Lafayette v. Louisiana Power & Light Co., 435 U.S. 389 (1978)

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Filed: 1978-03-29Precedential Status: PrecedentialCitations: 435 U.S. 389, 98 S. Ct. 1123, 55 L. Ed. 2d 364, 1978 U.S. LEXIS 19Docket: 76-864Supreme Court Database id: 1977-059

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435 U.S. 389
98 S.Ct. 1123
55 L.Ed.2d 364

CITY OF LAFAYETTE, LOUISIANA and City of
Plaquemine, Louisiana, Petitioners,
v.
LOUISIANA POWER & LIGHT COMPANY.
No. 76-864.
Argued Oct. 4, 1977.
Decided March 29, 1978.

Syllabus
Petitioner cities, which own and operate electric utility systems both
within and beyond their respective city limits as authorized by Louisiana
law, brought an action in District Court against respondent investor-owned
electric utility with which petitioners compete, alleging tha it committed
various federal antitrust offenses that injured petitioners in the operation of
their electric utility systems. Respondent counterclaimed, alleging that
petitioners had committed various antitrust offenses that injured
respondent in its business and property. Petitioners moved to dismiss the
counterclaim on the ground that, as cities and subdivisions of the State,
the "state action" doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307,
87 L.Ed. 315, rendered federal antitrust laws inapplicable to them. The
District Court granted the motion, but the Court of Appeals reversed and
remanded. Held: Apart from whether petitioners are exempt from the
antitrust laws as agents of the State under the Parker doctrine there are
insufficient grounds for inferring that Congress did not intend to subject
cities to antitrust liability. Pp. 394-408.
(a) The definition of "person" or "persons" covered by the antitrust laws
clearly includes cities, whether as municipal utility operators suing as
plaintiffs seeking damages for antitrust violations or as such operators
being sued as defendants. Chattanooga Foundry & Pipe Works v. Atlanta,
203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241; Georgia v. Evans, 316 U.S. 159,
62 S.Ct. 972, 86 L.Ed. 1346. Pp. 394-397.
(b) Petitioners have failed to show the existence of any overriding public
policy inconsistent with a construction of coverage of the antitrust laws.
The presumption against implied exclusion from such laws cannot be
negated either on the ground that it would be anomalous to subject
municipalities to antitrust liability or on the ground that the antitrust laws
are intended to protect the public only from abuses of private power and
not from action of municipalities that exist to serve the public weal. Pp.
400-408.
Mr. Justice BRENNAN, joined by Mr. Justice MARSHALL, Mr. Justice
POWELL, and Mr. Justice STEVENS, concluded:

1

1. Parker v. Brown does not automatically exempt from the antitrust laws all
governmental entities, whether state agencies or subdivisions of a State, simply
by reason of their status as such, but 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. Pp. 408-413.

2

2. The Court of Appeals did not err in holding that further inquiry should be
made to determine whether petitioners' actions were directed by the State, since
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. While a subordinate governmental unit's claim to Parker
immunity is not as readily established as the same claim by a state government
sued as such, an adequate state mandate for anticompetitive activities of cities
and other subordinate governmental units exists when it is found "from the
authority given a governmental entity to operate in a particular area, that the
legislature contemplated the kind of action complained of." Pp. 413-417.

3

The Chief Justice, while agreeing with the directions for remand in Part III
because they represent at a minimum what is required to establish an
exemption, would insist that the State compel the alleged anticompetitive
activity and that the cities demonstrate that the exemption is essential to the
state regulatory scheme. Pp. 425-426, and n. 6.

4

5 Cir., 532 F.2d 431, affirmed.

5

Jerome A. Hochberg, Washington, D. C., for petitioners.

6

Andrew P. Carter, New Orleans, La., for respondent.

7

William T. Crisp, Raleigh, N. C., for the National Rural Elec. Cooperative
Ass'n et al., as amicus curiae, by special leave of Court.

8

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.

9

Parker v. Brown 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (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.

10

Petitioner cities are organized under the laws of the State of Louisiana,1 which
grant them power to own and operate electric utility systems both within and
beyond their city limits.2 Petitioners brought this action in the District Court for
the Eastern District of Louisiana, alleging that, among others,3 Louisiana
Power & Light Co. (LP&L), an investor-owned electric service utility with
which petitioners compete in the areas beyond their city limits,4 committed
various antitrust offenses which injured petitioners in the operation of their
electric utility systems.5 LP&L counterclaimed, seeking damages and
injunctive relief for various antitrust offenses which petitioners had allegedly
committed and which injured it in its business and property.6

11

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 hold that the antitrust laws do
not apply to any state activity."7 App. 47 (emph sis in original). The District
Court in this case read Saenz to interpret the "state action" exemption 8 as
requiring the "holding that purely state government activities are not subject to
the requirements of the antitrust laws of the United States," App. 48, thereby
making petitioners' status as cities determinative against maintenance of
antitrust suits against them. The Court of Appeals for the Fifth Circuit reversed
and remanded for further proceedings.9 532 F.2d 431 (1976). The Court of
Appeals noted that the District Court had acted before this Court's decision in
Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572
(1975), and held that "taken together" Parker v. Brown and Goldfarb "require
the following analysis":

12

"A subordinate state governmental body is not ipso facto exempt from the
operation of the antitrust laws. Rather, a district court must ask whether the
state legislature contemplated a certain type of anticompetitive restraint. In our
opinion, though, it is not necessary to point to an express statutory mandate for
each act which is alleged to violate the antitrust laws. It will suffice if the
challenged activity was clearly within the legislative intent. Thus, a trial judge
may ascertain, from the authority given a governmental entity to operate in a
particular area, that the legislature contemplated the kind of action complained
of. On the other hand, as inGoldfarb, the connection between a legislative grant
of power and the subordinate entity's asserted use of that power may be too
tenuous to permit the conclusion that the entity's intended scope of activity
encompassed such conduct. Whether a governmental body's actions are
comprehended within the powers granted to it by the legislature is, of course, a
determination which can be made only under the specific facts in each case. A
district judge's inquiry on this point should be broad enough to include all
evidence which might show the scope of legislative intent." 532 F.2d, at 434435 (footnotes omitted).

13

We granted certiorari, 430 U.S. 944, 97 S.Ct. 1577, 51 L.Ed.2d 791 (1977). We
affirm.

14

* 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.
A.

15

The antitrust laws impose liability on and create a cause of action for damages
for a "person" or "persons" as defined in the Acts.10 Since the Court has held
that the definition of "person" or "persons" embraces both cities and States, it is
understandable that the cities do not argue that they are not "persons" within
the meaning of the antitrust laws.

16

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."11 Section 4 of the
Clayton Act, 38 Stat. 731, 15 U.S.C. § 15 (1976 ed.), provides, in pertinent part,
that "[a]ny 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 . .
., and shall recover threefold the damages by him sustained . . . ." 12

17

Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 27 S.Ct.
65, 51 L.Ed. 241 (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,13 against a supplier from whom the
city purchased water pipe which it used to furnish water as a municipal utility
service. Some 36 years later, Georgia v. Evans, 316 U.S. 159, 62 S.Ct. 972, 86
L.Ed. 1346 (1942), held that the words "any person" in § 7 of the Sherman Act
included States. Under that decision, the State of Georgia was permitted to
bring an action in its own name charging injury from a combination to fix
prices and suppress competition in the market for asphalt which the State
purchased annually for use in the construction of public roads. The Court
reasoned that "[n]othing in the Act, its history, or its poli y, could justify so
restrictive a construction of the word 'person' in § 7 as to exclude a State." 316
U.S., at 162, 62 S.Ct., at 974.

18

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.14
B

19

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 to the antitrust laws should be inferred. Those
arguments, like the Parker exemption itself, necessarily must be considered in
light of the presumption against implied exclusions from coverage under the
antitrust laws.

20

(1)

21

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, 64 S.Ct. 1162, 1174, 88
L.Ed. 1440 (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,15 sought to establish a regime of competition as the
fundamental principle governing commerce in this country.16

22

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. Philadelphia
Nat. Bank, 374 U.S. 321, 350-351, and n. 28, 83 S.Ct. 1715, 1734-1735, 10
L.Ed.2d 915 (1963) (collecting cases). The presumption against repeal by
implication reflects the understanding that the antitrust laws establish
overarching and fundamental policies, a principle which argues with equal
force against implied exclusions. See Goldfarb, 421 U.S., at 786-788, 95 S.Ct.,
at 2012-2013.

23

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, 81 S.Ct.
523, 5 L.Ed.2d 464 (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, 81 S.Ct., at 529-530.17

24

Parker v. Brown18 identified a second overriding policy, namely that "[i]n a
dual system of government in which, under the Constitution, the states, are
sovereign, save only as Congress may constitutionally subtract from their
authority, an unexpressed purpose to nullify a state's control over its officers
and agents is not lightly to be attributed to Congress." 317 U.S., at 351, 63
S.Ct., at 313.

25

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, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972).

26

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.

27

(2)

28

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. Co. v. United States, 313 U.S. 450, 61 S.Ct.
1064, 85 L.Ed. 1453 (1941).19 See generally Ohio v. Helvering, 292 U.S. 360,
370, 54 S.Ct. 725, 727, 78 L.Ed. 1307 (1934);20 California v. United States,
320 U.S. 577, 64 S.Ct. 352, 88 L.Ed. 322 (1944).21 But those cases do not
necessarily require the conclusion that remedies appropriate to redress
violations by private corporations would be equally appropriate for
municipalities; nor need we decide any question of remedy in this case.22

29

Petitioners next argue that the antitrust laws are intended to protect the public
only from abuses of private power and not from actions of municipalities that
exist to serve the public weal.

