Monopolistic Licensing Board Taken to Court, Others Could Follow

By Matt Kelly

In 2015, the US Supreme Court ruled that North Carolina’s State Board of Dental Examiners, which administers the state’s occupational licensing regulations, violated federal antitrust law. Occupational licensing has been growing for decades, both in terms of the number of regulated industries and the costs to those seeking licenses. However, the North Carolina court case is a very new kind of response to such regulatory expansion. North Carolina State Board of Dental Examiners v. FTC could be the beginning of a major overhaul to state occupational licensing regulations across the nation, including Florida.

North Carolina’s dental licensing board is composed of six practicing dentists and two dental hygienists. When nondentists began offering teeth whitening services at lower prices than dentists around 2006, the board launched enforcement actions against them. Records from board meetings show that complaints about the insurgent teeth whiteners revolved around the low prices charged by nondentists rather than consumer safety. The Federal Trade Commission (FTC) subsequently sued the board under federal antitrust law, arguing that the state dental board acted monopolistically by allowing existing dentists to collude and eliminate competition in their industry. The US Supreme Court voted 6-3 in the FTC’s favor. In the majority opinion, Justice Kennedy wrote, “Because a controlling number of the Board’s decision makers are active market participants in the occupation the Board regulates, the Board can invoke state-action antitrust immunity only if it was subject to active supervision by the State.”

The word “monopoly” usually connotes a private-sector firm that enjoys an unfair advantage due to an absence of competitors in its industry, whether because of economies of scale and transaction costs or through government regulations. Government entities like state licensing boards aren’t usually thought of in this way. Yet, North Carolina’s licensing board did seek to exclude competitors from the market. Dentists received higher profits and consumers paid higher prices because others were not allowed to compete. That certainly resembles a monopoly.

Licensing boards in Florida have also limited competition. A recent article in the Tampa Bay Times highlights abuse by the Pinellas County Construction Licensing Board, which enforced regulations arbitrarily and with little oversight from elected officials. This board didn’t just act monopolistically; it disregarded Florida ethics and public records laws. The board, made up mostly of contractors with a vested interest in limiting competition, routinely issued enforcement actions without a quorum, turned off tape recordings at meetings when it suited them, and didn’t keep meeting minutes or voting records. Critics of the board were targeted for fines. Complaints against board member companies were dismissed and conflicts of interest weren’t properly disclosed before rulings.

A 2015 paper by economist Morris Kleiner estimates that occupational licensing has resulted in the destruction or prevention of 2.85 million jobs nationwide and cost consumers as much as $203 billion annually. Florida’s occupational licensing laws are some of the country’s most excessive, as detailed in a 2016 DeVoe Moore Center policy brief. The justification for these regulations is particularly weak for licensing auctioneers, interior designers, and barbers, where no public safety issue exists. In addition to these economic costs, states like Florida could be liable for court costs from defending anticompetitive regulatory boards.

Monopolizing occupations is no way to regulate. Reining in licensing boards, and altogether eliminating some occupational licensing laws would encourage competition in some of Florida’s monopolized occupations and provide greater access to these services by consumers at a lower cost.