consumers. Polk Bros, does about 80% of its business in large appliances. If it could bring to the same location building supplies and the other *190items in which Forest City specializes, shopping would be more convenient for consumers. As the district court put it, the parties "hoped to attract more customers because of the proximity of two stores, selling different but complementary items for the home.”

This was productive cooperation. The covenant allocating items between the retailers played an important role in inducing the two retailers to cooperate. The district court found that Polk “would not have entered into this arrangement, however, unless it had received assurances that [Forest City] would not compete with it in the sale of products that are the ‘foundation of [Polk’s] business’. ... The agreement not to compete was an integral part of the lease and land sale.”

It is easy to see why. Polk spent substantial sums in advertising to attract customers to its stores, where it displayed and demonstrated the appliances. It might be tempting for another retailer to take a free ride on these efforts. Once Polk had persuaded a customer to purchase a color TV, its next door neighbor might try to lure the customer away by quoting a lower price. It could afford to do this if, for example, it simply kept the TV sets in boxes and let Polk bear the costs of sales personnel and demonstrations. Polk would not continue doing the work while its neighbor took the sales. It would do less demonstrating and promotion, to the detriment of consumers who valued the information. The Supreme Court has recognized that the control of free riding is a legitimate objective of a system of distribution. See Monsanto, supra, 104 S.Ct. at 1469-70; Continental T.V., supra, 433 U.S. at 55-57, 97 S.Ct. at 2560-61. See also General Leaseways, supra, 744 F.2d at 592-93; Valley Liquors, Inc. v. Renfield Importers, Ltd., 678 F.2d 742 (7th Cir.1982); Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers Advertising Association, Inc., 672 F.2d 1280 (7th Cir.1982).

The district court nonetheless concluded that the covenant is not ancillary because it was an essential part of the arrangement. It reasoned: “The agreement not to compete was an integral part of the lease and land sale. This was not a sale with an ancillary agreement designed to protect an original owner’s established business interests. The lease and land sale would not have been made by Polk Bros, absent an agreement not to compete____ Because the covenant not to compete was not merely ancillary to a sale of land or business, it constitutes a horizontal restraint of trade and a per se violation of the Illinois Antitrust Act...” There are two possible interpretations of this reasoning. One is that this covenant is not ancillary because it is so important. The other is that the agreement is not ancillary when it is part of the establishment of a new business, as opposed to the sale of an existing business. Neither is correct.

The reason for distinguishing between “ancillary” and “naked” restraints is to determine whether the agreement is part of a cooperative venture with prospects for increasing output. If it is, it should not be condemned per se. Only by exalting Webster’s Third over the function of antitrust law could a court determine that a restraint is not “ancillary” because it was so important to the productive undertaking. The suggestion that the ancillary restraints doctrine does not apply to new ventures also slights the functions of the rule. The partners of a newly-formed law firm agree on fees and allocate subjects of specialty and clients among them; this “price fixing” and “market division” do not become unlawful just because the firm is new. The benefits of cooperation may be greatest when launching a new venture.

Polk Bros, and Forest City were cooperating to produce, not to curtail output; the cooperation increased the amount of retail space available and was at least potentially beneficial to consumers; the restrictive covenant made the cooperation possible. The Rule of Reason therefore applies. Discriminating analysis is necessary. Cf. Harold Friedman Inc. v. Thorofare Markets Inc., 587 F.2d 127, 141-42 (3d Cir.1978) (exclusivity clauses in leases at shopping *191centers must be assessed under the Rule of Reason); Wesley J. Liebeler, Antitrust Law and the New Federal Trade Commission, 12 Sw.U.L.Rev. 166 (1981) (discussing free riding in shopping centers).

The first step in any Rule of Reason case is an assessment of market power. Brunswick Corp. v. Riegel Textile Corp., 752 F.2d 261, 265 (7th Cir.1984), cert. denied, - U.S. -, 105 S.Ct. 3480, 87 L.Ed.2d 615 (1985); General Leaseways, supra, 744 F.2d at 596 (collecting cases); Lektro-Vend Corp. v. Vendo Co., 660 F.2d 255, 268-69 (7th Cir.1981), cert. denied, 455 U.S. 921, 102 S.Ct. 1272, 71 L.Ed.2d 461 (1982) (collecting cases applying this principle to restrictive covenants); cf. NCAA, supra, 104 S.Ct. at 2965 (only “naked” arrangements may be condemned without proof of market power); Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 104 S.Ct. 1551, 1566-68, 80 L.Ed.2d 2 (1984) (market power is essential even in some per se cases). Unless the firms have the power to raise price by curtailing output, their agreement is unlikely to harm consumers, and it makes sense to understand their cooperation as benign or beneficial. Forest City has not argued that the arrangement in question here affects a substantial portion of any market. It governs two stores on a single site. The stores are surrounded by a vast parking lot; the site apparently attracts customers with cars, the very customers who have many other options within a reasonable distance. There was a full trial, and Forest City did not offer evidence from which the court could find market power. It does not suggest that we affirm the judgment on Rule of Reason grounds. Forest City has litigated the antitrust issue as one in which it prevails under the per se rule or not at all. “Not at all” it must be.

II

The district court found that Polk could not enforce the covenant because of its disregard of its own obligations. Polk Bros, promised not to sell Toro products. It welched on this promise. Almost from the time the stores opened, Polk sold Toro lawn mowers and snowblowers at Burbank. Polk stocked these items throughout its chain, and apparently city-wide advertising led some customers to ask for the products at Burbank. Polk therefore kept a stock of Toro products in a back room. A customer who asked about a Toro product would be shown a picture from a catalog; a customer who wanted to see a Toro product would be conducted to the stock room, where they were available. This is not an ordinary way of doing business; one of Polk’s employees at Burbank testified that he had never seen other merchandise being sold in this manner during his 31 years with the firm. Polk continued to sell Toro lawn mowers at Burbank until May 1982; the aggregate volume from 1979-82 was $438,-000. It continued to sell Toro snowblowers at Burbank until April 1984; the aggregate volume from 1979-84 was $1,660;000. Polk also sold $62,000 worth of Toro hose reels and lawn trimmers in those years.

Polk offers a number of excuses for this conduct. Its first manager at Burbank testified, for example, that because the goods were not delivered from the sales floor, the practice did not violate the covenant. Senior managers of Polk testified that only a lack of proper internal controls allowed its central warehouse to ship the products to Burbank, and that the firm stopped selling the products when it discovered the problem. Polk insisted that it was authorized to sell Toro products by the clause in the initial lease permitting Polk to sell snow-blowers and lawn mowers, that Forest City consented in writing in 1975 to the sale of Toro snowblowers, and that Forest City knew of and did not object to the sales of all Toro products. Forest City replied that its consent covered only 1975-76 and that it objected annually to other sales and was told that the sales would cease.

The whisper, “Psst, wanna buy some Toro snowblowers?”, followed by a trip to the back room, is not an ordinary part of a retail business. It may have been hard for Polk to resist selling at Burbank products it advertised and sold in large volumes *192elsewhere, but the covenant obliged it to do so. The district court was entitled to credit Forest City’s reports of annual protests, to conclude that the permission granted in 1975 lasted but one year, and to hold that the specific ban on selling Toro products survived the general permission to sell snowblowers and lawn mowers. It may be that Polk believed in good faith (based on the 1975 letter) that it was entitled to sell Toro snowblowers (though one wonders why, if this is so, Polk did not put the products on the sales floor), but the district court found that it had no similar support for the covert sales of lawn mowers. Indeed, when Polk requested permission to sell Toro lawn mowers in 1977, Forest City refused in writing. The district court believed Forest City’s version of events, as it was entitled to. “When there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.” Anderson v. City of Bessemer City, - U.S. -, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985). See also Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1427-1430 (7th Cir.1985).

It does not follow, however, that the district court was free to excuse Forest City from complying with its obligations. By the time Forest City repudiated the covenant in January 1983, Polk had stopped selling the lawn mowers. Forest City sold a few black and white television sets and microwave ovens at Burbank in April 1982. Polk protested, and Forest City promptly quit selling these items. Forest City objected in turn to Polk’s sales of Toro lawn mowers. Polk both removed the Toro lawn mowers from the Burbank store in May 1982 and brought the snowblowers out into the open, explicitly relying on the 1975 letter as authority. When this dispute ripened, then, Polk was in compliance with the covenant except for the disputed Toro snowblowers. The magistrate who conducted the trial concluded that until the incident in April 1982 Forest City had not told Polk that it viewed Polk’s violations as substantial, and that “once Forest City made a demand for strict compliance Polk Bros, complied.”

The district court invoked the doctrine of unclean hands. The plaintiff seeking an injunction to enforce a covenant running with the land, the court held, must show “that he has exercised good faith and appropriate diligence in performing his own obligations under the agreement.” Polk could not show this; to the contrary it had committed a “substantial and continued breach” of its covenants. Polk’s “nearly continuous sale of the prohibited items, its practice of concealing these sales, and its lack of response to [Forest City’s] complaints show a wilful breach of its obligations under the restrictive covenant.” According to the court, one party’s wilful breach precludes enforcement of the other’s obligations. We disagree with this conclusion.

It is undisputed that Polk honored its covenant not to sell “building materials, lumber and related products, tools, paints and sundries, hardware, ... automotive supplies or plumbing supplies.” These were the principal products Forest City offered at Burbank. Polk did sell Toro products, covertly and in wilful violation of its duties. Yet although Polk’s sales of Toro products came to about $2 million from 1979 through 1984, the district court did not find that these sales injured Forest City. The record does not contain any evidence showing the importance of the sales of Toro products to Forest City at Burbank or at any other store. There is not a hint that Toro sales were a substantial portion of Forest City’s business at any store or that Forest City did less Toro business at Burbank than elsewhere. As the district court put it, Forest City “has offered no evidence concerning any losses due to [Polk’s] sale of restricted products”; more, John Evancho, Forest City’s district manager, testified “that he did not believe that [Polk’s] sales of prohibited goods were hurting [Forest City] ‘that much’.” Evancho even filed an affidavit conceding that “Forest City has never sought to enforce the restraint of trade provisions or to restrict Polk Bros.’ sales activities in any way.” This is the approach of a firm un*193concerned by the breach of covenant — Polk may have been violating the rules, but so long as its violations did not harm Forest City, Forest City chose not to stand on its rights.

The law of Illinois entitles a party to obtain specific performance of covenants running with the land. Housing Authority of Gallatin County v. Church of God, 401 Ill. 100, 81 N.E.2d 500, 504 (1948). The covenant between Polk and Forest City reinforces this rule. It states that the remedy at law for a breach “will be inadequate” and that either party “shall be entitled to injunctive relief” in addition to damages. Specific performance of a covenant such as this is necessary to achieve the objectives of the contracting parties. They wanted to limit free riding on each other’s sales efforts. This is a continuing concern; damages for past violations will not ensure that these adjoining retailers conduct their future efforts efficiently. If a court declines to enforce this covenant, the parties must either adopt the covenant anew (which may be a difficult bit of negotiation) or forgo its benefits — for themselves and for their customers. In either case the loss may be well out of line with the injury the unauthorized sales inflicted on Forest City. For these and other reasons Illinois treats “unclean hands” as an exceptional defense, one that rarely prevents the grant of the relief that would otherwise be appropriate. E.g., Baal v. McDonald’s Corp., 97 Ill.App.3d 495, 501, 52 Ill.Dec. 957, 962, 422 N.E.2d 1166, 1171 (1981); Mascenic v. Anderson, 53 Ill.App.3d 971, 972, 11 Ill.Dec. 718, 719, 369 N.E.2d 172, 173 (1977); Illinois Power Co. v. Latham, 15 Ill.App.3d 156, 168, 303 N.E.2d 448, 457 (1973).

The Illinois cases are consistent with those of the federal courts, which have concluded that injunctions issue when appropriate under rules that can be announced in advance and applied evenhandedly. See TV A v. Hill, 437 U.S. 153, 193-95, 98 S.Ct. 2279, 2301-02, 57 L.Ed.2d 117 (1978); Shondel v. McDermott, 775 F.2d 859, 868 (7th Cir. 1985); Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380 (7th Cir.1984); Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 925, 937-40 (7th Cir.1974) (concurring opinion). Equity is no longer granted or withheld according to the chancellor’s sensibilities and his regard for the uprightness of the parties. The injunction, like other remedies, is designed to achieve compliance with established rules, and even the wicked have a right to treatment according to the rules. An injunction that is otherwise appropriate may be withheld to achieve some competing objective, see Weinberger v. Romero-Barcelo, 456 U.S. 305, 312-18, 102 S.Ct. 1798, 1803-6, 72 L.Ed.2d 91 (1982), but not to express disapproval of the plaintiff’s conduct. As we put it in Shondel, 755 F.2d at 868 (citation omitted): “Today, ‘unclean hands’ really just means that in equity as in law the plaintiff’s fault, like the defendant’s, is relevant to the question of what if any remedy the plaintiff is entitled to. An obviously sensible application of this principle is to withhold an equitable remedy that would encourage or reward (and thereby encourage) illegal activity____”

Illinois follows this approach. The most common formulation of the “unclean hands” doctrine in recent Illinois cases is that “one seeking equitable relief cannot take advantage of his own wrong.” Fair Automotive Repair, Inc. v. Car Service Systems, Inc., 128 Ill.App.3d 763, 84 Ill.Dec. 25, 29, 471 N.E.2d 554, 558 (1984) (collecting other cases). If the plaintiff creates or contributes to the situation on which it relies, the court denies equitable relief in order to deter the wrongful conduct. “One who has defrauded his adversary to his injury will not be heard to assert a right in equity.” Fruhling v. County of Champaign, 95 Ill.App.3d 409, 51 Ill.Dec. 508, 414, 420 N.E.2d 1066, 1071 (1981). See also, e.g., Jaffe Commercial Finance Co. v. Harris, 119 Ill.App.3d 136, 74 Ill.Dec. 722, 726, 456 N.E.2d 224, 228 (1983); LaSalle National Bank v. Hoffman, 1 Ill.App.3d 470, 274 N.E.2d 640 (1971); American National Bank & Trust Co. of Chicago v. Hamilton Industries *194 International, Inc., 583 F.Supp. 164 (N.D.Ill.1984).

When the plaintiffs wrongful conduct did not lead to a situation from which the plaintiff seeks to take further advantage, the courts of Illinois routinely grant equitable relief notwithstanding prior transgressions. Sometimes they come to this end by saying that the obligation sought to be enforced was not “in connection with the very transaction complained of” (see Baal, supra, 52 Ill.Dee. at 962, 422 N.E.2d at 1171); if the events are distinct, the court will enforce the separate promise despite the earlier wrong. They have been most creative in severing transactions that to the untrained eye appear single. E.g., Carlyle v. Jaskiewicz, 124 Ill.App.3d 487, 79 Ill.Dec. 847, 464 N.E.2d 751 (1984) (a fraudulent acquisition of an interest in land and the obligation to pay expenses in connection with that interest are separate transactions); Ellis v. Photo America Corp., 113 Ill.App.3d 493, 69 Ill.Dec. 417, 447 N.E.2d 852 (1983) (an employee’s fraudulent misappropriation of his employer’s funds is a transaction separate from the employment, so the employee may obtain the equitable remedy of quantum meruit for work done). Sometimes the state’s courts enforce the promise by saying that violations by one party of its own duties do not prevent enforcement of the deal unless substantial violations have caused the original function of the covenant to be lost. Punzak v. Delano, 11 Ill.2d 117, 120, 11 Ill.Dec. 117, 118, 142 N.E.2d 64, 65 (1957). Usually this means that the violations must have been so extensive as to upset the original bargain.

Under any of these variations the courts of Illinois would enforce Forest City’s promises. Polk did not obtain the covenant by fraud or wrongfully propel Forest City into a situation from which Polk now seeks further advantage. The covenants were negotiated at arms’ length, and there was no wrongdoing in their formation. Polk’s transgressions are logically distinct from the duties it seeks to enforce against Forest City. Polk’s violations also were not substantial in the sense Illinois uses. From 1975 until Forest City disavowed its obligations in 1983, the parties generally lived by the covenants; Forest City sold building supplies and household goods but not appliances, and Polk sold appliances but not any of Forest City’s specialties. In January 1983 Polk was in compliance except for Toro snowblowers, which it was selling openly under a claim of right. The record does not demonstrate how, if at all, Polk’s sales of Toro products injured Forest City.

Forest City has assembled an armada of cases in support of the district court’s decision. Many of them, however, are not “unclean hands” cases. Two strands of Illinois law in addition to unclean hands may prevent enforcement of a covenant, and these need to be kept distinct. One is abandonment, the other repudiation.

McGovern v. Brown, 317 Ill. 73, 147 N.E. 664 (1925), on which Forest City strongly relies, is an example of abandonment. A covenant required all buildings in a development to be set back 30 feet from the street. For an extended period everyone built right up to the street; then one who had done so attempted to require others to respect the setback. The Supreme Court of Illinois found that the setback had been abandoned by all; it was too late to enforce a common building line. A covenant is abandoned when the parties repeatedly acquiesce in long-lasting violations, indicating that none intends to enforce the restrictions. See Knolls Associates v. Hinton, 71 Ill.App.3d 205, 27 Ill.Dec. 629, 389 N.E.2d 693 (1979). Usually abandonment includes a change of position making costly the restoration of the state of affairs contemplated by contract. Unlike unclean hands, abandonment does not require wilful or bad faith behavior. Mutual disregard and costly restoration were the essential features of McGovern. There is no similar mutual abandonment here, no similar difficulty in enforcing the agreement prospectively.

Johnstowne Centre Partnership v. Chin, 99 Ill.2d 284, 76 Ill.Dee. 80, 458 N.E.2d 480 (1983), another of Forest City’s cases, illustrates repudiation. Chin signed a lease to operate a restaurant at a shopping center; the center pledged not to al*195low any competing restaurant. When the shopping center nonetheless leased space to another restaurant, Chin walked away from the lease. The Supreme Court of Illinois held that he could. Chin had leased “exclusive” space; the shopping center had not furnished him with such space; he was entitled to set aside the whole contract. Forest City has not offered to set aside its whole contract; it wants the benefit (the right to occupy the store) without the detriment of the covenant. And even if Forest City could have repudiated its entire package of obligations, vacated the store, and conveyed the land back to Polk at some earlier time — an issue we need not decide— it may not do so now, for Polk (unlike the shopping center) is in compliance with its obligations.

We therefore conclude that Forest City has not made out the elements of the “unclean hands” defense in Illinois or of either related doctrine. Polk is not trying to take advantage of its own wrong; the covenants were not abandoned; Forest City did not try to repudiate the whole contract; Polk’s transgressions were not legally substantial; prospective relief may fully implement this bargain. Polk is entitled to the permanent injunction it seeks. Polk’s relief may be conditioned, however, on its iron-clad undertaking to live up to its end of the bargain, and the district court should incorporate this into the injunction. Ross v. Steiner, 66 Ill.App.3d 567, 23 Ill.Dec. 604, 384 N.E.2d 398 (1978). Forest City also has an action for damages caused by Polk’s sales, if it can establish any and if it has preserved the claim.

Ill

After the briefing had been completed on appeal, Polk moved to dismiss the case as moot. It stated that Forest City had vacated the store and leased it to a firm that does not sell appliances. Forest City apparently has closed all of its stores near Chicago. Forest City responded with an affidavit that the store had been leased to Service Merchandise Co., which planned to sell appliances, and that Service Merchandise has an option to buy. Polk replied with requests to add Service Merchandise as a party, to substitute it for Forest City, and to enjoin it, too, from selling appliances.

We deny all of these motions. The case is not moot. The covenant runs with the land. It binds any lessee or buyer from Forest City, so that the disposition of this case will have a real effect no matter who owns or operates the store. It also influences the price Forest City may realize for its store. As for the addition of Service Merchandise as a party: The affidavits concerning what Forest City and Service Merchandise plan to do with Forest City’s store present issues of fact. The district court may need to explore the facts more fully. It is enough for now that the injunction against Forest City will bind those in “active concert or participation” with Forest City who receive actual notice. Fed.R. Civ.P. 65(d). See Regal Knitwear Co. v. NLRB, 324 U.S. 9, 12-15, 65 S.Ct. 478, 480-81, 89 L.Ed. 661 (1945); G & C. Merriam Co. v. Webster Dictionary Co., 639 F.2d 29, 34-40 (1st Cir.1980); Silvers v. Traverse, 82 Iowa 52, 47 N.W. 888 (1891). If Service Merchandise should argue that it does not fit within the terms of Rule 65(d), the district court then must decide whether to add it as a party.

Reversed.

*759Justice Souter

delivered the opinion of the Court.

There are two issues in this case: whether the jurisdiction of the Federal Trade Commission extends to the California Dental Association (CDA), a nonprofit professional association, and whether a “quick look” sufficed to justify finding that certain advertising restrictions adopted by the CDA violated the antitrust laws. We hold that the Commission’s jurisdiction under the Federal Trade Commission Act (FTC Act) extends to an association that, like the CDA, provides substantial economic benefit to its for-profit members, but that where, as here, any anticompetitive effects of given restraints are far from intuitively obvious, the rule of reason demands a more thorough enquiry into the consequences of those restraints than the Court of Appeals performed.

HH

The CDA is a voluntary nonprofit association of local dental societies to which some 19,000 dentists belong, including about three-quarters of those practicing in the State. In re California Dental Assn., 121 P. T. C. 190, 196-197 (1996). The CDA is exempt from federal income tax under 26 U. S. C. § 501(c)(6), covering “[bjusiness leagues, chambers *760of commerce, real-estate boards, [and] boards of trade,” although it has for-profit subsidiaries that give its members advantageous access to various sorts of insurance, including liability coverage, and to financing for their real estate, equipment, cars, and patients’ bills. The CDA lobbies and litigates in its members’ interests, and conducts marketing and public relations campaigns for their benefit. 128 F. 3d 720, 723 (CA9 1997).

The dentists who belong to the CDA through these associations agree to abide by a Code of Ethics (Code) including the following § 10:

“Although any dentist may advertise, no dentist shall advertise or solicit patients in any form of communication in a manner that is false or misleading in any material respect. In order to properly serve the public, dentists should represent themselves in a manner that contributes to the esteem of the public. Dentists should not misrepresent their training and competence in any way that would be false or misleading in any material respect.” App. 33.

The CDA has issued a number of advisory opinions interpreting this section,1 and through separate advertising *761guidelines intended to help members comply with the Code and with state law the CDA has advised its dentists of disclosures they must make under state law when engaging in discount advertising.2

Responsibility for enforcing the Code rests in the first instance with the local dental societies, to which applicants for CDA membership must submit copies of their own advertisements and those of their employers or referral services to assure compliance with the Code. The local societies also actively seek information about potential Code violations by applicants or CDA members. Applicants who refuse to withdraw or revise objectionable advertisements may be denied membership; and members who, after a hearing, remain *762similarly recalcitrant are subject to censure, suspension, or expulsion from the CDA. 128 F. 3d, at 724.

The Commission brought a leging that it applied its guidelines so as to restrict truthful, nondeceptive advertising, and so violated § 5 of the FTC Act, 38 Stat. 717, 15 U. S. C. § 45.3 The complaint alleged that the CDA had unreasonably restricted two types of advertising: price advertising, particularly discounted fees, and advertising relating to the quality of dental services. Complaint ¶ 7. An Administrative Law Judge (ALJ) held the Commission to have jurisdiction over the CDA, which, the ALJ noted, had itself “stated that a selection of its programs and services has a potential value to members of between $22,739 and $65,127,” 121 F. T. C., at 207. He found that, although there had been no proof that the CDA exerted market power, no such proof was required to establish an antitrust violation under In re Mass. Bd. of Registration in Optometry, 110 F. T. C. 549 (1988), since the CDA had unreasonably prevented members and potential members from using truthful, nondeceptive advertising, all to the detriment of both dentists and consumers of dental services. He accordingly found a violation of § 5 of the FTC Act. 121 F. T. C., at 272-273.

The Commission except for his conclusion that the CDA lacked market power, with which the Commission disagreed. The Commission treated the CDA’s restrictions on discount advertising as illegal per se. 128 F. 3d, at 725. In the alternative, the Commission held the price advertising (as well as the nonprice) restrictions to be violations of the Sherman and FTC Acts *763under an abbreviated rule-of-reason analysis. One Commissioner concurred separately, arguing that the Commission should have applied the Mass. i3d. standard, not the per se analysis, to the limitations on price advertising. Another Commissioner dissented, finding the evidence insufficient to show either that the restrictions had an anticompetitive effect under the rule of reason, or that the CDA had market power. 128 F. 3d, at 725.

Court of Appeals for the Ninth Circuit affirmed, sustaining the Commission’s assertion of jurisdiction over the CDA and its ultimate conclusion on the merits. Id., at 730. The court thought it error for the Commission to have applied per se analysis to the price advertising restrictions, finding analysis under the rule of reason required for all the restrictions. But the Court of Appeals went on to explain that the Commission had properly

“applied an abbreviated, or 'quick look,’ rule of reason analysis designed for restraints that are not per se un-lawffil but are sufficiently anticompetitive on their face that they do not require a full-blown rule of reason inquiry. See [National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 109-110, and n. 39 (1984)] ('The essential point is that the rule of reason can sometimes be applied in the twinkling of an eye.’ [Ibid, (citing P. Areeda, The “Rule of Reason” in Antitrust Analysis: General Issues 37-38 (Federal Judicial Center, June 1981) (parenthetical omitted)).] It allows the condemnation of a 'naked restraint’ on price or output without an 'elaborate industry analysis.’ Id., at 109.” Id., at 727.

The Court of Appeals thought truncated rule-of-reason analysis to be in order for several reasons. As for the restrictions on discount advertising, they “amounted in practice to a fairly 'naked’ restraint on price competition itself,” ibid. The CDA’s procompetitive justification, that the re*764strictions encouraged disclosure and prevented false and misleading advertising, carried little weight because “it is simply infeasible to disclose all of the information that is required,” id., at 728, and “the record provides no evidence that the rule has in fact led to increased disclosure and transparency of dental pricing,” ibid. As to nonpriee advertising restrictions, the court said that

“[t]hese restrictions are in effect a form of output limitation, as they restrict the supply of information about individual dentists’ services. See Areeda & Hoven-kamp, Antitrust Law ¶ 1505 at 693-94 (Supp. 1997).... The restrictions may also affect output more directly, as quality and comfort advertising may induce some customers to obtain nonemergeney care when they might not otherwise do so. . . . Under these circumstances, we think that the restriction is a sufficiently naked restraint on output to justify quick look analysis.” Ibid.

The Court of Appeals went on to hold that the Commission’s findings with respect to the CDA’s agreement and intent to restrain trade, as well as on the effect of the restrictions and the existence of market power, were all supported by substantial evidence. Id., at 728-730. In dissent, Judge Real took the position that the Commission’s jurisdiction did not cover the CDA as a nonprofit professional association engaging in no commercial operations. Id., at 730. But even assuming jurisdiction, he argued, full-bore rule-of-reason analysis was called for, since the disclosure requirements were not naked restraints and neither fixed prices nor banned nondeceptive advertising. Id., at 730-731.

We granted certiorari to resolve conflicts among the Circuits on the Commission’s jurisdiction over a nonprofit professional association4 and the occasions for abbreviated *765rule-of-reason analysis.5 524 U. S. 980 (1998). We now vacate the judgment of the Court of Appeals and remand.

W

The FTC Act gives the Commission authority over “persons, partnerships, or corporations,” 15 U. S. C. § 45(a)(2), and defines “corporation” to include “any company ... or association, incorporated or unincorporated, without shares of capital or capital stock or certificates of interest, except partnerships, which is organized to carry on business for its own profit or that of its members,” §44. Although the Circuits have not agreed on the precise extent of this definition, see n. 4, supra, the Commission has long held that some circumstances give it jurisdiction over an entity that seeks no profit for itself. While the Commission has claimed to have jurisdiction over a nonprofit entity if a substantial part of its total activities provides pecuniary benefits to its members, see In re American Medical Assn., 94 F. T. C. 701, 983-984 (1980), respondent now advances the slightly different formulation that the Commission has jurisdiction “over anti-competitive practices by nonprofit associations whose activities provid[e] substantial economic benefits to their for-profit members’ businesses.” Brief for Respondent 20.

urges deference to this interpretation of the Commission’s jurisdiction as reasonable. Id., at 25-26 (citing Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U. S. 354, 380-382 *766(1988) (Scalia, J., concurring) (Chevron deference applies to agency's interpretation of its own statutory jurisdiction)). But we have no occasion to review the call for deference here, the interpretation urged in respondent’s brief being clearly the better reading of the statute under ordinary principles of construction.

The FTC Act is at pains to an ganized to carry on business for its own profit,” 15 U. S. C. §44, but also one that carries on business for the profit “of its members,” ibid. While such a supportive organization may be devoted to helping its members in ways beyond immediate enhancement of profit, no one here has claimed that such an entity must devote itself single-mindedly to the profit of others. It could, indeed, hardly be supposed that Congress intended such a restricted notion of covered supporting organizations, with the opportunity this would bring with it for avoiding jurisdiction where the purposes of the FTC Act would obviously call for asserting it.

Just as the FTC Act does not require that a organization must devote itself entirely to its members' profits, neither does the Act say anything about how much of the entity’s activities must go to raising the members’ bottom lines. There is accordingly no apparent reason to let the statute’s application turn on meeting some threshold percentage of activity for this purpose, or even satisfying a softer formulation calling for a substantial part of the nonprofit entity’s total activities to be aimed at its members’ pecuniary benefit. To be sure, proximate relation to lucre must appear; the FTC Act does not cover all membership organizations of profit-making corporations without more, and an organization devoted solely to professional education may lie outside the FTC Act’s jurisdictional reach, even though the quality of professional services ultimately affects the profits of those who deliver them.

There is no line drawing exercise in this case, however, where the CDA’s contributions to the profits of its individual *767members are proximate and apparent. Through for-profit subsidiaries, the CDA provides advantageous insurance and preferential financing arrangements for its members, and it engages in lobbying, litigation, marketing, and public relations for the benefit of its members’ interests. This congeries of activities confers far more than de minimis or merely presumed economic benefits on CDA members; the economic benefits conferred upon the CDA’s profit-seeking professionals plainly fall within the object of enhancing its members’ “profit,”6 which the FTC Act makes the jurisdictional toueh-*768stone. There is no difficulty in concluding that the Commission has jurisdiction over the CDA.

The logic and purpose result. The FTC Act directs the Commission to “prevent” the broad set of entities under its jurisdiction “from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.” 15 U. S. C. § 45(a)(2). Nonprofit entities organized on behalf of for-profit members have the same capacity and derivatively, at least, the same incentives as for-profit organizations to engage in unfair methods of competition or unfair and deceptive acts. It may even be possible that a nonprofit entity up to no good would have certain advantages, not only over a for-profit member but over a for-profit membership organization as well; it would enjoy the screen of superficial disinterest while devoting itself to serving the interests of its members without concern for doing more than breaking even.

Nor, contrary to petitioner’s argument, history inconsistent with this interpretation of the Commission’s jurisdiction. Although the versions of the FTC Act first passed by the House and the Senate defined “corporation” to refer only to incorporated, joint stock, and share-capital companies organized to carry on business for profit, see H. R. Conf. Rep. No. 1142, 63d Cong., 2d Sess., 11, 14 (1914), the Conference Committee subsequently revised the definition to its present form, an alteration that indicates an *769intention to include nonprofit entities.7 And the legislative history, like the text of the FTC Act, is devoid of any hint at an exemption for professional associations as such.

Commission had jurisdiction to pursue the claim here, and turn to the question whether the Court of Appeals devoted sufficient analysis to sustain the claim that the advertising restrictions promulgated by the CDA violated the FTC Act.

The Court of Appeals treated as distinct questions the sufficiency of the analysis of anticompetitive effects and the substantiality of the evidence supporting the Commission’s conclusions. Because we decide that the Court of Appeals erred when it held as a matter of law that quick-look analysis was appropriate (with the consequence that the Commission’s abbreviated analysis and conclusion were sustainable), we do not reach the question of the substantiality of the evidence supporting the Commission’s conclusion.8

In National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85 (1984), we held that a “naked restraint on price and output requires some competitive jus-*770tifieation even in the absence of a detailed market analysis.” Id., at 110. Elsewhere, we held that “no elaborate industry analysis is required to demonstrate the anticompetitive character of” horizontal agreements among competitors to refuse to discuss prices, National Soc. of Professional Engineers v. United States, 435 U. S. 679, 692 (1978), or to withhold a particular desired service, FTC v. Indiana Federation of Dentists, 476 U. S. 447, 459 (1986) (quoting National Soc. of Professional Engineers, supra, at 692). In each of these eases, which have formed the basis for what has come to be called abbreviated or “quick-look” analysis under the rule of reason, an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets. In National Collegiate Athletic Assn., the league's television plan expressly limited output (the number of games that could be televised) and fixed a minimum price. 468 U. S., at 99-100. In National Soc. of Professional Engineers, the restraint was “an absolute ban on competitive bidding.” 435 U. S., at 692. In Indiana Federation of Dentists, the restraint was “a horizontal agreement among the participating dentists to withhold from their customers a particular service that they desire.” 476 U. S., at 459. As in such cases, quick-look analysis carries the day when the great likelihood of anticompetitive effects can easily be ascertained. See Law v. National Collegiate Athletic Assn., 134 F. 3d 1010, 1020 (CA10 1998) (explaining that quick-look analysis applies “where a practice has obvious anticompeti-tive effects”); Chicago Professional Sports Limited Partnership v. National Basketball Assn., 961 F. 2d 667, 674-676 (CA7 1992) (finding quick-look analysis adequate after assessing and rejecting logic of proffered procompetitive justifications); cf. United States v. Brown University, 5 F. 3d 658, 677-678 (CA3 1993) (finding full rule-of-reason analysis required where universities sought to provide financial aid to needy students and noting by way of contrast that the agree-*771merits in National Soc. of Professional Engineers and Indiana Federation of Dentists “embodied a strong economic self-interest of the parties to them”).

case us, however, fails to present a situation in which the likelihood of anticompetitive effects is comparably obvious. Even on Justice Breyer’s view that bars on truthful and verifiable price and quality advertising are prima facie anticompetitive, see post, at 784-785 (opinion concurring in part and dissenting in part), and place the burden of procompetitive justification on those who agree to adopt them, the very issue at the threshold of this case is whether professional price and quality advertising is sufficiently verifiable in theory and in fact to fall within such a general rule. Ultimately our disagreement with Justice Breyer turns on our different responses to this issue. Whereas he accepts, as the Ninth Circuit seems to have done, that the restrictions here were like restrictions on advertisement of price and quality generally, see, e. g., post, at 785, 787, 790, it seems to us that the CDA’s advertising restrictions might plausibly be thought to have a net procom-petitive effect, or possibly no effect at all on competition. The restrictions on both discount and nondiscount advertising are, at least on their face, designed to avoid false or deceptive advertising9 in a market characterized by striking disparities between the information available to the professional and the patient.10 Cf. Carr & Mathewson, The Eco*772nomics of Law Firms: A Study in the Legal Organization of the Firm, 33 J. Law & Econ. 307,309 (1990) (explaining that in a market for complex professional services, “inherent asymmetry of knowledge about the product” arises because “professionals supplying the good are knowledgeable [whereas] consumers demanding the good are uninformed”); Akerlof, The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, 84 Q. J. Econ. 488 (1970) (pointing out quality problems in market characterized by asymmetrical information). In a market for professional services, in which advertising is relatively rare and the comparability of service packages not easily established, the difficulty for customers or potential competitors to get and verify information about the price and availability of services magnifies the dangers to competition associated with misleading advertising. What is more, the quality of professional services tends to resist either calibration or monitoring by individual patients or clients, partly because of the specialized knowledge required to evaluate the services, and partly because of the difficulty in determining whether, and the degree to which, an outcome is attributable to the quality of services (like a poor job of tooth filling) or to something else (like a very tough walnut). See Leland, Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards, 87 J. Pol. Econ. 1328,1330 (1979); 1 B. Furrow, T. Greaney, S. Johnson, T. Jost, & R. Schwartz, Health Law §3-1, p. 86 (1995) (describing the common view that “the lay public is incapable of adequately evaluating the quality of medical services”). Patients’ attachments to particular professionals, the rationality of which is difficult to assess, complicate the picture even further. Cf. Evans, Professionals and the Production Function: Can Competition Policy Improve Efficiency in the Licensed Professions?, in Occupational Licensure and Regulation 235-236 (S. Rotten-*773berg ed. 1980) (describing long-term relationship between professional and client not as “a series of spot contracts” but rather as “a long-term agreement, often implicit, to deal with each other in a set of future unspecified or incompletely specified circumstances according to certain rules,” and adding that "CQt is not clear how or if these [implicit contracts] can be reconciled with the promotion of effective price competition in individual spot markets for particular services”). The existence of such significant challenges to informed deci-sionmaking by the customer for professional services immediately suggests that advertising restrictions arguably protecting patients from misleading or irrelevant advertising call for more than cursory treatment as obviously comparable to classic horizontal agreements to limit output or price competition.

The explanation proffered by the Court of Appeals for the likely anticompetitive effect of the CDAs restrictions on discount advertising began with the unexceptionable statements that “price advertising is fundamental to price competition,” 128 F. 3d, at 727, and that “[r]estrictions on the ability to advertise prices normally make it more difficult for consumers to find a lower price and for dentists to compete on the basis of price,” ibid, (citing Bates v. State Bar of Ariz., 433 U. S. 350, 364 (1977); Morales v. Trans World Airlines, Inc., 504 U.S. 374, 388 (1992)). The court then acknowledged that, according to the CDA, the restrictions nonetheless furthered the “legitimate, indeed proeompetitive, goal of preventing false and misleading price advertising.” 128 F. 3d, at 728. The Court of Appeals might, at this juncture, have recognized that the restrictions at issue here are very far from a total ban on price or discount advertising, and might have considered the possibility that the particular restrictions on professional advertising could have different effects from those “normally5’ found in the commercial world, even to the point of promoting competition by reducing the occurrence of unverifiable and misleading across-the-board *774discount advertising.11 Instead, the Court of Appeals confined itself to the brief assertion that the “CDA’s disclosure requirements appear to prohibit aeross-the-board discounts because it is simply infeasible to disclose all of the information that is required,” ibid., followed by the observation that “the record provides no evidence that the rule has in fact led to increased disclosure and transparency of dental pricing,” ibid.

But these text and describe no anticompetitive effects. Assuming that the record in fact supports the conclusion that the CDA disclosure rules essentially bar advertisement of across-the-board discounts, it does not obviously follow that such a ban would have a net anticompetitive effect here. Whether advertisements that announced discounts for, say, first-time customers, would be less effective at conveying information relevant to competition if they listed the original and discounted prices for checkups, X-rays, and fillings, than they would be if they simply specified a percentage discount across the board, seems to us a question susceptible to empirical but not a priori analysis. In a suspicious world, the discipline of specific example may well be a necessary condition of plausibility for professional claims that for all practical purposes defy comparison shopping. It is also possible in principle that, even if aeross-the-board discount advertisements were more effective in drawing customers in the short run, the recurrence of some measure of intentional or accidental misstatement due to the breadth of their claims might *775leak out over time to make potential patients skeptical of any such across-the-board advertising, so undercutting the method’s effectiveness. Cf. Akerlof, 84 Q. J. Eeon., at 495 (explaining that “dishonest dealings tend to drive honest dealings out of the market”). It might be, too, that across-the-board discount advertisements would continue to attract business indefinitely, but might work precisely because they were misleading customers, and thus just because their effect would be anticompetitive, not procompetitive. Put another way, the CDA’s rule appears to reflect the prediction that any costs to competition associated with the elimination of across-the-board advertising will be outweighed by gains to consumer information (and hence competition) created by discount advertising that is exact, accurate, and more easily verifiable (at least by regulators). As a matter of economics this view may or may not be correct, but it is not implausible, and neither a court nor the Commission may initially dismiss it as presumptively wrong.12

In theory, it is true, the Court of Appeals neither ruled out the plausibility of some procompetitive support for the CDA’s requirements nor foreclosed the utility of an eviden-tiary discussion on the point. The court indirectly acknowledged the plausibility of procompetitive justifications for the *776CDA’s position when it stated that “the record provides no evidence that the rule has in fact led to increased disclosure and transparency of dental pricing,” 128 F. 3d, at 728. But because petitioner alone would have had the incentive to introduce such evidence, the statement sounds as though the Court cf Appeals may have thought it was justified without further analysis to shift a burden to the CDA to adduce hard evidence of the proeompetitive nature of its policy; the court’s adversión to empirical evidence at the moment of this implicit burden shifting underscores the leniency of its enquiry into evidence of the restrictions’ anticompetitive effects.

The Court of Appeals was comparably ing the sufficiency of abbreviated rule-of-reason analysis as to the nonpriee advertising restrictions. The court began with the argument that “[t]hese restrictions are in effect a form of output limitation, as they restrict the supply of information about individual dentists’ services.” Ibid, (citing P. Areeda & H. Hovenkamp, Antitrust Law ¶ 1505, pp. 693-694 (1997 Supp.)). Although this sentence does indeed appear as cited, it is puzzling, given that the relevant output for antitrust purposes here is presumably not information or advertising, but dental services themselves. The question is not whether the universe of possible advertisements has been limited (as assuredly it has), but whether the limitation on advertisements obviously tends to limit the total delivery of dental services. The court came closest to addressing this latter question when it went on to assert that limiting advertisements regarding quality and safety “prevents dentists from fully describing the package of services they offer,” 128 F. 3d, at 728, adding that “[t]he restrictions may also affect output more directly, as quality and comfort advertising may induce some customers to obtain nonemer-gency care when they might not otherwise do so,” ibid. This suggestion about output is also puzzling. If quality advertising actually induces some patients to obtain more care *777than they would in its absence, then restricting such advertising would reduce the demand for dental services, not the supply; and it is of course the producers’ supply of a good in relation to demand that is normally relevant in determining whether a producer-imposed output limitation has the anti-competitive effect of artificially raising prices,13 see General Leaseways, Inc. v. National Truck Leasing Assn., 744 P. 2d 588, 594-595 (CA7 1984) (“An agreement on output also equates to a price-fixing agreement. If firms raise price, the market’s demand for their product will fall, so the amount supplied will fall too — in other words, output will be restricted. If instead the firms restrict output directly, price will as mentioned rise in order to limit demand to the reduced supply. Thus, with exceptions not relevant here, raising price, reducing output, and dividing markets have the same anticompetitive effects”).

of Appeals acknowledged the CDA’s view that “claims about quality are inherently unverifiable and therefore misleading,” 128 F. 3d, at 728, it responded that this concern “does not justify banning all quality claims without regard to whether they are, in fact, false or misleading,” ibid. As a result, the court said, “the restriction is a sufficiently naked restraint on output to justify quick look analysis.” Ibid. The court assumed, in these words, that some dental quality claims may escape justifiable censure, because they are both verifiable and true. But its implicit *778assumption fails to explain why it gave no weight to the countervailing, and at least equally plausible, suggestion that restricting difficult-to-verify claims about quality or patient comfort would have a procompetitive effect by preventing misleading or false claims that distort the market. It is, indeed, entirely possible to understand the CDA’s restrictions on unverifiable quality and comfort advertising as nothing more than a procompetitive ban on puffery, ef. Bates, 438 U. S., at 366 (claims relating to the quality of legal services “probably are not susceptible of precise measurement or verification and, under some circumstances, might well be deceptive or misleading to the public, or even false”); id., at 383-384 (“[Advertising claims as to the quality of services ... are not susceptible of measurement or verification; accordingly, such claims may be so likely to be misleading as to warrant restriction”), notwithstanding Justice Breyer’s citation (to a Commission discussion that never faces the issue of the unverifiability of professional quality claims, raised in Bates), post, at 785.14

The point have the procompetitive effect claimed by the CD A; it is possible that banning quality claims might have no effect at all on competitiveness if, for example, many dentists made very much the same sort of claims. And it is also of course possible that the restrictions might in the final analysis be anti-competitive. The point, rather, is that the plausibility of competing claims about the effects of the professional advertising restrictions rules out the indulgently abbreviated review to which the Commission’s order was treated. The obvious anticompetitive effect that triggers abbreviated analysis has not been shown.

*779In light of our focus on the adequacy of the Court of Appeals’s analysis, Justice Breyer’s thorough-going, de novo antitrust analysis contains much to impress on its own merits but little to demonstrate the sufficiency of the Court of Appeals’s review. The obligation to give a more deliberate look than a quick one does not arise at the door of this Court and should not be satisfied here in the first instance. Had the Court of Appeals engaged in a painstaking discussion in a league with Justice Breyer’s (compare his 14 pages with the Ninth Circuit’s 8), and had it confronted the comparability of these restrictions to bars on clearly verifiable advertising, its reasoning might have sufficed to justify its conclusion. Certainly Justice Breyer’s treatment of the antitrust issues here is no “quick look,” Lingering is more like it, and indeed Justice Breyer, not surprisingly, stops short of endorsing the Court of Appeals’s discussion as adequate to the task at hand.

Saying here that the Court of Appeals’s conclusion at least required a more extended examination of the possible factual underpinnings than it received is not, of course, necessarily to call for the fullest market analysis. Although we have said that a challenge to a “naked restraint on price and output” need not be supported by “a detailed market analysis” in order to “requirfe] some competitive justification,” National Collegiate Athletic Assn., 468 U. S., at 110, it does not follow that every ease attacking a less obviously anticompeti-tive restraint (like this one) is a candidate for plenary market examination. The truth is that our categories of analysis of anticompetitive effect are less fixed than terms like “per se,” “quick look,” and “rule of reason” tend to make them appear. We have recognized, for example, that “there is often no bright line separating per se from Rule of Reason analysis,” since “considerable inquiry into market conditions” may be required before the application of any so-called “per se” condemnation is justified. Id., at 104, n. 26. “[Wjhether the ultimate finding is the product of a presumption or actual *780market analysis, the essential inquiry remains the same— whether or not the challenged restraint enhances competition.” Id., at 104. Indeed, the scholar who enriched antitrust law with the metaphor of “the twinkling of an eye” for the most condensed rule-of-reason analysis himself cautioned against the risk of misleading even in speaking of a “spectrum” of adequate reasonableness analysis for passing upon antitrust claims: “There is always something of a sliding scale in appraising reasonableness, but the sliding scale formula deceptively suggests greater precision than we can hope for. . . . Nevertheless, the quality of proof required should vary with the circumstances.” P. Areeda, Antitrust Law f 1507, p. 402 (1986).15 At the same time, Professor Areeda also emphasized the necessity, particularly great in the quasi-common law realm of antitrust, that courts explain the logic of their conclusions. “By exposing their reasoning, judges ... are subjected to others’ critical analyses, which in turn can lead to better understanding for the future.” Id., ¶ 1500, at 364. As the circumstances here demonstrate, there is generally no categorical line to be drawn between *781restraints that give rise to an intuitively obvious inference of anticompetitive effect and those that call for more detailed treatment. What is required, rather, is an enquiry meet for the case, looking to the circumstances, details, and logic of a restraint. The object is to see whether the experience of the market has been so clear, or necessarily will be, that a confident conclusion about the principal tendency of a restriction will follow from a quick (or at least quicker) look, in place of a more sedulous one. And of course what we see may vary over time, if rule-of-reason analyses in case after ease reach identical conclusions. Por now, at least, a less quick look was required for the initial assessment of the tendency of these professional advertising restrictions. Because the Court of Appeals did not scrutinize the assumption of relative anticompetitive tendencies, we vacate the judgment and remand the case for a fuller consideration of the issue.

