Antitrust, UCL and Privacy

Competition: Spring 2014 Vol. 23, No. 1

Content

THE MARKET-PARTICIPANT EXCEPTION TO STATE-ACTION IMMUNITY FROM ANTITRUST LIABILITY

Jarod M. Bona and Luke A. Wake1

I. INTRODUCTION

"The heart of our national economy has long been faith in the value of competition,"2 and as the United States Supreme Court put it, those "fundamental national values of free enterprise and economic competition" are embodied in federal antitrust laws.3 Antitrust enforcers and "private attorneys’ general"4 work within this system to support competition by challenging anticompetitive conduct.

But a significant category of potentially-anticompetitive conduct often escapes antitrust scrutiny: state and local commercial activity. Governmental entities can, and do, enter the marketplace as competitors, and may have even stronger incentives than profit-maximizing firms to harm competition.5 Indeed, state and local entities have built-in advantages that may allow them to successfully monopolize, or otherwise injure competition. For example, a local entity could utilize a statutory monopoly on certain utilities to tie those monopolistic services to other products or services from a competitive market. Or, a governmental entity could use the power to tax to raise sufficient revenue to offer a product or service below cost for sufficient time to exclude other competitors from a market.

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