Regulating the Regulators: North Carolina Board of Dental Examiners v. Federal Trade Commission

Summary: The North Carolina State Board of Dental Examiners is the state agency responsible for regulating the practice of dentistry in North Carolina. Under state law, six of the Board's eight members are practicing dentists elected by the state’s licensed dentists. In response to the Board's enforcement actions against non-dentist teeth-whitening providers, the FTC issued an administrative complaint charging that the Board had engaged in concerted action to exclude competition from those non-dentist providers. -- The Board moved to dismiss under the state-action antitrust doctrine, which exempts a State’s anticompetitive actions from federal antitrust scrutiny. The doctrine also exempts the activities of private actors if their conduct is (1) authorized by a clearly articulated state policy to displace competition, and (2) “actively supervised” by state officials. Municipal actors are exempt so long as they act pursuant to a clearly articulated state policy. -- The FTC determined that the state-action doctrine did not exempt the Board’s conduct. According to the FTC, a state regulatory body that is controlled by participants in the market that it regulates must be actively supervised by the State—it is treated as a private actor rather than a municipality. Thus, the FTC concluded, even assuming that the Board’s actions were authorized by a clearly articulated state policy, because no state official had “actively supervised” the Board’s enforcement activities, the state-action doctrine did not apply. The Board petitioned for review, which the Fourth Circuit denied. The Fourth Circuit agreed with the FTC that a state agency operated by market participants elected by other market participants is a private actor for purposes of the state-action exemption. And for such agencies, the court reasoned, the State must "exercise sufficient independent judgment and control" to address the “danger” that they are acting “to benefit [their] own membership,” even where their conduct is authorized by a clearly articulated state policy. -- The Supreme Court heard oral arguments on October 14. The Court will consider whether, for purposes of the state-action exemption from federal antitrust law, an official state regulatory board created by state law may properly be treated as a “private” actor simply because, pursuant to state law, a majority of the board’s members are also market participants who are elected to their official positions by other market participants. -- Featuring: Prof. Rebecca Haw Allensworth, Vanderbilt University Law School and Misha Tseytlin, Deputy Attorney General, Office of West Virginia Attorney General