States have three options to react to a U.S. Supreme Court ruling making state licensing boards more vulnerable to antitrust lawsuits, say two law professors whose research was cited in the decision.
The Feb. 25 ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission affirmed the FTC’s position that state licensing boards controlled by “active market participants” are exempt from antitrust lawsuits only if they are also supervised by the state itself.
State licensing boards oversee professions ranging from boxing to medicine to cosmetology.
As they are currently composed, most licensing boards in the United States are groups of licensed practitioners in their fields. This can lead to anticompetitive regulation that stifles competition, argued Rebecca Haw Allensworth and Aaron Edlin in an article for the University of Pennsylvania Law Review.
Now Allensworth, associate professor of law at Vanderbilt Law School, and Edlin, the Richard Jennings Professor of Law and professor of economics at UC Berkeley, argue that states have three options going forward to avoid antitrust lawsuits.
- Change the composition of licensing boards so that they are a mix of licensed professionals (not a majority) and members representing other interests such as consumers and safety experts.
- Leave the composition of licensing boards as they are, but increase the state’s supervision of the boards, making state government more politically accountable for anticompetitive excesses of the boards.
- Do nothing, if state officials are confident that their licensing boards are addressing legitimate health and safety risks in a reasonable manner.
“Although exactly how states will react to the Supreme Court’s opinion is uncertain, one thing is clear,” Allensworth said. “The Supreme Court is intolerant of cartel activity, whatever its form, and it has taken an important step toward restoring competition as a real force in the professions.”