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Competition policy took center stage before the Supreme Court this term, after the Court agreed to review an appellate court decision rejecting an FTC challenge to a hospital merger-to-monopoly. At issue was whether the Georgia legislature had shielded the local hospital authority from federal antitrust review by granting it general powers to acquire hospitals. Under the state action doctrine, actions of the state or its subdivisions are not subject to the federal antitrust laws if the legislature clearly articulates and affirmatively expresses a policy to displace competition with regulation. The Court, in a unanimous decision, found that there was no evidence that the legislature contemplated that the hospital authorities would displace competition by consolidating hospital ownership.

“[G]iven the fundamental national values of free enterprise and economic competition that are embodied in the federal antitrust laws, state-action immunity is disfavored. . .”

– Supreme Court, FTC v. Phoebe Putney Health System, Inc

This case is the latest FTC effort to clarify when state regulation prevents application of the federal rules favoring competition. The Commission respects the values underlying the state action doctrine, but overbroad interpretations impose significant costs on consumers and can have long-lasting impact on market participants. For these reasons, the FTC recently rejected efforts by the North Carolina State Board of Dentistry to inappropriately use the doctrine as a shield to protect its anticompetitive efforts to discourage and prevent non-dentists from providing teeth whitening services to consumers. This case is pending review by an appellate court.

In addition to enforcement actions, the Commission offers its policy expertise in a number of other forums. In fact, for years, the FTC’s advocacy program has offered policymakers analysis and insights based on FTC experience and expertise. When asked, the Commission comments on state or local proposals that may enhance competition or, alternatively, impose burdens on market participants without generating offsetting benefits to consumers. As examples, FTC staff recently supported a proposal to eliminate existing restrictions preventing veterinarians from working at non-profit spay and neuter clinics in Alabama, and raised concerns about separate proposals to limit competition from new vehicle transportation services that utilize mobile app technology to serve passengers.

As part of its mission to promote competition for the benefit of consumers, the Commission urges policymakers to adopt a flexible regulatory framework that promotes innovation and informed consumer choice. As a general rule, the Commission strongly believes that competition should only be restricted when clearly necessary to achieve some countervailing benefit, such as protecting the public from significant harm.

Policy Highlights