In Supreme Court, AAI Supports FTC’s Approach to State Action Defense (N.C. State Bd. of Dental Examiners v. FTC)

The American Antitrust Institute (AAI) filed an amicus brief today in the Supreme Court supporting the FTC’s position that anticompetitive conduct by state boards comprised of market participants must be actively supervised by a disinterested state official in order to be exempt from the federal antitrust laws under the state-action doctrine.

In the case before the Supreme Court, the FTC found (and the Fourth Circuit affirmed) that the North Carolina Board of Dental Examiners had violated the FTC Act by using unauthorized procedures to exclude competitive teeth whitening clinics, without any reasonable health and safety justification. The state board is comprised of practicing dentists who provide more expensive teeth whitening services and are elected by other members of the profession.  No disinterested state official supervised the board’s exclusionary conduct to determine whether it was consistent with North Carolina policy, and no state court ever ruled that teeth whitening services may only be performed by dentists.

The AAI’s brief concludes: “The decision of the Fourth Circuit and the FTC does not call into question the use of active professionals in regulating the professions.  Their expertise no doubt redounds to the public benefit. But as market participants, active professionals also have a financial interest at stake, particularly when it comes to deciding what services must be performed by the professionals themselves, and what services can safely (and more cheaply) be performed by unlicensed providers, such as the teeth whitening clinics at issue here.  The only thing the Fourth Circuit and the FTC ruling calls into question is whether practicing members of a profession (or of other occupations) may restrict competition without any meaningful review by a disinterested public official to ensure that such restrictions comport with state policy, and nonetheless escape any scrutiny of the federal antitrust laws.  The FTC’s answer to that question should be affirmed.  Antitrust exemption is appropriate only when a financially self-interested board’s discretionary decision to restrict competition is subject to meaningful review before any market impact, regardless of how the board is selected.”

The brief was written by AAI General Counsel Richard Brunell, with help from Senior Counsel Randy Stutz, Special Counsel Sandeep Vaheesan, and Research Fellow Geoff Kozen.