MR. JUSTICE BRENNAN delivered the opinion of the Court (Part I), together with an opinion (Parts II and III), in which MR. JUSTICE MARSHALL, MR. JUSTICE POWELL, and MR. JUSTICE STEVENS joined.
Parker v. Brown, 317 U.S. 341 (1943), held that the federal antitrust laws do not prohibit a State "as sovereign" from imposing certain anticompetitive restraints "as an act of government." The question in this case is the extent to which the antitrust laws prohibit a State's cities from imposing such anticompetitive restraints.
Petitioner cities are organized under the laws of the State of Louisiana,
Petitioners moved to dismiss the counterclaim on the ground that, as cities and subdivisions of the State of Louisiana, the "state action" doctrine of Parker v. Brown, rendered federal antitrust laws inapplicable to them. The District Court granted the motion, holding that the decision of the Court of Appeals for the Fifth Circuit in Saenz v. University Interscholastic League, 487 F.2d 1026 (1973), required dismissal, notwithstanding that "[t]hese plaintiff cities are engaging in what is clearly a business activity . . . in which a profit is realized," and "for this reason . . . this court is reluctant to
We granted certiorari, 430 U.S. 944 (1977). We affirm.
Petitioners' principal argument is that "since a city is merely a subdivision of a state and only exercises power delegated to it by the state, Parker's findings regarding the congressionally intended scope of the Sherman Act apply with equal force to such political subdivisions." Brief for Petitioners 5. Before addressing this question, however, we shall address the contention implicit in petitioners' arguments in their brief that, apart from the question of their exemption as agents of the State under the Parker doctrine, Congress never intended to subject local governments to the antitrust laws.
The antitrust laws impose liability on and create a cause of action for damages for a "person" or "persons" as defined in
Section 8 of the Sherman Act, ch. 647, 26 Stat. 210, 15 U. S. C. § 7 (1976 ed.), and § 1 of the Clayton Act, 38 Stat. 730, 15 U. S. C. § 12 (1976 ed.), are general definitional sections which define "person" or "persons," "wherever used in this [Act] . . . to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country."
Chattanooga Foundry & Pipe Works v. Atlanta, 203 U.S. 390 (1906), held that a municipality is a "person" within the meaning of § 8 of the Sherman Act, the general definitional section, and that the city of Atlanta therefore could maintain a treble-damages action under § 7, the predecessor of § 4 of the Clayton Act,
Although both Chattanooga Foundry and Georgia v. Evans involved the public bodies as plaintiffs, whereas petitioners in the instant case are defendants to a counterclaim, the basis of those decisions plainly precludes a reading of "person" or "persons" to include municipal utility operators that sue as plaintiffs but not to include such municipal operators when sued as defendants. Thus, the conclusion that the antitrust laws are not to be construed as meant by Congress to subject cities to liability under the antitrust laws must rest on the impact of some overriding public policy which negates the construction of coverage, and not upon a reading of "person" or "persons" as not including them.
Petitioners suggest several reasons why, in addition to their arguments for exemption as agents of the State under the Parker doctrine, a congressional purpose not to subject cities
The purposes and intended scope of the Sherman Act have been developed in prior cases and require only brief mention here. Commenting upon the language of the Act in rejecting a claim that the insurance business was excluded from coverage, the Court stated: "Language more comprehensive is difficult to conceive. On its face it shows a carefully studied attempt to bring within the Act every person engaged in business whose activities might restrain or monopolize commercial intercourse among the states." United States v. South-Eastern Underwriters Assn., 322 U.S. 533, 553 (1944). That and subsequent cases reviewing the legislative history of the Sherman Act have concluded that Congress, exercising the full extent of its constitutional power,
For this reason, our cases have held that even when Congress by subsequent legislation establishes a regulatory regime over an area of commercial activity, the antitrust laws will not be displaced unless it appears that the antitrust and regulatory provisions are plainly repugnant. E. g., United States v.
