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From Antitrust Law Daily, April 22, 2013

Kansas Law Amended to Require Application of Rule of Reason Analysis in Antitrust Cases

By Jeffrey May, J.D.

The Kansas Restraint of Trade Act (KRTA) has been amended to require that agreements challenged in state law antitrust actions be reviewed under "rule of reason" analysis and not be deemed per se unlawful. Senate Bill No. 124 was signed by the governor on April 16 and became effective April 18.

Under the KRTA, as amended, an agreement is not unlawful if it "is a reasonable restraint of trade or commerce." The reasonableness of a restraint is to be determined in light of "all of the facts and circumstances of the particular case." In order to be reasonable, the restraint must "not contravene public welfare."

The law responds to a 2012 decision of the Kansas Supreme Court rejecting the rule of reason standard for KRTA violations. In O’Brien v. Leegin Creative Leather Products, Inc., 294 Kan. 318, 277 P.3d 1062, 2012-1 Trade Cases ¶77,884, in connection with a challenge to a manufacturer’s resale price maintenance (RPM) policy, the court held that vertical and horizontal price fixing agreements were per se violations of the KRTA.

The KRTA is to be "construed in harmony with ruling judicial interpretations of federal antitrust law by the United States supreme court." However, the law specifies that federal law does not apply if it conflicts with the requirement that rule of reason analysis apply to challenged restraints. In addition, actions by indirect purchasers are permitted. Moreover, treble damages are now recoverable under the KRTA.

The amended law also states that it does not apply to franchise agreements or covenants not to compete. Also exempted are certain groups, such as agricultural and electric cooperatives.

MainStory: TopStory Antitrust KansasNews

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