Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AIA praises rationale used in Supreme Court natural gas price-fixing decision, (Apr 22, 2015)

By Edward L. Puzzo, J.D.

The American Antitrust Institute (AAI) praised yesterday’s U.S. Supreme Court ruling in Oneok, Inc. v. Learjet, Inc., which upheld the application of state antitrust laws to alleged market manipulation by natural gas companies. The AAI noted that the rationale used by the Court was first raised by the AAI in its 2011 amicus brief, which argued that the state antitrust claims should not be barred because they did not conflict with Federal Energy Regulatory Commission (FERC) regulations.

Oneok, Inc. v. Learjet, Inc. involved allegations by large retail buyers of natural gas that pipeline companies had violated state antitrust laws by engaging in practices—such as wash sales and false price information—that inflated natural gas indices in order to increase retail prices for natural gas. The matter reached the Supreme Court after the federal district court ruled in favor of the pipelines on the grounds that the claims were entirely preempted by the federal National Gas Act (NGA), and after the Ninth Circuit Court of Appeals reversed.

The Supreme Court rejected the pipelines’ “field preemption” argument: that the claims fell entirely within the field preempted by the NGA, namely “the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce.” The Supreme Court found that, while Section 5(a) of the NGA did give rate-setting authority to the FERC, that jurisdiction was limited. Its regulation did not foreclose every other form of state regulation that affected those rates. Because state antitrust laws were not directed at natural gas companies in particular, but governed background marketplace conditions generally, such laws were not preempted merely because they affected conduct or rates subject to FERC regulation, the court ruled.

“This is a tremendous victory for state antitrust law and a sensible accommodation between regulation and antitrust,” said AAI Vice President and General Counsel Richard Brunell. In the 7-2 decision, written by Justice Breyer, the Court recognized that “States have a long history of providing common-law and statutory remedies against monopolies and unfair business practices,” and that such remedies could co-exist with FERC prohibition “of the very kind of anticompetitive conduct that the state actions attack.”

Companies: Learjet, Inc.; Oneok, Inc.

News: Antitrust