Court rules city-company deal has antitrust immunity

April 02, 1991|By Lyle Denniston | Lyle Denniston,Washington Bureau of The Sun

WASHINGTON -- A divided Supreme Court ruled yesterday that if a business induces city officials to pass new ordinances to shut out or harm a rival company, both the business and the local officials could qualify for immunity from federal antitrust law.

So long as the city had been granted authority by a state to pass laws that could reduce competition, the firm that lost out as a result may not sue for antitrust damages under the Sherman Act, the court ruled by a 6-3 vote.

"The antitrust laws regulate business, not politics," the court said in an opinion by Justice Antonin Scalia.

The court specifically rejected the theory that the kind of antitrust immunity state and local government have for their governmental acts is lost when officials join with a business firm in a conspiracy against a rival firm.

The decision appeared to widen not only the immunity that local governments may have when performing their official actions, but also the immunity that private citizens and firms may have when they lobby for government action.

Justice John Paul Stevens, writing for the dissenters, said the ruling meant a "wholesale exemption of municipal action from antitrust scrutiny."

The ruling came in a case growing out of a competitive war over putting up billboards in Columbia, S.C.

(Columbia vs. Omni, No. 89-1671).

The decision wiped out a $3 million antitrust verdict against a well-established Columbia firm, Columbia Outdoor Advertising Inc., which had used its close political and personalties to City Council members to induce the council to pass zoning ordinances that put limits on billboards, thus harming Omni Advertising Inc., an outsider from Georgia that was seeking to enter the market.

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