Southern Motor Carriers Rate Conference, Inc. v. United States

471 U.S. 48, 105 S. Ct. 1721, 85 L. Ed. 2d 36, 1985 U.S. LEXIS 196, 53 U.S.L.W. 4422

Opinions

Justice Powell

delivered the opinion of the Court.

Southern Motor Carriers Rate Conference, Inc. (SMCRC), and North Carolina Motor Carriers Association, Inc. (NCMCA), petitioners, are “rate bureaus” composed of motor common carriers operating in four Southeastern States. The rate bureaus, on behalf of their members, submit joint rate proposals to the Public Service Commission in each State for approval or rejection. This collective rate-making is authorized, but not compelled, by the States in which the rate bureaus operate. The United States, contending that collective ratemaking violates the federal antitrust laws, filed this action to enjoin the rate bureaus’ alleged anticompetitive practices. We here consider whether the petitioners’ collective ratemaking activities, though not compelled by the States, are entitled to Sherman Act immunity under the “state action” doctrine of Parker v. Brown, 317 U. S. 341 (1943).

I

A

In North Carolina, Georgia, Mississippi, and Tennessee, Public Service Commissions set motor common carriers’ rates for the intrastate transportation of general commodities.¹ Common carriers are required to submit proposed rates to the relevant Commission for approval.² A proposed rate becomes effective if the state agency takes no action within a specified period of time. If a hearing is scheduled, however, a rate will become effective only after affirmative agency approval.³ The State Public Service Commissions thus have and exercise ultimate authority and control over all intrastate rates.

In all four States, common carriers are allowed to agree on rate proposals prior to their joint submission to the regulatory agency.⁴ By reducing the number of proposals, collective ratemaking permits the agency to consider more carefully each submission. In fact, some Public Service Commissions have stated that without collective ratemaking they would be unable to function effectively as rate-setting bodies.⁵ Nevertheless, collective ratemaking is not compelled by any of the States; every common carrier remains free to submit individual rate proposals to the Public Service Commissions.⁶

As indicated above, SMCRC and NCMCA are private associations composed of motor common carriers operating in North Carolina, Georgia, Mississippi, and Tennessee.⁷ Both organizations have committees that consider possible rate changes.⁸ If a rate committee concludes that an intrastate rate should be changed, a collective proposal for the changed rate is submitted to the State Public Service Commission. Members of the bureau, however, are not bound by the joint proposal. Any disapproving member may submit an independent rate proposal to the state regulatory Commission.⁹

B

On November 17, 1976, the United States instituted this action against SMCRC and NCMCA in the United States District Court for the Northern District of Georgia.¹⁰ The United States charged that the two rate bureaus had violated § 1 of the Sherman Act by conspiring with their members to fix rates for the intrastate transportation of general commodities. The rate bureaus responded that their conduct was exempt from the federal antitrust laws by virtue of the state action doctrine. See Parker v. Brown, 317 U. S. 341 (1943).¹¹ They further asserted that their collective rate-making activities did not violate the Sherman Act because the rates ultimately were determined by the appropriate state agencies. The District Court found the rate bureaus’ arguments meritless, and entered a summary judgment in favor of the Government. 467 F. Supp. 471 (1979). The defendants were enjoined from engaging in collective rate-making activities with their members.

The Court of Appeals for the Fifth Circuit (Unit B, now the Eleventh Circuit), sitting en banc, affirmed the judgment of the District Court. 702 F. 2d 532 (1983).¹² Relying primarily on Goldfarb v. Virginia State Bar, 421 U. S. 773 (1975), the court held that the rate bureaus’ challenged conduct, because it was not compelled by the State, was not entitled to Parker immunity. The two-pronged test set forth in California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. 97 (1980), was irrelevant, the court reasoned, for in that case a public official was the named defendant.¹³ 702 F. 2d, at 539. The Court of Appeals further held that even if Midcal were applicable to a private party’s claim of state action immunity, the rate bureaus were not shielded from liability under the Sherman Act. The court concluded that only if the anticompetitive acts of a private party are compelled can a State’s policy be held “clearly articulated and affirmatively expressed” within the meaning of Midcal. 702 F. 2d, at 539.

