## Facts

- Richard A. Gordon, a small investor, brought a putative class action against the New York Stock Exchange (NYSE), the American Stock Exchange (Amex), and two member firms.
- The complaint alleged that the exchanges’ system of fixed commission rates for securities transactions under $500,000 constituted unlawful price-fixing and monopolization under §§ 1 and 2 of the Sherman Act.
- Fixed commission rates had long been set by agreement among exchange members and were historically part of exchange rules.
- Congress was aware of the fixed-rate practice when adopting and administering federal securities laws.
- Section 19(b)(9) of the Securities Exchange Act of 1934 authorized the Securities and Exchange Commission (SEC) to approve or disapprove exchange commission rates.
- Over decades, the SEC reviewed proposed rate changes, conducted studies, and ultimately required a transition from fixed to competitive commission rates.
- The district court granted summary judgment to defendants, concluding the rate-fixing system was immune from antitrust attack given the SEC’s authority and active supervision; the court of appeals affirmed.

## Issues

1. Whether the Sherman Act applies to exchange-fixed commission rates when those rates fall within the SEC’s authority and active supervision under § 19(b)(9) of the Securities Exchange Act of 1934.
2. Whether, to the extent of any conflict, the antitrust laws are impliedly repealed in this domain so the securities regulatory scheme can operate as Congress intended.

## Decision

- The Supreme Court affirmed.
- The Court held that exchange fixed commission rates under the SEC’s active supervision were beyond the reach of the antitrust laws.
- The Court concluded that the antitrust laws are impliedly repealed to the extent necessary to prevent interference with the SEC’s congressionally assigned rate-regulation function.
- The Court reasoned that applying per se antitrust condemnation to SEC-supervised fixed rates would directly conflict with the securities statute and render § 19(b)(9) ineffective.
- The Court distinguished cases where the securities regulator lacked or did not exercise direct authority over the challenged conduct, finding a direct statutory and regulatory conflict here.

## Legal Principles

- Implied antitrust immunity may be found where application of the antitrust laws would conflict with a federal regulatory scheme and frustrate Congress’s intended operation of that scheme.
- When Congress authorizes an agency to supervise a practice that would otherwise violate antitrust rules, and the agency actively exercises that authority, courts may treat the antitrust laws as displaced to the extent necessary for the regulatory program to function.
- Implied repeal is limited to the particular conduct and regulatory domain creating the conflict; it does not confer broad immunity for all conduct by regulated entities.

## Conclusion

The Court held that the SEC’s statutory authority and active supervision over exchange commission rates under § 19(b)(9) required a limited implied repeal of the antitrust laws, making exchange fixed commission rates immune from Sherman Act challenge to the extent needed to avoid interference with the securities regulatory regime.


Gordon v. New York Stock Exch., Inc., 422 U.S. 659 (1975)