Two policies have been held sufficiently weighty to override the presumption against implied exclusions from coverage of the antitrust laws. In Eastern Railroad Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), the Court held that, regardless of anticompetitive purpose or intent, a concerted effort by persons to influence lawmakers to enact legislation beneficial to themselves or detrimental to competitors was not within the scope of the antitrust laws. Although there is nothing in the language of the statute or its history which would indicate that Congress considered such an exclusion, the impact of two correlative principles was held to require the conclusion that the presumption should not support a finding of coverage. The first is that a contrary construction would impede the open communication between the polity and its lawmakers which is vital to the functioning of a representative democracy. Second, "and of at least equal significance," is the threat to the constitutionally protected right of petition which a contrary construction would entail. Id., at 137-138.
Common to the two implied exclusions was potential conflict with policies of signal importance in our national traditions and governmental structure of federalism. Even then, however, the recognized exclusions have been unavailing to prevent antitrust enforcement which, though implicating those fundamental policies, was not thought severely to impinge upon them. See, e. g., Goldfarb, supra; California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972).
Petitioners' arguments therefore cannot prevail unless they demonstrate that there are countervailing policies which are sufficiently weighty to overcome the presumption. We now turn to a consideration of whether, apart from the question of their exemption as agents of the State under the Parker doctrine, petitioners have made that showing.
Petitioners argue that their exclusion must be inferred because it would be anomalous to subject municipalities to the criminal and civil liabilities imposed upon violators of the antitrust laws. The short answer is that it has not been regarded as anomalous to require compliance by municipalities with the substantive standards of other federal laws which impose such sanctions upon "persons." See Union Pacific R.
Petitioners' contention that their goal is not private profit but public service is only partly correct. Every business enterprise, public or private, operates its business in furtherance of its own goals. In the case of a municipally owned utility, that goal is likely to be, broadly speaking, the benefit of its citizens. But the economic choices made by public corporations in the conduct of their business affairs, designed as they are to assure maximum benefits for the community constituency, are not inherently more likely to comport with the broader interest of national economic well-being than are those of private corporations acting in furtherance of the interests of the organization and its shareholders. The allegations of the counterclaim, which for present purposes we accept as true,
LP&L alleged that the city of Plaquemine contracted to provide LP&L's electric customers outside its city limits gas and water service only on condition that the customers purchase
Another aspect of the public-service argument
In 1972, there were 62,437 different units of local government in this country.
We conclude that these additional arguments for implying an exclusion for local governments from the antitrust laws must be rejected. We therefore turn to petitioners' principal argument, that "Parker's findings regarding the congressionally intended scope of the Sherman Act apply with equal force to such political subdivisions." Brief for Petitioners 5.
Plainly petitioners are in error in arguing that Parker held that all governmental entities, whether state agencies or subdivisions of a State, are, simply by reason of their status as such, exempt from the antitrust laws.
Parker v. Brown involved the California Agricultural Prorate
Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), underscored the significance of Parker's holding that the determinant of the exemption was whether the challenged action was "an act of government" by the State as "sovereign." Parker repeatedly emphasized that the anticompetitive effects of California's prorate program derived from "the state['s] command"; the State adopted, organized, and enforced the program "in the execution of a governmental policy."
Bates v. State Bar of Arizona, 433 U.S. 350 (1977), involved the actions of a state agency to which the Parker exemption applied. Bates considered the applicability of the antitrust laws to a ban on attorney advertising directly imposed by the Arizona Supreme Court. In holding the antitrust laws inapplicable, Bates noted that "[t]hat court is the ultimate body wielding the State's power over the practice of law, see Ariz. Const., Art. 3; In re Bailey, 30 Ariz. 407, 248 P. 29 (1926), and, thus, the restraint is `compelled by direction of the State acting as a sovereign.'" Id., at 360, quoting Goldfarb, supra, at 791. We emphasized, moreover, the significance to our conclusion of the fact that the state policy requiring the anticompetitive restraint as part of a comprehensive regulatory system, was one clearly articulated and affirmatively expressed as state policy, and that the State's policy was actively supervised by the State Supreme Court as the policymaker.
