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Local Government Antitrust Immunity

In January 1982, the United States Supreme Court held in Community Communications Company v. City of Boulder, Colorado (the Boulder decision) that sub-state governmental entities (cities, towns, counties, state chartered agencies and other local governments) are subject to review under the federal antitrust laws first passed by the U.S. Congress in 1890 (the Sherman Act). This ruling constituted a complete reversal of the then general assumption that local governments, like state governments, were exempt from the application of antitrust laws. The Boulder decision subjects all sub-state governments to antitrust review regardless of their charter, home rule or general law status.

The Government Finance Officers Association takes note that from 1890 to 1982, a period of 92 years during which sub-state governments were presumed to be exempt from the application of antitrust laws, no pattern of abuse developed. In the handful of cases in which a governmental entity exceeded its authority in a manner to which antitrust prosecution would be applicable, existing laws (other than antitrust statutes) proved adequate for the redress of grievances.

The only existing exemption from antitrust scrutiny -- the requirement that the entity be operating under state authorizing legislation which sets forth the state's policy to displace competition in language that is "clearly articulated and affirmatively expressed," and which provides for "active supervision" by the state -- is completely inadequate to the needs of sub-state governments and runs counter to a century-long trend in state and local government relations toward greater local autonomy.

The Government Finance Officers Association calls upon Congress to adopt legislation to clarify the applicability of the federal antitrust laws to sub-state government entities with the same status as that enjoyed the states so long as the city, county of other governmental entity is operating within or pursuant to its general enabling legislation or authority. Antitrust litigation is enormously expensive and time consuming and can result in significant delays in the implementation of public policy.

In addition, the Association recognizes that very significant protections already exist for all parties doing business with or otherwise dealing with governments in the form of due process, equal protection, and civil rights reviews, and with state open meetings, administrative procedure, and procurement requirements. In addition, whenever a sub-state entity acts beyond its authority, it is subject to challenge under existing state law and, in more extreme cases, a sub-state entity and its officials are subject to criminal prosecution under state and federal laws other than antitrust statutes.

Further, in order to return to the situation that was presumed to exist before the Boulder decision, the Government Finance Officers Association feels that such clarifying legislation should provide local governments and local government officials with the same immunity from injunctions, criminal prosecution, money damages, Federal Trade Commission (FTC) actions and suits against local government officials, as that possessed by state governments and state officials.

Adopted: April 17, 1984