Document Type

Article

Publication Date

Summer 2003

Abstract

Antitrust observers are familiar with the two-part Midcal test for the immunity of state regulation from federal antitrust laws: the state must clearly articulate its policy to displace competition and must "actively supervise" any private conduct pursuant to the policy. But state action need not meet these requirements if it is "unilateral" and therefore does not conflict with Section 1. Only if a state-authorized restraint is "hybrid," combining state and private action in a way that resembles aprohibited agreement, need the restraint satisfy Midcal.

In this article, John Lopatka and Bill Page examine the history andcurrent importance of the distinction between unilateral and hybrid restraints. Although the Supreme Court's precedents are not entirely consistent, the authors argue that a unilateral restraint is one in which governmental actors define the extent of consumer harm, while a hybrid restraint is one in which the government "empowers private actors to exercise discretion as to the nature or level of consumer injury in a way that closely resembles an antitrust violation." They examine the emergence of this principle in the context of state restraints that are analogous to resale price maintenance. They then examine recent appellate decisions characterizing horizontal restraints as hybrid. In this part, the authors argue that antitrust law reaches "not only state authorized express collusion but state practices that significantly facilitate tacit collusion and serve no competitively benign purpose."

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