On the other hand, the fact that municipalities, simply by their status as such, are not within the Parker doctrine, does not necessarily mean that all of their anticompetitive activities are subject to antitrust restraints. Since "[m]unicipal corporations are instrumentalities of the State for the convenient administration of government within their limits." Louisiana ex rel. Folsom v. Mayor of New Orleans, 109 U.S. 285, 287 (1883), the actions of municipalities may reflect state policy. We therefore conclude that the Parker doctrine exempts only anticompetitive conduct engaged in as an act of government by the State as sovereign, or, by its subdivisions, pursuant to state policy to displace competition with regulation or monopoly public service. There remains the question whether the Court of Appeals erred in holding that further inquiry should be made to determine whether petitioners' actions were directed by the State.
The petitioners and our Brother STEWART'S dissent focus their arguments upon the fact that municipalities may exercise the sovereign power of the State, concluding from this that any actions which municipalities take necessarily reflect state policy and must therefore fall within the Parker doctrine.
The Parker doctrine, so understood, preserves to the States their freedom under our dual system of federalism to use their municipalities to administer state regulatory policies free of the inhibitions of the federal antitrust laws without at the
Our Brother STEWART'S dissent argues that the result we reach will "greatly . . . impair the ability of a State to delegate governmental power broadly to its municipalities." Post, at 438 (footnote omitted). That, with respect, is simply hyperbole. Our decision will render a State no less able to allocate governmental power between itself and its political subdivisions. It means only that when the State itself has not directed or authorized an anticompetitive practice, the State's subdivisions in exercising their delegated power must obey the antitrust laws. The dissent notwithstanding, it is far too late to argue that a State's desire to insulate anticompetitive practices not imposed by it as an act of government falls within the Parker doctrine. Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384 (1951). Moreover, by characterizing the Parker exemption as fully applicable to local governmental units simply by virtue of their status as such, the approach taken by the dissent would hold anticompetitive municipal action free from federal antitrust enforcement even when state statutes specifically provide that municipalities shall be subject to the antitrust laws of the United States. See generally La. Rev. Stat. Ann. § 33:1334 (G) (West Supp. 1977), quoted in n. 44, supra. That result would be a perversion of federalism.
Today's decision does not threaten the legitimate exercise of governmental power, nor does it preclude municipal government
MR. JUSTICE MARSHALL, concurring.
I agree with THE CHIEF JUSTICE, post, at 425-426, that any implied "state action" exemption from the antitrust laws should be no broader than is necessary to serve the State's legitimate purposes. I join the plurality opinion, however, because the test there established, relating to whether it is "state policy to displace competition," ante, at 413, incorporates within it the core of THE CHIEF JUSTICE'S concern. As the plurality opinion makes clear, it is not enough that the State
MR. CHIEF JUSTICE BURGER, concurring in the Court's opinion in Part I and in the judgment.
This case turns, or ought to, on the District Court's explicit conclusion,
There is nothing in this record to support any assumption other than that this is an ordinary dispute among competitors in the same market. It is true that petitioners are municipalities, but we should not ignore the reality that this is the only difference between the Cities and any other entrepreneur in the economic community. Indeed, the injuries alleged in petitioners' complaint read as a litany of economic woes suffered by a business which has been unfairly treated by a competitor:
It strikes me as somewhat remarkable to suggest that the same Congress which "meant to deal comprehensively and effectively with the evils resulting from contracts, combinations and conspiracies in restraint of trade," Atlantic Cleaner & Dyers, Inc. v. United States, 286 U.S. 427, 435 (1932), would have allowed these petitioners to complain of such economic damage while baldly asserting that any similar harms they might unleash upon competitors or the economy are absolutely beyond the purview of federal law. To allow the defense asserted by the petitioners in this case would inject a wholly arbitrary variable into a "fundamental national economic policy,"
As I indicated, concurring in Cantor v. Detroit Edison Co., 428 U.S. 579, 604 (1976), "in interpreting Parker, the Court has heretofore focused on the challenged activity, not upon the identity of the parties to the suit." Such an approach is surely logical in light of the fact that the Congress which passed the Sherman Act very likely never considered the kinds of problems generated by Parker and the cases which have arisen in its wake. E. g., Bates v. State Bar of Arizona, 433 U.S. 350 (1977); Cantor, supra; Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975); see Slater, Antitrust and Government Action: A Formula for Narrowing Parker v. Brown, 69 Nw. U. L. Rev. 71, 84 (1974). It is even more dubious to assume that the Congress specifically focused its attention on the possible liability of a utility operated by a subdivision of a State. Not only were the States generally considered free to regulate commerce within their own borders, see, e. g., United States v. E. C. Knight Co., 156 U.S. 1 (1895); Kidd v. Pearson, 128 U.S. 1 (1888), but manufacturing enterprises, in and of themselves, were not taken to be interstate commerce. Id., at 20.
