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The Court Can Strike a Blow for Occupational Freedom

Next month the Supreme Court will consider an antitrust case that pits federalism against occupational freedom.   Over the last decade, individuals and companies who are not practicing dentists have begun offering teeth whitening services. In North Carolina a state board has told them to desist. What makes the case interesting under antitrust law is that the substantial majority of the board is elected by  dentists and dental hygienists—precisely the groups that stand to lose from this competition. The Federal Trade Commission challenged their action as a restraint of trade and the Fourth Circuit Court of Appeals sustained its decision.

Antitrust law seeks a competitive marketplace. There is little doubt that it would condemn a private agreement among dentists to keep out competitors. It would be obviously the case that the potential competitors cannot evaluate health risks dispassionately.   But for reasons of federalism antitrust law exempts state action from its strictures even if that action is blatantly skewed to protect producers. Here the question is whether the Court will permit the state to cloak the actions of private competitors in its own authority.

In this area Court has substantial authority to shape doctrine in the public interest. The state action exemption does not appear in the Sherman Act itself but has been read into the Act in order to reflect principles of federalism.  For me a key point is that the federalism exemption should require bona fide action of the state, but in this case the decisions are taken not by state officials, but by private actors elected by interested parties.  A proper interpretation of federal constitutional law would not allow Congress to delegate its government power to private actors.  For instance, Congress should not be permitted delegate its regulatory authority over telecommunications firms to regulators elected by those firms.  Analogously, the Supreme Court should say that considerations of state sovereignty recognized as an exception to the scope of antitrust law cannot extend to delegations to private actors.

Subjecting the actions of such self-interested boards to antitrust law will be a boon to occupational freedom. Economists have noted the rise of licensing schemes in the United States that often serve to protect incumbents without offering any substantial public benefits.  Excessive occupational licensing may contribute to structural unemployment and certainly raises the cost of services.  Consumers of legal services may have particular reason to cheer. In many states bar regulation is run by lawyers and these bars have tried to prevent disruptive competition generated by new computer technology. It is interesting to note that LegalZoom, a company that uses computers to generate consumer legal documents, like wills, filed an amicus brief on the side of the FTC.

Of course, a favorable Supreme Court ruling will not prevent interest groups from influencing state officials to maintain protectionist rules, even if  boards of self-interested regulators are disbanded.  But state bureaucrats will at least be subject to some countervailing forces, like considerations of their own craft and pressure from consumer groups.

Reader Discussion

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on September 05, 2014 at 12:27:30 pm

I wonder if this may be decided on somewhat simpler grounds. What was the specific grant of authority given to this board? Was it simply to discipline dentists within the state - to assure good conduct / efficacy, etc?

Are they exceeding it?

If it is to insure best practices, it may get a little gray here as one could argue that the "whitening" practice may require certain minimal knowledge - but all in all should this be a constitutional issue?

BTW: I am all for reducing the influence of such groups but must still question whether we should elevate this to a constitutional issue.

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gabe
on September 05, 2014 at 17:44:36 pm

Gabe is right about the importance of the specific grant of authority provided in state statute. The NC statute declares that the NC State Board of Dental Examiners is the state agency for the licensing and regulation of dentists in the state of North Carolina. The statute also provides that only licensed dentists may practice dentistry and defines the practice of dentistry to include the "removal of stains from the human teeth." So, this is clearly a state licensing board acting pursuant to a clearly articulated state policy as passed by the state's legislature. That fits the traditional definition of state action going all the way back to the Parker case. I share many of the concerns expressed about the proliferation of occupational licensing but the beef is with the state legislatures. Here, the North Carolina State Board of Dental Examiners is merely acting pursuant to its statutory mandates.

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Dave O
on September 06, 2014 at 10:58:55 am

What is the likelihood a ruling by SCOTUS upholding the lower court decisions affects other professions/trade organizations, e.g., mandatory county bar associations in North Carolina? The local bar associations operate under statutory authority and seem to be another example of "a state licensing board acting pursuant to a clearly articulated state policy as passed by the state’s legislature." Although in the case of mandatory local bars, they don't act as the actual licensing board, but failure to comply with mandatory dues can result in suspension of your law license.

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Eric Rowell
on September 06, 2014 at 15:26:28 pm

This is a perfect example of the rise of the 4th branch of government. That is the Administrative Branch. In today's America every mundane activity from being a "professional" to making changes to the property that you allegedly own is subject to administrative review. In other words the average American has lost their right to run their lives and now have to ask permission. Much of this is subjected to licensing which means that you have to conform to certain rules and regulations,including fees and taxes,or your license(permission)may be pulled and thus you may lose your given right to use the public roads or partake in a profession or run a business and thus make a living. Step by step the inalienable rights of Americans have been superseded by contract. Thus a birth certificate,social security number,incorporation,permits,licensing,owning a firearm,using the public roads to travel or other indentures are all subject to control and regulation by the Administrative Branch of government. Either the Federal,State,County or Local jurisdictions. People ask "where does the government get the right to do such and such." The Answer is that we volunteer to give them that power because we volunteer to give up our rights. This is why filing a 1040 form is voluntary. Why signing up for the Draft is voluntary. Why sending our kids to Public Schools is voluntary. And so forth and so on to encompass thousands of activities. In essence,without our voluntary consent the current system would collapse like a bunch of broccoli.

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libertarian jerry

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.