It is so ordered.

Justice Breyer,

with whom Justice Stevens, Justice Kennedy, and Justice Ginsburg join, concurring in part and dissenting in part.

I agree with the Court that the Federal Trade Commission (FTC or Commission) has jurisdiction over petitioner, and I join Parts I and II of its opinion. I also agree that in a “rule of reason” antitrust case “the quality of proof required should vary with the circumstances,” that “[w]hat is required ... is an enquiry meet for the case,” and that the object is a “confident conclusion about the principal tendency of a restriction.” Ante, at 780 and this page (internal quotation marks omitted). But I do not agree that the Court has properly applied those unobjectionable principles here. In my view, a traditional application of the rule of reason to the facts as found by the Commission requires affirming the Commission — just as the Court of Appeals did below.

*782I

The Commission’s conclusion is lawful if its “factual findings,” insofar as they are supported by “substantial evidence,” “make out a violation of Sherman Act §1.” FTC v. Indiana Federation of Dentists, 476 U. S. 447, 454-455 (1986). To determine whether that is so, I would not simply ask whether the restraints at issue are anticompetitive overall. Rather, like the Court of Appeals (and the Commission), I would break that question down into four classical, subsidiary antitrust questions: (1) What is the specific restraint at issue? (2) What are its likely anticompetitive effects? (3) Are there offsetting proeompetitive justifications? (4) Do the parties have sufficient market power to make a difference?

A

The most important question is the first: What are the specific restraints at issue? See, e. g., National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 98-100 (1984) (NCAA); Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 21-23 (1979). Those restraints do not include merely the agreement to which the California Dental Association’s (Dental Association or Association) ethical rule literally refers, namely, a promise to refrain from advertising that is “ ‘false or misleading in any material respect.’ ” Ante, at 760 (quoting California Dental Code of Ethics § 10 (1993), App. 33). Instead, the Commission found a set of restraints arising out of the way the Dental Association implemented this innocent-sounding ethical rule in practice, through advisory opinions, guidelines, enforcement policies, and review of membership applications. In re California Dental Assn., 121 F. T. C. 190 (1996). As implemented, the ethical rule reached beyond its nominal target, to prevent truthful and nondeceptive advertising. In particular, the Commission determined that the rule, in practice:

*783(1) “precluded advertising that characterized a dentist’s fees as being low, reasonable, or affordable,” id., at 301;

(2) “precluded advertising ... of across the board discounts,” ibid.; and

(3) “prohibited] all quality claims,” id., at 308.

Whether the Dental Association’s basic rule as implemented actually restrained the truthful and nondeceptive advertising of low prices, across-the-board discounts, and quality service are questions of fact. The Administrative Law Judge (AU) and the Commission may have found those questions difficult ones. But both the AU and the Commission ultimately found against the Dental Association in respect to these facts. And the question for us — whether those agency findings are supported by substantial evidence, see Indiana Federation, supra, at 454-455 — is not difficult.

of Appeals referred explicitly to some of the evidence that it found adequate to support the Commission’s conclusions. It pointed out, for example, that the Dental Association’s “advisory opinions and guidelines indicate that... descriptions of prices as 'reasonable’ or ‘low5 do not comply” with the Association’s rule; that in “numerous cases” the Association “advised members of objections to special offers, senior citizen discounts, and new patient discounts, apparently without regard to their truth”; and that one advisory opinion “expressly states that claims as to the quality of services are inherently likely to be false or misleading,” all “without any particular consideration of whether” such statements were “true or false.” 128 F. 3d 720, 729 (CA9 1997).

The Commission itself had before it far more evidence. It referred to instances in which the Association, without regard for the truthfulness of the statements at issue, recommended denial of membership to dentists wishing to advertise, for example, “reasonable fees quoted in advance,” “major savings,” or “making teeth cleaning... inexpensive.” *784121 P. T. C., at 301. It referred to testimony that “across-the-board discount advertising in literal compliance with the requirements ‘would probably take two pages in the telephone book' and ‘[njobody is going to really advertise in that fashion.’ ” Id., at 302. And it pointed to many instances in which the Dental Association suppressed such advertising claims as “we guarantee all dental work for 1 year,” “latest in cosmetic dentistry,” and “gentle dentistry in a earing environment.” Id., at 308-310.

I need not review said that “substantial evidence” is a matter for the courts of appeals, and that it “will intervene only in what ought to be the rare instance when the standard appears to have been misapprehended or grossly misapplied.” Universal Camera Corp. v. NLRB, 340 U. S. 474, 490-491 (1951). I have said enough to make clear that this is not a case warranting our intervention. Consequently, we must decide only the basic legal question whether the three restraints described above unreasonably restrict competition.

B

Do each of the three restrictions mentioned have “the potential for genuine adverse effects on competition”? Indiana Federation, 476 U. S., at 460; 7 P. Areeda, Antitrust Law ¶ 1503a, pp. 372-377 (1986) (hereinafter Areeda). I should have thought that the anticompetitive tendencies of the three restrictions were obvious. An agreement not to advertise that a fee is reasonable, that service is inexpensive, or that a customer will receive a discount makes it more difficult for a dentist to inform customers that he charges a lower price. If the customer does not know about a lower price, he will find it more difficult to buy lower price service. That fact, in turn, makes it less likely that a dentist will obtain more customers by offering lower prices. And that likelihood means that dentists will prove less likely to offer lower prices. But why should I have to spell out the obvious? To *785restrain truthful advertising about lower prices is likely to restrict competition in respect to price — “the central nervous system of the economy.” United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 226, n. 59 (1940); cf., e.g., Bates v. State Bar of Ariz., 433 U. S. 350, 364 (1977) (price advertising plays an “indispensable role in the allocation of resources in a free enterprise system”); Virginia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U. S. 748,765 (1976). The Commission thought this fact sufficient to hold (in the alternative) that the price advertising restrictions were unlawful per se. See 121 F. T. C., at 307; cf. Socony-Vacuum, supra, at 222-228 (finding agreement among competitors to buy “spot-market oil” unlawful per se because of its tendency to restrict price competition). For present purposes, I need not decide whether the Commission was right in applying a per se rule. I need only assume a rule of reason applies, and note the serious anticompetitive tendencies of the price advertising restraints.

The restrictions on the advertising of service quality also have serious anticompetitive tendencies. This is not a case of “mere puffing,” as the FTC recognized. See 121 F. T. C., at 317-318; cf. ante, at 778. The days of my youth, when the billboards near Emeryville, California, home of AAA baseball’s Oakland Oaks, displayed the name of “Painless” Parker, Dentist, are long gone — along with the Oakland Oaks. But some parents may still want to know that a particular dentist makes a point of “gentle care.” Others may want to know about 1-year dental work guarantees. To restrict that kind of service quality advertisement is to restrict competition over the quality of service itself, for, unless consumers know, they may not purchase, and dentists may not compete to supply that which will make little difference to the demand for their services. That, at any rate, is the theory of the Sherman Act. And it is rather late in the day for anyone to deny the significant anticompetitive tendencies of an agreement that restricts competition in any legitimate respect, see, e. g., *786 Paramount Famous Lasky Corp. v. United States, 282 U. S. 30, 43 (1930); United States v. First Nat. Pictures, Inc., 282 U. S. 44, 54-55 (1930), let alone one that inhibits customers from learning about the quality of a dentist’s service.

Nor did the Commission rely solely on proposition that a restriction on the ability of dentists to advertise on quality is likely to limit their incentive to compete on qusility. Rather, the Commission pointed to record evidence affirmatively establishing that quality-based competition is important to dental consumers in California. 121 F. T. C., at 309-311. Unsurprisingly, these consumers choose dental services based at least in part on “information about the type and quality of service.” Id., at 249. Similarly, as the Commission noted, the ALJ credited testimony to the effect that “advertising the comfort of services will ‘absolutely’ bring in more patients,” and, conversely, that restraining the ability to advertise based on quality would decrease the number of patients that a dentist could attract. Id., at 310. Finally, the Commission looked to the testimony of dentists who themselves had suffered adverse effects on their business when forced by petitioner to discontinue advertising quality of care. See id., at 310-311.

The FTC found that the price amounted to a “naked attempt to eliminate price competition.” Id., at 300. It found that the service quality advertising restrictions “deprive consumers of information they value and of healthy competition for their patronage.” Id., at 311. It added that the “anticompetitive nature of these restrictions” was “plain.” Ibid. The Court of Appeals agreed. I do not believe it possible to deny the anticompeti-tive tendencies I have mentioned.

C

We must also ask whether, despite their anticompetitive tendencies, these restrictions might be justified by other pro-competitive tendencies or redeeming virtues. See 7 Areeda, *787¶ 1504, at 377-383. This is a closer question — at least in theory. The Dental Association argues that the three relevant restrictions are inextricably tied to a legitimate Association effort to restrict false or misleading advertising. The Association, the argument goes, had to prevent dentists from engaging in the kind of truthful, nondeeeptive advertising that it banned in order effectively to stop dentists from making unverifiable claims about price or service quality, which claims would mislead the consumer.

The problem with this or any similar argument is an empirical one. Notwithstanding its theoretical plausibility, the record does not bear out such a claim. The Commission, which is expert in the area of false and misleading advertising, was uncertain whether petitioner had even made the claim. It characterized petitioner’s efficiencies argument as rooted in the (unproved) factual assertion that its ethical rule “challenges only advertising that is false or misleading.” 121 F. T. C., at 316 (emphasis added). Regardless, the Court of Appeals wrote, in respect to the price restrictions, that “the record provides no evidence that the rule has in fact led to increased disclosure and transparency of dental pricing.” 128 F. 3d, at 728. With respect to quality advertising, the Commission stressed that the Association “offered no convincing argument, let alone evidence, that consumers of dental services have been, or are likely to be, harmed by the broad categories of advertising it restricts.” 121 F. T. C., at 319. Nor did the Court of Appeals think that the Association’s unsubstantiated contention that “claims about quality are inherently unverifiable and therefore misleading” could “justify banning all quality claims without regard to whether they are, in fact, false or misleading.” 128 F. 3d, at 728.

With one exception, my own review of the record reveals no significant evidentiary support for the proposition that the Association’s members must agree to ban truthful price and quality advertising in order to stop untruthful claims. The one exception is the obvious fact that one can stop un*788truthful advertising if one prohibits all advertising. But since the Association made virtually no effort to sift the false from the true, see 121 F. T. C., at 316-317, that fact does not make out a valid antitrust defense. See NCAA, 468 U. S., at 119; 7 Areeda, ¶ 1505, at 383-384.

In the usual Sherman Act § 1 case, burden of establishing a proeompetitive justification. See National Soc. of Professional Engineers v. United States, 435 U.S. 679, 695 (1978); 7 Areeda, ¶ 1507b, at 397; 11 H. Hovenkamp, Antitrust Law ¶ 1914c, pp. 313-315 (1998); see also Law v. National Collegiate Athletic Assn., 134 F. 3d 1010, 1019 (CA10), cert. denied, 525 U. S. 822 (1998); United States v. Brown Univ., 5 F. 3d 658, 669 (CA3 1993); Capital Imaging Associates v. Mohawk Valley Medical Associates, Inc., 996 F. 2d 537, 543 (CA2), cert. denied, 510 U. S. 947 (1993); Kreuzer v. American Academy of Periodontology, 735 F. 2d 1479, 1492-1495 (CADC 1984). And the Court of Appeals was correct when it concluded that no such justification had been established here.

D

I shall assume that the Commission must prove one additional circumstance, namely, that the Association’s restraints would likely have made a real difference in the marketplace. See 7 Areeda, ¶1503, at 376-377. The Commission, disagreeing with the ALJ on this single point, found that the Association did possess enough market power to make a difference. In at least one region of California, the mid-peninsula, its members accounted for more than 90% of the marketplace; on average they accounted for 75%. See 121 F. T. C., at 314. In addition, entry by new-dentists into the marketplace is fairly difficult. Dental education is expensive (leaving graduates of dental school with $50,000-$100,000 of debt), as is opening a new dentistry office (which costs $75,000~$100,000). Id., at 315-316. And Dental Association members believe membership in the Association is *789important and valuable and recognized as such by the public. Id., at 312-313, 315-316.

These facts, in the Court of Appeals’ view, were sufficient to show “enough market power to harm competition through [the Association’s] standard setting in the area of advertising.” 128 F. 3d, at 730. And that conclusion is correct. Restrictions on advertising price discounts in Palo Alto may make a difference because potential patients may not respond readily to discount advertising by the handful (10%) of dentists who are not members of the Association. And that fact, in turn, means that the remaining 90% will prove less likely to engage in price competition. Facts such as these have previously led this Court to find market power— unless the defendant has overcome the showing with strong contrary evidence. See, e. g., Indiana Federation, 476 U. S., at 456-457; cf. United States v. Loew’s Inc., 371 U. S. 38, 45 (1962); Brown Shoe Co. v. United States, 370 U. S. 294, 341-344 (1962); accord, United States v. Aluminum Co. of America, 148 F. 2d 416, 424 (CA21945). I can find no reason for departing from that precedent here.

In the Court’s view, the legal analysis conducted by the Court of Appeals was insufficient, and the Court remands the case for a more thorough application of the rule of reason. But in what way did the Court of Appeals fail? I find the Court’s answers to this question unsatisfactory — when one divides the overall Sherman Act question into its traditional component parts and adheres to traditional judicial practice for allocating the burdens of persuasion in an antitrust case.

Did the Court of Appeals misconceive the anticompetitive tendencies of the restrictions? After all, the object of the rule of reason is to separate those restraints that “may suppress or even destroy competition” from those that “merely regulat[e] and perhaps thereby promot[e] competition.” Board of Trade of Chicago v. United States, 246 U. S. 231, *790238 (1918). The majority says that the Association’s “advertising restrictions might plausibly be thought to have a net procompetitive effect, or possibly no effect at all on competition.” Ante, at 771. It adds that

“advertising restrictions arguably protecting patients from misleading or irrelevant advertising call for more than cursory treatment as obviously comparable to classic horizontal agreements to limit output or price competition.” Ante, at 773.

And it criticizes the Court of Appeals for failing to recognize that “the restrictions at issue here are very far from a total ban on price or discount advertising” and that “the particular restrictions on professional advertising could have different effects from those ‘normally1 found in the commercial world, even to the point of promoting competition . . . .” Ibid.

The problem with these statements is that the Court of Appeals did consider the relevant differences. It rejected the legal “treatment” customarily applied “to classic horizontal agreements to limit output or price competition” — i. e., the FTC’s (alternative) per se approach. See 128 F. 3d, at 726-727. It did so because the Association’s “policies do not, on their face, ban truthful nondeceptive ads”; instead, they “have been enforced in a way that restricts truthful advertising,” id., at 727. It added that “[t]he value of restricting false advertising... counsels some caution in attacking rules that purport to do so but merely sweep too broadly.” Ibid.

Did the Court of Appeals misunderstand the nature of an anticompetitive effect? The Court says:

“If quality advertising actually induces some patients to obtain more care than they would in its absence, then restricting such advertising would reduce the demand for dental services, not the supply; and ... the producers’ supply ... is normally relevant in determining *791whether a . .. limitation has the anticompetitive effect of artificially raising prices.” Ante, at 776-777.

But if the Court means this statement as an argument against the anticompetitive tendencies that flow from an agreement not to advertise service quality, I believe it is the majority, and not the Court of Appeals, that is mistaken. An agreement not to advertise, say, “gentle care” is anticom-petitive because it imposes an artificial barrier against eaeh dentist’s independent decision to advertise gentle care. That barrier, in turn, tends to inhibit those dentists who want to supply gentle care from getting together with those customers who want to buy gentle care. See P. Areeda & H. Hovenkamp, Antitrust Law ¶ 1505', p. 404 (Supp. 1998). There is adequate reason to believe that tendency present in this case. See supra, at 786.

Did the Court of Appeals inadequately consider possible procompetitive justifications? The Court seems to think so, for it says:

“[T]he [Association’s] rule appears to reflect the prediction that any costs to competition associated with the elimination of across-the-board advertising will be outweighed by gains to consumer information (and hence competition) created by discount advertising that is exact, accurate, and more easily verifiable (at least by regulators).” Ante, at 775.

That may or may not be an accurate assessment of the Association’s motives in adopting its rule, but it is of limited relevance. Cf. Board of Trade of Chicago, supra, at 238. The basic question is whether this, or some other, theoretically redeeming virtue in fact offsets the restrictions’ anticom-petitive effects in this case. Both court and Commission adequately answered that question.

The Commission found that the defendant did not make the necessary showing that a redeeming virtue existed in practice. See 121 F. T. C., at 319-320. The Court of Ap*792peals, asking whether the rules, as enforced, “augmented] competition and inerease[d] market efficiency,” found the Commission’s conclusion supported by substantial evidence. 128 F. 3d, at 728. That is why the court said that “the record provides no evidence that the rule has in fact led to increased disclosure and transparency of dental pricing”— which is to say that the record provides no evidence that the effects, though anticompetitive, are nonetheless redeemed or justified. Ibid.

The majority would have had the incentive to introduce such evidence” of procompetitive justification. Ante, at 776. (Indeed, that is one of the reasons defendants normally bear the burden of persuasion about redeeming virtues. See supra, at 788.) But despite this incentive, petitioner’s brief in this Court offers nothing concrete to counter the Commission’s conclusion that the record does not support the claim of justification. Petitioner’s failure to produce such evidence itself “explain[s] why [the lower court] gave no weight to the .. . suggestion that restricting difficult-to-verify claims about quality or patient comfort would have a procompetitive effect by preventing misleading or false claims that distort the market.” Ante, at 778.

With respect to the on board discounts, the majority summarizes its concerns as follows: “Assuming that the record in fact supports the conclusion that the [Association’s] disclosure rules essentially bar advertisement of [such] discounts, it does not obviously follow that such a ban would have a net anticompetitive effect here.” Ante, at 774. I accept, rather than assume, the premise: The FTC found that the disclosure rules did bar advertisement of across-the-board discounts, and that finding is supported by substantial evidence. See supra, at 783-784. And I accept as literally true the conclusion that the Court says follows from that premise, namely, that “net anti-competitive effects” do not “obviously” follow from that *793premise. But obviousness is not the point. With respect to any of the three restraints found by the Commission, whether “net anticompetitive effects” follow is a matter of how the Commission, and, here, the Court of Appeals, have answered the questions I laid out at the beginning. See supra, at 782. Has the Commission shown that the restriction has anticompetitive tendencies? It has. Has the Association nonetheless shown offsetting virtues? It has not. Has the Commission shown market power sufficient for it to believe that the restrictions will likely make a real world difference? It has.

The upshot, in my view, is that the Court of Appeals, applying ordinary antitrust principles, reached an unexceptional conclusion. It is the same legal conclusion that this Court itself reached in Indiana Federation — a much closer case than this one. There the Court found that an agreement by dentists not to submit dental X rays to insurers violated the rule of reason. The anticompetitive tendency of that agreement was to reduce competition among dentists in respect to their willingness to submit X rays to insurers, see 476 U. S., at 456 — a matter in respect to which consumers are relatively indifferent, as compared to advertising of price discounts and service quality, the matters at issue here. The redeeming virtue in Indiana Federation was the alleged undesirability of having insurers consider a range of matters when deciding whether treatment was justified — a virtue no less plausible, and no less proved, than the virtue offered here. See id., at 462-464. The “power” of the dentists to enforce their agreement was no greater than that at issue here (control of 75% to 90% of the relevant markets). See id., at 460. It is difficult to see how the two cases can be reconciled.

* * *

I would note that the form of analysis I have followed is not rigid; it admits of some variation according to the circumstances. The important point, however, is that its allocation *794of the burdens of persuasion reflects a gradual evolution within the courts over a period of many years. That evolution represents an effort carefully to blend the proeompeti-tive objectives of the law of antitrust with administrative necessity. It represents a considerable advance, both from the days when the Commission had to present and/or refute every possible fact and theory, and from antitrust theories so abbreviated as to prevent proper analysis. The former prevented cases from ever reaching a conclusion, cf. Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv. L. Rev. 226, 266 (1960), and the latter called forth the criticism that the “Government always wins,” United States v. Von’s Grocery Co., 384 U. S. 270, 301 (1966) (Stewart, J., dissenting). I hope that this ease does not represent an abandonment of that basic, and important, form of analysis.

For these reasons, I the Court’s opinion.

Justice Kennedy

delivered the opinion of the Court.

In Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911), the Court established the rule that it is per se illegal under § 1 of the Sherman Act, 15 U. S. C. § 1, for a manufacturer to agree with its distributor to set the minimum price the distributor can charge for the manufacturer’s goods. The question presented by the instant case is *882whether the Court should overrule the per se rule and allow resale price maintenance agreements to be judged by the rule of reason, the usual standard applied to determine if there is a violation of § 1. The Court has abandoned the rule of per se illegality for other vertical restraints a manufacturer imposes on its distributors. Respected economic analysts, furthermore, conclude that vertical price restraints can have procompetitive effects. We now hold that Dr. Miles should be overruled and that vertical price restraints are to be judged by the rule of reason.

I

Petitioner, Leegin Creative Leather Products, Inc. (Lee-gin), designs, manufactures, and distributes leather goods and accessories. In 1991, Leegin began to sell belts under the brand name “Brighton.” The Brighton brand has now expanded into a variety of women’s fashion accessories. It is sold across the United States in over 5,000 retail establishments, for the most part independent, small boutiques and specialty stores. Leegin’s president, Jerry Kohl, also has an interest in about 70 stores that sell Brighton products. Lee-gin asserts that, at least for its products, small retailers treat customers better, provide customers more services, and make their shopping experience more satisfactory than do larger, often impersonal retailers. Kohl explained: “[W]e want the consumers to get a different experience than they get in Sam’s Club or in Wal-Mart. And you can’t get that kind of experience or support or customer service from a store like Wal-Mart.” 5 Record 127.

Respondent, PSKS, Inc. (PSKS), operates Kay’s Kloset, a women’s apparel store in Lewisville, Texas. Kay’s Kloset buys from about 75 different manufacturers and at one time sold the Brighton brand. It first started purchasing Brighton goods from Leegin in 1995. Once it began selling the brand, the store promoted Brighton. For example, it ran Brighton advertisements and had Brighton days in the store. *883Kay’s Kloset became the destination retailer in the area to buy Brighton products. Brighton was the store’s most important brand and once accounted for 40 to 50 percent of its profits.

In 1997, Leegin instituted the “Brighton Retail Pricing and Promotion Policy.” 4 id., at 939. Following the policy, Leegin refused to sell to retailers that discounted Brighton goods below suggested prices. The policy contained an exception for products not selling well that the retailer did not plan on reordering. In the letter to retailers establishing the policy, Leegin stated:

“In this age of mega stores like Macy’s, Bloomingdales, May Co. and others, consumers are perplexed by promises of product quality and support of product which we believe is lacking in these large stores. Consumers are further confused by the ever popular sale, sale, sale, etc.

“We, at Leegin, choose to break away from the pack by selling [at] specialty stores; specialty stores that can offer the customer great quality merchandise, superb service, and support the Brighton product 365 days a year on a consistent basis.

“We realize that half the equation is Leegin producing great Brighton product and the other half is you, our retailer, creating great looking stores selling our products in a quality manner.” Ibid.

Leegin adopted the policy to give its retailers sufficient margins to provide customers the service central to its distribution strategy. It also expressed concern that discounting harmed Brighton’s brand image and reputation.

A year after instituting the pricing policy Leegin introduced a marketing strategy known as the “Heart Store Program.” See id., at 962-972. It offered retailers incentives to become Heart Stores, and, in exchange, retailers pledged, among other things, to sell at Leegin’s suggested prices. Kay’s Kloset became a Heart Store soon after Leegin created *884the program. After a Leegin employee visited the store and found it unattractive, the parties appear to have agreed that Kay’s Kloset would not be a Heart Store beyond 1998. Despite losing this status, Kay’s Kloset continued to increase its Brighton sales.

In December 2002, Leegin discovered Kay’s Kloset had been marking down Brighton’s entire line by 20 percent. Kay’s Kloset contended it placed Brighton products on sale to compete with nearby retailers who also were undercutting Leegin’s suggested prices. Leegin, nonetheless, requested that Kay’s Kloset cease discounting. Its request refused, Leegin stopped selling to the store. The loss of the Brighton brand had a considerable negative impact on the store’s revenue from sales.

PSKS sued Leegin in the United States District Court for the Eastern District of Texas. It alleged, among other claims, that Leegin had violated the antitrust laws by “enter-ting] into agreements with retailers to charge only those prices fixed by Leegin.” Id., at 1236. Leegin planned to introduce expert testimony describing the procompetitive effects of its pricing policy. The District Court excluded the testimony, relying on the per se rule established by Dr. Miles. At trial PSKS argued that the Heart Store program, among other things, demonstrated Leegin and its retailers had agreed to fix prices. Leegin responded that it had established a unilateral pricing policy lawful under § 1, which applies only to concerted action. See United States v. Colgate & Co., 250 U. S. 300, 307 (1919). The jury agreed with PSKS and awarded it $1.2 million. Pursuant to 15 U. S. C. § 15(a), the District Court trebled the damages and reimbursed PSKS for its attorney’s fees and costs. It entered judgment against Leegin in the amount of $3,975,000.80.

The Court of Appeals for the Fifth Circuit affirmed. 171 Fed. Appx. 464 (2006) (per curiam). On appeal Leegin did not dispute that it had entered into vertical price-fixing agreements with its retailers. Rather, it contended that the *885rule of reason should have applied to those agreements. The Court of Appeals rejected this argument. Id., at 466-467. It was correct to explain that it remained bound by Dr. Miles “[b]ecause [the Supreme] Court has consistently applied the per se rule to [vertical minimum price-fixing] agreements.” 171 Fed. Appx., at 466. On this premise the Court of Appeals held that the District Court did not abuse its discretion in excluding the testimony of Leegin’s economic expert, for the per se rule rendered irrelevant any procompetitive justifications for Leegin’s pricing policy. Id., at 467. We granted certiorari to determine whether vertical minimum resale price maintenance agreements should continue to be treated as per se unlawful. 549 U. S. 1092 (2006).

II

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” Ch. 647, 26 Stat. 209, as amended, 15 U. S. C. § 1. While § 1 could be interpreted to proscribe all contracts, see, e. g., Board of Trade of Chicago v. United States, 246 U. S. 231, 238 (1918), the Court has never “taken a literal approach to [its] language,” Texaco Inc. v. Dagher, 547 U. S. 1, 5 (2006). Rather, the Court has repeated time and again that § 1 “outlaw[s] only unreasonable restraints.” State Oil Co. v. Khan, 522 U. S. 3, 10 (1997).

The rule of reason is the accepted standard for testing whether a practice restrains trade in violation of § 1. See Texaco, supra, at 5. “Under this rule, the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition.” Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 49 (1977). Appropriate factors to take into account include “specific information about the relevant business” and “the restraint’s history, nature, and effect.” Khan, supra, at 10. Whether the busi*886nesses involved have market power is a further, significant consideration. See, e. g., Copperweld Corp. v. Independence Tube Corp., 467 U. S. 752, 768 (1984) (equating the rule of reason with “an inquiry into market power and market structure designed to assess [a restraint’s] actual effect”); see also Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U. S. 28, 45-46 (2006). In its design and function the rule distinguishes between restraints with anticompetitive effect that are harmful to the consumer and restraints stimulating competition that are in the consumer’s best interest.

The rule of reason does not govern all restraints. Some types “are deemed unlawful per se.” Khan, supra, at 10. The per se rule, treating categories of restraints as necessarily illegal, eliminates the need to study the reasonableness of an individual restraint in light of the real market forces at work, Business Electronics Corp. v. Sharp Electronics Corp., 485 U. S. 717, 723 (1988); and, it must be acknowledged, the per se rule can give clear guidance for certain conduct. Restraints that are per se unlawful include horizontal agreements among competitors to fix prices, see Texaco, supra, at 5, or to divide markets, see Palmer v. BRG of Ga., Inc., 498 U. S. 46, 49-50 (1990) (per curiam).

Resort to per se rules is confined to restraints, like those mentioned, “that would always or almost always tend to restrict competition and decrease output.” Business Electronics, supra, at 723 (internal quotation marks omitted). To justify a per se prohibition a restraint must have “manifestly anticompetitive” effects, GTE Sylvania, supra, at 50, and “lack .. . any redeeming virtue,” Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U. S. 284, 289 (1985) (internal quotation marks omitted).

As a consequence, the per se rule is appropriate only after courts have had considerable experience with the type of restraint at issue, see Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 9 (1979), and only if courts can predict with confidence that it would be invali*887dated in all or almost all instances under the rule of reason, see Arizona v. Maricopa County Medical Soc., 457 U. S. 332, 344 (1982). It should come as no surprise, then, that “we have expressed reluctance to adopt per se rules with regard to restraints imposed in the context of business relationships where the economic impact of certain practices is not immediately obvious.” Khan, supra, at 10 (internal quotation marks omitted); see also White Motor Co. v. United States, 372 U. S. 253, 263 (1963) (refusing to adopt a per se rule for a vertical nonprice restraint because of the uncertainty concerning whether this type of restraint satisfied the demanding standards necessary to apply a per se rule). And, as we have stated, a “departure from the rule-of-reason standard must be based upon demonstrable economic effect rather than . . . upon formalistic line drawing.” GTE Sylvania, supra, at 58-59.

Ill

The Court has interpreted Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373, as establishing a per se rule against a vertical agreement between a manufacturer and its distributor to set minimum resale prices. See, e. g., Monsanto Co. v. Spray-Rite Service Corp., 465 U. S. 752, 761 (1984). In Dr. Miles the plaintiff, a manufacturer of medicines, sold its products only to distributors who agreed to resell them at set prices. The Court found the manufacturer’s control of resale prices to be unlawful. It relied on the common-law rule that “a general restraint upon alienation is ordinarily invalid." 220 U. S., at 404-405. The Court then explained that the agreements would advantage the distributors, not the manufacturer, and were analogous to a combination among competing distributors, which the law treated as void. Id., at 407-408.

The reasoning of the Court’s more recent jurisprudence has rejected the rationales on which Dr. Miles was based. By relying on the common-law rule against restraints on alienation, id., at 404-405, the Court justified its decision *888based on “formalistic” legal doctrine rather than “demonstrable economic effect,” GTE Sylvania, 433 U. S., at 58-59. The Court in Dr. Miles relied on a treatise published in 1628, but failed to discuss in detail the business reasons that would motivate a manufacturer situated in 1911 to make use of vertical price restraints. Yet the Sherman Act’s use of “restraint of trade” “invokes the common law itself, . . . not merely the static content that the common law had assigned to the term in 1890.” Business Electronics, supra, at 732. The general restraint on alienation, especially in the age when then-Justice Hughes used the term, tended to evoke policy concerns extraneous to the question that controls here. Usually associated with land, not chattels, the rule arose from restrictions removing real property from the stream of commerce for generations. The Court should be cautious about putting dispositive weight on doctrines from antiquity but of slight relevance. We reaffirm that “the state of the common law 400 or even 100 years ago is irrelevant to the issue before us: the effect of the antitrust laws upon vertical distributional restraints in the American economy today.” GTE Sylvania, supra, at 53, n. 21 (internal quotation marks omitted).

Dr. Miles, furthermore, treated vertical agreements a manufacturer makes with its distributors as analogous to a horizontal combination among competing distributors. See 220 U. S., at 407-408. In later cases, however, the Court rejected the approach of reliance on rules governing horizontal restraints when defining rules applicable to vertical ones. See, e.g., Business Electronics, supra, at 734 (disclaiming, the “notion of equivalence between the scope of horizontal per se illegality and that of vertical per se illegality”); Maricopa County, supra, at 348, n. 18 (noting that “horizontal restraints are generally less defensible than vertical restraints”). Our recent cases formulate antitrust principles in accordance with the appreciated differences in economic effect between vertical and horizontal agreements, differences the Dr. Miles Court failed to consider.

*889The reasons upon which Dr. Miles relied do not justify a per se rule. As a consequence, it is necessary to examine, in the first instance, the economic effects of vertical agreements to fix minimum resale prices, and to determine whether the per se rule is nonetheless appropriate. See Business Electronics, 485 U. S., at 726.

A

Though each side of the debate can find sources to support its position, it suffices to say here that economics literature is replete with procompetitive justifications for a manufacturer’s use of resale price maintenance. See, e. g., Brief for Economists as Amici Curiae 16 (“In the theoretical literature, it is essentially undisputed that minimum [resale price maintenance] can have procompetitive effects and that under a variety of market conditions it is unlikely to have anticompetitive effects”); Brief for United States as Amicus Curiae 9 (“[T]here is a widespread consensus that permitting a manufacturer to control the price at which its goods are sold may promote mferbrand competition and consumer welfare in a variety of ways”); ABA Section of Antitrust Law, Antitrust Law and Economics of Product Distribution 76 (2006) (“[T]he bulk of the economic literature on [resale price maintenance] suggests that [it] is more likely to be used to enhance efficiency than for anticompetitive purposes”); see also H. Hovenkamp, The Antitrust Enterprise: Principle and Execution 184-191 (2005) (hereinafter Hovenkamp); R. Bork, The Antitrust Paradox 288-291 (1978) (hereinafter Bork). Even those more skeptical of resale price maintenance acknowledge it can have procompetitive effects. See, e. g., Brief for William S. Comanor et al. as Amici Curiae 3 (“[G]iven [the] diversity of effects [of resale price maintenance], one could reasonably take the position that a rule of reason rather than a per se approach is warranted”); F. Scherer & D. Ross, Industrial Market Structure and Economic Performance 558 (3d ed. 1990) (hereinafter Scherer & Ross) (“The overall bal*890anee between benefits and costs [of resale price maintenance] is probably close”).

The few recent studies documenting the competitive effects of resale price maintenance also cast doubt on the conclusion that the practice meets the criteria for a per se rule. See Bureau of Economics Staff Report to the FTC, T. Overstreet, Resale Price Maintenance: Economic Theories and Empirical Evidence 170 (1983) (hereinafter Overstreet) (noting that “[e]fficient uses of [resale price maintenance] are evidently not unusual or rare”); see also Ippolito, Resale Price Maintenance: Empirical Evidence From Litigation, 34 J. Law & Econ. 263,292-293 (1991) (hereinafter Ippolito).

The justifications for vertical price restraints are similar to those for other vertical, restraints. See GTE Sylvania, 433 U. S., at 54-57. Minimum resale price maintenance can stimulate interbrand competition — the competition among manufacturers selling different brands of the same type of product — by reducing intrabrand competition — the competition among retailers selling the same brand. See id., at 51-52. The promotion of interbrand competition is important because “the primary purpose of the antitrust laws is to protect [this type of] competition.” Khan, 522 U. S., at 15. A single manufacturer’s use of vertical price restraints tends to eliminate intrabrand price competition; this in turn encourages retailers to invest in tangible or intangible services or promotional efforts that aid the manufacturer’s position as against rival manufacturers. Resale price maintenance also has the potential to give consumers more options so that they can choose among low-price, low-service brands; high-price, high-service brands; and brands that fall in between.

Absent vertical price, restraints, the retail services that enhance interbrand competition might be underprovided. This is because discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate. GTE Sylvania, supra, at 55. Consumers might learn, for example, about *891the benefits of a manufacturer’s product from a retailer that invests in fine showrooms, offers product demonstrations, or hires and trains knowledgeable employees. R. Posner, Antitrust Law 172-173 (2d ed. 2001) (hereinafter Posner). Or consumers might decide to buy the product because they see it in a retail establishment that has a reputation for selling high-quality merchandise. Marvel & McCafferty, Resale Price Maintenance and Quality Certification, 15 Rand J. Econ. 346,347-349 (1984) (hereinafter Marvel & McCafferty). If the consumer can then buy the product from a retailer that discounts because it has not spent capital providing services or developing a quality reputation, the high-service retailer will lose sales to the discounter, forcing it to cut back its services to a level lower than consumers would otherwise prefer. Minimum resale price maintenance alleviates the problem because it prevents the discounter from undercutting the service provider. With price competition decreased, the manufacturer’s retailers compete among themselves over services.

Resale price maintenance, in addition, can increase inter-brand competition by facilitating market entry for new firms and brands. “[N]ew manufacturers and manufacturers entering new markets can use the restrictions in order to induce competent and aggressive retailers to make the kind of investment of capital and labor that is often required in the distribution of products unknown to the consumer.” GTE Sylvania, supra, at 55; see Marvel & McCafferty 349 (noting that reliance on a retailer’s reputation “will decline as the manufacturer’s brand becomes better known, so that [resale price maintenance] may be particularly important as a competitive device for new entrants”). New products and new brands are essential to a dynamic economy, and if markets can be penetrated by using resale price maintenance there is a procompetitive effect.

Resale price maintenance can also increase interbrand competition by encouraging retailer services that would not *892be provided even absent free riding. It may be difficult and inefficient for a manufacturer to make and enforce a contract with a retailer specifying the different services the retailer must perform. Offering the retailer a guaranteed margin and threatening termination if it does not live up to expectations may be the most efficient way to expand the manufacturer’s market share by inducing the retailer’s performance and allowing it to use its own initiative and experience in providing valuable services. See Mathewson & Winter, The Law and Economics of Resale Price Maintenance, 13 Rev. Indus. Org. 57,74-75 (1998) (hereinafter Mathewson & Winter); Klein & Murphy, Vertical Restraints as Contract Enforcement Mechanisms, 31 J. Law & Econ. 265, 295 (1988); see also Deneckere, Marvel, & Peck, Demand Uncertainty, Inventories, and Resale Price Maintenance, 111 Q. J. Econ. 885, 911 (1996) (noting that resale price maintenance may be beneficial to motivate retailers to stock adequate inventories of a manufacturer’s goods in the face of uncertain consumer demand).

B

While vertical agreements setting minimum resale prices can have procompetitive justifications, they may have anti-competitive effects in other cases; and unlawful price fixing, designed solely to obtain monopoly profits, is an ever-present temptation. Resale price maintenance may, for example, facilitate a manufacturer cartel. See Business Electronics, 485 U. S., at 725. An unlawful cartel will seek to discover if some manufacturers are undercutting the cartel’s fixed prices. Resale price maintenance could assist the cartel in identifying price-cutting manufacturers who benefit from the lower prices they offer. Resale price maintenance, furthermore, could discourage a manufacturer from cutting prices to retailers with the concomitant benefit of cheaper prices to consumers. See ibid,.; see also Posner 172; Overstreet 19-23.

*893Vertical price restraints also “might be used to organize cartels at the retailer level.” Business Electronics, supra, at 725-726. A group of retailers might collude to fix prices to consumers and then compel a manufacturer to aid the unlawful arrangement with resale price maintenance. In that instance the manufacturer does not establish the practice to stimulate services or to promote its brand but to give inefficient retailers higher profits. Retailers with better distribution systems and lower cost structures would be prevented from charging lower prices by the agreement. See Posner 172; Overstreet 13-19. Historical examples suggest this possibility is a legitimate concern. See, e. g., Marvel & McCafferty, The Welfare Effects of Resale Price Maintenance, 28 J. Law & Econ. 363, 373 (1985) (hereinafter Marvel) (providing an example of the power of the National Association of Retail Druggists to compel manufacturers to use resale price maintenance); Hovenkamp 186 (suggesting that the retail druggists in Dr. Miles formed a cartel and used manufacturers to enforce it).

A horizontal cartel among competing manufacturers or competing retailers that decreases output or reduces competition in order to increase price is, and ought to be, per se unlawful. See Texaco, 547 U. S., at 5; GTE Sylvania, 433 U. S., at 58, n. 28. To the extent a vertical agreement setting minimum resale prices is entered upon to facilitate either type of cartel, it, too, would need to be held unlawful under the rule of reason. This type of agreement may also be useful evidence for a plaintiff attempting to prove the existence of a horizontal cartel.

Resale price maintenance, furthermore, can be abused by a powerful manufacturer or retailer. A dominant retailer, for example, might request resale price maintenance to forestall innovation in distribution that decreases costs. A manufacturer might consider it has little choice but to accommodate the retailer’s demands for vertical price restraints if the manufacturer believes it needs access to the retailer’s *894distribution network. See Overstreet 31; 8 P. Areeda & H. Hovenkamp, Antitrust Law 47 (2d ed. 2004) (hereinafter Areeda & Hovenkamp); cf. Toys “R” Us, Inc. v. FTC, 221 F. 3d 928, 937-938 (CA7 2000). A manufacturer with market power, by comparison, might use resale price maintenance to give retailers an incentive not to sell the products of smaller rivals or new entrants. See, e.g., Marvel 366-368. As should be evident, the potential anticompetitive consequences of vertical price restraints must not be ignored or underestimated.

C

Notwithstanding the risks of unlawful conduct, it cannot be stated with any degree of confidence that resale price maintenance “always or almost always tend[s] to restrict competition and decrease output.” Business Electronics, supra, at 723 (internal quotation marks omitted). Vertical agreements establishing minimum resale prices can have either procompetitive or anticompetitive effects, depending upon the circumstances in which they are formed. And although the empirical evidence on the topic is limited, it does not suggest efficient uses of the agreements are infrequent or hypothetical. See Overstreet 170; see also id., at 80 (noting that for the majority of enforcement actions brought by the Federal Trade Commission between 1965 and 1982, “the use of [resale price maintenance] was not likely motivated by collusive dealers who had successfully coerced their suppliers”); Ippolito 292 (reaching a similar conclusion). As the rule would proscribe a significant amount of procompetitive conduct, these agreements appear ill suited for per se condemnation.

Respondent contends, nonetheless, that vertical price restraints should be per se unlawful because of the administrative convenience of per se rules. See, e. g., GTE Sylvania, supra, at 50, n. 16 (noting “per se rules tend to provide guidance to the business community and to minimize the burdens on litigants and the judicial system”). That argument sug*895gests per se illegality is the rule rather than the exception. This misinterprets our antitrust law. Per se rules may decrease administrative costs, but that is only part of the equation. Those rules can be counterproductive. They can increase the total cost of the antitrust system by prohibiting procompetitive conduct the antitrust laws should encourage. See Easterbrook, Vertical Arrangements and the Rule of Reason, 53 Antitrust L. J. 135, 158 (1984) (hereinafter Easterbrook). They also may increase litigation costs by promoting frivolous suits against legitimate practices. The Court has thus explained that administrative “advantages are not sufficient in themselves to justify the creation of per se rules,” GTE Sylvania, 433 U. S., at 50, n. 16, and has relegated their use to restraints that are “manifestly anticompetitive,” id., at 49-50. Were the Court now to conclude that vertical price restraints should be per se illegal based on administrative costs, we would undermine, if not overrule, the traditional “demanding standards” for adopting per se rules. Id., at 50. Any possible reduction in administrative costs cannot alone justify the Dr. Miles rule.

Respondent also argues the per se rule is justified because a vertical price restraint can lead to higher prices for the manufacturer’s goods. See also Overstreet 160 (noting that “price surveys indicate that [resale price maintenance] in most cases increased the prices of products sold”). Respondent is mistaken in relying on pricing effects absent a further showing of anticompetitive conduct. Cf. id., at 106 (explaining that price surveys “do not necessarily tell us anything conclusive about the welfare effects of [resale price maintenance] because the results are generally consistent with both procompetitive and anticompetitive theories”). For, as has been indicated already, the antitrust laws are designed primarily to protect interbrand competition, from which lower prices can later result. See Khan, 522 U. S., at 15. The Court, moreover, has evaluated other vertical restraints under the rule of reason even though prices can be *896increased in the course of promoting procompetitive effects. See, e. g., Business Electronics, 485 U. S., at 728. And resale price maintenance may reduce prices if manufacturers have resorted to costlier alternatives of controlling resale prices that are not per se unlawful. See infra, at 902-904; see also Marvel 371.

Respondent’s argument, furthermore, overlooks that, in general, the interests of manufacturers and consumers are aligned with respect to retailer profit margins. The difference between the price a manufacturer charges retailers and the price retailers charge consumers represents part of the manufacturer’s cost of distribution, which, like any other cost, the manufacturer usually desires to minimize. See GTE Sylvania, 433 U. S., at 56, n. 24; see also id., at 56 (“Economists . . . have argued that manufacturers have an economic interest in maintaining as much intrabrand competition as is consistent with the efficient distribution of their products”). A manufacturer has no incentive to over compensate retailers with unjustified margins. The retailers, not the manufacturer, gain from higher retail prices. The manufacturer often loses; interbrand competition reduces its competitiveness and market share because consumers will “substitute a different brand of the same product.” Id., at 52, n. 19; see Business Electronics, supra, at 725. As a general matter, therefore, a single manufacturer will desire to set minimum resale prices only if the “increase in demand resulting from enhanced service . . . will more than offset a negative impact on demand of a higher retail price.” Mathewson & Winter 67.

The implications of respondent’s position are far reaching. Many decisions a manufacturer makes and carries out through concerted action can lead to higher prices. A manufacturer might, for example, contract with different suppliers to obtain better inputs that improve product quality. Or it might hire an advertising agency to promote awareness of its goods. Yet no one would think these actions violate the *897Sherman Act because they lead to higher prices. The antitrust laws do not require manufacturers to produce generic goods that consumers do not know about or want. The manufacturer strives to improve its product quality or to promote its brand because it believes this conduct will lead to increased demand despite higher prices. The same can hold true for resale price maintenance.

