Avoiding Impotence: Rethinking the Standards for Applying State Antitrust Laws to Interstate Commerce

Ratio est legis anima. ("The reason for the law is its soul.")1 I. INTRODUCTION State antitrust laws are broadly constructed.2 With sweeping, general terms, often mirroring the language of the federal antitrust laws,3 most state antitrust statutes manifest a legislative design to prevent-and to punish-a variety of commercial activities that are anticompetitive in purpose or effect.4 These statutes, in conjunction with consumer protection statutes, constitute the primary vehicles through which state authorities protect consumers from harmful, anticompetitive behavior.5 Of course, despite the importance of state antitrust laws in preserving a competitive marketplace, the Constitution confines their reach.6 Through the Commerce Clause, the Constitution vests in Congress the exclusive IMAGE FORMULA6power to regulate interstate commerce. Accordingly, since passage of the Sherman Act in 1890,8 Congress has promulgated an extensive body of antitrust legislation regulating interstate commercial conduct.9 Another federal constraint on state antitrust laws arises through the Supremacy Clause.10 To the extent that state antitrust laws conflict with federal legislation in the same field, courts will find them constitutionally invalid.11 State antitrust statutes, however, are not completely preempted by federal antitrust laws.12 Instead, the legislative history accompanying most state and federal antitrust statutes indicates that the two sets of statutes were designed to function as equally potent ingredients in a comprehensive protective scheme.13 In fact, early federal antitrust legislation directly reflected the policies behind the state antitrust laws of the late nineteenth century; they also reflected contemporary principles of common law.14 As coexisting and complementary instruments, state and federal antitrust statutes form an excellent example of the potential for effective multi-layered legislation. In one court's analysis, the relationship between the federal and state antitrust laws is a quintessential example of "cooperative federalism."15 Problems arise, however, when attempting to determine exactly how far the reach of state antitrust legislation actually extends within the federal scheme. Arguably, given the limitations IMAGE FORMULA8 imposed by the Commerce Clause, state antitrust laws should cover only conduct that is "predominantly intrastate in nature."16 Application of this standard, however, is increasingly problematic in a modern context. Federal regulatory authority under the Commerce Clause has expanded significantly throughout the twentieth century;17 thus it may be appropriate to reevaluate the validity of maintaining a strict interstate/intrastate dichotomy in the application of antitrust laws. For example, if even discrete, local transactions, through their tangential effect on interstate commerce, are subject to Congressional regulation,18 little, if any, commercial behavior remains that can fairly be labeled "intrastate commerce." Defining interstate commerce too broadly will thus leave no transactions in the intrastate category, and state antitrust laws confined to in-state conduct will become, in effect, dead letters.19 Such an outcome comports neither with the intent of the antitrust laws' drafters nor with the idea of coexisting state and federal legislative schemes. Indeed, even the Supreme Court has recognized that state laws may constitutionally reach transactions that are on some level "interstate" in nature.20 The extent of this reach is the primary focus of this Note. Accordingly, this Note explores how the courts should characterize "intrastate commerce" in order to preserve the continued viability of state antitrust laws. It also addresses the extent to which the federal and state antitrust laws overlap or, in contrast, the extent to which they fatally conflict. …