Supreme Court issues ruling in North Carolina dental board, Federal Trade Commission case

Supreme Court rules N.C. dental board subject to antitrust law, has insufficent state oversight to regulate whitening businesses.

Mar 3rd, 2015
Supreme Court Diq

Decision consistent with court's previous rulings on state oversight, or lack thereof, for regulatory boards


The Supreme Court has issued a ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission. In a 6-3 vote, the court sided with the Federal Trade Commission's (FTC) assertion that the North Carolina dental board was subject to antitrust laws, due in part to lack of proper oversight by the state.

Justice Anthony Kennedy wrote the majority opinion for court, stating that “the Board’s concerted action to exclude nondentists from the market for teeth whitening services in North Carolina constituted an anticompetitive and unfair method of competition under the Federal Trade Commission Act.”

While the case was popularly discussed as a conflict between the rights of dentists and nondentists, or as a litmus test for the power of dental boards, the court focused on the question of oversight of public and private regulatory boards. The court found the North Carolina dental board to be acting without proper state supervision, making it vulnerable to conflicts of interest between the duties of the board and the commercial interests of its members. In this case, members of the dental board were seen to have a commercial stake in the regulation of nondentist tooth-whitening businesses.

The court agreed with the FTC that actions by the North Carolina board, such as sending cease-and-desist letters to nondentist whitening businesses, led to a situation that prevented fair market competition. Therefore, the board’s actions are subject to antitrust regulatory actions by the FTC.

Analysis

Deborah Gersh, a partner at Ropes & Gray LLP, offered this analysis of the ruling:

The court confirmed the decisions in Omni, Ticor, and Phoebe Putney, making clear that the active supervision test is an essential prerequisite of Parker immunity for any non-sovereign entity–public or private–controlled by active market participants.

The board’s argument that the state designated the North Carolina Dental Board as an agency, making it exempt from the active supervision requirement, was rejected by the Court. The board’s position was found to be inconsistent with the court’s repeated conclusion that the need for supervision turns not on the formal designation given by states, but on the risk that active market participants will pursue private interests in restraining trade.

Reaction

In a statement, Federal Trade Commission Chairperson Edith Ramirez offered the following in response to the court decision:

The FTC works to promote competition across the economy and advocates on the behalf of Americans to help prevent occupational licensing requirements, which now govern a significant and growing segment of the economy, from unduly suppressing pro-consumer competition.

We are pleased with the Supreme Court’s recognition that the antitrust laws limit the ability of market incumbents to suppress competition through state professional boards. We will remain vigilant through our enforcement initiatives and advocacy to safeguard competition and ensure that American consumers benefit from entrepreneurial initiative.

-----

RELATED:Landmark UK decision keeps whitening in the hands of dentists

More in Industry
Industry
New Article