Resale price maintenance, it is true, does have economic dangers. If the rule of reason were to apply to vertical price restraints, courts would have to be diligent in eliminating their anticompetitive uses from, the market. This is a realistic objective, and certain factors are relevant to the inquiry. For example, the number of manufacturers that make use of the practice in a given industry can provide important instruction. When only a few manufacturers lacking market power adopt the practice, there is little likelihood it is facilitating a manufacturer cartel, for a cartel then can be undercut by rival manufacturers. See Overstreet 22; Bork 294. Likewise, a retailer cartel is unlikely when only a single manufacturer in a competitive market uses resale price maintenance. Interbrand competition would divert consumers to lower priced substitutes and eliminate any gains to retailers from their price-fixing agreement over a single brand. See Posner 172; Bork 292. Resale price maintenance should be subject to more careful scrutiny, by contrast, if many competing manufacturers adopt the practice. Cf. Scherer & Ross 558 (noting that “except when [resale price maintenance] spreads to cover the bulk of an industry’s output, depriving consumers of a meaningful choice between high-service and low-price outlets, most [resale price maintenance arrangements] are probably innocuous”); Easterbrook 162 (suggesting that “every one of the potentially-anticompetitive outcomes of vertical arrangements depends on the uniformity of the practice”).

The source of the restraint may also be an important consideration. If there is evidence retailers were the impetus *898for a vertical price restraint, there is a greater likelihood that the restraint facilitates a retailer cartel or supports a dominant, inefficient retailer. See Brief for William S. Comanor et al. as Amici Curiae 7-8. If, by contrast, a manufacturer adopted the policy independent of retailer pressure, the restraint is less likely to promote anticompetitive conduct. Cf. Posner 177 (“It makes all the difference whether minimum retail prices are imposed by the manufacturer in order to evoke point-of-sale services or by the dealers in order to obtain monopoly profits”). A manufacturer also has an incentive to protest inefficient retailer-induced price restraints because they can harm its competitive position.

As a final matter, that a dominant manufacturer or retailer can abuse resale price maintenance for anticompetitive purposes may not be a serious concern unless the relevant entity has market power. If a retailer lacks market power, manufacturers likely can sell their goods through rival retailers. See also Business Electronics, supra, at 727, n. 2 (noting “[r]etail market power is rare, because of the usual presence of interbrand competition and other dealers”). And if a manufacturer lacks market power, there is less likelihood it can use the practice to keep competitors away from distribution outlets.

The rule of reason is designed and used to eliminate anti-competitive transactions from the market. This standard principle applies to vertical price restraints. A party alleging injury from a vertical agreement setting minimum resale prices will have, as a general matter, the information and resources available to show the existence of the agreement and its scope of operation. As courts gain experience considering the effects of these restraints by applying the rule of reason over the course of decisions, they can establish the litigation structure to ensure the rule operates to eliminate anticompetitive restraints from the market and to provide more guidance to businesses. Courts can, for example, devise rules over time for offering proof, or even presumptions *899where justified, to make the rule of reason a fair and efficient way to prohibit anticompetitive restraints and to promote procompetitive ones.

For all of the foregoing reasons, we think that were the Court considering the issue as an original matter, the rule of reason, not a per se rule of unlawfulness, would be the appropriate standard to judge vertical price restraints.

IV

We do not write on a clean slate, for the decision in Dr. Miles is almost a century old. So there is an argument for its retention on the basis of stare decisis alone. Even if Dr. Miles established an erroneous rule, “[s]tare decisis reflects a policy judgment that in most matters it is more important that the applicable rule of law be settled than that it be settled right.” Khan, 522 U. S., at 20 (internal quotation marks omitted). And concerns about maintaining settled law are strong when the question is one of statutory interpretation. See, e. g., Hohn v. United States, 524 U. S. 236, 251 (1998).

Stare decisis is not as significant in this case, however, because the issue before us is the scope of the Sherman Act. Khan, supra, at 20 (“[T]he general presumption that legislative changes should be left to Congress has less force with respect to the Sherman Act”). From the beginning the Court has treated the Sherman Act as a common-law statute. See National Soc. of Professional Engineers v. United States, 435 U. S. 679, 688 (1978); see also Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77, 98, n. 42 (1981) (“In antitrust, the federal courts ... act more as common-law courts than in other areas governed by federal statute”). Just as the common law adapts to modern understanding and greater experience, so too does the Sherman Act’s prohibition on “restraint^] of trade” evolve to meet the dynamics of present economic conditions. The case-by-case adjudication contemplated by the rule of reason has implemented this common-law approach. See National Soc. of Professional *900 Engineers, supra, at 688. Likewise, the boundaries of the doctrine of per se illegality should not be immovable. For “[i]t would make no sense to create out of the single term ‘restraint of trade’ a chronologically schizoid statute, in which a ‘rule of reason' evolves with new circumstances and new wisdom, but a line of per se illegality remains forever fixed where it was.” Business Electronics, 485 U. S., at 732.

A

Stare decisis, we conclude, does not compel our continued adherence to the per se rule against vertical price restraints. As discussed earlier, respected authorities in the economics literature suggest the per se rule is inappropriate, and there is now widespread agreement that resale price maintenance can have procompetitive effects. See, e. g., Brief for Economists as Amici Curiae 16. It is also significant .that both the Department of Justice and the Federal Trade Commission — the antitrust enforcement agencies with the ability to assess the long-term impacts of resale price maintenance— have recommended that this Court replace the per se rule with the traditional rule of reason. See Brief for United States as Amicus Curiae 6. In the antitrust context the fact that a decision has been “called into serious question” justifies our reevaluation of it. Khan, supra, at 21.

Other considerations reinforce the conclusion that Dr. Miles should be overturned. Of most relevance, “we have overruled our precedents when subsequent cases have undermined their doctrinal underpinnings.” Dickerson v. United States, 530 U. S. 428, 443 (2000). The Court’s treatment of vertical restraints has progressed away from Dr. Miles' strict approach. We have distanced ourselves from the opinion’s rationales. See supra, at 887-889; see also Khan, supra, at 21 (overruling a case when “the views underlying [it had been] eroded by this Court’s precedent”); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U. S. 477, 480-481 (1989) (same). This is unsurprising, for the case was decided not long after enactment of the *901Sherman Act when the Court had little experience with antitrust analysis. Only eight years after Dr. Miles, moreover, the Court reined in the decision by holding that a manufacturer can announce suggested resale prices and refuse to deal with distributors who do not follow them. Colgate, 250 U. S., at 307-308.

In more recent cases the Court, following a common-law approach, has continued to temper, limit, or overrule once strict prohibitions on vertical restraints. In 1977, the Court overturned the per se rule for vertical nonprice restraints, adopting the rule of reason in its stead. GTE Sylvania, 433 U. S., at 57-59 (overruling United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967)); see also 433 U. S., at 58, n. 29 (noting “that the advantages of vertical restrictions should not be limited to the categories of new entrants and failing firms”). While the Court in a footnote in GTE Sylvania suggested that differences between vertical price and nonprice restraints could support different legal treatment, see id., at 51, n. 18, the central part of the opinion relied on authorities and arguments that find unequal treatment “difficult to justify,” id., at 69-70 (White, J., concurring in judgment).

Continuing in this direction, in two cases in the 198Q’s the Court defined legal rules to limit the reach of Dr. Miles and to accommodate the doctrines enunciated in GTE Sylvania and Colgate. See Business Electronics, supra, at 726-728; Monsanto, 465 U. S., at 763-764. In Monsanto, the Court required that antitrust plaintiffs alleging a § 1 price-fixing conspiracy must present evidence tending to exclude the possibility a manufacturer and its distributors acted in an independent manner. Id., at 764. Unlike Justice Brennan’s concurrence, which rejected arguments that Dr. Miles should be overruled, see 465 U. S., at 769, the Court “decline[d] to reach the question” whether vertical agreements fixing resale prices always should be unlawful because neither party suggested otherwise, id., at 761-762, n. 7. In *902 Business Electronics the Court further narrowed the scope of Dr. Miles. It held that the per se rule applied only to specific agreements over price levels and not to an agreement between a manufacturer and a distributor to terminate a price-cutting distributor. 485 U. S., at 726-727, 735-736.

Most recently, in 1997, after examining the issue of vertical maximum price-fixing agreements in light of commentary and real experience, the Court overruled a 29-year-old precedent treating those agreements as per se illegal. Khan, 522 U. S., at 22 (overruling Albrecht v. Herald Co., 390 U. S. 145 (1968)). It held instead that they should be evaluated under the traditional rule of reason. 522 U. S., at 22. Our continued limiting of the reach of the decision in Dr. Miles and our recent treatment of other vertical restraints justify the conclusion that Dr. Miles should not be retained.

The Dr. Miles rule is also inconsistent with a principled framework, for it makes little economic sense when analyzed with our other cases on vertical restraints. If we were to decide the procompetitive effects of resale price maintenance were insufficient to overrule Dr. Miles, then cases such as Colgate and GTE Sylvania themselves would be called into question. These later decisions, while they may result in less intrabrand competition, can be justified because they permit manufacturers to secure the procompetitive benefits associated with vertical price restraints through other methods. The other methods, however, could be less efficient for a particular manufacturer to establish and sustain. The end result hinders competition and consumer welfare because manufacturers are forced to engage in second-best alternatives and because consumers are required to shoulder thé increased expense of the inferior practices.

The manufacturer has a number of legitimate options to achieve benefits similar to those provided by vertical price restraints. A manufacturer can exercise its Colgate right to refuse to deal with retailers that do not follow its suggested prices. See 250 U. S., at 307. The economic effects of uni*903lateral and concerted price setting are in general the same. See, e. g., Monsanto, 465 U. S., at 762-764. The problem for the manufacturer is that a jury might conclude its unilateral policy was really a vertical agreement, subjecting it to treble damages and potential criminal liability. Ibid.; Business Electronics, supra, at 728. Even with the stringent standards in Monsanto and Business Electronics, this danger can lead, and has led, rational manufacturers to take wasteful measures. See, e. g., Brief for PING, Inc., as Amicus Curiae 9-18. A manufacturer might refuse to discuss its pricing policy with its distributors except through counsel knowledgeable of the subtle intricacies of the law. Or it might terminate longstanding distributors for minor violations without seeking an explanation. See ibid. The increased costs these burdensome measures generate flow to consumers in the form of higher prices.

Furthermore, depending on the type of product it sells, a manufacturer might be able to achieve the procompetitive benefits of resale price maintenance by integrating downstream and selling its products directly to consumers. Dr. Miles tilts the relative costs of vertical integration and vertical agreement by making the former more attractive based on the per se rule, not. on real market conditions. See Business Electronics, supra, at 725; see generally. Coase, The Nature of the Firm, 4 Economica, New Series 386 (1937). This distortion might lead to inefficient integration that would not otherwise take place, so that consumers must again suffer the consequences of the suboptimal distribution strategy. And integration, unlike vertical price restraints, eliminates all intrabrand competition. See, e. g., GTE Sylvania, supra, at 57, n. 26.

There is yet another consideration. A manufacturer can impose territorial restrictions on distributors and allow only one distributor to sell its goods in a given region. Our cases have recognized, and the economics literature confirms, that these vertical nonprice restraints have impacts similar to *904those of vertical price restraints; both reduce intrabrand competition and can stimulate retailer services. See, e. g., Business Electronics, supra, at 728; Monsanto, supra, at 762-763; see also Brief for Economists as Amici Curiae 17-18. Cf. Scherer & Ross 560 (noting that vertical nonprice restraints “can engender inefficiencies at least as serious as those imposed upon the consumer by resale price maintenance”); Steiner, How Manufacturers Deal with the Price-Cutting Retailer: When Are Vertical Restraints Efficient? 65 Antitrust L. J. 407, 446-447 (1997) (indicating that “antitrust law should recognize that the consumer interest is often better served by [resale price maintenance] — contrary to its per se illegality and the rule-of-reason status of vertical nonprice restraints”). The same legal standard (per se unlawfulness) applies to horizontal market division and horizontal price fixing because both have similar economic effect. There is likewise little economic justification for the current differential treatment of vertical price and nonprice restraints. Furthermore, vertical nonprice restraints may prove less efficient for inducing desired services, and they reduce intrabrand competition more than vertical price restraints by eliminating both price and service competition. See Brief for Economists as Amici Curiae 17-18.

In sum, it is a flawed antitrust doctrine that serves the interests of lawyers — by creating legal distinctions that operate as traps for the unwary — more than the interests of consumers — by requiring manufacturers to choose second-best options to achieve sound business objectives.

B

Respondent’s arguments for reaffirming Dr. Miles on the basis of stare decisis do not require a different result. Respondent looks to congressional action concerning vertical price restraints. In 1937, Congress passed the MillerTydings Fair Trade Act, 50 Stat. 693, which made vertical price restraints legal if authorized by a fair trade law *905enacted by a State. Fifteen years later, Congress expanded the exemption to permit vertical price-setting agreements between a manufacturer and a distributor to be enforced against other distributors not involved in the agreement. McGuire Act, 66 Stat. 632. In 1975, however, Congress repealed both Acts. Consumer Goods Pricing Act, 89 Stat. 801. That the Dr. Miles rule applied to vertical price restraints in 1975, according to respondent, shows Congress ratified the rule.

This is not so. The text of the Consumer Goods Pricing Act did not codify the rule of per se illegality for vertical price restraints. It rescinded statutory provisions that made them per se legal. Congress once again placed these restraints within the ambit of § 1 of the Sherman Act. And, as has been discussed, Congress intended § 1 to give courts the ability “to develop governing principles of law” in the common-law tradition. Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U. S. 630, 643 (1981); see Business Electronics, 485 U. S., at 731 (“The changing content of the term ‘restraint of trade’ was well recognized at the time the Sherman Act was enacted”). Congress could have set the Dr. Miles rule in stone, but it chose a more flexible option. We respect its decision by analyzing vertical price restraints, like all restraints, in conformance with traditional § 1 principles, including the principle that our antitrust doctrines “evolv[e] with new circumstances and new wisdom.” Business Electronics, supra, at 732; see also Easterbrook 139.

The rule of reason, furthermore, is not inconsistent with the Consumer Goods Pricing Act. Unlike the earlier congressional exemption, it does not treat vertical price restraints as per se legal. In this respect, the justifications for the prior exemption are illuminating. Its goal “was to allow the States to protect small retail establishments that Congress thought might otherwise be driven from the marketplace by large-volume discounters.” California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. *90697,102 (1980). The state fair trade laws also appear to have been justified on similar grounds. See Areeda & Hovenkamp 298. The rationales for these provisions are foreign to the Sherman Act. Divorced from competition and consumer welfare, they were designed to save inefficient small retailers from their inability to compete. The purpose of the antitrust laws, by contrast, is “the protection of competition, not competitors.” Atlantic Richfield Co. v. USA Petroleum Co., 495 U. S. 328, 338 (1990) (internal quotation marks omitted). To the extent Congress repealed the exemption for some vertical price restraints to end its prior practice of encouraging anticompetitive conduct, the rule of reason promotes the same objective.

Respondent also relies on several congressional appropriations in the mid-1980’s in which Congress did not permit the Department of Justice or the Federal Trade Commission to use funds to advocate overturning Dr. Miles. See, e. g., 97 Stat. 1071. We need not pause long in addressing this argument. The conditions on funding are no longer in place, see, e. g., Brief for United States as Amicus Curiae 21, and they were ambiguous at best. As much as they might show congressional approval for Dr. Miles, they might demonstrate a different proposition: that Congress could not pass legislation codifying the rule and reached a short-term compromise instead.

Reliance interests do not require us to reaffirm Dr. Miles. To be sure, reliance on a judicial opinion is a significant reason to adhere to it, Payne v. Tennessee, 501 U. S. 808, 828 (1991), especially “in cases involving property and contract rights,” Khan, 522 U. S., at 20. The reliance interests here, however, like the reliance interests in Khan, cannot justify an inefficient rule, especially because the narrowness of the rule has allowed manufacturers to set minimum resale prices in other ways. And while the Dr. Miles rule is longstanding, resale price maintenance was legal under fair trade laws *907in a majority of States for a large part of the past century up until 1975. .

It is also of note that during this time “when the legal environment in the [United States] was most favorable for [resale price maintenance], no more than a tiny fraction of manufacturers ever employed [resale price maintenance] contracts.” Overstreet 6; see also id., at 169 (noting that “no more than one percent of manufacturers, accounting for no more than ten percent of consumer goods purchases, ever employed [resale price maintenance] in any single year in the [United States]”); Scherer & Ross 549 (noting that “[t]he fraction of U. S. retail sales covered by [resale price maintenance] in its heyday has been variously estimated at from 4 to 10 percent”). To the extent consumers demand cheap goods, judging vertical price restraints under the rule of reason will not prevent the market from providing them. Cf. Easterbrook 152-153 (noting that “S.S. Kresge (the old K-Mart) flourished during the days of manufacturers’ greatest freedom” because “discount stores offer a combination of price and service that many customers value” and that “[njothing in restricted dealing threatens the ability of consumers to find low prices”); Scherer & Ross 557 (noting that “for the most part, the effects of the [Consumer Goods Pricing Act] were imperceptible because the forces of competition had already repealed the [previous antitrust exemption] in their own quiet way”).

For these reasons the Court’s decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911), is now overruled. Vertical price restraints are to be judged according to the rule of reason.

V

Noting that Leegin’s president has an ownership interest in retail stores that sell Brighton, respondent claims Leegin participated in an unlawful horizontal cartel with competing *908retailers. Respondent did not make this allegation in the lower courts, and we do not consider it here.

The judgment of the Court of Appeals is reversed, and the case is remanded for proceedings consistent with this opinion.

It is so ordered.

Justice Breyer,

with whom Justice Stevens, Justice Souter, and Justice Ginsburg join, dissenting.

In Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373, 394, 408-409 (1911), this Court held that an agreement between a manufacturer of proprietary medicines and its dealers to fix the minimum price at which its medicines could be sold was “invalid . . . under the [Sherman Act, 15 U. S. C. § 1].” This Court has consistently read Dr. Miles as establishing a bright-line rule that agreements fixing minimum resale prices are per se illegal. See, e.g., United States v. Trenton Potteries Co., 273 U. S. 392, 399-401 (1927); NYNEX Corp. v. Discon, Inc., 525 U. S. 128, 133 (1998). That per se rule is one upon which the legal profession, business, and the public have relied for close to a century. Today the Court holds that courts must determine the lawfulness of minimum resale price maintenance by applying, not a bright-line per se rule, but a circumstance-specific “rule of reason.” Ante, at 907. And in doing so it overturns Dr. Miles.

The Court justifies its departure from ordinary considerations of stare decisis by pointing to a set of arguments well known in the antitrust literature for close to half a century. See ante, at 889-892. Congress has repeatedly found in these arguments insufficient grounds for overturning the per se rule. See, e. g., Hearings on H. R. 10527 et al. before the Subcommittee on Commerce and Finance of the House Committee on Interstate and Foreign Commerce, 85th Cong., 2d Sess., 74-76, 89, 99, 101-102, 192-195, 261-262 (1958). And, *909in my view, they do not warrant the Court’s now overturning so well-established a legal precedent.

I

The Sherman Act seeks to maintain a marketplace free of anticompetitive practices, in particular those enforced by agreement among private firms. The law assumes that such a marketplace, free of private restrictions, will tend to bring about the lower prices, better products, and more efficient production processes that consumers typically desire. In determining the lawfulness of particular practices, courts often apply a “rule of reason.” They examine both a practice’s likely anticompetitive effects and its beneficial business justifications. See, e. g., National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 109-110, and n. 39 (1984); National Soc. of Professional Engineers v. United States, 435 U. S. 679, 688-691 (1978); Board of Trade of Chicago v. United States, 246 U. S. 231, 238 (1918).

Nonetheless, sometimes the likely anticompetitive consequences of a particular practice are so serious and the potential justifications so few (or, e. g., so difficult to prove) that courts have departed from a pure “rule of reason” approach. And sometimes this Court has imposed a rule of per se unlawfulness — a rule that instructs courts to find the practice unlawful all (or nearly all) the time. See, e. g., NYNEX, supra, at 133; Arizona v. Maricopa County Medical Soc., 457 U. S. 332, 343-344, and n. 16 (1982); Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 50, n. 16 (1977); United States v. Topco Associates, Inc., 405 U. S. 596, 609-611 (1972); United States v. Socony-Vacuum Oil Co., 310 U. S. 150, 213-214 (1940) (citing and quoting Trenton Potteries, supra, at 397-398).

The case before us asks which kind of approach the courts should follow where minimum resale price maintenance is at issue. Should they apply a per se rule (or a variation) that *910would make minimum resale price maintenance always (or almost always) unlawful? Should they apply a “rule of reason”? Were the Court writing on a blank slate, I would find these questions difficult. But, of course, the Court is not writing on a blank slate, and that fact makes a considerable legal difference.

To best explain why the question would be difficult were we deciding it afresh, I briefly summarize several classical arguments for and against the use of a per se rule. The arguments focus on three sets of considerations, those involving: (1) potential anticompetitive effects, (2) potential benefits, and (3) administration. The difficulty arises out of the fact that the different sets of considerations point in different directions. See, e.g., 8 P. Areeda, Antitrust Law ¶¶ 1628-1633, pp. 330-392 (1st ed. 1989) (hereinafter Areeda); 8 P. Areeda & H. Hovenkamp, Antitrust Law ¶¶ 1628-1633, pp. 288-339 (2d ed. 2004) (hereinafter Areeda & Hovenkamp); Easterbrook, Vertical Arrangements and the Rule of Reason, 53 Antitrust L. J. 135,146-152 (1984) (hereinafter Easterbrook); Pitofsky, In Defense of Discounters: The No-Frills Case for a Per Se Rule Against Vertical Price Fixing, 71 Geo. L. J. 1487 (1983) (hereinafter Pitofsky); Scherer, The Economics of Vertical Restraints, 52 Antitrust L. J. 687, 706-707 (1983) (hereinafter Scherer); Posner, The Next Step in the Antitrust Treatment of Restricted Distribution: Per Se Legality, 48 U. Chi. L. Rev. 6, 22-26 (1981); Brief for William S. Comanor et al. as Amici Curiae 7-10.

On the one hand, agreements setting minimum resale prices may have serious anticompetitive consequences. In respect to dealers: Resale price maintenance agreements, rather like horizontal price agreements, can diminish or eliminate price competition among dealers of a single brand or (if practiced generally by manufacturers) among multibrand dealers. In doing so, they can prevent dealers from offering customers the lower prices that many customers prefer; they can prevent dealers from responding to changes *911in demand, say, falling demand, by cutting prices; they can encourage dealers to substitute service, for price, competition, thereby threatening wastefully to attract too many resources into that portion of the industry; they can inhibit expansion by more efficient dealers whose lower prices might otherwise attract more customers, stifling the development of new, more efficient modes of retailing; and so forth. See, e. g., 8 Areeda & Hovenkamp ¶ 1632c, at 319-321; Steiner, The Evolution and Applications of Dual-Stage Thinking, 49 The Antitrust Bulletin 877, 899-900 (2004); Comanor, Vertical Price-Fixing, Vertical Market Restrictions, and the New Antitrust Policy, 98 Harv. L. Rev. 983, 990-1000 (1985).

In respect to producers: Resale price maintenance agreements can help to reinforce the competition-inhibiting behavior of firms in concentrated industries. In such industries firms may tacitly collude, i. e., observe each other’s pricing behavior, each understanding that price cutting by one firm is likely to trigger price competition by all. See 8 Areeda & Hovenkamp ¶ 1632d, at 321-323; P. Areeda & L. Kaplow, Antitrust Analysis ¶¶ 231-233, pp. 276-283 (4th ed. 1988) (hereinafter Areeda & Kaplow). Cf. United States v. Container Corp. of America, 393 U. S. 333 (1969); Areeda & Kaplow ¶¶ 247-253, at 327-348. Where that is so, resale price maintenance can make it easier for each producer to identify (by observing retail markets) when a competitor has begun to cut prices. And a producer who cuts wholesale prices without lowering the minimum resale price will stand to gain little, if anything, in increased profits, because the dealer will be unable to stimulate increased consumer demand by passing along the producer’s price cut to consumers. In either case, resale price maintenance agreements will tend to prevent price competition from “breaking out”; and they will thereby tend to stabilize producer prices. See Pitofsky 1490-1491. Cf., e.g., Container Corp., supra, at 336-337.

*912Those who express concern about the potential anticompetitive effects find empirical support in the behavior of prices before, and then after, Congress in 1975 repealed the Miller-Tydings Fair Trade Act, 50 Stat. 693, and the McGuire Act, 66 Stat. 631. Those Acts had permitted (but not required) individual States to enact “fair trade” laws authorizing minimum resale price maintenance. At the time of repeal minimum resale price maintenance was lawful in 36 States; it was unlawful in 14 States. See Hearings on S. 408 before the Subcommittee on Antitrust and Monopoly of the Senate Committee on the Judiciary, 94th Cong., 1st Sess., 173 (1975) (hereinafter Hearings on S. 408) (statement of Thomas E. Kauper, Assistant Attorney General, Antitrust Division). Comparing prices in the former States with prices in the latter States, the Department of Justice argued that minimum resale price maintenance had raised prices by 19% to 27%. See Hearings on H. R. 2384 before the Subcommittee on Monopolies and Commercial Law of the House Committee on the Judiciary, 94th Cong., 1st Sess., 122 (1975) (hereinafter Hearings on H. R. 2384) (statement of Keith I. Clearwaters, Deputy Assistant Attorney General, Antitrust Division).

After repeal, minimum resale price maintenance agreements were unlawful per se in every State. The Federal Trade Commission (FTC) staff, after studying numerous price surveys, wrote that collectively the surveys “indicate[d] that [resale price maintenance] in most cases increased the prices of products sold with [resale price maintenance].” Bureau of Economics Staff Report to the FTC, T. Overstreet, Resale Price Maintenance: Economic Theories and Empirical Evidence 160 (1983) (hereinafter Overstreet). Most economists today agree that, in the words of a prominent antitrust treatise, “resale price maintenance tends to produce higher consumer prices than would otherwise be the case.” 8 Areeda & Hovenkamp ¶ 1604b, at 40 (finding “[t]he evidence . . . persuasive on this point”). See also Brief for William S. Comanor et al. as Amici Curiae 4 (“It is uni*913formly acknowledged that [resale price maintenance] and other vertical restraints lead to higher consumer prices”).

On the other hand, those favoring resale price maintenance have long argued that resale price maintenance agreements can provide important consumer benefits. The majority lists two: First, such agreements can facilitate new entry. Ante, at 891. For example, a newly entering producer wishing to build a product name might be able to convince dealers to help it do so — if, but only if, the producer can assure those dealers that they will later recoup their investment. Without resale price maintenance, late-entering dealers might take advantage of the earlier investment and, through price competition, drive prices down to the point where the early dealers cannot recover what they spent. By assuring the initial dealers that such later price competition will not occur, resale price maintenance can encourage them to carry the new product, thereby helping the new producer succeed. See 8 Areeda & Hovenkamp ¶¶ 1617a, 1631b, at 193-196, 308. The result might be increased competition at the producer level, i.e., greater inter-brand competition, that brings with it net consumer benefits.

Second, without resale price maintenance a producer might find its efforts to sell a product undermined by what resale price maintenance advocates call “free riding.” Ante, at 890-891. Suppose a producer concludes that it can succeed only if dealers provide certain services, say, product demonstrations, high quality shops, advertising that creates a certain product image, and so forth. Without resale price maintenance, some dealers might take a “free ride” on the investment that others make in providing those services. Such a dealer would save money by not paying for those services and could consequently cut its own price and increase its own sales. Under these circumstances, dealers might prove unwilling to invest in the provision of necessary services. See, e. g., 8 Areeda & Hovenkamp ¶¶ 1611-1613, *9141631c, at 126-165, 309-313; R. Posner, Antitrust Law 172-173 (2d ed. 2001); R. Bork, The Antitrust Paradox 290-291 (1978) (hereinafter Bork); Easterbrook 146-149.

Moreover, where a producer and not a group of dealers seeks a resale price maintenance agreement, there is a special reason to believe some such benefits exist. That is because, other things being equal, producers should want to encourage price competition among their dealers. By doing so they will often increase profits by selling more of their product. See Sylvania, 433 U. S., at 56, n. 24; Bork 290. And that is so, even if the producer possesses sufficient market power to earn a supernormal profit. That is to say, other things being equal, the producer will benefit by charging his dealers a competitive (or even a higher-than-competitive) wholesale price while encouraging price competition among them. Hence, if the producer is the moving force, the producer must have some special reason for wanting resale price maintenance; and in the absence of, say, concentrated producer markets (where that special reason might consist of a desire to stabilize wholesale prices), that special reason may well reflect the special circumstances just described: new entry, “free riding,” or variations on those themes.

The upshot is, as many economists suggest, sometimes resale price maintenance can prove harmful; sometimes it can bring benefits. See, e. g., Brief for Economists as Amici Curiae 16; 8 Areeda & Hovenkamp ¶¶ 1631-1632, at 306-328; Pitofsky 1495; Scherer 706-707. But before concluding that courts should consequently apply a rule of reason, I would ask such questions as, how often are harms or benefits likely to occur? How easy is it to separate the beneficial sheep from the antitrust goats?

Economic discussion, such as the studies the Court relies upon, can help provide answers to these questions, and in doing so, economics can, and should, inform antitrust law. But antitrust law cannot, and should not, precisely replicate *915economists’ (sometimes conflicting) views. That is because law, unlike economics, is an administrative system the effects of which depend upon the content of rules and precedents only as they are applied by judges and juries in courts and by lawyers advising their clients. And that fact means that courts will often bring their own administrative judgment to bear, sometimes applying rules of per se unlawfulness to business practices even when those practices sometimes produce benefits. See, e. g., F. Scherer & D. Ross, Industrial Market Structure and Economic Performance 335-339 (3d ed. 1990) (hereinafter Scherer & Ross) (describing some circumstances under which price-fixing agreements could be more beneficial than “unfettered competition,” but also noting potential costs of moving from a per se ban to a rule of reasonableness assessment of such agreements).

I have already described studies and analyses that suggest (though they cannot prove) that resale price maintenance can cause harms with some regularity — and certainly when dealers are the driving foree. But what about benefits? How often, for example, will the benefits to which the Court points occur in practice? I can find no economic consensus on this point. There is a consensus in the literature that “free riding” takes place. But “free riding” often takes place in the economy without any legal effort to stop it. Many visitors to California take free rides on the Pacific Coast Highway. We all benefit freely from ideas, such as that of creating the first supermarket. Dealers often take a “free ride” on investments that others have made in building a product’s name and reputation. The question is how often the “free riding” problem is serious enough significantly to deter dealer investment.

To be more specific, one can easily imagine a dealer who refuses to provide important presale services, say, a detailed explanation of how a product works (or who fails to provide a proper atmosphere in which to sell expensive perfume or alligator billfolds), lest customers use that “free” service (or *916enjoy the psychological benefit arising when a high-priced retailer stocks a particular brand of billfold or handbag) and then buy from another dealer at a lower price. Sometimes this must happen in reality. But does it happen often? We do, after all, live in an economy where firms, despite Dr. Miles’ per se rule, still sell complex technical equipment (as well as expensive perfume and alligator billfolds) to consumers.

All this is to say that the ultimate question is not whether, but how much, “free riding” of this sort takes place. And, after reading the briefs, I must answer that question with an uncertain “sometimes.” See, e. g., Brief for William S. Comanor et al. as Amici Curiae 6-7 (noting “skepticism in the economic literature about how often [free riding] actually occurs”); Scherer & Ross 551-555 (explaining the “severe limitations” of the free-rider justification for resale price maintenance); Pitofsky, Why Dr. Miles Was Right, 8 Regulation, No. 1, pp. 27,29-30 (Jan./Feb. 1984) (similar analysis).

How easily can courts identify instances in which the benefits are likely to outweigh potential harms? My own answer is, not very easily. For one thing, it is often difficult to identify who — producer or dealer — is the moving force behind any given resale price maintenance agreement. Suppose, for example, several large multibrand retailers all sell resale-price-maintained products. Suppose further that small producers set retail prices because they fear that, otherwise, the large retailers will favor (say, by allocating better shelf space) the goods of other producers who practice resale price maintenance. Who “initiated” this practice, the retailers hoping for considerable insulation from retail competition, or the producers, who simply seek to deal best with the circumstances they find? For another thing, as I just said, it is difficult to determine just when, and where, the “free riding” problem is serious enough to warrant legal protection.

*917I recognize that scholars have sought to develop checklists and sets of questions that will help courts separate instances where anticompetitive harms are more likely from instances where only benefits are likely to be found. See, e.g., 8 Areeda & Hovenkamp ¶¶ 1633e-1633e, at 330-339. See also Brief for William S. Comanor et al. as Amici Curiae 8-10. But applying these criteria in court is often easier said than done. The Court’s invitation to consider the existence of “market power,” for example, ante, at 898, invites lengthy time-consuming argument among competing experts, as they seek to apply abstract, highly technical, criteria to often ill-defined markets. And resale price maintenance cases, unlike a major merger or monopoly case, are likely to prove numerous and involve only private parties. One cannot fairly expect judges and juries in such cases to apply complex economic criteria without making a considerable number of mistakes, which themselves may impose serious costs. See, e.g., H. Hovenkamp, The Antitrust Enterprise 105 (2005) (litigating a rule of reason case is “one of the most costly procedures in antitrust practice”). See also Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv. L. Rev. 226,238-247 (1960) (describing lengthy FTC efforts to apply complex criteria in a merger case).

Are there special advantages to a bright-line rule? Without such a rule, it is often unfair, and consequently impractical, for enforcement officials to bring criminal proceedings. And since enforcement resources are limited, that loss may tempt some producers or dealers to enter into agreements that are, on balance, anticompetitive.

Given the uncertainties that surround key items in the overall balance sheet, particularly in respect to the “administrative” questions, I can concede to the majority that the problem is difficult. And, if forced to decide now, at most I might agree that the per se rule should be slightly modified to allow an exception for the more easily identifiable *918and temporary condition of “new entry.” See Pitofsky 1495. But I am not now forced to decide this question. The question before us is not what should be the rule, starting from scratch. We here must decide whether to change a clear and simple price-related antitrust rule that the courts have applied for nearly a century.

II

We write, not on a blank slate, but on a slate that begins with Dr. Miles and goes on to list a century’s worth of similar cases, massive amounts of advice that lawyers have provided their clients, and untold numbers of business decisions those clients have taken in reliance upon that advice. See, e. g., United States v. Bausch & Lomb Optical Co., 321 U. S. 707, 721 (1944); Sylvania, 433 U. S., at 51, n. 18 (“The per se illegality of [vertical] price restrictions has been established firmly for many years . . . ”). Indeed, a Westlaw search shows that Dr. Miles itself has been cited dozens of times in this Court and hundreds of times in lower courts. Those who wish this Court to change so well-established a legal precedent bear a heavy burden of proof. See Illinois Brick Co. v. Illinois, 431 U. S. 720, 736 (1977) (noting, in declining to overrule an earlier case interpreting §4 of the Clayton Act, that “considerations of stare decisis weigh heavily in the area of statutory construction, where Congress is free to change this Court’s interpretation of its legislation”). I am not aware of any case in which this Court has overturned so well-established a statutory precedent. Regardless, I do not see how the Court can claim that ordinary criteria for overruling an earlier case have been met. See, e.g., Planned Parenthood of Southeastern Pa. v. Casey, 505 U. S. 833, 854-855 (1992). See also Federal Election Comm’n v. Wisconsin Right to Life, Inc., ante, at 500-503 (Scalia, J., concurring in part and concurring in judgment).

*919A

I can find no change in circumstances in the past several decades that helps the majority’s position. In fact, there has been one important change that argues strongly to the contrary. In 1975, Congress repealed the McGuire and MillerTydings Acts. See Consumer Goods Pricing Act of 1975,89 Stat. 801. And it thereby consciously extended Dr. Miles’ per se rule. Indeed, at that time the Department of Justice and the FTC, then urging application of the per se rule, discussed virtually every argument. presented now to this Court as well as others not here presented. And they explained to Congress why Congress should reject them. See Hearings on S. 408, at 176-177 (statement of Thomas E. Kauper, Assistant Attorney General, Antitrust Division); id., at 170-172 (testimony of Lewis A. Engman, Chairman of the FTC); Hearings on H. R. 2384, at 113-114 (testimony of Keith I. Clearwaters, Deputy Assistant Attorney General, Antitrust Division). Congress fully understood, and consequently intended, that the result of its repeal of McGuire and Miller-Tydings would be to make minimum resale price maintenance per se unlawful. See, e. g., S. Rep. No. 94-466, pp. 1-3 (1975) (“Without [the exemptions authorized by the Miller-Tydings and McGuire Acts,] the agreements they authorize would violate the antitrust laws.... [R]epeal of the fair trade laws generally will prohibit manufacturers from enforcing resale prices”). See also Sylvania, supra, at 51, n. 18 (“Congress recently has expressed its approval of a per se analysis of vertical price restrictions by repealing those provisions of the Miller-Tydings and McGuire Acts allowing fair-trade pricing at the option of the individual States”).

Congress did not prohibit this Court from reconsidering the per se rule. But enacting major legislation premised upon the existence of that rule constitutes important public *920reliance upon that rule. And doing so aware of the relevant arguments constitutes even stronger reliance upon the Court’s keeping the rule, at least in the absence of some significant change in respect to those arguments.

Have there been any such changes? There have been a few economic studies, described in some of the briefs, that argue, contrary to the testimony of the Justice Department and the FTC to Congress in 1975, that resale price maintenance is not harmful. One study, relying on an analysis of litigated resale price maintenance cases from 1975 to 1982, concludes that resale price maintenance does not ordinarily involve producer or dealer collusion. See Ippolito, Resale Price Maintenance: Empirical Evidence from Litigation, 34 J. Law & Econ. 263, 281-282, 292 (1991). But this study equates the failure of plaintiffs to allege collusion with the absence of collusion — an equation that overlooks the superfluous nature of allegations of horizontal collusion in a resale price maintenance case and the tacit form that such collusion might take. See H. Hovenkamp, Federal Antitrust Policy § 11.3c, p. 464, n. 19 (3d ed. 2005); supra, at 911.

The other study provides a theoretical basis for concluding that resale price maintenance “need not lead to higher retail prices.” Marvel & McCafferty, The Political Economy of Resale Price Maintenance, 94 J. Pol. Econ. 1074,1075 (1986). But this study develops a theoretical model “under the assumption that [resale price maintenance] is efficiency-enhancing.” Ibid. Its only empirical support is a 1940 study that the authors acknowledge is much criticized. See id., at 1091. And many other economists take a different view. See Brief for William S. Comanor et al. as Amici Curiae 4.

Regardless, taken together, these studies at most may offer some mild support for the majority’s position. But they cannot constitute a major change in circumstances.

Petitioner and some amici have also presented us with newer studies that show that resale price maintenance some*921times brings consumer benefits. Overstreet 119-129 (describing numerous case studies). But the proponents of a per se rule have always conceded as much. What is remarkable about the majority’s arguments is that nothing in this respect is new. See supra, at 910, 919 (citing articles and congressional testimony going back several decades). The only new feature of these arguments lies in the fact that the most current advocates of overruling Dr. Miles have abandoned a host of other not-very-persuasive arguments upon which prior resale price maintenance proponents used to rely. See, e. g., 8 Areeda ¶ 1631a, at 350-352 (listing “ ‘[t]raditional’ justifications” for resale price maintenance).

The one arguable exception consists of the majority’s claim that “even absent free riding,” resale price maintenance “may be the most efficient way to expand the manufacturer’s market share by inducing the retailer’s performance and allowing it to use its own initiative and experience in providing valuable services.” Ante, at 892. I cannot count this as an exception, however, because I do not understand how, in the absence of free riding (and assuming competitiveness), an established producer would need resale price maintenance. Why, on these assumptions, would a dealer not “expand” its “market share” as best that dealer sees fit, obtaining appropriate payment from consumers in the process? There may be an answer to this question. But I have not seen it. And I do not think that we should place significant weight upon justifications that the parties do not explain with sufficient clarity for a generalist judge to understand.

No one claims that the American economy has changed in ways that might support the majority. Concentration in retailing has increased. See, e. g., Brief for Respondent 18 (since minimum resale price maintenance was banned nationwide in 1975, the total number of retailers has dropped while the growth in sales per store has risen); Brief for American Antitrust Institute as Amicus Curiae 17, n. 20 (citing private study reporting that the combined sales of the 10 largest *922retailers worldwide has grown to nearly 80% of total retail sales of top 250 retailers; also quoting 1999 Organisation for Economic Co-operation and Development report stating that the “ ‘last twenty years have seen momentous changes in retail distribution including significant increases in concentration’”); Mamen, Facing Goliath: Challenging the Impacts of Supermarket Consolidation on our Local Economies, Communities, and Food Security, The Oakland Institute, 1 Policy Brief, No. 3, pp. 1, 2 (Spring 2007), http://www. oaklandinstitute.org/pdfs/facing_goliath.pdf (as visited June 25, 2007, and available in Clerk of Court’s case file) (noting that “[f)or many decades, the top five food retail firms in the U. S. controlled less than 20 percent of the market”; from 1997 to 2000, “the top five firms increased their market share from 24 to 42 percent of all retail sales”; and “[b]y 2003, they controlled over half of all grocery sales”). That change, other things being equal, may enable (and motivate) more retailers, accounting for a greater percentage of total retail sales volume, to seek resale price maintenance, thereby making it more difficult for price-cutting competitors (perhaps internet retailers) to obtain market share.

Nor has anyone argued that concentration among manufacturers that might use resale price maintenance has diminished significantly. And as far as I can tell, it has not. Consider household electrical appliances, which a study from the late 1950’s suggests constituted a significant portion of those products subject to resale price maintenance at that time. See Hollander, United States of America, in Resale Price Maintenance 67, 80-81 (B. Yamey ed. 1966). Although it is somewhat difficult to compare census data from 2002 with that from several decades ago (because of changes in the classification system), it is clear that at least some subsets of the household electrical appliance industry are more concentrated, in terms of manufacturer market power, now than they were then. For instance, the top eight domestic manufacturers of household cooking appliances accounted for 68% *923of the domestic market (measured by value of shipments) in 1963 (the earliest date for which I was able to find data), compared with 77% in 2002. See Dept, of Commerce, Bureau of Census, 1972 Census of Manufactures, Special Report Series, Concentration Ratios in Manufacturing, No. MC72(SR)-2, p. SR2-38 (1975) (hereinafter 1972 Census); Dept, of Commerce, Bureau of Census, 2002 Economic Census, Concentration Ratios: 2002, No. EC02-31SR-1, p. 55 (2006) (hereinafter 2002 Census). The top eight domestic manufacturers of household laundry equipment accounted for 95% of the domestic market in 1963 (90% in 1958), compared with 99% in 2002. 1972 Census, at SR2-38; 2002 Census, at 55. And the top eight domestic manufacturers of household refrigerators and freezers accounted for 91% of the domestic market in 1963, compared with 95% in 2002. 1972 Census, at SR2-38; 2002 Census, at 55. Increased concentration among manufacturers increases the likelihood that producer-originated resale price maintenance will prove more prevalent today than in years past, and more harmful. At the very least, the majority has not explained how these, or other changes in the economy, could help support its position.

In sum, there is no relevant change. And without some such change, there is no ground for abandoning a well-established antitrust rule.

B

With the preceding discussion in mind, I would consult the list of factors that our case law indicates are relevant when we consider overruling an earlier case. Justice Scalia, writing separately in another of our cases this Term, "well summarizes that law. See Wisconsin Right to Life, Inc., ante, at 500-503 (opinion concurring in part and concurring in judgment). And every relevant factor he mentions argues against overruling Dr. Miles here.

First, the Court applies stare decisis more “rigidly” in statutory than in constitutional cases. See Glidden Co. v. *924 Zdanok, 370 U. S. 530, 543 (1962); Illinois Brick Co., 431 U. S., at 736. This is a statutory case.

Second, the Court does sometimes overrule cases that it decided wrongly only a reasonably short time ago. As Justice Scalia put it, “[ojverruling a constitutional case decided just a few years earlier is far from unprecedented.” Wisconsin Right to Life, ante, at 501 (emphasis added). We here overrule one statutory case, Dr. Miles, decided 100 years ago, and we overrule the cases that reaffirmed its per se rule in the intervening years. See, e. g., Trenton Potteries, 273 U. S., at 399-401; Bausch & Lomb, 321 U. S., at 721; United States v. Parke, Davis & Co., 362 U. S. 29, 45-47 (1960); Simpson v. Union Oil Co. of Cal., 377 U. S. 13, 16-17 (1964).

Third, the fact that a decision creates an “unworkable” legal regime argues in favor of overruling. See Payne v. Tennessee, 501 U. S. 808, 827-828 (1991); Swift & Co. v. Wickham, 382 U. S. 111, 116 (1965). Implementation of the per se rule, even with the complications attendant the exception allowed for in United States v. Colgate & Co., 250 U. S. 300 (1919), has proved practical over the course of the last century, particularly when compared with the many complexities of litigating a case under the “rule of reason” regime. No one has shown how moving from the Dr. Miles regime to “rule of reason” analysis would make the legal regime governing minimum resale price maintenance more “administrable,” Wisconsin Right to Life, ante, at 501 (opinion of Scalia, J.), particularly since Colgate would remain good law with respect to unreasonable price maintenance.

Fourth, the fact that a decision “unsettles” the law may argue in favor of overruling. See Sylvania, 433 U. S., at 47; Wisconsin Right to Life, ante, at 502 (opinion of Scalia, J.). The per se rule is well-settled law, as the Court itself has previously recognized. Sylvania, supra, at 51, n. 18. It is the majority’s change here that will unsettle the law.

*925Fifth, the fact that a case involves property rights or contract rights, where reliance interests are involved, argues against overruling. Payne, supra, at 828. This case involves contract rights and perhaps property rights (consider shopping malls). And there has been considerable reliance upon the per se rule. As I have said, Congress relied upon the continued vitality of Dr. Miles when it repealed Miller-Tydings and McGuire. Supra, at 919-920. The Executive Branch argued for repeal on the assumption that Dr. Miles stated the law. Supra, at 919-920. Moreover, whole sectors of the economy have come to rely upon the per se rule. A factory outlet store tells us that the rule “form[s] an essential part of the regulatory background against which [that firm] and many other discount retailers have financed, structured, and operated their businesses.” Brief for Burlington Coat Factory Warehouse Corp. as Amicus Curiae 5. The Consumer Federation of America tells us that large low-price retailers would not exist without Dr. Miles; minimum resale price maintenance, “by stabilizing price levels and preventing low-price competition, erects a potentially insurmountable barrier to entry for such low-price innovators.” Brief for Consumer Federation of America as Amicus Curiae 5, 7-9 (discussing, inter alia, comments by Wal-Mart’s founder 25 years ago that relaxation of the per se ban on minimum resale price maintenance would be a “ ‘great danger’” to Wal-Mart’s then-relatively-naseent business). See also Brief for American Antitrust Institute as Amicus Curiae 14-15, and sources cited therein (making the same point). New distributors, including internet distributors, have similarly invested time, money, and labor in an effort to bring yet lower cost goods to Americans.