30

Petitioners' contention that their goal is not private profit but public service is
only partly correc . 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 interests 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,23 aptly illustrate the impact which local governments, acting
as providers of services, may have on other individuals and business enterprises
with which they inter-relate as purchasers, suppliers, and sometimes, as here, as
competitors.24

31

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 electricity from the city and not from LP&L.25 The effect
of such a tie-in is twofold. First, the tying contract might injure former LP&L
customers in two ways. The net effect of the tying contract might be to increase
the cost of electric service to these customers. Moreover, a municipality
conceivably might charge discriminatorily higher rates to such captive
customers outside its jurisdiction without a cost-justified basis. Both of these
practices would provide maximum benefits for its constituents, while
disserving the interests of the affected customers. Second, the practice would
necessarily have an impact on the regulated public utility whose service is
displaced.26 The elimination of customers in an established service area would
likely reduce revenues, and possibly require abandonment or loss of existing
equipment the effect of which would be to reduce its rate base and possibly
affect its capital structure. The surviving customers and the investor-owners
would bear the brunt of these consequences. The decision to displace existing
service, rather than being made on the basis of efficiency in the distribution of
services, may be made by the municipality in the interest of realizing maximum
benefits to itself without regard to extra-territorial impact and regional
efficiency.27

32

The second allegation of LP&L's counterclaim,28 is that petitioners conspired
with others t engage in sham and frivolous litigation against LP&L before
various federal agencies29 and federal courts for the purpose, and with the
effect, of delaying approval and construction of LP&L's proposed nuclear
electric generating plant. It is alleged that this course of conduct was designed
to deprive LP&L of needed financing and to impose delay costs, amounting to
$180 million, which would effectively block construction of the proposed
project. Such activity may benefit the citizens of Plaquemine and Lafayette by
eliminating a competitive threat to expansion of the municipal utilities in still
undeveloped areas beyond the cities' territorial limits. But that kind of activity,
if truly anticompetitive,30 may impose enormous unnecessary costs on the
potential customers of the nuclear generating facility both within and beyond
the cities' proposed area of expansion. In addition, it may cause significant
injury to LP&L, interfering with its ability to provide expanded service.

33

Another aspect of the public-service argument31 is that because government is
subject to political control, the welfare of its citizens is assured through the
political process and that federal antitrust regulation is therefore unnecessary.
The argument that consumers dissatisfied with the service provided by the
municipal utilities may seek redress through the political process is without
merit. While petitioners recognize, as they must, that those consumers living
outside the municipality who are forced to take municipal service have no
political recourse at the municipal level, they argue nevertheless that the
customers may take their complaints to the state legislature. It fairly may be
questioned whether the consumers in question or the Florida corporation of
which LP&L is a subsidiary have a meaningful chance of influencing the state
legislature to outlaw on an ad hoc basis whatever anticompetitive practices
petitioners may direct against them from time to time. More fundamentally,
however, that argument cuts far too broadly; the same argument may be made
regarding anticompetitive activity in which any corporation engages. Mulcted
consumers and unfairly displaced competitors may always seek redress through
the political process. In enacting the Sherman Act, however, Congress
mandated competition as the polestar by which all must be guided in ordering
their business affairs. It did not leave this fundamental national policy to the
vagaries of the political process, but established a broad policy, to be
administered by neutral courts,32 which would guarantee every enterprise the
right to exercise "whatever economic muscle it can muster," United States v.
Topco Associates, 405 U.S. 596, 610, 92 S.Ct. 1126, 1135, 31 L.Ed.2d 515
(1972), without regard to the amount of influence it might have with local or
state legislatures.33

34

In 1972, there were 62,437 different units of local government in this country.34
Of this number 23,885 were special districts which had a defined goal or goals
for the provision of one or several services,35 while the remaining 38,552
represented the number of counties, municipalities, and townships, most of
which have broad authority for general governance subject to limitations in one
way or another imposed by the State.36 These units may, and do, participate in
and affect the economic life of this Nation in a great number and variety of
ways. When these bodies act as owners and providers of services, they are fully
capable of aggrandizing other economic units with which they interrelate, with
the potential of serious distortion of the rational and efficient allocation of
resources, and the efficiency of free markets which the regime of competition
embodied in the antitrust laws is thought to engender.37 If municipalities were
free to make economic choices counseled solely by their own parochial
interests and without regard to their anticompetitive effects, a serious chink in
the armor of antitrust protection would be introduced at odds with the
comprehensive national policy Congress established.38

35

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.
II

36

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.

37

Parker v. Brown involved the California Agricultural Prorate Act enacted by
the California Legislature as a program to be enforced "through action of state
officials . . . to restrict competition among the growers [of raisins] and maintain
prices in the distribution of their commodities to packers." 317 U.S., at 346, 63
S.Ct., at 311. The Court held that the program was not prohibited by the federal
antitrust laws since "nothing in the language of the Sherman Act or in its history
. . . suggests that its purpose was to restrain a state or its officers or agents from
activities directed by its legislature," id., at 350-351, 63 S.Ct., at 313, and "[t]he
state . . . as sovereign, imposed the restraint as an act of government which the
Sherman Act did not undertake to prohibit." Id., at 352, 63 S.Ct., at 314.

38

Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572
(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." 39 317 U.S., at 352, 63 S.Ct., at 314.
Goldfarb, on the other hand, presented the question "whether a minimum-fee
schedule for lawyers published by the Fairfax County Bar Association and
enforced by the Virginia State Bar," 421 U.S., at 775, 95 S.Ct., at 2007,
violated the Sherman Act. Exemption was claimed on the ground that the
Virginia State Bar was "a state agency by law." Id., at 790, 95 S.Ct., at 2014.
The Virginia Legislature had empowered the Supreme Court of Virginia to
regulate the practice of law and had assigned the State Bar a role in that
regulation as an administrative agency of the Virginia Supreme Court. But no
Virginia statute referred to lawyers' fees and the Supreme Court of Virginia had
taken no action requiring the use of and adherence to minimum-fee schedules.
Goldfarb therefore held that it could not be said that the anticompetitive effects
of minimum-fee schedules were directed by the State acting as sovereign. Id., at
791, 95 S.Ct., at 2015. The State Bar, though acting within its broad powers,
had "voluntarily joined in what is essentially a private anticompetitive activity,"
id., at 792, 95 S.Ct., at 2015, and was not executing the mandate of the State.
Thus, the actions of the State Bar had failed to meet "[t]he threshold inquiry in
determining if an anticompetitive activity is state action of the type the
Sherman Act was not meant to proscribe . . . ." Id., at 790, 95 S.Ct., at 2015. Go
dfarb therefore made it clear that, for purposes of the Parker doctrine not every
act of a state agency is that of the State as sovereign.

39

Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810
(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, 97 S.Ct., at 2697, quoting Goldfarb, supra, 421 U.S., at 791, 95 S.Ct., at
2015. 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. 40

40

These decisions require rejection of petitioners' proposition that their status as
such automatically affords governmental entities the "state action" exemption.41
Parker 's limitation of the exemption, as applied by Goldfarb and Bates, to
"official action directed by [the] state," arises from the basis for the "state
action" doctrine—that given our "dual system of government in which, under
the Constitution, the states are sovereign, save only as Congress may
constitutionally subtract from their authority," 317 U.S., at 351, 63 S.Ct., at
313, a congressional purpose to subject to antitrust control the States' acts of
government will not lightly be inferred. To extend that doctrine to
municipalities would be inconsistent with that limitation. Cities are not
themselves sovereign; they do not receive all the federal deference of the States
that create them. See, e. g., Edelman v. Jordan, 415 U.S. 651, 667 n. 12, 94
S.Ct. 1347, 1357-1358, 39 L.Ed.2d 662 (1974); Lincoln County v. Luning, 133
U.S. 529, 10 S.Ct. 363, 33 L.Ed. 766 (1890) (political subdivisions not
protected by Eleventh Amendment from immunity from suit in federal court).
Parker's limitation of the exemption to "official action directed by a state," 317
U.S., at 351, 63 S.Ct., at 313, is consistent with the fact that the States'
subdivisions generally have not been treated as equivalents of the States
themselves.42 In light of the serious economic dislocation which could result if
cities were free to place their own parochial interests above the Nation's
economic goals reflected in the antitrust laws, see supra, at 403-408, we are
especially unwilling to presume that Congress intended to exclude
anticompetitive municipal action from their reach.

41

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, 3 S.Ct. 211, 213, 27 L.Ed. 936 (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.
III

42

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. But, the
fact that the governmental bodies sued are cities, with substantially less than
statewide jurisdiction, has significance. When cities, each of the same status
under state law, are equally free to approach a policy decision in their own way,
the anticompetitive restraints adopted as policy by any one of them, may
express its own preference, rather than that of the State.43 Therefore, in the
absence of evidence that the State authorized or directed a given municipality to
act as it did, the actions of a particular city hardly can be found to be pursuant to
"the state['s] command," or to be restraints that "the state . . . as sovereign"
imposed. 317 U.S., at 352, 63 S.Ct., at 314. The most44 that could be said is
that state policy may be neutral. To permit municipalities to be shielded from
the antitrust laws in such circumstances would impair the goals Congress
sought to achieve by those laws, see supra, at 403-408, without furthering the
policy underlying the Parker "exemption." This does not mean, however, that a
political subdivision necessarily must be able to point to a specific, detailed
legislative authorization before it properly may assert a Parker defense to an
antitrust suit. While a subordinate governmental unit's claim to Parker
immunity is not as readily established as the same claim by a state government
sued as such, we agree with the Court of Appeals that an adequate state
mandate for anticompetitive activities of cities and other subordinate
governmental units exists when it is found "from the authority given a
governmental entity to operate in a particular area, that the legislature
contemplated the kind of action complained of."45 532 F.2d, at 434.

43

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 same time permitting purely parochial interests to disrupt the Nation's freemarket goals.

44

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, 71 S.Ct. 745, 95 L.Ed. 1035 (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 sub ect 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.46

45

Today's decision does not threaten the legitimate exercise of governmental
power, nor does it preclude municipal government from providing services on a
monopoly basis. Parker and its progeny make clear that a State properly may,
as States did in Parker and Bates, direct or authorize its instrumentalities to act
in a way which, if it did not reflect state policy, would be inconsistent with the
antitrust laws. Compare Bates, with Goldfarb. True, even a lawful monopolist
may be subject to antitrust restraints when it seeks to extend or exploit its
monopoly in a manner not contemplated by its authorization. Cf. Otter Tail
Power Co. v. United States, 410 U.S. 366, 377-382, 93 S.Ct. 1022, 1029-1032,
35 L.Ed.2d 359 (1973).47 But assuming that the municipality is authorized to
provide a service on a monopoly basis, these limitations on municipal action48
will not hobble the execution of legitimate governmental programs.

