Protecting Economic Liberty by Other Means
Occupational licensing continues to burden businesses and entrepreneurs to no discernible benefit to consumers. While licensing requirements alone are economic barriers enough, regulators have proven savvy at using such regimes to frustrate the free operation of labor and capital markets, often as a means of rewarding or protecting politically-connected interests. Deputized by state governments—sometimes not even staffed by state employees—private practitioners acting as licensing boards can use their government-granted authority to bar entry, deter competition, and engage in price-fixing. Such self-interested and monopolistic behavior would be a clear violation of federal antitrust law were it not for the judicial invention of an immunity doctrine that shields state actors—even market participants—from such liability.
Thanks to the 1943 Supreme Court ruling in Parker v. Brown, state-government entities and private parties who act on state orders are typically immune from prosecution under federal antitrust laws. To avail themselves of Parker immunity, regulators must prove that the alleged anti-competitive behavior is in pursuance of a “clearly articulated” official policy, and that it is “actively supervised by the State itself.” In practice, both of these requirements have proven exceptionally low bars, and thanks to Parker and its progeny, state governments can institutionalize the same anti-competitive behavior for which businessmen and companies routinely face severe penalties. This impunity is legally unique. Pacific Legal Foundation (“PLF”) attorney Timothy Sandefur, also a Cato Institute adjunct scholar, has explained that exempting cartels protected by state law from federal law was “an extreme innovation in both antitrust law and federalism jurisprudence . . . . In virtually no other context can states exempt their citizens from the operation of federal statutes.”
The Supreme Court had the opportunity to reevaluate the need for and scope of Parker immunity this past term in the case of North Carolina Board of Dental Examiners v. Federal Trade Commission. The Court ultimately ruled that to enjoy state-action immunity, there re-ally does have to be active state supervision over the occupational-licensing board—you can’t just give a blank regulatory check to a private cartel. But it declined to question why this sort of immunity exists in the first place. Neither the six-justice majority nor the three dissenters saw fit to place meaningful limitations on Parker immunity or to contemplate relevant and too-often neglected constitutional principles, such as the right to earn a living.
