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 |
| Subject Matter | Domestic Antitrust |
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 the evils resulting from the restraint
of
trade
among such citizens was left to the States to deal
with.
. . .
Chief
Justice Fuller in United States v.
B.C. Knight Company,
156 U.S. I, 11 (1895).
The language quoted above is from the first 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 a dismissal of the
case on the ground that the indictment 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 within a single state.>
To
hold
otherwise,
according
to the
Court,
would
mean
that
"Congress would be invested, to the exclusion of the States, with
the power to regulate
...
every branch of human industry.'?
Without
question,
current
conceptions
of
the
Commerce
Clause would preclude such a sweeping conclusion today; Com-
merce Clause jurisprudence has undergone a revolution since this
decision.' However, the line between permissible state regulation
of interstate commerce and encroachment on the uniquely federal
power to do so has been drawn almost entirely by cases uncon-
cerned with antitrust
law.>
The one area of antitrust inquiry that
has straddled this line is the so-called state action doctrine, first
formulated by the Supreme Court's decision in Parker
v.
Brown»
In this case and its progeny, we find the sole surviving 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 crop to a committee that
controlled the marketing
of
raisins so as to eliminate competition
among producers and raise prices. Because nearly 95%
of
the
raisins were shipped out of California, there was a clear effect on
2156 U.S. at 16.
3[d. at 14.
4"As interstate commerce has become ubiquitous, activities once
considered purely local have come to have effects on the national econ-
omy, and have accordingly come within the scope of 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,
ET
AL.,
TREATISE ON
CONSTITU-
TIONAL
LAW:
SUBSTANCE AND PROCEDURE §§
4.1-10
(1986).
But see 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 be congruent 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 state actors.? 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, it is 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 from that contemplated by
the stabilization programs authorized by federal statutes." [d. at 368.
9"[N]othing in the language of the Sherman Act or in its history
. . . suggests that its purpose was to restrain a state or its officers 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., 428U.S. 579 (1976); Bates v. State Bar of
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
Carriers Rate Conference v. United States, 471 U.S. 48 (1985);
324
Liquor Corp. v. Duffy, 479 U.S. 335 (1987); Patrick v. Burget, 486 U.S.
94 (1988); City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S.
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. &ECON. 23, 39-40 (1983).
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