Southern Motor Carriers Rate Conference, Inc v. United States

• Decision Date: 27 March 1985
• Docket Number: No. 82-1922,82-1922
• Citation: 85 L.Ed.2d 36,105 S.Ct. 1721,471 U.S. 48
• Parties: SOUTHERN MOTOR CARRIERS RATE CONFERENCE, INC., et al. v. UNITED STATES
• Court: U.S. Supreme Court

471 U.S. 48

105 S.Ct. 1721

85 L.Ed.2d 36

SOUTHERN MOTOR CARRIERS RATE CONFERENCE, INC., et al.

v UNITED STATES.

No. 82-1922.

Argued Nov. 26, 1984.

Decided March 27, 1985.

Syllabus

Petitioner Southern Motor Carriers Rate Conference and petitioner North Carolina Motor Carriers Association (petitioners), "rate bureaus" composed of motor common carriers operating in North Carolina, Georgia, Tennessee, and Mississippi, submit, on behalf of their members, joint rate proposals to the Public Service Commission in each State. This collective ratemaking is authorized, but not compelled, by the respective States. The United States, contending that petitioners' collective ratemaking violates the federal antitrust laws, filed an action in Federal District Court to enjoin it. Petitioners responded that their conduct was immune from the federal antitrust laws by virtue of the "state action" doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The District Court entered a summary judgment in the Government's favor. The Court of Appeals affirmed, holding that compulsion is a threshold requirement to a finding of Parker immunity. The court reasoned that the two-pronged test of California Retail Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), for determining whether state regulation of private parties is shielded from the federal antitrust laws—the challenged restraint must be one clearly articulated and affirmatively expressed as a state policy and the State must supervise actively any private anticompetitive conduct—is inapplicable to suits against private parties; that even if Midcal is applicable, private conduct that is not compelled cannot be taken pursuant to a "clearly articulated state policy" within the meaning of Midcal § first prong; and that because Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975)—which held that a State Bar, acting alone, could not immunize from the federal antitrust laws its anticompetitive conduct in fixing minimum fees for lawyers—was cited with approval in Midcal, the Midcal Court endorsed the continued validity of a "compulsion requirement."

Held: Petitioners' collective ratemaking activities, although not compelled by the respective States, are immune from federal antitrust liability under the state action doctrine. The Midcal test should be used to determine whether the private rate bureaus' collective ratemaking activities are protected under the federal antitrust laws. Moreover, the actions of a private party can be attributed to a "clearly articulated state policy," within the meaning of the Midcal test's first prong, even in the absence of compulsion. The anticompetitive conduct is taken pursuant to a "clearly articulated state policy" under the first prong of the Midcal test. Here North Carolina, Georgia, and Tennessee statutes expressly permit collective ratemaking. Mississippi, while not expressly approving of collective ratemaking, has clearly articulated its intent to displace price competition among common carriers with a regulatory structure. Because the Government conceded that there was adequate state supervision, both prongs of the Midcal test are satisfied. Pp. 55-66.

702 F.2d 532 (CA5 1983), reversed.

Allen I. Hirsch, Atlanta, Ga., for petitioners.

Lawrence G. Wallace, Washington, D.C., for respondent.

Justice POWELL delivered the opinion of the Court.

Southern Motor Carriers Rate Conference, Inc. (SMCRC), and North Carolina Motor Carriers Association, Inc. (NCMCA), petitioners, are "rate bureaus" composed of motor common carriers operating in four Southeastern States. The rate bureaus, on behalf of their members, submit joint rate proposals to the Public Service Commission in each State for approval or rejection. This collective ratemaking is authorized, but not compelled, by the States in which the rate bureaus operate. The United States, contending that collective ratemaking violates the federal antitrust laws, filed this action to enjoin the rate bureaus' alleged anticompetitive practices. We here consider whether the petitioners' collective ratemaking activities, though not compelled by the States, are entitled to Sherman Act immunity under the "state action" doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943).

I

A.

In North Carolina, Georgia, Mississippi, and Tennessee, Public Service Commissions set motor common carriers' rates for the intrastate transportation of general commodities.¹ Common carriers are required to submit proposed rates to the relevant Commission for approval.² A proposed rate becomes effective if the state agency takes no action within a specified period of time. If a hearing is scheduled, however, a rate will become effective only after affirmative agency approval.³ The State Public Service Commissions thus have and exercise ultimate authority and control over all intrastate rates.

