WASHINGTON (CN) - North Carolina dentistry regulations that proscribe nondentists from offering teeth-whitening services will face Supreme Court scrutiny, the justices said Monday.
Nondentists joined the teeth-whitening field - essentially the application of peroxide to teeth by means of a gel or strip - about a decade ago, significantly undercutting the costs dentists charge for the same procedure.
Complaints from dentists led the North Carolina Board of Dental Examiners to issue at least 47 cease-and-desist letters to 29 nondentists. Several of the letters indicated the sale or use of teeth-whitening products by a nondentist is a misdemeanor.
The board also sent letters to mall operators asking them not to lease kiosk space to nondentist teeth-whitening providers.
Its strategy proved highly effective, essentially expelling nondentist providers 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. It decided a year later that 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.
A three-judge panel of the 4th Circuit last year shot down
the board's claims that it was exempt from federal antitrust laws under the state action doctrine, which shields some conduct by states from anti-trust oversight.
"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," the June ruling states.
"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," Judge Dennis Shedd wrote for the court.
There is no difficulty in understanding "that forcing low-cost teeth-whitening providers from the market has a tendency to increase a consumer's price for that service," the panel added.
The ruling emphasized its narrow scope 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."
The Supreme Court did not issue any comment in granting the board a writ of certiorari Monday, as is its custom.