Cases Concern Allegedly Illegal Filing of Collective Rates with States
The Federal Trade Commission today announced the issuance of three complaints against associations in Alabama, Kentucky, and Mississippi. These matters concern the collective filing by competing household goods movers of rates for intrastate moving services in those states. The complaints allege that each of these agreements violate Section 5 of the FTC Act. The Commission has recently settled a similar case with the Indiana Household Movers and Warehousemen, Inc.
"As in the Indiana case, the three complaints filed today provide an opportunity for the Commission and the courts to provide greater analysis and elaboration of the state action doctrine as a defense under the antitrust laws," said Joe Simons, Director of the FTC's Bureau of Competition.
The State Action Doctrine
The state action doctrine dates back to the Supreme Court decision in Parker v. Brown, 317 U.S. 341 (1943) which held that, in light of the States' status as sovereign entities, Congress did not intend the Sherman Act - a primary U.S. antitrust law - to apply to the activities of the States themselves. As a result, in limited circumstances, the Court has ruled that the activities of certain private firms conducted under state authority may be immune from federal antitrust scrutiny.
States, however, may not simply authorize private parties to violate the antitrust laws. A private party that relies on the state action doctrine as a defense for allegedly anticompetitive conduct must show that its conduct meets a strict two-prong standard established by the U.S. Supreme Court. The party must show first, that "the challenged restraint [is] 'one clearly articulated and affirmatively expressed as state policy'" and second, that the policy is "'actively supervised' by the State itself."
In the Supreme Court's landmark decision in FTC v. Ticor Title Insurance Co, 504 U.S. 621 (1992), upholding an FTC challenge to certain title insurance companies' practice of agreeing among themselves on the fees they would charge for background title searches, the Court said that the purpose of the "active supervision" inquiry "is to determine whether the State has exercised sufficient independent judgement and control so that the details of the rates or prices have been established as a product of deliberate state intervention, not simply by agreement among private parties."
A more detailed discussion of the state action doctrine - and specifically the Supreme Court's standard for active supervision - is provided in the Commission's Analysis to Aid Public Comment in Indiana Household Movers and Warehousemen, Inc. (FTC File No. 021-0115). This document is available on the FTC's Web site at the address provided below.
The Commission's Complaints
The three complaints announced today were issued against the following movers associations: 1) the Alabama Trucking Association; 2) Kentucky Household Goods Carrier's Association; and 3) the Movers Conference of Mississippi. According to the complaints, the associations have violated the FTC Act by engaging in collective action in the form of filing tariffs containing collective rates on behalf of the members.
The Commission vote to approve the issuance of the administrative complaint against the Alabama Trucking Association was 5-0. The Commission vote to approve the issuance of the administrative complaint against the Kentucky Household Goods Carrier's Association was 5-0. The Commission vote to approve the issuance of the administrative complaint against the Movers Conference of Mississippi was 5-0. In each complaint, the FTC issued a notice of proposed relief which identifies provisions that my be appropriate in a final order resolving the charges. These include: 1) cease and desist provisions related to the preparation and filing of collective rates for the intrastate transportation of property or other related services, goods, or equipment, and 2) the cancellation of all rates on file with the state that establish rates for transportation of property or related services, goods, or equipment.
NOTE: The Commission issues or files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the named parties have violated the law. The administrative complaint marks the beginning of a proceeding in which the allegations will be ruled upon after a formal hearing by an administrative law judge.
Copies of the Commission's complaints are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580, Electronic Mail: firstname.lastname@example.org; Telephone (202) 326-3300. For more information on the laws that the FTC enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
(FTC Docket Nos. 9307, 9308, and 9309)
Office of Public Affairs
Bureau of Competition