Standard Setting by Governmental or Quasi-Governmental Bodies

• Pages: 139-167

139

CHAPTER V

STANDARD SETTING BY GOVERNMENTAL OR

QUASI

-

GOVERNMENTAL BODIES

Governmental or quasi

-

governmental entities often play an important

role in setting and implementing standards. Governmental involvement

in the standard-setting process requires consideration of various antitrust

immunities and exemptions created by Congress and the courts.

Congress has enacted legislation creating express or implied antitrust

immunity in specific industries. The

Parker

state action doctrine and the

Noerr

-

Pennington

doctrine can also immunize conduct from the antitrust

laws.

1 This chapter discusses the antitrust exemptions and immunities

that may apply when the government is involved in the standard-

setting

process.

A.

Federal Regulatory Immunity

Federal government agencies have adopted thousands of standards,

and the actions of these agencies are immune from antitrust challenge.2

In specific areas, Congress has encouraged competitors to work together,

providing private parties

with

express immunity from antitrust liability in

legislation.

3 At other times, however, the government has not provided

1. Depending on the state, immunities may also be available from state

antitrust and unfair competition statutes.

2.

See

Chapter I.A.1 for a discussion of government adopted standards.

Federal agencies, and agency officials acting in their official capacity, are

immune from antitrust liabil

ity.

See, e.g.

, Lawline v. Am. Bar Ass’n

, 956

F.2d 1378, 1384 (7th Cir. 1992) (executive committee and U.S. Trustee

of U.S. district court were immune from antitrust liability for their roles

in adopting ABA model rule regarding unauthorized practice of law);

Rex

Sys. v. Holiday, 814 F.2d 994, 997 (4th Cir. 1987) (Department of Navy

and Navy officials acting in official capacity are not “persons” subject to

potential Sherman Act liability).

3. See, e.g., Agricultural Marketing Agreement Act of 1937, 7 U.S.C.

§ 608b (expressly exempting marketing orders promulgated pursuant to

the AMAA by the Secretary of Agriculture from antitrust laws); Clayton

Act, 15 U.S.C. § 17 (antitrust laws not applicable to labor organizations);

Reed

-Bulwinkle Act, 49 U.S.C. § 10706(a)(5)(A) (rate agreement

between shippers, if approved by Surface Transportation Board as

furthering transportation policy, is expressly exempted from an titrust

laws); Capper-Volstead Act, 7 U.S.C. § 291 (exempting from antitrust

laws farmers’ associations, corporate or otherwise, engaged in

140

Handbook on the Antitrust Aspects of Standard Setting

any express immunity but has nonetheless encouraged competitors to act

together to develop a standard. For example, the Federal

Communications Commission (FCC) sought to develop a single standard

for the development of a digital television broadcast and empanelled an

advisory committee comprised of industry participants to do so.4 The

committee members worked together to develop and test prototype

standards. The committee found that four competing systems were

viable, and the three groups that had developed those four systems

created an alliance to produce a single system to propose as the standard

for digital broadcasting. This coordinated effort was undertaken without

any express immunity.

Difficult issues may arise in such circumstances because the mere

fact that federal officials knew of or induced private conduct is

insufficient to confer antitrust immunity.5 However, in certain limited

circumstances, antitrust immunity may be implied where a federal

statute, its legislative history, and any accompanying adminis

trative

regulatory scheme all appear incompatible with application of the

collectively processing, handling, and marketing thei

r products for mutual

benefit of their members); Am. Fed’n of Musicians v. Carroll, 391 U.S.

99, 106 (1968) (holding that challenged musicians’ union practices fall

within the definition of “labor dispute” and thus were exempt from the

antitrust laws under the Norris-LaGuardia Act, 29 U.S.C. §

113);

United

States v. Tucor Int’l, Inc., 189 F.3d 834, 837 (9th Cir. 1999) (defendant

motor carriers operating entirely within the Philippines were expressly

exempted from antitrust liability by the Shipping Act of 1984);

Haw.

Newspaper Agency v. Bronster, 103 F.3d 742, 749-50 (9th Cir. 1996)

(Newspaper Preservation Act, 15 U.S.C. §§ 1801-03, expressly exempts

from the antitrust laws newspaper joint operating agreements entered into

at a time when only one of the newspapers is likely to remain or become

financially sound).

4. In re Advanced Television Sys. and Their Impact on Existing Television

Broadcast Serv., Fifth Further Notice of Proposed Rulemaking, 11

F.C.C.R. 6235

(May

9, 1996).

5. See, e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225

(1940)

(knowledge and acquiescence of federal officials does not

imm

unize private scheme to stabilize petroleum prices);

Consumers

Union v. Rogers, 352 F. Supp. 1319, 1323 (D.D.C. 1973)

,

modified sub

nom.

Consumers Union v. Kissinger, 506 F.2d 136 (D.C. Cir. 1974)

(“President clearly has no authority to give binding assurances that a

particular course of conduct, even if encouraged by his representa

tives,

does not violate the Sherman Act . . . any more than he can grant

immunity under such” law); see also Otter Tail Power Co. v. United

States

, 410 U.S. 366, 378-79 (1973) (federal officials’ approval of

challenged electricity distribution contracts did not confer an titrust

immunity).