This Court’s overruling of the per se rule jeopardizes this reliance, and more. What about malls built on the assumption that a discount distributor will remain an anchor tenant? What about home buyers who have taken a home’s distance *926from such a mall into account? What about Americans, producers, distributors, and consumers, who have understandably assumed, at least for the last 30 years, that price competition is a legally, guaranteed way of life? The majority denies none of this. It simply says that these “reliance interests ..., like the reliance interests in [State Oil Co. v.] Khan, [522 U. S. 3 (1997),] cannot justify an inefficient rule.” Ante, at 906.

The Court minimizes the importance of this reliance, adding that it “is also of note” that at the time resale price maintenance contracts were lawful “ ‘no more than a tiny fraction of manufacturers ever employed’” the practice. Ante, at 907 (quoting Overstreet 6). By “tiny” the Court means manufacturers that accounted for up to “ ‘ten percent of consumer goods purchases’” annually. Ante, at 907. That figure in today’s economy equals just over $300 billion. See Dept, of Commerce, Bureau of Census, Statistical Abstract of the United States: 2007, p. 649 (126th ed.) (over $3 trillion in U. S. retail sales in 2002). Putting the Court’s estimate together with the Justice Department’s early 1970’s study translates a legal regime that permits all resale price maintenance into retail bills that are higher by an average of roughly $750 to $1,000 annually for an American family of four. Just how much higher retail bills will be after the Court’s decision today, of course, depends upon what is now unknown, namely, how courts will decide future cases under a “rule of reason.” But these figures indicate that the amounts involved are important to American families and cannot be dismissed as “tiny.”

Sixth, the fact that a rule of law has become “embedded” in our “national culture” argues strongly against overruling. Dickerson v. United States, 530 U. S. 428, 443-444 (2000). The per se rule forbidding minimum resale price maintenance agreements has long been “embedded” in the law of antitrust. It involves price, the economy’s “ ‘central nervous system.’” National Soc. of Professional Engineers, 435 *927U. S., at 692 (quoting Socony-Vacuum Oil, 310 U. S., at 226, n. 59). It reflects a basic antitrust assumption (that consumers often prefer lower prices to more service). It embodies a basic antitrust objective (providing consumers with a free choice about such matters). And it creates an easily administered and enforceable bright line, “Do not agree about price,” that businesses as well as lawyers have long understood.

The only contrary stare decisis factor that the majority mentions consists of its claim that this Court has “[f]rom the beginning . . . treated the Sherman Act as a common-law statute,” and has previously overruled antitrust precedent. Ante, at. 899, 900-902. It points in support to State Oil Co. v. Khan, 522 U. S. 3 (1997), overruling Albrecht v. Herald Co., 390 U. S. 145 (1968), in which this Court had held that maximum resale price agreements were unlawful per se, and to Sylvania, overruling United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967), in which this Court had held that producer-imposed territorial limits were unlawful per se.

The Court decided Khan, however, 29 years after Albrecht — still a significant period, but nowhere close to the century Dr. Miles has stood. The Court specifically noted the lack of any significant reliance upon Albrecht. 522 U. S., at 18-19 (Albrecht has had “little or no relevance to ongoing enforcement of the Sherman Act”). Albrecht had far less support in traditional antitrust principles than did Dr. Miles. Compare, e. g., 8 Areeda & Hovenkamp ¶ 1632, at 316-328 (analyzing potential harms of minimum resale price maintenance), with id., ¶ 1637, at 352-361 (analyzing potential harms of maximum resale price maintenance). See also, e. g., Pitofsky 1490, n. 17. And Congress had nowhere expressed support for Albrecht's rule. Khan, supra, at 19.

In Sylvania, the Court, in overruling Schwinn, explicitly distinguished Dr. Miles on the ground that while Congress had “recently . . . expressed its approval of a per se analysis of vertical price restrictions” by repealing the Miller*928Tydings and McGuire Acts, “[n]o similar expression of congressional intent exists for nonprice restrictions.” 433 U. S., at 51, n. 18. Moreover, the Court decided Sylvania only a decade after Schwinn; And it based its overruling on a generally perceived need to avoid “confusion” in the law, 433 U. S., at 47-49, a factor totally absent here.

The Court suggests that it is following “the common-law tradition.” Ante, at 905. But the common law would not have permitted overruling Dr. Miles in these circumstances. Common-law courts rarely overruled well-established earlier rules outright. Rather, they would over time issue decisions that gradually eroded the scope and effect of the rule in question, which might eventually lead the courts to put the rule to rest. One can argue that modifying the per se rule to make an exception, say, for new entry, see Pitofsky 1495, could prove consistent with this approach. To swallow up a century-old precedent, potentially affecting many billions of dollars of sales, is not. The reader should compare today’s “common-law” decision with Justice Cardozo’s decision in Allegheny College v. National Chautauqua Cty. Bank of Jamestown, 246 N. Y. 369, 159 N. E. 173 (1927), and note a gradualism that does not characterize today’s decision.

Moreover, a Court that rests its decision upon economists’ views of the economic merits should also take account of legal scholars’ views about common-law overruling. Professors Hart and Sacks list 12 factors (similar to those I have mentioned) that support judicial “adherence to prior holdings.” They all support adherence to Dr. Miles here. See H. Hart & A. Sacks, The Legal Process 568-569 (W. Eskridge & P. Frickey eds. 1994). Karl Llewellyn has written that the common-law judge’s “conscious reshaping” of prior law “must so move as to hold the degree of movement down to the degree to which need truly presses.” The Bramble Bush 156 (1960). Where here is the pressing need? The Court notes that the FTC argues here in favor of a rule of reason. See ante, at 900. But both Congress and the FTC, *929unlike courts, are well equipped to gather empirical evidence outside the context of a single case. As neither has done so, we cannot conclude with confidence that the gains from eliminating the per se rule will outweigh the costs.

In sum, every stare decisis concern this Court has ever mentioned counsels against overruling here. It is difficult for me to understand how one can believe both that (1) satisfying a set of stare decisis concerns justifies overruling a recent constitutional decision, Wisconsin Right to Life, Inc., ante, at 500-503 (Scalia, J., joined by Kennedy and Thomas, JJ., concurring in part and concurring in judgment), but (2) failing to satisfy any of those same concerns nonetheless permits overruling a longstanding statutory decision. Either those concerns are relevant or they are not.

* * *

The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles. I do not believe that the majority has shown new or changed conditions sufficient to warrant overruling a decision of such long standing. All ordinary stare decisis considerations indicate the contrary. For these reasons, with respect, I dissent.

EASTERBROOK, Circuit Judge.

In the six years since they filed this antitrust suit, the Chicago Bulls have won four National Basketball Association titles and an equal number of legal victories. Suit and titles are connected. The Bulls want to broadcast more of their games over WGN television, a “superstation” carried on cable systems nationwide. The Bulls’ popularity makes WGN attractive to these cable systems; the large audience makes WGN attractive to the Bulls. Since 1991 the Bulls and WGN have been authorized by injunction to broadcast 25 or 30 games per year. 754 F.Supp. 1336 (1991). We affirmed that injunction in 1992, see 961 F.2d 667, and the district court proceeded to determine whether WGN could carry even more games — and whether the NBA could impose a “tax” on the games broadcast to a national audience, for which other superstations have paid a pretty penny to the league. After holding a nine-week trial and receiving 512 stipulations of fact, the district court made a 30-game allowance permanent, 874 F.Supp. 844 (1995), and held the NBA’s fee excessive, 1995-2 Trade Cas. para. 71,253. Both sides appeal. The Bulls want to broadcast 41 games per year over WGN; the NBA contends that the antitrust laws allow it to fix a lower number (15 or 20) and to collect the tax it proposed. With apologies to both sides, we conclude that they must suffer through still more litigation.

Our 1992 opinion rejected the league’s defense based on the Sports Broadcasting Act, 15 U.S.C. §§ 1291-95, but our rationale implied that the NBA could restructure its contracts to take advantage of that statute. 961 F.2d at 670-72. In 1993 the league tried to do so, signing a contract that transfers all broadcast rights to the National Broadcasting Company. NBC shows only 26 games during the regular season, however, and the network contract allows the league and its teams to permit telecasts at other times. Every team received the right to broadcast all 82 of its regular-season games (41 over the air, 41 on cable), unless NBC telecasts a given contest. The NBA-NBC contract permits the league to exhibit 85 games per year on superstations. Seventy were licensed to the Turner stations (TBS and TNT), leaving 15 potentially available for WGN to license from the league. It disdained the opportunity. The Bulls sold 30 games directly to WGN, treating these as over-the-air broadcasts authorized by the NBC contract — not to mention the district court’s injunction. The Bulls’ only concession (perhaps more to *596the market’ than to the league) is that WGN does not broadcast a Bulls game at the same time as a basketball telecast on a Turner superstation.

Back in 1991 and 1992, the parties were debating whether the NBA’s television arrangements satisfied § 1 of the Sports Broadcasting Act, 15 U.S.C. § 1291. We held not, because the Act addresses the effects of “transfers” by a “league of clubs,” and the NBA had prescribed rather than “transferred” broadcast rights. The 1993 contract was written with that distinction in mind. The league asserted title to the copyright interests arising from the games and transferred all broadcast rights to NBC; it received some back, subject to contractual restrictions. Section 1 has been satisfied. But the league did not pay enough attention to § 2, 15 U.S.C. § 1292, which reads:

Section 1291 of this title shall not apply to any joint agreement described in the first sentence in such section which prohibits any person to whom such rights are sold or transferred from televising any games within any area, except within the home territory of a member club of the league on a day when such club is playing at home.

The NBA-NBC contract permits each club to license the broadcast of its games, and then, through the restriction on superstation broadcasts, attempts to limit telecasts to the teams’ home markets. Section 2 provides that this makes § 1 inapplicable, so the Sports Broadcasting Act leaves the antitrust laws in force.

Our prior opinion observed that the Sports Broadcasting Act, as a special-interest exception to the antitrust laws, receives a beady-eyed reading. A league has to jump through every hoop; partial compliance doesn’t do the trick. The NBA could have availed itself of the Sports Broadcasting Act by taking over licensing and by selling broadcast rights in the Bulls’ games to one of the many local stations in Chicago, rather than to WGN. The statute offered other options as well. Apparently the league did not want to use them, in part for tax reasons and in part because it sought to avoid responsibilities that come from being a licensor, rather than a regulator, of telecasts. Such business decisions are understandable and proper, but they have consequences under the Sports Broadcasting Act. By signing a contract with NBC that left the Bulls, rather than the league, with the authority to select the TV station that would broadcast the games, the NBA made its position under the Sports Broadcasting Act untenable. For as soon as the Bulls picked WGN, any effort to control cable system retransmission of the WGN signal tripped over § 2. The antitrust laws therefore apply, and we must decide what they have to say about the league’s effort to curtail superstation transmissions.

Three issues were left unresolved in 1992. One was whether the Bulls and WGN, as producers, suffer antitrust injury. 961 F.2d at 669-70. The NBA has not pursued this possibility, and as it is not jurisdictional (plaintiffs suffer injury in fact), we let the question pass. The other two issues are related. We concluded in 1992 that the district court properly condemned the NBA’s superstation rule under the quick-look version of the Rule of Reason, see National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984), because (a) the league did not argue that it should be treated as a single entity, and (b) the anti-free-riding justification for the su-perstation rule failed because a fee collected on nationally telecast games would compensate other teams (and the league as a whole) for the value of their contributions to the athletic contests being broadcast. 961 F.2d at 672-76. Back in the district court, the NBA argued that it is entitled to be treated as a single firm and therefore should possess the same options as other licensors of entertainment products; outside of court, the league’s Board of Governors adopted a rule requiring any club that licenses broadcast rights to superstations to pay a fee based on the amount the two Turner stations pay for games they license directly from the league.

Plaintiffs say that the single-entity argument was forfeited by its omission from the first appeal, but we think not. As our 1992 opinion observed, the case went to initial trial and decision within seven weeks, 961 F.2d at 676, a salutary development made possible in *597part by judicial willingness to entertain in subsequent rounds of the ease arguments that could not be fully developed in such short compass. If defendants in complex cases feared that any arguments omitted from the first phase of the case would be lost forever, they would drag their heels in order to ensure that nothing was overlooked, a step that would benefit no one. Cf. Schering Corp. v. Illinois Antibiotics Co., 89 F.3d 357 (7th Cir.1996). That is why we noted that the argument would be available in the ensuing stages of the case, 961 F.2d at 672-73, and why the district court properly entertained and resolved it on the merits.

The district court was unimpressed by the NBA’s latest arguments. It held that a sports league should not be treated as a single firm unless the teams have a “complete unity of interest” — which they don’t. The court also held the fee to be invalid. Our opinion compelled the judge to concede that a fee is proper in principle. 961 F.2d at 675-76. But the judge thought the NBA’s fee excessive. Instead of starting with the price per game it had negotiated with Turner (some $450,000), and reducing to account for WGN’s smaller number of cable outlets, as it did, the judge concluded that the league should have started with the advertising revenues WGN generated from retransmission on cable (the “outer market revenues”). Then it should have cut this figure in half, the judge held, so that the Bulls could retain “their share” of these revenues. The upshot: the judge cut the per game fee from roughly $138,000 to $39,400.

The district court’s opinion concerning the fee reads like the ruling of an agency exercising a power to regulate rates. Yet the antitrust laws do not deputize district judges as one-man regulatory agencies. The core question in antitrust is output. Unless a contract reduces output in some market, to the detriment of consumers, there is no antitrust problem. A high price is not itself a violation of the Sherman Act. See Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 9-10, 19-20, 22 n. 40, 99 S.Ct. 1551, 1557-58, 1562-63, 1564 n. 40, 60 L.Ed.2d 1 (1979); Buffalo Broadcasting Co. v. ASCAP, 744 F.2d 917 (2d Cir.1984). WGN and the Bulls argue that the league’s fee is excessive, unfair, and the like. But they do not say that it will reduce output. They plan to go on broadcasting 30 games, more if the court will let them, even if they must pay $138,000 per telecast. Although the fee exceeds WGN’s outer-market revenues, the station evidently obtains other benefits — for example, (i) the presence of Bulls games may increase the number of cable systems that carry the station, augmenting its revenues ’round the clock; (ii) WGN slots into Bulls games ads for its other programming; and (iii) many viewers will keep WGN on after the game and watch whatever comes next. Lack of an effect on output means that the fee does not have antitrust significance. Once antitrust issues are put aside, how much the NBA charges for national telecasts is for the league to resolve under its internal governance procedures. It is no different in principle from the question how much (if any) of the live gate goes to the visiting team, who profits from the sale of cotton candy at the stadium, and how the clubs divide revenues from merchandise bearing their logos and trademarks. Courts must respect a league’s disposition of these issues, just as they respect contracts and decisions by a corporation’s board of directors. Charles O. Finley & Co. v. Kuhn, 569 F.2d 527 (7th Cir.1978); cf. Baltimore Orioles, Inc. v. Major League Baseball Players Association, 805 F.2d 663 (7th Cir.1986).

According to the league, the analogy to a corporate board is apt in more ways than this. The NBA concedes that it comprises 30 juridical entities — 29 teams plus the national organization, each a separate corporation or partnership. The teams are not the league’s subsidiaries; they have separate ownership. Nonetheless, the NBA submits, it functions as a single entity, creating a single product (“NBA Basketball”) that competes with other basketball leagues (both college and professional), other sports (“Major League Baseball”, “college football”), and other entertainments such as plays, movies, opera, TV shows, Disneyland, and Las Vegas. Separate ownership of the clubs promotes local boosterism, which increases interest; each ownership group also has a powerful *598incentive to field a better team, which makes the contests more exciting and thus more attractive. These functions of independent team ownership do not imply that the league is a cartel, however, any more than separate ownership of hamburger joints (again useful as an incentive device, see Benjamin Klein & Lester F. Saft, The Law and Economics of Franchise Tying Contracts, 28 J.L. & Econ. 345 (1985)) implies that McDonald’s is a cartel. Whether the best analogy is to a system of franchises (no one expects a McDonald’s outlet to compete with other members of the system by offering pizza) or to a corporate holding company structure (on which see Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984)) does not matter from this perspective. The point is that antitrust law permits, indeed encourages, cooperation inside a business organization the better to facilitate competition between that organization and other producers. To say that participants in an organization may cooperate is to say that they may control what they make and how they sell it: the producers of Star Trek may decide to release two episodes a week and grant exclusive licenses to show them, even though this reduces the number of times episodes appear on TV in a given market, just as the NBA’s superstation rule doés.

The district court conceded this possibility but concluded that all cooperation among separately incorporated firms is forbidden by § 1 of the Sherman Act, except to the extent Copperweld permits. Copperweld, according to the district court, “is quite narrow, and rests solely upon the fact that a parent corporation and its wholly-owned subsidiary have a ‘complete unity of interest’ ” (quoting from 467 U.S. at 771, 104 S.Ct. at 2741). Although that phrase appears in Copperweld, the Court offered it as a statement of fact about the parent-subsidiary relation, not as a proposition of law about the limits of permissible cooperation. As a proposition of law, it would be silly. Even a single firm contains many competing interests. One division may make inputs for another’s finished goods. The first division might want to sell its products directly to the market, to maximize income (and thus the salary and bonus of the division’s managers); the second division might want to get its inputs' from the first at a low transfer price, which would maximize the second division’s paper profits. Conflicts are endemic in any multi-stage firm, such as General Motors or IBM, see Robert G. Ec-cles, Transfer Pricing as a Problem of Agency, in Principals and Agents: The Structure of Business 151 (Pratt & Zeckhauser eds. 1985), but they do not imply that these large firms must justify all of their acts under the Rule of Reason. Or consider a partnership for the practice of law (or accounting): some lawyers would be better off with a lockstep compensation agreement under which all partners with the same seniority have the same income, but others would prosper under an “eat what you kill” system that rewards bringing new business to the firm. Partnerships have dissolved as a result of these conflicts. Yet these wrangles — every bit as violent as the dispute among the NBA’s teams about how to generate and divide broadcast revenues — do not demonstrate that law firms are cartels, or subject to scrutiny under the Rule of Reason their decisions about where to open offices or which clients to serve.

Copperweld does not hold that only conflict-free enterprises may be treated as single entities. Instead it asks why the antitrust laws distinguish between unilateral and concerted action, and then assigns a parent-subsidiary group to the “unilateral” side in light of those functions. Like a single firm, the parent-subsidiary combination cooperates internally to increase efficiency. Conduct that “deprives the marketplace of the independent centers of decisionmaking that competition assumes”, 467 U.S. at 769, 104 S.Ct. at 2740, without the efficiencies that come with integration inside a firm, go on the “concerted” side of the line. And there are entities in the middle: “mergers, joint ventures, and various vertical agreements” {id. at 768, 104 S.Ct. at 2740) that reduce the number of independent decisionmakers yet may improve efficiency. These are assessed under the Rule of Reason. We see no reason why a sports league cannot be treated as a single firm in this typology. It produces a single product; cooperation is essential (a *599league with one team would be like one hand clapping); and a league need not deprive the market of independent centers of decision-making. The district court’s legal standard was therefore incorrect, and a judgment resting on the application of that standard is flawed.

Whether the NBA itself is more like a single firm, which would be analyzed only under § 2 of the Sherman Act, or like a joint venture, which would be subject to the Rule of Reason under § 1, is a tough question under Copperweld. It has characteristics of both. Unlike the colleges and universities that belong to the National Collegiate Athletic Association, which the Supreme Court treated as a joint venture in NCAA, the NBA has no existence independent of sports. It makes professional basketball; only it can malte “NBA Basketball” games; and unlike the NCAA the NBA also “makes” teams. After this ease was last here the NBA created new teams in Toronto and Vancouver, stocked with players from the 27 existing teams plus an extra helping of draft choices. All of this makes the league look like a single firm. Yet the 29 clubs, unlike GM’s plants, have the right to secede (wouldn’t a plant manager relish that!), and rearrange into two or three leagues. Professional sports leagues have been assembled from clubs that formerly belonged to other leagues; the National Football League and the NBA fit that description, and the teams have not surrendered their power to rearrange things yet again. Moreover, the league looks more or less like a firm depending on which facet of the business one examines. See Phillip E. Areeda, 7 Antitrust Law para. 1478d (1986). From the perspective of fans and advertisers (who use sports telecasts to reach fans), “NBA Basketball” is one product from a single source even though the Chicago Bulls and Seattle Supersonies are highly distinguishable, just as General Motors is a single firm even though a Corvette differs from a Chevrolet. But from the perspective of college basketball players who seek to sell their skills, the teams are distinct, and because the human capital of players is not readily transferable to other sports (as even Michael Jordan learned) the league looks more like a group of firms acting as a monopsony. That is why the Supreme Court found it hard to characterize the National Football League in Brown v. Pro Football, Inc., — U.S. -, -, 116 S.Ct. 2116, 2126, 135 L.Ed.2d 521 (1996): “the clubs that make up a professional sports league are not completely independent economic competitors, as they depend upon a degree of cooperation for economic survival- In the present context, however, that circumstance makes the league more like a single bargaining employer, which analogy seems irrelevant to the legal issue before us.” To say that the league is “more like a single bargaining employer” than a multi-employer unit is not to say that it necessarily is one, for every purpose.

The league wants us to come to a conclusion on this subject (six years of litigation is plenty!) and award it the victory. Yet as we remarked in 1992, “Characterization is a creative rather than exact endeavor.” 961 F.2d at 672. The district court plays the leading role, followed by deferential appellate review. We are not authorized to announce and apply our own favored characterization unless the law admits of only one choice. The Supreme Court’s ambivalence in Brown, like the disagreement among judges on similar issues, implies that more than one characterization is possible, and therefore that the district court must revisit the subject using the correct legal approach.

Most courts that have asked whether professional sports leagues should be treated like single firms or like joint ventures have preferred the joint venture characterization. E.g., Sullivan v. NFL, 34 F.3d 1091 (1st Cir.1994); North American Soccer League v. NFL, 670 F.2d 1249 (2d Cir.1982); Smith v. Pro Football, Inc., 593 F.2d 1173, 1179 (D.C.Cir.1978). But Justice Rehnquist filed a strong dissent from the denial of certiorari in the soccer case, arguing that “the league competes as a unit against other forms of entertainment”, NFL v. North American Soccer League, 459 U.S. 1074, 1077, 103 S.Ct. 499, 500, 74 L.Ed.2d 639 (1982), and the fourth circuit concluded that the Professional Golf Association should be treated as one firm for antitrust purposes, even though that sport is less economically integrated than the NBA. Seabury Management, Inc. v. PGA of *600 America, Inc., 878 F.Supp. 771 (D.Md.1994), affirmed in relevant part, 52 F.3d 322 (4th Cir.1995). Another court of appeals has treated an electric cooperative as a single firm, Mt. Pleasant v. Associated Electric Cooperative, 838 F.2d 268 (8th Cir.1988), though the co-op is less integrated than a sports league. These cases do not yield a clear principle about the proper characterization of sports leagues — and we do not think that Copperweld imposes one “right” characterization. Sports are sufficiently diverse that it is essential to investigate their organization and ask Copperweld’s functional question one league at a time — and perhaps one facet of a league at a time, for we do not rule out the possibility that an organization such as the NBA is best understood as one firm when selling broadcast rights to a network in competition with a thousand other producers of entertainment, but is best understood as a joint venture when curtailing competition for players who have few other market opportunities. Just as the ability of McDonald’s franchises to coordinate the release of a new hamburger does not imply their ability to agree on wages for counter workers, so the ability of sports teams to agree on a TV contract need not imply an ability to set wages for players. See Jesse W. Markham & Paul V. Teplitz, Baseball Economics and Public Policy (1981); Arthur A. Fleisher III, Brian L. Goff & Robert D. Tollison, The National Collegiate Athletic Association: A Study in Cartel Behavior (1992).

However this inquiry may come out ■ on remand, we are satisfied that the NBA is sufficiently integrated that its superstation rules may not be condemned without analysis under the full Rule of Reason. We affirmed the district court’s original injunction after applying the “quick look” version because the district court had characterized the NBA as something close to a cartel, and the league had not then made a Copperweld argument. After considering this argument, we conclude that when acting in the broadcast market the NBA is closer to a single firm than to a group of independent firms. This means that plaintiffs cannot prevail without establishing that the NBA possesses power in a relevant market, and that its exercise of this power has injured consumers. Even in the NCAA case, the first to use a bobtailed Rule of Reason, see Diane P. Wood, Antitrust 1984: Five Decisions in Search of a Theory, 1984 Sup.Ct.Rev. 69, 110-12, the Court satisfied itself that the NCAA possesses market power. The district court had held that there is a market in college football telecasts on Saturday afternoon in the fall, a time when other entertainments do not flourish but college football dominates. Only after holding that this was not clearly erroneous did the Court cast any burden of justification on the NCAA. 468 U.S. at 111-13, 104 S.Ct. at 2965-67; see also International Boxing Club v. United States, 358 U.S. 242, 79 S.Ct. 245, 3 L.Ed.2d 270 (1959).

Substantial market power is an indispensable ingredient of every claim under the full Rule of Reason. Digital Equipment Corp. v. Uniq Digital Technologies, Inc., 73 F.3d 756, 761 (7th Cir.1996); Sanjuan v. American Board of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir.1994); Hardy v. City Optical, Inc., 39 F.3d 765, 767 (7th Cir.1994); Chicago Professional Sports Limited Partnership v. National Basketball Association 961 F.2d 667, 673 (7th Cir.1992); Will v. Comprehensive Accounting Corp., 776 F.2d 665, 670-74 (7th Cir.1985); Carl Sandburg Village Condominium Ass’n No. 1 v. First Condominium Development Co., 758 F.2d 203, 210 (7th Cir.1985). During the lengthy trial of this case, the NBA argued that it lacks market power, whether the buyers are understood as the viewers of games (the way the district court characterized things in NCAA) or as advertisers, who use games to attract viewers (the way the Supreme Court characterized a related market in Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953)). College football may predominate on Saturday afternoons in the fall, but there is no time slot when NBA basketball predominates. The NBA’s season lasts from November through June; games are played seven days a week. This season overlaps all of the other professional and college sports, so even sports fanatics have many other options. From advertisers’ perspective — likely the right one, because advertisers are the ones who actually pay for telecasts — the mar*601ket is even more competitive. Advertisers seek viewers of certain demographic characteristics, and homogeneity is highly valued. A homogeneous audience facilitates targeted ads: breakfast cereals and toys for cartoon shows, household appliances and detergents for daytime soap operas, automobiles and beer for sports. If the NBA assembled for advertisers an audience that was uniquely homogeneous, or had especially high willingness-to-buy, then it might have market power even if it represented a small portion of air-time. The parties directed considerable attention to this question at trial, but the district judge declined to make any findings of fact on the subject, deeming market power irrelevant. As we see things, market power is irrelevant only if the NBA is treated as a single firm under Copperweld; and given the difficulty of that issue, it may be superior to approach this as a straight Rule of Reason ease, which means starting with an inquiry into market power and, if there is power, proceeding to an evaluation of competitive effects.

Perhaps this can be accomplished using the materials in the current record. Although the judge who presided at the trial died earlier this year, the parties may be willing to agree that an assessment of credibility is unnecessary, so that a new judge could resolve the dispute after reviewing the transcript, exhibits, and stipulations, and entertaining argument. See Fed.R.Civ.P. 63. At all events, the judgment of the district court is vacated, and the ease is remanded for proceedings consistent with this opinion. Pending further proceedings in the district court or agreement among the parties, the Bulls and WGN must respect the league’s (and the NBC contract’s) limitations on the maximum number of superstation telecasts.

CUDAHY, Circuit Judge,

concurring:

Although I agree with the majority’s firm conclusion that the “quick look” doctrine does not apply to these complex facts, I must indicate some differences in significant matters that are reached in the course of the majority opinion. Thus, in arriving at its conclusion that a full Rule of Reason analysis is required, the majority seems to be extrapolating from its discussion of whether the NBA may be a “single entity.” Classification as a “single entity” means immunity from Sherman Act, § 1, considerations, a distinction much more drastic than the conclusion that the conduct in question here deserves a “quizzical look” rather than a mere “quick look.” So, although it is not entirely clear, the majority seems to be saying that, since the NBA may be a single entity, its conduct certainly merits more than a quick look. Perhaps so, but, since the single entity question is unresolved, I would prefer to address the problem from a slightly different direction.

For the “quick look” approach should have a narrow application, reflecting its recent and sharply delimited origin in the NCAA case. Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of the Univ. of Oklahoma, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984). That case, involving a loose alliance of colleges which had agreed on price and output restrictions on broadcast of their football games, held that under some circumstances a full analysis of market power is not required to determine that an agreement is anticom-petitive. This framework should not be extended to the more highly integrated and economically unitary NBA.

The colleges which made up the NCAA were entirely separate economic entities, competing with each other in many areas unrelated to their athletic encounters. There is, of course, a sort of continuum of economic integration, with entities at different points along the continuum warranting differing levels of antitrust concern. At one end are loose alliances of economic actors having independent concerns (like the NCAA), the anticompetitive nature of whose agreements is obvious from a “quick look.” At the other end are fully-integrated entities in which the economic interests of the participants are so completely aligned that antitrust scrutiny of their policies is unnecessary except where § 2 of the Sherman Act is violated. In the center is the broad range of organizations (generally like the NBA) whose separate constituents are individually owned but are closely but not completely tied economically to their organizations. These entities are *602capable of anticompetitive agreements, but a full Rule of Reason analysis is necessary to ensure that productive cooperation is not mistaken for anticompetitive conduct. Single entity aside, there is certainly enough concern here for the efficiency of the league as a competitor in the entertainment market to require full Rule of Reason analysis.

On a more clear-cut point, I think it was appropriate for Judge Will to examine the size of the NBA’s fee for the WGN broadcasts of Bulls games. In this connection, the majority rejects considerations of fairness “and the like” and asserts that, “The core question in antitrust is output.” Maj. Op. at 597. Under the reductive view that prevails in antitrust matters, this somewhat grating aphorism appears to be correct. If efficiency (or consumer welfare) is the be-all and end-all, more seems to be better no matter how the more is distributed. But taking these principles as a given, it is still difficult for me to understand how output can be disjoined from cost under the circumstances of this case. In fact, Judge Will found as a fact that, “[the NBA’s proposed fee] may well at some future date decrease output and distribution of Bulls games on WGN_” Dist. Ct. Findings of Fact, Conclusions of Law and Opinion, NBA App. at 77a. But, particularly since output is currently constrained to 30 games, rather than whatever the market would produce, it is difficult to ascertain whether the fee is high enough to reduce output below the competitive level. Since it is not clear to me that the magnitude of Judge Will’s adjustment was justified by antitrust considerations alone, I would include this issue with other matters to be considered on remand.

That said, I turn to the single entity issue, where the discussion of the majority is deserving of comment both as to substance and to procedure. My first reservation is procedural and concerns whether this issue may be reached at all. The majority announces an exception — without precedent to my knowledge — from the usual rules of waiver of issues on appeal. The exception applies, according to the majority, to “defendants in complex cases” without elaboration. Why we should have more forgiving policies for highly skilled and highly compensated counsel in big corporate eases than for pro se litigants or appointed counsel of perhaps lesser qualification is certainly unclear to me. Our earlier opinion in this case states that “the NBA did not contend in the district court that the NBA is a single entity, let alone that it is a single entity as a matter of law.” Chicago Professional Sports Ltd. Partnership v. National Basketball Ass’n, 961 F.2d 667, 673 (7th Cir.1992), cert. denied, 506 U.S. 954, 113 S.Ct. 409, 121 L.Ed.2d 334 (1992). We also stated that:

Characterization is a creative rather than exact endeavor. Appellate review is accordingly deferential. The district court held a trial, heard the evidence, and concluded that the best characterization of the NBA is the third we have mentioned: a joint venture in the production of games but more like a cartel in the sale of its output. Whether this is the best characterization of professional sports is a subject that has divided courts and scholars for some years, making it hard to characterize the district judge’s choice as clear error.

Id. at 672. No one seems to have argued that the basic structure of the NBA has changed since that opinion. I think, therefore, that, despite dicta in our earlier opinion speculating that “[p]erhaps the parties will join issue more fully [regarding the single entity status of the NBA] in the proceedings still to come in the district court,” id. at 673, there is a real question whether we can reach the single entity issue — fascinating though it may be.

However, on the assumption that the “single entity” question may be reached (and presumably will be reached on remand) a number of considerations will be relevant. Assuming as I must that the sole goal of antitrust is efficiency or, put another way, the maximization of total societal wealth, the question whether a sports league is a “single entity” turns on whether the actions of the league have any potential to lessen economic competition among the separately owned *603teams.1 The fact that teams compete on the floor is more or less irrelevant to whether they compete economically — it is only their economic competition which is germane to antitrust analysis. In principle, of course, a sports league could actually be a single firm and the individual teams could be under unified ownership and management. Such a firm would, of course, be subject to scrutiny only under § 2 of the Sherman Act and not under § 1. From the point of view of wealth maximization, a league of independently-owned teams, if it is no more likely than a single firm to make inefficient management decisions, should be treated as a single entity. The single entity question thus would boil down to “whether member clubs of a sports league have legitimate economic interests of their own, independent of the league and each other.” Sports Leagues Revisited at 127. It follows that a sports league, no matter what its ownership structure, can make inefficient decisions only if the individual teams have some chance of economic gain at the expense of the league.

Another form of the same question is whether a sports league is more like a single firm or like a joint venture. With efficiency the sole criterion, a joint venture warrants scrutiny for at least two reasons — (1) the venture could possess market power with respect to the jointly produced product (essentially act like a single firm with monopoly power) or (2) the fact that the venturers remain competitors in other arenas might either distort the way the joint product is managed or allow the venturers to use the joint product as a smoke-screen behind which to cut deals to reduce competition in the other arenas. The most convincing “single entity” argument involving the NBA is that the teams produce only the joint product of “league basketball” and that there is thus no significant economic competition between them. NBA Br. at 25-27. If this is the ease, the argument goes, type (2) concerns drop out and only type (1) concerns remain. • Type (1) concerns, of course, are exactly those appropriate for § 2 analysis of a single firm.

There are, however, flaws in this single entity argument. The assumption underlying it is that league sports are a different and more desirable product than a disorganized collection of independently arranged games between teams. For this reason, it is contended that joining sports teams into a league is efficiency-enhancing and desirable. I will accept this premise.2 It is perhaps true, as argued by the NBA and many commentators, that sports are different from many joint ventures because the individual teams cannot, even in principle, produce the product — league sports. However, the fact that cooperation is necessary to produce league basketball does not imply that the league will necessarily produce its product in the most efficient fashion. There is potential for inefficient decisionmaking regarding the joint product of “league basketball” even when the individual teams engage in no economic activity outside of the league. This potential arises because the structure of the league is such that all “owners” of the league must be “owners” of individual teams and decisions are made by a vote of the teams. This means that the league will not necessarily make efficient decisions about the number of teams fielded or, more generally, the competitive balance among teams. Thus, the fact that several teams are required to make a league does not necessarily imply that the current makeup of the league is the most desirable or “efficient” one.

The NBA’s justification for its restriction of Bulls broadcasts centers on the need to maintain a competitive balance among teams. *604Such a balance is needed to ensure that the league provides high quality entertainment throughout the season so as to optimize competition with other forms of entertainment. Competitive balance is not the only contributor to the entertainment value of NBA basketball, however. Fan enjoyment of league sports depends on both the opportunity to identify with a local or favorite team and the thrill of watching the best quality of play. A single firm owning all of the teams would presumably arrange for the number of teams and their locations efficiently to maximize fan enjoyment of the league season. There is, however, no reason to expect that the current team owners will necessarily make such decisions efficiently, given their individual economic interests in the financial health of their own teams.

It’s not surprising that far-flung fans want to watch the Bulls’ superstars on a superstation. The NBA argues that the broadcasting of more Bulls games to these fans will , disturb the competitive balance among teams. However, one can also speculate that, since sports viewing has become more of a television activity than an “in the flesh” activity, these fans might prefer to have a league composed of fewer, better teams (like the Bulls). If this were the case, league policies designed to shore up all of the current teams would be inefficient. The point, of course, is not that this speculation is necessarily correct, but that the efficient number of teams (or, more generally, the efficient competitive balance) may not be obtained as a matter of course given the current league ownership framework.

The team owners thus retain independent economic interests. This would be the case even if they did not compete for the revenues of the league. Teams do compete for broadcast revenues, however. “A conflicting economic interest between the league and an individual club can exist only when league revenues are distributed unequally among the member clubs based on club participation in the games generating the revenue.” Sports Leagues and the Sherman Act at 297-99. When teams receive a disproportionate share of the broadcast revenues generated by their own games, such a situation exists.

The analysis of this issue is tricky, however, since decisions about how to allocate broadcasting revenues are made by the league. It may be that “member clubs of a league do not have any legitimate independent economic interests in the league product” and “each team has an ownership interest in every game” (including an equal a priori ownership interest in the broadcast rights to every game). Sports Leagues Revisited at 135-36. If this assumption is correct, then whatever arrangements for revenue distribution the league decides to make will be, like bonuses to successful salespeople in an ordinary firm, presumptively efficient. If, however, broadcast rights inure initially to the two teams participating in a particular game and if, as is certainly the case, some games are more attractive to fans than others, the league cannot be presumed to have made decisions allocating those broadcast revenues efficiently.

The analogy, within the context of an ordinary firm, is to allow the salespeople to vote on the bonuses each is to get. Each salesperson has some incentive, of course, to promote the overall efficiency of the firm on which his or her salary, or perhaps the value of his or her firm stock, depends and therefore to award the larger bonuses to the most productive salespersons. However, in this scenario each salesperson has two ways of maximizing personal wealth — increasing the overall efficiency of the firm and redistributing income within the firm.3 The result of *605the vote might not be to distribute bonuses in the most efficient fashion. The potential for this type of inefficiency is particularly great when, as with the NBA, the league is “the only game in town” so that a team does not have the option of going elsewhere if it is not receiving revenues commensurate with its contribution to the overall league product.4 In any event, a group of team owners who do not share all revenues from all games might well make decisions that do not maximize the profit of the league as a whole.5

As this discussion demonstrates, determining whether the potential for inefficient decisionmaking survives within a joint venture because of the independent economic interests of the partners is extraordinarily complex and confusing. For this reason, a simple, if not courageous, way out of the problem might be to establish a legal presumption that a single entity cannot exist without single ownership. To avoid the complexities and confusions of attempted analysis, one might simply ordain that combinations that lack diverse economic interests should opt for joint ownership of a single enterprise to avoid antitrust problems. On the other hand, judges may want to play economist to the extent of resisting simplifying assumptions.

In any event, sports leagues argue that they must maintain independent ownership of the teams because separate ownership enhances the appearance of competitiveness demanded by fans. But the leagues cannot really expect the courts to aid them in convincing consumers that competition exists if it really does not. If consumers want economic competition between sports teams, then independent ownership and preservation of independent economic interests is likely an efficient choice for a sports league. But that choice, as with other joint ventures, brings with it the attendant antitrust risks. The NBA cannot have it both ways.

Relating all of this to the majority’s treatment of the single entity issue, I see two problems with the majority analysis. First, as already noted, divorcing the question of single entity from the question of ownership is likely to lead to messy and inconsistent application of antitrust law. The bottom line may be that the inquiry into whether separate economic interests are maintained by the participants in a joint enterprise is likely to be no easier than a full Rule of Reason analysis.

Second, some of the majority’s discussion of independent interests is puzzling. The majority contends that the district court “concluded that all cooperation among separately incorporated firms is forbidden by § 1 of the Sherman Act, except to the extent Copperweld permits.” Maj. Op. at 598, citing Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771, 104 S.Ct. 2731, 2741-42, 81 L.Ed.2d 628 (1984). Copperweld concluded that a parent corporation and its wholly-owned subsidiary have a “complete unity of interest” and hence should be treat*606ed as a single entity. Here the district court simply concluded that the NBA, because it involved cooperation between separately-owned teams, was subject to antitrust analysis. Dist.Ct. Findings of Fact, Conclusions of Law and Opinion, NBA App. at 34a. This conclusion is a far cry from deciding that all cooperation among separately incorporated firms is, forbidden.

I also cannot agree with the majority’s analysis of the type of “unity of interest” required for single entity status. The majority states, Maj. Op. at 598, that “[e]ven a single firm contains many competing interests.” The opinion goes on to cite the competition for salary and bonuses between division managers as an example. However, when Copperweld talks about unity of interests in the single entity context, I think it must be taken to mean unity of economic interests of the decisionmakers. See Copperweld, 467 U.S. at 769, 104 S.Ct. at 2740-41. A single firm does not evidence diverse economic interests to the outside world because final decisions are made by the owners or stockholders, who care only about the overall performance of the firm. Only because this is the case can single firms be assumed to behave in the canonical profit-maximizing fashion. The diverse interests mentioned in the majority opinion seem as irrelevant to the antitrust analysis as is the on-court rivalry between teams in the NBA.

Thus, when Copperweld refers to conduct that “deprives the marketplace of the independent centers of decisionmaking that competition assumes,” it does not refer to “deci-sionmakers” whose economic independence is only potential. The antitrust issue is really whether, as a result of some cooperative venture, economic interests which remain independent coordinate their decisions. As Copperweld notes, “[t]he officers of a single firm are not separate economic actors pursuing separate economic interests....” Id. Therefore, their joint decisionmaking is of no antitrust concern. Employees or divisions within a firm, on the other hand, may remain separate economic actors pursuing separate economic interests but they do not make the final decisions governing the firm’s operations. They may compete for shares of the firm’s revenues, but they do not decree how that revenue will be shared. Thus their conflict or cooperation does not pose antitrust issues either. Joint ventures, on the other hand, are subject to antitrust scrutiny precisely because separate economic interests are joined in decisionmaking, with the potential for distorted results.

As long as teams are individually owned and revenue is not shared in fixed proportion, the teams both retain independent economic interests and make decisions in concert. Where this is the case, there is a strong argument that sports leagues should be treated as joint ventures rather than single entities because there remains a potential that league policy will be made to satisfy the independent economic interests of some group of teams, rather than to maximize the overall performance of the league. Thus, it is possible, if more Bulls games were broadcast, league profits might increase. But, if the revenue from the broadcast of Bulls games goes disproportionately to the Bulls, the other league members may not vote for this more efficient result.

There may, of course, be cases in which independent ownership of the partners in a joint venture does not pose any real possibility of inefficient decisionmaking. This would be the case if the parties did not compete in any other arena and if all revenues were shared in fixed proportions among the partners. In general, however, a plausible case can be made for the proposition that independent ownership should presumptively preclude treatment as a single entity. This certainly does not mean, of course, that “all cooperation among separately incorporated firms is forbidden by § 1 of the Sherman Act,” Maj. Op. at 598. It would mean only that such cooperation must ordinarily be justified under the Rule of Reason. Justification might not be more difficult than the elusive search for treatment as a single entity-

Mr. Justice Stevens

delivered the opinion of the Court.

This is a civil antitrust case brought by the United States to nullify an association’s canon of ethics prohibiting competitive bidding by its members. The question is whether the canon 'may be justified under the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1 et seq. (1976 ed.), because it was adopted by members of a learned profession for the purpose of minimizing the risk that competition would produce inferior engineering work endangering the public safety. The District Court rejected this justification without making any findings on the likelihood that competition would produce the dire consequences foreseen by the association.1 The Court of Appeals affirmed.2 We granted certiorari to decide whether the District Court should have considered the factual basis for the proffered justification before rejecting it. 434 U. S. 815. Because we are satisfied that the asserted defense rests on a fundamental misunderstanding of the Rule of Reason frequently applied in antitrust litigation, we affirm.

I

Engineering is an important and learned profession. There are over 750,000 graduate engineers in the United States, of whom about 325,000 are registered as professional engineers. Registration requirements vary from State to State, but usually require the applicant to be a graduate engineer with at least *682four years of practical experience and to pass a written examination. About half of those who are registered engage in consulting engineering on a fee basis. They perform services in connection with the study, design, and construction of all types of improvements to real property — bridges, office buildings, airports, and factories are examples. Engineering fees, amounting to well over $2 billion each year, constitute about 5% of total construction costs. In any given facility, approximately 50% to 80% of the cost of construction is the direct result of work performed by an engineer concerning the systems and equipment to be incorporated in the structure.

The National Society of Professional Engineers (Society) was organized in 1935 to deal with the nontechnical aspects of engineering practice, including the promotion of the professional, social, and economic interests of its members. Its present membership of 69,000 resides throughout the United States and in some foreign countries. Approximately 12,000 members are consulting engineers who offer their services to governmental, industrial, and private clients. Some Society members are principals or chief executive officers of some of the largest engineering firms in the country.

The charges of a consulting engineer may be computed in different ways. He may charge the client a percentage of the cost of the project, may set his fee at his actual cost plus overhead plus a reasonable profit, may charge fixed rates per hour for different types of work, may perform an assignment for a specific sum, or he may combine one or more of these approaches. Suggested fee schedules for particular types of services in certain areas have been promulgated from time to time by various local societies. This case does not, however, involve any claim that the National Society has tried to fix specific fees, or even a specific method of calculating fees. It involves a charge that the members of the Society have unlawfully agreed to refuse to negotiate or even to discuss the question of fees until after a prospective client has selected the *683engineer for a particular project. Evidence of this agreement is found in § 11 (c) of the Society’s Code of Ethics, adopted in July 1964.3

The District Court found that the Society’s Board of Ethical Review has uniformly interpreted the “ethical rules against competitive bidding for engineering services as prohibiting the submission of any form of price information to a prospective customer which would enable that customer to make a price comparison on engineering services.” 4 If the client requires that such information be provided, then § 11 (c) imposes an *684obligation upon the engineering firm to withdraw from consideration for that job. The Society’s Code of Ethics thus “prohibits engineers from both soliciting and submitting such price information,” 389 F. Supp. 1193, 1206 (DC 1974),5 and seeks to preserve the profession’s “traditional” method of selecting professional engineers. Under the traditional method, the client initially selects an engineer on the basis of background and reputation, not price.6

In 1972 the Government filed its complaint against the Society alleging that members had agreed to abide by canons of ethics prohibiting the submission of competitive bids for engineering services and that, in consequence, price competition among the members had been suppressed and customers had been deprived of the benefits of free and open competition. The complaint prayed for an injunction terminating the unlawful agreement.

