FTC Commissioner Ohlhausen Testifies Before Senate Judiciary Subcommittee Regarding Occupational Licensing and the State Action Doctrine

In testimony presented to a U.S. Senate Judiciary subcommittee, the Federal Trade Commission described its competition enforcement and advocacy work relating to state regulatory boards and licensing requirements for occupations, trades, and professions.

Testifying on behalf of the FTC before the Subcommittee on Antitrust, Competition Policy and Consumer Rights, Commissioner Maureen K. Ohlhausen noted that while occupational licensing can help protect consumers from health and safety risks and support other valuable public policy goals, unwarranted restrictions can harm competition, leaving consumers with higher-priced, lower-quality, and less convenient services.

“From, a competition standpoint, occupational regulation can be especially worrisome when regulatory authority is delegated to a board composed of members of the occupation it regulates,” Commissioner Ohlhausen said.

According to the testimony, this type of board may make regulatory decisions that serve the private economic interests of its members and not the policies of the state. Such decisions could result in occupational restrictions that discourage new entrants; deter competition among licensees and from providers in related fields; and suppress truthful, nondeceptive advertising, and innovative products or services that could challenge the status quo.

The testimony notes that while the principles of federalism embodied in the state action doctrine limit the reach of federal antitrust laws when a restraint on competition is imposed by a state, this does not mean that all state regulators are exempt from antitrust scrutiny. Through its enforcement and advocacy work, the Commission has helped to define the contours of the state action doctrine for actions taken by state boards composed of private actors – culminating in last year’s decision by the Supreme Court in North Carolina State Board of Dental Examiners v. FTC.

The testimony notes that in the wake of the Supreme Court decision, state officials have sought advice from the FTC on antitrust compliance for state boards responsible for regulating occupations. In October 2015, FTC staff issued guidance on how states can comply with the state action doctrine with respect to regulatory boards controlled by market participants. Although this guidance does not have the force of law, it may help state officials determine the appropriate level of oversight they need in order to benefit from state action immunity.

Since the late 1970s, the Commission and its staff have submitted to state agencies and self-regulatory bodies hundreds of comments and amicus curiae briefs on competition policy and antitrust law issues relating to real estate brokers, electricians, accountants, lawyers, dentists and dental hygienists, nurses, eye doctors and opticians, and veterinarians.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

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