The Evolution of Sherman Act Jurisdiction: A Roadmap for Competitive Federalism


Recent Supreme Court decisions confirm for the first time in over six decades that federal regulatory authority under the Commerce Clause truly is limited. These decisions coincide with an increasing appreciation among scholars and jurists for the concept of competitive federalism. This paper derives the implications of competitive federalism for the evolution of federal jurisdiction over trade restraints under the Sherman Antitrust Act (1890). It provides a clear and substantively reasoned jurisdictional test based on the analysis of geographic market power familiar to antitrust scholars, practitioners, and regulators in evaluating horizontal mergers. To be subject to federal antitrust jurisdiction under this test, Sherman Act defendants must control a sufficiently large share of the geographic antitrust market that their trade restraint could plausibly affect prices “in more states than one.” This test resolves a number of troubling inconsistencies in the case law on federal antitrust jurisdiction and provides a useful roadmap for how the Court can constructively realign its approach to general Commerce Clause jurisdiction. As the Court’s economic understanding of the market failure underlying a regulatory statute advances, general Commerce Clause jurisdiction should evolve to require a closer substantive nexus between the market failure and the effect on interstate commerce necessary to justify federal jurisdiction This approach will allow the Court to iterate toward an appropriate and workable balance of dual sovereignty that takes seriously the concept of competitive federalism without requiring a dramatic departure from existing constitutional precedent.


Antitrust and Trade Regulation | Constitutional Law | Economics | Jurisdiction

Date of this Version

March 2004