By the time Parker was decided, however, this narrow view of "interstate commerce" had broadened via the "affection doctrine" to include intrastate events which had a sufficient effect on interstate commerce. See NLRB v. Fainblatt, 306 U.S. 601, 605, and n. 1 (1939); cf. Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738, 743 (1976). Given this development, and the Court's interpretation of "person" or "persons" in the Sherman Act to include States and municipalities, ante, at 394-397, along with the trend of allowing the reach of the Sherman Act to expand with broadening conceptions of congressional power under the Commerce Clause, see
The holding in Parker is perfectly understandable, though, in light of the historical period in which the case was decided. The Court had then but recently emerged from the era of substantive due process, and was undoubtedly not eager to commence a new round of invalidating state regulatory laws on federal principles. See Verkuil, State Action, Due Process and Antitrust: Reflections on Parker v. Brown, 75 Colum. L. Rev. 328, 331-334 (1975). Responding to this concern, the Parker Court's interpretation of legislative intent reflects a "polic[y] of signal importance in our national traditions and governmental structure of federalism." Ante, at 400.
The Parker decision was thus firmly grounded on principles of federalism, the ambit of its inquiry into congressional purpose being defined by the Court's view of the requirements of "a dual system of government."
This mode of analysis is as sound today as it was then, and I am surprised that neither the plurality opinion nor the dissents focus their attention on this aspect of Parker. Indeed,
The answer to the question presented ought not to be so difficult. When Parker was decided there was certainly no question that a State's operation of a common carrier, even without profit and as a "public function," would be subject to federal regulation under the Commerce Clause. United States v. California, 297 U.S. 175, 183-186 (1936) ("[W]e think it unimportant to say whether the state conducts its railroad in its `sovereign' or in its `private' capacity." Id., at 183); see Parden v. Terminal R. Co., 377 U.S. 184, 189-193 (1964); California v. Taylor, 353 U.S. 553, 568 (1957). Likewise, it had been held in Ohio v. Helvering, 292 U.S. 360 (1934), that a State, upon engaging in business, became subject to a federal statute imposing a tax on those dealing in intoxicating liquors, although States were not specifically mentioned in the statute. In short, the Court had already recognized, for purposes of federalism, the difference between a State's entrepreneurial personality and a sovereign's decision— as in Parker—to replace competition with regulation.
The National League of Cities opinion focused its delineation of the "attributes of sovereignty" alluded to above on a determination as to whether the State's interest involved "`functions essential to separate and independent existence.'" Ibid.,
Following the path outlined above should lead us to a logical destination: Petitioners should be treated, for purposes of applying the federal antitrust laws, in essentially the same manner as respondent. This is not to say, of course, that the conduct in which petitioners allegedly engaged is automatically subject to condemnation under the Sherman Act. As the Court recognized in Cantor v. Detroit Edison Co., 428 U. S., at 592-598, state-regulated utilities pose special analytical problems under Parker. It may very well be, for example, that a State, acting as sovereign, has imposed a system of governmental control in order "to avoid the consequences of unrestrained
I agree with the plurality, then, that "[t]he threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman Act was not meant to proscribe is whether the activity is required by the State acting as sovereign." Goldfarb, 421 U. S., at 790. (Emphasis added.) But this is only the first, not the final step of the inquiry, for Cantor recognized that "all economic regulation does not necessarily suppress competition." 428 U. S., at 595. "There is no logical inconsistency between requiring such a firm to meet regulatory criteria insofar as it is exercising its natural monopoly powers and also to comply with antitrust standards to the extent that it engages in business activity in competitive areas of the economy." Id., at 596.
I would therefore remand, directing the District Court to take an additional step beyond merely determining—as the plurality would—that any area of conflict between the State's regulatory policies and the federal antitrust laws was the result of a "state policy to displace competition with regulation or monopoly public service."
