As explained in Parker v. Brown, 317 U.S. 341 (1943), under the state-action doctrine, state and municipal authorities are immune from federal antitrust lawsuits for actions taken pursuant to a clearly expressed state policy that, when legislated, had foreseeable anticompetitive effects.
When a state approves and regulates certain conduct, even if it is anticompetitive under FTC or DOJ standards, the federal government must respect the decision of the state. Therefore, if a state sanctions anticompetitive conduct, the state is immune from investigation and possible prosecution by the FTC.
This doctrine can apply to provide immunity to non-state actors as well if a two-pronged requirement is met:
- There must be a clearly articulated policy to displace competition; and
- There must be active supervision by the state of the policy or activity.
[Last updated in June of 2024 by the Wex Definitions Team]
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