46

Affirmed.

47

Mr. Justice MARSHALL, concurring.

48

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 "desire[s] to insulate anticompetitive practices." Ante, at
416. For there to be an antitrust exemption, the State must "impose" the
practices "as an act of government." Ibid. State action involving more
anticompetitive restraint than necessary to effectuate governmental purposes
must be viewed as inconsistent with the plurality's approach.

49

Mr. CHIEF JUSTICE BURGER, concurring in the Court's opinion in Part I and
in the judgment.

50

This case turns, or ought to, on the District Court's explicit conclusion,1
unchallenged here, that "[t]hese plaintiff cities are engaging in what is clearly a
business activity; activity in which a profit is realized." There is nothing in
Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), or its
progeny, which suggests that a proprietary enterprise with the inherent capacity
for economically disruptive anticompetitive eff cts should be exempt from the
Sherman Act merely because it is organized under state law as a municipality.
Parker was a case involving a suit against state officials who were
administering a state program which had the conceded purpose of replacing
competition in a segment of the agricultural market with a regime of
governmental regulation. The instant lawsuit is entirely different. It arises
because respondent took the perfectly natural step of answering a federal
antitrust complaint— filed by competitors—with a counterclaim alleging
serious violations of the Sherman Act.

51

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:

52

"As a direct and proximate result of the unlawful conduct hereinabove alleged,
plaintiffs have: (1) been prevented from and continue to be prevented from
profitably expanding their businesses ; (2) lost and continue to lose the profits
which would have resulted from the operation of an expanded, more efficient
and lower cost business ; (3) been deprived of and continue to be deprived of
economies in the financing and operation of their systems; (4) sustained and
continue to sustain losses in the value of their businesses and properties ; and
(5) incurred and continue to incur excessive costs and expenses they otherwise
would not have incurred." App. 14. (Emphasis added.)

53

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, 52 S.Ct. 607, 609, 76 L.Ed.
1204 (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." Carnation Co. v. Pacific Conference, 383 U.S. 213, 218, 86 S.Ct. 781,
784, 15 L.Ed.2d 709 (1966), which strongly disfavors immunity from its scope.
See United States v. Philadelphia Nat. Bank, 374 U.S. 321, 350-351, 83 S.Ct.
1715, 1734-1735, 10 L.Ed.2d 915 (1963); California v. FPC, 369 U.S. 482,
485, 82 S.Ct. 901, 903, 8 L.Ed.2d 54 (1962).

54

As I indicated, concurring in Cantor v. Detroit Edison Co., 428 U.S. 579, 604,
96 S.Ct. 3110, 3123, 49 L.Ed.2d 1141 (1976), "in interpreting Parker, the
Court has heretofore focused on the challenged activity, not upon the identity of
the parti § 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, 97 S.Ct. 2691, 53
L.Ed.2d 810 (1977); Cantor, supra; Goldfarb v. Virginia State Bar, 421 U.S.
773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (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, 15 S.Ct. 249, 39 L.Ed. 325
(1895); Kidd v. Pearson, 128 U.S. 1, 9 S.Ct. 6, 32 L.Ed. 346 (1888), but
manufacturing enterprises, in and of themselves, were not taken to be interstate
commerce. Id., at 20, 9 S.Ct., at 9.

55

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, 59 S.Ct. 668, 671, 83 L.Ed. 1014
(1939); cf. Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738, 743,
96 S.Ct. 1848, 1852, 48 L.Ed.2d 338 (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 Rex Hospital Trustees,
supra, at 743 n. 2, 96 S.Ct., at 1852, one might reasonably wonder how the
Court reached its result in Parker.

56

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.

57

"In a dual system of government in which, under the Constitution, the states are
sovereign, save only as Congress may constitutionally subtract from their
authority, an unexpressed purpose to nullify a state's control over its officers
and agents is not lightly to be attributed to Congress." Parker, 317 U.S., at 351,
63 S.Ct., at 313.

58

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." 2

59

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, it is even more puzzling that so much judicial energy is
expended here on deciding a question not presented by the parties or by the
facts of this case: that is, to what extent the Sherman Act impinges generally
upon the monopoly powers of state and local governments. As I suggested at
the outset, the issue here is whether the Sherman Act reaches the proprietary
enterprises of municipalities.3

60

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, 56 S.Ct. 421, 423-425, 80 L.Ed. 567 (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, 56 S.Ct., at 424); see Parden
v. Terminal R. Co., 377 U.S. 184, 189-193, 84 S.Ct. 1207, 1211-1213, 12
L.Ed.2d 233 (1964); California v. Taylor, 353 U.S. 553, 568, 77 S.Ct. 1037,
1045, 1 L.Ed.2d 1034 (1957). Likewise, it had been held in Ohio v. Helvering,
292 U.S. 360, 54 S.Ct. 725, 78 L.Ed. 1307 (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.4

61

I see nothing in the last 35 years to question this conclusion. In fact, the Court's
recent decision in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct.
2465, 49 L.Ed.2d 245 (1976), which rekindled a commitment to tempering the
Commerce Clause power with the limits imposed by our structure of
government, employs language strikingly similar to the words of Mr. Chief
Justice Stone in Parker :

62

"It is one thing to recognize the authority of Congress to enact laws regulating
individual businesses necessarily subject to the dual sovereignty of the
government of the Nation and of the State in which they reside. It is quite
another to uphold a similar exercise of congressional authority directed, not to
private citizens, but to States as States. We have repeatedly recognized that
there are attributes of sovereignty attaching to every state government which
may not be impaired by Congress, not because Congress may lack an
affirmative grant of legislative authority to reach the matter, but because the
Constitution prohibits it from exercising the authority in that manner." 426
U.S., at 845, 96 S.Ct., at 2470.

63

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., quoting Coyle v. Oklahoma, 221 U.S. 559, 580, 31 S.Ct. 688, 695, 55
L.Ed. 853 (1911). It should be evident, I would think, that the running of a
business enterprise is not an integral operation in the area of traditional
government functions. See Alfred Dunhill of London, Inc. v. Cuba, 425 U.S.
682, 695-696, 96 S.Ct. 1854, 1861-1862, 48 L.Ed.2d 301 (1976); Bank of
United States v. Planters' Bank of Georgia, 9 Wheat. 904, 907, 6 L.Ed. 244
(1824). Indeed, the reaffirmance of the holding in United States v. California,
supra, by National League of Cities, supra, 426 U.S., at 854 n. 18, 96 S.Ct., at
2475, strongly supports this understanding. Even if this proposition were not
generally true, the particular undertaking at issue here—the supplying of
electric service—has not traditionally been the prerogative of the State. Jackson
v. Metropolitan Edison Co., 419 U.S. 345, 352-353, 95 S.Ct. 449, 454, 42
L.Ed.2d 477 (1974).5

64

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, 96 S.Ct., at 3117-3121, stateregulated utilities pose special analytical problems underParker. 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
competition." Cantor, supra, 428 U.S., at 595, 96 S.Ct., at 3119. This is
precisely what occurred in Parker, and there is no question that a utility's action
taken pursuant to the command of such an "act of government." Parker, 317
U.S., at 352, 63 S.Ct., at 314, would not be prohibited by the Sherman Act.

65

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, 95 S.Ct., at 2015. (Emphasis added.)
But this is only the first, not the final step of the inqui y, for Cantor recognized
that "all economic regulation does not necessarily suppress competition." 428
U.S., at 595, 96 S.Ct., at 3119. "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, 96 S.Ct., at 3119.

66

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."6 Ante, at 413. This supplemental inquiry would consist of
determining whether the implied exemption from federal law "was necessary in
order to make the regulatory Act work, 'and even then only to the minimum
extent necessary.' " 428 U.S., at 597, 96 S.Ct., at 3120. 7

67

Mr. Justice STEWART, with whom Mr. Justice WHITE, Mr. Justice
BLACKMUN, * and Mr. Justice REHNQUIST join, dissenting.

68

In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, 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, 63 S.Ct., at 314. 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, 81 S.Ct. 523, 529, 5 L.Ed.2d
464.

69

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 and
unjustifiable limits upon it. According to the plurality, governmental action will
henceforth be immune from the antitrust laws1 only when "authorized or
directed" by the State "pursuant to state policy to displace competition with
regulation or monopoly public service." Ante, at 414, 413. Such a "direction"
from the State apparently will exist only when it can be shown " 'from the
authority given a governmental entity to operate in a particular area, that the
legislature contemplated the kind of action complained of.' " Ante, at 415. By
this exclusive focus on a legislative mandate the plurality has effectively
limited the governmental action immunity of the Parker case to the acts of a
state legislature. This is a sharp and I think unjustifiable departure from our
prior cases.

70

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.

71

* 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.
A.

72

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, 60 S.Ct. 982, 990, 84 L.Ed. 1311. 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).2

73

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 fact established by California's legislature, and not by one
of its political subdivisions. But the Court nowhere held that the actions of
municipal governments should not equally be immune from the antitrust laws.
On the contrary, it expressly equated "the state or its municipality." 317 U.S. at
351, 63 S.Ct., at 313. The Parker opinion repeatedly and carefully 3 emphasized
that California's program was not the action of "private persons, individual or
corporate." Id., at 350, 63 S.Ct., at 313. 4 The distinction established in Parker
v. Brown was not one between actions of a state legislature and those of other
governmental units. Rather, the Court drew the line between private action and
governmental action.