After finding the rate bureaus not entitled to Parker immunity, the Court of Appeals held that their collective rate-making activities violated the Sherman Act. 672 F. 2d 469, 481 (1982).¹⁴ It rejected the rate bureaus’ contention that because the regulatory agencies had ultimate authority and control over the rates charged, the federal antitrust laws were not violated. The Court of Appeals found that “joint ratesetting . . . reduce[d] the amount of independent rate filing that otherwise would characterize the market process,” and thus raised the prices charged for intrastate transportation of general commodities. Id., at 478. This “naked price restraint,” the court reasoned, is per se illegal. Ibid.

Four judges strongly dissented. They argued that Midcal was applicable to a private party’s claim of state action immunity. The success of an antitrust action should depend upon the activity challenged rather than the identity of the defendant. 702 F. 2d, at 543-544. After asserting that Midcal provided the relevant test, the dissenters concluded that the lack of compulsion was not dispositive. Even in the absence of compulsion, a “state can articulate a clear and express policy.” Id., at 546. The dissent further concluded that a per se compulsion requirement denies States needed flexibility in the formation of regulatory programs, and thus is inconsistent with the principles of federalism that Congress intended to embody in the Sherman Act.¹⁵

We granted certiorari,¹⁶ 467 U. S. 1240 (1984), to decide whether petitioners’ collective ratemaking activities, though not compelled by the States in which they operate, are entitled to Parker immunity.¹⁷

II

In Parker v. Brown, 317 U. S., at 341, this Court held that the Sherman Act was not intended to prohibit States from imposing restraints on competition.¹⁸ There, a raisin producer filed an action against the California Director of Agriculture to enjoin the enforcement of the State’s Agricultural Prorate Act. Under that statute, a cartel of private raisin producers was created in order to stabilize prices and prevent “economic waste.” Id., at 346. The Court recognized that the State’s program was anticompetitive, and it assumed that Congress, “in the exercise of its commerce power, [could] prohibit a state from maintaining [such] a stabilization program . . . .” Id., at 350. Nevertheless, the Court refused to find in the Sherman Act “an unexpressed purpose to nullify a state’s control over its officers and agents . . . .” Id., at 351.

Although Parker involved an action against a state official, the Court’s reasoning extends to suits against private parties. The Parker decision was premised on the assumption that Congress, in enacting the Sherman Act, did not intend to compromise the States’ ability to regulate their domestic commerce.¹⁹ If Parker immunity were limited to the actions of public officials, this assumed congressional purpose would be frustrated, for a State would be unable to implement programs that restrain competition among private parties. A plaintiff could frustrate any such program merely by filing suit against the regulated private parties, rather than the state officials who implement the plan. We decline to reduce Parker's holding to a formalism that would stand for little more than the proposition that Porter Brown sued the wrong parties. Cantor v. Detroit Edison Co., 428 U. S. 579, 616-617, n. 4 (1976) (Stewart, J., dissenting).

The circumstances in which Parker immunity is available to private parties, and to state agencies or officials regulating the conduct of private parties, are defined most specifically by our decision in California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S., at 97. See Hallie v. Eau Claire, ante, at 46, n. 10. In Midcal, we affirmed a state-court injunction prohibiting officials from enforcing a statute requiring wine producers to establish resale price schedules. We set forth a two-pronged test for determining whether state regulation of private parties is shielded from the federal antitrust laws. First, the challenged restraint must be “ ‘one clearly articulated and affirmatively expressed as state policy.’” 445 U. S., at 105, quoting Lafayette v. Louisiana Power & Light Co., 435 U. S. 389, 410 (1978) (opinion of Brennan, J.). Second, the State must supervise actively any private anticompetitive conduct. 445 U. S., at 105.²⁰ This supervision requirement prevents the State from frustrating the national policy in favor of competition by casting a “gauzy cloak of state involvement” over what is essentially private anticompetitive conduct. Id., at 106.²¹

I — H 1 — 4

The Midcal test does not expressly provide that the actions of a private party must be compelled by a State in order to be protected from the federal antitrust laws. The Court of Appeals, however, held that compulsion is a threshold requirement to a finding of Parker immunity. It reached this conclusion by finding that: (i) Midcal is inapplicable to suits brought against private parties; (ii) even if Midcal is applicable, private conduct that is not compelled cannot be taken pursuant to a “clearly articulated state policy,” within the meaning of Midcal’s first prong; and (iii) because Gold-farb was cited with approval in Midcal, the Midcal Court endorsed the continued validity of a “compulsion requirement.” We consider these points in order.

