On February 25, 2015, in a 6-3 decision, the U.S. Supreme Court ruled that North Carolina’s State Board of Dental Examiners (“Board“) was NOT exempt from federal antitrust laws when it tried to stop non-dentist teeth whitening service providers. The history and ramifications of this case are HUGE! So let’s go into some of the details, ok?
The Board believed that teeth whitening constituted the “practice of dentistry”. The relevant legislation didn’t specify. But after dentists complained of non-dentist teeth whitening service providers, the Board sent out 47 cease-and-desist letters, warning them that practicing dentistry is a crime. This led the non-dentists to stop offering teeth whitening services in North Carolina.
Following me so far? Good… let’s keep going… what happens next is interesting…
The Federal Trade Commission (FTC) got wind of what the Board had done and filed an administrative complaint. The FTC alleged that the Board’s actions to EXCLUDE the non-dentists constituted an anti-competitive and unfair method of competition under the Federal Trade Commission Act. The case was appealed right up to the U.S. Supreme Court.
The U.S. Supreme Court sided with the lower court and held that because the Board was comprised of dentists, it can only invoke state-action antitrust immunity IF it was subject to active supervision by the State (i.e. the government). Since that requirement was not met (i.e. the Board was simply a self-regulating comprised of dentists, etc.), the Board did not have immunity and had violated federal antitrust laws. The idea here is this: if the Board was supervised by the State, then it could claim a monopoly and even violate antitrust laws and be immune because it was simply exercising the State’s sovereign power. But because the Board was made up of dentists who it was also trying to regulate at the same time, and because the board was not under the State’s active supervision, this IMMUNITY did not apply to the Board. Get it?
Now, in getting to that conclusion, the U.S. Supreme Court reviewed over 70 years of legal jurisprudence, trying to reconcile the various tests that have been laid down.
So what are the implications? Well, basically, the monopoly that dental boards may have enjoyed may now be called into question – if the boards are comprised of market participants. Those boards may make decisions (like trying to stop competitors to dentists) from participating in the marketplace, but those decisions may come under attack by the FTC for being anti-competitive. Dental boards may try to modify their internal structures to come under some kind of active state control so that they can enjoy immunity from anti-competitive and antitrust laws.
In case you were wondering, up here in Canada, the Competition Bureau (equivalent to the FTC) has been investigating various aspects of the dental industry as follows over the past few years:
2008: the Competition Bureau launched a national study into the self-regulated profession of dentistry (looking at methods and regulating practices used int eh industry and analyzing their potential economic impact to ensure the system in place delivers the maximum possible benefits of competition to consumers).
Over the next few years: the Competition Bureau lauded provinces that allowed dental hygienists to self-regulate, incorporate and operate their own independent practices.
2014: the Competition Bureau undertook a review of the restrictions among dentists (and others) in an ongoing effort to promote competition to ensure that consumers benefit from lower prices and higher levels of choice and quality.
