An Enquiry Meet for Professional Regulation: Lessons from PolyGram
- Author(s): James Cooper
- Date Posted: 2017
- Law & Economics #: 17-49
- Availability: Full text (most recent) on SSRN
After North Carolina State Board of Dental Examiners v. FTC, it is clear that the antitrust laws have an important role to play in reforming occupational licensing, but the exact framework remains an open question. Under a rule of reason analysis, health and safety rationales are off limits. But if state board cannot draw on these types of consumer protection arguments to defend their actions, as a practical matter, can a state board ever win an antitrust suit? Some have suggested applying a modified rule of reason to incorporate non-competition justifications. But these approaches threaten to summon the ghost of Lochner and raise problems of subjectivity and predictability that are sure to arise when courts and enforcers are called on to weigh losses in competition against purported gains across other dimensions. Rather than expanding the rule of reason to accommodate non-competition concerns, there is a better path that draws from PolyGram Holding, Inc. v. FTC. Given the vast empirical literature pointing to the harms from state regulation of professions, board actions that restrain competition should be treated as inherently suspect as a matter of law. As such, in an antitrust challenge, the burden of persuasion immediately should fall to the board to provide an efficiency rationale that is both cognizable and plausible. If the board cannot muster a story involving cognizable benefits to competition to justify the restraint, it should be condemned as per se illegal, and the authorizing law subject to preemption. If the board is able to offer a justification that sounds in competition, it still must provide a plausible reason why either the restraint offers procompetitive benefits or does not harm competition. If they cannot meet this burden, the restraint should be condemned summarily. If they do, courts will conduct a full-blown rule of reason in inquiry.