In all four States, common carriers are allowed to agree on rate proposals prior to their joint submission to the regulatory agency.⁴ By reducing the number of proposals, collective ratemaking permits the agency to consider more carefully each submission. In fact, some Public Service Commissions have stated that without collective ratemaking they would be unable to function effectively as rate-setting bodies.⁵ Nevertheless, collective ratemaking is not compelled by any of the States; every common carrier remains free to submit individual rate proposals to the Public Service Commissions.⁶ As indicated above, SMCRC and NCMCA are private associations composed of motor common carriers operating in North Carolina, Georgia, Mississippi, and Tennessee.⁷ Both organizations have committees that consider possible rate changes.⁸ If a rate committee concludes that an intrastate rate should be changed, a collective proposal for the changed rate is submitted to the State Public Service Commission. Members of the bureau, however, are not bound by the joint proposal. Any disapproving member may submit an independent rate proposal to the state regulatory Commission.⁹

B

On November 17, 1976, the United States instituted this action against SMCRC and NCMCA in the United States District Court for the Northern District of Georgia.¹⁰ The United States charged that the two rate bureaus had violated § 1 of the Sherman Act by conspiring with their members to fix rates for the intrastate transportation of general commodities. The rate bureaus responded that their conduct was exempt from the federal antitrust laws by virtue of the state action doctrine. See Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943).¹¹ They further asserted that their collective ratemaking activities did not violate the Sherman Act because the rates ultimately were determined by the appropriate state agencies. The District Court found the rate bureaus' arguments meritless, and entered a summary judgment in favor of the Government. 467 F.Supp. 471 (1979). The defendants were enjoined from engaging in collective ratemaking activities with their members.

The Court of Appeals for the Fifth Circuit (Unit B, now the Eleventh Circuit), sitting en banc, affirmed the judgment of the District Court. 702 F.2d 532 (1983).¹² Relying primarily on Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the court held that the rate bureaus' challenged conduct, because it was not compelled by the State, was not entitled to Parker immunity. The two-pronged test set forth in California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), was irrelevant, the court reasoned, for in that case a public official was the named defendant.¹³ 702 F.2d, at 539. The Court of Appeals further held that even if Midcal were applicable to a private party's claim of state action immunity, the rate bureaus were not shielded from liability under the Sherman Act. The court concluded that only if the anticompetitive acts of a private party are compelled can a State's policy be held "clearly articulated and affirmatively expressed" within the meaning of Midcal. 702 F.2d, at 539.

After finding the rate bureaus not entitled to Parker immunity, the Court of Appeals held that their collective ratemaking activities violated the Sherman Act. 672 F.2d 469, 481 (CA5 1982).¹⁴ It rejected the rate bureaus' contention that because the regulatory agencies had ultimate authority and control over the rates charged, the federal antitrust laws were not violated. The Court of Appeals found that "joint ratesetting . . . reduce[d] the amount of independent rate filing that otherwise would characterize the market process," and thus raised the prices charged for intrastate transportation of general commodities. Id., at 478. This "naked price restraint," the court reasoned, is per se illegal. Ibid.

Four judges strongly dissented. They argued that Midcal was applicable to a private party's claim of state action immunity. The success of an antitrust action should depend upon the activity challenged rather than the identity of the defendant. 702 F.2d, at 543-544. After asserting that Midcal provided the relevant test, the dissenters concluded that the lack of compulsion was not dispositive. Even in the absence of compulsion, a "state can articulate a clear and express policy." Id., at 546. The dissent further concluded that a per se compulsion requirement denies States needed flexibility in the formation of regulatory programs, and thus is inconsistent with the principles of federalism that Congress intended to embody in the Sherman Act.¹⁵

We granted certiorari ¹⁶ 467 U.S. 1240, 104 S.Ct. 3508, 82 L.Ed.2d 818 (1984), to decide whether petitioners' collective ratemaking activities, though not compelled by the States in which they operate, are entitled to Parker immunity.¹⁷

II

In Parker v. Brown, 317 U.S., at 341, 63 S.Ct., at 307, this Court held...