The Colorado Antitrust Act of 1992
| Publication year | 1993 |
| Pages | 695 |
| Citation | Vol. 04 No. 1993 Pg. 695 |
1993, April, Pg. 695. The Colorado Antitrust Act of 1992
Without a great deal of fanfare in a legislative term burdened with controversial issues, the Colorado General Assembly did something in 1992 that its predecessors had failed to do since 1913---pass a clear, concise and, most importantly, enforceable antitrust bill. Colorado had been long-burdened with antitrust legislation that provided confusingly redundant and incomplete remedies for both private and public parties. A major overhaul of Colorado antitrust law was essential both for the Attorney General's Office and for the private sector in order to address competition issues effectively. This has finally been accomplished with the passage of H.B. 92-1082, the Colorado Antitrust Act of 1992 ("1992 Act").
The following analysis of the 1992 Act is designed to introduce legal practitioners and judges to this new legislation and provide some insight into the drafters' intent behind its various provisions.
When first confronted with the idea of replacing the Colorado antitrust statute,(fn1) many business leaders, legal practitioners and even some state legislators responded with that time-worn maxim: "If it ain't broke, don't fix it." After all, Colorado's antitrust law, the Restraint of Trade Act, had been in place for more than thirty years, and generally had been held to address the same competitive concerns as its federal counterparts.(fn2) However, historically, with the exception of a flurry of activity by the Colorado Attorney General(fn3) and the infrequent private suit, the Restraint of Trade Act has been one of the most under-utilized statutes in Colorado. The reason for this is that, aside from providing criminal penalties for violations of antitrust laws that ranked with the toughest in the nation,(fn4) the balance of the Restraint of Trade Act placed it near the bottom of the class in terms of scope, clarity and enforceability.
From the adoption of the first antitrust law in 1913,(fn6) Colorado lawmakers have struggled to create a clear and unambiguous antitrust statute. The U.S. Supreme Court held that the 1913 effort was unconstitutionally vague because it provided an indefinite standard for imposing criminal liability.(fn6) This rebuke went unanswered for thirty years, during which time Colorado consumers were without state antitrust protection.
In 1957, the General Assembly passed the Restraint of Trade Act,(fn7) modeling this effort after the antitrust statute of Wisconsin(fn8) and ignoring once again the well-established model of the federal statutes. Although the Restraint of Trade Act underwent some "official"(fn9) and "unofficial"(fn10) amendments, its substantive provisions were unaffected.
Despite the promise of renewed focus on state antitrust enforcement, the Colorado Supreme Court had only three opportunities to interpret the Restraint of Trade Act in that statute's thirty-five-year existence.(fn11) Although the court said that the Colorado and federal antitrust statutes had "substantial similarity in text and purpose,"(fn12) significant questions regarding several provisions of the Restraint of Trade Act were never addressed. For example, it was unclear whether the language of former § 101 of the Restraint of Trade Act required a plaintiff to prove specific intent, even in civil cases involving per se offenses.(fn13) Liability under § 1 of the Sherman Act(fn14) is dependent, not on the specific intent of the conspirators, but on the anticompetitive "effects" of the conspiracy. Finally, questions remained whether unilateral conduct, often the case with claims of monopolization and attempts to monopolize, would have violated the Restraint of Trade Act.(fn15)
The Restraint of Trade Act's greatest weaknesses, however, were its failure to provide a meaningful enforcement mechanism and comprehensive remedies. The Colorado Attorney General was given the task of enforcing the antitrust laws, but was not authorized to conduct pre-filing discovery to investigate potential violations. Investigations were conducted through the benevolent cooperation of targets or through the draconian reliance on state grand jury investigations. Even when a violation was uncovered, the Attorney General was left to pursue a criminal case or a civil injunctive action, with only limited opportunities to recover damages, costs or attorney fees.(fn16)
The situation was only slightly better for private litigants who, until a 1984 amendment to the Restraint of Trade
The Colorado Attorney General's Office conducted a survey of the antitrust statutes of the other forty-nine states, plus the District of Columbia, Puerto Rico and the Virgin Islands which exposed the inadequacies of the Colorado Restraint of Trade Act, particularly with respect to the provision of comprehensive enforcement tools and remedies. Excluding those states with no general antitrust statutes,(fn19) Colorado was one of only five states that did not authorize some form of pre-filing civil investigation by the Attorney General.(fn20) Colorado was one of nine states that did not allow the recovery of treble damages,(fn21) and one of seven states that did not allow the recovery of costs and attorney fees.(fn22) Even Wisconsin, on whose antitrust statute the Restraint of Trade Act was based, has amended its laws to provide for pre-filing discovery, civil penalties, "indirect purchaser" standing, treble damages and costs and attorney fees.(fn23)
Although Colorado antitrust law was not "broken," in its best light the Restraint of Trade Act was incomplete. In redesigning that old model to create a sleek, modern antitrust statute for Colorado, the Attorney General had two paramount goals. First, it was important to establish a consistent link between state and federal law. With the growing predominance of multi-state enterprises, it is critical that those involved in commercial activities understand the trade laws governing their conduct. Second, the Attorney General recognized that Colorado consumers stood to benefit the most from an antitrust statute that gave public and private litigants the kind of remedies that would make state antitrust enforcement meaningful.
Before being introduced as H.B. 92-1082, the 1992 Act was worked and reworked through discussions with and input from numerous business and consumer groups, and various members of the local and national antitrust bar. As any legislation, the final version of H.B. 92-1082 reflected certain necessary compromises. The unanimous approval of this bill on final vote in both houses of the Colorado General Assembly suggests that an appropriate balance between business and consumer interests was achieved. The 1992 Act was signed into law by Governor Romer on May 26 and became effective July 1, 1992. The remainder of this article describes the 1992 Act's provisions section by section.
The language of § 6-4-102 was borrowed in large part from the Utah Antitrust Act(fn24) and reflects the intent of the drafters that the 1992 Act be broadly and liberally construed. This statement is consistent with the U.S. Supreme Court's broad view of the important purposes accomplished by the Sherman Act, most notably in providing consumers with "the lowest prices, the highest quality and the greatest National progress."(fn25)
To assist the courts and litigants in understanding the scope of the 1992 Act, certain key terms are defined. First, the broadest possible definition of "commodity" is provided to make it clear that the 1992 Act will apply no matter what the article of commerce. Second, "governmental or public entity" is defined to include virtually every conceivable state or local government and subdivision of state or local government. This definition is especially relevant when considering the applicability of the local governmental immunity provided in § 6-4-114(3) of the 1992 Act, discussed below.
"Person" is defined to include every business entity, natural person, and governmental or quasi-governmental body. Unlike the Federal Trade Commission Act,(fn26) this definition is expanded to include both for-profit and not-for-profit business entities.(fn27) This is consistent with the definition of "service" in § 6-4-103(4) of the 1992 Act, which includes activities performed in whole or in part for economic or "noneconomic benefit." In addition to nonprofit organizations, the inclusion of "noneconomic benefit" is intended to include charitable organizations within the scope of the 1992 Act. This is consistent with the Sherman Act.(fn28)
Although the Restraint of Trade Act had been interpreted in accordance with federal precedent,(fn29) the language of former §§ 6-4-101 and 102 was redundant and confusing. To insure the consistent application of state and federal law, the language of the 1992 Act parallels that of § 1 of the Sherman Act.(fn30)
Section 104 of the 1992 Act retains the language "contract, combination in the form...
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