Document: 435 U.S. 679 98 S.Ct. 1355 5 L.Ed.2d 637 NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS, Petitioner,v.UNITED STATES. No. 76-1767. Argued Jan. 18, 1978. Decided April 25, Syllabus The United States brought this civil antitrust suit against petitioner, the National Society of Professional Engineers, alleging that petitioner's canon ethics prohibiting its members from submitting competitive bids for engineering services suppressed competition in violation § 1 Sherman Act. Petitioner defended on ground, inter alia, under Rule Reason was justified because it adopted by a learned profession purpose minimizing risk would produce inferior work endangering public safety. District Court, granting an injunction canon, rejected justification, holding face violated Act, thus making unnecessary to make findings likelihood dire consequences envisaged petitioner. Court Appeals affirmed, although modifying Court's certain respects so that, as modified, prohibits petitioner adopting any official opinion, policy statement, or guideline stating implying bidding is unethical. Held : 1. On face, question restrains trade within meaning and Reason, which proper inquiry whether challenged agreement one promotes, suppresses, competition, does not support defense based assumption itself unreasonable. Pp. 686-696. (a) amounts among competitors refuse discuss prices with potential customers until after negotiations have resulted initial selection engineer, and, while price fixing such, operates absolute ban bidding, applying equal force both complicated simple projects inexperienced sophisticated customers. 692-693. (b) Petitioner's affirmative confirms rather than refutes anticompetitive effect attempt justify, restraint imposed basis threat poses safety nothing less frontal assault basic 693-695. (c) That engineers are often involved large-scale significantly affecting justify exception 695-696. (d) While ethical norms may serve regulate promote professional fall argument here far cry such position; be entirely conducive behavior, reason, cognizable doing away competition. P. 696. 2. injunction, modified Appeals, abridge First Amendment rights. 696-699. "make . impossible ever enforce laws agreements trade," Giboney v. Empire Storage & Ice Co., 336 490, 502, 69 684, 691, 93 L.Ed. 834, consider fact impinge upon rights otherwise constitutionally protected, those protections do prevent remedying violations. 697-698. standard must judged relief represents reasonable method eliminating illegal conduct, meets standard. 698. If wishes adopt some other more closely confined legitimate objective preventing deceptively low bids, move modify injunction. 698-699. 181 U.S.App.D.C. 41, 555 F.2d 978, affirmed. Lee Loevinger, Washington, D. C., Howard E. Shapiro, respondent. Mr. Justice STEVENS delivered opinion Court. This case nullify association's members. 26 Stat. 209, amended, 15 U.S.C. et seq. (1976 ed.), justification without foreseen association.1 affirmed.2 We granted certiorari decide should considered factual proffered before rejecting it. 434 815, 51, 54 70. Because we satisfied asserted rests fundamental misunderstanding frequently applied litigation, affirm. 2 * Engineering important profession. There over 750,000 graduate States, whom about 325,000 registered engineers. Registration requirements vary State State, but usually require applicant engineer at least four years practical experience pass written examination. About half who engage consulting fee basis. They perform connection study, design, construction all types improvements real property—bridges, office buildings, airports, factories examples. fees, amounting well $2 billion each year, constitute 5% total costs. In given facility, approximately 50% 80% cost direct result performed concerning systems equipment incorporated structure. 3 Engineers (Society) organized 1935 deal nontechnical aspects practice, including promotion professional, social, economic interests Its present membership 69,000 resides throughout foreign countries. Approximately 12,000 offer their governmental, industrial, private clients. Some principals chief executive officers largest firms country. 4 charges computed different ways. He charge client percentage he project, set his actual plus overhead profit, fixed rates per hour work, assignment specific sum, combine these approaches. Suggested schedules particular areas been promulgated time various local societies. not, however, involve claim has tried fix even calculating fees. It involves unlawfully agreed negotiate fees prospective selected project. Evidence found 11(c) Society's Code Ethics, July 1964.3 Board Ethical Review uniformly interpreted "ethical rules submission form information customer enable comparison services."4 requires provided, then imposes obligation firm withdraw consideration job. Ethics "prohibits soliciting information," 389 F.Supp. 1193, 1206 (DC 1974),5 seeks preserve profession's "traditional" selecting Under traditional method, initially selects background reputation, price.6 6 1972 Government filed complaint had abide canons consequence, deprived benefits free open prayed terminating unlawful agreement. 