Administrative Monopoly: The State Action Doctrine under U.S. Antitrust Law
Yee Wah Chin
Ingram Yuzek Gainen Carroll & Bertolotti, LLP
May 29, 2007
HOT SPOTS OF CHINESE ANTIMONOPOLY LEGISLATION, pp. 127-140, Wang, Xiaoye, ed., Social Sciences Academic Press, 2007
The State Action Doctrine exempts anti-competitive conduct from the United States antitrust laws, under certain conditions. This paper discusses the exemption, particularly its limits, from the perspective of its historical and Constitutional background. It demonstrates that this doctrine does not support any exclusion of administrative monopolies from the prohibitions of China’s Anti-Monopoly Law. The incorporation in the AML of prohibitions against administrative monopoly may in fact achieve in China an analog to the Dormant Commerce Clause prohibition in the U.S. against local protectionism, and may in fact be more important than all the other prohibitions in the AML.
The State Action Doctrine may be distinctive to the U.S., because it is based on the U.S. federal system and the residual sovereignty of the 50 states. Moreover, it is counterbalanced by other principles in the U.S. Constitution, so that state action is not permitted to enable what in China would be administrative monopolies or anti-competitive abuse of administrative power. In the U.S., prohibitions against local protectionism alone was sufficient for over 100 years, before the Sherman Act was enacted in 1890 to prohibit private monopolies. The lesson in the U.S. is that it is more fundamental to prohibit public restraints against competition than to prohibit private restraints to competition. This is true even though government in the U.S. historically had a relatively low level of involvement in the economy.
There is no comparable basis for a state action exemption in the AML. In any event, it would not make sense to adopt the principle of the State Action Doctrine without also adopting the limiting principles. An AML without a prohibition against administrative monopolies will be a competition law that will not lead to a fully competitive national economy for China.
Number of Pages in PDF File: 27
Keywords: China, Anti-Monopoly Law, state action doctrine, Dormant Commerce Clause, administrative monopoly, abuse of administrative power, local protectionism, Commerce Clause, state action exemption, state action, public restraints against competition
JEL Classification: K21, K33, L30, L32, L33, L39, L40, L43, L44, L49, L50, L52, L59
Date posted: June 5, 2010 ; Last revised: June 7, 2010