Overbearing,Inc. ,which manufactures ball bearings,has built up a network of wholesale dealers.Under agreements between Overbearing and various dealers,each dealer has an established geographical territory of operation.These agreements also call for the individual dealers not to compete in another Overbearing dealer's exclusive territory.An appropriate plaintiff has sued Overbearing on the theory that these agreements violate Section 1 of the Sherman Act.What treatment will the court give the agreements? Why? Under that treatment,is it possible for Overbearing to avoid liability even if the plaintiff establishes the existence of the agreements? If so,how?

Because the agreements are vertical restraints on distribution,the court will give them rule of reason treatment.This means that the agreements may or may not violate Section 1,depending upon the facts.Unlike the results of the per se approach (under which proof of the subject behavior conclusively establishes a violation),the plaintiff's proof that the defendant(s)engaged in behavior receiving rule of reason treatment does not necessarily mean that the behavior violated Section 1.Because the rule of reason approach applies here,Overbearing will be given an opportunity to offer justifications for the vertical restraints on distribution.A party in Overbearing's position normally will attempt to show that any harm to intrabrand competition (i.e. ,competition among dealers of Overbearing ball bearings)resulting from the agreements is outweighed by the benefits to interbrand competition (i.e. ,competition between dealers of Overbearing ball bearings and dealers of other companies' ball bearings).