Sherman Antitrust Act: Difference between revisions

:If the statute does not mandate conduct violating a per se rule, the conduct is analyzed under the rule of reason, which requires an examination of the conduct's actual effects on competition.<ref>''See ''[''Rice,'' 458 U.S. at 661.]</ref> If unreasonable anticompetitive effects are created, the required conduct violates Section 1<ref>National Soc'y of Professional Eng'rs v. United States, 435 U.S. 679, 687–90 (1978); Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49 (1977)</ref> and the statute is in irreconcilable conflict with the Sherman Act.<ref>See Battipaglia v. New York State Liquor Auth., 745 F.2d 166, 175 (2d Cir. 1984) (while declining to decide whether a statute required an antitrust violation in a facial attack, the court left open the possibility of preemption based on the statute's operation), cert. denied, 105 S. Ct. 1393 (1985); Lanierland Distribs. v. Strickland, 544 F. Supp. 747, 751 (N.D. Ga. 1982) (plaintiff failed to show anticompetitive effects sufficient to violate the rule of reason); Wine & Spirits Specialty, Inc. v. Daniel, 666 S.W.2d 416, 419 (Mo.) ([[en banc]]) (declining to decide whether the rule of reason might invalidate a law on the record before them), Appeal dismissed, 105 S. Ct. 56 (1984); United States Brewers Ass'n v. Director of N.M. Dept' of Alcoholic Beverage Control, 100 N.M. 216, , 668 P.2d 1093, 1099 (1983) (rejecting a facial attack on a statute but reserving a decision on whether the actual application of the statute might violate the antitrust laws), appeal dismissed, 104 S. Ct. 1581 (1984). But see infra note 149 for a discussion on the possibility of a much more limited rule of reason preemption analysis.</ref> Then statutory arrangement is analyzed to determine whether it qualifies as "state action" and is thereby saved from preemption.<ref>See Rice, 458 U.S. at 662–63 n.9 ("because of our resolution of the pre-emption issue, it is not necessary for us to consider whether the statute may be saved from invalidation under the [state action] doctrine"); Capitol Tel. Co. v New York Tel. Co., 750 F.2d 1154, 1157, 1165 (2d Cir. 1984) (holding that the state action doctrine protected the conduct of a private party after assuming that it violated the federal antitrust laws), cert. denied, 105 S. Ct. 2325 (1985); Allied Artists Picture Corp. v. Rhodes, 679 F.2d 656, 662 (6th Cir. 1982) (even if conduct violated Sherman Act, the statute is saved by the state action doctrine); Miller v. Hedlund, 579 F. Supp. 116, 124 (D. Or. 1984) (statute violating Section 1 saved by state action); Flav-O-Rich, Inc. v. North Carolina Milk Comm'n, 593 F. Supp. 13, 17–18 (E.D.N.C. 1983) (though conduct violates Section 1, state action saves statute).</ref>

Rice sets out guidelines to aid in preemption analysis. Preemption should not occur "simply because in a hypothetical situation a private party's compliance with the statute might cause him to violate the antitrust laws."<ref>Rice v. Norman Williams Co., 458 U.S. 654, 659 (1982).</ref> This language suggests that preemption occurs only if economic analysis determines that the statutory requirements create "an unacceptable and unnecessary risk of anticompetitive effect,"<ref>Id. at 668 (Stevens, J., concurring in the judgment).</ref> and does not occur simply because it is possible to use the statute in an anticompetitive manner.<ref>See Grendel's Den, Inc. v. Goodwin, 662 F.2d 88, 100 n.15 (1st Cir.) (power to control others not sufficient for facial preemption where party had no institutional reason to make anticompetitive decisions especially likely), aff'd on other grounds, 662 F.2d 102 (1st Cir. 1981) ([[en banc]]), aff'd sub nom. Larkin v. Grendel's Den, Inc., 459 U.S. 116 (1982); Flav-O-Rich, Inc. v. North Carolina Milk Comm'n, 593 F. Supp. 13, 15 (E.D.N.C. 1983) (in an oligopolistic market, price posting would result in an antitrust violation).</ref> It should not mean that preemption is impossible whenever both procompetitive and anticompetitive results are conceivable.<ref>But cf. Allied Artists Pictures Corp. v. Rhodes, 496 F. Supp. 408, 449 (S.D. Ohio 1980) (indicating that a statute neither requiring nor permitting an anticompetitive collaboration gives the private party enough freedom of choice to preclude preemption), aff'd in part and remanded in part, 679 F.2d 656 (6th Cir. 1982)</ref> The per se rule "reflects the judgment that such cases are not sufficiently common or important to justify the time and expense necessary to identify them."