Antitrust Immunity and Standard Setting Organizations : A Case Study in the Use of Liberal Models to Cope with Private Power

This paper uses an ongoing issue of local legal doctrine as a case study to provide insights into a problem of larger political philosophy: the problem whether the difference between "public" and "private" should be made to matter and, indeed, whether there is a difference at all. The case study is as follows: In our system, state governments are free to fashion their own trade policies in virtually any manner they choose. During the past century there has evolved a complex range of relationships between government and the businesses regulated by those policies, the result often being that businesses themselves play significant, more or less formal roles in making such policy. A problem is then to ask how those private "policymakers" should be handled by our law, as our legal traditions are used to handling only "public" and "private" entities, not those in between. The problem poses a familiar conceptual difficulty for the liberalism that has been our mainstream political philosophy for nearly two centuries, the safeguarding of "private" interests being a central liberal tenet. Confusion on this point is beginning to pose serious consequences. The courts remain confused by the problem of private standard setting groups that produce model standards for adoption by government, and have been deeply troubled by the idea that they could ever face liability for such conduct, even in the face of overwhelming evidence that some organizations are so influential as to be simply de facto state regulatory agencies. Judicial discomfort is understandable, given the terrific inertia of American law. It should probably be overcome, however, for if the current trend continues, a donation of public authority into private hands threatens to be removed not only from the normal democratic constraints of healthy policymaking, but from any legal review as well. This issue, as it happens, is a useful study in what appears to be a significant problem in the broader political theory of the law governing business. This paper explains a means by which the standard setting problem can be overcome, but the paper's larger purpose in so doing is that the solution sheds light on the hidden consequences of application of traditional political models to the regulation of business