Author:Page, William H.
Position:Special Issue on Antitrust Law

TABLE OF CONTENTS INTRODUCTION 1468 I. AN OVERVIEW OF THE Two IMMUNITIES 1471 A. State Action 1471 B. The Eleventh Amendment 1479 II. THE TWO IMMUNITIES AND ANTITRUST POLICY 1487 A. Actions Subject to Both Immunities 1490 B. Actions Subject to Parker, but Not 1493 Eleventh Amendment, Immunity C. Actions (Against State-Connected Actors) 1495 Not Subject to Either Immunity D. Actions Subject to Eleventh Amendment, 1496 but Not Parker, Immunity III. SOVEREIGN AND OFFICIAL ANTITRUST IMMUNITIES 1500 BEYOND PARKER A. Antitrust Injury and Eleventh Amendment 1504 Immunity B. Are There Benefits of Sovereign and 1512 Official Antitrust Immunities Beyond the Parker Doctrine? C. Accidental Efficiency 1516 CONCLUSION 1521 INTRODUCTION

The Parker v. Brown (1) (or "state action") doctrine and the Eleventh Amendment of the Constitution (2) impose different, sometimes conflicting, limits on antitrust suits challenging anticompetitive state regulation. The Supreme Court created these two versions of sovereign immunity in long, separate lines of cases, but has said almost nothing yet about the doctrines' relationship to each other. (3) Lower courts have applied both doctrines in antitrust challenges to state regulation, but have also never explained the relationship between the doctrines, other than to say that the immunities apply independently of each other. (4) The lower courts' approach is understandable: both immunities are convoluted and controversial, so any effort to reconcile them or to fully explain their relationship is likely to be problematic. (5) It is simpler to apply their standards separately to dispose of the claims each new case raises.

Nevertheless, the Court has derived both doctrines from the principle of sovereign immunity, so it is worth considering how and why they differ, and what the consequences of the differences are for antitrust policy. In this Article, we consider two important issues, one under each doctrine. The antitrust issue--our primary focus--is whether application of the Eleventh Amendment in cases involving anticompetitive state regulatory choices reduces consumer welfare. (6) The state action immunity is based on statutory interpretation of the Sherman Act; (7) the Court has shaped the doctrine over decades, (8) guided by both sovereignty and antitrust considerations, so the doctrine should reflect an appropriate balance between the two. (9) The Eleventh Amendment immunity, by contrast, has nothing specifically to do with antitrust policy; it is a general constitutional doctrine that protects state sovereignty, while acknowledging the needs of general federal authority. (10) Our concern is that the application of the broader immunity is a blunt instrument that may thwart the balance between state sovereignty and antitrust policy reflected in the antitrust-specific immunity. Ultimately, we conclude that the effect of the conflict on consumer welfare is probably small, because of the constitutional doctrine's own limitations and because of adaptations that state governments and public and private enforcers can make in case of a conflict.

That conclusion has implications for the second issue: whether, as some scholars have argued, the Roberts Court's expansion of Eleventh Amendment immunity has improperly intruded on federal legislative power. (11) The antitrust experience is unique, because, unlike other federal legislative policies, antitrust's relationship to the Eleventh Amendment is overshadowed by its own immunity, which is also based on state sovereignty, and is in some ways broader. But the relatively minor practical consequences of the conflict between the immunities in antitrust litigation lends some support for the view that the expanded Eleventh Amendment immunity imposes no insurmountable barrier to the enforcement of federal law. (12) As we show in Part III, one can argue that the limited Eleventh Amendment immunity is an efficient supplement to Parker immunity.

