QUESTION: To me the line between a market regulator and market participant seems very blurry. How does a court determine when a State is acting as a market participant versus a market regulator?
ANSWER: The essential question is whether the government is entering a market in its proprietary capacity, as either a buyer or seller of goods or services, or instead is using its coercive power to dictate the ways in which the governed conduct their business or other activities. The former is market participation, the latter regulation.
QUESTION: In Hunt, for instance, it seems to me that the the State was participating in the sale of apples. So why then did the Court determine they were a state regulator as opposed to a market participant?
ANSWER: I don't think so. The State of North Carolina was not selling or buying apples. Nor did its regulation dictate the terms on which the state was going to do so in the future. Rather, the state law at issue was dictating the terms on which private persons were to sell apples within the state: namely, with only the USDA grade on the outside of the crate. This is regulation. It is a coercive mandate on the conduct of others. It is not simply stating the terms on which the state itself would act as a buyer or seller of apples.