Antitrust's “State Action” Doctrine and the Policy of the Commerce Clause
Author | Frank P. Spinella |
Published date | 01 September 1994 |
Date | 01 September 1994 |
DOI | http://doi.org/10.1177/0003603X9403900302 |
The Antitrust Bulletin/Fall 1994
Antitrust's "state action" doctrine
and the policy
of
the
commerce clause
BY FRANK P. SPINELLA, JR. *
653
The relief
of
the citizens
of
each state from the burden
of
monopoly and theevilsresulting fromtherestraint
of
trade
among such citizens wasleft to the States to deal
with.
. . .
Chief Justice Fuller in United States v.
E.C. Knight Company,
156 U.S.1, 11 (1895).
The language quoted aboveis from thefirst Sherman Act! case to
reach the United States Supreme Court, an action challenging the
acquisition
of
four Pennsylvania
sugar
refiners through
which
defendant obtained control over virtually all United States sugar
refining capacity. The Supreme Court affirmed adismissal of the
case on the ground thattheindictment alleged only monopoliza-
*Frank P. Spinella, Jr., Hibbard &Spinella, P.A., Concord, NH.
15 U.S.C.§1.
©1994 by Federal Legal Publications. Inc.
654
The antitrust bulletin
tion
of
the
manufacture
of sugar, and no interstate commerce (as
distinguished from manufacture) could be restrained by the acqui-
sition of manufacturing operations wholly withina single state.s
To
hold
otherwise,
according
to
the
Court,
would
mean
that
"Congress would be invested, to the exclusion of theStates, with
the powerto regulate
...
every branchof human industry."3
Without
question,
current
conceptions
of
the
Commerce
Clause would preclude such a sweeping conclusion today; Com-
merce Clause jurisprudence has undergone arevolution since this
decision.' However, the line between permissible state regulation
of
interstate commerce and encroachment on the uniquely federal
power to do so hasbeen drawnalmost entirely by cases uncon-
cerned with antitrust law.' The one area of antitrust inquiry that
has straddled this line is theso-called state actiondoctrine, first
formulated by the Supreme Court's decision in
Parker
v.
Browns
In thiscase and its progeny,we find the solesurviving vestiges
of
E.C.
Knight.
In
Parker,
California raisin producers sued under the Sherman
Act to enjoin enforcement of a California law requiring raisin pro-
ducers to deliver over two-thirds of their cropto a committee that
controlled the marketing of raisins soas to eliminate competition
among producers
and
raise prices. Because nearly 95%
of
the
raisins were shipped out of California, there wasa clear effect on
156 U.S. at16.
Id. at 14.
4"As interstate commerce has become ubiquitous, activities once
considered purely local have come to have effectson the national econ-
omy, and have accordingly come within the scopeof Congress' com-
merce power." New York v, U.S.,112 S. Ct.2408,2419(1992). See
Schwartz, Commerce, the States,and the Burger Court, 74 Nw. U.
L.
REV.
409 (1979); Epstein, The Proper Scope
of
the Commerce Power, 73
VA.
L.
REV.
1387 (1987);1
R.
ROTUNDA,
ETAL.,
TREATISE ON
CONSTITU-
TIONAL
LAW:
SUBSTANCE AND PROCEDURE §§ 4.1-10 (1986).
Butsee. Northern Securities Co. v. United States, 193 U.S. 197
(1904); Swift & Co. v. United States, 196 U.S. 375 (1905).
6317 U.S. 341 (1943).
Commerce clause:
655
interstate
commerce." The Court rejected aCommerce Clause
attack, finding the state's policy to becongruent with federal agri-
cultural policy favoring diminished production.! It also disposed
of
the
Sherman
Act
claim
by
holding
that
the
Act
was
not
intended to apply to stateactors," thus avoiding any construction
of
the
Act
that
might
implicate
the
policy
of
the
Commerce
Clause.
Every subsequent Supreme Court opinion applying the Parker
state action doctrine'? has ignored the interplay of the Sherman
Act and the Commerce Clause;" only once since 1978 has
the
[d. at 345.
"It
thus appears that whatever effect the operation of the Califor-
nia program may have on interstate commerce, itis one that it has been
the policy
of
Congress to aid and encourage through federal agencies in
conformity to the Agricultural Marketing Agreement Act and sec. 302
of
the
Agricultural
Adjustment
Act. Nor is the
effect
on the
commerce
greater than or substantially different in kind fromthat contemplated by
the stabilization programs authorized by federal statutes." [d. at 368.
9"[N]othing in the language of theSherman Act or in itshistory
... suggests that its purpose was to restrain astate or itsofficers or
agents from activities directed by its legislature." [d. at 350-51.
10 See, e.g., Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975);
Cantor v. Detroit Edison Co., 428 U.S. 579(1976); Bates v. State Bar
of
Arizona, 433 U.S.350(1977);City of Lafayette v. Louisiana Power &
Light Co., 435U.S. 389(1978);Exxon Corp.v. Governor
of
Maryland,
437 U.S.117 (1978); New Motor Vehicle Bd.of California v. Orrin W.
Fox Co.,439 U.S. 96 (1978); California Retail Liquor Dealers
Ass'n
v.
Midcal Aluminum, Inc., 445 U.S.97 (1980); Community Communica-
tions
Co.
v.
City
of
Boulder,
455 U.S. 40
(1982);
Rice
v.
Norman
Williams Co., 458 U.S.654(1982); Hoover v. Ronwin, 466 U.S. 558
(1984); Hallie v. City
of
Eau Claire, 471 U.S.34 (1985); Southern Motor
Carriers
Rate
Conference
v. United
States,
471 U.S. 48 (1985);
324
Liquor Corp.v. Duffy, 479U.S. 335 (1987); Patrick v. Burget, 486 U.S.
94 (1988); City of Columbia v. Omni Outdoor Advertising, Inc.,499 U.S.
365 (1991); FTC v. Ticor TitleIns. Co., 112 S. Ct. 2169(1992).
11 "Since Parker the Court has not even hinted that antitrust scrutiny
might depend on whether the effects of [the state's] program are broad-
cast outside the state's borders. It has left all scrutiny of interstate effects
to the jurisprudence of the Commerce Clause."Easterbrook, Antitrust and
the Economics
of
Federalism, 26 J. L. &Ecos. 23,
39-40
(1983).
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