N.C. State Bd. of Dental Examiners v. FTC
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FTC Promotes Competition Among Professionals Through Advocacy, Enforcement

On July 16, 2014, Andrew Gavil, Director of the Office of Policy Planning at the Federal Trade Commission (FTC), testified on the subject of “Competition and the Potential Costs and Benefits of Professional Licensure” before the House Committee on Small Business.  Gavil explained the FTC’s rationale for evaluating the competitive effects of different licensing regimes and described its strategy of promoting competition among professionals through a combination of advocacy and enforcement.

The FTC’s approach in this area is to evaluate the pros and cons of specific licensure regulations on a case-by-case basis.  In a nutshell, the agency recognizes that, “although licensure may be designed to provide consumers with minimum quality assurances, licensure provisions do not always increase service quality,” and indeed “may . . . discourage innovation and entrepreneurship” and “impede the flow of labor or services.”  Advocacy is an important component of the FTC’s strategy because state and local licensing regimes are often not actionable under the federal antitrust laws.  Instead, the agency utilizes tools such as comments, testimony, workshops, reports and amicus briefs to encourage policymakers to consider the likely competitive effects of proposed regulations.  Gavil noted a recent example in which, at the request of Chicago Alderman Brendan Reilly, FTC staff provided a comment assessing the potential competitive effects of a proposed Chicago ordinance creating a licensing scheme to regulate mobile ride-sharing apps.  The comment, available here, details how certain provisions of the ordinance might “unnecessarily impede competition in these services without providing any apparent consumer protection benefits,” for example, by placing licensees at a competitive disadvantage to traditional transportation services or by restricting innovative pricing models.

The FTC also keeps an eye out for opportunities to flex its enforcement muscle and discourage anticompetitive conduct by independent regulatory boards that are not protected by the state action doctrine.  For example, the Fourth Circuit last year sided with the FTC in a suit challenging the North Carolina Board of Dental Examiners’ practice of issuing cease-and-desist letters to non-dentist providers of teeth-whitening services.  See N.C. State Bd. of Dental Examiners v. FTC, 717 F.3d 359 (4th Cir. 2013), cert. granted, No. 13-564, 5014 WL 801099 (U.S. Mar. 3, 2014).  In particular, state agencies comprised mostly of industry participants who are chosen by other industry participants must take special precautions to avoid violating the antitrust laws.  Many of the examples of enforcement actions Gavil provided in his testimony concerned the healthcare arena, which is consistent with the FTC’s ongoing commitment to promote competition in that sector.

The text of the Commission’s prepared statement is available here.


North Carolina Dentists Seek Rehearing En Banc After Losing Bid for Antitrust Immunity

by Lincoln Mayer

North Carolina’s dentists were not smiling when a three judge panel of the U.S. Court of Appeals for the Fourth Circuit sided with the Federal Trade Commission in a challenge to the State Board of Dental Examiners’ policy that only dentists could perform teeth whitening.  On July 15, 2013, the board filed a petition asking the full court to reconsider the panel’s May 31, 2013 decision.  N.C. State Bd. of Dental Examiners v. FTC, No. 12-1172.

The dispute centers on whether the state action doctrine shields the board’s policy from antitrust scrutiny.  That doctrine holds that state actors need only show that the state had a clearly articulated policy to displace competition with regulation.  However, private parties invoking the doctrine must also show that they are actively supervised by the state.  The Fourth Circuit panel concluded that since the board is composed of licensed dentists who have a financial interest in the market and are answerable to other members of the profession with a similar interest, the board needed to demonstrate active state supervision.  The board countered that it is a state agency and therefore does not need to satisfy this additional requirement.

The North Carolina State Bar, and the National Association of Boards of Pharmacy together with the North Carolina Board of Pharmacy and North Carolina Board of Physical Therapy Examiners, submitted amici briefs supporting the dental board’s petition.





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