74

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, 3 S.Ct. 211, 213, 27 L.Ed. 936; cf.
Reynolds v. Sims, 377 U.S. 533, 575, 84 S.Ct. 1362, 1388, 12 L.Ed.2d 506.5
They have only such powers as are delegated them by the State of which they
are a subdivision, and when they act they exercise the State's sovereign power.
Avery v. Midland County, 390 U.S. 474, 480, 88 S.Ct. 1114, 1118, 20 L.Ed.2d
45; Breard v. Alexandria, 341 U.S. 622, 640, 71 S.Ct. 920, 931, 95 L.Ed. 1233.
City governments are not unaccountable to the public but are subject to direct
popular control through their own electorates and through the state legislature.6
They are thus a far cry from the private accumulations of wealth that the
Sherman Act was intended to regulate.
B

75

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 cla m 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.7 And if constitutional analogies are to
be looked to, a decision much more directly related to this case than those
under the Eleventh Amendment isNational League of Cities v. Usery, 426 U.S.
833, 96 S.Ct. 2465, 49 L.Ed.2d 245. That case, like this one, involved an
exercise of Congress' power under the Commerce Clause, and held that States
and their political subdivisions must be given equal deference. Id., at 855-856,
n. 20, 96 S.Ct., at 2476. The plurality does not advance any basis for its
disregard of National League of Cities and its reliance instead on the basically
irrelevant body of law under the Eleventh Amendment.

76

Secondly, the plurality relies on Goldfarb v. Virginia State Bar, 421 U.S. 773,
95 S.Ct. 2004, 44 L.Ed.2d 572. 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, 95 S.Ct., at 2015,
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, 95 S.Ct., at 2015, the scheme was not immune from the
antitrust laws. Cf. Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384,
71 S.Ct. 745, 95 L.Ed. 1035.

77

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,
97 S.Ct. 2691, 2697, 53 L.Ed.2d 810, 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, 95 S.Ct., at 2015, 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."8

78

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, 96 S.Ct. 3110, 49 L.Ed.2d 1141, 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 when private
persons claim that their anticompetitive actions are not their own but the State's,
since a State cannot immunize private anticompetitive conduct merely by
permitting it.9 But it is senseless to require a showing of state compulsion when
the State itself cts through one of its governmental subdivisions. See New
Mexico v. American Petrofina, Inc., 501 F.2d 363, 369-370 (CA9).
C

79

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. 10 But this
distinction is no more substantial a basis for disregarding the governmental
action immunity in this case than the reasons advanced by the plurality.

80

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.11 Yet, according
to THE CHIEF JUSTICE, the former type of governmental decision is immune
from antitrust liability while the latter is not.

81

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 428430. And, as this Court has previously said:

82

" '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.' Federal Crop Insurance Corp. v. Merrill,
332 U.S. 380, 383-384, 68 S.Ct. 1, 92 L.Ed. 10. On the other hand, it is hard to
think of any governmental activity on the 'operational level,' our present
concern, which is 'uniquely governmental,' in the sense that its kind has not at
one time or another been, or could not conceivably be, privately performed."
Indian Towing Co. v. United States, 350 U.S. 61, 67-68, 76 S.Ct. 122, 126, 100
L.Ed. 48.

83

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.

84

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,
76 S.Ct., at 124. The "distinctions [are] so finespun and capricious as to be
almost incapable of being held in the mind for adequate formulation." Id., at
68, 76 S.Ct., at 126. The separate opinion of THE CHIEF JUSTICE does
nothing to make these distinctions any more substantial or understandable.12
Indeed, even a moment's consideration of the range of services provided today
by governments shows how difficult it is to determine whether or not they are
"proprietary." For example, if a city or State decides to provide water service to
its citizens at cost on a monopoly basis, is its action to be characterized as
"proprietary"? Whether it is "proprietary" or not, it is surely an act of
government, as are the petitioners' actions in this case. Cf. Lowenstein v. Evans,
69 F. 908 (CC S.C.).13 But THE CHIEF JUSTICE, like the plurality, ignores
what seems to me the controlling distinction in this case, that between private
and governmental action.
II

85

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.
A.

86

Under our federal system, a State is generally free to allocate its governmental
power to its political subdivisions as it wishes. 14 A State may decide to permit
its municipalities to exercise its police power without having to obtain approval
of each law from the legislature.15 Such local self-government serves important
state interests. It allows a state legislature to devote more time to statewide
problems without being burdened with purely local matters, and allows
municipalities to deal quickly and flexibly with local problems. But today's
decision, by demanding extensive legislative control over municipal action, will
necessarily diminish the extent to which a State can share its power with
autonomous local governmental bodies.

87

This will follow from the plurality's emphasis on state legislative action, and
the vagueness of the criteria it announces.16 First, it is not clear from the
plurality opinion whether a municipal government's actions will be immune
from the Sherman Act if they are merely "authorized" by a state legislature or
whether they must be legislatively "directed" in order to enjoy immunity. While
the plurality uses these terms interchangeably, they can have very different
meanings. See Cantor v. Detroit Edison, Co., 428 U.S., at 592-593, 96 S.Ct., at
3117-3118. A municipality that is merely "authorized" by a state statute to
provide a monopoly service thus cannot be certain it will not be subject to
antitrust liability if it does so.

88

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, and tied the sale of gas and water to the sale of
electricity. Broadly speaking, these actions could be characterized as bringing
lawsuits, issuing bonds, and providing electric and gas service, all of which are
activities authorized by state statutes.17 But in affirming the judgment of the
Court of Appeals the Court makes evident that it does not consider these
statutes alone a sufficient "mandate" to the cities.

89

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.18 But what intermediate showing of legislative authorization,
approval, or command will meet the plurality's test I am unable to fathom.19

90

Finally, state statutes often are enacted with little recorded legislative history,20
and the bare words of a statute will often be unilluminating in interpreting
legislative intent. For example, do the Louisiana statutes permitting the
petitioners to operate public utilities21 "contemplate" that the petitioners might
tie the sale of gas to the sale of electricity? Do those statutes, indeed,
"contemplate" that electric service will be provided to city residents on a
monopoly basis? Without legislative history or relevant statutory language, any
answer to these questions would be purely a creation of judicial imagination.22

91

As a practical result of the uncertainties in today's opinions, 23 and of the
plurality's emphasis on state legislative action, a prudent municipality will
probably believe itself compelled to seek passage of a state statute requiring it
to engage in any activity which might be considered anticompetitive. Each time
a city grants an exclusive franchise, or chooses to provide a service itself on a
monopoly basis, or refuses to grant a zoning variance to a business,24 or even—
as alleged in this case brings litigation on behalf of its citizens, state legislative
action will be necessary to ensure that a federal court will not subsequently
decide that the activity was not "contemplated" by the legislature. Thus, the
effect of today's decision is greatly to impair the ability of a State to delegate
governmental power broadly to its municipalities.25 Such extensive interference
with the fundamentals of state government is not a proper function of the
federal judiciary.26
B

92

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. States should be "accorded wide latitude in the regulation of
their local economies," New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct.
2513, 2517, 49 L.Ed.2d 511; and in "the manner in which they will structure
delivery of those governmental services which their citizens require." National
League of Cities v. Usery, 426 U.S., at 847, 96 S.Ct., at 2472. The antitrust
liability the Court today imposes on municipal governments will sharply limit
that latitude.

93

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.27 In the exercise of their powers
local governmen al entities often take actions that might violate the antitrust
laws if taken by private persons, such as granting exclusive franchises, enacting
restrictive zoning ordinances, and providing public services on a monopoly
basis. But a city contemplating such action in the interest of its citizens will be
able to do so after today only at the risk of discovering too late that a federal
court believes that insufficient statutory "direction" existed, or that the activity
is "proprietary" in nature.

94

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.28 For example,
in City of New Orleans v. Dukes, supra, a city ordinance which, to preserve the
character of a historic area, prohibited the sale of food from pushcarts unless
the vendor had been in business for at least eight years, was challenged under
the Equal Protection Clause of the Fourteenth Amendment. The Court upheld
the constitutional validity of the ordinance. But it now appears that if Dukes
had proceeded under the antitrust laws and claimed that the ordinance was an
unreasonably anticompetitive limit on the number of pushcart vendors, he
might well have prevailed unless New Orleans could establish that the
Louisiana Legislature "contemplated" the exclusion of all but a few pushcart
vendors from the historic area. The "wide latitude" of the States "in the
regulation of their local economies," exercised in Dukes by the city to which
this power to regulate had been delegated, could thus be wholly stifled by the
application of the antitrust laws.
C

95

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 75,000.29 A judgment of this magnitude would
assure bankruptcy for almost any municipality against which it might be
rendered.30 Even if the petitioners ultimately prevail, their citizens will have to
bear the rapidly mounting costs of antitrust litigation through increased taxes or
decreased services. 31 The prospect of a city closing its schools, discharging its
policemen, and curtailing its fire department in order to defend an antitrust suit
would surely dismay the Congress that enacted the Sherman Act. 32

96

For all of the reasons discussed in this opinion, I respectfully dissent.

97

Mr. Justice BLACKMUN, dissenting.

98

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,
63 S.Ct. 307, 314, 87 L.Ed. 315 (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, 61 S.Ct. 1064, 85 L.Ed. 1453"). 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 of Sherman Act liability had commanded a majority, a remand for
consideration of this more limited exception would be in order.

99

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 trebledamages remedy provided by the antitrust laws.1 Nor has the Court come to
grips with the plainly mandatory language of § 4 of the Clayton Act, 15 U.S.C.
§ 15 (1976 ed.): "Any person who shall be injured in his business or property
by reason of anything forbidden in the antitrust laws . . . shall recover threefold
the damages by him sustained" (emphasis supplied), and the repeated occasions
on which Congress has rejected proposals to make the treble-damages remedy
discretionary.2 It is one thing to leave open the question of remedy if there is a
conceivable defense to damages whose theory is consistent with the mandatory
language of the Clayton Act (e. g., in the case of private utilities subject to state
tariffs, that their conduct was required by state law and hence was involuntary).
See Cantor v. Detroit Edison Co., 428 U.S. 579, 614-615, n.6, 96 S.Ct. 3110,
3128-3129, 49 L.Ed.2d 1141 (1976) (opinion concurring in judgment). It is
quite another to delay the question of remedy in the absence of any suggested
basis for a defense, especially where the prospect of insolvency for petitioner
cities would so threaten the welfare of their inhabitants. The sensible course, it
seems to me, is to consider the range of liability in light of the range of
defendants for whom Sherman Act penalties would be appropriate.

