Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI seeks to preserve reasonable limits on state action immunity, (Dec 17, 2014)

By Greg Hammond, J.D.

The American Antitrust Institute (AAI) has filed an amicus brief requesting that the U.S. Supreme Court grant certiorari on the clear-articulation question posed in United National Maintenance, Inc. v. San Diego Convention Center (Dkt. No. 14-543). The AAI hopes the Court will reverse the San Francisco U.S. Court of Appeals’ earlier decision, which allegedly failed to follow the Court’s recent precedent in FTC v. Phoebe Putney Health System, Inc. (133 S.Ct. 1003, 2013-1 Trade Cases ¶78,269).

Last year, in Phoebe, the Supreme Court reversed an Eleventh Circuit decision (663 F.3d 1369, 2011-2 Trade Cases ¶77,722), which held that the effective merger of the only two competing hospitals in the Albany area was immune under the state action doctrine from the FTC’s suit. The Court found that the appellate court applied the concept of “foreseeability” from its clear-articulation test too loosely.

However, in United National, the U.S. Court of Appeals in San Francisco found that the San Diego Convention Center acted pursuant to a clearly articulated state policy in instituting a policy that it would be the exclusive provider of cleaning services staffing and that the active supervision requirement did not apply to its actions. The petitioner asks whether: (1) the clear articulation test is satisfied where the California legislature authorized San Diego to create a commission that would manage the use of the convention center; and (2) whether the convention center commission was a private actor that would satisfy the active supervision test because its board of directors included business leaders and because it competed in the San Diego market for trade show cleaning services.

In its amicus brief, AAI argues that—similar to Phoebe—it was foreseeable that the San Diego Convention Center “could have exercised its authority anticompetitively.” Further, “even if, arguendo, it were foreseeable that the convention center would provide cleaning services exclusively, the court of appeals still had no basis to infer that an unlawful exclusive arrangement is the ‘ordinary’ result of a grant of authority to manage the use of the convention center and to generate profits for the municipality.” Rather, the merits are separate and distinct from the immunity analysis, AAI asserts.

Companies: American Antitrust Institute; United National Maintenance, Inc.; San Diego Convention Center, Inc.

News: Antitrust