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Cartels by Another Name: Should Licensed Occupations Face Antitrust Scrutiny?

dc.contributor.authorAllensworth, Rebecca Haw
dc.contributor.authorEdlin, Aaron S.
dc.date.accessioned2015-06-01T18:24:03Z
dc.date.available2015-06-01T18:24:03Z
dc.date.issued2014
dc.identifier.citation162 Univ. of Pennsylvania Law Review 1093 (2014)en_US
dc.identifier.urihttp://hdl.handle.net/1803/7052
dc.descriptionarticle published in law reviewen_US
dc.description.abstractIt has been over a hundred years since George Bernard Shaw wrote that “[a]ll professions are a conspiracy against the laity.” Since then, the number of occupations and the percentage of workers subject to occupational licensing have exploded; nearly one-third of the U.S. workforce is now licensed, up from five percent in the 1950s. Through occupational licensing boards, states endow cosmetologists, veterinary doctors, medical doctors, and florists with the authority to decide who may practice their art. It cannot surprise when licensing boards comprised of competitors regulate in ways designed to raise their profits. The result for consumers is higher prices and less choice, as licensing raises wages by eighteen percent and bars competition from unlicensed workers. For African-style hair braiders, the result is either an illicit business or thousands of hours of irrelevant training imposed by a cosmetology board. For lawyers, the result is less competition from tax accountants, paralegals, and out-of-state lawyers. The Sherman Act’s great accomplishment has been to make cartels per se illegal and relatively scarce—unless the cartel is managed by a professional licensing board. Most jurisdictions consider such boards, as state creations, exempt from antitrust scrutiny by the state action doctrine, leaving would-be competitors and consumers no recourse against their cartel-like activity. We contend that the state action doctrine should not prevent antitrust suits against state licensing boards that are comprised of private competitors deputized to regulate and to outright exclude their own competition, often with the threat of criminal sanction. At most, state action should immunize licensing boards from the per se rule and require plaintiffs to prove their cases under the rule of reason. We argue that the Fourth Circuit’s recent decision, soon to be reviewed by the Supreme Court, to uphold a Federal Trade Commission (FTC) antitrust suit against a licensing board—denying state action immunity to a licensing board and thereby creating a circuit split—was a step in the right direction but did not go far enough. The Supreme Court should take the split as an opportunity to clarify that when competitors hold the reins to their own competition, they must answer to Senator Sherman.en_US
dc.format.extent1 PDF (73 pages)en_US
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen_US
dc.publisherUniversity of Pennsylvania Law Reviewen_US
dc.subjectOccupational licensingen_US
dc.subjectAntitrust suitsen_US
dc.subjectState licensing boardsen_US
dc.subject.lcshLicenses -- United Statesen_US
dc.subject.lcshCompetition, Unfair -- United Statesen_US
dc.subject.lcshHealth occupations licensing boards -- United Statesen_US
dc.subject.lcshCartels -- United Statesen_US
dc.subject.lcshAntitrust law -- United Statesen_US
dc.subject.lcshUnited States. Sherman Act.en_US
dc.subject.lcshUnited States. Federal Trade Commissionen_US
dc.subject.lcshUnited States. Supreme Courten_US
dc.titleCartels by Another Name: Should Licensed Occupations Face Antitrust Scrutiny?en_US
dc.typeArticleen_US
dc.identifier.ssrn-urihttp://ssrn.com/abstract=2384948


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