MR. JUSTICE STEWART, with whom MR. JUSTICE WHITE, MR. JUSTICE BLACKMUN,
In Parker v. Brown, 317 U.S. 341, a California statute restricted competition among raisin growers in order to keep the price of raisins artificially high. The Court found that California's program did not violate the antitrust laws but was "an act of government which the Sherman Act did not undertake to prohibit." Id., at 352. Parker v. Brown thus made clear that "where a restraint upon trade or monopolization is the result of valid governmental action, as opposed to private action, no violation of the [Sherman] Act can be made out." Eastern Railroad Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 136.
The principle of Parker v. Brown controls this case. The petitioners are governmental bodies, not private persons, and their actions are "act[s] of government" which Parker v. Brown held are not subject to the Sherman Act. But instead of applying the Parker doctrine, the Court today imposes new
THE CHIEF JUSTICE adopts a different approach, at once broader and narrower than the plurality's. In his view, municipalities are subject to antitrust liability when they engage in "proprietary enterprises," ante, at 422, but apparently retain their antitrust immunity for other types of activity. But a city engaged in proprietary activity is to be treated as if it were a private corporation: that is, it is immune from the antitrust laws only if it shows not merely that its action was "`required by the State acting as sovereign'" but also that such immunity is "`necessary in order to make the [State's] regulatory Act work.'" Ante, at 425, 426. THE CHIEF JUSTICE'S approach seems to me just as mistaken as the plurality's.
The fundamental error in the opinions of the plurality and THE CHIEF JUSTICE is their failure to recognize the difference between private activities authorized or regulated by government on the one hand, and the actions of government itself on the other.
In determining whether the actions of a political subdivision of a State as well as those of a state legislature are immune from the Sherman Act, we must interpret the provisions of the Act "in the light of its legislative history and of the particular evils at which the legislation was aimed." Apex Hosiery Co. v. Leader, 310 U.S. 469, 489. Those "particular evils" did not include acts of governmental bodies. Rather, Congress was concerned with attacking concentrations of private economic power unresponsive to public needs, such as "these great trusts, these great corporations, these large moneyed institutions." 21 Cong. Rec. 2562 (1890).
Recognizing this congressional intent, the Court in Parker v. Brown held that the antitrust laws apply to private and not governmental action. The program there at issue was in
There can be no doubt on which side of this line the petitioners' actions fall. "Municipal corporations are instrumentalities of the State for the convenient administration of government within their limits." Louisiana ex rel. Folsom v. Mayor of New Orleans, 109 U.S. 285, 287; cf. Reynolds v. Sims, 377 U.S. 533, 575.
The plurality today advances two reasons for holding nonetheless that the Parker doctrine is inapplicable to municipal governments. First, the plurality notes that municipalities cannot claim the State's sovereign immunity under the Eleventh Amendment. Ante, at 412. But this is hardly relevant to the question of whether they are within the reach of the Sherman Act. That question must be answered by reference to congressional intent, and not constitutional principles that apply in entirely different situations.
Secondly, the plurality relies on Goldfarb v. Virginia State Bar, 421 U.S. 773. The Goldfarb case, however, did not overrule Parker v. Brown but rather applied it. Goldfarb concerned a scheme regulating economic competition among private parties, namely, lawyers. The Court held that this "private anticompetitive activity," 421 U. S., at 792, could not be sheltered under the umbrella of the Parker doctrine unless it was compelled by the State. Since the bar association and State Bar could show no more than that their minimum-fee schedule "complemented" actions of the State, id., at 791, the scheme was not immune from the antitrust laws. Cf. Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384.
Unlike Goldfarb, this case does not involve any anticompetitive activity by private persons. As noted in Bates v. State Bar of Arizona, 433 U.S. 350, 361, actions of governmental bodies themselves present "an entirely different case" falling squarely within the rule of Parker v. Brown. Although the State Bar in Goldfarb was "a state agency for some limited purposes," 421 U. S., at 791, the price fixing it fostered was for the private benefit of its members and its actions were essentially those of a private professional group. Cf. Asheville Tobacco Board of Trade, Inc. v. FTC, 263 F.2d 502, 508-510 (CA4). Unlike a city, the Virginia State Bar surely is not "a political subdivision of the State."