1

See La.Const., Art. 6, §§ 2, 7(A) (effective Jan. 1, 1975); La.Const., Art.
XIV, § 40(d) (1921) (effective prior to Jan. 1, 1975); see generally
La.Rev.Stat.Ann. §§ 33:621, 33:361, 33:506 (West 1951).

2

La.Rev.Stat.Ann. § 33:1326 (West 1951); §§ 33:4162, 33:4163 (West
1950).

3

The complaint named as parties defendant Middle-South Utilities, Inc., a
Florida corporation of which LP&L is a subsidiary, Central Louisiana
Electric Co., Inc., and Gulf States Utilities, Louisiana and Texas
corporations respectively, engaged in the generation, transmission, and
sale of electric power at wholesale and retail in Louisiana.

4

5

6

7

8

9

LP&L does not allege that it directly competes with the city of Lafayette,
but does allege that the city of Plaquemine imposed tying arrangements
which injured it. See Respondent's Second Amended Counterclaim, App.
33-34; Affidavit of J. M. Wyatt, Senior Vice President of LP&L, id., at 37.
Petitioners' complaint charged that the defendants conspired to restrain
trade and attempted to monopolize and have monopolized the generation,
transmission, and distribution of electric power by preventing the
construction and operation of competing utility systems, by improperly
refusing to wheel power, by foreclosing supplies from markets served by
defendants, by engaging in boycotts against petitioners, and by utilizing
sham litigation and other improper means to prevent the financing of
construction of electric generation facilities beneficial to petitioners.
The counterclaim, as amended, alleged that the petitioners, together with a
nonparty electric cooperative, had conspired to engage in sham litigation
against LP&L to prevent the financing with the purpose and effect of
delaying or preventing the construction of a nuclear electric-generating
plant, to eliminate competition within the municipal boundaries by use of
covenants in their respective debentures, to exclude competition in certain
markets by using long-term supply agreements, and to displace LP&L in
certain areas by requiring customers of LP&L to purchase electricity from
petitioners as a condition of continued water and gas service.
Saenz was a treble-damages action by a slide-rule manufacturer who
alleged a conspiracy between a state agency, the University Interscholastic
League (UIL), its director, and a private competitor of Saenz to effect the
rejection of Saenz products for use in interscholastic competition among
Texas public schools. In Saenz the Court of Appeals affirmed the District
Court's dismissal of the action against the UIL and its director on the
ground that as a state agency and a state official, they were not answerable
under the Sherman Act.
The word "exemption" is commonly used by courts as a shorthand
expression for Parker's holding that the Sherman Act was not intended by
Congress to prohibit the anticompetitive restraints imposed by California
in that case.
In entering its order dismissing the counterclaim, the District Court made
an express determination that there was no just reason for delay and
expressly directed the entry of judgment for plaintiffs pursuant to Fed.Rule
Civ.Proc. 54(b). This action designated the dismissal as a final appealable
order. See Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 742-743, 96
S.Ct. 1202, 1205-1206, 47 L.Ed.2d 435 (1976).

10

11

The word "person" or "persons" is used repeatedly in the antitrust statutes.
For examples, see 15 U.S.C. § 1 (1976 ed.) ("Every person who shall make
any contract or engage in any combination or conspiracy hereby declared
to be illegal shall be deemed guilty of a felony . . ."); 15 U.S.C. § 2 (1976
ed.) ("Every person who shall monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to monopolize any
part of the trade or commerce among the several States, or with foreign
nations, shall be deemed guilty of a felony . . ."); 15 U.S.C. § 3 (1976 ed.)
("Every person [making a contract or engaging in a combination or
conspiracy in restraint of trade in any Territory or the District of
Columbia] shall be deemed guilty of a felony . . ."); 15 U.S.C. § 7 (1976
ed.) (defining the word "person" or "persons"); 15 U.S.C. § 8 (1976 ed.)
(declaring illegal every contract, combination or conspiracy in restraint of
trade by persons or corporations engaged in importing articles into the
United States, and providing that any person so engaged shall be guilty of
a misdemeanor).
Section 8 of the Sherman Act provides in full:
"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.

12

Section 4 is quoted in full in n. 13, infra.

13

Section 7 of the Sherman Act, ch. 647, 26 Stat. 210 (1890) (repealed in
1955), provided in full:
"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.).

14

15

When Congress wished to exempt municipal service operations from the
coverage of the antitrust laws, it has done so without ambiguity. The Act
of May 26, 1938, ch. 283, 52 Stat. 446, 15 U.S.C. § 13c (1976 ed.), grants
a limited exemption to certain not-for-profit institutions for "purchases of
their supplies for their own use" from the provisions of the Clayton Act as
amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. §§ 13 to
13b and 21a (1976 ed.), which otherwise make it unlawful for a supplier to
grant, or for an institution to induce, a discriminatory discount with respect
to such supplies. Congress expressly included public libraries in this
exemption. (Public libraries are, by definition, operated by local
government. See I U. S. Office of Education, Biennial Surveys of
Education in the United States, ch. 8 (Library Service 1938-1940), p. 27
(1947); 2 U.S. Office of Education, ch. 2 (Statistical Summary of
Education, 1941-1942), p. 38; 32 Am. Library Assn. Bull. 272 (1938)).
See Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334
U.S. 219, 229-235, 68 S.Ct. 996, 1002-1005, 92 L.Ed. 1328 (1948).

16

17

18
19

"Antitrust laws in general, and the Sherman Act in particular, are the
Magna Carta of free enterprise. They are as important to the preservation
of economic freedom and our free-enterprise system as the Bill of Rights is
to the protection of our fundamental personal freedoms. And the freedom
guaranteed each and every business, no matter how small, is the freedom
to compete—to assert with vigor, imagination, devotion, and ingenuity
whatever economic muscle it can muster." United States v. Topco
Associates, 405 U.S. 596, 610, 92 S.Ct. 1126, 1135, 31 L.Ed.2d 515
(1972).
See also Mine Workers v. Pennington, 381 U.S. 657, 669-672, 85 S.Ct.
1585, 1588, 1592-1594, 14 L.Ed.2d 626 (1965). Pennington held that,
regardless of the anticompetitive purpose or effect on small competing
mining companies, the joint action of certain large mining companies and
labor unions in lobbying before the Secretary of Labor in favor of
legislation establishing a minimum wage for employees of contractors
selling coal to the Tennessee Valley Authority and in lobbying before
TVA to avoid coal purchases exempted from the legislation was not
subject to antitrust attack. Cases subsequent to Pennington have
emphasized the possible constitutional infirmity in the antitrust laws that a
contrary construction would entail in light of the serious threat to First
Amendment freedoms that would have been presented. See Continental
Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 707-708, 82
S.Ct. 1404, 1414-1415, 8 L.Ed.2d 777 (1962); California Motor Transport
Co. v. Trucking Unlimited, 404 U.S. 508, 516, 92 S.Ct. 609, 614, 30
L.Ed.2d 642 (1972) (Stewart, J., concurring in judgment).
See also Olsen v. Smith, 195 U.S. 332, 344-345, 25 S.Ct. 52, 54-55, 49
L.Ed. 224 (1904).
Union Pacific considered the applicability to a city of § 1 of the Elkins
Act, 32 Stat. 847, as amended, 34 Stat. 587, 49 U.S.C. § 41(1). That
statute, in definitional language similar to that used in § 8 of the Sherman
Act, makes it unlawful for "any person, persons, or corporation to offer,
grant, or give, or to solicit, accept, or receive any rebate, concession, or
discrimination in respect to the transportation of any property in interstate
or foreign commerce by any [covered] common carrier . . . ." (Emphasis
added.) Kansas City, Kan. (hereinafter Kansas), decided to develop its
Public Levee as a metropolitan rail food terminal with wholesale and retail
produce markets. Kansas constructed, operated, and owned the market,
financing the development with municipal revenue bonds.

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 10 , 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 the 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 RobinsonPatman Act. Accord, Slater, Antitrust and Government Action: A Formula
For Narrowing Parker v. Brown, 69 Nw.U.L.Rev. 71, 89 n. 100 (1974).

20

21

22

23

24

25
26

Ohio v. Helvering sustained a federal tax liability imposed upon the State
of Ohio in its business as a distributor of alcoholic beverages. The statute,
Rev.Stat. § 3244 (1978), imposed a tax upon "[e]very person who sells or
offers for sale [alcoholic beverages]." The applicable definitional section,
Rev.Stat. § 3140 (1978), provided: [W]here not otherwise distinctly
expressed or manifestly incompatible with the intent thereof, the word
'person,' as used in this title, shall be construed to mean and include a
partnership, association, company, or corporation, as well as a natural
person." Helvering stated that "[w]hether the word 'person' or 'corporation'
includes a state or the United States depends upon the connection in which
the word is found," 292 U.S., at 370, 54 S.Ct., at 727, and held that "the
state itself, when it becomes a dealer in intoxicating liquors, falls within
the reach of the tax either as a 'person' under the statutory extension of that
word to include a corporation, or as a 'person' without regard to such
extension." Id., at 371, 54 S.Ct., at 727.
California held that a city and State are subject to §§ 16 and 17 of the
Shipping Act, 1916, 39 Stat. 734, as amended, 46 U.S.C. §§ 815, 816,
making unlawful certain practices of "person[s]," defined by § 1, 46
U.S.C. § 801, as including "corporations, partnerships, and associations,
existing under or authorized by the laws of the United States, or any State .
. . ."
The question of remedy can arise only if the District Court, on the Court of
Appeals remand, determines that petitioners' activities are prohibited by
the antitrust laws.
Cf. Hospital Building Co. v. Trustees of Rex Hosp., 425 U.S. 738, 740, 96
S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976). We use the allegations of the
counterclaim only as a ready and convenient example of the kinds of
activities in which a municipality may engage in the operation of its utility
business which would have an anticompetitive effect transcending its
municipal borders.
See generally Duke & Co. v. Foerster, 521 F.2d 1277 (CA3 1975); New
Mexico v. American Petrofina, Inc., 501 F.2d 363 (CA9 1974); Hecht v.
Pro-Football, Inc., 144 U.S.App.D.C. 56, 444 F.2d 931 (1971).
See Respondent's Second Amended Counterclaim, App. 33.
As one commentator has noted, our cases indicate that the protection
against injury to the buyer is only one purpose of the rule against tying
arrangements. Equally important is the need to protect competing sellers
from competition unrelated to the merits of the product involved, and,
concomitantly, to protect the market from distortion. Turner, The Validity
of Tying Arrangements Under the Antitrust Laws, 72 Harv.L.Rev. 50, 60
(1958).

