Dentists Can’t Monopolize Teeth Whitening

(CN) - North Carolina's state dental board cannot ban non-dentists from offering teeth-whitening services, the 4th Circuit ruled.

North Carolina dentists began offering teeth-whitening services - essentially the application of peroxide to teeth by means of a gel or strip - in the 1990s. Beginning around 2003, non-dentists began offering the same services, often at a significantly lower cost.

Responding to complaints from dentists, the board issued at least 47 cease-and-desist letters to 29 non-dentists. Several of the letters indicated the sale or use of teeth-whitening products by a non-dentist is a misdemeanor.

The board also sent letters to mall operators asking them not to lease kiosk space to non-dentist teeth-whitening providers.

Its strategy proved highly effective, non-dentist providers were essentially expelled from the North Carolina teeth-whitening market.

In June 2010, the Federal Trade Commission issued an administrative complaint against the board, charging it with violating Section 5 of the Federal Trade Commission Act.

The following year, the agency issued a decision and order holding the board's actions were illegal and harmed consumers because they resulted in higher prices and reduced choices in whitening services.

Though the board filed suit for declaratory judgment, a federal judge in North Carolina dismissed the action as an improper attempt to enjoin ongoing administrative procedure.

The board then sought review of the FTC's order by the 4th Circuit, arguing that it was exempt from federal antitrust laws under the state action doctrine, which shields some conduct by states from anti-trust oversight. Commissions contended, however, that the board is a private party largely made up of dentists appointed by other dentists, and not actively supervised by the state.

On Friday, the Richmond, Va.-based federal appeals court shot down the board's petition.

"At the end of the day, this case is about a state board run by private actors in the marketplace taking action outside of the procedures mandated by state law to expel a competitor from the market," Judge Dennis Shedd wrote for a three-person panel.

"We affirm the FTC's mode of analysis and find that its conclusion that the Board's behavior was likely to cause significant anticompetitive harms is supported by substantial evidence," Shedd added.

The panel also noted the ease in understanding "that forcing low-cost teeth-whitening providers from the market has a tendency to increase a consumer's price for that service."

Judge James Wynn Jr. and Judge Barbara Milano Keenan joined in the opinion, with Keenan writing separately to "emphasize the narrow scope" of the court's holding in light of the 1980 Supreme Court decision, California Retail Liquor Dealers Association v. Midcal Aluminum.

"In this context, it is useful to state what our opinion does not hold," Keenan wrote. "We do not hold that a state agency must always satisfy the active supervision prong of the standard set forth in Midcal to qualify for antitrust immunity under the state action doctrine. Nor do we hold that a state agency comprised, in whole or in part, of members participating in the market regulated by that state agency is a private actor subject to Midcal's active supervision prong. Instead, our holding that the Board is a private actor for purposes of the state action doctrine turns on the fact that the members of the Board, who are market participants, are elected by other private participants in the market."

FTC chairwoman Edith Ramirez applauded the decision, saying "a state regulatory board dominated by self-interested private sector actors cannot shield its anticompetitive conduct from antitrust review using the state action doctrine."

The decision "recognizes that exemptions to the antitrust laws are to be applied narrowly and that consumers are best off when there is vigorous competition," Ramirez added.

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