Part I of this Article provides an overview of the two immunities: state action and the Eleventh Amendment. In Part II, we compare the sources and natures of the two immunities. In Part III, we show how the definitions of the two immunities affect their applicability to different state-connected entities and individuals in antitrust cases. At the same time, we consider whether the differences between the doctrines make a significant difference for antitrust policy. We show that the primary practical effect of Eleventh Amendment immunity is to limit private plaintiffs to prospective relief in antitrust suits against state officials. That effect is significant, however, only in the subset of cases in which Eleventh Amendment immunity applies but the state action immunity does not--cases, in other words, in which the Supreme Court has chosen not to shelter state-connected actors with Parker immunity, in part because of considerations of antitrust policy. In cases such as these, the antitrust-specific version of sovereign immunity does not shield the state actors from damage liability, (13) but the Eleventh Amendment immunity does. (14) We consider the extent to which this limitation on remedies in antitrust cases is likely to reduce consumer welfare in ways that conflict with antitrust policy. We conclude by considering the significance of this assessment for the scope of the two immunities.


    The Eleventh Amendment and state action immunities are both expressions of the ancient principle of state sovereignty and its correlative principle of sovereign immunity. (15) But the Supreme Court has also drawn on other policies to formulate their content.

    1. State Action

      First consider the antitrust-specific state action immunity. In Parker, the Supreme Court refused to apply the Sherman Act to invalidate a state-created agricultural prorationing scheme. (16) The Court did not believe that Congress, by enacting Section 1 of the Sherman Act in 1890, meant to intrude on states' sovereign regulatory powers as extensively as the requested remedy would entail:

      [I]t is plain that the prorate program here was never intended to operate by force of individual agreement or combination. It derived its authority and its efficacy from the legislative command of the state and was not intended to operate or become effective without that command. We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress. (17) Under Parker, sovereignty is a constitutional attribute of state government, but it does not directly immunize states or their officers. (18) Instead, it functions as a background norm that requires a limiting construction of the Sherman Act. Because the doctrine excludes state-created restraints from the reach of the statute, (19) state action immunity forecloses any suits challenging covered restraints, whether brought by private antitrust plaintiffs, such as the raisin producer in Parker, (20) or public antitrust enforcers, such as the Federal Trade Commission (FTC) (21) or the Department of Justice (DOJ) in later cases. (22) Also notice that the quoted passage makes clear that the state action immunity applies not only to the agencies, but to their officials--both are immune or not immune in the same circumstances. (23) And because the immunity is based on an inference about congressional intent, Congress is presumably free both to expand the immunity and to restrict it by more explicit legislation. (24)

      Anticompetitive state regulation "involve[s] a blend of private and public decisionmaking." (25) The issue under Parker has been what degree and form of state involvement justifies immunity. (26) A key determinant has been the proximity of the defendant to the state as a sovereign: the closer the defendant is to the state's three constitutional branches, the fewer the conditions it must satisfy to warrant immunity. (27) The Court has recognized three main categories of protection. First, if the defendant is itself a coordinate branch of state government or its members, such as the state supreme court (or in some courts' views, an executive branch department), (28) it is "ipso facto" immune from antitrust liability for anticompetitive acts attributed to it under Hoover v. Ronwin. (29) The Court has stated the principle of automatic immunity in absolute terms: these state actors' actions are, by definition, uniquely governmental decisions and are presumed to have been taken in the service of some positive value. (30) To the extent the actions respond to market failures, they are not antithetical to the antitrust laws; to the extent they serve an alternative value, they are not a naked repudiation of the policies of antitrust law, but a recognition that the action is ancillary to the state's choice of another positive value. (31) If the state's choice is unwise, it is still the choice of the state itself, and it is subject to correction by the political process. (32)

      Second, if the defendant is a municipality or a "prototypical state agency" (33) (or its officials), it is immune under Town of Hallie v. City of Eau Claire (34) so long as its actions are taken pursuant to a policy that the state as sovereign has clearly articulated--for example, by legislation. (35) The "clear articulation" test means that the state must give the municipality "the express authority to take action that foreseeably will result in anticompetitive effects." (36) Congress went further in the Local Government Antitrust Act, (37) which immunizes local governments and their agents acting in an...

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