A

The Court of Appeals held that Midcal, that involved a suit against a state agency, is inapplicable where a private party is the named defendant. Midcal, however, should not be given such a narrow reading. In that case we were concerned, as we are here, with state regulation restraining competition among private parties. Therefore, the two-pronged test set forth in Midcal should be used to determine whether the private rate bureaus’ collective ratemaking activities are protected from the federal antitrust laws. The success of an antitrust action should depend upon the nature of the activity challenged, rather than on the identity of the defendant. See Cantor v. Detroit Edison Co., supra, at 604 (Burger, C. J., concurring in part and concurring in judgment); Lafayette v. Louisiana Power & Light Co., supra, at 420 (Burger, C. J., concurring in part and concurring in judgment).

B

The Court of Appeals held that even if Midcal were applicable here, the rate bureaus would not be immune from federal antitrust liability. According to that court, the actions of a private party cannot be attributed to a clearly articulated state policy, within the meaning of the Midcal test’s first prong, “when it is left to the private party to carry out that policy or not as he sees fit.” 702 F. 2d, at 539. In the four States in which petitioners operate, all common carriers are free to submit proposals individually. The court therefore reasoned that the States’ policies are neutral with respect to collective ratemaking, and that these policies will not be frustrated if the federal antitrust laws are construed to require individual submissions.

In reaching its conclusion, the Court of Appeals assumed that if anticompetitive activity is not compelled, the State can have no interest in whether private parties engage in that conduct. This type of analysis ignores the manner in which the States in this case clearly have intended their permissive policies to work. Most common carriers probably will engage in collective ratemaking, as that will allow them to share the cost of preparing rate proposals. If the joint rates are viewed as too high, however, carriers individually may submit lower proposed rates to the Commission in order to obtain a larger share of the market. Thus, through the self-interested actions of private common carriers, the States may achieve the desired balance between the efficiency of collective ratemaking and the competition fostered by individual submissions. Construing the Sherman Act to prohibit collective rate proposals eliminates the free choice necessary to ensure that these policies function in the manner intended by the States. The federal antitrust laws do not forbid the States to adopt policies that permit, but do not compel, anti-competitive conduct by regulated private parties. As long as the State clearly articulates its intent to adopt a permissive policy, the first prong of the Midcal test is satisfied.²²

C

In Goldfarb v. Virginia State Bar, 421 U. S. 773 (1975), this Court said that “[t]he threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman Act was not meant to proscribe is whether the activity is required by the State acting as sovereign.” Id., at 790. Midcal cited Goldfarb with approval. 445 U. S., at 104. On the basis of this citation, the Court of Appeals reasoned that Midcal did not eliminate the “compulsion requirement” of Goldfarb.

Goldfarb, however, is not properly read as making compulsion a sine qua non to state action immunity. In that case, the Virginia State Bar, a state agency, compelled Fairfax County lawyers to adhere to a minimum-fee schedule. 421 U. S., at 776-778. The Goldfarb Court therefore was not concerned with the necessity of compulsion — its presence in the case was not an issue. The focal point of the Goldfarb opinion was the source of the anticompetitive policy, rather than whether the challenged conduct was compelled. The Court held that a State Bar, acting alone, could not immunize its anticompetitive conduct. Instead, the Court held that private parties were entitled to Parker immunity only if the State “acting as sovereign” intended to displace competition. 421 U. S., at 790; see Lafayette v. Louisiana Power & Light Co., 435 U. S., at 410 (opinion of Brennan, J.) (“Goldfarb . . . made it clear that, for purposes of the Parker doctrine, not every act of a state agency is that of the State as sovereign”).

Although Goldfarb did employ language of compulsion, it is beyond dispute that the Court would have reached the same result had it applied the two-pronged test later set forth in Midcal. As stated above, Virginia “as sovereign” did not have a “clearly articulated policy” designed to displace price competition among lawyers. In fact, the Supreme Court of Virginia had explicitly directed lawyers not “to be controlled” by minimum-fee schedules. Goldfarb, supra, at 789, n. 19. Although we recognize that the language in Goldfarb is not without ambiguity, we do not read that opinion as making compulsion a prerequisite to a finding of state action immunity.

D

The Parker doctrine represents an attempt to resolve conflicts that may arise between principles of federalism and the goal of the antitrust laws, unfettered competition in the marketplace. A compulsion requirement is inconsistent with both values. It reduces the range of regulatory alternatives available to the State. At the same time, insofar as it encourages States to require, rather than merely permit, anticompetitive conduct, a compulsion requirement may result in greater restraints on trade. We do not believe that Congress intended to resolve conflicts between two competing interests by impairing both more than necessary.

