Commercial Litigation and Arbitration

Antitrust — When Municipal Entities and Officials May Invoke the State Action Doctrine

From Rectrix Aerodrome Ctrs., Inc. v. Barnstable Municipal Airport Comm’n, 610 F.3d 8 (1st Cir. 2010):

Rectrix claims that restricting Rectrix from selling jet fuels at the airport violates section 2 of the Sherman Act, which forbids monopolization, attempted monopolization and conspiracies to monopolize. 15 U.S.C. § 2. The district court rejected this claim without reaching the merits, relying on federal antitrust law's so-called state action doctrine (quite different from the constitutional doctrine that shares the same name) and a leading precedent of this court.***

The state action doctrine was originally adopted by the Supreme Court in Parker v. Brown, 317 U.S. 341, 347-52, 63 S. Ct. 307, 87 L. Ed. 315 (1943), to immunize from attack under the federal antitrust laws a regulatory scheme, adopted by statute, by which California required raisin growers to deliver the majority of their raisins into a common pool in exchange for set payments — a practice that might be treated as unlawful price fixing if arranged without state approval. The Sherman Act, said the Court, does not automatically forbid the state from imposing restrictions on competition that private citizens could not have adopted for themselves. *** From this decision has flowed a host of refining decisions, one subset of which is concerned with actions taken by municipalities.

Although not automatically treated as states, municipal entities (like BMAC) can invoke state action immunity — as can municipal officials acting for them, Fisichelli v. Town of Methuen, 956 F.2d 12, 15-16 (1st Cir. 1992) (Breyer, C.J.) — if they act pursuant to a "clearly articulated and affirmatively expressed" state policy to displace competition with regulation. The policy must authorize the municipal entity both to regulate the conduct and to "suppress competition," City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 372, 111 S. Ct. 1344, 113 L. Ed. 2d 382 (1991); but the latter purpose is inferred if suppression is a foreseeable result of a broad delegation, id. at 373; Town of Hallie, 471 U.S. at 42-43; Fisichelli, 956 F.2d at 14.

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