In its answer the Society admitted the essential facts alleged by the Government and pleaded a series of affirmative defenses, only one of which remains in issue. In that defense, the Society averred that the standard set out in the Code of Ethics was reasonable because competition among professional engineers was contrary to the public interest. It was averred that it would be cheaper and easier for an engineer “to design and specify inefficient and unnecessarily expensive structures and *685methods of construction.” 7 Accordingly, competitive pressure to offer engineering services at the lowest possible price would adversely affect the quality of engineering. Moreover, the practice of awarding engineering contracts to the lowest bidder, regardless of quality, would be dangerous to the public health, safety, and welfare. For these reasons, the Society claimed that its Code of Ethics was not an “unreasonable restraint of interstate trade or commerce.”

The parties compiled a voluminous discovery and trial record. The District Court made detailed findings about the *686engineering profession, the Society, its members’ participation in interstate commerce, the history of the ban on competitive bidding, and certain incidents in which the ban appears to have been violated or enforced. The District Court did not, however, make any finding on the question whether, or to what extent, competition had led to inferior engineering work which, in turn, had adversely affected the public health, safety, or welfare. That inquiry was considered unnecessary because the court was convinced that the ethical prohibition against competitive bidding was “on its face a tampering with the price structure of engineering fees in violation of § 1 of the Sherman Act.” 389 F. Supp., at 1200.

Although it modified the injunction entered by the District Court,8 the Court of Appeals affirmed its conclusion that the agreement was unlawful on its face and therefore “illegal without regard to claimed or possible benefits.” 181 U. S. App. D. C. 41, 47, 556 F. 2d 978, 984.

II

In Goldfarb v. Virginia State Bar, 421 U. S. 773, the Court held that a bar association’s rule prescribing minimum fees for legal services violated § 1 of the Sherman Act. In that opinion the Court noted that certain practices by members of a learned profession might survive scrutiny under the Rule of Reason even though they would be viewed as a violation of the Sherman Act in another context. The Court said:

“The fact that a restraint operates upon a profession as distinguished from a business is, of course, relevant in determining whether that particular restraint violates the *687Sherman Act. It would be unrealistic to view the practice of professions as interchangeable with other business activities, and automatically to apply to the professions antitrust concepts which originated in other areas. The public service aspect, and other features of the professions may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently. We intimate no view on any other situation than the one with which we are confronted today.” 421 U. S., at 788-789, n. 17.

Relying heavily on this footnote, and on some of the major cases applying a Rule of Reason — principally Mitchel v. Reynolds, 1 P. Wms. 181, 24 Eng. Rep. 347 (1711); Standard Oil Co. v. United States, 221 U. S. 1; Chicago Board of Trade v. United States, 246 U. S. 231; and Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36 — petitioner argues that its attempt to preserve the profession’s traditional method of setting fees for engineering services is a reasonable method of forestalling the public harm which might be produced by unrestrained competitive bidding. To evaluate this argument it is necessary to identify the contours of the Rule of Reason and to discuss its application to the kind of justification asserted by petitioner.

A. The Rule of Reason.

One problem presented by the language of § 1 of the Sherman Act is that it cannot mean what it says. The statute says that “every” contract that restrains trade is unlawful.9 But, as Mr. Justice Brandéis perceptively noted, restraint is the very *688essence of every contract;10 read literally, § 1 would outlaw the entire body of private contract law. Yet it is that body of law that establishes the enforceability of commercial agreements and enables competitive markets — indeed, a competitive economy — to function effectively.

Congress, however, did not intend the text of the Sherman Act to delineate the full meaning of the statute or its application in concrete situations. The legislative history makes it perfectly clear that it expected the courts to give shape to the statute’s broad mandate by drawing on common-law tradition.11 The Rule of Reason, with its origins in common-law precedents long antedating the Sherman Act, has served that purpose. It has been used to give the Act both flexibility and definition, and its central principle of antitrust analysis has remained constant. Contrary to its name, the Rule does not open the field of antitrust inquiry to any argument in favor of a challenged restraint that may fall within the realm of reason. Instead, it focuses directly on the challenged restraint’s impact on competitive conditions.

This principle is apparent in even the earliest of cases applying the Rule of Reason, Mitchel v. Reynolds, supra. Mitchel involved the enforceability of a promise by the seller of a bakery that he would not compete with the purchaser of his business. The covenant was for a limited time and applied only to the area in which the bakery had operated. It was therefore upheld as reasonable, even though it deprived the *689public of the benefit of potential competition. The long-run benefit of enhancing the marketability of the business itself — and thereby providing incentives to develop such an enterprise — outweighed the temporary and limited loss of competition.12

The Rule of Reason suggested by Mitchel v. Reynolds has been regarded as a standard for testing the enforceability of covenants in restraint of trade which are ancillary to a legitimate transaction, such as an employment contract or the sale of a going business. Judge (later Mr. Chief Justice) Taft so interpreted the Rule in his classic rejection of the argument that competitors may lawfully agree to sell their goods at the same price as long as the agreed-upon price is reasonable. United States v. Addyston Pipe & Steel Co., 85 F. 271, 282-283 (CA6 1898), aff'd, 175 U. S. 211. That case, and subsequent decisions by this Court, unequivocally foreclose an interpretation of the Rule as permitting an inquiry into the reasonableness of the prices set by private agreement.13

The early cases also foreclose the argument that because of the special characteristics of a particular industry, monopolistic arrangements will better promote trade and commerce than competition. United States v. Trans-Missouri Freight Assn., 166 U. S. 290; United States v. Joint Traffic Assn., 171 U. S. 505, 573-577. That kind of argument is properly addressed to Congress and may justify an exemption from the statute for *690specific industries,14 but it is not permitted by the Rule of Reason. As the Court observed in Standard Oil Co. v. United States, 221 U. S., at 65, “restraints of trade within the purview of the statute . . . [can]not be taken out of that category by indulging in general reasoning as to the expediency or non-expediency of having made the contracts or the wisdom or want of wisdom of the statute which prohibited their being made.” The test prescribed in Standard Oil is whether the challenged contracts or acts “were unreasonably restrictive of competitive conditions.” Unreasonableness under that test could be based either (1) on the nature or character of the contracts, or (2) on surrounding circumstances giving rise to the inference or presumption that they were intended to restrain trade and enhance prices.15 Under either branch of the test, the inquiry is confined to a consideration of impact on competitive conditions.16

*691In this respect the Rule of Reason has remained faithful to its origins. From Mr. Justice Brandéis’ opinion for the Court in Chicago Board of Trade to the Court opinion written by Mr. Justice Powell in Continental T. V., Inc., the Court has adhered to the position that the inquiry mandated by the Rule of Reason is whether the challenged agreement is one that promotes competition or one that suppresses competition. “The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.” 246 U. S., at 238, quoted in 433 U. S., at 49 n. 15.17

*692There are, thus, two complementary categories of antitrust analysis. In the first category are agreements whose nature and necessary effect are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality — they are “illegal per se." In the second category are agreements whose competitive effect can only be evaluated by analyzing the facts peculiar to the business, the history of the restraint, and the reasons why it was imposed. In either event, the purpose of the analysis is to form a judgment about the competitive significance of the restraint; it is not to decide whether a policy favoring competition is in the public interest, or in the interest of the members of an industry. Subject to exceptions defined by statute, that policy decision has been made by the Congress.18

B. The Ban on Competitive Bidding.

Price is the “central nervous system of the economy,” United States v. Socony-Vacuum Oil Co., 310 U. S. 150, 226 n. 59, and an agreement that “interfere[s] with the setting of price by free market forces” is illegal on its face. United States v. Container Corp., 393 U. S. 333, 337. In this case we are presented with an agreement among competitors to refuse to discuss prices with potential customers until after negotiations have" resulted in the initial selection of an engineer. While this is not price fixing as such, no elaborate industry analysis is required to demonstrate the anticompetitive character of such an agreement. It operates as an absolute ban on competitive bidding, applying with equal force to both complicated and simple projects and to both inexperienced and sophisticated customers. As the District Court found, the ban “impedes the ordinary give and take of the market place,” and substantially deprives the customer of “the ability to utilize *693and compare prices in selecting engineering services.” 404 F. Supp. 457, 460. On its face, this agreement restrains trade within the meaning of § 1 of the Sherman Act.

The Society’s affirmative defense confirms rather than refutes the anticompetitive purpose and effect of its agreement. The Society argues that the restraint is justified because bidding on engineering services is inherently imprecise, would lead to deceptively low bids, and would thereby tempt individual engineers to do inferior work with consequent risk to public safety and health.19 The logic of this argument rests on the assumption that the agreement will tend to maintain the price level; if it had no such effect, it would not serve its intended purpose. The Society nonetheless invokes the Rule of Reason, arguing that its restraint on price competition ultimately inures to the public benefit by preventing the *694production of inferior work and by insuring ethical behavior. As the preceding discussion of the Rule of Reason reveals, this Court has never accepted such an argument.

It may be, as petitioner argues, that competition tends to force prices down and that an inexpensive item may be inferior to one that is more costly. There is some risk, therefore, that competition will cause some suppliers to market a defective product. Similarly, competitive bidding for engineering projects may be inherently imprecise and incapable of taking into account all the variables which will be involved in the actual performance of the project.20 Based on these considerations, a purchaser might conclude that his interest in quality — which may embrace the safety of the end product — outweighs the advantages of achieving cost savings by pitting one competitor against another. Or an individual vendor might independently refrain from price negotiation until he has satisfied himself that he fully understands the scope of his customers’ needs. These decisions might be reasonable; indeed, petitioner has provided ample documentation for that thesis. But these are not reasons that satisfy the Rule; nor are such individual decisions subject to antitrust attack.

The Sherman Act does not require competitive bidding;21 *695it prohibits unreasonable restraints on competition. Petitioner’s ban on competitive bidding prevents all customers from making price comparisons in the initial selection of an engineer, and imposes the Society’s views of the costs and benefits of competition on the entire marketplace. It is this restraint that must be justified under the Rule of Reason, and petitioner’s attempt to do so on the basis of the potential threat that competition poses to the public safety and the ethics of its profession is nothing less than a frontal assault on the basic policy of the Sherman Act.

The Sherman Act reflects a legislative judgment that ultimately competition will produce not only lower prices, but also better goods and services. “The heart of our national economic policy long has been faith in the value of competition.” Standard Oil Co. v. FTC, 340 U. S. 231, 248. The assumption that competition is the best method of allocating resources in a free market recognizes that all elements of a bargain— quality, service, safety, and durability — and not just the immediate cost, are favorably affected by the free opportunity to select among alternative offers. Even assuming occasional exceptions to the presumed consequences of competition, the statutory policy precludes inquiry into the question whether competition is good or bad.

The fact that engineers are often involved in large-scale projects significantly affecting the public safety does not alter our analysis. Exceptions to the Sherman Act for potentially dangerous goods and services would be tantamount to a repeal of the statute. In our complex economy the number of items that may cause serious harm is almost endless — automobiles, drugs, foods, aircraft components, heavy equipment, and countless others, cause serious harm to individuals or to the public at large if defectively made. The judiciary cannot *696indirectly protect the public against this harm by conferring monopoly privileges on the manufacturers.

By the same token, the cautionary footnote in Goldfarb, 421 U. S., at 788-789, n. 17, quoted supra, cannot be read as fashioning a broad exemption under the Rule of Reason for learned professions. We adhere to the view expressed in Goldfarb that, by their nature, professional services may differ significantly from other business services, and, accordingly, the nature of the competition in such services may vary. Ethical norms may serve to regulate and promote this competition, and thus fall within the Rule of Reason.22 But the Society’s argument in this case is a far cry from such a position. We are faced with a contention that a total ban on competitive bidding is necessary because otherwise engineers will be tempted to submit deceptively low bids. Certainly, the problem of professional deception is a proper subject of an ethical canon. But, once again, the equation of competition with deception, like the similar equation with safety hazards, is simply too broad; we may assume that competition is not entirely conducive to ethical behavior, but that is not a reason, cognizable under the Sherman Act, for doing away with competition.

In sum, the Rule of Reason does not support a defense based on the assumption that competition itself is unreasonable. Such a view of the Rule would create the “sea of doubt” on which Judge Taft refused to embark in Addyston, 85 F., at 284, and which this Court has firmly avoided ever since.

Ill

The judgment entered by the District Court, as modified by *697the Court of Appeals,23 prohibits the Society from adopting any official opinion, policy statement, or guideline stating or implying that competitive bidding is unethical.24 Petitioner argues that this judgment abridges its First Amendment rights.25 We find no merit in this contention.

Having found the Society guilty of a violation of the Sherman Act, the District Court was empowered to fashion appropriate restraints on the Society’s future activities both to avoid a recurrence of the violation and to eliminate its consequences. See, e. g., International Salt Co. v. United States, 332 U. S. 392, 400-401; United States v. Glaxo Group, Ltd., 410 U. S. 52, 64. While the resulting order may curtail the exercise of liberties that the Society might otherwise enjoy, that is a necessary and, in cases such as this, unavoidable consequence of the violation. Just as an injunction against price fixing abridges the freedom of businessmen to talk to one another about prices, so too the injunction in this case must restrict the Society’s range of expression on the ethics of competitive bidding.26 The First Amendment does not “make it . . . impossible ever to enforce laws against agreements in restraint of trade . . . .” Giboney v. Empire Storage & Ice Co., 336 U. S. 490, 502. In fashioning a remedy, the District Court may, of course, consider the fact that its injunction may impinge upon rights that would otherwise be constitutionally *698protected, but those protections do not prevent it from remedying the antitrust violations.

The standard against which the order must be judged is whether the relief represents a reasonable method of eliminating the consequences of the illegal conduct. We agree with the Court of Appeals that the injunction, as modified, meets this standard. While it goes beyond a simple proscription against the precise conduct previously pursued, that is entirely appropriate.

“The District Court is not obliged to assume, contrary to common experience, that a violator of the antitrust laws will relinquish the fruits of his violation more completely than the court requires him to do. And advantages already in hand may be held by methods more subtle and informed, and more difficult to prove, than those which, in the first place, win a market. When the purpose to restrain trade appears from a clear violation of law, it is not necessary that all of the untraveled roads to that end be left open and that only the worn one be closed.” International Salt Co., supra, at 400.

The Society apparently fears that the District Court’s injunction, if broadly read, will block legitimate paths of expression on all ethical matters relating to bidding.27 But the answer to these fears is, as the Court held in International Salt, that the burden is upon the proved transgressor “to bring any proper claims for relief to the court’s attention.” Ibid. In *699this case, the Court of Appeals specifically stated that “[i]f the Society wishes to adopt some other ethical guideline more closely confined to the legitimate objective of preventing deceptively low bids, it may move the district court for modification of the decree.” 181 U. S. App. D. C., at 46, 555 F. 2d, at 983. This is, we believe, a proper approach, adequately protecting the Society’s interests. We therefore reject petitioner’s attack on the District Court’s order.

The judgment of the Court of Appeals is

Affirmed.

Mr. Justice Brennan took no part in the consideration or decision of this case.

Mr. Justice Blackmun,

with whom Mr. Justice Rehnquist joins, concurring in part and concurring in the judgment.

I join Parts I and III of the Court’s opinion and concur in the judgment. I do not join Part II because I would not, at least for the moment, reach as far as the Court appears to me to do in intimating, ante, at 696, and n. 22, that any ethical rule with an overall anticompetitive effect promulgated by a professional society is forbidden under the Sherman Act. In my view, the decision in Goldfarb v. Virginia State Bar, 421 U. S. 773, 788-789, n. 17 (1975), properly left to the Court some flexibility in considering how to apply traditional Sherman Act concepts to professions long consigned to self-regulation. Certainly, this case does not require us to decide whether the “Rule of Reason” as applied to the professions ever could take account of benefits other than increased competition. For even accepting petitioner’s assertion that product quality is one such benefit, and that maintenance of the quality of engineering services requires that an engineer not bid before he has made full acquaintance with the scope of a client’s desired project, Brief for Petitioner 49-50, 54, petitioner Society’s rule is still grossly overbroad. As petitioner concedes, Tr. of Oral *700Arg. 47-48, § 11 (c) forbids any simultaneous consultation between a client and several engineers, even where the client provides complete information to each about the scope and nature of the desired project before requesting price information. To secure a price estimate on a project, the client must purport to engage a single engineer, and so long as that engagement continues no other member of the Society is permitted to discuss the project with the client in order to provide comparative price information. Though § 11 (c) does not fix prices directly, and though the customer retains the option of rejecting a particular engineer’s offer and beginning negotiations all over again with another engineer, the forced process of sequential search inevitably increases the cost of gathering price information, and hence will dampen price competition, without any calibrated role to play in preventing uninformed bids. Then, too, the Society’s rule is overbroad in the aspect noted by Judge Leventhal, when it prevents any dissemination of competitive price information in regard to real property improvements prior to the engagement of a single engineer regardless of “the sophistication of the purchaser, the complexity of the project, or the procedures for evaluating price information.” 181 U. S. App. D. C. 41, 45, 555 F. 2d 978, 982 (1977).

My skepticism about going further in this case by shaping the Rule of Reason to such a narrow last as does the majority,* arises from the fact that there may be ethical rules which have a more than de minimis anticompetitive effect and yet are important in a profession’s proper ordering. A medical association’s prescription of standards of minimum competence for licensing or certification may lessen the number of *701entrants. A bar association’s regulation of the permissible forms of price advertising for nonroutine legal services or limitation of in-person solicitation, see Bates v. State Bar of Arizona, 433 U. S. 350 (1977), may also have the effect of reducing price competition. In acknowledging that “professional services may differ significantly from other business services” and that the “nature of the competition in such services may vary,” ante, at 696, but then holding that ethical norms can pass muster under the Rule of Reason only if they promote competition, I am not at all certain that the Court leaves enough elbowroom for realistic application of the Sherman Act to professional services.

Mr. Chief Justice Burger,

concurring in part and dissenting in part.

I concur in the Court’s judgment to the extent it sustains the finding of a violation of the Sherman Act but dissent from that portion of the judgment prohibiting petitioner from stating in its published standards of ethics the view that competitive bidding is unethical. The First Amendment guarantees the right to express such a position and that right cannot be impaired under the cloak of remedial judicial action.

*414Justice Stevens

delivered the opinion of the Court.

Pursuant to a well-publicized plan, a group of lawyers agreed not to represent indigent criminal defendants in the District of Columbia Superior Court until the District of Columbia government increased the lawyers’ compensation. The questions presented are whether the lawyers’ concerted conduct violated §5 of the Federal Trade Commission Act and, if so, whether it was nevertheless protected by the First Amendment to the Constitution.1

I — I

The burden of providing competent counsel to indigent defendants in the District of Columbia is substantial. During 1982, court-appointed counsel represented the defendant in approximately 25,000 cases. In the most serious felony cases, representation was generally provided by full-time employees of the District’s Public Defender System (PDS). Less serious felony and misdemeanor cases constituted about *41585 percent of the total caseload. In these cases, lawyers in private practice were appointed and compensated pursuant to the District of Columbia Criminal Justice Act (CJA).2

Although over 1,200 lawyers have registered for CJA appointments, relatively few actually apply for such work on a regular basis. In 1982, most appointments went to approximately 100 lawyers who are described as “CJA regulars.” These lawyers derive almost all of their income from representing indigents.3 In 1982, the total fees paid to CJA lawyers amounted to $4,579,572.

In 1974, the District created a Joint Committee on Judicial Administration with authority to establish rates of compensation for CJA lawyers not exceeding the rates established by the federal Criminal Justice Act of 1964. After 1970, the federal Act provided for fees of $30 per hour for court time and $20 per hour for out-of-court time. See 84 Stat. 916, codified at 18 U. S. C. §3006A (1970 ed.). These rates accordingly capped the rates payable to the District’s CJA lawyers, and could not be exceeded absent amendment to either the federal statute or the District Code.

Bar organizations began as early as 1975 to express concern about the low fees paid to CJA lawyers. Beginning in 1982, respondents, the Superior Court Trial Lawyers Association (SCTLA) and its officers, and other bar groups sought to persuade the District to increase CJA rates to at least $35 per hour. Despite what appeared to be uniform support for the bill, it did not pass. It is also true, however, that noth*416ing in the record indicates that the low fees caused any actual shortage of CJA lawyers or denied effective representation to defendants.

In early August 1983, in a meeting with officers of SCTLA, the Mayor expressed his sympathy but firmly indicated that no money was available to fund an increase. The events giving rise to this litigation then ensued.

At an SCTLA meeting, the CJA lawyers voted to form a “strike committee.” The eight members of that committee promptly met and informally agreed “that the only viable way of getting an increase in fees was to stop signing up to take new CJA appointments, and that the boycott should aim for a $45 out-of-court and $55 in-court rate schedule.” In re Superior Court Trial Lawyers Assn., 107 F. T. C. 510, 538 (1986).

On August 11, 1983, about 100 CJA lawyers met and resolved not to accept any new cases after September 6 if legislation providing for an increase in their fees had not passed by that date. Immediately following the meeting, they prepared (and most of them signed) a petition stating:

“We, the undersigned private criminal lawyers practicing in the Superior Court of the District of Columbia, agree that unless we are granted a substantial increase in our hourly rate we will cease accepting new appointments under the Criminal Justice Act.” 272 U. S. App. D. C. 272, 276, 856 F. 2d 226, 230 (1988).

On September 6, 1983, about 90 percent4 of the CJA regulars refused to accept any new assignments. Thereafter, SCTLA arranged a series of events to attract the attention of the news media and to obtain additional support. These events were well publicized and did engender favorable editorial comment, but the Administrative Law Judge (ALJ) found that “there is no credible evidence that the District’s *417eventual capitulation to the demands of the CJA lawyers was made in response to public pressure, or, for that matter, that this publicity campaign actually engendered any significant measure of public pressure.” 107 F. T. C., at 543.5

As the participating CJA lawyers had anticipated, their refusal to take new assignments had a severe impact on the District’s criminal justice system. The massive flow of new cases did not abate,6 and the need for prompt investigation and preparation did not ease. As the ALJ found, “there was no one to replace the CJA regulars, and makeshift measures were totally inadequate. A few days after the September 6 deadline, PDS was swamped with cases. The handful of CJA regulars who continued to take cases were soon overloaded. The overall response of the uptown lawyers to the PDS call for help was feeble, reflecting their universal distaste for criminal law, their special aversion for compelled in-digency representation, the near epidemic siege of self-doubt about their ability to handle cases in this field, and their underlying support for the demands of the CJA lawyers. Most of the law student volunteers initially observed the boycott, and later all law student volunteers were limited (as they usually are) to a relatively few minor misdemeanors.” Id., at 544 (footnotes omitted).

*418Within 10 days, the key figures in the District’s criminal justice system “became convinced that the system was on the brink of collapse because of the refusal of CJA lawyers to take on new cases.” Ibid. On September 15, they hand-delivered a letter to the Mayor describing why the situation was expected to “reach a crisis point” by early the next week and urging the immediate enactment of a bill increasing all CJA rates to $35 per hour. The Mayor promptly met with members of the strike committee and offered to support an immediate temporary increase to the $35 level as well as a subsequent permanent increase to $45 an hour for out-of-court time and $55 for in-court time.

At noon on September 19, 1983, over 100 CJA lawyers attended an SCTLA meeting and voted to accept the $35 offer and end the boycott. The city council’s Judiciary Committee convened at 2 o’clock that afternoon. The committee recommended legislation increasing CJA fees to $35, and the council unanimously passed the bill on September 20. On September 21, the CJA regulars began to accept new assignments and the crisis subsided.

II

The Federal Trade Commission (FTC) filed a complaint against SCTLA and four of its officers (respondents) alleging that they had “entered into an agreement among themselves and with other lawyers to restrain trade by refusing to compete for or accept new appointments under the CJA program beginning on September 6, 1983, unless and until the District of Columbia increased the fees offered under the CJA program.” Id., at 511. The complaint alleged that virtually all of the attorneys who regularly compete for or accept new appointments under the CJA program had joined the agreement. The FTC characterized respondents’ conduct as “a conspiracy to fix prices and to conduct a boycott” and concluded that they were engaged in “unfair methods of compe*419tition in violation of Section 5 of the Federal Trade Commission Act.”7

After a 3-week hearing, the ALJ found that the facts alleged in the complaint had been proved, and rejected each of respondents’ three legal defenses — that the boycott was adequately justified by the public interest in obtaining better legal representation for indigent defendants; that as a method of petitioning for legislative change it was exempt from the antitrust laws under our decision in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U. S. 127 (1961); and that it was a form of political action protected by the First Amendment under our decision in NAACP v. Claiborne Hardware Co., 458 U. S. 886 (1982). The ALJ nevertheless concluded that the complaint should be dismissed because the District officials, who presumably represented the victim of the boycott, recognized that its net effect was beneficial. The increase in fees would attract more CJA lawyers, enabling them to reduce their caseloads and provide better representation for their clients. “I see no point,” he concluded, “in striving resolutely for an antitrust triumph in this sensitive area when the particular case can be disposed of on a more pragmatic basis — there was no harm done.” 107 F. T. C., at 561.

The ALJ’s pragmatic moderation found no favor with the FTC. Like the ALJ, the FTC rejected each of respondents’ defenses. It held that their “coercive, concerted refusal to deal” had the “purpose and effect of raising prices” and was illegal per se. Id., at 573. Unlike the ALJ, the FTC refused to conclude that the boycott was harmless, noting that the “boycott forced the city government to increase the CJA fees from a level that had been sufficient to obtain an adequate supply of CJA lawyers to a level satisfactory to the re*420spondents. The city must, as a result of the boycott, spend an additional $4 million to $5 million a year to obtain legal services for indigents. We find that these are substantial anticompetitive effects resulting from the respondents’ conduct.” Id., at 577. Finally, the FTC determined that the record did not support the AL J’s conclusion that the District supported the boycott. The FTC also held that such support would not in any event excuse respondents’ antitrust violations. Accordingly,. it entered a cease-and-desist order “to prohibit the respondents from initiating another boycott. . . whenever they become dissatisfied with the results or pace of the city’s legislative process.” Id., at 602.

The Court of Appeals vacated the FTC order and remanded for a determination whether respondents possessed “significant market power.” The court began its analysis by recognizing that absent any special First Amendment protection, the boycott “constituted a classic restraint of trade within the meaning of Section 1 of the Sherman Act.”8 272 U. S. App. D. C., at 280, 856 F. 2d, at 234. The Court of Appeals was not persuaded by respondents’ reliance on Claiborne Hardware or Noerr, or by their argument that the boycott was justified because it was designed to improve the quality of representation for indigent defendants. It concluded, however, that “the SCTLA boycott did contain an element of expression warranting First Amendment protection.” 272 U. S. App. D. C., at 294, 856 F. 2d, at 248. It *421noted that boycotts have historically been used as a dramatic means of expression and that respondents intended to convey a political message to the public at large. It therefore concluded that under United States v. O’Brien, 391 U. S. 367 (1968), a restriction on this form of expression could not be justified unless it is no greater than is essential to an important governmental interest. - This test, the court reasoned, could not be satisfied by the application of an otherwise appropriate per se rule, but instead required the enforcement agency to “prove rather than presume that the evil against which the Sherman Act is directed looms in the conduct it condemns.” 272 U. S. App. D. C., at 296, 856 F. 2d, at 250.

Because of our concern about the implications of the Court of Appeals’ unique holding, we granted the FTC’s petition for certiorari as well as respondents’ cross-petition. 490 U. S. 1019 (1989).

We consider first the cross-petition, which contends that respondents’ boycott is outside the scope of the Sherman Act or is immunized from antitrust regulation by the First Amendment. We then turn to the FTC’s petition.

Ill

Reasonable lawyers may differ about the wisdom of this enforcement proceeding. The dissent from the decision to file the complaint so demonstrates. So, too, do the creative conclusions of the AL J and the Court of Appeals. Respondents’ boycott may well have served a cause that was worthwhile and unpopular. We may assume that the preboycott rates were unreasonably low, and that the increase has produced better legal representation for indigent defendants. Moreover, given that neither indigent criminal defendants nor the lawyers who represent them command any special appeal with the electorate, we may also assume that without the boycott there would have been no increase in District CJA fees at least until the Congress amended the federal statute. These assumptions do not control the case, for it is *422not our task to pass upon the social utility or political wisdom of price-fixing agreements.

As the ALJ, the FTC, and the Court of Appeals all agreed, respondents’ boycott “constituted a classic restraint of trade within the meaning of Section 1 of the Sherman Act.” 272 U. S. App. D. C., at 280, 856 F. 2d, at 234. As such, it also violated the prohibition against unfair methods of competition in § 5 of the FTC Act. See FTC v. Cement Institute, 333 U. S. 683, 694 (1948). Prior to the boycott CJA lawyers were in competition with one another, each deciding independently whether and how often to offer to provide services to the District at CJA rates.9 The agreement among the *423CJA lawyers was designed to obtain higher prices for their services and was implemented by a concerted refusal to serve an important customer in the market for legal services and, indeed, the only customer in the market for the particular services that CJA regulars offered. “This constriction of supply is the essence of ‘price-fixing/ whether it be accomplished by agreeing upon a price, which will decrease the quantity demanded, or by agreeing upon an output, which will increase the price offered.” 272 U. S. App. D. C., at 280, 856 F. 2d, at 234. The horizontal arrangement among these competitors was unquestionably a “naked restraint” on price and output. See National Collegiate Athletic Assn. v. Board, of Regents of Univ. of Okla., 468 U. S. 85, 110 (1984).

It is, of course, true that the city purchases respondents’ services because it has a constitutional duty to provide representation to indigent defendants. It is likewise true that the quality of representation may improve when rates are increased. Yet neither of these facts is an acceptable justification for an otherwise unlawful restraint of trade. As we have remarked before, the “Sherman Act reflects a legislative judgment that ultimately competition will produce not only lower prices, but also better goods and services.” National Society of Professional Engineers v. United States, 435 U. S. 679, 695 (1978). This judgment “recognizes that all elements of a bargain — quality, service, safety, and durability — and not just the immediate cost, are favorably affected by the free opportunity to select among alternative offers.” *424 Ibid. That is equally so when the quality of legal advocacy, rather than engineering design, is at issue.

The social justifications proffered for respondents’ restraint of trade thus do not make it any less unlawful. The statutory policy underlying the Sherman Act “precludes inquiry into the question whether competition is good or bad.” Ibid. Respondents’ argument, like that made by the petitioners in Professional Engineers, ultimately asks us to find that their boycott is permissible because the price it seeks to set is reasonable. But it was settled shortly after the Sherman Act was passed that it “is no excuse that the prices fixed are themselves reasonable. See, e. g., United States v. Trenton Potteries Co., 273 U. S. 392, 397-398 (1927); United States v. Trans-Missouri Freight Assn., 166 U. S. 290, 340-341 (1897).” Catalano, Inc. v. Target Sales, Inc., 446 U. S. 643, 647 (1980). Respondents’ agreement is not outside the coverage of the Sherman Act simply because its objective was the enactment of favorable legislation.

Our decision in Noerr in no way detracts from this conclusion. In Noerr, we “considered whether the Sherman Act prohibited a publicity campaign waged by railroads” and “designed to foster the adoption of laws destructive of the trucking business, to create an atmosphere of distaste for truckers among the general public, and to impair the relationships existing between truckers and their customers.” Claiborne Hardware, 458 U. S., at 913. Interpreting the Sherman Act in the light of the First Amendment’s Petition Clause, the Court noted that “at least insofar as the railroads’ campaign was directed toward obtaining governmental action, its legality was not at all affected by any . anticompetitive purpose it may have had.” 365 U. S., at 139-140.

It of course remains true that “no violation of the Act can be predicated upon mere attempts to influence the passage or enforcement of laws,” id., at 135, even if the defendants’ sole purpose is to impose a restraint upon the trade of their competitors, id., at 138-140. But in the Noerr case the alleged *425restraint of trade was the intended consequence of public action; in this case the boycott was the means by which respondents sought to obtain favorable legislation. The restraint of trade that was implemented while the boycott lasted would have had precisely the same anticompetitive consequences during that period even if no legislation had been enacted. In Noerr, the desired legislation would have created the restraint on the truckers’ competition; in this case the emergency legislative response to the boycott put an end to the restraint.

Indeed, respondents’ theory of Noerr was largely disposed of by our opinion in Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U. S. 492 (1988). We held that the Noerr doctrine does not extend to “every concerted effort that is genuinely intended to influence governmental action.” 486 U. S., at 503. We explained:

“If all such conduct were immunized then, for example, competitors would be free to enter into horizontal price agreements as long as they wished to propose that price as an appropriate level for governmental ratemaking or price supports. But see Georgia v. Pennsylvania R. Co. 324 U. S. 439, 456-463 (1945). Horizontal conspiracies or boycotts designed to exact higher prices or other economic advantages from the government would be immunized on the ground that they are genuinely intended to influence the government to agree to the conspirators’ terms. But see Georgia v. Evans, 316 U. S. 159 (1942). Firms could claim immunity for boycotts or horizontal output restrictions on the ground that they are intended to dramatize the plight of their industry and spur legislative action.” Ibid.

IV

SCTLA argues that if its conduct would otherwise be prohibited by the Sherman Act and the Federal Trade Commission Act, it is nonetheless protected by the First Amendment rights recognized in NAACP v. Claiborne Hardware Co., *426458 U. S. 886 (1982). That case arose after black citizens boycotted white merchants in Claiborne County, Mississippi. The white merchants sued under state law to recover losses from the boycott. We found that the “right of the States to regulate economic activity could not justify a complete prohibition against a nonviolent, politically motivated boycott designed to force governmental and economic change and to effectuate rights guaranteed by the Constitution itself.” Id., at 914. We accordingly held that “the nonviolent elements of petitioners’ activities are entitled to the protection of the First Amendment.” Id., at 915.

SCTLA contends that because it, like the boycotters in Claiborne Hardware, sought to vindicate constitutional rights, it should enjoy a similar First Amendment protection. It is, of course, clear that the association’s efforts to publicize the boycott, to explain the merits of its cause, and to lobby District officials to enact favorable legislation — like similar activities in Claiborne Hardware — were activities that were fully protected by the First Amendment. But nothing in the FTC’s order would curtail such activities, and nothing in the FTC’s reasoning condemned any of those activities.

The activity that the FTC order prohibits is a concerted refusal by CJA lawyers to accept any further assignments until they receive an increase in their compensation; the undenied objective of their boycott was an economic advantage for those who agreed to participate. It is true that the Claiborne Hardware case also involved a boycott. That boycott, however, differs in a decisive respect. Those who joined the Claiborne Hardware boycott sought no special advantage for themselves. They were black citizens in Port Gibson, Mississippi, who had been the victims of political, social, and economic discrimination for many years. They sought only the equal respect and equal treatment to which they were constitutionally entitled. They struggled “to change a social order that had consistently treated them as second class citizens.” Id., at 912. As we observed, the campaign was not *427intended “to destroy legitimate competition.” Id., at 914. Equality and freedom are preconditions of the free market, and not commodities to be haggled over within it.

The same cannot be said of attorney’s fees. As we recently pointed out, our reasoning in Claiborne Hardware is not applicable to a boycott conducted by business competitors who “stand to profit financially from a lessening of competition in the boycotted market.” Allied Tube & Conduit Corp. v. Indian Head, Inc., supra, at 508.10 No matter how altruistic the motives of respondents may have been, it is -undisputed that their immediate objective was to increase the price that they would be paid for their services. Such an economic boycott is well within the category that was expressly distinguished in the Claiborne Hardware opinion itself. 458 U. S., at 914-915.11

*428Only after recognizing the well-settled validity of prohibitions against various economic boycotts did we conclude in Claiborne Hardware that “peaceful, political activity such as that found in the [Mississippi] boycott” are entitled to constitutional protection.12 We reaffirmed the government’s “power to regulate [such] economic activity.” Id., at 912-913. This conclusion applies with special force when a clear objective of the boycott is to economically advantage the participants.

V

Respondents’ concerted action in refusing to accept further CJA assignments until their fees were increased was thus a plain violation of the antitrust laws. The exceptions derived from Noerr and Claiborne Hardware have no application to respondents’ boycott. For these reasons we reject the arguments made by respondents in the cross-petition.

The Court of Appeals, however, crafted a new exception to the per se rules, and it is this exception which provoked the *429FTC’s petition to this Court. The Court of Appeals derived its exception from United States v. O’Brien, 391 U. S. 367 (1968). In that case O’Brien had burned his Selective Service registration certificate on the steps of the South Boston Courthouse. He did so before a sizable crowd and with the purpose of advocating his antiwar beliefs. We affirmed his conviction. We held that the governmental interest in regulating the “nonspeech element” of his conduct adequately justified the incidental restriction on First Amendment freedoms.13 Specifically, we concluded that the statute’s incidental restriction on O’Brien’s freedom of expression was no greater than necessary to further the Government’s interest in requiring registrants to have valid certificates continually available.

However, the Court of Appeals held that, in light of O’Brien, the expressive component of respondents’ boycott compelled courts to apply the antitrust laws “prudently and with sensitivity,” 272 U. S. App. D. C., at 279-280, 856 F. 2d, at 233-234, with a “special solicitude for the First Amendment rights” of respondents. The Court of Appeals concluded that the governmental interest in prohibiting boycotts is not sufficient to justify a restriction on the communicative element of the boycott unless the FTC can prove, and not merely presume, that the boycotters have market power. Because the Court of Appeals imposed this special requirement upon the government, it ruled that per se antitrust *430analysis was inapplicable to boycotts having an expressive component.

There are at least two critical flaws in the Court of Appeals’ antitrust analysis: it exaggerates the significance of the expressive component in respondents’ boycott and it denigrates the importance of the rule of law that respondents violated. Implicit in the conclusion of the Court of Appeals are unstated assumptions that most economic boycotts do not have an expressive component, and that the categorical prohibitions against price fixing and boycotts are merely rules of “administrative convenience” that do not serve any substantial governmental interest unless the price-fixing competitors actually possess market power.

It would not much matter to the outcome of this case if these flawed assumptions were sound. O’Brien would offer respondents no protection even if their boycott were uniquely expressive and even if the purpose of the per se rules were purely that of administrative efficiency. We have recognized that the government’s interest in adhering to a uniform rule may sometimes satisfy the O’Brien test even if making an exception to the rule in a particular case might cause no serious damage. United States v. Albertini, 472 U. S. 675, 688 (1985) (“The First Amendment does not bar application of a neutral regulation that incidentally burdens speech merely because a party contends that allowing an exception in the particular case will not threaten important government interests”). The administrative efficiency interests in antitrust regulation are unusually compelling. The per se rules avoid “the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable.” Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958). If small parties “were allowed to prove lack of market power, all parties would have that right, thus introducing the enormous complexities of market definition *431into every price-fixing case.” R. Bork, The Antitrust Paradox 269 (1978). For these reasons, it is at least possible that the Claiborne Hardware doctrine, which itself rests in part upon O’Brien, 14 exhausts O’Brien’s application to the antitrust statutes.

In any event, however, we cannot accept the Court of Appeals’ characterization of this boycott or the antitrust laws. Every concerted refusal to do business with a potential customer or supplier has an expressive component. At one level, the competitors must exchange their views about their objectives and the means of obtaining them. The most blatant, naked price-fixing agreement is a product of communication, but that is surely not a reason for viewing it with special solicitude. At another level, after the terms of the boycotters’ demands have been agreed upon, they must be communicated to its target: “[W]e will not do business until you do what we ask.” That expressive component of the boycott conducted by these respondents is surely not unique. On the contrary, it is the hallmark of every effective boycott.

At a third level, the boycotters may communicate with third parties to enlist public support for their objectives; to the extent that the boycott is newsworthy, it will facilitate the expression of the boycotters’ ideas. But this level of expression is not an element of the boycott. Publicity may be generated by any other activity that is sufficiently newsworthy. Some activities, including the boycott here, may be newsworthy precisely for the reasons that they are prohibited: the harms they produce are matters of public concern. Certainly that is no reason for removing the prohibition.

In sum, there is thus nothing unique about the “expressive component” of respondents’ boycott. A rule that requires courts to apply the antitrust laws “prudently and with sensitivity” whenever an economic boycott has an “expressive component” would create a gaping hole in the fabric of those *432laws. Respondents’ boycott thus has no special characteristics meriting an exemption from the per se rules of antitrust law.

Equally important is the second error implicit in respondents’ claim to immunity from the per se rules. In its opinion, the Court of Appeals assumed that the antitrust laws permit, but do not require, the condemnation of price fixing and boycotts without proof of market power.15 The opinion further assumed that the per se rule prohibiting such activity “is only a rule of 'administrative convenience and efficiency,’ not a statutory command.” 272 U. S. App. D. C., at 295, 856 F. 2d, at 249. This statement contains two errors. The per se *433rules are, of course, the product of judicial interpretations of the Sherman Act, but the rules nevertheless have the same force and effect as any other statutory commands. Moreover, while the per se rule against price fixing and boycotts is indeed justified in part by “administrative convenience,” the Court of Appeals erred in describing the prohibition as justified only by such concerns. The per se rules also reflect a longstanding judgment that the prohibited practices by their nature have “a substantial potential for impact on competition.” Jefferson Parish Hospital District No. 2 v. Hyde, 466 U. S. 2, 16 (1984).

As we explained in Professional Engineers, the rule of reason in antitrust law generates

“two complementary categories of antitrust analysis. In the first category are agreements whose nature and necessary effect are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality — they are ‘illegal per se.’ In the second category are agreements whose competitive effect can only be evaluated by analyzing the facts peculiar to the business, the history of the restraint, and the reasons why it was imposed.” 435 U. S., at 692.

“Once experience with a particular kind of restraint enables the Court to predict with confidence that the rule of reason will condemn it, it has applied a conclusive presumption that the restraint is unreasonable.” Arizona v. Maricopa County Medical Society, 457 U. S. 332, 344 (1982).

The per se rules in antitrust law serve purposes analogous to per se restrictions upon, for example, stunt flying in congested areas or speeding. Laws prohibiting stunt flying or setting speed limits are justified by the State’s interest in protecting human life and property. Perhaps most violations of such rules actually cause no harm. No doubt many experienced drivers and pilots can operate much more safely, even at prohibited speeds, than the average citizen.

*434If the especially skilled drivers and pilots were to paint messages on their cars, or attach streamers to their planes, their conduct would have an expressive component. High speeds and unusual maneuvers would help to draw attention to their messages. Yet the laws may nonetheless be enforced against these skilled persons without proof that their conduct was actually harmful or dangerous.

In part, the justification for these per se rules is rooted in administrative convenience. They are also supported, however, by the observation that every speeder and every stunt pilot poses some threat to the community. An unpredictable event may overwhelm the skills of the best driver or pilot, even if the proposed course of action was entirely prudent when initiated. A bad driver going slowly may be more dangerous that a good driver going quickly, but a good driver who obeys the law is safer still.

So it is with boycotts and price fixing.16 Every such horizontal arrangement among competitors poses some threat to the free market. A small participant in the market is, obviously, less likely to cause persistent damage than a large participant. Other participants in the market may act quickly and effectively to take the small participant’s place. For reasons including market inertia and information failures, however, a small conspirator may be able to impede compe*435tition over some period of time.17 Given an appropriate set of circumstances and some luck, the period can be long enough to inflict real injury upon particular consumers or competitors.18

As Justice Douglas observed in an oft-quoted footnote to his United States v. Socony-Vacuum Oil Co., 310 U. S. 150 (1940), opinion:

“Price-fixing agreements may or may not be aimed at complete elimination of price competition. The group making those agreements may or may not have power to control the market. But the fact that the group cannot control the market prices does not necessarily mean that the agreement as to prices has no utility to the members of the combination. The effectiveness of price-fixing agreements is dependent on many factors, such as competitive tactics, position in the industry, the formula underlying pricing policies. Whatever economic justification particular price-fixing agreements may be thought to have, the law does not permit an inquiry into their reasonableness. They are all banned because of their actual or potential threat to the central nervous system of the economy.” Id., at 225-226, n. 59.

See also Maricopa County Medical Society, 457 U. S., at 351, and n. 23.

Of course, some boycotts and some price-fixing agreements are more pernicious than others; some are only partly successful, and some may only succeed when they are buttressed by other causative factors, such as political influence. But *436an assumption that, absent proof of market power, the boycott disclosed by this record was totally harmless — when overwhelming testimony demonstrated that it almost produced a crisis in the administration of criminal justice in the District and when it achieved its economic goal — is flatly inconsistent with the clear course of our antitrust jurisprudence. Conspirators need not achieve the dimensions of a monopoly, or even a degree of market power any greater than that already disclosed by this record, to warrant condemnation under the antitrust laws.

<1 HH

The judgment of the Court of Appeals is accordingly reversed insofar as that court held the per se rules inapplicable to the lawyers’ boycott.19 The case is remanded for further proceedings consistent with this opinion.20

It is so ordered.

Justice Brennan,

with whom Justice Marshall joins, concurring in part and dissenting in part.

The Court holds today that a boycott by the Superior Court Trial Lawyers Association (SCTLA or Trial Lawyers), whose members collectively refused to represent indigent *437criminal defendants without greater compensation, constituted conduct that was neither clearly outside the scope of the Sherman Act nor automatically immunized from antitrust regulation by the First Amendment. With this much I agree.1 In Part V of its opinion, however, the Court maintains that under the per se rule the Federal Trade Commission (FTC or Commission) could find the boycott illegal because it might have implicated some of the concerns underlying the antitrust laws. I cannot countenance this reasoning, which upon examination reduces to the Court’s assertion that since the government may prohibit airplane stunt flying and reckless automobile driving as categorically harmful, see ante, at 433-434, it may also subject expressive political boycotts to a presumption of illegality without even inquiring as to whether they actually cause any of the harms that the antitrust laws are designed to prevent. This non sequitur cannot justify the significant restriction on First Amendment freedoms that the majority’s rule entails. Because I believe that the majority’s decision is insensitive to the venerable tradition of expressive boycotts as an important means of political communication, I respectfully dissent from Part V of the Court’s opinion.