7 answer admitted essential facts alleged pleaded series defenses, only remains issue. defense, averred out contrary interest. cheaper easier "to design specify inefficient unnecessarily expensive structures methods construction."7 Accordingly, pressure lowest possible adversely affect quality engineering. Moreover, practice awarding contracts bidder, regardless quality, dangerous health, safety, welfare. For reasons, claimed "unreasonable interstate commerce." 8 parties compiled voluminous discovery trial record. made detailed profession, Society, members' participation commerce, history incidents appears enforced. did finding whether, what extent, led which, turn, affected court convinced prohibition "on tampering structure Act." F.Supp., 1200. 9 Although entered Court,8 affirmed conclusion therefore "illegal regard benefits." 47, 984. II 10 Goldfarb Virginia Bar, 421 773, 95 2004, 44 572, held bar rule prescribing minimum legal noted practices might survive scrutiny though they viewed Act another context. said: 11 "The distinguished business is, course, relevant determining violates unrealistic view professions interchangeable activities, automatically apply concepts originated areas. service aspect, features professions, could properly context, treated differently. intimate no situation confronted today." U.S., 788-789, n. 17, S.Ct., 2013. 12 Relying heavily footnote, major cases Reason—principally Mitchel Reynolds, P.Wms. 181, 24 Eng.Rep. 347 (1711); Standard Oil Co. 221 1, 31 55 619; Chicago Trade 246 231, 38 242, 62 683; Continental T. V., Inc. GTE Sylvania, Inc., 433 36, 97 2549, 53 568—petitioner argues setting forestalling harm produced unrestrained bidding. To evaluate necessary identify contours application kind 13 A. Reason. 14 One problem presented language cannot mean says. statute says "every" contract unlawful.9 But, Brandeis perceptively noted, very essence every contract;10 read literally, outlaw entire body law. Yet law establishes enforceability commercial enables markets—indeed, economy—to function effectively. Congress, intend text delineate full concrete situations. legislative makes perfectly clear expected courts give shape statute's broad mandate drawing common-law tradition.11 origins precedents long antedating served purpose. used flexibility definition, central principle analysis remained constant. Contrary name, field favor realm reason. Instead, focuses directly restraint's impact conditions. 16 apparent earliest supra. promise seller bakery compete purchaser business. covenant limited area operated. upheld reasonable, benefit long-run enhancing marketability itself—and thereby providing incentives develop enterprise outweighed temporary loss competition.12 17 suggested Reynolds regarded testing covenants ancillary transaction, employment sale going Judge (later Chief Justice) Taft classic rejection lawfully agree sell goods same agreed-upon reasonable. Addyston Pipe Steel 85 F. 271, 282-283 (CA6 1898), aff'd, 175 211, 20 96, 136. case, subsequent decisions unequivocally foreclose interpretation permitting into reasonableness agreement.13 18 early also special characteristics industry, monopolistic arrangements will better commerce Trans-Missouri Freight Assn., 166 290, 540, 41 1007; Joint Traffic 171 505, 573-577, 19 33-34, 43 259. addressed Congress exemption industries,14 permitted As observed 65, 517, "restraints purview [can]not taken category indulging general reasoning expediency nonexpediency having contracts, wisdom want prohibited being made." test prescribed acts "were unreasonably restrictive conditions." Unreasonableness either (1) nature character (2) surrounding circumstances giving rise inference presumption were intended restrain enhance prices.15 branch test, conditions.16 respect oe faithful origins. From Brandeis' Trade, Powell adhered position mandated promotes suppresses true legality merely regulates perhaps suppress destroy competition." 238, 243, quoted 49 15, 2557.17 21 are, thus, two complementary categories analysis. first whose plainly elaborate study industry needed establish illegality—they se." second can evaluated analyzing peculiar business, restraint, reasons why imposed. event, judgment significance restraint; favoring interest, interest industry. Subject exceptions defined statute, decision Congress.18 22 Price "central nervous system economy," Socony-Vacuum 310 150, 226 59, 60 811, 845, 84 1129, "interfere[s] market forces" face. Container Corp., 393 333, 337, 89 510, 512, 526. engineer. required demonstrate found, "impedes ordinary take place," substantially deprives "the ability utilize compare services." 