N.C. State Bd. of Dental Exam’rs v. F.T.C. (Summary)

ANTITRUST – STATE-ACTION IMMUNITY DOCTRINE

N.C. State Bd. of Dental Exam’rs v. F.T.C., No. 13-534 (U.S. Feb. 25, 2015)

The United States Supreme Court affirmed a decision by the United States Court of Appeals for the Fourth Circuit, holding that the North Carolina Board of Dental Examiners (“Board”) was not entitled to immunity from federal antitrust laws under the state-action immunity doctrine for the Board’s attempts to prevent non-dentists from offering teeth whitening services in the state.

Specifically, the Board had issued at least 47 cease-and-desist letters to various non-dentist teeth whitening service providers and product manufacturers. It justified this by arguing that teeth whitening is equivalent to “the practice of dentistry” for legal purposes, and that the unlicensed practice of dentistry is a crime.

The Federal Trade Commission (“FTC”) challenged these actions by filing an administrative complaint against the Board. The FTC claimed that the Board’s activities violated the federal antitrust laws. The Board asserted the state-action immunity doctrine, which permits state actors to engage in anticompetitive conduct under certain limited circumstances.

After a long series of appeals, the dispute between the Board and the FTC eventually reached the Supreme Court. The Court sided with the FTC, explaining that limits on state-action immunity are most important in circumstances where the Board has delegated regulatory power to active market participants. The Court illustrated its point by noting that eight of the ten members of the Board had themselves offered teeth whitening services at some time in the past. Because of this, the Court warned that market participants might be susceptible to hidden dual allegiances that affect their judgment.

Because a controlling number of Board members were active market participants with this kind of dual allegiance, the Court explained that the Board would only receive immunity if it acted under the active supervision of the state. The Board could not show that this active supervision requirement had been met. Therefore, it was not immune to the FTC’s antitrust challenge.