Antitrust and the Politics of State Action

By Nachbar, Thomas B. | William and Mary Law Review, March 2019 | Go to article overview

Antitrust and the Politics of State Action


Nachbar, Thomas B., William and Mary Law Review


TABLE OF CONTENTS  INTRODUCTION                                                       1397 I. FROM PARKER TO NORTH CAROLINA STATE BOARD                       1399    A. Putting the State Back in State Action                       1400       1. The Parker Era: A State Actor?                            1400       2. Midcal's Turn                                             1405       3. Cities and the Lost Public/Private Distinction            1407    B. The Antitrust Ecosystem of Political Immunities              1412       1. Protections for Private Parties                           1412       2. Fitting the Pieces Together                               1414 C. Applying Parker (and the Lessons of Midcal,) to North Carolina  1415    State Board II. THE POLITICS OF STATE ACTION                                   1419    A. Taking off Antitrust Blinders                                1419    B. A Constitutional State Action Doctrine                       1424       1. State Action and Nondelegation                            1425       2. State Action and "State Action"                           1428       3. A Federal Standard                                        1429       4. Problems of an Economic Solution to a Political Problem   1430 III. THE WAY FORWARD                                               1431    A. Toward Antitrust Accountability                              1431    B. The Problem(s) with Midcal                                   1433    C. The Dubious Constitutionality of State Licensing Boards      1434    D. Merging Noerr/Pennington and State Action                    1435 CONCLUSION                                                         1437 

INTRODUCTION

In North Carolina State Board of Dental Examiners v. FTC, (1) the Supreme Court considered whether attempts by North Carolina's dental regulatory board (the Board) to prevent nondentists from engaging in teeth whitening should be immune from antitrust scrutiny by virtue of the doctrine of "state action immunity" first developed in Parker v. Brown. (2) As established by North Carolina law, an overwhelming majority of the Board (six of eight seats) must be dentists who are elected by the state's licensed dentists. (3) The Board is charged with the regulation of dentistry in the state, which includes the prohibition of unlicensed dentistry. (4) Consequently, the state's dentists are effectively in control not only of the practice of dentistry but also of defining what constitutes dentistry. (5) This means that their regulations can have considerable effects on non-dentists, including both patients (who purchase the dental services regulated by the Board) and nondentist practitioners of similar services (who might be excluded by them). (6) That is exactly what happened in the case of teeth whitening, which the Board determined to be "the practice of dentistry" and therefore required a license from the Board to perform. (7)

When one considers the kind of regulatory power the Board wields, and its effects on nondentists, (8) it might seem a little strange to vest control of the Board exclusively in the state's dentists. Don't we all have a stake in the question of how dentistry is performed? Why should we nondentists be effectively excluded from regulating such a substantial part of our economy?

The Court in North Carolina State Board analyzed the problem from the standpoint of self-dealing; it was problematic that the Board was made up largely of practicing dentists. (9) But that misses the point. The problem is not that the dentists are self-interested; the problem is that in a republican government it is the people, not its dentists, who set regulatory policy. (10) Imagine, if you will, that the State of North Carolina had vested exclusive regulatory authority over dentistry in the state's lawyers. That would solve the problem of self-interest, but it would still be completely illegitimate, not as a matter of competition regulation but rather as a matter of political control in a democratic society. …

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