Chapter 27, Problem 1RE

Summary Introduction

Case s ummary :Company ICANN is a non-profit organization that is involved in internet business. The most important function of ICANN is authorizing the registry for certain top-level domains (TLDs). An agreement was signed between ICANN and company VS that authorized company VS to serve as a registrar for the ‘.com’ as per ICANN’s specification and guidelines. VS although not being satisfied with the terms of the agreement, signed the agreement. VS accused ICANN of violating Section 1 of the Sherman Act as ICANN restricted various services it can be made available as a registrar.

To f ind: The judgment for the action of company ICANN that is related to the rule of reason or deemed per se violations or the of section 1 of the Sherman Act.

Explanation of Solution

Explanation: 

The Rule of reason helps the court to analyse any anti-competitive agreements and also helps to decide whether the agreement is actually violating Section 1 of the Sherman Act which determines the reasonable constitution of restraint of trade. On the other hand, ‘per se’ explains that the agreement is inherently illegal.

Company ICANN should be judged based on the rule of reason as both the organizations operate at a different level. Vertical restraints exist in this case as VS was imposed with various restrictions.