27

28
29

30
31

While the investor-owned utilities in Louisiana are subject to regulation by
the Louisiana Public Utilities Commission, municipally owned utilities are
not subject to the jurisdiction of the PUC and hence apparently need not
conform their expansion policies to whatever plans the PUC might deem
advisable for coordinating service. See n. 44, infra.
See Respondent's Answer & Counterclaim, App. 18-20.
The counterclaim alleged that petitioners engaged in sham litigation before
the Securities and Exchange Commission, the Federal Power Commission,
the Atomic Energy Commission, and the United States Department of
Justice.
See generally California Motor Transport Co. v. Trucking Unlimited, 404
U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972).
Petitioners have urged that the antimonopoly principles of the antitrust
laws are inconsistent with the very nature of government operating as a
monopoly in the public interest. They suggest that to apply antitrust
principles to local governments will necessarily interfere with the
execution of governmental programs. We do not agree. Acting as agents at
the direction of the State, local governments are free to implement state
policies without being subject to the antitrust laws to the same extent as
would the State itself. See infra, at 413-417. On the other hand, it would
not hinder governmental programs to require that cities authorized to
provide services on a monopoly basis refrain from, for example, predatory
conduct not itself directed by the State.

32

"The prohibitions of the Sherman Act were not stated in terms of precision
or of crystal clarity and the Act itself did not define them. In consequence
of the vagueness of its language, perhaps not uncalculated,[*] the courts
have been left to give content to the statute, and in the performance of that
function it is appropriate that courts should interpret its word in the light of
its legislative history and of the particular evils at which the legislation
was aimed. . . ."
" [*] See Debates, 21 Cong.Rec. 2460, 3148; 2 Hoar, Autobiography of
Seventy Years 364; Senator Edmunds, The Interstate Trust and Commerce
Act of 1890, 194 No.Am.Rev. 801, 813, 'after most careful and earnest
consideration by the Judiciary Committee of the Senate it was agreed by
every member that it was quite impracticable to include by specific
description all the acts which should come within the meaning and
purpose of the words "trade" and "commerce" or "trust," or the words
"restraint" or "monopolize," by precise and all-inclusive definitions; and
that these were truly matters for judicial consideration.'
"See also Senator Hoar who with Senator Edmunds probably drafted the
bill (see A. H. Walker, History of the Sherman Law (1910), p. 27-28) in
36 Cong.Rec. 522, Jan. 6, 1903: 'We undertook by law to clothe the courts
with the power and impose on them and the Department of Justice the duty
of preventing all combinations in restraint of trade. . . . ' "
Apex Hosiery Co. v. Leader, 310 U.S. 469, 489, and n. 10, 60 S.Ct. 982,
990, 84 L.Ed. 1311 (1940).

33

34

35

The political-redress argument could also be made in the context of
anticompetitive actions engaged in by the State itself. Our rejection of the
argument here is not, however, inconsistent with the Parker doctrine.
Parker did not reason that political redress is an adequate substitute for
direct enforcement of the antitrust laws. Rather, Parker held that, in the
absence of congressional intent to the contrary, a purpose that the antitrust
laws be used to strike down the State's regulatory program imposed as an
act of government would not be inferred. To the extent that the actions of a
State's subdivisions are the actions of the State, the Parker exemption
applies. See infra, at 413-417.
1 U.S. Bureau of the Census, 1972 Census of Governments, Governmental
Organization 1 (1973). This figure (62,437) represents the total of county,
municipal, township, and special district governments, but does not
include the 15,781 independent school districts in the United States which,
of course, have a much more narrowly defined range of functions and
powers than those of local governmental units generlly. See id., at 1-5.
See, id., at 4-5.

36
37
38

39

40

See id., at 1-3.
See, e. g., Apex Hosiery Co. v. Leader, supra, 310 U.S., at 493-495, n. 15,
60 S.Ct., at 992-993, n. 15 (reviewing legislative history).
See United States v. Topco Associates, 405 U.S., at 610, 92 S.Ct., at 1134;
Apex Hosiery Co. v. Leader, supra, 310 U.S., at 492-495, and n. 15, 60
S.Ct., at 992-993, and n. 15; Mandeville Island Farms, Inc. v. American
Crystal Sugar Co., 334 U.S. 219, 229-235, 68 S.Ct. 996, 1002-1005, 92
L.Ed. 1328 (1948).
The state regulatory program involved in Parker furthered an important
state interest which was consistent with federal policy. See Parker, 317
U.S., at 352-359, 63 S.Ct., at 314-317.
The plurality opinion in Cantor v. Detroit Edison Co., 428 U.S. 579, 96
S.Ct. 3110, 49 L.Ed.2d 1141 (1976), also analyzed a "state action"
exemption claim in terms of whether the challenged anticompetitive action
was taken pursuant to state command. Detroit Edison, an electric utility
regulated by Michigan, was charged by an independent seller of light
bulbs with antitrust violations in the operation of a program which
provided light bulbs without extra cost to electricity customers. Detroit
Edison, relying on Parker, defended on the ground that the light-bulb
program was included in its rate filed with and approved by the State
Public Service Commission and that state law required it to follow the
terms of the tariff as long as it was in effect. Cantor rejected the claim,
holding that since no Michigan statutes regulated the light-bulb industry,
and since neither the Michigan Legislature nor the Public Service
Commission had passed upon the desirability of such a light-bulb
program, the Commission's approval of Detroit-Edison's program did not
"implement any statewide policy relating to light bulbs" and that "the
State's policy is neutral on the question whether a utility should, or should
not, have such a program." 428 U.S., at 585, 96 S.Ct., at 3114. THE
CHIEF JUSTICE, while not joining all of the plurality opinion, agreed
with this analysis. Id., at 604-605, 96 S.Ct., at 3123-3124.
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.

41

Petitioners argue that Goldfarb, like Cantor v. Detroit Edison Co., supra,
expresses a limitation upon the circumstances under which private parties
may be immunized from suit under the antitrust laws. They seek to avoid
our holding in Goldfarb by suggesting that the State Bar, although a state
agency by law acting in its official capacity, was somehow not a state
agency because its official actions in issuing ethical opinions, see 421
U.S., at 791 n. 21, 95 S.Ct., at 2015, benefited its member-lawyers by
discouraging price competition. We think it obvious that the fact that the
ancillary effect of the State Bar's policy, or even the conscious desire on its
part, may have been to benefit the lawyers it regulated cannot transmute
the State Bar's official actions into those of a private organization. In
addition to the decision in this case, every other Court of Appeals which
has considered the immunity of state instrumentalities after Goldfarb has
regarded it as having held that anticompetitive actions of a state
instrumentality not compelled by the State acting as sovereign are not
immune from the antitrust laws. City of Fairfax v. Fairfax Hospital Assn.,
562 F.2d 280, 284-285 (CA4 1977); id., at 288 (concurring opinion);
Kurek v. Pleasure Driveway & Park Dist., 557 F.2d 580, 588-591 (CA7
1977), cert. pending, No. 77-440; Duke & Company, Inc. v. Foerster, 521
F.2d, at 1280.
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,
76 S.Ct. 122, 126, 100 L.Ed. 48 (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.

42

Without explication, our Brother STEWART's dissent states that our
"reliance . . . on the basically irrelevant body of law under the Eleventh
Amendment" is unfounded. Ibid. Rather, it is the statement that is
unfounded. For the longstanding principle, of which Congress in 1890 was
well aware, see Lincoln County v. Luning, 133 U.S. 529, 10 S.Ct. 363, 33
L.Ed. 766 (1890), is that political subdivisions are not as such sovereign.
Certainly, nothing in National League of Cities v. Usery, 426 U.S. 833, 96
S.Ct. 2465, 49 L.Ed.2d 245 (1976), even remotely suggested the contrary;
we search in vain for anything in that case that establishes a constructional
principle of presumptive congressional deference in behalf of cities Indeed
our emphasis today in our conclusion, that municipalities are "exempt"
from antitrust enforcement when acting as state agencies implementing
state policy to the same extent as the State itself, makes it difficult to see
how National League of Cities is even tangentially implicated.

43

"While state legislatures exercise extensive power over their constituents
and over the various units of local government, the States universally leave
much policy and decisionmaking to their governmental subdivisions.
Legislators enact many laws but do not attempt to reach those countless
matters of local concern necessarily left wholly or partly to those who
govern at the local level." Avery v. Midland County, 390 U.S. 474, 481, 88
S.Ct. 1114, 1118, 20 L.Ed.2d 45 (1968).
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 di ferent attributes. Cf. Edelman v.
Jordan, 415 U.S. 651, 667 n. 12, 94 S.Ct. 1347, 1357-1358, 39 L.Ed.2d
662 (1974).