404 457, 460. 23 conf rms inherently imprecise, lead tempt individual consequent health.19 logic tend maintain level; if effect, nonetheless invokes arguing ultimately inures production insuring behavior. preceding discussion reveals, never accepted argument. be, argues, tends down inexpensive item costly. risk, therefore, cause suppliers defective product. Similarly, imprecise incapable taking account variables performance project.20 Based considerations, conclude quality—which embrace end product—outweighs advantages achieving savings pitting competitor another. Or vendor independently refrain negotiation himself fully understands scope customers' needs. These reasonable; indeed, provided ample documentation thesis. But satisfy Rule; nor subject attack. 25 bidding;21 unreasonable restraints prevents comparisons views costs marketplace. reflects lower prices, services. heart our national faith value FTC, 340 248, 71 240, 249, 239. best allocating resources recognizes elements bargain—quality, service, durability—and just immediate cost, favorably opportunity select alternative offers. Even assuming occasional presumed statutory precludes good bad. 27 alter Exceptions potentially tantamount repeal statute. complex economy number items serious almost endless—automobiles, drugs, foods, aircraft components, heavy equipment, countless others, individuals large defectively made. judiciary indirectly protect conferring monopoly privileges manufacturers. 28 By token, cautionary footnote Goldfarb, 2013, supra, fashioning professions. adhere expressed nature, differ services, accordingly, vary. Reason.22 position. faced contention tempted submit bids. Certainly, deception canon. once again, equation deception, like similar hazards, simply too broad; assume avior, 29 Such create "sea doubt" refused embark Addyston, F., 284, firmly avoided since. III 30 Appeals,23 unethical.24 abridges rights.25 find merit contention. Having guilty empowered fashion appropriate future activities avoid recurrence eliminate consequences. See, e. g., International Salt 332 392, 400-401, 68 12, 92 20; Glaxo Group, Ltd., 410 52, 64, 861, 868, 35 104. resulting order curtail exercise liberties enjoy, this, unavoidable consequence violation. Just freedom businessmen talk restrict range expression bidding.26 ." 834. remedy, may, 32 conduct. goes beyond proscription precise conduct previously pursued appropriate. 33 obliged assume, common experience, violator relinquish fruits completely him do. And already hand subtle informed, difficult prove, place, win market. When fro law, untraveled roads left worn closed." 400, 17. 34 apparently fears broadly read, block paths matters relating bidding.27 Salt, burden proved transgressor bring claims court's attention." Ibid. specifically stated "[i]f district modification decree." U.S.App.D.C., 46, F.2d, 983. believe, approach, adequately protecting interests. reject attack order. Affirmed. 36 BRENNAN took part case. 37 BLACKMUN, REHNQUIST joins, concurring judgment. I join Parts concur Part moment, reach me intimating, ante, 696, 22, overall society forbidden my view, 572 (1975), considering how consigned self-regulation. us "Rule Reason" increased accepting assertion product benefit, maintenance bid acquaintance client's desired Brief 49-50, 54, still grossly overbroad. concedes, Tr. Oral Arg. 47-48, forbids simultaneous consultation between several engineers, where provides complete project requesting information. secure estimate purport single engagement continues member provide comparative Though directly, retains option engineer's beginning again forced process sequential earch inevitably increases gathering information, hence dampen calibrated role play uninformed Then, too, overbroad aspect Leventhal, when dissemination property prior sophistication purchaser, complexity procedures evaluating information." 45, 982 (1977). 39 My skepticism further shaping narrow last majority,* arises there de minimis yet progression's ordering. A medical prescription standards competence licensing certification lessen entrants. regulation permissible forms advertising nonroutine limitation in-person solicitation, see Bates Bar Arizona, 350, 2691, 810 (1977), reducing acknowledging "professional services" "nature vary," muster am leaves enough elbowroom realistic 40 BURGER, dissenting part. extent sustains dissent portion published guarantees right express impaired cloak remedial judicial action. 1193 1974). 978 original entered, entitled appeal vacated reconsideration light recent 572. 