Term: State action antitrust immunity

Definition: State action antitrust immunity is a legal concept that protects state and municipal authorities from federal antitrust lawsuits for actions taken in accordance with a clearly expressed state policy that has foreseeable anticompetitive effects. This means that if a state approves and regulates certain conduct, even if it is anticompetitive under federal antitrust laws, the federal government must respect the decision of the state. The state is immune from investigation and possible prosecution by the Federal Trade Commission (FTC) if it sanctions anticompetitive conduct. This doctrine can also apply to provide immunity to non-state actors if two requirements are met: (1) there must be a clearly articulated policy to displace competition; and (2) there must be active supervision by the state of the policy or activity.

Examples:

• A state passes a law that allows only one company to provide cable television services in a certain area. This law is anticompetitive because it prevents other companies from entering the market and offering their services. However, because the state has clearly expressed this policy and actively supervises the company providing the cable television services, the state is immune from federal antitrust lawsuits.
• A state creates a licensing board that only allows a certain number of doctors to practice in a particular area. This policy limits competition among doctors and may result in higher prices for medical services. However, because the state has clearly expressed this policy and actively supervises the licensing board, the state is immune from federal antitrust lawsuits.

These examples illustrate how state action antitrust immunity can protect states from federal antitrust lawsuits when they pass laws or create policies that limit competition. As long as the state has a clearly expressed policy and actively supervises the policy or activity, it is immune from federal antitrust lawsuits.