Can Government Engage in Anticompetitive Conduct?

If you run a business renting bikes, it is definitely going to be a problem if your municipality should start a program renting out bikes at below market rates to tourists. Of course, these issues come up from time to time. Unfortunately, there is not usually much that can be done when government is simply subsidizing services. One might argue that this is not the proper role of government, but that’s a philosophical objection—not a legal argument.

However, if government actors are affirmatively competing with your business, shouldn’t they be held to the same rules and standards as you are? In all fairness, the answer should be yes. I lay out the case for why in this post.

As explained more thoroughly in a recent law review article with Jarod Bona, federal antitrust law should apply just the same to state and local actors as it applies to private businesses. Bona explains the inherent unfairness of allowing government to engage in anticompetitive conduct in this article, putting the issue in baseball terms: What do you do when the umpire is playing against you?

We argue that, at least in some cases, government should be held liable for anticompetitive conduct—even regulatory conduct when it seeks to displace private competition in the market. For example, a City might be held liable in antitrust if it should use the power of eminent domain to eliminate competition for a public parking garage, or if it should use its power to enact zoning laws to prevent businesses from competing with another public enterprise. This is a controversial issue to some extent, and one that the Courts are divided on. But, we think in all fairness to small business—its time the courts begin applying antitrust laws to public actors when they are actively competing with private business. Fair is fair.

If you are facing an issue of this nature, please feel free to contact the NFIB Small Business Legal Center.

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About Luke Wake

Luke A. Wake is a senior staff attorney at the NFIB Small Business Legal Center. Wake has particular expertise on environmental and land use issues, and has worked on numerous other constitutional issues and matters of importance to small business owners. He is an ardent defender of private property rights, which he believes are essential to the free enterprise system and the foundation of American liberty. As a strong advocate of individual rights and economic liberties, he has built his career defending small business interests. Since joining the NFIB Legal Center, Wake has focused on a whole host of issues, from employment law matters to regulatory compliance. In addition to serving as a resource for small business owners, Wake remains committed to the Legal Center’s pledge to ensure that the voice of small business is heard in the nation’s courts. He is also working to advance small business interests in law review articles, including publications in the Berkeley Journal of Law & Ecology, the Texas Journal of Law and Politics, and Competition Magazine. See R.S. Radford & Luke A. Wake, Deciphering and Extrapolating: Searching for Sense in Penn Central, 38 Ecology L.Q. 731, 746-747 (2011); Damien M. Schiff, Luke A. Wake, Leveling the Playing Field in David v. Goliath: Remedies to Agency Overreach, 17 Tex. L. Rev. & Pol. 97 (2012); Jarod M. Bona and Luke A. Wake, The Market-Participant Exception to State-Action Immunity From Antitrust Liability, J. of Antitrust and Unfair Competition of the State Bar of Ca., Vol. 23, No. 1, 156 (Spring 2014); James S. Burling and Luke A. Wake, Takings and Torts: The Role of Intention and Foreseeability in Assessing Takings Damages, in Condemnation 101: Making the Complex Simple in Eminent Domain 449-51 (ALI-ABA Committee on Continuing Professional Education eds. 2011). Before joining the Legal Center’s team, Wake completed a prestigious two-year fellowship as an attorney in the Pacific Legal Foundation’s (PLF) College of Public Interest Law. Wake is a graduate of Case Western Reserve University School of Law in Cleveland Ohio. He is a member of the California Bar, the District of Columbia Bar, and the U.S. Supreme Court Bar. He completed his undergraduate studies at Elon University in North Carolina in 2006 where he focused on political theory and corporate communications.
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