In summary, we hold Midcal’s two-pronged test applicable to private parties’ claims of state action immunity. Moreover, a state policy that expressly permits, but does not compel, anticompetitive conduct may be “clearly articulated” within the meaning of Midcal,²³ Our holding today does not suggest, however, that compulsion is irrelevant. To the contrary, compulsion often is the best evidence that the State has a clearly articulated and affirmatively expressed policy to displace competition. See Hallie v. Eau Claire, ante, at 45-46; 1 P. Areeda & D. Turner, Antitrust Law ¶212.5, p. 62 (Supp. 1982) (compulsion is “powerful evidence” of existence of state policy). Nevertheless, when other evidence conclusively shows that a State intends to adopt a permissive policy, the absence of compulsion should not prove fatal to a claim of Parker immunity.

IV

A

Our holding that there is no inflexible compulsion requirement” does not suggest necessarily that petitioners’ collective ratemaking activities are shielded from the federal antitrust laws. A private party may claim state action immunity only if both prongs of the Midcal test are satisfied. Here the Court of Appeals found, and the Government concedes, that the State Public Service Commissions actively supervise the collective ratemaking activities of the rate bureaus. Therefore, the only issue left to resolve is whether the petitioners’ challenged conduct was taken pursuant to a clearly articulated state policy.

The Public Service Commissions in North Carolina, Georgia, Mississippi, and Tennessee permit collective ratemaking. See n. 4, supra. Acting alone, however, these agencies could not immunize private anticompetitive conduct. In Goldfarb, the State Bar — a special type of “state agency”— prohibited lawyers from charging fees lower than those set forth in schedules published by the local bar. Nevertheless, this Court held that the local lawyers were not immune from antitrust liability because their anticompetitive conduct was not required by the State as sovereign. 421 U. S., at 790. Parker immunity is available only when the challenged activity is undertaken pursuant to a clearly articulated policy of the State itself, such as a policy approved by a state legislature, see New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co., 439 U. S. 96 (1978), or a State Supreme Court, Bates v. State Bar of Arizona, 433 U. S. 350 (1977).

In this case, therefore, the petitioners are entitled to Parker immunity only if collective ratemaking is clearly sanctioned by the legislatures of the four States in which the rate bureaus operate. North Carolina, Georgia, and Tennessee have statutes that explicitly permit collective ratemaking by common carriers.²⁴ The rate bureaus’ challenged actions, at least in these States, are taken pursuant to an express and clearly articulated state policy. Mississippi’s legislature, however, has not specifically addressed collective ratemak-ing. We therefore must consider whether, in the absence of a statute expressly permitting the challenged conduct, the first prong of the Midcal test can be satisfied.

B

The Mississippi Motor Carrier Regulatory Law of 1938, Miss. Code Ann. § 77-7-1 et seq. (1972 and Supp. 1984), gives the State Public Service Commission authority to regulate common carriers. The statute provides that the Commission is to prescribe “just and reasonable” rates for the intrastate transportation of general commodities. §77-7-221. The legislature thus made clear its intent that intrastate rates would be determined by a regulatory agency, rather than by the market. The details of the inherently anticompetitive rate-setting process, however, are left to the agency’s discretion. The State Commission has exercised its discretion by actively encouraging collective ratemaking among common carriers. See Response of the State of Mississippi and the Mississippi Public Service Comm’n as Amici Curiae in District Court, No. 76-1909A (ND Ga. 1977), p. 11. We do not believe that the actions petitioners took pursuant to this regulatory program should be deprived of Parker immunity.

A private party acting pursuant to an anticompetitive regulatory program need not “point to a specific, detailed legislative authorization” for its challenged conduct. Lafayette v. Louisiana Power & Light Co., 435 U. S., at 415 (opinion of Brennan, J.). As long as the State as sovereign clearly intends to displace competition in a particular field with a regulatory structure, the first prong of the Midcal test is satisfied. In Goldfarb, the Court held that Parker immunity was unavailable only because the State as sovereign did not intend to do away with competition among lawyers. 421 U. S., at 790. Similarly, in Cantor the anti-competitive acts of a private utility were held unprotected because the Michigan Legislature had indicated no intention to displace competition in the relevant market. 428 U. S., at 584-585.

