Antitrust Comes to the Cities - Analysis of City of Lafayette v. Louisiana Power & (and) Light Co. and Its Effect on Municipal Antitrust Liability

On March 29, 1978, the United States Supreme Court ruled, in City of Lafayette v. Louisiana Power & Light Co., that cities could not claim a state action exemption from the federal antitrust laws, absent evidence that the state authorized or directed a given municipality to act as it did. The Court rejected the argument of the cities of Lafayette and Plaquemine, Louisiana, that the 1943 Supreme Court decision of Parker v. Brown, which established an antitrust immunity for states and state mandated activities, applied with equal force to political subdivisions of a state. Rather, the Court concluded that the Parker doctrine exempts only anticompetitive conduct engaged in as an act of government by the state as sovereign, or, by its subdivisions, pursuant to state policy to displace competition with regulation or monopoly public service.” Under Lafayette, municipalities will be held accountable for conduct which contravenes a national policy as critical to the nations wellbeing as the Sherman Antitrust Act. The decision exposes all municipalities and their officials to felony criminal penalties ranging up to one million dollars and to civil damage awards that are commonly trebled, with an additive for the prevailing plaintiff\u27s attorney\u27s fees. In addition to forcing municipal attorneys to add antitrust law to the ever growing list of subjects on which they must be well informed, the decision has awakened the interest of private lawyers in antitrust litigation as a means of collecting money damages from a previously immune municipality. Because of possible treble damages and attorney fees the private sector might find this field most attractive. This article will discuss the effect of this landmark decision on municipalities. However, a detailed review of the law before Lafayette and an analysis of the Lafayette decision are important in setting the proper framework to determine as far as possible the effect of Lafayette on municipalities