ELR Citation: ELR 20373
No(s). 82-1832 (U.S. Mar 27, 1985)

The Court holds that anticompetitive sewage treatment activities of a municipality, undertaken pursuant to a clearly articulated state policy of replacing competition with regulation, are protected by the state action exemption from the antitrust laws. States are exempt from the antitrust laws due to principles of federalism that sovereignty, but muncipalities are not, unless acting with clear state authorization. The Court first rules that respondent's refusal to extend sewer service residents of neighboring small towns unless those served agreed to annexation into the city if authorized by a clearly articulated state policy. Wisconsin's statutory grant of authority to municipalities to define the areas to be served by their sewage treatment systems clearly authorizes the city's anticompetitive actions. The state policy need not expressly mention competition. The Court rejects petitioners' arguments that the statute is neutral on this issue and that the state policy must compel municipalities' anticompetitive actions to pass the state action exemption test.

The Court also rules that municipalities may qualify for the exemption regardless of whether the state actively supervises the activity. The rationale of the Court's earlier decision that supervision is necessary if a private party is to qualify for the state action exemption does not apply to municipalities. Private parties authorized to suppress competition by a state policy are likely to use the power for private gain absent supervision. Public entities like cities do not present the same risk.

Counsel for Petitioners
Claude J. Covelli, Michael P. May
Boardman, Suhr, Curry & Field
Suite 410, One South Pinckney St., P.O. Box 927, Madison WI 53703
(608) 257-9521

Counsel for Respondent
Frederick W. Fischer
City Attorney
203 S. Farwell, P.O. Box 5148, Eau Claire WI 54702
(715) 839-4907