The US Supreme Court has decided to hear a case that involves a potential refinement of the so-called State Action Doctrine (or Parker v. Brown antitrust immunity), where it will analyse whether the exercise of “general corporate powers” by a subdivision of a local authority amounts to a “clearly articulated and affirmatively expressed State policy to displace competition in the market” (the FTC petition for certiorari is definitely worth reading, as it provides an excellent summary of the State Action Doctrine in the US: http://tinyurl.com/clo3px9).
The case will have very relevant implications for the analysis of State intervention in the economy through ‘private law’ entities and instruments, and may contribute to restrict the scope of the State Action Doctrine to preserve its core elements: democratic decision-making based on an overriding public interests, clear articulation, and effective enforcement. Needless to say, the US S. Ct. decision in Federal Trade Commission, Petitioner v. Phoebe Putney Health System, Inc., et al. is much awaited.
This case should bring echoes to the EU position in this field, were the equivalent of the State Action Doctrine has, at best, been dormant for too long. According to the settled case law of the EU judicature, where a Member State’s legislation or regulation i) requires undertakings to conduct anti-competitive behaviour, ii) reinforces the effects of previous anti-competitive behaviour adopted by the undertakings, or iii) delegates responsibility for decisions affecting the economic activity to undertakings, the ECJ will analyse whether it frustrates the effet utile of the EU competition rules (Case 267/86 Van Eycke  ECR 4769 16, which remains substantially unaltered; see Case C-446/05 Doulamis  ECR I-01377). Therefore, the Van Eycke test is much broader and lenient that the equivalent US State Action Doctrine (and light years away from its sophisticated foreseeable development) and in my opinion gives excessive room to anticompetitive public market intervention in the EU, particularly through the use of market instruments or ‘private law’ tools.
In this regard, my proposal for a revitalisation of the State Action Doctrine in the EU (made in relation with public procurement delegated legislation, administrative guidelines and practice, but extendable to other low-level public market interventions) would run along the following broad lines:
it is hard to envisage a good reason to exempt the conduct of the public sector from competition scrutiny in those cases i) where the protection derived from the legitimacy of the public competition-distorting action is feeble because the adoption of anti-competitive rules and legislation does not respond to a real political option and is not the result of a proportional trade-off between different, competing policies, or ii) where competition-distorting practices and policies are adopted as a result of ‘mere’ administrative discretion.
Therefore, these activities should not be covered by the State Action antitrust exemption—as they do not seem to comply with the sovereignty and legitimacy criteria that justify the existence of the State Action Doctrine of competition law immunity. Moreover, while being imbued with a lower legitimacy level, low-level administrative practices and decisions—as opposed to legislation and regulation stricto sensu, seem to present a higher risk of generating anti-competitive effects (as they are more specific and usually complement the general criteria contained in the laws and regulations which, precisely because of that generality, will tend to be less restrictive). Consistently, they should be subjected to more intense competition scrutiny.
Whereas the first part of the development of the current State Action Doctrine in relation to the adoption of anti-competitive legislation and regulations merits further analysis, developing a ‘market participant exception’ would suffice to effectively subject public administrative practices to competition law scrutiny. That is, ‘piercing the sovereign veil’ to subject to competition scrutiny all instances of market intervention related to non-regulatory activities could contribute to fostering competition. The implementation would be rather simple (in formal terms), since it would exclusively require disregarding the fact that a public authority or other entity is conducting a given market activity (ie, excluding it from the shield of the State Action Doctrine), and indirectly analysing it under the general prohibitions of ‘core’ competition rules (ie, arts 101 and 102 TFEU) by means of arts 3(3) TEU, 4(3) TEU, 3(1)(b) TFEU, 119 TFEU and Protocol (No 27) TFEU—that is, overstepping the formal Van Eycke test and extending the corresponding substantive analysis of the unilateral behaviour of public bodies and their subdivisions and controlled corporate entities [for further elaboration, see my Public Procurement and the EU Competition Rules (Oxford, Hart, 2011, pp. 166-186) and Distortions of Competition Generated by the Public (Power) Buyer: A Perceived Gap in EC Competition Law and Proposals to Bridge It, University of Oxford CCLP (L). 23, available at http://ssrn.com/abstract=1458949].
At this stage, I think it would be a good time for the European Commission to look for an appropriate case and push for a revitalisation of the State Action Doctrine in Europe. In my view, the public procurement field would be an extremely fruitful living lab for these purposes.