Mere Refinement of the State Action Doctrine will not Work
Journal
DePaul Business & Commercial Law Journal
ISSN
1542-2763
Type
journal article
Date Issued
2006-12-01
Author(s)
Abstract
The State Action Doctrine is far from settled, and heavy battled in the Supreme Court. In Ticor, Justice Scalia expressed skepticism if an "exemption for state-programmed private collusion" is justified at all. Other Justices have been more favorable towards state and local regulation of commerce. Beside this more philosophical clash about the proper scope of regulation, it is generally acknowledged that the doctrine bears inherent flaws and provides no guidance. Justice O'Connor has already pointed out that it is unfair to punish regulated parties with treble damages for their compliance with anticompetitive state regulation.
The State Action Task Force of the FTC acknowledges the inherent flaws of the State Action Doctrine; so do most scholars. However, all proposals made so far aim to clarify and refine the State Action Doctrine. The current proposals have their merits, but they will only mitigate the problems associated with the State Action Doctrine. The present standard requires a "clearly articulated state policy" and "active supervision" for immunity; these are purely procedural requirements. This essay brings forward a proposal to include institutional and substantive changes to the State Action Doctrine. From an institutional perspective, the courts should reaffirm the FTC's mandate to preserve public policy; the FTC is best suited to defend the federal interest in unfettered competition. From a substantive point of view, the courts have to reengage in a moderate review of the reasonabless of state regulation. This paper does not ask to revive the Lochner era; however, the competitive process needs at least minimal protection against arbitrary state regulation.
The essay describes the State Action Doctrine, as it is currently applied by the Supreme Court and Circuit courts [1(a)]. It continues to identify the most obvious problems associated with the Doctrine [1(b)]. Even if these problems could be resolved, the application of the State Action Doctrine renders near-arbitrary results in regulated markets [2]. Reasonable regulation, e.g., may not immunize regulated parties because state involvement is insufficient; on the other hand, price regulation with devastating effects on competition and efficiency may be upheld. Mere refinement of the Doctrine will not work [3(a)]; only combined procedural, substantive, and institutional changes to the Doctrine may render satisfactory, foreseeable results in court for regulators, regulated parties as well as prospective competitors [3(b)-(d)].
The State Action Task Force of the FTC acknowledges the inherent flaws of the State Action Doctrine; so do most scholars. However, all proposals made so far aim to clarify and refine the State Action Doctrine. The current proposals have their merits, but they will only mitigate the problems associated with the State Action Doctrine. The present standard requires a "clearly articulated state policy" and "active supervision" for immunity; these are purely procedural requirements. This essay brings forward a proposal to include institutional and substantive changes to the State Action Doctrine. From an institutional perspective, the courts should reaffirm the FTC's mandate to preserve public policy; the FTC is best suited to defend the federal interest in unfettered competition. From a substantive point of view, the courts have to reengage in a moderate review of the reasonabless of state regulation. This paper does not ask to revive the Lochner era; however, the competitive process needs at least minimal protection against arbitrary state regulation.
The essay describes the State Action Doctrine, as it is currently applied by the Supreme Court and Circuit courts [1(a)]. It continues to identify the most obvious problems associated with the Doctrine [1(b)]. Even if these problems could be resolved, the application of the State Action Doctrine renders near-arbitrary results in regulated markets [2]. Reasonable regulation, e.g., may not immunize regulated parties because state involvement is insufficient; on the other hand, price regulation with devastating effects on competition and efficiency may be upheld. Mere refinement of the Doctrine will not work [3(a)]; only combined procedural, substantive, and institutional changes to the Doctrine may render satisfactory, foreseeable results in court for regulators, regulated parties as well as prospective competitors [3(b)-(d)].
Language
English
Keywords
State Action
Antitrust
Regulation
HSG Classification
contribution to scientific community
Refereed
No
Publisher
DePaul University College of Law
Publisher place
Chicago, Ill.
Volume
5
Number
1
Start page
105
End page
157
Pages
53
Subject(s)
Eprints ID
32293
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Hettich State Action.pdf
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Format
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