§6.3 B. State Law

• Jurisdiction: New York

B. State Law

All 50 states, as well as the District of Columbia, Puerto Rico and the Virgin Islands, have state antitrust statutes. Most are patterned on or analogous to §§ 1 and 2 of the Sherman Act, and some states have counterparts to § 7 of the Clayton Act⁶⁸⁹ and the Robinson-Patman Act.⁶⁹⁰ The Attorney General is the primary antitrust enforcement official in all states. The majority of statutes also authorize enforcement by local prosecutors and private rights of action by persons injured by the antitrust violation.

Most states have some form of criminal penalty for anticompetitive conduct, with fines varying from $1,000 to $1 million per violation as well as imprisonment for terms up to 10 years.⁶⁹¹ Other provisions of the state’s criminal code may also be used in connection with antitrust violations, particularly if bid-rigging on state contracts is alleged. Attorneys General have brought claims of criminal conspiracy, grand theft or larceny by false pretenses.

State antitrust laws are usually construed in a manner consistent with federal law. Nearly half the state antitrust statutes direct that the legislation be construed in light of analogous federal antitrust laws.⁶⁹² In other jurisdictions, state courts frequently refer to and follow interpretations of comparable federal antitrust law. The practice has tended to harmonize federal and state legal developments in the antitrust area during a period of increasing state enforcement. In some cases, however, state courts have declined to follow federal precedent when interpreting state antitrust laws.⁶⁹³

The most significant difference between state and federal antitrust law is the treatment of injury to indirect purchasers. In Illinois Brick Co. v. Illinois,⁶⁹⁴ the U.S. Supreme Court held that under federal law only direct purchasers of price-fixed items may sue the price fixers for treble damages. Persons who purchase a product through a middleman are precluded from recovering any damages they may have suffered, although they may seek injunctive relief. In 1990, however, the Supreme Court held, in California v. ARC America Corp.,⁶⁹⁵ that state statutes permitting recovery by indirect purchasers were not preempted. The Supreme Court found that recovery under state law did not pose obstacles to enforcement of federal antitrust policy because liability under state laws would be in addition to, not in lieu of, liability under federal law.

The majority of states, either by statute or by judicial decision, permit actions for damages to be maintained on behalf of indirect purchasers injured by antitrust violations.⁶⁹⁶ In some cases, only the state Attorney General can recover damages on behalf of indirect purchasers,⁶⁹⁷ and some statutes only permit recovery for governmental or public entities.⁶⁹⁸ Some states permit defendants to prove a “pass-through” defense, under which the defendant can prove that the illegal overcharge was passed on to others who can claim damages, but other states have specifically rejected that defense.⁶⁹⁹

Another area where federal and state law differ is state statutes authorizing parens patriae actions for violations of state antitrust laws.⁷⁰⁰ Some of those state laws extend the scope of the parens patriae authority beyond the “natural persons” covered by the Clayton Act.⁷⁰¹

Another significant difference between federal and state antitrust laws has arisen since the Supreme Court’s decision in Leegin Creative Leather Products Inc. v. PSKS, Inc.⁷⁰² In that case, the Court reversed the long-standing doctrine that vertical price restraints are illegal per se, and held that such restraints should be examined under the rule of reason. Several states, including New York and California, take the position that vertical price restraints are illegal under their state law. Maryland has enacted a statute to preserve the per se treatment of resale price maintenance. The law adds a new section which provides, “For purposes of subsection (a)(1) of this section, a contract, combination or conspiracy that establishes a minimum price below which a retailer wholesaler or distributor may not sell a commodity or service is an unreasonable restraint of commerce.”⁷⁰³ California has settled one vertical price fixing case, brought under the state’s antitrust statute⁷⁰⁴ and New York filed a complaint against Tempur-Pedic, alleging violations of the state’s General Business Law.⁷⁰⁵

On the consumer protection side, each state has a consumer protection statute prohibiting deceptive acts and practices. These statutes fall into four general categories: (1) “Little FTC Acts,” which use the language of § 5 of the Federal Trade Commission Act to prohibit “unfair methods of competition and unfair or deceptive acts or practices” in trade or commerce;⁷⁰⁶ (2) statutes...