CSG Joins SLLC Supreme Court Brief in State Agency Antitrust Case

The Supreme Court will decide in North Carolina State Board of Dental Examiners v. FTC whether state boards with members who are market participants elected by their peers must be “actively supervised” to be exempt from federal antitrust law.  This case will impact the thousands of state boards and commissions nationwide (at least those with market participants elected by their peers that take actions that implicate federal antitrust law). 

The North Carolina State Board of Dental Examiners is a state agency primarily made up of dentists elected by other dentists.  The Board, which has the power to enjoin the unlicensed practice of dentistry, successfully expelled non-dentist providers from the North Carolina teeth-whitening market.  The Federal Trade Commission found that the Board engaged in unfair competition in violation of federal antitrust law.

The state action doctrine exempts states from federal antitrust law.  It applies to private parties if they are acting pursuant to a clear state policy of anti-competition and are being actively supervised by the state; substate actors only have to be acting pursuant to a clear state policy.  The Board argued that it does not need to be actively supervised because it is a state agency.  The lower court disagreed concluding that when the majority of a state agency is made up of market participants who are chosen and accountable to fellow market participants, active supervision is required.  The court reasoned that a state agency may not “foster anti-competitive practices for the benefit of its members.” 

The SLLC’s brief points out that states typically have hundreds of boards and commissions that are prohibited by state law from engaging in self-interested decision making, meaning active supervision is unnecessary.  The SLLC’s brief also argues that precedent and the practical difficulty of actively supervising hundreds of boards and commissions indicate active supervision should not be required.

Seth P. Waxman, Thomas G. Sprankling, and Alan Schoenfeld of WilmerHale wrote the SLLC’s brief.  The National Governors Association, the National Conference of State Legislatures, and the Council of State Governments joined the brief.