By requiring that a city show a legislative mandate for its activity, the plurality today blurs, if indeed it does not erase, this logical distinction between private and governmental action. In Goldfarb and in Cantor v. Detroit Edison Co., 428 U.S. 579, the Court held that private action must be compelled by the state legislature in order to escape the reach of the Sherman Act. State compulsion is an appropriate requirement
The separate opinion of THE CHIEF JUSTICE does not rely on any distinctions between States and their political subdivisions. It purports to find a simpler reason for subjecting the petitioners to antitrust liability despite the fact that they are governmental bodies, namely, that Parker v. Brown does not protect "a State's entrepreneurial personality." Ante, at 422.
A State may choose to regulate private persons providing certain goods or services, or it may provide the goods and services itself. The State's regulatory body in the former case, or a state-owned utility in the latter, will necessarily make economic decisions. These decisions may be responsive to similar concerns, and they may have similar anticompetitive effects.
There is no basis for this distinction either in the Sherman Act itself or in our prior cases interpreting it. To the contrary, Parker v. Brown established that governmental actions are not regulated by the Sherman Act. See supra, at 428-430. And, as this Court has previously said:
Nonetheless THE CHIEF JUSTICE would treat some governmental actions as governmental for purposes of the antitrust laws, and some as if they were not governmental at all.
Moreover, the scope of the immunity envisioned by THE CHIEF JUSTICE is virtually impossible to determine. The distinction between "proprietary" and "governmental" activities has aptly been described as a "quagmire." Id., at 65. The "distinctions [are] so finespun and capricious as to be almost incapable of being held in the mind for adequate formulation." Id., at 65-68. The separate opinion of THE CHIEF JUSTICE does nothing to make these distinctions any more substantial or understandable.
The Court's decision in this case marks an extraordinary intrusion into the operation of state and local government in this country. Its impact can hardly be overstated.
Under our federal system, a State is generally free to allocate its governmental power to its political subdivisions as it wishes.
This will follow from the plurality's emphasis on state legislative action, and the vagueness of the criteria it announces.
Second, the plurality gives no indication of how specifically the legislature's "direction" must relate to the "action complained of." Reference to the facts of this case will show how elusive the plurality's test is. Stripped to its essentials, the counterclaim alleged that the petitioners engaged in sham litigation, maintained their monopolies by debenture covenants, foreclosed competition by long-term supply contracts,
On the other hand, the plurality states that a city need not "point to a specific, detailed legislative authorization before it properly may assert a Parker defense to an antitrust suit." Ante, at 415. Thus, it seems that the petitioners need not identify a statute compelling each lawsuit, each contract, and each debenture covenant.
Finally, state statutes often are enacted with little recorded legislative history,
Today's decision will cause excessive judicial interference not only with the procedures by which a State makes its governmental decisions, but with their substance as well.
First, the very vagueness and uncertainty of the new test for antitrust immunity is bound to discourage state agencies and subdivisions in their experimentation with innovative social and economic programs.
Second, the imposition of antitrust liability on the activities of municipal governments will allow the sort of wide-ranging inquiry into the reasonableness of state regulations that this Court has forsworn.
Finally, today's decision will impose staggering costs on the thousands of municipal governments in our country. In this case, a not atypical antitrust action, the respondent claimed that it had suffered damages of $180 million as a result of only one of the antitrust violations it alleged. Trebled, this amounts to $540 million on this claim alone, to be recovered from cities with a combined population (in 1970) of about 75,000.
For all of the reasons discussed in this opinion, I respectfully dissent.
MR. JUSTICE BLACKMUN, dissenting.
