This case presents two critical questions regarding the legal standards governing the Rule of Reason, which determines the outcome of nearly every Sherman Act case. It is well settled that a restraint that has both pro- and anticompetitive effects is unlawful if a "less-restrictive alternative" will achieve the same benefits while harming competition less. The circuits are divided, however, on two issues that were outcome-determinative in this case: (1) the legal test for identifying a less-restrictive alternative; and (2) if no less-restrictive alternative exists, whether the restraint is valid even when (as in this case) the court finds harms to competition that vastly outweigh the benefits.

1. Must a less-restrictive alternative be free from additional costs to the defendant?

2. If there is no less-restrictive alternative, is the restraint invalid if the harms to competition substantially outweigh the restraint's procompetitive justification?

Must a less-restrictive alternative be free from additional costs to the defendant?