Antitrust process and vertical deference: Judicial review of state regulatory inaction

Courts struggle with the tension between national competition laws, on the one hand, and state and local regulation, on the other-especially as traditional governmental functions are privatized and as economic regulation advances beyond its traditional role to address market monitoring. This Article defends a process-based account of the antitrust state-action exception against alternative interpretations, such as the substantive efficiency-preemption approach that Richard Squire recently advanced, and it elaborates on what such a process-based account would entail for courts addressing the role of state economic regulation as a defense in antitrust cases. It recasts the debate as focused around delegation issues and judicial deference to regulation-traditionally issues of administrative law. Courts frequently invoke antitrust state-action-exception issues where state officials fail to act or only act partially to regulate, as is increasingly common where states privatize governmental functions or attempt to deregulate, or implement competition policies of their own. As this Article argues, in such contexts a delegation model, which focuses on the conditions under which state legislative bodies have made delegations, whether agency regulators have standards, and the reasons provided by state and local officials for regulatory inaction, provides a more powerful and principled approach for evaluating the interaction between regulation and antitrust litigation than alternative approaches.