I join MR. JUSTICE STEWART'S dissent with the exception of Part II-B, but wish to note that I do not take his opinion as reaching the question whether petitioners should be immune under the Sherman Act even if found to have been acting in concert with private parties. To grant immunity to municipalities in such a circumstance would go beyond the protections previously accorded officials of the States themselves. See Parker v. Brown, 317 U.S. 341, 351-352 (1943) ("[W]e have no question of the state or its municipality becoming a participant in a private agreement or combination by others for restraint of trade, cf. Union Pacific R. Co. v. United States, 313 U.S. 450"). The Court of Appeals did not have the opportunity to rule on how a "conspiracy with private parties" exception to municipalities' general immunity should be limited, if indeed such an exception is appropriate at all. If the view that municipalities are not subject to the full reach
In light of the fact that the plurality and THE CHIEF JUSTICE have concluded that municipalities should be subject to broad Sherman Act liability, I must question the nonchalance with which the Court puts aside the question of remedy. Ante, at 402, and n. 22. It is a grave act to make governmental units potentially liable for massive treble damages when, however "proprietary" some of their activities may seem, they have fundamental responsibilities to their citizens for the provision of life-sustaining services such as police and fire protection. The several occasions in the past when the Court has found that Congress intended to subject municipalities and States to liability as "persons" or "corporations" do not provide the support for today's holding that the plurality opinion would pretend. Ante, at 400-402, and nn. 19-21. The Court cites previous constructions of the Elkins Act; the federal tax on sellers of alcoholic beverages; and the Shipping Act, 1916. But the financial penalties available under those Acts do not even approach the magnitude of the treble-damages remedy provided by the antitrust laws.
Frederick T. Searls and Michael P. Graney filed a brief for the Columbus and Southern Ohio Electric Co. et al. as amici curiae.
"That the word `person,' or `persons,' wherever used in this act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country."
Section 8 has remained unchanged since its enactment in 1890.
Section 1 of the Clayton Act defines the word "person" or "persons" in language identical to that of § 8 of the Sherman Act, and it also has remained unchanged since its enactment in 1914.
"Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover three fold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee."
Section 4 of the Clayton Act provides in full:
"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."
Section 4 has remained unchanged since its enactment in 1914. It is made applicable to all of the antitrust statutes by § 1 of the Clayton Act, 15 U. S. C. § 12 (1976 ed.).
Another city, Kansas City, Mo. (hereinafter Missouri), also operated a rail food terminal within the same metropolitan area. Because Kansas believed that there was insufficient business in the metropolitan area to support both markets, it developed a plan to induce Missouri produce dealers to lease its facilities by offering cash payments and temporary reduction or abatement of rent. These payments exceeded the amounts needed to compensate the merchants for the costs of moving, settlement of existing leases, and disruption to business. Kansas adopted the payment plan by resolution, and its legality under Kansas law was sustained by the Kansas Supreme Court in a quo warranto proceeding. State ex rel. Parker v. Kansas City, 151 Kan. 1, 97 P.2d 104, 98 P.2d 101 (1939).
The Missouri terminal was served by a number of railroads, but the Kansas terminal was served virtually exclusively by the Union Pacific Railroad. As merchants moved from Missouri to Kansas, the Union Pacific's traffic necessarily increased while that of the other railroads shrank. The United States charged that the effect of Kansas' concessions to merchants was to permit them to ship produce over the Union Pacific more cheaply than on the competing railroads serving the Missouri terminal and, in effect, amounted to a rebate from Union Pacific's tariffs. The District Court permanently enjoined Kansas from giving cash or rental credits to Missouri dealers to move or for moving to Kansas.
On appeal to this Court, Kansas argued that because the concessions were lawful under state law, it could not be enjoined from making them, and the United States argued that the municipality was a "person" within the meaning of the statute and therefore subject to the Act on the same terms as a private corporation. See Brief for Appellants, O. T. 1940, No. 594, pp. 233-235, 244-256; Brief for United States, O. T. 1940, No. 594, p. 72. See generally id., at 59-68, 69-75.
The Court held that the municipality was a "person" subject to the Act, and, with a modification not important here, upheld the permanent injunction against it. Mr. Justice Roberts, in dissent, made the argument made by the cities here, that the statutory phrase "every person" was not sufficiently specific to justify the conclusion that Congress wished to subject municipal corporations and their officers to the criminal penalties for which the Act provided. It is significant that the cities' argument was rejected in the context of the antirebate provisions of the Elkins Act, a statute which essentially is an antitrust provision serving the same purposes as the anti-price-discrimination provisions of the Robinson-Patman Act. Accord, Slater, Antitrust and Government Action: A Formula For Narrowing Parker v. Brown, 69 Nw. U. L. Rev. 71, 89 n. 100 (1974).