44

Indeed, state policy may be contrary to that adopted by a political
subdivision, yet, for a variety of reasons, might not render the local policy
unlawful under state law. For example, a state public utilities commission
might adopt, though we are not aware that the Louisiana PUC has done so,
a policy prohibiting the specific anticompetitive practices in which the
municipality engages, yet be unable to enforce that policy with respect to
municipalities because it lacks jurisdiction over them. (The Louisiana
PUC, in litigation unrelated to this case, has been held to lack jurisdiction
over municipal utility systems whether operating within or without the
municipality. City of Monroe v. Louisiana Public Serv. Comm'n, No.
177,757—Div. "I" (19th Jud. Dist. Ct., Sept. 14, 1976).) If that were the
case, and assuming that there were no other evidence to the contrary, it
would be difficult to say that state policy fosters, much less compels, the
anticompetitive practices.
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."

45

46

47

48

1

We reject petitioners' fallback position that an antitrust claim will not lie
for anticompetitive municipal action which, though not state directed, is
lawful under state law. See Schwegmann Bros. v. Calvert Distillers Corp.,
341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035 (1951); Northern Securities Co.
v. United States, 193 U.S. 197, 344-351, 24 S.Ct. 436, 459-462, 48 L.Ed.
679 (1904); cf. Union Pacific R. Co. v. United States, 313 U.S. 450, 61
S.Ct. 1064, 85 L.Ed. 1453 (1941) (discussed in n. 19, supra ). See also n.
44, supra.
Restating a theme made and rejected before, see Cantor v. Detroit Edison
Co., 428 U.S., at 640, 96 S.Ct., at 3140 (Stewart, J., dissenting), our
Brother STEWART's dissent, post, at 438-440, likens judicial enforcement
of the antitrust laws to a regime of substantive due process used by federal
judges to strike down state and municipal economic regulation thought by
them unfair. That analogy, of course, ignores the congressional judgment
mandating broad scope in enforcement of the antitrust laws and simply
reflects the dissent's view that such enforcement with respect to cities is
unwise.
While the majority and dissent disagreed in Otter Tail over whether the
specific practices of which plaintiffs complained could be regarded as
unlawful anticompetitive restraints in light of the existence of federal
regulation, there was agreement that a lawful monopolist could violate the
antitrust laws. Compare 410 U.S., at 377-382, 93 S.Ct., at 1029-1032 with
id., at 390-391, n. 7, 93 S.Ct., at 1035-1036 (Stewart, J., concurring in part
and dissenting in part).
It may be that certain activities which might appear anticompetitive when
engaged in by private parties, take on a different complexion when
adopted by a local government. See generally Posner, The Proper
Relationship Between State Regulation and the Federal Antitrust Laws, 49
N.Y.U.L.Rev. 693, 705 (1974).
The District Court did not, of course, make a formal finding of fact to this
effect since the counterclaim was disposed of on the basis of pleadings.
Nonetheless, the District Court could reasonably conclude, as a matter of
law, that the Cities are engaging in business activities which have as their
aim the production of revenues in excess of costs. It certainly is the case
that these Cities are attempting to provide a public service, but it is
likewise undeniable that they seek to do so in the most profitable way. The
Cities allege in their complaint, for example, that they have "been
prevented from profitably expanding their businesses." App. 14. While it
is correct that the Cities are ordinarily constrained from applying their net
earnings as a private corporation would, this does not detract from their
competitive posture and resulting incentive to engage in anticompetitive
practices.

2

3

4

Our conceptions of the limits imposed by federalism are bound to evolve,
just as our understanding of Congress' power under the Commerce Clause
has evolved. Consequently, since we find it appropriate to allow the ambit
of the Sherman Act to expand with evolving perceptions of congressional
power under the Commerce Clause, a similar process should occur with
respect to "state action" analysis under Parker. That is, we should not treat
the result in the Parker case as cast in bronze; rather, the scope of the
Sherman Act's power should parallel the developing concepts of American
federalism.
I use the term "proprietary" only to focus attention on the fact that all of
the parties are in a competitive relationship such that each should be
constrained, when necessary, by the federal antitrust laws. It is highly
unlikely that Congress would have meant to impose liability only on some
of these parties, when each possesses the means to thwart federal antitrust
policy.
Mr. Justice STEWART's dissent, post, at 433-434, attempts to blunt this
analysis by noting that the "nongovernmental-governmental" distinction
was criticized in Indian Towing Co. v. United States, 350 U.S. 61, 76 S.Ct.
122, 100 L.Ed. 48 (1955). I suggest no more, however, than what is
obvious from our past cases: Petitioners' business activities are not entitled
to per se exemption from the Sherman Act. This much ought to be quite
clear from United States v. California, 297 U.S. 175, 56 S.Ct. 421, 80
L.Ed. 567 (1936), where the State operated a railroad, albeit without
profit, and as a "public function." I cannot comprehend why the Cities
here should be treated in a different manner. The only authority which Mr.
Justice STEWART cites to the contrary, Lowenstein v. Evans, 69 F. 908
(CC SC 1895), was a case in which a State's complete monopolization of
the liquor industry was challenged as violating the Sherman Act. But in
that circumstance the State clearly directed the creation of a monopoly,
thus bringing the matter within the Parker rationale. Compare Ohio v.
Helvering, 292 U.S. 360, 54 S.Ct. 725, 78 L.Ed. 1307 (1934).

5

6

7

*

Such an ascertainment dovetails precisely with the law of Louisiana. There
it is recognized that the powers of a municipal corporation are both public
and private: As to the former, the city represents the State, discharging
duties incumbent upon the State; as to the latter, it represents pecuniary
and proprietary interests of individuals, and is held to the same
responsibility as a private person. Hall v. City of Shreveport, 157 La. 589,
594, 102 So. 680, 681 (1925). A long line of Louisiana cases dealing
explicitly with the subject of municipally owned electrical utilities holds
that cities are to be governed by the same rules applicable to private
corporations and individuals. See Hicks v. City of Monroe Utilities
Comm'n, 237 La. 848, 112 So.2d 635 (1959); Elias v. Mayor of New
Iberia, 137 La. 691, 69 So. 141 (1915); Hart v. Town of Lake Providence,
5 La.App. 294 (1926); Bannister v. City of Monroe, 4 La.App. 182 (1926).
While I agree with the plurality that a State may cause certain activities to
be exempt from the federal antitrust laws by virtue of an articulated policy
to displace competition with regulation, I would require a strong showing
on the part of the defendant that the State so intended. Thus, I would not
be satisfied, as the plurality and Court of Appeals apparently are, that the
highest policymaking body in the State of Louisiana merely
"contemplated" the activities being undertaken by the cities. See ante, at
415. I would insist, as the Court did in Goldfarb v. Virginia State Bar, 421
U.S. 773, 791, 95 S.Ct. 2004, 2015, 44 L.Ed.2d 572 (1975), that the State
compel the anticompetitive activity. Moreover, I would have the Cities
demonstrate that the exemption was not only part of a regulatory scheme
to supersede competition, but that it was essential to the State's plan.
Consequently, I do not disagree with the terms of the plurality's remand as
such ; I would simply ask for a stronger showing on the part of the Cities. I
join the judgment, however, and the directions of the remand, because
they represent at a minimum what I believe we should demand of
petitioners.
In Cantor this mode of analysis effectively answered Detroit Edison's
claim that it was required by state law to engage in the allegedly
anticompetitive activities. We "infer[red] that the State's policy [was]
neutral on the question whether a utility should, or should not, have such a
program," 428 U.S., at 585, 96 S.Ct., at 3115 (opinion of STEVEN, J.)
(emphasis added), 604-605, 96 S.Ct., at 3125 (opinion of BURGER, C.
J.), and consequently it could not be said that an exemption "was
necessary in order to make the regulatory Act work."
Mr. Justice Blackmun joins all but Part II-B of this opinion.

1

2

As the plurality acknowledges, ante, at 393 n.8, Parker v. Brown did not
create any exemption from the antitrust laws, but simply recognized that it
was the intent of Congress that the Sherman Act should not apply to
governmental action. It is thus hard to understand why the plurality
invokes the doctrine that exemptions from the antitrust laws will not be
lightly implied by subsequent enactment of a regulatory statute. This rule,
which effects the accommodation of two federal statutes and rests on the
principle that implied repeals are not favored, has no relevance to the
Parker doctrine, which is based on an interpretation of the Sherman Act
itself.
See also, e. g., 20 Cong.Rec. 1458 (1889) ("the practice, now becoming
too common, of large corporations, and of single persons, too, of large
wealth, so arranging that they dictate to the people of this country what
they shall pay when they purchase, and what they shall receive when they
sell"); 21 Cong.Rec. 2728 (1890) ("transaction[s] the only purpose of
which is to extort from the community, monopolize, segregate, and apply
to individual use, for the purposes of individual greed, wealth which ought
properly and lawfully and for the public interest to be generally diffused
over the whole community"); id., at 3147 (remarks of Sen. George).
That the Sherman Act was enacted to deal with combinations of
individuals and corporations for private business advanta e has long been
recognized by this Court. Eastern Railroad Presidents Conf. v. Noerr
Motor Freight, Inc., 365 U.S. 127, 135-136, 81 S.Ct. 523, 528-529, 5
L.Ed.2d 464; Apex Hosiery Co. v. Leader, 310 U.S., at 492-493, 60 S.Ct.,
at 992, and n.15; Standard Oil Co. v. United States, 221 U.S. 1, 50, 58, 31
S.Ct. 502, 511, 515, 55 L.Ed. 619.

3
4

See Cantor v. Detroit Edison Co., 428 U.S. 579, 591, and n.24, 96 S.Ct.
3110, 3117, 49 L.Ed.2d 1141.
The Court assumed that California's program would violate the Sherman
Act "if it were organized and made effective solely by virtue of a contract,
combination or conspiracy of private persons individual or corporate," but
noted that the program "was never intended to operate by force of
individual agreement or combination." 317 U.S., at 350, 63 S.Ct., at 313.
The Court found nothing in the Sherman Act or its legislative history to
suggest that "it was intended to restrain state action or official action
directed by a state"; rather, the Act was intended "to suppress
combinations to restrain competition and attempts to monopolize by
individuals and corporations." Id., at 351, 63 S.Ct., at 313. It was "a
prohibition of individual and not state action." Id. at 352, 63 S.Ct. at 314.

