If you run a business renting bikes, it is definitely going to be a problem if your municipality should start a program renting out bikes at below market rates to tourists. Of course, these issues come up from time to time. Unfortunately, there is not usually much that can be done when government is simply subsidizing services. One might argue that this is not the proper role of government, but that’s a philosophical objection—not a legal argument.
However, if government actors are affirmatively competing with your business, shouldn’t they be held to the same rules and standards as you are? In all fairness, the answer should be yes. I lay out the case for why in this post.
As explained more thoroughly in a recent law review article with Jarod Bona, federal antitrust law should apply just the same to state and local actors as it applies to private businesses. Bona explains the inherent unfairness of allowing government to engage in anticompetitive conduct in this article, putting the issue in baseball terms: What do you do when the umpire is playing against you?
We argue that, at least in some cases, government should be held liable for anticompetitive conduct—even regulatory conduct when it seeks to displace private competition in the market. For example, a City might be held liable in antitrust if it should use the power of eminent domain to eliminate competition for a public parking garage, or if it should use its power to enact zoning laws to prevent businesses from competing with another public enterprise. This is a controversial issue to some extent, and one that the Courts are divided on. But, we think in all fairness to small business—its time the courts begin applying antitrust laws to public actors when they are actively competing with private business. Fair is fair.
If you are facing an issue of this nature, please feel free to contact the NFIB Small Business Legal Center.