I — I

The Petition and Free Speech Clauses of the First Amendment guarantee citizens the right to communicate with the government, and when a group persuades the government to adopt a particular policy through the force of its ideas and the power of its message, no antitrust liability can attach. “There are, of course, some activities, legal if engaged in by one, yet illegal if performed in concert with others, but political expression is not one of them.” Citizens Against Rent *438 Control/Coalition for Fair Housing v. Berkeley, 454 U. S. 290, 296 (1981). But a group’s effort to use market power to coerce the government through economic means may subject the participants to antitrust liability.

In any particular case, it may be difficult to untangle these two effects by determining whether political or economic power was brought to bear on the government. The Court of Appeals thoughtfully analyzed this problem and concluded, I believe correctly, that there could be no antitrust violation absent a showing that the boycotters possessed some degree of market power — that is, the ability to raise prices profitably through economic means or, more generally, the capacity to act other than as would an actor in a perfectly competitive market. The court reasoned that “[w]hen the government seeks to regulate an economic boycott with an expressive component.. . . its condemnation without proof that the boycott could in fact be anticompetitive ignores the command of [United States v.] O’Brien that restrictions on activity protected by the First Amendment be ‘no greater than is essential’ to preserve competition from the sclerotic effects of combination.” 272 U. S. App. D. C. 272, 295, 856 F. 2d 226, 249 (1988) (quoting United States v. O’Brien, 391 U. S. 367, 377 (1968)) (emphasis in original). The concurring judge added that if the participants wielded no market power, “the boycott must have succeeded out of persuasion and been a political activity.” 272 U. S. App. D. C., at 300, 856 F. 2d, at 254 (opinion of Silberman, J.). This approach is quite sensible, and I would affirm the Court of Appeals’ decision to remand the case to the FTC for a showing of market power.

A

The issue in this case is not whether boycotts may ever be punished under § 5 of the Federal Trade Commission Act, 15 U. S. C. § 45(a)(1), consistent with the First Amendment; rather, the issue is how the government may determine which boycotts are illegal. Two well-established premises *439lead to the ineluctable conclusion that when applying the antitrust laws to a particular expressive boycott, the government may not presume an antitrust violation under the per se rule, but must instead apply the more searching, case-specific rule of reason.

First, the per se rule is a presumption of illegality.2 As Justice Stevens has written:

“The costs of judging business practices under the rule of reason, however, have been reduced by the recognition of per se rules. Once experience with a particular kind of restraint enables the Court to predict with confidence that the rule of reason will condemn it, it has applied a conclusive presumption that the restraint is unreasonable. As in every rule of general application, the match between the presumed and the actual is imperfect. For the sake of business certainty and litigation efficiency, *440 we have tolerated the invalidation of some agreements that a fullblown inquiry might have proved to be reasonable.” Arizona v. Maricopa County Medical Society, 457 U. S. 332, 343-344 (1982) (emphasis added; footnotes omitted).

We have freely admitted that conduct condemned under the per se rule sometimes would be permissible if subjected merely to rule-of-reason analysis. See Maricopa, supra, at 344, n. 16; Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 50, n. 16 (1977); United States v. Topco Associates, Inc., 405 U. S. 596, 609 (1972).

Second, the government may not in a First Amendment case apply a broad presumption that certain categories of speech are harmful without engaging in a more particularized examination.3 As the Court of Appeals perceptively reasoned, “the evidentiary shortcut to antitrust condemnation without proof of market power is inappropriate as applied to a boycott that served, in part, to make a statement on a matter of public debate.” 272 U. S. App. D. C., at 296, 856 F. 2d, at 250. “Government may not regulate expression in such a manner that a substantial portion of the burden on speech does not serve to advance its goals”; rather, government must ensure that, even when its regulation is not content based, the restriction narrowly “focuses on the source of the evils the [State] seeks to eliminate.” Ward v. Rock Against Racism, 491 U. S. 781, 799, and n. 7 (1989). This is *441what it means for a law to be “narrowly tailored” to the State’s interest. See Board of Trustees of State Univ. of N. Y. v. Fox, 492 U. S. 469, 478 (1989); Frisby v. Schultz, 487 U. S. 474, 485 (1988). “Broad prophylactic rules in the area of free expression are suspect.” NAACP v. Button, 371 U. S. 415, 438 (1963).

In Speiser v. Randall, 357 U. S. 513 (1958), for example, we invalidated a state program under which taxpayers applying for a certain tax exemption bore the burden of proving that they did not advocate the overthrow of the United States Government. We held that the presumption against the taxpayer was unconstitutional because the State had “no such compelling interest at stake as to justify a short-cut procedure which must inevitably result in suppressing protected speech.” Id., at 529. More recently, we determined that the First Amendment prohibits a State from imposing liability on a newspaper for the publication of embarrassing but truthful information based on a “negligence per se” theory. See The Florida Star v. B. J. F., 491 U. S. 524 (1989). In language applicable to the instant case, we rejected “the broad sweep” of a standard where “liability follows automatically from publication,” and we instead required “case-by-case findings” of harm. Id., at 539. Similarly, I would hold in this case that the FTC cannot ignore the particular factual circumstances before it by employing a presumption of illegality in the guise of the per se rule.

B

The Court’s approach today is all the more inappropriate because the success of the Trial Lawyers’ boycott could have been attributable to the persuasiveness of its message rather than any coercive economic force. When a boycott seeks to generate public support for the passage of legislation, it may operate on a political rather than economic level, especially when the government is the target. Here, the demand for lawyers’ services under the Criminal Justice Act (CJA) is *442created by the command of the Sixth Amendment. How that demand is satisfied is determined by the political decisions of the Mayor, city council, and, because of the unique status of the District of Columbia, the Federal Government as well. As the FTC recognized, see In re Superior Court Trial Lawyers Assn., 107 F. T. C. 510, 572-574(1986), atypical boycott functions by transforming its participants into a single monopolistic entity that restricts supply and increases price. See, e. g., FTC v. Indiana Federation of Dentists, 476 U. S. 447, 459 (1986); National Collegiate Athletic Assn. v. Board of Regents of Univ. of Oklahoma, 468 U. S. 85, 109-110 (1984).

The boycott in this case was completely different: it may have persuaded the consumer of the Trial Lawyers’ services — the District government — to raise the price it paid by altering the political preferences of District officials. Prior to the boycott, these officials perceived that at a time of fiscal austerity, a pay raise for lawyers who represented criminal defendants was not likely to be well received by the voters, whatever the merits of the issue. The SCTLA campaign drew public attention to the lawyers’ plight and generated enough sympathy among city residents to convince District officials, many of whom were already favorably inclined toward the Trial Lawyers’ cause, that they could augment CJA compensation rates without risking their political futures. Applying the per se rule to such a complex situation ignores the possibility that the boycott achieved its goal through a politically driven increase in demand for improved quality of representation, rather than by a cartel-like restriction in supply. The Court of Appeals concluded that “it [was]. . . possible that, lacking any market power, [the Trial Lawyers] procured a rate increase by changing public attitudes through the publicity attending the boycott,” 272 U. S. App. D. C., at 297, 856 F. 2d, at 251, or that “the publicity surrounding the boycott may have served ... to dissipate any public opposition that a substantial raise for lawyers who represent indi*443gent defendants had previously encountered.” Ibid.4 The majority is able to reach the contrary conclusion only by disregarding the long history of attempts to raise defense lawyers’ compensation levels in the District and the virtually unanimous support the Trial Lawyers enjoyed among members of the bar, the judiciary, and, indeed, officials of the city government.

As the Court appears to recognize, see ante, at 421, pre-boycott rates were unreasonably low. City officials hardly could have reached a different conclusion. After 1970, the CJA set fees at $30 per hour for court time and $20 per hour for out-of-court time, and, despite a 147 percent increase in the Consumer Price Index, compensation remained at those levels until the boycott in 1983. Calculated in terms of 1970 dollars, at the time of the boycott CJA lawyers earned approximately $7.80 per hour for out-of-court time and $11.70 for in-court time. In contrast, in 1983 the typical billing rate for private attorneys in major metropolitan areas with 11 to 20 years of experience was $123 per hour, and the rate for those with less than two years of experience was $64 per hour. See App. in No. 86-1465 (CADC), pp. 678-679, 807. Even attorneys receiving compensation under the Equal Access to Justice Act, 28 U. S. C. §2412(d)(2)(A)(ii) (1982 ed.), obtained fees of $75 per hour, with the possibility of upward adjustments to still larger sums. The Chairperson of the Judicial Conference Committee to Implement the Criminal Justice Act testified before Congress that “generally, the present Criminal Justice Act compensation rates do not even *444cover the appointed attorney’s office overhead expenses related to time devoted to representation of defendants under the Act.” Criminal Justice Act: Hearings on H. R. 3233 before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Committee on the Judiciary, 98th Cong., 1st Sess., 22 (1983) (statement of Hon. Thomas J. MacBride). David B. Isbell, then District of Columbia Bar president, warned that “unrealistic and unreasonable compensation rates have hampered the D. C. CJA program in attracting and retaining significant numbers of qualified criminal defense counsel.” Id., at 306.

The legal community became concerned about the low level of CJA fees as early as 1975. The Report on the Criminal Defense Services in the District of Columbia by the Joint Committee of the Judicial Conference of the District of Columbia Circuit and the District of Columbia Bar (Austern-Rezneck Report) concluded that the prevailing rates “drove talented attorneys out of CJA practice, and encouraged those who remained to do a less than adequate job on their cases.” 272 U. S. App. D. C., at 275, 856 F. 2d, at 229. The Austern-Rezneck Report recommended that CJA lawyers be paid $40 per hour for time spent in or out of court, subject to a ceiling of $800 for a misdemeanor case and $1,000 for a felony case. The Report characterized this increase as “‘the absolute minimum necessary to attract and hold good criminal lawyers and assure their ability to render effective representation to their clients.’” Ibid, (quoting Austern-Rezneck Report 84).

In March 1982, the District of Columbia Court System Study Committee of the District of Columbia Bar issued the Horsky Report, which recommended the identical pay increase. See Senate Committee on Governmental Affairs, Senate Print No. 98-34, 98th Cong., 1st Sess. 69 (1983). Legislation increasing the hourly rate to $50 was then introduced in the District of Columbia Council, but the bill died in committee in 1982 without a hearing.

*445In September 1982, SCTLA officials began a lobbying effort to increase CJA compensation levels. They met with Chief Judge Moultrie of the District of Columbia Superior Court, Herbert Reid, who was counsel to the Mayor, and Wiley Branton, then Dean of Howard University Law School. Chief Judge Moultrie told SCTLA representatives that he thought they deserved more money, but he declined to provide them any public support on the ground that if an increase were implemented, his court might be called upon to decide its legality. See 272 U. S. App. D. C., at 275, 856 F. 2d, at 229. Reid informed them that the Mayor was sympathetic to their cause but would not support legislation without the urging of Chief Judge Moultrie. Dean Branton advised that the SCTLA should do “‘something dramatic to attract attention in order to get any relief.’” Ibid.

In March 1983, District of Columbia Council Chairman David Clarke introduced a new, less ambitious bill increasing CJA lawyers’ pay to $35 per hour. A wide variety of groups testified in favor of the bill at a hearing held by the city council’s Judiciary Committee, reflecting an overwhelming consensus on the need to increase CJA rates.5 No one testified against the bill, though the Executive Office of the District of Columbia Courts worried about how to fund it. The Court of Appeals concluded that “Mayor Barry and other important city officials were sympathetic to the boycotters’ goals and may even have been supportive of the boycott itself,” id., at 297, n. 35, 856 F. 2d, at 251, n. 35, and that certain statements by the Mayor could be interpreted “as encouraging the [Trial Lawyers] to stage a demonstration of their political *446muscle so that a rate increase could more easily be justified to the public.” Id., at 298, n. 35, 856 F. 2d, at 252, n. 35.

Taken together, these facts strongly suggest that the Trial Lawyers’ campaign persuaded the city to increase CJA compensation levels by creating a favorable climate in which supportive District officials could vote for a raise without public opposition, even though the lawyers lacked the ability to exert economic pressure. As the court below expressly found, the facts at the very least do not exclude the possibility that the SCTLA succeeded due to political rather than economic power. See id., at 297, 856 F. 2d, at 251. The majority today permits the FTC to find an expressive boycott to violate the antitrust laws, without even requiring a showing that the participants possessed market power or that their conduct triggered any anticompetitive effects. I believe that the First Amendment forecloses such an approach.

HH HH

A

The majority concludes that the Trial Lawyers’ boycott may be enjoined without any showing of market power because “the government’s interest in adhering to a uniform rule may sometimes satisfy the O’Brien test even if making an exception to the rule in a particular case might cause no serious damage.” Ante, at 430 (citing United States v. Albertini, 472 U. S. 675 (1985)) (emphasis added). The Court draws an analogy between the per se rule in antitrust law and categorical proscriptions against airplane stunt flying and reckless automobile driving. See ante, at 433-434. This analogy is flawed.

It is beyond peradventure that sometimes no exception need be made to a neutral rule of general applicability not aimed at the content of speech; “the arrest of a newscaster for a traffic violation,” for example, does not offend the First Amendment. Arcara v. Cloud Books, Inc., 478 U. S. 697, 708 (1986) (O’Connor, J., concurring). Neither do restric*447tions on stunt flying and reckless driving usually raise First Amendment concerns.6 But ever since Schneider v. State, 308 U. S. 147 (1939), we have held that even when the government seeks to address harms entirely unconnected with the content of speech, it must leave open ample alternative channels for effective communication. See Rock Against Racism, 491U. S., at 802-803; Frisby, 487 U. S., at 483-484; Clark v. Community for Creative Non-Violence, 468 U. S. 288, 293 (1984); Metromedia, Inc. v. San Diego, 453 U. S. 490, 552 (1981) (Stevens, J., dissenting in part); Heffron v. International Society for Krishna Consciousness, Inc., 452 U. S. 640, 648 (1981). Although sometimes such content-neutral regulations with incidental effects on speech leave open sufficient room for effective communication, application of the per se rule to expressive boycotts does not. The role of boycotts in political speech is too central, and the effective alternative avenues open to the Trial Lawyers were too few, to permit the FTC to invoke the per se rule in this case.

Expressive boycotts have been a principal means of political communication since the birth of the Republic. As the Court of Appeals recognized, “boycotts have historically been used as a dramatic means of communicating anger or disapproval and of mobilizing sympathy for the boycotters’ cause.” 272 U. S. App. D. C., at 294, 856 F. 2d, at 248. From the colonists’ protest of the Stamp and Townsend Acts to the Montgomery bus boycott and the National Organization for Women’s campaign to encourage ratification of the Equal Rights Amendment, boycotts have played a central role in otir Nation’s political discourse. In recent years there have *448been boycotts of supermarkets, meat, grapes, iced tea in cans, soft drinks, lettuce, chocolate, tuna, plastic wrap, textiles, slacks, animal skins and furs, and products of Mexico, Japan, South Africa, and the Soviet Union. See Missouri v. National Organization for Women, Inc., 620 F. 2d 1301, 1304, n. 5 (CA8), cert. denied, 449 U. S. 842 (1980); Note, 80 Colum. L. Rev. 1317, 1318, 1334 (1980). Like soapbox oratory in the streets and parks, political boycotts are a traditional means of “communicating thoughts between citizens” and “discussing public questions.” Hague v. Committee for Industrial Organization, 307 U. S. 496, 515 (1939) (opinion of Roberts, J.). Any restrictions on such boycotts must be scrutinized with special care in light of their historic importance as a mode of expression. Cf. Perry Education Assn. v. Perry Local Educators’ Assn., 460 U. S. 37, 45 (1983).

The Court observes that all boycotts have “an expressive component” in the sense that participants must communicate their plans among themselves and to their target. Ante, at 431. The Court reasons that this expressive feature alone does not render boycotts immune from scrutiny under the per se rule. Otherwise, the rule could never.be applied to any boycotts or to most price-fixing schemes. On this point I concur with the majority. But while some boycotts may not present First Amendment concerns, when a particular boycott appears to operate on a political rather than economic level, I believe that it cannot be condemned under the per se rule.7 The Court disagrees and maintains that communica*449tion of ideas to the public is a function not of a boycott itself but rather of media coverage, interviews, and other activities ancillary to the boycott and not prohibited by the antitrust laws. See ante, at 426. The Court also notes that other avenues of speech are open, because “[pjublicity may be generated by any other activity that is sufficiently newsworthy.” Ante, at 431. These views are flawed.

First, we have already recognized that an expressive boycott necessarily involves “constitutionally protected activity.” NAACP v. Claiborne Hardware Co., 458 U. S. 886, 911 (1982). That case, in which we held that a civil rights boycott was political expression, forecloses the Court’s approach today. In Claiborne Hardware, Justice Stevens observed that “[t]he established elements of speech, assembly, association, and petition, Though not identical, are inseparable’ ” when combined in an expressive boycott. Ibid, (citation omitted). I am surprised that he now finds that the Trial Lawyers’ boycott was not protected speech. In this case, as in Claiborne Hardware, “[t]hrough the exercise of the[ir] First Amendment rights, petitioners sought to bring about political, social, and economic change.” Ibid. The Court contends that the SCTLA’s motivation differed from that of the boycotters in Claiborne Hardware, see ante, at 426-427, because the former sought to supplement its members’ own salaries rather than to remedy racial injustice. Even if true, the different purposes of the speech can hardly render the Trial Lawyers’ boycott any less expressive.

Next, although the Court is correct that the media coverage of the boycott was substantial,8 see ante, at 414, this *450does not support the majority’s argument that the boycott itself was not expressive. Indeed, that the SCTLA strove so mightily to communicate with the public and the government is an indication that it relied more on its ability to win public sympathy and persuade government officials politically than on its power to coerce the city economically. But media coverage is not the only, or even the principal, reason why the boycott was entitled to First Amendment protection. The refusal of the Trial Lawyers to accept appointments by itself communicated a powerful idea: CJA compensation rates had deteriorated so much, relatively speaking, that the lawyers were willing to forgo their livelihoods rather than return to work.

By sacrificing income that they actually desired, and thus inflicting hardship on themselves as well as on the city, the lawyers demonstrated the intensity of their feelings and the depth of their commitment. The passive nonviolence of King and Gandhi are proof that the resolute acceptance of pain may communicate dedication and righteousness more eloquently than mere words ever could. A boycott, like a hunger strike, conveys an emotional message that is absent in a letter to the editor, a conversation with the mayor, or even a protest march. Cf. Cohen v. California, 403 U. S. 15, 26 (1971) (First Amendment protects “not only ideas capable of relatively precise, detached explication, but otherwise inexpressible emotions as well”). In this respect, an expressive *451boycott is a special form of political communication. Dean Branton’s advice to the Trial Lawyers — that they should do “something dramatic to attract attention” — was sage indeed.

Another reason why expressive boycotts are irreplaceable as a means of communication is that they are essential to the “poorly financed causes of little people.” Martin v. Struthers, 319 U. S. 141, 146 (1943). It is no accident that boycotts have been used by the American colonists to throw off the British yoke and by the oppressed to assert their civil rights. See Claiborne Hardware, swpra. Such groups cannot use established organizational techniques to advance their political interests, and boycotts are often the only effective route available to them.

B

Underlying the majority opinion are apprehensions that the Trial Lawyers’ boycott was really no different from any other, and that requiring the FTC to apply a rule-of-reason analysis in this case will lead to the demise of the per se rule in the boycott area. I do not share the majority’s fears. The boycott before us today is readily distinguishable from those with which the antitrust laws are concerned, on the very ground suggested by the majority: the Trial Lawyers intended to and in fact did “communicate with third parties to enlist public support for their objectives.” Ante, at 431. As we have seen, in all likelihood the boycott succeeded not due to any market power wielded by the lawyers but rather because they were able to persuade the District government through political means. Other boycotts may involve no expressive features and instead operate solely on an economic level. Very few economically coercive boycotts seek notoriety both because they seek to escape detection and because they have no wider audience beyond the participants and the target.

Furthermore, as the Court of Appeals noted, there may be significant differences between boycotts aimed at the government and those aimed at private parties. See 272 U. S. *452App. D. C., at 296, 856 F. 2d, at 250. The government has options open to it that private parties do not; in this suit, for example, the boycott was aimed at a legislative body with the power to terminate it at any time by requiring all members of the District Bar to represent defendants pro bono. If a boycott against the government achieves its goal, it likely owes its success to political rather than market power.

The Court’s concern for the vitality of the per se rule, moreover, is misplaced, in light of the fact that we have been willing to apply rule-of-reason analysis in a growing number of group-boycott cases. See, e. g., Indiana Federation of Dentists, 476 U. S., at 458-459; Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U. S. 284, 293-298 (1985); National Collegiate Athletic Assn., 468 U. S., at 101; Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 9-10 (1979) (criticizing application of per se rule because “[l]iteralness is overly simplistic and often overbroad”).9 We have recognized that “there is *453often no bright line separating per se from Rule of Reason analysis. Per se rules may require considerable inquiry into market conditions before the evidence justifies a presumption of anticompetitive conduct.” National Collegiate Athletic Assn., supra, at 104, n. 26.

In short, the conclusion that per se analysis is inappropriate in this boycott case would not preclude its application in many others, nor would it create insurmountable difficulties for antitrust enforcement. The plainly expressive nature of the Trial Lawyers’ campaign distinguishes it from boycotts that are the intended subjects of the antitrust laws.

I respectfully dissent.

Justice Blackmun,

concurring in part and dissenting in part.

Like Justice Brennan, I, too, join Parts I, II, III, and IV of the Court’s opinion. But, while I agree with the reasoning of Justice Brennan’s dissent, I write separately to express my doubt whether a remand for findings of fact concerning the market power of the Superior Court Trial Lawyers Association (SCTLA or Trial Lawyers) would be warranted in the unique circumstances of this litigation. As Justice Brennan notes, the Trial Lawyers’ boycott was aimed at the District’s courts and legislature, governmental bodies that had the power to terminate the boycott at any time by requiring any or all members of the District Bar— including the members of SCTLA — to represent indigent defendants pro bono. Attorneys are not merely participants in a competitive market for legal services; they are officers of the court. Their duty to serve the public by representing indigent defendants is not only a matter of conscience, but is also enforceable by the government’s power to order such representation, either as a condition of practicing law. in the District or on pain of contempt. See Powell v. Alabama, 287 U. S. 45, 73 (1932) (“Attorneys are officers of the court, and are bound to render service when required” by court appointment); see also United States v. Accetturo, 842 F. 2d *4541408, 1412-1413 (CA3 1988); Waters v. Kemp, 845 F. 2d 260, 263 (CA11 1988).*

The Trial Lawyers’ boycott thus was a dramatic gesture not fortified by any real economic power. They could not have coerced the District to meet their demands by brute economic force, i. e., by constricting the supply of legal services to drive up the price. Instead, the Trial Lawyers’ boycott put the government in a position where it had to make a political choice between exercising its power to break the boycott or agreeing to a rate increase. The factors relevant to this choice were political, not economic: that forcing the lawyers to stop the boycott would have been unpopular, because, as it turned out, public opinion supported the boycott; and that the District officials themselves may not have genuinely opposed the rate increase, and may have welcomed the appearance of a politically expedient “emergency.”

I believe that, in this unique market where the government buys services that it could readily compel the sellers to provide, the Trial Lawyers lacked any market power and their boycott could have succeeded only through political persuasion. I therefore would affirm the judgment below insofar as it invokes the United States v. O’Brien, 391 U. S. 367 (1968), analysis to preclude application of the per se rule to the Trial Lawyers’ boycott, but reverse as to the remand to the FTC for a determination of market power.

Mr. Justice Clark

delivered the opinion of the Court.

This action for treble damages and injunctive relief, brought under § 4 of the Clayton Act,1 tests the application of the antitrust laws to the business of professional football. Petitioner Radovich, an all-pro guard formerly with the Detroit Lions, contends that the respondents 2 *447entered into a conspiracy to monopolize and control organized professional football in the United States, in violation of §§ 1 and 2 of the Sherman Act; 3 that part of the conspiracy was to destroy the All-America Conference, a competitive professional football league in which Radovich once played; and that pursuant to agreement, respondents boycotted Radovich and prevented him from becoming a player-coach in the Pacific Coast League. Petitioner alleges that respondents’ illegal conduct damaged him in the sum of $35,000, to be trebled as provided by the Act. The trial court, on respondents’ motion, dismissed the cause for lack of jurisdiction and failure to state a claim on which relief could be granted. The Court of Appeals affirmed, 231 F. 2d 620, on the basis of Federal Baseball Club v. National League, 259 U. S. 200 (1922), and Toolson v. New York Yankees, Inc., 346 U. S. 356 (1953), applying the baseball rule to all “team sports.” It further found that even if such application was erroneous and that United States v. International Boxing Club, 348 U. S. 236 (1955), applied, Radovich had not grounded his claim on conduct of respondents which was “calculated to prejudice the public or unreasonably restrain interstate commerce.” 231 F. 2d, at 623. We granted certiorari, 352 U. S. 818, in order to clarify the application of the Toolson doctrine and determine whether the business of football comes within the scope of the Sherman Act. For the reasons hereafter stated we conclude that Toolson and Federal Baseball do not con*448trol; that the respondents’ activities as alleged are within the coverage of the antitrust laws; and that the complaint states a cause of action thereunder.

I.

Since the complaint was dismissed its allegations must be taken by us as true. It is, therefore, important for us to consider what Radovich alleged. Concisely the complaint states that:

1. Radovich began his professional football career in 1938 when he signed with the Detroit Lions, a National League club. After four seasons of play he entered the Navy, returning to the Lions for the 1945 season. In 1946 he asked for a transfer to a National League club in Los Angeles because of the illness of his father. The Lions refused the transfer and Radovich broke his player contract by signing with and playing the 1946 and 1947 seasons for the Los Angeles Dons, a member of the All-America Conference.4 In 1948 the San Francisco Clippers, a member of the Pacific Coast League which was affiliated with but not a competitor of the National League, offered to employ Radovich as a player-coach. However, the National League advised that Radovich was black-listed and any affiliated club signing him would suffer severe penalties. The Clippers then refused to sign him in any position. This black-listing effectively prevented his employment in organized professional football in the United States.

2. The black-listing was the result of a conspiracy among the respondents to monopolize commerce in professional football among the States. The purpose of the conspiracy was to “control, regulate and dictate the terms upon which organized professional football shall be played throughout the United States” in violation of §§ 1 and 2 of the *449Sherman Act. It was part of the conspiracy to boycott the All-America Conference and its players with a view to its destruction and thus strengthen the monopolistic position of the National Football League.

3. As part of its football business, the respondent league and its member teams schedule football games in various metropolitan centers, including New York, Chicago, Philadelphia, and Los Angeles. Each team uses a standard player contract which prohibits a player from signing with another club without the consent of the club holding the player’s contract. These contracts are enforced by agreement of the clubs to black-list any player violating them and to visit severe penalties on recalcitrant member clubs. As a further “part of the business of professional football itself” and “directly tied in and connected” with its football exhibitions is the transmission of the games over radio and television into nearly every State of the Union. This is accomplished by contracts which produce a “significant portion of the gross receipts” and without which “the business of operating a professional football club would not be profitable.” The playing of the exhibitions themselves “is essential to the interstate transmission by broadcasting and television” and the actions of the respondents against Radovich were necessarily related to these interstate activities.

In the light of these allegations respondents raise two issues: They say the business of organized professional football was not intended by Congress to be included within the scope of the antitrust laws; and, if wrong in this contention, that the complaint does not state a cause of action upon which relief can be granted.

II.

Respondents’ contention, boiled down, is that agreements similar to those complained of here, which have for many years been used in organized baseball, have *450been held by this Court to be outside the scope of the antitrust laws.5 They point to Federal Baseball and Toolson, supra, both involving the business of professional baseball, asserting that professional football has embraced the same techniques which existed in baseball at the time of the former decision.6 They contend that stare decisis compels the same result here. True, the umbrella under which respondents hope to stand is not so large as that contended for in United States v. International Boxing Club, supra, nor in United States v. Shubert, 348 U. S. 222 (1955). There we were asked to extend Federal Baseball to boxing and the theater. Here respondents say that the contracts and sanctions which baseball and football find it necessary to impose have no counterpart in other businesses and that, therefore, they alone are outside the ambit of the Sherman Act. In Toolson we continued to hold the umbrella over baseball that was placed there some 31 years earlier by Federal Baseball. The Court did this because it was concluded that more harm would be done in overruling Federal Baseball than in upholding a ruling which at best was of dubious validity. Vast efforts had gone into the development and organization of baseball since that decision and enormous capital had been invested in reliance on its permanence. Congress had chosen to make no change.7 All this, combined with the flood of litigation that would follow its repudiation, the harass*451ment that would ensue, and the retroactive effect of such a decision, led the Court to the practical result that it should sustain the unequivocal line of authority reaching over many years.

The Court was careful to restrict Toolson’s coverage to baseball, following the judgment of Federal Baseball only so far as it “determines that Congress had no intention of including the business of baseball within the scope of the federal antitrust laws.” 346 U. S., at 357. The Court reiterated this in United States v. Shubert, supra, at 230, where it said, “In short, Toolson was a narrow application of the rule of stare decisis.” And again, in International Boxing Club, it added, “Toolson neither overruled Federal Baseball nor necessarily reaffirmed all that was said in Federal Baseball. . . . Toolson is not authority for exempting other businesses merely because of the circumstance that they are also based on the performance of local exhibitions.” 348 U. S., at 242. Furthermore, in discussing the impact of the Federal Baseball decision, the Court made the observation that that decision “could not be relied upon as a basis of exemption for other segments of the entertainment business, athletic or otherwise. . . . The controlling consideration in Federal Baseball . . . was . . . the degree of interstate activity involved in the particular business under review.” Id., at 242-243. It seems that this language would have made it clear that the Court intended to isolate these cases by limiting them to baseball, but since Toolson and Federal Baseball are still cited as controlling authority in antitrust actions involving other fields of business, we now specifically limit the rule there established to the facts there involved, i. e., the business of organized professional baseball. As long as the Congress continues to acquiesce we should adhere to — but not extend — the interpretation of the Act made in those cases. We did not extend them to boxing or the theater because we believed *452that the volume of interstate business in each — the rationale of Federal Baseball — was such that both activities were within the Act. Likewise, the volume of interstate business involved in organized professional football places it within the provisions of the Act.

If this ruling is unrealistic, inconsistent, or illogical, it is sufficient to answer, aside from the distinctions between the businesses,8 that were we considering the question of baseball for the first time upon a clean slate we would have no doubts. But Federal Baseball held the business of baseball outside the scope of the Act. No other business claiming the coverage of those cases has such an adjudication. We, therefore, conclude that the orderly way to eliminate error or discrimination, if any there be, is by legislation and not by court decision. Congressional processes are more accommodative, affording the whole industry hearings and an opportunity to assist in the formulation of new legislation. The resulting product is therefore more likely to protect the industry and the public alike. The whole scope of congressional action would be known long in advance and effective dates for the legislation could be set in the future without the injustices of retroactivity and surprise which might follow court action. Of course, the doctrine of Toolson and Federal Baseball must yield to any congressional action and continues only at its sufferance. This is not a new approach. See Davis v. Department of Labor, 317 U. S. 249, 255 (1942); 9 Compare Rutkin v. United States, 343 U. S. 130 (1952).

*453III.

We now turn to the sufficiency of the complaint. At the outset the allegations of the nature and extent of interstate commerce seem to be sufficient. In addition to the standard allegations, a specific claim is made that radio and television transmission is a significant, integral part of the respondents’ business, even to the extent of being the difference between a profit and a loss. Unlike International Boxing, the complaint alleges no definite percentage in this regard. However, the amount must be substantial and can easily be brought out in the proof. If substantial, as alleged, it alone is sufficient to meet the commerce requirements of the Act. See International Boxing, supra, at 241.

Likewise, we find the technical objections to the pleading without merit. The test as to sufficiency laid down by Mr. Justice Holmes in Hart v. B. F. Keith Vaudeville Exchange, 262 U. S. 271, 274 (1923), is whether “the claim is wholly frivolous.” While the complaint might have been more precise in its allegations concerning the purpose and effect of the conspiracy, “we are not prepared to say that nothing can be extracted from this bill that falls under the act of Congress . . . .” Id., at 274. See also United States v. Employing Plasterers Assn., 347 U. S. 186 (1954).

Petitioner’s claim need only be “tested under the Sherman Act’s general prohibition on unreasonable restraints of trade,” Times-Picayune Publishing Co. v. United States, 345 U. S. 594, 614 (1953), and meet the requirement that petitioner has thereby suffered injury. Congress has, by legislative fiat, determined that such prohibited activities are injurious to the public10 and has *454provided sanctions allowing private enforcement of the antitrust laws by an aggrieved party. These laws protect the victims of the forbidden practices as well as the public. Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U. S. 219, 236 (1948). Furthermore, Congress itself has placed the private antitrust litigant in a most favorable position through the enactment of § 5 of the Clayton Act.11 Emich Motors Corp. v. General Motors Corp., 340 U. S. 558 (1951). In the face of such a policy this Court should not add requirements to burden the private litigant beyond what is specifically set forth by Congress in those laws.

Respondents’ remaining contentions we believe to be lacking in merit.

We think that Radovich is entitled to an opportunity to prove his charges. Of course, we express no opinion as to whether or not respondents have, in fact, violated the antitrust laws, leaving that determination to the trial court after all the facts are in.

Reversed.

*455Mr. Justice Frankfurter,

dissenting.

The difficult problem in this case derives for me not out of the Sherman Law but in relation to the appropriate compulsion of stare decisis. It does not derive from the Sherman Law because the most conscientious probing of the text and the interstices of the Sherman Law fails to disclose that Congress, whose will we are enforcing, excluded baseball — the conditions under which that sport is carried on — from the scope of the Sherman Law but included football. I say this, fully aware that the Sherman Law’s applicability turns on the particular circumstances of activities pursued in trade and commerce among the several States. But whether the conduct of an enterprise is within or without the limits of the Sherman Law is, after all, a question for judicial determination, and conscious as I am of my limited competence in matters athletic, I have yet to hear of any consideration that led this Court to hold that “the business of providing public baseball games for profit between clubs of professional baseball players was not within the scope of the federal antitrust laws,” Toolson v. New York Yankees, 346 U. S. 356, 357, that is not equally applicable to football.

But considerations pertaining to stare decisis do raise a serious question for me. That principle is a vital ingredient of law, for it “embodies an important social policy.” Helvering v. Hallock, 309 U. S. 106, 119. It would disregard the principle for a judge stubbornly to persist in his views on a particular issue after the contrary had become part of the tissue of the law. Until then, full respect for stare decisis does not require a judge to forego his own convictions promptly after his brethren have rejected them.

The considerations that governed me two years ago in United States v. International Boxing Club, 348 U. S. 236, *456have not lost their force by reason of the authority that time gives to a single decision. And so I am confronted with the Toolson case, supra, which guides me to find the present situation within its scope, and the Boxing case, supra, which, while it looks the other way, left Toolson as a living authority. Respect for the doctrine of stare decisis does not yet require me to disrespect the views I expressed in the Boxing case.

I would affirm.

Mr. Justice Harlan,

with whom Mr. Justice Brennan joins,

dissenting.

What was foreshadowed by United States v. International Boxing Club, 348 U. S. 236, has now come to pass. The Court, in holding that professional football is subject to the antitrust laws, now says in effect that professional baseball is sui generis so far as those laws are concerned, and that therefore Federal Baseball Club v. National League, 259 U. S. 200, and Toolson v. New York Yankees, Inc., 346 U. S. 356, do not control football by reason of stare decisis. Since I am unable to distinguish football from baseball under the rationale of Federal Baseball and Toolson, and can find no basis for attributing to Congress a purpose to put baseball in a class by itself, I would adhere to the rule of stare decisis and affirm the judgment below.

If the situation resulting from the baseball decisions is to be changed-, I think it far better to leave it to be dealt with by Congress than for this Court to becloud the situation further, either by making untenable distinctions between baseball and other professional sports, or by discriminatory fiat in favor of baseball.

*755Chief Justice Burger

delivered the opinion of the Court.

We granted certiorari to determine whether a parent corporation and its wholly owned subsidiary are legally capable of conspiring with each other under § 1 of the Sherman Act.

I

A.

The predecessor to petitioner Regal Tube Co. was established in Chicago in 1955 to manufacture structural steel *756tubing used in heavy equipment, cargo vehicles, and construction. From 1955 to 1968 it remained a wholly owned subsidiary of C. E. Robinson Co. In 1968 Lear Siegler, Inc., purchased Regal Tube Co. and operated it as an unincorporated division. David Grohne, who had previously served as vice president and general manager of Regal, became president of the division after the acquisition.

In 1972 petitioner Copperweld Corp. purchased the Regal division from Lear Siegler; the sale agreement bound Lear Siegler and its subsidiaries not to compete with Regal in the United States for five years. Copperweld then transferred Regal’s assets to a newly formed, wholly owned Pennsylvania corporation, petitioner Regal Tube Co. The new subsidiary continued to conduct its manufacturing operations in Chicago but shared Copperweld’s corporate headquarters in Pittsburgh.

Shortly before Copperweld acquired Regal, David Grohne accepted a job as a corporate officer of Lear Siegler. After the acquisition, while continuing to work for Lear Siegler, Grohne set out to establish his own steel tubing business to compete in the same market as Regal. In May 1972 he formed respondent Independence Tube Corp., which soon secured an offer from the Yoder Co. to supply a tubing mill. In December 1972 respondent gave Yoder a purchase order to have a mill ready by the end of December 1973.

When executives at Regal and Copperweld learned of Grohne’s plans, they initially hoped that Lear Siegler’s non-competition agreement would thwart the new competitor. Although their lawyer advised them that Grohne was not bound by the agreement, he did suggest that petitioners might obtain an injunction against Grohne’s activities if he made use of any technical information or trade secrets belonging to Regal. The legal opinion was given to Regal and Copperweld along with a letter to be sent to anyone with whom Grohne attempted to deal. The letter warned that Copperweld would be “greatly concerned if [Grohne] contem*757plates entering the structural tube market... in competition with Regal Tube” and promised to take “any and all steps which are necessary to protect our rights under the terms of our purchase agreement and to protect the know-how, trade secrets, etc., which we purchased from Lear Siegler.” Petitioners later asserted that the letter was intended only to prevent third parties from developing reliance interests that might later make a court reluctant to enjoin Grohne’s operations.

When Yoder accepted respondent’s order for a tubing mill on February 19, 1973, Copperweld sent Yoder one of these letters; two days later Yoder voided its acceptance. After respondent’s efforts to resurrect the deal failed, respondent arranged to have a mill supplied by another company, which performed its agreement even though it too received a warning letter from Copperweld. Respondent began operations on September 13,1974, nine months later than it could have if Yoder had supplied the mill when originally agreed.

Although the letter to Yoder was petitioners’ most successful effort to discourage those contemplating doing business with respondent, it was not their only one. Copperweld repeatedly contacted banks that were considering financing respondent’s operations. One or both petitioners also approached real estate firms that were considering providing plant space to respondent and contacted prospective suppliers and customers of the new company.

B

In 1976 respondent filed this action in the District Court against petitioners and Yoder.1 The jury found that *758Copperweld and Regal had conspired to violate §1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1, but that Yoder was not part of the conspiracy. It also found that Copperweld, but not Regal, had interfered with respondent’s contractual relationship with Yoder; that Regal, but not Copperweld, had interfered with respondent’s contractual relationship with a potential customer of respondent, Deere Plow & Planter Works, and had slandered respondent to Deere; and that Yoder had breached its contract to supply a tubing mill.

At a separate damages phase, the judge instructed the jury that the damages for the antitrust violation and for the inducement of the Yoder contract breach should be identical and not double counted. The jury then awarded $2,499,009 against petitioners on the antitrust claim, which was trebled to $7,497,027. It awarded $15,000 against Regal alone on the contractual interference and slander counts pertaining to Deere. The court also awarded attorney’s fees and costs after denying petitioners’ motions for judgment n.o.v. and for a new trial.

C

The United States Court of Appeals for the Seventh Circuit affirmed. 691 F. 2d 310 (1982). It noted that the exoneration of Yoder from antitrust liability left a parent corporation and its wholly owned subsidiary as the only parties to the § 1 conspiracy. The court questioned the wisdom of subjecting an “intra-enterprise” conspiracy to antitrust liability, when the same conduct by a corporation and an unincorpo*759rated division would escape liability for lack of the requisite two legal persons. However, relying on its decision in Photovest Corp. v. Fotomat Corp., 606 F. 2d 704 (1979), cert. denied, 445 U. S. 917 (1980), the Court of Appeals held that liability was appropriate “when there is enough separation between the two entities to make treating them as two independent actors sensible.” 691 F. 2d, at 318. It held that the jury instructions took account of the proper factors for determining how much separation Copperweld and Regal in fact maintained in the conduct of their businesses.2 It also held that there was sufficient evidence for the jury to conclude that Regal was more like a separate corporate entity than a mere service arm of the parent.

We granted certiorari to reexamine the intra-enterprise conspiracy doctrine, 462 U. S. 1131 (1983), and we reverse.

Review of this case calls directly into question whether the coordinated acts of a parent and its wholly owned subsidiary can, in the legal sense contemplated by § 1 of the Sherman Act, constitute a combination or conspiracy.3 The so-called “intra-enterprise conspiracy” doctrine provides that § 1 liability is not foreclosed merely because a parent and its subsidiary are subject to common ownership. The doctrine derives from declarations in several of this Court’s opinions.

*760In no case has the Court considered the merits of the intra-enterprise conspiracy doctrine in depth. Indeed, the concept arose from a far narrower rule. Although the Court has expressed approval of the doctrine on a number of occasions, a finding of intra-enterprise conspiracy was in all but perhaps one instance unnecessary to the result.

The problem began with United States v. Yellow Cab Co., 332 U. S. 218 (1947). The controlling shareholder of the Checker Cab Manufacturing Corp., Morris Markin, also controlled numerous companies operating taxicabs in four cities. With few exceptions, the operating companies had once been independent and had come under Markin’s control by acquisition or merger. The complaint alleged conspiracies under §§ 1 and 2 of the Sherman Act among Markin, Checker, and five corporations in the operating system. The Court stated that even restraints in a vertically integrated enterprise were not “necessarily” outside of the Sherman Act, observing that an unreasonable restraint

“may result as readily from a conspiracy among those who are affiliated or integrated under common ownership as from a conspiracy among those who are otherwise independent. Similarly, any affiliation or integration flowing from an illegal conspiracy cannot insulate the conspirators from the sanctions which Congress has imposed. The corporate interrelationships of the conspirators, in other words, are not determinative of the applicability of the Sherman Act. That statute is aimed at substance rather than form. See Appalachian Coals, Inc. v. United States, 288 U. S. 344, 360-361, 376-377.

“And so in this case, the common ownership and control of the various corporate appellees are impotent to liberate the alleged combination and conspiracy from the impact of the Act. The complaint charges that the restraint of interstate trade was not only effected by the combination of the appellees but was the primary object *761of the combination. The theory of the complaint... is that ‘dominating power’ over the cab operating companies ‘was not obtained by normal expansion . . . but by deliberate, calculated purchase for control.’” Id., at 227-228 (emphasis added) (quoting United States v. Reading Co., 253 U. S. 26, 57 (1920)).

It is the underscored language that later breathed life into the intra-enterprise conspiracy doctrine. The passage as a whole, however, more accurately stands for a quite different proposition. It has long been clear that a pattern of acquisitions may itself create a combination illegal under § 1, especially when an original anticompetitive purpose is evident from the affiliated corporations’ subsequent conduct.4 The Yellow Cab passage is most fairly read in light of this settled rule. In Yellow Cab, the affiliation of the defendants was irrelevant because the original acquisitions were themselves illegal.5 An affiliation “flowing from an illegal conspiracy” would not avert sanctions. Common ownership and control were irrelevant because restraint of trade was “the primary object of the combination,” which was created in a “‘delib*762erate, calculated’ ” manner. Other language in the opinion is to the same effect.6

The Court’s opinion relies on Appalachian Coals, Inc. v. United States, 288 U. S. 344 (1933); however, examination of that case reveals that it gives very little support for the broad doctrine Yellow Cab has been thought to announce. On the contrary, the language of Chief Justice Hughes speaking for the Court in Appalachian Coals supports a contrary conclusion. After observing that “[t]he restrictions the Act imposes are not mechanical or artificial,” 288 U. S., at 360, he went on to state:

*763“The argument that integration may be considered a normal expansion of business, while a combination of independent producers in a common selling agency should be treated as abnormal — that one is a legitimate enterprise and the other is not — makes but an artificial distinction. The Anti-Trust Act aims at substance.” Id., at 377.7

As we shall see, infra, at 771-774, it is the intra-enterprise conspiracy doctrine itself that “makes but an artificial distinction” at the expense of substance.

The ambiguity of the Yellow Cab holding yielded the one case giving support to the intra-enterprise conspiracy doctrine.8 In Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211 (1951), the Court held that two wholly owned subsidiaries of a liquor distiller were guilty under § 1 of the Sherman Act for jointly refusing to supply a wholesaler who declined to abide by a maximum resale pricing scheme. The Court offhandedly dismissed the defendants’ argument *764that “their status as ‘mere instrumentalities of a single manufacturing-merchandizing unit’ makes it impossible for them to have conspired in a manner forbidden by the Sherman Act.” Id., at 215. With only a citation to Yellow Cab and no further analysis, the Court stated that the

“suggestion runs counter to our past decisions that common ownership and control does not liberate corporations from the impact of the antitrust laws”

and stated that this rule was “especially applicable” when defendants “hold themselves out as competitors.” 340 U. S., at 215.

Unlike the Yellow Cab passage, this language does not pertain to corporations whose initial affiliation was itself unlawful. In straying beyond Yellow Cab, the Kiefer-Stewart Court failed to confront the anomalies an intra-enterprise doctrine entails. It is relevant nonetheless that, were the ease decided today, the same result probably could be justified on the ground that the subsidiaries conspired with wholesalers other than the plaintiff.9 An intra-enterprise conspiracy doctrine thus would no longer be necessary to a finding of liability on the facts of Kiefer-Stewart.

