State Action and the Meaning of Agreement Under the Sherman Act: An Approach to Hybrid Restraints

Abstract

Antitrust observers are familiar with the two-part Midcal test for the immunity of state regulation from federal antitrust laws. the state must clearly articulate its policy to displace competition and must "actively supervise" any private conduct pursuant to the policy. But state action need not meet these requirements if it is "unilateral" and therefore does not conflict with Section 1. Only if a state-authorized restraint is "hybrid, " combining state and private action in a way that resembles a prohibited agreement, need the restraint satisfy Midcal. In this article, John Lopatka and Bill Page examine the history and current importance of the distinction between unilateral and hybrid restraints.