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Exemptions from Antitrust Regulation

10. What businesses are exempt from the provisions of the Sherman Act?

Businesses in certain industries may be exempt from some of the antitrust provisions of the Sherman Act. These businesses do not receive a blanket exemption; rather, they receive specific exemptions for certain practices or activities. Examples of exempted businesses include:

•    State Action Exemption – State actors (or state-owned entities) are exempt from Sherman Act regulations. This is known as the “Parker v. Brown Doctrine”. The key is that the state entity must be acting in its sovereign capacity.

•    Lobbying Exemption – Efforts to lobby government officials is exempt from antitrust regulation, despite the anticompetitive purpose and potential effect. This is known as the “Noerr-Pennington Doctrine”. The justification for this exemption is that regulation of lobbying activity may violate an individual’s First Amendment rights to petition the government for redress of a grievance. This doctrine extends First Amendment protections to these business organizations.

⁃    Note: Lobbying activity may be actionable as anticompetitive if a company uses efforts to lobby the government with the true purpose of disrupting or interfering with a competitor’s business.

•    Patent Law (or Trademark Law) – Grants of intellectual property rights are exempt from the Sherman Act. For example, awarding the creator of a patented item is a limited form of monopoly granted in that item.

•    Discussion: How do you feel about exemptions from antitrust regulation of state actors, intellectual property, and lobbying efforts? What arguments exist for regulating these activities under the antitrust laws?

•    Practice Question: Devan works for ABC Corp, a company that installs solar power systems on personal residences. His primary responsibilities are to promote the interests of ABC Corp to state and federal lawmakers. Part of his efforts include seeking the heightened regulation of businesses installing these types of systems. He is trying to push out of the market competitors who cannot meet these heightened regulatory standards. This may have the effect of creating monopoly power in ABC Corp. Is this activity prohibited by antitrust law?

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