15:27
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Simple English definitions for legal terms
Midcal test
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A quick definition of Midcal test:
Midcal test: A rule that says if a private company does something that hurts competition, they might not get in trouble if the state said it was okay and is watching them closely. This is called the state-action doctrine and active supervision. It was decided in a court case called California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc. in 1980.
A more thorough explanation:
The Midcal Test is a legal doctrine in antitrust law. It states that if a private party engages in actions that limit competition, those actions may be protected from liability under antitrust laws if they are within a clearly articulated and affirmatively expressed policy of the state, and if the conduct is actively supervised by the state.
For example, if a state government creates a policy that limits the number of liquor licenses that can be issued in a certain area, and actively supervises the enforcement of that policy, a liquor store that is granted a license may not be held liable for antitrust violations.
Another example could be a state government creating a policy that limits the number of taxi licenses in a certain area, and actively supervising the enforcement of that policy. A taxi company that is granted a license may not be held liable for antitrust violations.
The Midcal Test is important because it allows states to regulate certain industries without fear of antitrust liability, as long as they follow certain guidelines.