Later cases invoking the intra-enterprise conspiracy doctrine do little more than cite Yellow Cab or Kiefer-Stewart, and in none of the cases was the doctrine necessary to the result reached. Timken Roller Bearing Co. v. United States, 341 U. S. 593 (1951), involved restrictive horizontal agree*765ments between an American corporation and two foreign corporations in which it owned 30 and 50 percent interests respectively. The Timken Court cited Kiefer Stewart to show that “[t]he fact that there is common ownership or control of the contracting corporations does not liberate them from the impact of the antitrust laws.” 341 U. S., at 598. But the relevance of this statement is unclear. The American defendant in Timken did not own a majority interest in either of the foreign corporate conspirators and, as the District Court found, it did not control them.10 Moreover, as in Yellow Cab, there was evidence that the stock acquisitions were themselves designed to effectuate restrictive practices.11 The Court’s reliance on the intra-enterprise conspiracy doctrine was in no way necessary to the result.

The same is true of Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134 (1968), which involved a conspiracy among a parent corporation and three subsidiaries to impose various illegal restrictions on plaintiff franchisees. The Court did suggest that, because the defendants

“availed themselves of the privilege of doing business through separate corporations, the fact of common own*766ership could not save them from any of the obligations that the law imposes on separate entities [citing Yellow Cab and Timken].” Id., at 141-142.

But the Court noted immediately thereafter that “[i]n any event” each plaintiff could “clearly” charge a combination between itself and the defendants or between the defendants and other franchise dealers. Ibid. Thus, for the same reason that a finding of liability in Kiefer-Stewart could today be justified without reference to the intra-enterprise conspiracy doctrine, see n. 9, supra, the doctrine was at most only an alternative holding in Perma Life Mufflers.

In short, while this Court has previously seemed to acquiesce in the intra-enterprise conspiracy doctrine, it has never explored or analyzed in detail the justifications for such a rule; the doctrine has played only a relatively minor role in the Court’s Sherman Act holdings.

III

Petitioners, joined by the United States as amicus curiae, urge us to repudiate the intra-enterprise conspiracy doctrine. 12 The central criticism is that the doctrine gives undue significance to the fact that a subsidiary is separately incorporated and thereby treats as the concerted activity of two *767entities what is really unilateral behavior flowing from decisions of a single enterprise.

We limit our inquiry to the narrow issue squarely presented: whether a parent and its wholly owned subsidiary are capable of conspiring in violation of § 1 of the Sherman Act. We do not consider under what circumstances, if any, a parent may be liable for conspiring with an affiliated corporation it does not completely own.

A

The Sherman Act contains a “basic distinction between concerted and independent action.” Monsanto Co. v. Spray-Rite Service Corp., 465 U. S. 752, 761 (1984). The conduct of a single firm is governed by § 2 alone and is unlawful only when it threatens actual monopolization.13 It is not enough that a single firm appears to “restrain trade” unreasonably, for even a vigorous competitor may leave that impression. For instance, an efficient firm may capture unsatisfied customers from an inefficient rival, whose own ability to compete may suffer as a result. This is the rule of the marketplace and is precisely the sort of competition that promotes the consumer interests that the Sherman Act aims to foster.14 In part because it is sometimes difficult to *768distinguish robust competition from conduct with long-run anticompetitive effects, Congress authorized Sherman Act scrutiny of single firms only when they pose a danger of monopolization. Judging unilateral conduct in this manner reduces the risk that the antitrust laws will dampen the competitive zeal of a single aggressive entrepreneur.

Section 1 of the Sherman Act, in contrast, reaches unreasonable restraints of trade effected by a "contract, combination ... or conspiracy” between separate entities. It does not reach conduct that is “wholly unilateral.” Albrecht v. Herald Co., 390 U. S. 145, 149 (1968); accord, Monsanto Co. v. Spray-Rite Corp., supra, at 761. Concerted activity subject to § 1 is judged more sternly than unilateral activity under §2. Certain agreements, such as horizontal price fixing and market allocation, are thought so inherently anti-competitive that each is illegal per se without inquiry into the harm it has actually caused. See generally Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958). Other combinations, such as mergers, joint ventures, and various vertical agreements, hold the promise of increasing a firm’s efficiency and enabling it to compete more effectively. Accordingly, such combinations are judged under a rule of reason, an inquiry into market power and market structure designed to assess the combination’s actual effect. See, e. g., Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36 (1977); Chicago Board of Trade v. United States, 246 U. S. 231 (1918). Whatever form the inquiry takes, however, it is not necessary to prove that concerted activity threatens monopolization.

The reason Congress treated concerted behavior more strictly than unilateral behavior is readily appreciated. Concerted activity inherently is fraught with anticompetitive *769risk. It deprives the marketplace of the independent centers of decisionmaking that competition assumes and demands. In any conspiracy, two or more entities that previously pursued their own interests separately are combining to act as one for their common benefit. This not only reduces the diverse directions in which economic power is aimed but suddenly increases the economic power moving in one particular direction. Of course, such mergings of resources may well lead to efficiencies that benefit consumers, but their anticompetitive potential is sufficient to warrant scrutiny even in the absence of incipient monopoly.

B

The distinction between unilateral and concerted conduct is necessary for a proper understanding of the terms “contract, combination ... or conspiracy” in § 1. Nothing in the literal meaning of those terms excludes coordinated conduct among officers or employees of the same company. But it is perfectly plain that an internal “agreement” to implement a single, unitary firm’s policies does not raise the antitrust dangers that § 1 was designed to police. The officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals. Coordination within a firm is as likely to result from an effort to compete as from an effort to stifle competition. In the marketplace, such coordination may be necessary if a business enterprise is to compete effectively. For these reasons, officers or employees of the same firm do not provide the plurality of actors imperative for a §1 conspiracy.16

*770There is also general agreement that § 1 is not violated by the internally coordinated conduct of a corporation and one of its unincorporated divisions.16 Although this Court has not previously addressed the question,17 there can be little doubt that the operations of a corporate enterprise organized into divisions must be judged as the conduct of a single actor. The existence of an unincorporated division reflects no more than a firm’s decision to adopt an organizational division of labor. A division within a corporate structure pursues the common interests of the whole rather than interests separate from those of the corporation itself; a business enterprise establishes divisions to further its own interests in the most efficient manner. Because coordination between a corporation *771and its division does not represent a sudden joining of two independent sources of economic power previously pursuing separate interests, it is not an activity that warrants § 1 scrutiny.

Indeed, a rule that punished coordinated conduct simply because a corporation delegated certain responsibilities to autonomous units might well discourage corporations from creating divisions with their presumed benefits. This would serve no useful antitrust purpose but could well deprive consumers of the efficiencies that decentralized management may bring.

C

For similar reasons, the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act. A parent and its wholly owned subsidiary have a complete unity of interest. Their objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one. They are not unlike a multiple team of horses drawing a vehicle under the control of a single driver. With or without a formal “agreement,” the subsidiary acts for the benefit of the parent, its sole shareholder. If a parent and a wholly owned subsidiary do “agree” to a course of action, there is no sudden joining of economic resources that had previously served different interests, and there is no justification for § 1 scrutiny.

Indeed, the very notion of an “agreement” in Sherman Act terms between a parent and a wholly owned subsidiary lacks meaning. A § 1 agreement may be found when “the conspirators had a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement.” American Tobacco Co. v. United States, 328 U. S. 781, 810 (1946). But in reality a parent and a wholly owned subsidiary always have a “unity of purpose or a common design.” They share a common purpose whether or not the parent keeps a tight rein over the subsidiary; the parent may assert *772full control at any moment if the subsidiary fails to act in the parent’s best interests.18

The intra-enterprise conspiracy doctrine looks to the form of an enterprise’s structure and ignores the reality. Antitrust liability should not depend on whether a corporate subunit is organized as an unincorporated division or a wholly owned subsidiary. A corporation has complete power to maintain a wholly owned subsidiary in either form. The economic, legal, or other considerations that lead corporate management to choose one structure over the other are not relevant to whether the enterprise’s conduct seriously threatens competition.19 Rather, a corporation may adopt the subsidiary form of organization for valid management and related purposes. Separate incorporation may im*773prove management, avoid special tax problems arising from multistate operations, or serve other legitimate interests.20 Especially in view of the increasing complexity of corporate operations, a business enterprise should be free to structure itself in ways that serve efficiency of control, economy of operations, and other factors dictated by business judgment without increasing its exposure to antitrust liability. Because there is nothing inherently anticompetitive about a corporation’s decision to create a subsidiary, the intra-enterprise conspiracy doctrine “impose[s] grave legal consequences upon organizational distinctions that are of de minimis meaning and effect.” Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U. S. 19, 29 (1962).21

If antitrust liability turned on the garb in which a corporate subunit was clothed, parent corporations would be encouraged to convert subsidiaries into unincorporated divisions. Indeed, this is precisely what the Seagram company did after this Court’s decision in Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211 (1951).22 Such an *774incentive serves no valid antitrust goals but merely deprives consumers and producers of the benefits that the subsidiary form may yield.

The error of treating a corporate division differently from a wholly owned subsidiary is readily seen from the facts of this case. Regal was operated as an unincorporated division of Lear Siegler for four years before it became a wholly owned subsidiary of Copperweld. Nothing in this record indicates any meaningful difference between Regal’s operations as a division and its later operations as a separate corporation. Certainly nothing suggests that Regal was a greater threat to competition as a subsidiary of Copperweld than as a division of Lear Siegler. Under either arrangement, Regal might have acted to bar a new competitor from entering the market. In one case it could have relied on economic power from other quarters of the Lear Siegler corporation; instead it drew on the strength of its separately incorporated parent, Copperweld. Prom the standpoint of the antitrust laws, there is no reason to treat one more harshly than the other. As Chief Justice Hughes cautioned, “[idealities must dominate the judgment.” Appalachian Coals, Inc. v. United States, 288 U. S., at 360.23

D

Any reading of the Sherman Act that remains true to the Act’s distinction between unilateral and concerted conduct will necessarily disappoint those who find that distinction arbitrary. It cannot be denied that § l’s focus on concerted *775behavior leaves a “gap” in the Act’s proscription against unreasonable restraints of trade. See post, at 789. An unreasonable restraint of trade may be effected not only by two independent firms acting in concert; a single firm may restrain trade to precisely the same extent if it alone possesses the combined market power of those same two firms. Because the Sherman Act does not prohibit unreasonable restraints of trade as such — but only restraints effected by a contract, combination, or conspiracy — it leaves untouched a single firm’s anticompetitive conduct (short of threatened monopolization) that may be indistinguishable in economic effect from the conduct of two firms subject to § 1 liability.

*774“It is the unlawful combination, tested by the rules of common law and human experience, that is aimed at by this bill, and not the lawful and useful combination.” 21 Cong. Rec. 2457 (1890).

*775We have already noted that Congress left this “gap” for eminently sound reasons. Subjecting a single firm’s every action to judicial scrutiny for reasonableness would threaten to discourage the competitive enthusiasm that the antitrust laws seek to promote. See supra, at 767-769. Moreover, whatever the wisdom of the distinction, the Act’s plain language leaves no doubt that Congress made a purposeful choice to accord different treatment to unilateral and concerted conduct. Had Congress intended to outlaw unreasonable restraints of trade as such, § l’s requirement of a contract, combination, or conspiracy would be superfluous, as would the entirety of §2.24 Indeed, this Court has recog*776nized that § 1 is limited to concerted conduct at least since the days of United States v. Colgate & Co., 250 U. S. 300 (1919). Accord, post, at 789.

The appropriate inquiry in this case, therefore, is not whether the coordinated conduct of a parent and its wholly owned subsidiary may ever have anticompetitive effects, as the dissent suggests. Nor is it whether the term “conspiracy” will bear a literal construction that includes parent corporations and their wholly owned subsidiaries. For if these were the proper inquiries, a single firm’s conduct would be subject to § 1 scrutiny whenever the coordination of two employees was involved. Such a rule would obliterate the Act’s distinction between unilateral and concerted conduct, contrary to the clear intent of Congress as interpreted by the weight of judicial authority. See n. 15, supra. Rather, the appropriate inquiry requires us to explain the logic underlying Congress’ decision to exempt unilateral conduct from § 1 scrutiny, and to assess whether that logic similarly excludes the conduct of a parent and its wholly owned subsidiary. Unless we second-guess the judgment of Congress to limit § 1 to concerted conduct, we can only conclude that the coordinated behavior of a parent and its wholly owned subsidiary falls outside the reach of that provision.

Although we recognize that any “gap” the Sherman Act leaves is the sensible result of a purposeful policy decision by Congress, we also note that the size of any such gap is open *777to serious question. Any anticompetitive activities of corporations and their wholly owned subsidiaries meriting antitrust remedies may be policed adequately without resort to an intra-enterprise conspiracy doctrine. A corporation’s initial acquisition of control will always be subject to scrutiny under § 1 of the Sherman Act and § 7 of the Clayton Act, 38 Stat. 731, 15 U. S. C. §18. Thereafter, the enterprise is fully subject to § 2 of the Sherman Act and § 5 of the Federal Trade Commission Act, 38 Stat. 719, 15 U. S. C. §45. That these statutes are adequate to control dangerous anticompet-itive conduct is suggested by the fact that not a single holding of antitrust liability by this Court would today be different in the absence of an intra-enterprise conspiracy doctrine. It is further suggested by the fact that the Federal Government, in its administration of the antitrust laws, no longer accepts the concept that a corporation and its wholly owned subsidiaries can “combine” or “conspire” under § l.25 Elimination of the intra-enterprise conspiracy doctrine with respect to corporations and their wholly owned subsidiaries will therefore not cripple antitrust enforcement. It will simply eliminate treble damages from private state tort suits masquerading as antitrust actions.

IV

We hold that Copperweld and its wholly owned subsidiary Regal are incapable of conspiring with each other for purposes of § 1 of the Sherman Act. To the extent that prior decisions of this Court are to the contrary, they are disapproved and overruled. Accordingly, the judgment of the Court of Appeals is reversed.

It is so ordered.

*778Justice White took no part in the consideration or decision of this case.

Justice Stevens,

with whom Justice Brennan and Justice Marshall join,

dissenting.

It is safe to assume that corporate affiliates do not vigorously compete with one another. A price-fixing or market-allocation agreement between two or more such corporate entities does not, therefore, eliminate any competition that would otherwise exist. It makes no difference whether such an agreement is labeled a “contract,” a “conspiracy,” or merely a policy decision, because it surely does not unreasonably restrain competition within the meaning of the Sherman Act. The Rule of Reason has always given the courts adequate latitude to examine the substance rather than the form of an arrangement when answering the question whether collective action has restrained competition within the meaning of § 1.

Today the Court announces a new per se rule: a wholly owned subsidiary is incapable of conspiring with its parent under §1 of the Sherman Act. Instead of redefining the word “conspiracy,” the Court would be better advised to continue to rely on the Rule of Reason. Precisely because they do not eliminate competition that would otherwise exist but rather enhance the ability to compete, restraints which enable effective integration between a corporate parent and its subsidiary — the type of arrangement the Court is properly concerned with protecting — are not prohibited by § 1. Thus, the Court’s desire to shield such arrangements from antitrust liability provides no justification for the Court’s new rule.

In contrast, the case before us today presents the type of restraint that has precious little to do with effective integration between parent and subsidiary corporations. Rather, the purpose of the challenged conduct was to exclude a potential competitor of the subsidiary from the market. The jury apparently concluded that the two defendant corporations— *779Copperweld and its subsidiary Regal — had successfully delayed Independence’s entry into the steel tubing business by applying a form of economic coercion to potential suppliers of financing and capital equipment, as well as to potential customers. Everyone seems to agree that this conduct was tortious as a matter of state law. This type of exclusionary conduct is plainly distinguishable from vertical integration designed to achieve competitive efficiencies. If, as seems to be the case, the challenged conduct was manifestly anti-competitive, it should not be immunized from scrutiny under § 1 of the Sherman Act.

h — I

Repudiation of prior cases is not a step that should be taken lightly. As the Court wrote only days ago: “[A]ny departure from the doctrine of stare decisis demands special justification.” Arizona v. Rumsey, ante, at 212. It is therefore appropriate to begin with an examination of the precedents.

In United States v. Yellow Cab Co., 332 U. S. 218 (1947), the Court explicitly stated that a corporate subsidiary could conspire with its parent:

“The fact that these restraints occur in a setting described by the appellees as a vertically integrated enterprise does not necessarily remove the ban of the Sherman Act. The test of illegality under the Act is the presence or absence of an unreasonable restraint on interstate commerce. Such a restraint may result as readily from a conspiracy among those who are affiliated or integrated under common ownership as from a conspiracy among those who are otherwise independent.” Id., at 227.

The majority attempts to explain Yellow Cab by suggesting that it dealt only with unlawful acquisition of subsidiaries. Ante, at 761-762. But the Court mentioned acquisitions only as an additional consideration separate from the passage *780quoted above,1 and more important, the Court explicitly held that restraints imposed by the corporate parent on the affiliates that it already owned in themselves violated § l.2

At least three cases involving the motion picture industry also recognize that affiliated corporations may combine or conspire within the meaning of §1. In United States v. Crescent Amusement Co., 323 U. S. 173 (1944), as the Court recognizes, ante, at 762, n. 6, the only conspirators were affiliated corporations. The majority’s claim that the case involved only unlawful acquisitions because of the Court’s comments concerning divestiture of the affiliates cannot be squared with the passage immediately following that cited by the majority, which states that there had been unlawful conduct going beyond the acquisition of subsidiaries:

“That principle is adequate here to justify divestiture of all interest in some of the affiliates since their acquisition was part of the fruits of the conspiracy. But the relief need not, and under these facts should not, be so restricted [to divestiture]. The fact that the companies were affiliated induced joint action and agreement. Common control was one of the instruments in bringing about unity of purpose and unity of action and in making the conspiracy effective. If that affiliation continues, *781there will be tempting opportunity for these exhibitors to continue to act in combination against the independents.” 323 U. S., at 189-190 (emphasis supplied).

Similarly, in Schine Chain Theatres, Inc. v. United States, 334 U. S. 110 (1948), the Court held that concerted action by parents and subsidiaries constituted an unlawful conspiracy.3 That was also the holding in United States v. Griffith, 334 U. S. 100, 109 (1948). The majority’s observation that in these cases there were alternative grounds that could have been used to reach the same result, ante, at 763, n. 8, disguises neither the fact that the holding that actually appears in these opinions rests on conspiracy between affiliated entities, nor that today’s holding is inconsistent with what was actually held in these cases.

In Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211 (1951), the Court’s holding was plain and unequivocal: *782This holding is so clear that even the Court, which is not wanting for inventiveness in its reading of the prior cases, cannot explain it away. The Court suggests only that today Kiefer-Stewart might be decided on alternative grounds, ante, at 764, ignoring the fact that today’s holding is inconsistent with the ground on which the case actually was decided.4

*781“Respondents next suggest that their status as ‘mere in-strumentalities of a single manufacturing-merchandizing unit’ makes it impossible for them to have conspired in a manner forbidden by the Sherman Act. But this suggestion runs counter to our past decisions that common ownership and control does not liberate corporations from the impact of the antitrust laws. E. g. United States v. Yellow Cab Co., 332 U. S. 218. The rule is especially applicable where, as here, respondents hold themselves out as competitors.” Id., at 215.

*782A construction of the statute that reaches agreements between corporate parents and subsidiaries was again embraced by the Court in Timken Roller Bearing Co. v. United States, 341 U. S. 598 (1951),5 and Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134 (1968).6 The majority only notes that there might have been . other grounds for decision available in these cases, ante, at 764-766, but again it cannot deny that its new rule is inconsistent with what the Court actually did write in these cases.

*783Thus, the rule announced today is inconsistent with what this Court has held on at least seven previous occasions.7 Perhaps most illuminating is the fact that until today, whether they favored the doctrine or not, it had been the universal conclusion of both the lower courts8 and the commentators9 that this Court’s cases establish that a parent *784and a wholly owned subsidiary corporation are capable of conspiring in violation of § 1. In this very case the Court of Appeals observed:

“[T]he salient factor is that the Supreme Court’s decisions, while they need not be read with complete literalism, of course they cannot be ignored. It is no accident that every Court of Appeals to consider the question has concluded that a parent and its subsidiary have the same capacity to conspire, whether or not they can be found to have done so in a particular case.” 691 F. 2d 310, 317 (CA7 1982) (footnotes omitted).

Thus, we are not writing on a clean slate. “[W]e must bear in mind that considerations of stare decisis weigh heavily in the area of statutory construction, where Congress is free to change this Court’s interpretation of its legislation.” Illinois Brick Co. v. Illinois, 431 U. S. 720, 736 (1977).10 There can be no doubt that the Court today changes what has been taken to be the long-settled rule: a rule that Congress did not revise at any point in the last four decades. At a minimum there should be a strong presumption against the approach taken today by the Court. It is to the merits of that approach that I now turn.

II

The language of § 1 of the Sherman Act is sweeping m its breadth: “Every contract, combination in the form of trust or *785otherwise, or conspiracy, in restraint of trade or commerce among the several States, ... is declared to be illegal.” 15 U. S. C. § 1. This Court has long recognized that Congress intended this language to have a broad sweep, reaching any form of combination:

“[I]n view of the. many new forms of contracts and combinations which were being evolved from existing economic conditions, it was deemed essential by an all-embracing enumeration to make sure that no form of contract or combination by which an undue restraint of interstate or foreign commerce was brought about could save such restraint from condemnation. The statute under this view evidenced the intent not to restrain the right to make and enforce contracts, whether resulting from combination or otherwise, which did not unduly restrain interstate or foreign commerce, but to protect that commerce from being restrained by methods, whether old or new, which would constitute an interference that is an undue restraint.” Standard Oil Co. v. United States, 221 U. S. 1, 59-60 (1911).

This broad construction is illustrated by the Court’s refusal to limit the statute to actual agreements. Even mere acquiescence in an anticompetitive scheme has been held sufficient to satisfy the statutory language.11

Since the statute was written against the background of the common law,12 reference to the common law is particularly enlightening in construing the statutory requirement of a “contract, combination in the form of trust or otherwise, or conspiracy.” Under the common law, the question whether *786affiliated corporations constitute a plurality of actors within the meaning of the statute is easily answered. The well-settled rule is that a corporation is a separate legal entity; the separate corporate form cannot be disregarded.13 The Congress that passed the Sherman Act was well acquainted with this rule. See 21 Cong. Rec. 2571 (1890) (remarks of Sen. Teller) (“Each corporation is a creature by itself”). Thus it has long been the law of criminal conspiracy that the officers of even a single corporation are capable of conspiring with each other or the corporation.14 This Court has held that a corporation can conspire with its employee,15 and that a labor union can “combine” with its business agent within the meaning of § l.16 This concept explains the Timken Court’s statement that the affiliated corporations in that case made *787“agreements between legally separate persons,” 341 U. S., at 598. Thus, today’s holding that agreements between parent and subsidiary corporations involve merely unilateral conduct is at odds with the way that this Court has traditionally understood the concept of a combination or conspiracy, and also at odds with the way in which the Congress that enacted the Sherman Act surely understood it.

Holding that affiliated corporations cannot constitute a plurality of actors is also inconsistent with the objectives of the Sherman Act. Congress was particularly concerned with “trusts,” hence it named them in § 1 as a specific form of “combination” at which the statute was directed. Yet “trusts” consisted of affiliated corporations. As Senator Sherman explained:

“Because these combinations are always in many States and, as the Senator from Missouri says, it will be very easy for them to make a corporation within a State. So they can; but that is only one corporation of the combination. The combination is always of two or more, and in one case of forty-odd corporations, all bound together by a link which holds them under the name of trustees, who are themselves incorporated under the laws of one of the States.” 21 Cong. Rec. 2569 (1890).

The activities of these “combinations” of affiliated corporations were of special concern:

“[Associated enterprise and capital are not satisfied with partnerships and corporations competing with each other, and have invented a new form of combination commonly called trusts, that seeks to avoid competition by combining the controlling corporations, partnerships, and individuals engaged in the same business, and placing the power and property of the combination under the government of a few individuals, and often under the control of a single man called a trustee, a chairman, or a president.

*788“The sole object of such a combination is to make competition impossible. It can control the market, raise or lower prices, as will best promote its selfish interests, reduce prices in a particular locality and break down competition and advance prices at will where competition does not exist. Its governing motive is to increase the profits of the parties composing it. The law of selfishness, uncontrolled by competition, compels it to disregard the interest of the consumer. It dictates terms to transportation companies, it commands the price of labor without fear of strikes, for in its field it allows no competitors. ... It is this kind of a combination we have to deal with now.” Id., at 2457.17

Thus, the corporate subsidiary, when used as a device to eliminate competition, was one of the chief evils to which the Sherman Act was addressed.18 The anomaly in today’s holding is that the corporate devices most similar to the original “trusts” are now those which free an enterprise from antitrust scrutiny.

*789h — ( I — ( l-H

The Court s reason for rejecting the concept of a combination or conspiracy among a parent corporation and its wholly owned subsidiary is that it elevates form over substance— while in form the two corporations are separate legal entities, in substance they are a single integrated enterprise and hence cannot comprise the plurality of actors necessary to satisfy §1. Ante, at 771-774. In many situations the Court’s reasoning is perfectly sensible, for the affiliation of corporate entities often is procompetitive precisely because, as the Court explains, it enhances efficiency. A challenge to conduct that is merely an incident of the desirable integration that accompanies such affiliation should fail. However, the protection of such conduct provides no justification for the Court’s new rule, precisely because such conduct cannot be characterized as an unreasonable restraint of trade violative of § 1. Conversely, the problem with the Court’s new rule is that it leaves a significant gap in the enforcement of § 1 with respect to anticompetitive conduct that is entirely unrelated to the efficiencies associated with integration.

Since at least United States v. Colgate & Co., 250 U. S. 300 (1919), § 1 has been construed to require a plurality of actors. This requirement, however, is a consequence of the plain statutory language, not of any economic principle. As an economic matter, what is critical is the presence of market power, rather than a plurality of actors.19 From a competitive standpoint, a decision of a single firm possessing power to reduce output and raise prices above competitive levels has the same consequence as a decision by two firms acting together who have acquired an equivalent amount of market *790power through an agreement not to compete.20 Unilateral conduct by a firm with market power has no less anticompet-itive potential than conduct by a plurality of actors which generates or exploits the same power,21 and probably more, since the unilateral actor avoids the policing problems faced by cartels.

The rule of Yellow Cab thus has an economic justification. It addresses a gap in antitrust enforcement by reaching anti-competitive agreements between affiliated corporations which *791have sufficient market power to restrain marketwide competition, but not sufficient power to be considered monopolists within the ambit of §2 of the Act.22 The doctrine is also useful when a third party declines to join a conspiracy to restrain trade among affiliated corporations, and is harmed as a result through a boycott or similar tactics designed to penalize the refusal. In such cases, since there has been no agreement with the third party, only an agreement between the affiliated corporations can be the basis for § 1 inquiry.23 Finally, it must be remembered that not all persons who restrain trade wear grey flannel suits. Businesses controlled by organized crime often attempt to gain control of an industry through violence or intimidation of competitors; in such cases § 1 can be applied to separately incorporated businesses which benefit from such tactics, but which may be ultimately controlled by a single criminal enterprise.24

*792The rule of Yellow Cab and its progeny is not one that condemns every parent-subsidiary relationship. A single firm, no matter what its corporate structure may be, is not expected to compete with itself.25 Functional integration by its very nature requires unified action; hence in itself it has never been sufficient to establish the existence of an unreasonable restraint of trade: “In discussing the charge in the Yellow Cab case, we said that the fact that the conspirators were integrated did not insulate them from the act, not that corporate integration violated the act.” United States v. Columbia Steel Co., 334 U. S. 495, 522 (1948). Restraints that act only on the parent or its subsidiary as a consequence of an otherwise lawful integration do not violate § 1 of the Sherman Act.26 But if the behavior at issue is unrelated to any functional integration between the affiliated corporations and *793imposes a restraint on third parties of sufficient magnitude to restrain marketwide competition, as a matter of economic substance, as well as form, it is appropriate to characterize the conduct as a “combination or conspiracy in restraint of trade.”27

For example, in Yellow Cab the Court read the complaint as alleging that integration had assisted the parent in excluding competing manufacturers from the marketplace, 332 U. S., at 226-227, leading the Court to conclude that “restraint of interstate trade was not only effected by the combination of the appellees but was the primary object of the combination.” Id., at 227. Similarly, in Crescent Amusement the Court noted that corporate affiliation between exhibitors enhanced their buying power and “was one of the instruments in . . . making the conspiracy effective” in excluding independents from the market. 323 U. S., at 189-190. Thus, in both cases the Court found that the affiliation enhanced the ability of the parent corporation to exclude the competition of third parties, and hence raised entry *794barriers faced by actual and potential competitors. When conduct restrains trade not merely by integrating affiliated corporations but rather by restraining the ability of others to compete, that conduct has competitive significance drastically different from procompetitive integration.28 In these cases, the affiliation assisted exclusionary conduct; it was not the competitive equivalent of unilateral integration but instead generated power to restrain marketwide competition.

There are other ways in which corporate affiliation can operate to restrain competition. A wholly owned subsidiary might market a “fighting brand” or engage in other predatory behavior that would be more effective if its ownership were concealed than if it was known that only one firm was involved. A predator might be willing to accept the risk of bankrupting a subsidiary when it could not afford to let a division incur similar risks. Affiliated corporations might enhance their power over suppliers by agreeing to refuse to deal with those who deal with an actual or potential com*795petitor of one of them; such a threat might be more potent coming from both corporations than from only one.29

In this case, it may be that notices to potential suppliers of respondent emanating from Copperweld carried more weight than would notices coming only from Regal. There was evidence suggesting that Regal and Copperweld were not integrated, and that the challenged agreement had little to do with achieving procompetitive efficiencies and much to do with protecting Regal’s market position. The Court does not even try to explain why their common ownership meant that Copperweld and Regal were merely obtaining benefits associated with the efficiencies of integration. Both the District Court and the Court of Appeals thought that their agreement had a very different result — that it raised barriers to entry and imposed an appreciable marketwide restraint. The Court’s discussion of the justifications for corporate affiliation is therefore entirely abstract — while it dutifully lists the procompetitive justifications for corporate affiliation, ante, at 772-774, it fails to explain how any of them relate to the conduct at issue in this case. What is challenged here is not the fact of integration between Regal and Copperweld, but their specific agreement with respect to Independence. That agreement concerned the exclusion of *796Independence from the market, and not any efficiency resulting from integration. The facts of this very case belie the conclusion that affiliated corporations are incapable of engaging in the kind of conduct that threatens marketwide competition. The Court does not even attempt to assess the competitive significance of the conduct under challenge here — it never tests its economic assumptions against the concrete facts before it. Use of economic theory without reference to the competitive impact of the particular economic arrangement at issue is properly criticized when it produces overly broad per se rules of antitrust liability;30 criticism is no less warranted when a per se rule of antitrust immunity is adopted in the same way.

In sum, the question that the Court should ask is not why a wholly owned subsidiary should be treated differently from a corporate division, since the immunity accorded that type of arrangement is a necessary consequence of Colgate. Rather the question should be why two corporations that engage in a predatory course of conduct which produces a marketwide restraint on competition and which, as separate legal entities, can be easily fit within the language of § 1, should be immunized from liability because they are controlled by the same godfather. That is a question the Court simply fails to confront. I respectfully dissent.

Mr. Justice Powell

delivered the opinion of the Court.

Franchise agreements between manufacturers and retailers frequently include provisions barring the retailers from selling franchised products from locations other than those specified in the agreements. This case presents important questions concerning the appropriate antitrust analysis of these restrictions under § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1, and the Court’s decision in United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967).

*38I

Respondent GTE Sylvania Inc. (Sylvania) manufactures and sells television sets through its Home Entertainment Products Division. Prior to 1962, like most other television manufacturers, Sylvania sold its televisions to independent or company-owned distributors who in turn resold to a large and diverse group of retailers. Prompted by a decline in its market share to a relatively insignificant 1% to 2% of national television sales,1 Sylvania conducted an intensive reassessment of its marketing strategy, and in 1962 adopted the franchise plan challenged here. Sylvania phased out its wholesale distributors and began to sell its televisions directly to a smaller and more select group of franchised retailers. An acknowledged purpose of the change was to decrease the number of competing Sylvania retailers in the hope of attracting the more aggressive and competent retailers thought necessary to the improvement of the company's market position.2 To this end, Sylvania limited the number of franchises granted for any given area and required each franchisee to sell his Syl-vania products only from the location or locations at which he was franchised.3 A franchise did not constitute an exclusive territory, and Sylvania retained sole discretion to increase the number of retailers in an area in light of the success or failure of existing retailers in developing their market. The revised marketing strategy appears to have been successful during the period at issue here, for by 1965 Sylvania’s share of national television sales had increased to approximately 5%, and the *39company ranked as the Nation’s eighth largest manufacturer of color television sets.

This suit is the result of the rupture of a franchiser-franchisee relationship that had previously prospered under the revised Sylvania plan. Dissatisfied with its sales in the city of San Francisco,4 Sylvania decided in the spring of 1965 to franchise Young Brothers, an established San Francisco retailer of televisions, as an additional San Francisco retailer. The proposed location of the new franchise was approximately a mile from a retail outlet operated by petitioner Continental T. V., Inc. (Continental), one of the most successful Sylvania franchisees.5 Continental protested that the location of the new franchise violated Sylvania’s marketing policy, but Syl-vania persisted in its plans. Continental then canceled a large Sylvania order and placed a large order with Phillips, one of Sylvania’s competitors.

During this same period, Continental expressed a desire to open a store in Sacramento, Cal., a desire Sylvania attributed at least in part to Continental’s displeasure over the Young Brothers decision. Sylvania believed that the Sacramento market was adequately served by the existing Sylvania retailers and denied the request.6 In the face of this denial, Continental advised Sylvania in early September 1965, that it was in the process of moving Sylvania merchandise from its San Jose, Cal., warehouse to a new retail location that it had leased in Sacramento. Two weeks later, allegedly for unrelated reasons, Sylvania’s credit department reduced Conti*40nental’s credit line from $300,000 to $50,000.7 In response to the reduction in credit and the generally deteriorating relations with Sylvania, Continental withheld all payments owed to John P. Maguire & Co., Inc. (Maguire), the finance company that handled the credit arrangements between Sylvania and its retailers. Shortly thereafter, Sylvania terminated Continental’s franchises, and Maguire filed this diversity action in the United States District Court for the Northern District of California seeking recovery of money owed and of secured merchandise held by Continental.

The antitrust issues before us originated in cross-claims brought by Continental against Sylvania and Maguire. Most important for our purposes was the claim that Sylvania had violated § 1 of the Sherman Act by entering into and enforcing franchise agreements that prohibited the sale of Sylvania products other than from specified locations.8 At the close of evidence in the jury trial of Continental’s claims, Sylvania requested the District Court to instruct the jury that its location restriction was illegal only if it unreasonably restrained or suppressed competition. App. 5-6, 9-15. Relying on this Court’s decision in United States v. Arnold, Schwinn & Co., supra, the District Court rejected the proffered instruction in favor of the following one:

“Therefore, if you find by a preponderance of the evidence that Sylvania entered into a contract, combination or conspiracy with one or more of its dealers pursuant to which Sylvania exercised dominion or control over the

*41products sold to the dealer, after having parted with title and risk to the products, you must find any effort thereafter to restrict outlets or store locations from which its dealers resold the merchandise which they had purchased from Sylvania to be a violation of Section 1 of the Sherman Act, regardless of the reasonableness of the location restrictions.” App. 492.

In answers to special interrogatories, the jury found that Sylvania had engaged “in a contract, combination or conspiracy in restraint of trade in violation of the antitrust laws with respect to location restrictions alone,” and assessed Continental’s damages at $591,505, which was trebled pursuant to 15 U. S. C. § 15 to produce an award of $1,774,515. App. 498, 501.9

On appeal, the Court of Appeals for the Ninth Circuit, sitting en banc, reversed by a divided vote. 537 F. 2d 980 (1976). The court acknowledged that there is language in Schwinn that could be read to support the District Court’s instruction but concluded that Schwinn was distinguishable on several grounds. Contrasting the nature of the restrictions, their competitive impact, and the market shares of the franchisers in the two cases, the court concluded that Sylvania’s location restriction had less potential for competitive harm than the restrictions invalidated in Schwinn and thus should be judged under the “rule of reason” rather than the per se rule stated in Schwinn. The court found support for its *42position in the policies of the Sherman Act and in the decisions of other federal courts involving nonprice vertical restrictions.10

We granted Continental's petition for certiorari to resolve this important question of antitrust law. 429 U. S. 893 (1976).11

II

A

We turn first to Continental’s contention that Sylvania’s restriction on retail locations is a per se violation of § 1 of the Sherman Act as interpreted in Schwinn. The restrictions at issue in Schwinn were part of a three-tier distribution system comprising, in addition to Arnold, Schwinn & Co. (Schwinn), 22 intermediate distributors and a network of franchised retailers. Each distributor had a defined geographic area in which it had the exclusive right to supply franchised retailers. Sales to the public were made only through franchised retailers, who were authorized to sell Schwinn bicycles only from specified locations. In support of this limitation, Schwinn prohibited both distributors and retailers from selling Schwinn bicycles to nonfranchised retailers. At the retail level, therefore, Schwinn was able to control the number of retailers of *43its bicycles in any given area according to its view of the needs of that market.

As of 1967 approximately 75% of Schwinn’s total sales were made under the “Schwinn Plan.” Acting essentially as a manufacturer’s representative or sales agent, a distributor participating in this plan forwarded orders from retailers to the factory. Schwinn then shipped the ordered bicycles directly to the retailer, billed the retailer, bore the credit risk, and paid the distributor a commission on the sale. Under the Schwinn Plan, the distributor never had title to or possession of the bicycles. The remainder of the bicycles moved to the retailers through the hands of the distributors. For the most part, the distributors functioned as traditional wholesalers with respect to these sales, stocking an inventory of bicycles owned by them to supply retailers with emergency and “fill-in” requirements. A smaller part of the bicycles that were physically distributed by the distributors were covered by consignment and agency arrangements that had been developed to deal with particular problems of certain distributors. Distributors acquired title only to those bicycles that they purchased as wholesalers; retailers, of course, acquired title to all of the bicycles ordered by them.

In the District Court, the United States charged a continuing conspiracy by Schwinn and other alleged co-conspirators to fix prices, allocate exclusive territories to distributors, and confine Schwinn bicycles to franchised retailers. Relying on United States v. Bausch & Lomb Co., 321 U. S. 707 (1944), the Government argued that the nonprice restrictions were per se illegal as part of a scheme for fixing the retail prices of Schwinn bicycles. The District Court rejected the price-fixing allegation because of -a failure of proof and held that Schwinn’s limitation of retail bicycle sales to franchised retailers was permissible under § 1. The court found a § 1 violation, however, in “a conspiracy to divide certain borderline or overlapping counties in the territories served by four Midwestern *44cycle distributors.” 237 F. Supp. 323, 342 (ND Ill. 1965). The court described the violation as a “division of territory-by agreement between the distributors . . . horizontal in nature,” and held that Schwinn’s participation did not change that basic characteristic. Ibid. The District Court limited its injunction to apply only to the territorial restrictions on the resale of bicycles purchased by the distributors in their roles as wholesalers. Ibid.

Schwinn came to this Court on appeal by the United States from the District Court’s decision. Abandoning its per se theories, the Government argued that Schwinn’s prohibition against distributors’ and retailers’ selling Schwinn bicycles to nonfranchised retailers was unreasonable under § 1 and that the District Court’s injunction against exclusive distributor territories should extend to all such restrictions regardless of the form of the transaction. The Government did not challenge the District Court’s decision on price fixing, and Schwinn did not challenge the decision on exclusive distributor territories.

The Court acknowledged the Government’s abandonment of its per se theories and stated that the resolution of the case would require an examination of “the specifics of the challenged practices and their impact upon the marketplace in order to make a judgment as to whether the restraint is or is not 'reasonable’ in the special sense in which § 1 of the Sherman Act must be read for purposes of this type of inquiry.” 388 U. S., at 374. Despite this description of its task, the Court proceeded to articulate the following “bright line” per se rule of illegality for vertical restrictions: “Under the Sherman Act, it is unreasonable without more for a manufacturer to seek to restrict and confine areas or persons with whom an article may be traded after the manufacturer has parted with dominion over it.” Id., at 379. But the Court expressly stated that the rule of reason governs when “the manufacturer retains title, dominion, and risk with *45respect to the product and the position and function of the dealer in question are, in fact, indistinguishable from those of an agent or salesman of the manufacturer.” Id., at 380.

Application of these principles to the facts of Schwinn produced sharply contrasting results depending upon the role played by the distributor in the distribution system. With respect to that portion of Schwinn’s sales for which the distributors acted as ordinary wholesalers, buying and reselling Schwinn bicycles, the Court held that the territorial and customer restrictions challenged by the Government were per se illegal. But, with respect to that larger portion of Schwinn’s sales in which the distributors functioned under the Schwinn Plan and under the less common consignment and agency arrangements, the Court held that the same restrictions should be judged under the rule of reason. The only retail restriction challenged by the Government prevented franchised retailers from supplying nonfranchised retailers. Id., at 377. The Court apparently perceived no material distinction between the restrictions on distributors and retailers, for it held:

“The principle is, of course, equally applicable to sales to retailers, and the decree should similarly enjoin the making of any sales to retailers upon any condition, agreement or understanding limiting the retailer’s freedom as to where and to whom it will resell the products.” Id., at 378.

Applying the rule of reason to the restrictions that were not imposed in conjunction with the sale of bicycles, the Court had little difficulty finding them all reasonable in light of the competitive situation in “the product market as a whole.” Id., at 382.

B

In the present case, it is undisputed that title to the television sets passed from Sylvania to Continental. Thus, the Schwinn per se rule applies unless Sylvania’s restriction on *46locations falls outside Schwinn’s prohibition against a manufacturer’s attempting to restrict a “retailer’s freedom as to where and to whom it will resell the products.” Id., at 378. As the Court of Appeals conceded, the language of Schwinn is clearly broad enough to apply to the present case. Unlike the Court of Appeals, however, we are unable to find a principled basis for distinguishing Schwinn from the case now before us.

Both Schwinn and Sylvania sought to reduce but not to eliminate competition among their respective retailers through the adoption of a franchise system. Although it was not one of the issues addressed by the District Court or presented on appeal by the Government, the Schwinn franchise plan included a location restriction similar to the one challenged here. These restrictions allowed Schwinn and Sylvania to regulate' the amount of competition among their retailers by preventing a franchisee from selling franchised products from outlets other than the one covered by the franchise agreement. To exactly the same end, the Schwinn franchise plan included a companion restriction, apparently not found in the Sylvania plan, that prohibited franchised retailers from selling Schwinn products to nonfranchised retailers. In Schwinn the Court expressly held that this restriction was impermissible under the broad principle stated there. In intent and competitive impact, the retail-customer restriction in Schwinn is indistinguishable from the location restriction in the present case. In both cases the restrictions limited the freedom of the retailer to dispose of the purchased products as he desired. The fact that one restriction was addressed to territory and the other to customers is irrelevant to functional antitrust analysis and, indeed, to the language and broad thrust of the opinion in Schwinn.' 12 ' As Mr. Chief Justice Hughes stated in *47 Appalachian Coals, Inc. v. United States, 288 U. S. 344, 360, 377 (1933): “Realities must dominate the judgment. . . . The Anti-Trust Act aims at substance.”

Ill

Sylvania argues that if Schwinn cannot be distinguished, it should be reconsidered. Although Schwinn is supported by the principle of stare decisis, Illinois Brick Co. v. Illinois, 431 U. S. 720, 736 (1977), we are convinced that the need for clarification of the law in this area justifies reconsideration. Schwinn itself was an abrupt and largely unexplained departure from White Motor Co. v. United States, 372 U. S. 253 (1963), where only four years earlier the Court had refused to endorse a per se rule for vertical restrictions. Since its announcement, Schwinn has been the subject of continuing controversy and confusion, both in the scholarly journals and in the federal courts. The great weight of scholarly opinion *48has been critical of the decision,13 and a number of the federal courts confronted with analogous vertical restrictions have sought to limit its reach.14 In our view, the experience of the *49past 10 years should be brought to bear on this subject of considerable commercial importance.

The traditional framework of analysis under § 1 of the Sherman Act is familiar and does not require extended discussion. Section 1 prohibits “[e]very contract, combination ... , or conspiracy, in restraint of trade or commerce.” Since the early years of this century a judicial gloss on this statutory language has established the “rule of reason” as the prevailing standard of analysis. Standard Oil Co. v. United States, 221 U. S. 1 (1911). Under this rule, the factfinder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition.15 Per se rules of il*50legality are appropriate only when they relate to conduct that is manifestly anticompetitive. As the Court explained in Northern Pac. R. Co. v. United States, 356 U. S. 1, 5 (1958), “there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.” 16

In essence, the issue before us is whether Schwinn’s per se rule can be justified under the demanding standards of Northern Pac. R. Co. The Court’s refusal to endorse a per se rule in White Motor Co. was based on its uncertainty as to whether vertical restrictions satisfied those standards. Addressing this question for the first time, the Court stated)

“We need to know more than we do about the actual impact of these arrangements on competition to decide whether they have such a 'pernicious effect on competition and lack . . . any redeeming virtue’ (Northern Pac. R. Co. v. United States, supra, p. 5) and therefore should *51be classified as per se violations of the Sherman Act.” 372 U. S., at 263.

Only four years later the Court in Schwinn announced its sweeping per se rule without even a reference to Northern Pac. R. Co. and with no explanation of its sudden change in position.17 We turn now to consider Schwinn in light of Northern Pac. R. Co.

The market impact of vertical restrictions18 is complex because of their potential for a simultaneous reduction of intrabrand competition and stimulation of interbrand comp*52etition.19 Significantly, the Court in Schwinn did not distinguish among the challenged restrictions on the basis of their individual potential for intrabrand harm or interbrand benefit. Restrictions that completely eliminated intrabrand competition among Schwinn distributors were analyzed no differently from those that merely moderated intrabrand competition among retailers. The pivotal factor was the passage of title: All restrictions were held to be per se illegal where title had passed, and all were evaluated and sustained under the rule of reason where it had not. The location restriction at issue here would be subject to the same pattern of analysis under Schwinn.

