Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC addresses House Small Business Committee on occupational licensing requirements, (Jul 16, 2014)

By Jody Coultas, J.D.

Today, Andrew Gavil, the FTC Director of the Office of Policy Planning appeared before the U.S. House of Representatives’ Committee on Small Business at its “Barriers to Entrepreneurship: Examining the Antitrust Implications of Occupational Licensing” hearing. Director Gavil delivered FTC testimony on the agency’s approach to evaluating the potential anticompetitive effects of regulation of occupations, trades, and professions and how the FTC uses a combination of advocacy and enforcement tools to promote competition among professionals.

Licensing regulations generally stipulate entry conditions and define the various practices that constitute a licensed occupation. Licensure can help to prevent consumer fraud and mitigate the effects of certain types of market failure, but also works as an inherent constraint on competition. The rapid growth in the number of fields requiring licenses has raised questions about the standards being imposed and whether the licensure restrictions are being used properly. Almost 30% of U.S. workers are now employed in fields requiring licensing. Some restrictions may harm competition and mobility in the workforce by impeding competition and hindering entry into markets. Regulations may also lead to higher prices, lower quality services and products, and less convenience for consumers.

Occupational regulation can be problematic when regulatory authority is delegated to a nominally “independent” board comprising members of the very occupation it regulates. Industry regulation may also be used to protect current industry incumbents rather than consumers. To address the issues raised by occupational regulation, the FTC’s competition advocacy program responds to calls for public comment and invitations from legislators and regulators to identify and analyze specific licensure restrictions that may harm competition without offering significant consumer benefits. The FTC has also used its enforcement authority to challenge anticompetitive behavior by occupational regulators.

Advocacy. FTC’s competition advocacy program, which includes comments, testimony, workshops, reports, and amicus briefs, encourages federal and state policy makers to consider the competitive effects of existing and proposed regulations. The FTC advocates that federal, state, and local policymakers, as well as private, self-regulatory authorities integrate competition concerns into their decision-making process. The Commission has submitted hundreds of comments and amicus curiae briefs to state and self-regulatory entities on competition policy and antitrust law issues. When invited by the regulatory agencies, the FTC has generally been successful in influencing awareness of competition concerns, it was noted.

During questioning, Gavil addressed the concerns of transportation applications and ride share services, such as Uber and Lyft. The FTC has submitted comments in Chicago questioning whether the proposed regulations requiring ride share services to carry three times the insurance required of established taxi services was necessary for public safety or an unreasonable barrier to entry into the market.

Enforcement. The FTC has challenged agreements among competitors that restrained advertising and solicitation, price competition, and contract or commercial practices, as well as direct efforts to prohibit competition from new rivals, without any cognizable justification. In one such instance, the FTC challenged the North Carolina Board of Dental Examiners for issuing a series of cease-and-desist letters that expelled low-cost, non-dentist providers of teeth whitening services from the market. The case is currently pending before the Supreme Court. Many of the Commission’s enforcement actions have challenged restrictions on the dissemination of truthful advertising of professional services in the health care industry. Some regulatory boards have sought to suppress information that could be useful to consumers of their services, while other private self-regulatory associations have imposed unlawful advertising restraints. The Commission has ordered these boards and associations to cease and desist from imposing such restrains.

The FTC has not, however, closely studied whether, or to what extent, particular occupations should be subject to licensure as a form of regulation. Nor has the FTC attempted to design regulatory institutions or tell various jurisdictions and licensing authorities how best to administer their licensing laws, it was noted.

News: Antitrust FederalTradeCommissionNews