422 1031, 2646, 45 686. After reconsideration, re-entered judgment, 457 1975), appealed Appeals. section, trial, provided: "Section 11—The Engineer unfairly attempting obtain advancement engagements "c. shall solicit proposals Competitive formal informal submission, receipt, verbal estimates terms dollars, man days required, measure compensation whereby organization, negotiations. disclosure recommended prepared societies An requested proposal satisfactory contract, procedure changed conform practices, successful proposed work. principles obtaining professions." App. 9951. 1206. addition 3, Directors "Professional Policy" statements. Policy statement 10-F issued opposed projects. replaced 10-G permits quotations work—in particular, research development "enforced" Reply 15-18, record "support[s] NSPE actively pursue course policing adherence hrough indirect communication clients." clearly erroneous. selected, then, accordance ethics, arrangement client. unsuccessful, approach new Id., 1215. reads follows: "18. contained particularly above, welfare insofar "(b) Experience demonstrated inconsistent securing recipients most economical structures. Testing, designing efficient complex, expensive. construction. Consequently, pressures inevitable tendency price. lowering increasing decreasing efficiency specification "(c) instances situations results award factors ability, expertise, skill, capability, learning like, awards endanger "(d) aforesaid provisions above 21-22. struck decree ordered state reasoned provision "more intrusive achieve fulfillment governmental interest." petitioned review decision. Section orth provides: "Every combination trust otherwise, conspiracy, nations, declared "But determined Every trade, restrains. bind, restrain, essence." 244, 683. See Topco Associates, 405 596, 606, 1126, 1133, 515: "Were narrowest way, deemed violate it." Cong.Rec. 2456 (1890) (comments Sen. Sherman); generally H. Thorelli, Federal Antitrust 228-229 (1955). "4thly, fourth reason favour happen wherein useful beneficial, old man, mind, likely loser continuing consideration, selling custom, procure livelihood, probably lost, trading longer." P.Wms., 191, Eng.Rep., 350. 293. 340-342, 558-559, 1007. exempted industries §§ 291-292 ed.) (Capper-Volstead agricultural cooperatives); 1011-1013 (McCarran-Ferguson insurance); 5b (Reed-Bulwinkle rail motor carrier rate-fixing bureaus); 1801 (newspaper joint operating agreements). "Without detail, briefly surveying whole field, accuracy said dread enhancement wrongs thought flow undue conditions caused corporations, led, matter policy, treating conditions, act, reasonably forwarding personal developing but, contrary, done intent wrong limit individuals, restraining tending evils, policy." 58, 515. Throughout emphasis conceptions. instance, description treatment engrossing statutes later recognized tended 55, 513. pointed Report Attorney General's Committee Study Laws (1955): "While gave discretion interpreting word 'every' reviewed constitutes monopolization, monopolize. effect; obsolete prevalent arguments, as, arra gements socially preferable because, example, high risks 'cut-throat' unusual explained "Under factfinder weighs deciding imposing 49, 2557. analyzed "market impact" vertical restraints, noting reduction intrabrand stimulation interbrand 50-51, 2558. "Competitive "economic analysis" emphasized opinion. Report, 16, 10-11; Bork, Per Se Concept: Fixing Market Division, 74 Yale L.J. 775 (1965); L. Sullivan, Law 165-197 B. Ban Bidding. points bargaining customer, allowed selected. 6, contends timing analogous exchange forbade purchases close day's session closing Indeed, reprinted Government's brief Solicitor General exchange's fixing. A1-A28. reliance misplaced reasons. First, mistakenly treats buyer equivalent sellers. Second, accept concern formulation judging agreement; unquestionably stresses Whatever one's supra 175-182, positive 240-241, 244-245. preclude "regulation." We, truth assertion, country, 4, time, countries "as laws, regulations country." pp. 6487. rule, called "When-in-Rome" clause, abolished 1968. 6344. decided Brooks 541-544 (1970 ed., Supp. V), use "traditional method." relies evidence merit. exempt purchaser's seek through authorize vendors conspire impose purchasers. Courts have, marketing related product, seller's main liability. Tripoli Wella 425 932 (CA3 1970) (en banc); cf. 23, 2560. 8, 9974-9980. unconstitutional speech association. Thus, association believed schedule accurately reflected levels, enjoined "from adopting, publishing, distributing fees." 355 491, 495-496 (ED Va.1973). Assn. Real Estate Boards, 339 485, 70 711, 94 opposing 21, Noerr-Pennington doctrine. Eastern Railroad Presidents Conference Noerr Motor Freight, 365 127, 81 523, 464; Mine Workers America Pennington, 381 657, 1585, 626. contains prohibition, indeed "[n]othing influence action 60. always rigor businesses. Appalachian Coals, 288 344, 471, 77 825 (1933); 683 (1918); 175-182 (1977); R. Paradox 41-47, 56 (1978). correctness decisions.

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