California Liquor Dealers v. Midcal Aluminum

In California Liquor Dealers v. Midcal Aluminum (1980) 445 U.S. 97, the Supreme Court noted two standards for antitrust immunity. First, the challenged restraint must be one clearly articulated and affirmatively expressed as state policy; and second, the policy must be actively supervised by the state itself. ( Id., 445 U.S. 97 at p. 105.) The court found California's alcoholic beverage price maintenance laws to be without the state action exception because "The State simply authorizes price-setting and enforces the prices established by private parties. The State neither establishes prices nor reviews the reasonableness of the price schedules; nor does it regulate the terms of fair trade contracts. The State does not monitor market conditions or engage in any 'pointed reexamination' of the program. The national policy in favor of competition cannot be thwarted by casting such a gauzy cloak of state involvement over what is essentially a private price fixing arrangement." (Ibid.) The Supreme Court held ". . . that there is no bright line between federal and state powers over liquor. The Twenty-First Amendment grants the States virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system. Although States retain substantial discretion to establish other liquor regulations, those controls may be subject to the federal commerce power in appropriate situations. The competing state and federal interests can be reconciled only after careful scrutiny of those concerns in a 'concrete case.'" The court considered California's interest in its price maintenance laws and found that "the unsubstantiated state concerns put forward in this case simply are not of the same stature as the goals of the Sherman Act." ( Id., 445 U.S. 97 at p. 114.) The United States Supreme Court noted that the federal interest in enforcing the national policy in favor of competition is both familiar and substantial, citing a prior decision in which it was stated: "'Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms.'" ( California Liquor Dealers v. Midcal Aluminum, supra, 445 U.S. 97 at p. 110)