If more detail than a clear intent to displace competition were required of the legislature, States would find it difficult to implement through regulatory agencies their anti-competitive policies. Agencies are created because they are able to deal with problems unforeseeable to, or outside the competence of, the legislature. Requiring express authorization for every action that an agency might find necessary to effectuate state policy would diminish, if not destroy, its usefulness. Cf. Hallie v. Eau Claire, ante, at 44 (requiring explicit legislative authorization of anti-competitive activity would impose “detrimental side effects upon municipalities’ local autonomy”). Therefore, we hold that if the State’s intent to establish an anticompetitive regulatory program is clear, as it is in Mississippi,²⁵ the State’s failure to describe the implementation of its policy in detail will not subject the program to the restraints of the federal antitrust laws.

C

In summary, we hold that the petitioners’ collective rate-making activity is immune from Sherman Act liability. This anticompetitive conduct is taken pursuant to a “clearly articulated state policy.” The legislatures of North Carolina, Georgia, and Tennessee expressly permit motor common carriers to submit collective rate proposals to Public Service Commissions, which have the authority to accept, reject, or modify any recommendation. Mississippi, the fourth State in which the petitioners operate, has not expressly approved of collective ratemaking, but it has articulated clearly its intent to displace price competition among common carriers with a regulatory structure. Anticompetitive conduct taken pursuant to such a regulatory program satisfies the first prong of the Midcal test. The second prong of the Midcal test likewise is met, for the Government has conceded that the relevant States, through their agencies, actively supervise the conduct of private parties.

Y

We conclude that the petitioners’ collective ratemaking activities, although not compelled by the States, are immune from antitrust liability under the doctrine of Parker v. Brown. Accordingly, the judgment of the Court of Appeals is reversed.

It is so ordered.

1

N. C. Gen. Stat. § 62-130(a) (1982); Ga. Code Ann. § 46-7-18 (Supp. 1984); Miss. Code Ann. § 77-7-217 (1972); Tenn. Code Ann. § 65-15-106(a) (Supp. 1984).

The Interstate Commerce Commission has the power to fix common carriers’ rates for the interstate transportation of general commodities. 49 U. S. C. § 10704. The Interstate Commerce Act, however, expressly reserves to the States the regulation of common carriers’ intrastate rates, even if these rates affect interstate commerce. 49 U. S. C. § 10521(b).

2

N. C. Gen. Stat. § 62-134(a) (1982); Ga. Code Ann. §46-2-25(a) (1982); Miss. Code Ann. §§ 77-7-211 and 77-7-215 (1972); Tenn. Code Ann. § 65-5-202 (1982).

3

N. C. Gen. Stat. § 62-134(b) (1982); Ga. Code Ann. §46-2-25(b) (1982); Miss. Code Ann. §§ 77-7-217 and 77-7-219 (1972); Tenn. Code Ann. § 65-5-203(a) (Supp. 1984).

4

N. C. Gen. Stat. § 62-152.1(b) (1982); Ga. Code Ann. § 46-7-18 (Supp. 1984), Ga. Pub. Serv. Comm’n Rule 1-3-1-.14 (1983); Response of the State of Mississippi and the Mississippi Public Service Comm’n as Amici Curiae in No. 76-1909A (ND Ga. 1977), p. 11; Tenn. Code Ann. § 65-15-119 (Supp. 1984), Tenn. Pub. Serv. Comm’n Rule 1220-2-1-.40, Rules, Regulations and Statutes Governing Motor Carriers, p. 29 (1974).

5

See, e. g., Response of the State of Mississippi and the Mississippi Public Service Comm’n, supra, at 15-16.

Moreover, the uniformity in prices that collective ratemaking tends to produce is considered desirable by the legislature of at least one State and the Public Service Commission of another. See N. C. Gen. Stat. §62-152.1(b) (1982); Miss. Pub. Serv. Comm’n Rule 39D(4), Rules of Practice and Procedure and General Rules and Regulations under the Miss. Motor Carrier Act of 1938, as amended, p. 37 (1972).

6

N. C. Gen. Stat. § 62-152.1(e) (1982); Ga. Pub. Serv. Comm’n Rule 1-3-1-.14, supra; Response of the State of Mississippi and the Mississippi Public Service Comm’n, supra, at 11; Tenn. Pub. Serv. Comm’n Rule 1220-2-1-.40, supra.

