FTC v. Phoebe Putney Health System, Inc. (11-1160)

argument 11-1160

FTC v. Phoebe Putney Health System, Inc.

Supreme Court of the United States 1h 0m 5 speakers 8 chapters transcribed 6 days ago official recording ↗

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What is the State Action Doctrine and how does it apply to antitrust cases?

John G. Roberts 0:02

We'll hear argument first this morning in case eleven eleven sixty, the Federal Trade Commission versus Phoebe Putney Health System. Mr Horwich?

Unknown 0:10

Thank you, Mr. Chief Justice, and may it please the court. The state action doctrine provides defence to a federal antitrust suit when a state has clearly articulated and affirmatively expressed An intent to displace competition with respect to the particular activity at issue in the suit. Now, on practical terms, what that comes down to is whether application of federal competition law would somehow subvert a sovereign state policy choice that's clearly evident in state law. Now uh that policy might be expressed in mandatory or compulsory terms, but if uh short of that it would also be enough uh if the the the state had uh specifically permitted conduct that is inherently anti competitive. But a grant of general power to act

Elena Kagan 0:56

You don't think that the grant of powers in this case would permit the hospital authorities, the corporation to set prices for their services that are below the competitive prices in order to serve the needy. Well uh Isn't that inherent in the regulations?

Unknown 1:17

I I think it is, although for reasons that uh don't affect the analysis of the question about uh uh an anti-competitive acquisition, and let me explain why the analysis might be different with respect to prices. There is uh specific authorization in the statute uh for the uh hospital authorities in conjunction with the counties to uh partly fund, or I guess entirely, in principle, fund their services through tax revenues. So they have Have another source of funding that would allow them to price in ways that a competitive actor uh would not necessarily price its services. So if we're talking about uh particular pricing decisions, uh say, I guess it would be below cost pricing that is alleged to somehow be anti-competitive, uh, then there might very well be a state action defense to that because it it because the state's uh power to price services.

Unknown 2:07

Services subsidized in a way that an ordinary actor wouldn't be able to do, you might very well displace competition in that response. Do you have any cases in which we uh We slice it that fine. Well I do think that that you're you're a state actor for some anti competitive purposes and not for others? Absolutely, Justice Scalia. I think I think the best uh the best example uh comes from Goldfarb versus Virginia State Bar. So in that case, um the uh the the issue was uh a challenge to a practice of minimum fee schedules that were set um by uh not by the state but but agreed upon by a a bar organization. Now the state in that case, of course, regulated the practice of law. It regulated Admission into the practice of law.

Unknown 2:52

It regulated uh certain aspects of the conduct of the practice of law. Uh and this court uh held in Bates versus Arizona State Bar that those sort of regulations do constitute state action. But the court did not accept uh the submission that the State Action Defense uh covered the setting of uh minimum prices uh that was at issue in that case, because that was not something that there was state action over. And as a and taking a step back, uh the justification. for the State Action Doctrine is that the state is trying to pursue some policy uh that uh is part of its traditional sovereign prerogatives to uh uh uh regulate its own economy, and that federal law was not understood to intrude upon that.

Unknown 3:37

But if the State is not actually trying to uh advance some other policy uh uh uh with respect to the particular conduct at issue, then it can't be said that the State has done something the Federal law should stand aside for. The the execution In your reply brief. that if the hospital authorities law specifically authorized local hospital authorities to acquire any and all hospitals within their geographic area. then the clear articulation requirement would be satisfied. But the authorities law Does authorise the acquisition Um other hospitals. And it doesn't say One or two, it says other. other facilities.