It appears that this distinction between sale and nonsale transactions resulted from the Court’s effort to accommodate the perceived intrabrand harm and interbrand benefit of vertical restrictions. The per se rule for sale transactions reflected the view that vertical restrictions are “so obviously destructive” of intrabrand competition20 that their use would “open the door to exclusivity of outlets and limitation of ter*53ritory further than prudence permits.” 388 U. S., at 379-380.21 Conversely, the continued adherence to the traditional rule of reason for nonsale transactions reflected the view that the restrictions have too great a potential for the promotion of interbrand competition to justify complete prohibition.22 *54The Court’s opinion provides no analytical support for these contrasting positions. Nor is there even an assertion in the opinion that the competitive impact of vertical restrictions is significantly affected by the form of the transaction. Non-sale transactions appear to be excluded from the per se rule, not because of a greater danger of intrabrand harm or a greater promise of interbrand benefit, but rather because of the Court’s unexplained belief that a complete per se prohibition would be too “inflexibl[e].” Id., at 379.

Vertical restrictions reduce intrabrand competition by limiting the number of sellers of a particular product competing for the business of a given group of buyers. Location restrictions have this effect because of practical constraints on the effective marketing area of retail outlets. Although intrabrand competition may be reduced, the ability of retailers to exploit the resulting market may be limited both by the ability of consumers to travel to other franchised locations and, perhaps more importantly, to purchase the competing products of other manufacturers. None of these key variables, however, is affected by the form of the transaction by which a manufacturer conveys his products to the retailers.

Vertical restrictions promote interbrand competition by allowing the manufacturer to achieve certain efficiencies in the distribution of his products. These “redeeming virtues” are implicit in every decision sustaining vertical restrictions under the rule of reason. Economists have identified a num*55ber of ways in which manufacturers can use such restrictions to compete more effectively against other manufacturers. See, e. g., Preston, Restrictive Distribution Arrangements: Economic Analysis and Public Policy Standards, 30 Law & Contemp. Prob. 506, 511 (1965).23 For example, new manufacturers and manufacturers entering new markets can use the restrictions in order to induce competent and aggressive retailers to make the kind of investment of capital and labor that is often required in the distribution of products unknown to the consumer. Established manufacturers can use them to induce retailers to engage in promotional activities or to provide service and repair facilities necessary to the efficient marketing of their products. Service and repair are vital for many products, such as automobiles and major household appliances. The availability and quality of such services affect a manufacturer’s goodwill and the competitiveness of his product. Because of market imperfections such as the so-called “free rider” effect, these services might not be provided by retailers in a purely competitive situation, despite the fact that each retailer’s benefit would be greater if all provided the services than if none did. Posner, supra, n. 13, at 285; cf. P. Samuelson, Economics 506-507 (10th ed. 1976).

*56Economists also have argued that manufacturers have an economic interest in maintaining as much intrabrand competition as is consistent with the efficient distribution of their products. Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division [II], 75 Yale L. J. 373, 403 (1966); Posner, supra, n. 13, at 283, 287-288.24 Although the view that the manufacturer's interest necessarily corresponds with that of the public is not universally shared, even the leading critic of vertical restrictions concedes that Schwinn’s distinction between sale and nonsale transactions is essentially unrelated to any relevant economic impact. Comanor, Vertical Territorial and Customer Restrictions: White Motor and Its Aftermath, 81 Harv. L. Rev. 1419, 1422 (1968).25 Indeed, to the extent that the form of the transaction is related to interbrand benefits, the Court’s distinction is inconsistent with its articulated concern for the ability of smaller firms to compete effectively with larger ones. Capital requirements and administrative expenses may prevent smaller firms from using the exception for nonsale transactions. See, e. g., Baker, supra, n. 13, at 538; Phillips, Schwinn Rules and the “New Economics” of Vertical *57Relation, 44 Antitrust L. J. 573, 576 (1975); Pollock, supra, n. 13, at 610.26

We conclude that the distinction drawn in Schwinn between sale and nonsale transactions is not sufficient to justify the application of a per se rule in one situation and a rule of reason in the other. The question remains whether the per se rule stated in Schwinn should be expanded to include non-sale transactions or abandoned in favor of a return to the rule of reason. We have found no persuasive support for expanding the per se rule. As noted above, the Schwinn Court recognized the undesirability of “prohibit [ing] all vertical restrictions of territory and all franchising . . . 388 U. S., at 379-380.27 And even Continental does not urge us to hold that all such restrictions are per se illegal.

We revert to the standard articulated in Northern Pac. R. Co., and reiterated in White Motor, for determining whether vertical restrictions must be “conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.” 356 U. S., at 5. Such restrictions, in varying forms, are widely used in our free market economy. As indicated above, there is substantial scholarly and judicial au*58thority supporting their economic utility. There is relatively little authority to the contrary.28 Certainly, there has been no showing in this case, either generally or with respect to Sylvania’s agreements, that vertical restrictions have or are likely to have a “pernicious effect on competition” or that they “lack . . . any redeeming virtue.” Ibid. 29 Accordingly, we conclude that the per se rule stated in Schwinn mtrstnbs' overruled.30 In so holding we do not foreclose the possibility that particular applications of vertical restrictions might justify per se prohibition under Northern Pac. R. Co. But we do make clear that departure from the rule-of-reason standard *59must be based upon demonstrable economic effect rather than — as in Schwinn — upon formalistic line drawing.

In sum, we' conclude that the appropriate decision is to return to the rule of reason that governed vertical restrictions prior to Schwinn. When anticompetitive effects are shown to result from particular vertical restrictions they can be adequately policed under the rule of reason, the standard traditionally applied for the majority of anticompetitive practices challenged under § 1 of the Act. Accordingly, the decision of the Court of Appeals is

Affirmed.

Mr. Justice Rehnquist took no part in the consideration or decision of this case.

Mr. Justice White,

concurring in the judgment.

Although I agree with the majority that the location clause at issue in this case is not a per se violation of the Sherman Act and should be judged under the rule of reason, I cannot agree that this result requires the overruling of United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967). In my view this case is'distinguishable from Schwinn because there is less potential for restraint of intrabrand competition and more potential for stimulating interbrand competition. As to intrabrand competition, Sylvania, unlike Schwinn, did not restrict the customers to whom or the territories where its purchasers could sell. As to interbrand competition, Syl-vania, unlike Schwinn, had an insignificant market share at the time it adopted its challenged distribution practice and enjoyed no consumer preference that would allow its retailers to charge a premium over other brands. In two short paragraphs, the majority disposes of the view, adopted after careful analysis by the Ninth Circuit en banc below, that these differences provide a “principled basis for distinguishing Schwinn,” ante, at 46, despite holdings by three Courts of Appeals and the District Court on remand in Schwinn that *60the per se rule established in that case does not apply to location clauses such as Sylvania’s. To reach out to overrule one of this Court’s recent interpretations of the Sherman Act, after such a cursory examination of the necessity for doing so, is surely an affront to the principle that considerations of stare decisis are to be given particularly strong weight in the area of statutory construction. Illinois Brick Co. v. Illinois, 431 U. S. 720, 736-737 (1977); Runyon v. McCrary, 427 U. S. 160, 175 (1976); Edelman v. Jordan, 415 U. S. 651, 671 (1974).

One element of the system of interrelated vertical restraints invalidated in Schwinn was a retail-customer restriction prohibiting franchised retailers from selling Schwinn products to nonfranchised retailers. The Court rests its inability to distinguish Schwinn entirely on this retail-customer restriction, finding it “[i]n intent and competitive impact . . . indistinguishable from the location restriction in the present case,” because “[i]n both cases the restrictions limited the freedom of the retailer to dispose of the purchased products as he desired.” Ante, at 46. The customer restriction may well have, however, a very different “intent and competitive impact” than the location restriction: It prevents discount stores from getting the manufacturer’s product and thus prevents intrabrand price competition. Suppose, for example, that in-terbrand competition is sufficiently weak that the franchised retailers are able to charge a price substantially above wholesale. Under a location restriction, these franchisers are free to sell to discount stores seeking to exploit the potential for sales at prices below the prevailing retail level. One of the franchised retailers may be tempted to lower its price and act in effect as a wholesaler for the discount house in order to share in the profits to be had from lowering prices and expanding volume.1

*61Under a retail customer restriction, on the other hand, the franchised dealers cannot sell to discounters, who are cut off altogether from the manufacturer’s product and the opportunity for intrabrand price competition. This was precisely the theory on which the Government successfully challenged Schwinn’s customer restrictions in this Court. The District Court in that case found that “[e]ach one of [Schwinn’s franchised retailers] knows also that he is not a wholesaler and that he cannot sell as a wholesaler or act as an agent for some other unfranchised dealer, such as a discount house retailer who has not been franchised as a dealer by Schwinn.” 237 F. Supp. 323, 333 (ND Ill. 1965). The Government argued on appeal, with extensive citations to the record; that the effect of this restriction was “to keep Schwinn products out of the hands of discount houses and other price cutters so as to discourage price competition in retailing . . . .” Brief for United States, O. T. 1966, No. 25, p. 26. See id., at 29-37.2

It is true that, as the majority states, Sylvania’s location restriction inhibited to some degree “the freedom of the retailer to dispose of the purchased products” by requiring the retailer to sell from one particular place of business. But the retailer is still free to sell to any type of customer — including discounters and other unfranchised dealers — from any area. I think this freedom implies a significant difference for the effect of a location clause on intrabrand competition. The *62District Court on remand in Schwinn evidently thought so as well, for after enjoining Schwinn’s customer restrictions as directed by this Court it expressly sanctioned location clauses, permitting Schwinn to “designate] in its retailer franchise agreements the location of the place or places of business for which the franchise is issued.” 291 F. Supp. 564, 565-566 (ND Ill. 1968).

An additional basis for finding less restraint of intrabrand competition in this case, emphasized by the Ninth Circuit en banc, is that Schwinn involved restrictions on competition among distributors at the wholesale level. As Judge Ely wrote for the six-member majority below:

“[Schwinn] had created exclusive geographical sales territories for each of its 22 wholesaler bicycle distributors and had made each distributor the sole Schwinn outlet for the distributor’s designated area. Each distributor was prohibited from selling to any retailers located outside its territory. . . .

“. . . Schwinn’s territorial restrictions requiring dealers to confine their sales to exclusive territories prescribed by Schwinn prevented a dealer from competing for customers outside his territory. . . . Schwinn’s restrictions guaranteed each wholesale distributor that it would be absolutely isolated from all competition from other Schwinn wholesalers.” 537 F. 2d 980, 989-990 (1976).

Moreover, like its franchised retailers, Schwinn’s distributors were absolutely barred from selling to nonfranchised retailers, further limiting the possibilities of intrabrand price competition.

The majority apparently gives no weight to the Court of Appeals’ reliance on the difference between the competitive effects of Sylvania’s location clause and Schwinn’s interlocking “system of vertical restraints affecting both wholesale and retail distribution.” Id., at 989. It also ignores post-Schwinn *63decisions of the Third and Tenth Circuits upholding the validity of location clauses similar to Sylvania’s here. Salco Corp. v. General Motors Corp., 517 F. 2d 567 (CA10 1975) ; Kaiser v. General Motors Corp., 530 F. 2d 964 (CA3 1976), aff’g 396 F. Supp. 33 (ED Pa. 1975). Finally, many of the scholarly authorities the majority cites in support of its overruling of Schwinn have not had to strain to distinguish location clauses from the restrictions invalidated there. E. g., Robinson, Recent Antitrust Developments: 1974, 75 Colum. L. Rev. 243, 278 (1975) (outcome in Sylvania not preordained by Schwinn because of marked differences in the vertical restraints in the two cases); McLaren, Territorial and Customer Restrictions, Consignments, Suggested Retail Prices and Refusals to Deal, 37 Antitrust L. J. 137, 144M45 (1968) (by implication Schwinn exempts location clauses from its per se rule); Pollock, Alternative Distribution Methods After Schwinn, 63 Nw. U. L. Rev. 595, 603 (1968) (“Nor does the Schwinn doctrine outlaw the use of a so-called ‘location clause’. . .”).

Just as there are significant differences between Schwinn and this case with respect to intrabrand competition, there are also significant differences with respect to interbrand competition. Unlike Schwinn, Sylvania clearly had no economic power in the generic product market. At the time they instituted their respective distribution policies, Schwinn was “the leading bicycle producer in the Nation,” with a national market share of 22.5%, 388 U. S., at 368, 374, whereas Syl-vania was a “faltering, if not failing” producer of television sets, with “a relatively insignificant 1% to 2%” share of the national market in which the dominant manufacturer had a 60% to 70% share. Ante, at 38, 58 n. 29. Moreover, the Schwinn brand name enjoyed superior consumer acceptance and commanded a premium price as, in the District Court’s words, “the Cadillac of the bicycle industry.” 237 F. Supp., at 335. This premium gave Schwinn dealers a margin of *64protection from interbrand competition and created the possibilities for price cutting by discounters that the Government argued were forestalled by Schwinn’s customer restrictions.3 Thus, judged by the criteria economists use to measure market power — -product differentiation and market share4 — Schwinn enjoyed a substantially stronger position in the bicycle market than did Sylvania in the television market. This Court relied on Schwinn’s market position as one reason not to apply the rule of reason to the vertical restraints challenged there. “Schwinn was not a newcomer, seeking to break into or stay in the bicycle business. It was not a 'failing company.’ On the contrary, at the initiation of these practices, it was the leading bicycle producer in the Nation.” 388 U. S., at 374. And the Court of Appeals below found “another significant distinction between our case and Schwinn” in Syl-vania’s “precarious market share,” which “was so small when it adopted its locations practice that it was threatened with expulsion from the television market.” 537 F. 2d, at 991.5

*65In my view there are at least two considerations, both relied upon by the majority to justify overruling Schwinn, that would provide a “principled basis” for instead refusing to extend Schwinn to a vertical restraint that is imposed by a “faltering” manufacturer with a “precarious” position in a generic product market dominated by another firm. The first is that, as the majority puts it, “when interbrand competition exists, as it does among television manufacturers, it provides a significant check on the exploitation of intrabrand market power because of the ability of consumers to substitute a different brand of the same product.” Ante, at 52 n. 19. See also ante, at 54.6 Second is the view, argued forcefully in the economic literature cited by the majority, that the potential benefits of vertical restraints in promoting interbrand competition are particularly strong where the manufacturer imposing the restraints is seeking to enter a new market or to expand a small market share. Ibid. 7 The majority even recognizes that Schwinn “hinted” at an exception for new entrants and failing firms from its per se rule. Ante, at 53-54, n. 22.

In other areas of antitrust law, this Court has not hesitated to base its rules of per se illegality in part on the defendant’s market power. Indeed, in the very case from which the majority draws its standard for per se rules, Northern Pac. R. Co. v. United States, 356 U. S. 1, 5 (1958), the *66Court stated the reach of the per se rule against tie-ins under § 1 of the Sherman Act as extending to all defendants with “sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product ...” 356 U. S., at 6. And the Court subsequently approved an exception to this per se rule for “infant industries” marketing a new product. United States v. Jerrold Electronics Corp., 187 F. Supp. 545 (ED Pa. 1960), aff’d per curiam, 365 U. S. 567 (1961). See also United States v. Philadelphia Nat. Bank, 374 U. S. 321, 363 (1963), where the Court held presumptively illegal a merger “which produces a firm controlling an undue percentage share of the relevant market I see no doctrinal obstacle to excluding firms with such minimal market power as Sylvania’s from the reach of the Schwinn rule.8

I have, moreover, substantial misgivings about the approach the majority takes to overruling Schwinn. The reason for the distinction in Schwinn between sale and nonsale transactions was not, as the majority would have it, “the Court’s effort to accommodate the perceived intrabrand harm and interbrand benefit of vertical restrictions,” ante, at 52; the reason was rather, as Judge Browning argued in dissent below, the notion in many of our cases involving vertical restraints that inde*67pendent businessmen should have the freedom to dispose of the goods they own as they see fit. Thus the first case cited by the Court in Schwinn for the proposition that “restraints upon alienation . . . are beyond the power of the manufacturer to impose upon its vendees and ... are violations of § 1 of the Sherman Act,” 388 U. S., at 377, was this Court’s seminal decision holding a series of resale-price-maintenance agreements per se illegal, Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911). In Dr. Miles the Court stated that “a general restraint upon alienation is ordinarily invalid,” citing Coke on Littleton, and emphasized that the case involved “agreements restricting the freedom of trade on the part of dealers who own what they sell.” Id., at 404, 407-408. Mr. Justice Holmes stated in dissent: “If [the manufacturer] should make the retail dealers also agents in law as well as in name and retain the title until the goods left their hands I cannot conceive that even the present enthusiasm for regulating the prices to be charged by other people would deny that the owner was acting within his rights.” Id., at 411.

This concern for the freedom of the businessman to dispose of his own goods as he sees fit is most probably the explanation for two subsequent cases in which the Court allowed manufacturers to achieve economic results similar to that in Dr. Miles where they did not impose restrictions on dealers who had purchased their products. In United States v. Colgate & Co., 250 U. S. 300 (1919), the Court found no antitrust violation in a manufacturer’s policy of refusing to sell to dealers who failed to charge the manufacturer’s suggested retail price and of terminating dealers who did not adhere to that price. It stated that the Sherman Act did not “restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.” Id., at 307. In United States v. General Electric Co., 272 U. S. 476 (1926), the Court upheld resale-price-maintenance *68agreements made by a patentee with its dealers who obtained its goods on a consignment basis. The Court distinguished Dr. Miles on the ground that the agreements there were “contracts of sale rather than of agency” and involved “an attempt by the Miles Medical Company ... to hold its purchasers, after the purchase at full price, to an obligation to maintain prices on a resale by them.” 272 U. S., at 487. By contrast, a manufacturer was free to contract with his agents to “[fix] the price by which his agents transfer the title from him directly to [the] consumer . . . however comprehensive as a mass or whole in [the] effect [of these contracts].” Id., at 488. Although these two cases have been called into question by subsequent decisions, see United States v. Parke, Davis & Co., 362 U. S. 29 (1960), and Simpson v. Union Oil Co., 377 U. S. 13 (1964), their rationale runs through our case law in the area of distributional restraints. In Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U. S. 211, 213 (1951), the Court held that an agreement to fix resale prices was per se illegal under § 1 because “such agreements, no less than those to fix minimum prices, cripple the freedom of traders and thereby restrain their ability to sell in accordance with their own judgment.” Accord, Albrecht v. Herald Co., 390 U. S. 145, 152 (1968). See generally Judge Browning’s dissent below, 537 F. 2d, at 1018-1022; ABA Antitrust Section, Monograph No. 2, Vertical Restrictions Limiting Intrabrand Competition 29-31, 82-83, 87-91, 96-97 (1977); Blake & Jones, Toward a Three-Dimensional Antitrust Policy, 65 Colum. L. Rev. 422, 427-436 (1965).

After summarily rejecting this concern, reflected in our interpretations of the Sherman Act, for “the autonomy of independent businessmen,” ante, at 53 n. 21, the majority not surprisingly finds “no justification” for Schwinn’s distinction between sale and nonsale transactions because the distinction is “essentially unrelated to any relevant economic impact.” Ante, at 56. But while according some weight to the business*69man’s interest in controlling the terms on which he trades in his own goods may be anathema to those who view the Sherman Act as directed solely to economic efficiency,9 this principle is without question more deeply eHrbeHded'ia our cases than the notions of “free rider” effects and distrmtK tional efficiencies borrowed by the majority from the “new economics of vertical relationships.” Ante, at 54^-57. Perhaps the Court is right in partially abandoning this principle and in judging the instant nonprice vertical restraints solely by their “relevant economic impact”; but the precedents which reflect this principle should not be so lightly rejected by the Court. The rationale of Schwinn is no doubt difficult to discern from the opinion, and it may be wrong; it is not, however, the aberration the majority makes it out to be here.

I have a further reservation about the majority’s reliance on “relevant economic impact” as the test for retaining per se rules regarding vertical restraints. It is common ground among the leading advocates of a purely economic approach to the question of distribution restraints that the economic arguments in favor of allowing vertical nonprice restraints generally apply to vertical price restraints as well.10 Although *70the majority asserts that “the per se illegality of price restrictions . . . involves significantly different questions of analysis and policy,” ante, at 51 n. 18, I suspect this purported distinction may be as difficult to justify as that of Schwinn under the terms of the majority’s analysis. Thus Professor Posner, in an article cited five times by the majority, concludes: “I believe that the law should treat price and nonprice restrictions the same and that it should make no distinction between the imposition of restrictions in a sale contract and their imposition in an agency contract.” Posner, supra, n. 7, at 298. Indeed, the Court has already recognized that resale price maintenance may increase output by inducing “demand-creating activity” by dealers (such as additional retail outlets, advertising and promotion, and product servicing) that outweighs the additional sales that would result from lower prices brought about by dealer price competition. Albrecht v. Herald Co., supra, at 151 n. 7. These same output-enhancing possibilities of nonprice vertical restraints are relied upon by the majority as evidence of their social utility and economic soundness, ante, at 55, and as a justification for judging them under the rule of reason. The effect, if not the intention, of the Court’s opinion is necessarily to call into question the firmly established per se rule against price restraints.

Although the case law in the area of distributional restraints has perhaps been less than satisfactory, the Court would do well to proceed more deliberately in attempting to improve it. In view of the ample reasons for distinguishing Schwinn from this case and in the absence of contrary congressional action, I would adhere to the principle that

“each case arising under the Sherman Act must be determined upon the particular facts disclosed by the record, and . . . the opinions in those cases must be read in the light of their facts and of a clear recognition of the essential differences in the facts of those cases, and in the facts of any new case to which the rule of earlier decisions *71is to be aplied.” Maple Flooring Mfrs. Assn. v. United States, 268 U. S. 563, 579 (1925).

In order to decide this case, the Court need only hold that a location clause imposed by a manufacturer with negligible economic power in the product market has a competitive impact sufficiently less restrictive than the Schwinn restraints to justify a rule-of-reason standard, even if the same weight is given here as in Schwinn to dealer autonomy. I therefore concur in the judgment.

Mr. Justice Brennan,

with whom Mr. Justice Marshall joins, dissenting.

I would not overrule the per se rule stated in United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967), and would therefore reverse the decision of the Court of Appeals for the Ninth Circuit.

BREYER, Circuit Judge.

The question that this case presents is whether defendant Pacific Scientific Company (“Pacific”) engaged in “exclusionary practices” in violation of the anti-monopoly law, Sherman Act § 2, 15 U.S.C. § 2. The practices at issue are embodied in agreements between Pacific and ITT Grinnell (“Grinnell”), under which Pacific agreed to sell its product (mechanical snubbers) to Grinnell at a specially low price and Grin-nell agreed to take nearly all its snubber requirements from Pacific. The district court, 555 F.Supp. 1264, found that the relevant contract provisions did not violate the antitrust laws. We agree with the district court on this matter, and on others less important; and we affirm its judgment.

I

On appeal from a judgment in defendant’s favor, we must, of course, accept the district court’s findings insofar as they determine, or rest upon, the facts, unless they are “clearly erroneous.” Fed.R.Civ.P. 52(a). Our reading of the record, in light of this standard, suggests the following somewhat simplified account of the most important factual matters:

*229Pacific produces mechanical snubbers; they are shock absorbers used in building pipe systems for nuclear power plants. No other domestic firm makes mechanical snubbers; foreign mechanical snubbers do not satisfy Nuclear Regulatory Commission standards; and snubber users have found the closest substitute, namely, hydraulic snubbers, to be less reliable than the mechanical version. Thus, in 1976, Pacific’s sales accounted for 47 percent of all snub-bers sold; in 1977, 83 percent; in 1978, 84 percent, and in 1979, 94 percent.

Grinnell makes and installs nuclear plant pipe systems; it is a major snubber user. Its snubber purchases accounted for 51 percent of all mechanical snubbers and related hardware sold domestically in 1977; 52 percent in 1978; and 43 percent in 1979. By 1976, most of Grinnell’s pipe system customers were requiring Grinnell to use mechanical snubbers. Recognizing Pacific’s strong market position, Grinnell sought to develop an alternate mechanical snubber source. Hence, it entered into a contract with Barry Wright Corporation (“Barry”), the plaintiff here, under which it would help Barry develop a full mechanical snubber line. Grin-nell agreed to contribute to Barry’s development costs. It also agreed to use Barry as an exclusive source of supply between 1977 and 1979, promising to buy between $9 million and $15 million worth of snubbers during that period. Barry was to have its full line of six snubber sizes in production by the first quarter of 1977.

While waiting for Barry, Grinnell satisfied its current needs by buying mechanical snubbers from Pacific at Pacific’s ordinary “discount” price — 20 percent below list. Pacific noticed that Grinnell’s orders seemed small in relation to its likely needs. And, by September, 1976, Pacific realized that Grinnell was trying to develop its own supply source through Barry. In August, 1976, Pacific offered Grinnell a special price break — a 30 percent discount from list for small snubbers, 25 percent for larger ones— in return for a large $5.7 million order that would have met Grinnell’s snubber needs through 1977. Grinnell, after tentatively accepting this proposal, consulted with Barry and then rejected Pacific’s offer. Instead, it placed a smaller $1 million order at the standard 20 percent discount.

Barry could not meet the required January, 1977 production schedule. By mid-January, 1977, it told Grinnell that it would not be able to produce small snubbers until August, 1977 nor large ones until February, 1978. Grinnell then met with Pacific and (at the end of January, 1977) negotiated a $4.3 million snubber contract — enough snubbers to meet Grinnell’s estimated needs for the next twelve months. Pacific gave Grinnell the large 30 percent/25 percent discounts. It also gave Grinnell an option open until July, 1977 —to buy its 1978 requirements at the same prices (as long as Grinnell agreed to buy as much as in 1977). Grinnell, in turn, agreed to a non-cancellation clause that would have made it especially onerous for Grinnell to break the agreement.

Grinnell then told Barry that its production delays were unacceptable and that Barry had breached its development contract. Grinnell wanted Barry to continue its efforts, but it would not promise to buy more than $3.6 million worth of snubbers through 1979. Barry said this modification of the development contract was unjustified. It continued to try to develop snubbers. The extent of its progress is in dispute, but there is considerable evidence that it fell further behind its production schedules.

At the end of May, 1977, Grinnell and Pacific agreed further that Grinnell would buy $6.9 million worth of Pacific’s snubbers for 1978 and $5 million for 1979. Grinnell predicted snubber “needs” of $6.9 million for each of the two years. On July 5, 1977 and July 14, 1977, Grinnell finalized the agreements for 1978 and 1979 by issuing purchase orders in these amounts. Pacific granted the special 30 percent/25 percent price discounts; and the contracts contained the special cancellation clause.

In June, 1977, Grinnell told Barry that their collaboration was at an end. Barry looked for other potential snubber buyers and then abandoned its snubber efforts. *230Subsequently, Barry brought this lawsuit against Pacific (and against Grinnell, as well, although Barry and Grinnell have reached a settlement). Barry charged that Pacific’s efforts to sell snubbers to Grinnell and the terms of its contracts violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and Section 3 of the Clayton Act, 15 U.S.C. § 14. It added a claim that Pacific had tortiously interfered with Barry’s snubber-development contract with Grin-nell.

The district court found that Barry failed to establish that Pacific’s conduct was improper. The court also found that Barry had breached its contract with Grinnell before Grinnell placed its 1977 order with Pacific (in late January, 1977). And, it found that Barry would not have been capable of supplying Grinnell in 1977-79 regardless. Barry appeals all these findings. We need not consider the latter two, however, for we find the district court’s conclusion about the lawfulness of Pacific’s behavior adequately supported. And that conclusion is dispositive.

II

Barry’s central claim is that Pacific’s conduct violates Sherman Act § 2, which makes it unlawful to “monopolize ... any part of the trade or commerce among the several States.” 15 U.S.C. § 2. Monopolization has two elements: first, the “possession of monopoly power in the relevant market” and, second, the “acquisition or maintenance of that power” by other than such legitimate means as patents, “superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04, 16 L.Ed.2d 778 (1966). On this appeal, the parties do not dispute Pacific’s monopoly power in the relevant market, which the district court identified as the domestic market for snubbers (whether mechanical or hydraulic). Nor do they dispute the legitimacy of Pacific’s acquisition of this power. Whether its acquisition rested upon the fact that Pacific possessed an important mechanical snubber patent, upon a “superi- or product,” or upon the “historic accident” that users began to find hydraulic snubbers unsatisfactory, no one alleges that Pacific acted unlawfully in acquiring its dominant position. Accepting these two assumptions, we turn to the issue that is in dispute, whether Pacific maintained its monopoly position against the threat of Barry’s entry through improper means.

In this context, a practice, a method, a means, is “improper” if it is “exclusionary.” United States v. United Shoe Machinery Corp., 110 F.Supp. 295, 342 (D.Mass. 1953), aff’d per curiam, 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954). To decide whether Pacific’s conduct was exclusionary, we should ask whether its dealings with Grinnell went beyond the needs of ordinary business dealings, beyond the ambit of ordinary business skill, and “unnecessarily excluded competition” from the snubber market. Greyhound Computer Corp. v. International Business Machines Corp., 559 F.2d 488, 498 (9th Cir.1977), cert. denied, 434 U.S. 1040, 98 S.Ct. 782, 54 L.Ed.2d 790 (1978). Professors Areeda and Turner have put the matter nicely: “ ‘Exclusionary’ conduct is conduct, other than competition on the merits or restraints reasonably ‘necessary’ to competition on the merits, that reasonably appears capable of making a significant contribution to creating or maintaining monopoly power.” 3 P. Areeda and D. Turner, Antitrust Law ¶ 626 at 83 (1978). Was Pacific’s conduct reasonable in light of its business needs or did it unreasonably restrict competition? California Computer Products, Inc. v. International Business Machines Corp., 613 F.2d 727, 735-36 (9th Cir. 1979). Barry points to three specific aspects of Pacific’s conduct — its offer of special discounts to Grinnell, its insistence on a long-term large-volume contract, and its inclusion of the special non-cancellation clause — which it claims show that Pacific acted in an exclusionary manner.

A

Barry first attacks the special 30 percent/25 percent discounts that Pacific granted Grinnell. It argues that Pacific’s *231discounted prices were unreasonably low. This argument founders, however, on the district court finding that these prices, while lower than normal, nonetheless generated revenues more than sufficient to cover the total cost of producing the goods to which they applied. Barry does not attack that finding; but, instead, it argues that price cutting by a monopolist may still prove unlawful, even if prices remain above total cost. While some circuits have accepted a form of Barry’s argument, see, e.g., Transamerica Computer Co. v. International Business Machines Corp., 698 F.2d 1377 (9th Cir.), cert. denied, -U.S.-, 104 S.Ct. 370, 78 L.Ed.2d 329 (1983); International Air Industries, Inc. v. American Excelsior Co., 517 F.2d 714, 724 (5th Cir.1975), cert. denied, 424 U.S. 943, 96 S.Ct. 1411, 47 L.Ed.2d 349 (1976), we do not.

To understand the basis of our disagreement, one must ask why the Sherman Act ever forbids price cutting. After all, lower prices help consumers. The competitive marketplace that the antitrust laws encourage and protect is characterized by firms willing and able to cut prices in order to take customers from their rivals. And, in an economy with a significant number of concentrated industries, price cutting limits the ability of large firms to exercise their “market power,” see J. Bain, Industrial Organization ch. 5 (2d ed. 1968); F. Scherer, Industrial Market Structure and Economic Performance 56-70, 222-25 (2d ed. 1980); at a minimum it likely moves “concentrated market” prices in the “right” direction — towards the level they would reach under competitive conditions. See 2 P. Areeda & D. Turner, Antitrust Law ¶ 404; J. Bain, supra, at 118-23; F. Scherer, supra, ch. 5. Thus, a legal precedent or rule of law that prevents a firm from unilaterally cutting its prices risks interference with one of the Sherman Act’s most basic objectives: the low price levels that one would find in well-functioning competitive markets. See, e.g., National Society of Professional Engineers v. United States, 435 U.S. 679, 692-96, 98 S.Ct. 1355, 1365-67, 55 L.Ed.2d 637 (1978); MCI Communications Corp. v. American Telephone and Telegraph Co., 708 F.2d 1081, 1114 (7th Cir.), cert. denied,U.S. -, 104 S.Ct. 234, 78 L.Ed.2d 226 (1983); 1 P. Areeda and D. Turner, Antitrust Law ¶¶ 103-05, 111-12.

Despite these considerations, courts have reasoned that it is sometimes possible to identify circumstances in which a price cut will make consumers worse off, not better off. See, e.g., Northeastern Telephone Co. v. American Telephone and Telegraph Co., 651 F.2d 76, 88 (2d Cir.1981), cert. denied, 455 U.S. 943, 102 S.Ct. 1438, 71 L.Ed.2d 654 (1982). Suppose, for example, a firm cuts prices to unsustainably low levels — prices below “incremental” costs. Suppose it drives competitors out of business, and later on it raises prices to levels higher than it could have sustained had its competitors remained in the market. Without special circumstances there is little to be said in economic or competitive terms for such a price cut. Yet, how often firms engage in such “predatory” price cutting, whether they ever do so, and precisely when, is all much disputed — a dispute that is not surprising given the difficulties of measuring costs, discerning intent, and predicting future market conditions. See, e.g., Roller, The Myth of Predatory Pricing: An Empirical Study, 4 Antitrust L. & Econ.Rev. 105 (1971); McGee, Predatory Pricing Revisited, 23 J.L. & Econ. 289 (1980); Posner, Exclusionary Practices and the Antitrust Laws, 41 U.Chi.L.Rev. 506, 516-17 (1974); F. Scherer, supra, at 335-40.

Despite this dispute, there is general agreement that a profit-maximizing firm might sometimes find it rational to engage in predatory pricing; it might do so if it knows (1) that it can cut prices deeply enough to outlast and to drive away all competitors, and (2) that it can then raise prices high enough to recoup lost profits (and then some) before new competitors again enter the market. See Areeda & Turner, Predatory Pricing and Related Practices Under Section 2 of the Sherman Act, 88 Harv.L.Rev. 697, 698-99 (1975) [hereafter cited as Areeda & Turner, Predatory Pricing]. There is also general agreement that the antitrust courts’ major task *232is to set rules and precedents that can segregate the economically harmful price-cutting goats from the more ordinary price-cutting sheep, in a manner precise enough to avoid discouraging desirable price-cutting activity. See P. Areeda & D. Turner, Antitrust Law ¶¶ 711.1a-b, 714.1b, 714.5 (1982 Supp.); Joskow & Klevorick, A Framework for Analyzing Predatory Pricing Policy, 89 Yale L.J. 213 (1979).

Barry, of course, suggests that Pacific’s price cut is a “goat,” arguing that Pacific “intended” to drive Barry from the market place. Some courts have written as if one might look to a firm’s “intent to harm” to separate “good” from “bad.” See, e.g., D.E. Rogers Associates, Inc. v. Gardner-Denver Co., 718 F.2d 1431, 1435-36 (6th Cir.1983); Forster Manufacturing Co. v. FTC, 335 F.2d 47 (1st Cir.1964), cert. denied, 380 U.S. 906, 85 S.Ct. 887, 13 L.Ed.2d 794 (1965). But “intent to harm” without more offers too vague a standard in a world where executives may think no further than “Let’s get more business,” and long-term effects on consumers depend in large measure on competitors’ responses. See Zerbe & Cooper, An Empirical and Theoretical Comparison of Alternative Predation Rules, 61 Tex.L. Rev. 655, 659-677 (1982). Moreover, if the search for intent means a search for documents or statements specifically reciting the likelihood of anticompetitive consequences or of subsequent opportunities to inflate prices, the knowledgeable firm will simply refrain from overt description. If it is meant to refer to a set of objective economic conditions that allow the court to “infer” improper intent, see, e.g., D.E. Rogers Associates, Inc. v. Gardner-Denver Co., 718 F.2d at 1436; cf. O. Hommel Corp. v. Ferro Corp., 659 F.2d 340, (347) (3rd Cir. 1981), cert. denied, 455 U.S. 1017, 102 S.Ct. 1711, 72 L.Ed.2d 134 (1982), then, using Occam’s razor, we can slice “intent” away. Thus, most courts now find their standard, not in intent, but in the relation of the suspect price to the firm’s costs. And, despite the absence of any perfect touchstone, modern antitrust courts look to the relation of price to “avoidable” or “incremental” costs as a way of segregating price cuts that are “suspect” from those that are not. See, e.g., Northeastern Telephone Co. v. American Telephone and Telegraph Co., 651 F.2d at 86-91; cf. Americana Industries, Inc. v. Wometco de Puerto Rico, Inc., 556 F.2d 625, 628 (1st Cir.1977); see generally Areeda & Turner, Predatory Pricing.

One can understand the intuitive idea behind this test by supposing, for example, that a firm charges prices that fail to cover these “avoidable” or “incremental” costs— the costs that the firm would save by not producing the additional product it can sell at that price. Suppose further that the firm cannot show that this low price is “promotional,” e.g., a “free sample.” Nor can it show that it expects costs to fall when sales increase. Then one would know that the firm cannot rationally plan to maintain this low price; if it does not expect to raise its price, it would do better to discontinue production. Moreover, equally efficient competitors cannot permanently match this low price and stay in business. Further, competitive industries are typically characterized by prices that are roughly equal to, not below, “incremental” costs. See F. Scherer, supra, at 13-14; Areeda & Turner, Predatory Pricing at 702-03, 712. At a minimum, one would wonder why this firm would cut prices on “incremental production” below its “avoidable” costs unless it later expected to raise its prices and recoup its losses. When prices exceed incremental costs, one cannot argue that they must rise for the firm to stay in business. Nor will such prices have a tendency to exclude or eliminate equally efficient competitors. Moreover, a price cut that leaves prices above incremental costs was probably moving prices in the “right” direction — towards the competitive norm. See J. Bain, supra, at 14; Areeda & Turner, Predatory Pricing, at 704-07. These considerations have typically led courts to question, and often to forbid, price cuts below “incremental costs,” (or “avoidable costs”), while allowing those where the resulting price is higher. See, e.g., Northeastern Telephone Co. v. American Telephone and Telegraph Co., 651 F.2d at 88; International Air Industries, Inc. v. American Excelsior Co., 517 F.2d at 723-24; cf. William Inglis & Sons *233 Baking Co. v. ITT Continental Baking Co., Inc., 668 F.2d 1014, 1035-36 (9th Cir.1981) (price below average variable cost supports “inference” of predatory pricing), cert. denied, 459 U.S. 825, 103 S.Ct. 57, 74 L.Ed.2d 61 (1982).

In fact, the use of cost-based standards is more complicated than this brief discussion suggests. But, we need not explore here the arguments about how best to measure “incremental” or “avoidable” costs (e.g., whether “average variable cost” is an appropriate surrogate). Nor need we consider the theoretical difficulties that arise when prices fall between “incremental costs” and “average (total) costs,” a circumstance that can arise either when production is at a level below full capacity and the firm lowers prices to levels that do not cover a “fair share” of fixed costs or when a plant is pushed beyond its “full” capacity at prices that do not cover the specially high costs of the extraordinary production levels. See, e.g., William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d at 1034-36; Pacific Engineering and Production Co. v. Kerr-McGee Corp., 551 F.2d 790, 795-97 (10th Cir.), cert. denied, 434 U.S. 879, 98 S.Ct. 234, 54 L.Ed.2d 160 (1977); Areeda & Turner, Predatory Pricing, at 709-12; Scherer, Predatory Pricing and the Sherman Act: A Comment, 89 Harv.L.Rev. 869 (1976); Zerbe & Cooper, supra, at 681-84. Here we have a price that exceeds both “average cost” and “incremental cost”— that exceeds cost however plausibly measured. And as to those prices, “virtually every court and commentator agrees” that they are lawful, “perhaps conclusively, but at least presumptively.” P. Areeda & D. Turner, Antitrust Law ¶ 711.1c at 118 (1982 Supp.).

Barry points, however, to a possible exception to this rule — an “exception” created by the Ninth Circuit making certain price cuts unlawful even when the resulting revenues exceed total costs. In Inglis, that circuit held that a price cut is unlawful if

the anticipated benefits of defendant’s price depended on its tendency to discipline or eliminate competition and thereby enhance the firm’s long-term ability to reap the benefits of monopoly power.

668 F.2d at 1035. In the Ninth Circuit’s view, prices below “average variable costs” (a surrogate for “incremental costs”) produce a presumption of “predatory pricing.” When prices exceed “average variable cost,” but are “below average total cost,” the plaintiff must prove by a preponderance of the evidence that the defendant’s pricing policy depends on its exclusionary or disciplinary tendency. And, in a case like this one — a case that the Ninth Circuit would describe as “prices above average total cost” — the plaintiff can still win if it proves “by clear and convincing evidence — i.e., that it is highly probably true — that the defendant’s pricing policy was predatory,” in the sense defined in Inglis. Transamerica Computer Co. v. International Business Machines Corp., 698 F.2d at 1388.

The virtue of the Ninth Circuit test is that it recognizes an economic circumstance in which even “above total cost” price cutting might not be procompetitive and might, in theory, hurt the consumer. See Transamerica Computer Corp. v. International Business Machines Corp., 698 F.2d at 1387. For instance, if a dominant firm’s costs are lower than its competitors’, it could use an “above cost” price cut to drive out competition, and then later raise prices to levels higher than they otherwise would be. Moreover, if the price cut meant less profit for the firm unless (1) it drove out competitors and (2) higher prices later followed, the cut might be viewed as lying outside the range of normal, desirable, competitive processes. Even though such a price cut would only injure or eliminate firms that were less efficient than the price-cutter, one could argue that, other things being equal, their continued presence helps the competitive process (say, by constraining price rises) and may lead to greater efficiency in the future. Why should the antitrust laws not forbid this potentially harmful behavior? Indeed, economists have identified this type of pricing behavior (and certain other forms of above-cost pricing behavior) as potentially harmful, see, e.g., Brodley & Hay, Predatory Pricing: Com *234 peting Economic Theories and the Evolution of Legal Standards, 66 Cornell L.Rev. 738, 743-46 (1981); Scherer, supra (discussing other, more complex anticompetitive pricing strategies involving above-cost prices); Williamson, Predatory Pricing: A Strategic Welfare Analysis, 87 Yale L.J. 284 (1977) (same).

Nonetheless, while technical economic discussion helps to inform the antitrust laws, those laws cannot precisely replicate the economists’ (sometimes conflicting) views. For, unlike economics, law is an administrative system the effects of which depend upon the content of rules and precedents only as they are applied by judges and juries in courts and by lawyers advising their clients. Rules that seek to embody every economic complexity and qualification may well, through the vagaries of administration, prove counter-productive, undercutting the very economic ends they seek to serve. Thus, despite the theoretical possibility of finding instances in which horizontal price fixing, or vertical price fixing, are economically justified, the courts have held them unlawful per se, concluding that the administrative virtues of simplicity outweigh the occasional “economic” loss. See United States v. Trenton Potteries Co., 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927) (horizontal price fixing); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940) (same); Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911) (vertical price fixing); see also National Society of Professional Engineers v. United States, 435 U.S. 679, 687-92, 98 S.Ct. 1355, 1363-65, 55 L.Ed.2d 637 (1978); Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv.L.Rev. 226 (1960). Conversely, we must be concerned lest a rule or precedent that authorizes a search for a particular type of undesirable pricing behavior end up by discouraging legitimate price competition. Indeed, it is this risk that convinces us not to follow the Ninth Circuit’s approach.

Thus, we believe we should not adopt the Ninth Circuit’s exception because of the combined effect of the following considerations. For one thing, a price cut that ends up with a price exceeding total cost — in all likelihood a cut made by a firm with market power — is almost certainly moving price in the “right” direction (towards the level that would be set in a competitive marketplace). The antitrust laws very rarely reject such beneficial “birds in hand” for the sake of more speculative (future low-price) “birds in the bush.” To do so opens the door to similar speculative claims that might seek to legitimate even the most settled unlawful practices. (Should a price-fixer be allowed to argue that a cartel will help weaker firms survive bad times, leaving them as a competitive force when times are good? Suppose the price-fixer offers to “prove it” by “clear and convincing evidence?” See United States v. Socony-Vacuum Oil Co., 310 U.S. at 220-23, 60 S.Ct. at 842-44.)

For another thing, the scope of the Ninth Circuit’s test is vague. Is it meant to include, for example, “limit pricing” — the common practice of firms in concentrated industries not to price “too high” for fear of attracting new competition? See Transamerica Computer Corp. v. International Business Machines Corp., 698 F.2d at 1387; Areeda & Turner, Predatory Pricing, at 705-06. The “anticipated benefits” of such a price arguably depend “on its tendency to discipline or eliminate competition” thereby enhancing “the firm’s long-term ability to reap the benefits of monopoly power.” Does the test mean to include every common instance of a firm (with market power) deciding not to raise its prices? If it means to include either of these sorts of circumstances, the rule risks making of the antitrust laws a powerful force for price increases. But, if the rule does not mean to include these sorts of circumstance, which prices do, and which do not, fall within the test’s proscription?

Further, even were the test more specific, it seems to us as a practical matter most difficult to distinguish in any particular case between a firm that is cutting price to “discipline” or to displace a rival and one cutting price “better to compete.” No one would condemn a price cut designed to *235maximize profits in the short run, i.e., by increasing sales at the lower price, not by destroying competition and then raising prices. But the general troubles surrounding proof of firm costs, see, e.g., Transamerica Computer Co. v. International Business Machines Corp., 698 F.2d at 1387; P. Areeda & D. Turner, Antitrust Law ¶¶ 711.1d, 715.2 (1982 Supp.), only hint at the difficulty of deciding whether or not a firm’s price cut is profit-maximizing in the short-run, a determination that hinges not only on cost data, but also on elasticity of demand, competitors’ responses to price shifts, and changes in unit costs with variations in production volume. Direct statements by firm executives concerning their expectations will probably not be found; and, one might ask, in light of uncertain and changing market conditions, how much will the firm itself know? One can foresee conflicting testimony by economic experts, with the eventual determination made, not by economists or accountants, but by a jury. Of course, one might claim that such are the dangers inherent in many antitrust cases. But the consequence of a mistake here is not simply to force a firm to forego legitimate business activity it wishes to pursue; rather, it is to penalize a procompetitive price cut, perhaps the most desirable activity (from an antitrust perspective) that can take place in a concentrated industry where prices typically exceed costs. See United States v. Container Corporation of America, 393 U.S. 333, 89 S.Ct. 510, 21 L.Ed.2d 526 (1969); O. Hommel Co. v. Ferro Corp., 659 F.2d at 346-47; Pacific Engineering & Production Co. v. Kerr-McGee Corp., 551 F.2d at 796-97; 2 P. Areeda & D. Turner, Antitrust Law ¶¶ 404-05; J. Bain, supra, at 118-23; F. Scherer, supra, ch. 5.