7

At the time this action was filed, SMCRC represented its common carrier members before Public Service Commissions in North Carolina, Georgia, Mississippi, Tennessee, and Alabama. SMCRC, however, is no longer active before the Alabama Public Service Commission. Brief for Petitioners 3, n. 2. NCMCA represents its members before the regulatory agency in North Carolina.

8

SMCRC has a separate rate committee for each of the States in which its members operate — North Carolina, Georgia, Mississippi, and Tennessee. NCMCA, which is concerned solely with matters before the North Carolina Public Service Commission, has only one rate committee.

9

In addition to providing a forum for their members to discuss rate proposals, the rate bureaus: “[(i)] publish tariffs and supplements containing the rates on which the carriers agree; and [(ii)] provide counsel, staff experts, and facilities for the preparation of cost studies, other exhibits and testimony for use in support of proposed rates at hearings held by the regulatory commissions.” 702 F. 2d 532, 534 (1983).

10

Motor Carriers Traffic Association, Inc. (MCTA), another rate bureau operating in North Carolina, also was named as a defendant. MCTA did not appeal from the District Court’s judgment, and is not a party before this Court.

The District Court permitted the National Association of Regulatory Utility Commissioners (NARUC), an organization composed of state agencies, to intervene as a defendant. See Fed. Rule Civ. Proc. 24(a). Throughout this litigation, the NARUC has represented the interests of the Public Service Commissions of those States in which the defendant rate bureaus operate.

11

The defendants also contended that their collective ratemaking activities were protected by the Noerr-Pennington doctrine. See Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U. S. 127 (1961); Mine Workers v. Pennington, 381 U. S. 657 (1965). Both the District Court and the Court of Appeals rejected this defense, and we do not address it. See n. 17, infra.

12

A panel of that court, with one judge dissenting, had affirmed the District Court’s judgment. United States v. Southern Motor Carriers Rate Conference, Inc., 672 F. 2d 469 (1982).

13

In this case, the Government elected, without explanation, not to name as defendants the state Public Service Commissions that regulated the motor common carriers’ intrastate rates.

14

The en banc Court of Appeals reinstated the part of the panel’s opinion that addressed the Sherman Act violation. 702 F. 2d, at 542.

15

Judge Clark’s separate dissenting opinion criticized the majority for ignoring “the Interstate Commerce Act, public policy, history, and fairness.” Id., at 548.

16

The joint petition for a writ of certiorari was filed by SMCRC, NCMCA, and the NARUC.

17

Although we granted certiorari on the Noerr-Pennington issue as well, see n. 11, supra, our disposition of this ease makes it unnecessary to consider the applicability of that doctrine to the petitioners’ collective ratemaking activities.

18

Justice Stevens, noting that “[ijmplied antitrust immunities . . . are disfavored . . . ,” post, at 67, cites United States v. South-Eastern Underwriters Assn., 322 U. S. 533 (1944), for the proposition that “if exceptions are to be written into the Sherman Act, they must come from Congress, and not this Court.” Id., at 561. The dissent apparently finds some significance in the fact that no federal statute expressly exempts the petitioners’ collective ratemaking activities from the antitrust laws. See post, at 70.

The dissent’s argument on this point, of course, does not suggest that compulsion should be a prerequisite to a finding of state action immunity. Instead, the logical result of its reasoning would require us to overrule Parker v. Brown and its progeny, for the state action doctrine is an implied exemption to the antitrust laws. After over 40 years of congressional acquiescence, we are unwilling to abandon the Parker doctrine.

Justice Stevens relies primarily upon United States v. South-Eastern Underwriters, supra, and Georgia v. Pennsylvania R. Co., 324 U. S. 439 (1945), in the first section of his dissent. Neither of these cases, however, has any bearing on the scope of Parker immunity. In South-Eastern Underwriters, supra, the Court held only that the “business of insurance is interstate commerce,” Group Life & Health Ins. Co. v. Royal Drug Co., 440 U. S. 205, 217 (1979), and thus is subject to the Sherman Act’s proscriptions. The Court did not suggest that, because of congressional silence, state regulation could not immunize insurance companies from the federal antitrust laws. Instead, it reasoned that Parker did not protect the insurance companies because “no states authorize combinations of insurance companies to coerce, intimidate, and boycott competitors and consumers in the manner... [there] alleged.” 322 U. S., at 562. In Georgia v. Pennsylvania R. Co., supra, the Court was concerned with whether Congress intended to immunize a. federal regulatory program from the antitrust laws. See n. 21, infra.

