State Power and Anticompetitive Conduct

State Power and Anticompetitive Conduct

Greg Day

University of Georgia - C. Herman and Mary Virginia Terry College of Business; Yale University - Yale Information Society Project

Abstract

States can and do suppress competition when it harms marginalized communities. For example, states have monopolized prison markets, forcing society’s least powerful to pay high prices for medicine, phone services, and other goods. It is also common for states to organize licensing agencies who can protect incumbent interests by refusing to grant licenses to immigrant entrepreneurs such as African hair braiders, street vendors, and more. From current and historical perspectives, anticompetitive practices have quietly entailed one of the most effective methods of oppressing marginalized people.

States are nevertheless immune from antitrust review as a matter of federalism—a concept referring to the constitutional division of power between state and federal actors. While the Sherman Act lacks express language about state action, the Supreme Court held in Parker v. Brown that antitrust scrutiny would strip states of their sovereign right to promote public policies via restricting some competition. Key to this ruling is that the threat of elections should compel states to suppress competition when it would benefit the public. The Court has thus ruled that the Sherman Act does not apply to states.

This Article argues that state action immunity was errantly premised on federalism and political accountability. The Supreme Court promoted Parker’s framework on the grounds of elections, yet states encounter incentives to monopolize markets comprised of inmates, immigrants, and others who lack resources, voting rights, or the ability to hold leaders accountable. In fact, antitrust law was founded on the common law of competition, which was exclusively fixated on state action and its likelihood of oppressing society’s least powerful. Due to the importance of historical sources in interpreting modern antitrust law, the dangers of state monopolies are not only engrained in the historical record but also rebut Parker’s rationales of federalism and congressional intent. While antitrust is considered a “colorblind” body of law, this Article seeks to expose how states harm marginalized people as consumers and competitors, resulting in the inequitable distributions of real estate, healthcare, labor, and other necessities—a danger that existed when the English established the common law of competition and that remains true today.