This case addressed the question of whether a state regulatory board created by state law, but composed of professionals with a commercial interest in limiting competition—which describes most state licensing boards in the U.S.—was immune from federal antitrust regulations because it functioned as a state agency.
Six of North Carolina’s eight-member Board of Dental Examiners must be licensed, practicing dentists. The board had attempted to allow only licensed dentists to offer teeth-whitening services by sending cease and desist letters to commercial teeth-whitening operations offered by unlicensed providers operating in spas and shopping malls, beginning in 2003. In response, the Federal Trade Commission filed a complaint against the board, ac
cusing it of anticompetitive behavior. The North Carolina Board of Dental Examiners claimed that its conduct was exempt from federal antitrust laws because it was a state agency.
The Supreme Court’s decision in favor of the FTC hinged on its conclusion that, because the dental board consists mostly of dentists and thus presents a significant risk of self-interest without accountability through oversight, the dental board is not a sovereign entity.
“Building on prior case law, the Court held that the board’s conduct was not immune. Only sovereign decisions by a state are exempt,” wrote James F. Blumstein, University Professor of Constitutional Law and Health Law & Policy at Vanderbilt University, commenting on the decision. “When a non-sovereign governmental entity acts, its behavior is exempt from antitrust scrutiny only when it acts pursuant to a clearly articulated state policy to prefer regulation to competition. And, secondly, a sovereign state entity must actively supervise the conduct to assure that the behavior reflects a state regulatory choice and not just a set of decisions by private actors acting in self-interest, even if under the rubric of state law.”
The Court’s ruling made clear that almost all state professional boards, as currently comprised, are vulnerable to antitrust liability.
Writing for the majority, Justice Anthony Kennedy cited the article by Allensworth and Edlin, who had identified the risk of self-interest if a regulatory board was composed of active professional practitioners in their 2014 Pennsylvania Law Review article. Allensworth and Edlin, who is the Richard W. Jennings Professor of Law at Berkeley Law, had also filed an amicus brief in the case in support of the FTC’s position.
Justice Samuel Alito issued a dissenting opinion in the case, in which he was joined by Justices Antonin Scalia and Clarence Thomas.