19

In holding that the States were free to regulate “domestic commerce,” the Parker Court relied upon congressional silence. There are, however, some statements in the legislative history that affirmatively express a desire not “to invade the legislative authority of the several States . . . .” H. R. Rep. No. 1707, 51st Cong., 1st Sess., 1 (1890). See Cantor v. Detroit Edison Co., 428 U. S. 579, 632 (1976) (Stewart, J., dissenting).

20

As we hold today in Hallie v. Eau Claire, ante, at 46, the second prong of the Midcal test is inapplicable to municipalities. Although its anticompetitive conduct must be taken pursuant to a clearly articulated state policy, a municipality need not be supervised by the State in order to qualify for Parker immunity. See ante, at 46.

21

The dissent argues that a state regulatory program is entitled to Parker immunity only if an antitrust exemption is “ ‘necessary... to make the [program] workPost, at 74 (quoting Cantor v. Detroit Edison Co., supra, at 597). This argument overlooks the fact that, with the exception of a questionable dictum in Cantor, supra, the dissent’s proposed test has been used only in deciding whether Congress intended to immunize a federal regulatory program from the Sherman Act’s proscriptions. See, e. g., Silver v. New York Stock Exchange, 373 U. S. 341, 357 (1963). In this context, if the federal courts wrongly conclude that an antitrust exemption is “unnecessary,” Congress can correct the error. As the dissent recognizes, however, the Supremacy Clause would prevent state legislatures from taking similar remedial action. Post, at 67. Moreover, the proposed test would prompt the “kind of interference with state sovereignty . . . that. . . Parker was intended to prevent.” 1 P. Areeda & D. Turner, Antitrust Law ¶ 214, p. 88 (1978). Therefore, we hold that state action immunity is not dependent on a finding that an exemption from the federal antitrust laws is “necessary.”

22

Under the Interstate Commerce Act, motor common carriers are permitted, but not compelled, to engage in collective interstate ratemaking. 49 U. S. C. §§ 10706(b)(2) and 10706(d)(2)(C). It is clear, therefore, that Congress has recognized the advantages of a permissive policy. We think it unlikely that Congress intended to prevent the States from adopting virtually identical policies at the intrastateTevel.

23

Contrary to the Government’s arguments, our holding here does not suggest that a State may “give immunity to those who violate the Sherman Act by authorizing them to violate it.” Parker v. Brown, 817 U. S., at 351; see Schwegmann Bros. v. Calvert Distillers Corp., 341 U. S. 384 (1951). A clearly articulated permissive policy will satisfy the first prong of the Midcal test. The second prong, however, prevents States from “easting ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement.” Midcal, 445 U. S., at 106. This active supervision requirement ensures that a State’s actions will immunize the anticompetitive conduct of private parties only when the “state has demonstrated its commitment to a program through its exercise of regulatory oversight.” See 1 P. Areeda & D. Turner, Antitrust Law § 213a, p. 73 (1978).

24

N. C. Gen. Stat. §62-152.1(b) (1982); Ga. Code Ann. §46-7-18 (1982 and Supp. 1984); Tenn. Code Ann. § 65-15-119 (1982).

25

The Mississippi statute stands in sharp contrast to the Colorado Home Rule Amendment, which we considered in Community Communications Co. v. Boulder, 455 U. S. 40 (1982). In Boulder, the State Constitution gave municipalities extensive powers of self-government. Id., at 43-44. Pursuant to this authority, the city of Boulder prohibited a cable television company from expanding its operations. The Court held that because the Home Rule Amendment did not evidence an intent to displace competition in the cable television industry, id., at 55, Boulder’s anticompetitive ordinance was not enacted pursuant to a clearly articulated state policy. This holding was premised on the fact that Boulder, as a “home rule municipality,” was authorized to elect free-market competition as an alternative to regulation. Id., at 56.

In this case, on the other hand, the Mississippi Public Service Commission is not authorized to choose free-market competition. Instead, it is required to prescribe rates for motor common carriers on the basis of statutorily enumerated factors. Miss. Code Ann. § 77-7-221 (1972). These factors bear no discernible relationship to the prices that would be set by a perfectly efficient and unregulated market. Therefore, the Mississippi statute clearly indicates that the legislature intended to displace competition in the intrastate trucking industry with a regulatory program.