## Facts

- Berkeley, California adopted by voter initiative a rent control ordinance imposing rent ceilings on residential rental property.
- The ordinance created a Rent Stabilization Board to administer and set maximum rent levels under legislative standards.
- Tenants could initiate enforcement procedures (including petitions) challenging rents and seeking application of the ceilings.
- A group of landlords challenged the ordinance, asserting it was preempted by § 1 of the Sherman Act because it allegedly produced price-fixing through concerted action.
- The California Supreme Court upheld the ordinance against the Sherman Act challenge, and the landlords appealed to the U.S. Supreme Court.

## Issues

1. Whether Berkeley’s rent control ordinance is preempted by § 1 of the Sherman Act as an alleged per se unlawful restraint of trade.
2. Whether a government-imposed rent ceiling constitutes the “contract, combination…, or conspiracy” (concerted action) required for § 1 liability.
3. Whether the ordinance is a “hybrid restraint” because tenants can trigger enforcement and the regulatory structure affects landlord pricing.

## Decision

- The Court affirmed the judgment upholding the ordinance and held it was not preempted by the Sherman Act.
- The ordinance imposed rent ceilings through unilateral government action rather than private agreement among market participants.
- The coercive, uniform effect of the ordinance on landlords did not convert compliance with law into a landlord conspiracy under § 1.
- Although tenants could invoke enforcement procedures, the Rent Stabilization Board retained exclusive substantive control over maximum rent levels, so the scheme did not delegate price-setting to private actors.

## Legal Principles

- § 1 of the Sherman Act requires concerted action; unilateral restraints imposed by government are not “contracts, combinations…, or conspiracies.”
- A regulation does not become concerted action merely because it compels uniform conduct by regulated competitors.
- “Hybrid restraints” raising § 1 concerns generally involve governmental authorization or enforcement of private price setting; a scheme remains outside § 1 where a governmental body retains exclusive control over price levels.
- Sherman Act preemption fails where the necessary predicate of § 1 liability—concerted private action—is absent.

## Conclusion

Berkeley’s rent control ordinance, enacted by initiative and administered by a public board that exclusively sets rent ceilings, constituted unilateral governmental regulation rather than private collusion; because § 1’s concerted-action element was missing, the ordinance was not preempted by the Sherman Act.


Fisher v. City of Berkeley, 475 U.S. 260 (1986)