5

6

7

See also, e. g., Trenton v. New Jersey, 262 U.S. 182, 185-186, 43 S.Ct.
534, 536, 67 L.Ed. 937; Hunter v. Pittsburgh, 207 U.S. 161, 178, 28 S.Ct.
40, 46, 52 L.Ed. 151; The Mayor v. Ray, 19 Wall. 468, 475, 22 L.Ed. 164;
Bradford v. Shreveport, 305 So.2d 487 (La.).
Cf. Barnes v. District of Columbia, 91 U.S. 540, 544-545, 23 L.Ed. 440;
The Mayor v. Ray, supra, at 475; East Hartford v. Hartford Bridge Co., 10
How. 511, 13 L.Ed. 518. Under Louisiana law the petitioners' powers are
subject to complete legislative control. See Bradford v. Shreveport, supra.
That the particular factual and legal context is all important is shown by
the fact that under other provisions of the Constitution a municipality is
equated with a State. E. g., Waller v. Florida, 397 U.S. 387, 90 S.Ct. 1184,
25 L.Ed.2d 435 (Double Jeopardy Clause); Avery v. Midland County, 390
U.S. 474, 480, 88 S.Ct. 1114, 1118, 20 L.Ed.2d 45 (Fourteenth
Amendment); Trenton v. New Jersey, supra (Impairment of Contract
Clause). See also Doran v. Salem Inn., Inc., 422 U.S. 922, 927 n. 2, 95
S.Ct. 2561, 45 L.Ed.2d 648 (28 U.S.C. § 1254(2).

8

Worcester v. Street R. Co., 196 U.S. 539, 548, 25 S.Ct. 327, 329, 49 L.Ed.
591.

9

See Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct.
745, 95 L.Ed. 1035; Northern Securities Co. v. United States, 193 U.S.
197, 346, 24 S.Ct. 436, 460, 48 L.Ed. 679.

10

11

12

13

However, the District Court's "conclusion," ante, at 418, that the
petitioners' electric utility service was a business activity engaged in for
profit was not supported by any evidence (since the case was decided on a
motion to dismiss) and is indeed challenged here by the petitioners in their
reply brief.
Of course, the fact—heavily relied upon both by the plurality and THE
CHIEF JUSTICE—that the actions of cities may have anticompetitive
effects misses the point. The whole issue before the Court today is
whether conduct that would concededly subject a private individual to
liability because of its anticompetitive nature is proscribed by the antitrust
laws when undertaken by a city.
In various places, the separate opinion of THE CHIEF JUSTICE refers to "
'business activit[ies] . . . in which a profit is realized,' " to "proprietary
enterprises," to activities which have "the inherent capacity for
economically disruptive anticompetitive effects," to those which are not
"integral operation[s] in the area of traditional government functions," and
to those not "the prerogative of the State."
This case, involving a state liquor monopoly, was cited with approval in
Parker v. Brown, 317 U.S., at 352, 63 S.Ct., at 314.

14

15

16

17

See, e. g., Lockport v. Citizens for Community Action, 430 U.S. 259, 269,
97 S.Ct. 1047, 1054, 51 L.Ed.2d 313; Avery v. Midland County, 390 U.S.,
at 481-482, 88 S.Ct., at 1118-1119.
Local self-government is broadest in "home rule" municipalities, which
can be almost entirely free from legislative control in local matters. See
Vanlandingham, Municipal Home Rule in the United States, 10 Wm. &
Mary L.Rev. 269 (1968). Although the petitioners are not home rule cities,
Louisiana's Constitution has a home rule provision, La.Const. of 1974, Art.
6, §§ 5, 6; La.Const. of 1921, Art. XIV, §§ 22, 40(c), as do the
constitutions or statutes of at least 33 other States. Note, Antitrust Law and
Municipal Corporations, 65 Geo.L.J. 1547, 1559 n. 77 (1977).
While THE CHIEF JUSTICE has not joined those portions of the plurality
opinion that discuss what is necessary to show that a challenged activity
was required by the State, he would apparently require a still stronger, and
hence less justifiable, showing of state legislative compulsion. Ante, at
425-426 n.6.
La.Rev.Stat.Ann. § 33:621 (West 1951):
"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).

18

The plurality's suggestion that the Louisiana Legislature has expressed a
state policy that the activities of cities should be subject to the antitrust
laws, ante, at 414-415 n.44, and 416, is both erroneous and irrelevant.
Louisiana Rev.Stat.Ann. § 33:1334(G) (West Supp.1977) applies not to
municipalities but only to utility commissions created jointly by several
cities or counties; there is no comparable statute applicable to the
petitioners. Moreover, the applicability of the federal antitrust laws is a
matter of federal, not state, law; conversely, a State's restrictions on
municipal action are a matter of state, not federal, law. A State can no
more bring a person's conduct within the coverage of federal law when
Congress has not done so than it can exempt a person's conduct from the
operation of federal law if Congress has provided otherwise. Cf.
Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745,
95 L.Ed. 1035.

19

20
21
22

23

24
25

26

The Court imposes yet another unwarranted limitation upon governmental
immunity from the antitrust laws. Apparently, a municipality can claim
immunity only if the state legislature has mandated its action "pursuant to
state policy to displace competition with regulation or monopoly public
service." Ante, at 413 (plurality opinion); see ante, at 425 (opinion of
BURGER, C. J.). Even had the Louisiana State Legislature passed a law
specifically compelling the petitioners to litigate in an effort to prevent
respondent from constructing its nuclear generating facility, compelling
them to insert restrictive covenants in their debentures, and compelling the
tying arrangements complained of, could such a law fairly be described as
"displac[ing] competition with regulation or monopoly public service"?
Would the Court thus deny the cities immunity for their actions even if
they were compelled by the State which controlled them?
See M. Price & H. Bitner, Effective Legal Research 73, 103 (3d ed. 1969).
See n.17, supra.
This problem of statutory interpretation is exacerbated by the fact that
today's decision will have "retroactive" application in two senses. First,
antitrust liability can be premised on actions that have occurred in the past.
Second, many of the statutes governing contemporary and future
municipal activities were enacted years ago. Thus, municipalities will be
faced with the difficult problem of establishing their antitrust immunity
based on statutes that were enacted without any foreknowledge of the
criteria announced by the Court today.
The vagueness of the test proposed in the separate opinion of THE CHIEF
JUSTICE, see supra, at 433-434, will only add to the confusion of a city
trying to protect itself from antitrust liability.
See Whitworth v. Perkins, 559 F.2d 378 (CA5).
By imposing antitrust liability on "proprietary" governmental activities,
the test adopted in the opinion of THE CHIEF JUSTICE would further
deter States from choosing to provide services themselves rather than
regulating others.
See Sailors v. Board of Education, 387 U.S. 105, 87 S.Ct. 1549, 18
L.Ed.2d 650; Williams v. Eggleston, 170 U.S. 304, 310, 18 S.Ct. 617, 619,
42 L.Ed. 1047; see also Baker v. Carr, 369 U.S. 186, 289-290, and n.23,
82 S.Ct. 691, 749-750, 7 L.Ed.2d 663, and cases cited (Frankfurter, J.,
dissenting).
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.

27
28
29

30

31

32

See New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371, 386,
76 L.Ed. 747 (Brandeis, J., dissenting).
Ferguson v. Skrupa, 372 U.S. 726, 83 S.Ct. 1028, 10 L.Ed.2d 93.
U. S. Department of Commerce, Bureau of the Census, 1970 Census of
Population, Number of Inhabitants, United States Summary, Table 31
(1971).
The Court indicates that the remedy of treble damages might not be
"appropriate" in antitrust actions against a municipality. Ante, at 401-402,
and n.22. But the language of § 4 of the Clayton Act, 15 U.S.C. § 15 (1976
ed.), is mandatory on its face: It requires that "[a]ny person who shall be
injured in his business or property by reason of anything forbidden in the
antitrust laws . . . shall recover threefold the damages by him sustained"
(emphasis supplied). Cf., e. g., 35 U.S.C. § 284. And the legislative history
cited by Mr. Justice BLACKMUN, post, at 443 n.2, demonstrates that
Congress has understood the treble-damages provision to be mandatory
and has refused to change it. The Court does not say on what basis a
district court could possibly disregard this clear statutory command. Cf.
Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 88
S.Ct. 1981, 20 L.Ed.2d 982.
Legal fees to defend one current antitrust suit have been esti ated as at least
one-half million dollars a month. N. Y. Times, June 27, 1977, p. 41, col. 6;
id., Sept. 4, 1977, section 3, p. 5, col. 1.
Treble-damages liability can, of course, be ruinous to a private corporation
as well. But a private corporation, organized for the purpose of seeking
private profit, is surely very different from a city providing essential
governmental functions, and shareholders do not stand in the same relation
to their corporation as do residents or taxpayers to the city in which they
live. An investment in a corporation is essentially a business decision; a
shareholder takes the risks of corporate losses in the hope of corporate
profits. A citizen's relationship to his city government is obviously far
different.

1

Respondent seeks treble damages in excess of $540 million in this case. If
divided among Plaquemine and Lafayette residents, that penalty would
exceed $28,000 for each family of four.
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, 370371, 54 S.Ct. 725, 727, 78 L.Ed. 1307, (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, 585586, 64 S.Ct. 352, 356, 88 L.Ed. 322 (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, 61 S.Ct. 1064, 85 L.Ed.
1453 (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.

2

E. g., H. R. 4597, 83d Cong., 1st Sess. (1953); H. R. 6875, 84th Cong., 1st
Sess. (1955); H. R. 978, 85th Cong., 1st Sess. (1957); H. R. 1184, 86th
Cong., 1st Sess. (1959); H. R. 190, 87th Cong., 1st Sess. (1961). See also
Hearings on H. R. 4597 before Subcommittee No. 3 of the House
Committee on the Judiciary, 83d Cong., 1st Sess. (1953); Hearings before
the Antitrust Subcommittee of the House Committee on the Judiciary,
84th Cong., 1st Sess., 189, 509-522, 2246-2249 (1955).

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