Apex Hosiery Co. v. Leader, 310 U.S. 469, 489, and n. 10 (1940).
Cantor's analysis is not, however, necessarily applicable here. Cantor was concerned with whether anticompetitive activity in which purely private parties engaged could, under the circumstances of that case, be insulated from antitrust enforcement. The situation involved here, on the other hand, presents the issue of under what circumstances a State's subdivisions engaging in anticompetitive activities should be deemed to be acting as agents of the State.
The acknowledgment of our Brother STEWART'S dissent, post, at 433, that, as noted in Indian Towing Co. v. United States, 350 U.S. 61, 67-68 (1955), "`Government is not partly public or partly private, depending upon the governmental pedigree of the type of a particular activity or the manner in which the Government conducts it'" (citation omitted), discloses the fallacy of his effort to distinguish Goldfarb on the ground that, although the State Bar was "`a state agency for some limited purposes,'. . . the price fixing it fostered was for the private benefit of its members and its actions were essentially those of a private professional group." Post, at 431.
Although Avery concluded that the actions of local government are the actions of the State for purposes of the Fourteenth Amendment, state action required under Parker has different attributes. Cf. Edelman v. Jordan, 415 U.S. 651, 667 n. 12 (1974).
Louisiana Rev. Stat. Ann. § 33:1334 (G) (West Supp. 1977) provides another illustration of the fact that a particular activity in which a subdivision technically has power to engage does not necessarily conform to, and may conflict with, state policy. Louisiana has authorized municipalities to create intergovernmental commissions as municipal instrumentalities jointly to construct and operate public services including utilities. §§ 33:1324, 33:1331-33:1334 (West Supp. 1977). Such commissions are, by definition, political subdivisions of the State. § 33:1334 (D) (West Supp. 1977). Section 1334 (G) nevertheless provides that "[n]othing in this Chapter shall be construed to grant an immunity to or on behalf of any [such] public instrumentality . . . from any antitrust laws of the state or of the United States."
That the Sherman Act was enacted to deal with combinations of individuals and corporations for private business advantage has long been recognized by this Court. Eastern Railroad Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 135-136; Apex Hosiery Co. v. Leader, 310 U. S., at 492-493, and n. 15; Standard Oil Co. v. United States, 221 U.S. 1, 50, 58.
"The inhabitants of the city shall continue a body politic and corporate by its present name and, as such, . . . may sue and be sued; . . . may acquire by condemnation or otherwise, construct, own, lease, and operate and regulate public utilities within or without the corporate limits of the city subject only to restrictions imposed by general law for the protection of other communities; . . . [and] may borrow money on the faith and credit of the city by issue or sale of bonds, notes, or other evidences of debt . . . ."
See also La. Rev. Stat. Ann. §§ 33:1326 (West 1951), 33:4162, 33:4163 (West 1966).
The plurality's emphasis on legislative action also leaves in doubt the status of state delegations of power to administrative agencies, unless they, too, can show that the legislature "directed" their actions. This, of course, defeats the whole purpose of establishing such agencies.
Under the federal tax on sellers of alcoholic beverages, 26 U. S. C. §§ 11 and 205 (1926 ed.), construed in Ohio v. Helvering, 292 U.S. 360, 370-371 (1934), the potential liability of the State of Ohio was $25 for each retail, and $100 for each wholesale, outlet. Under §§ 16 and 17 of the Shipping Act, 1916, 46 U. S. C. §§ 815, 816 (1940 ed.), construed in California v. United States, 320 U.S. 577, 585-586 (1944), a violation was a misdemeanor punishable by a $5,000 fine. The Court's only arguable support lies in § 1 of the Elkins Act, 49 U. S. C. § 41, construed in Union Pacific R. Co. v. United States, 313 U.S. 450 (1941). Even there, the potential liability of a municipality not acting as a common carrier is a $20,000 fine, and, were illegal transportation rebates to be received by the municipality, three times the amount of the rebate. Even if a municipality were held to be operating a common carrier under that Act, potential financial liability is limited to the fine and the actual damages caused by the prohibited conduct. 49 U. S. C. § 8.