Scope of the State Action Doctrine

The state action doctrine is a set of judicially created rules that
determine whether the federal antitrust laws apply to particular
anticompetitive interstate commercial conduct by states or other non-
federal governmental entities1 or whether a states legislative and
regulatory actions remove the particular conduct from federal antitrust
scrutiny.2 At its heart, the state action doctrine respects the reserved
authority of the several states to regulate economic activity within their
respective borders3 as against the power of Congress to regulate interstate
1. The Sherman Acts coverage of interstate commercial conduct is
coextensive with Co ngresss power over interstate commerce. See, e.g.,
Summit Health v. Pinhas, 500 U.S. 322, 329 n.10 (1991) (It is firmly
settled that when Congress passed the Sherman Act, it left no area of its
constitutional power [over commerce] unoccupied.’”) (quoting United
States v. Frankfort Distilleries, Inc., 324 U.S. 293, 298 (1945)) (alteration
in original).
2. Courts traditionally have defined the state action doctrine in terms of
immunity from Sher man Act scrutiny. Nevert heless, in Cine 42nd Street
Theater Corp. v. Nederlander Org., 790 F.2d 1032, 1040 (2d Cir. 1986),
the Second Circuit concluded tha t the state action defense is [also]
generally available to parties defending against a § 7 Clayton Ac t
violation. The state action doctrines logic has even been invoked to
restrict the Federal Trade Commissions (FTC) rulemaki ng authority to
nullify state regulations. I n California State Board of Optometry v. FTC,
910 F.2d 976 (D.C. Cir. 1990), the D.C. Circuit vacated an FTC rule that
purported to create a defense to any state proceeding brought against an
optometrist for violating certain state r estrictions upon the practice of
optometry. Relying upon state action cases, the court held that a federal
agency may not exercise author ity over States a s sovereigns un less that
authority has been unambiguously granted to it. Id. at 982. In FTC v.
Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003 (2013), the Court
considered the state action doctrine in t he context of alleged violations of
§ 5 of the FTC Act and § 7 of the Clayton Act. Id. at 1008.
3. The Tenth Amend ment to the U.S. Constitutio n provides: The powers not
delegated to the United States b y the Constitution, nor prohibited b y it to

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