The United States Department of Justice Antitrust Division (DOJ) has issued a second Business Review Letter pursuant to the expedited review process it announced on March 24, 2020 to review conduct related to COVID-19 within seven days. The letter released on April 20, 2020 issued to AmerisourceBergen Corporation, which follows a letter issued last week to medical/surgical distributors, again shows the DOJ is open to creative solutions that combat COVID-19, especially when those solutions are “focused on facilitating the government’s efforts” to get medical supplies where they are needed most.
The Business Review Letter states that the DOJ has no present intention to challenge AmerisourceBergen’s collaboration with federal government agencies, including FEMA and HHS and other private sector distributors to ensure supply and facilitate distribution of medications and other healthcare products to treat COVID-19 patients.
This week, the Federal Trade Commission filed an administrative complaint against the Louisiana Real Estate Appraisers Board (LREAB). This complaint is the FTC’s first against a state licensing board since it prevailed in the Supreme Court in the decision in NC State Board of Dental Examiners v. FTC in 2015. There, the Court held that immunity from the antitrust laws under the state action doctrine does not apply to a state board that regulates an industry if: 1) a majority of the board members are active participants in the market they are regulating, and 2) the board has not been actively supervised by the state. McDermott reported in detail about the NC Board of Dental Examiners at the time of the decision. The complaint comes on the tail of a settlement agreement between the FTC and a trade organization, the American Guild of Organists, as reported this week.
FTC alleges that the LREAB violated Section 5 of the Federal Trade Commission Act by unreasonably restraining price competition for real estate appraisal services provided to appraisal management companies (AMCs) in Louisiana.
On May 31, the Federal Trade Commission (FTC) recorded yet another victory in its continuing efforts to limit the scope and application of antitrust immunity under the state action doctrine. The Fourth Circuit ruled that the North Carolina State Board of Dental Examiners’ efforts to block non-dentists from providing teeth-whitening services was not entitled to antitrust immunity because the Board’s activities were not actively supervised by the state. North Carolina State Board of Dental Examiners v. Federal Trade Commission, Case No. 12-1172 (4th Cir. May 31, 2013).
The case focused on the activities of the North Carolina state agency, which is composed of several practicing dentists, a dental hygienist and a consumer representative. The Board licenses dentists in the state and is otherwise empowered to take disciplinary measures against licensees. Beginning in approximately 2003, in response to complaints from dentists practicing in the state, the Board opened numerous investigations into teeth-whitening services provided by non-dentists. As a result of these investigations, the Board issued dozens of cease-and-desist letters to such service providers and sought to restrict the market to licensed dentists by other means.
The Board’s activity attracted the attention of the FTC, which issued an administrative complaint in 2010 charging that the Board violated the FTC Act by acting to exclude non-dentist teeth whiteners from the market in North Carolina. A trial on the merits before an administrative law judge found the Board had violated the Act. On appeal, the FTC affirmed and entered a final order enjoining the Board from, among other things, continuing to unilaterally issue extra-judicial orders to teeth-whitening services in North Carolina. The Fourth Circuit’s decision came in response to the Board’s petition for review of the FTC’s order.
The Board maintained that it was a state entity created to regulate the practice of dentistry, which encompassed the teeth-whitening services. Under the state action doctrine, private parties may claim immunity from the antitrust laws if they act according to a “clearly articulated and affirmatively expresses state policy,” and their behavior is “actively supervised by the State itself.” California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc. (445 U.S. 97, 105 (1980). Municipalities and sub-state entities benefit from a less restrictive test. Such entities must act pursuant to a “state policy to displace competition with regulation or monopoly public service.” FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003, 1010 (2013). These entities are not required to demonstrate the “active state supervision” required under the two-prong Midcal test because with such entities there is little danger that their activities involve a private anti-competitive activities. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 47 (1985).
Relying on its status as a state entity, the Board maintained that it was not subject to the “active supervision” prong required under Midcal. The FTC countered that entities like the Board, regulatory bodies made up of market participants, were subject to the stricter Midcal test. The FTC focused on the need to [...]
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