Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Commissioner Ohlhausen testifies on state occupational licensing, competition enforcement, (Feb 3, 2016)

By Edward L. Puzzo, J.D.

With regard to state occupational licensing, the FTC endeavors to assist state regulators in assessing the impact of antitrust law, the state action doctrine, and its limitations, according to FTC testimony delivered by Commissioner Maureen K. Ohlhausen at a hearing of the Senate Judiciary Committee’s antitrust subcommittee on February 2. The topic of the hearing was state occupational licensing and competition enforcement.

Occupational licensing can further public policy goals such as health and safety, according to the testimony, but there is always a danger that the restrictions may not yield sufficient consumer benefits to justify the impediment to competition and the resultant higher costs. Occupational regulation can be especially worrisome when regulatory authority is delegated to a board consisting of members of the occupation it regulates. This may result in regulatory decisions that serve the private economic interests of its members rather than the public.

State action doctrine. Starting with the 1943 case of Parker v. Brown (317 U.S. 341), the Supreme Court established the state action doctrine, which states that where a state is acting in its sovereign capacity to achieve public policy objectives by acts such as the imposition of licensing requirements on occupations or otherwise limiting competition, federal antitrust laws cannot reach such conduct.

The doctrine has been refined over the years, Ohlhausen testified, most recently in North Carolina State Board of Dental Examiners v. FTC (135 S. Ct. 1101, 2015-1 Trade Cases ¶79,072), which held that where a licensing board on which a controlling number of decision makers are active market participants in the occupation the board regulates, their actions must be pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, and their conduct must be actively supervised by the State.

FTC enforcement. Consistent with the state action doctrine and NC State Dental, the FTC has brought a number of actions challenging anticompetitive conduct by state licensing boards acting outside the protection of the state action doctrine, Ohlhausen testified.

Upon the request of state officials seeking guidance on antitrust compliance for state boards regulating occupations, the FTC staff issued guidance in October 2015 on how states could satisfy the “active supervision” requirements. Ohlhausen emphasized that the antitrust analysis in such cases was fact-specific and context -dependent.

The FTC has also engaged in various advocacy efforts relating to licensing requirements for occupations and professions, including comments and amicus curiae briefs to state and self-regulatory entities on competition policy and antitrust law issues relating to such professionals as real estate brokers, electricians, accountants, lawyers, dentists and dental hygienists, nurses, eye doctors and opticians, and veterinarians. These advocacy efforts, Ohlhausen testified, have focused on various restrictions on price competition, commercial practices, entry by competitors or potential competitors, and truthful, nondeceptive advertising.

News: Antitrust FederalTradeCommissionNews