Supreme Court Limits State Action Immunity

The state action doctrine immunizes from antitrust scrutiny anticompetitive conduct that constitutes the action of a state itself. However, courts have not always been consistent in applying the state action doctrine to the conduct of local governments (or private parties) who act in accordance with state policy. The Supreme Court granted certiorari this term in FTC v. Phoebe Putney Health System – the Court’s first major state action doctrine case in decades – to address whether state action immunity bars a Clayton Act merger challenge to a public hospital authority’s acquisition of a private hospital, which was the largest competitor of a hospital operated by the authority. On February 19, 2013, the Supreme Court unanimously held that state action immunity was unavailable because the Georgia state legislature had not “clearly articulated and affirmatively expressed a policy allowing hospital authorities to make acquisitions that substantially lessen competition.”