AAI Praises Ninth Circuit Reversal on State Action Defense

Nov 24 2010

The American Antitrust Institute (AAI) praised the decision issued by the Ninth Circuit Court Appeals today reversing a lower court ruling (and its own prior decision) dismissing a price-fixing complaint on state-action immunity grounds.  The AAI had filed an amicus brief urging the court to reconsider its decision.  The court’s decision and the AAI’s amicus brief are available here.
 
The complaint involved claims that the major car rental companies in California had colluded, with the help of the California Travel and Tourism Commission, to pass on tourism assessment fees and airport concession fees to car rental customers.  The district court had dismissed the complaint, and the appeals panel originally affirmed, on the ground that the California legislature had authorized the companies to pass on the fee, and it was reasonably foreseeable that they would do so.
 
The AAI’s amicus brief argued that the legislature never intended to permit the car rental companies to conspire to uniformly pass on the fees, and the Ninth Circuit agreed on rehearing.    The court clarified that “an unintended consequence–even if foreseeable–does not satisfy the ‘clear articulation’ prong of Midcal.“
 
AAI Director of Legal Advocacy Richard Brunell said that the court’s reconsidered decision was exactly right and confirms that the state-action defense must be read narrowly to immunize anticompetitive conduct from the antitrust laws only when the state legislature clearly intends to displace normal market forces with regulation, and actively supervises such conduct.

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