NC Dental Antitrust Professors Amicus Brief

44 Pages Posted: 14 Aug 2014  

Rebecca Haw Allensworth

Vanderbilt University School of Law

Einer Elhauge

Harvard Law School

Aaron S. Edlin

University of California at Berkeley; National Bureau of Economic Research (NBER)

Date Written: August 11, 2014

Abstract

Petitioner advocates a radical change in this Court’s precedent on antitrust state action immunity, which has consistently held that financially-interested market participants must be treated as private actors, regardless of whether the state makes them a state agency. Under Petitioner's logic, a state instead can, by the simple expedient of calling market actors a state agency and giving them authority to enforce their cartel, immunize that private cartel and effectively repeal the operation of federal antitrust law. This sort of inverse preemption of federal antitrust law by states has never been permitted by this Court. Petitioner mischaracterizes the cases it claims support its position, which in fact have never given state action immunity to financially-interested market participants unless they are actively supervised by disinterested government actors, and ignores or mischaracterizes other cases that plainly hold the contrary.

In recent decades, the states have created a host of new licensing boards made up of market participants with strong incentives to restrain trade. See Aaron Edlin & Rebecca Haw, Cartels By Another Name: Should Licensed Occupations Face Antitrust Scrutiny? 162 U. Penn. L. Rev. 1093 (2014). Occupational licensing, once limited to a few licensed professions, is widespread and growing -- from 5% of the U.S. workforce in the 1950s, to 15% in the 1970s, to 30% today. Occupational licensing has been abused by incumbent market participants to exclude rivals, often in unreasonable ways, and to raise prices. This disturbing trend already costs consumers billions of dollars every year and impedes job growth, and the trend would get much worse if the Court were to accept Petitioner’s argument and hold that financially-interested market participants enjoy antitrust immunity whenever the state empowers them as a state agency.

Even if the North Carolina board members were not themselves financially-interested market participants, the fact that they were all elected to their positions by financially-interested market participants should suffice to treat the board as private. After all, if a private cartel paid an employee a flat salary to fix prices for it, the fixed prices would predictably reflect the cartel’s financial interests even though the employee was not a market participant and had no direct financial interest in the prices set. Thus, election by financially-interested market participants should always be treated as sufficient to treat a board as private, although such election is not necessary for such treatment when (as here) the board members are themselves financially-interested market participants. Sufficiency, should not, however be confused with necessity. Because state boards dominated by financially-interested market participants are almost always appointed, if the Court changed current law to make election by market participants necessary to lose immunity, it would leave the foxes to guard the henhouse for a large fraction of the workforce.

Keywords: antitrust, state action, immunity, dental, Midcal, Parker, Goldfarb

JEL Classification: K21, L12, L40, L41, L42

Suggested Citation

Allensworth, Rebecca Haw and Elhauge, Einer and Edlin, Aaron S., NC Dental Antitrust Professors Amicus Brief (August 11, 2014). Available at SSRN: https://ssrn.com/abstract=2479114 or http://dx.doi.org/10.2139/ssrn.2479114

Rebecca Haw Allensworth

Vanderbilt University School of Law ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

Einer R. Elhauge (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States

Aaron S. Edlin

University of California at Berkeley ( email )

Dept of Economics 549 Evans Hall #3880
Berkeley, CA 94720
United States
510-642-4719 (Phone)
510-643-0413 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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