In its Active Supervision Guidelines, the Federal Trade Commission staff discusses how regulatory boards frequently act in an adjudicatory capacity by seeking to impose discipline on a licensee or by seeking to enjoin an unlicensed individual. While such actions may have an anti-competitive effect, those actions will not necessarily expose the board members to personal anti-trust liability if the Board’s actions are ministerial in nature, are expressly authorized by statute, or involve a reasonable restraint of competition. As an example of reasonable competition restraint, the FTC staff described how regulatory boards can sue to prohibit deceptive advertising. As an example of a ministerial proceeding, the FTC staff described how a board might revoke a license because the licensee failed to provide documentation required by statute. For another example, the Guidelines reference where a state statute defines functions that require a license, and also authorize the regulatory board to enjoin an unlicensed individual from performing those functions.
When the members of the Missouri State Board of Embalmers and Funeral Directors ran afoul of the Federal Trade Commission ten years ago, the Board sought to enjoin an unlicensed individual from selling caskets. The Board relied upon a regulation, rather than a statute, as the authority for the functions that could not be performed by an unlicensed individual. Putting aside the “clear articulation” prong required by California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), the Missouri State Board would have been required to demonstrate the following actions were taken by the either the Division of Professional Registration or the Missouri Attorney General’s Office before the lawsuit was filed:
(i) reviewed the evidentiary record created by the regulatory board;
(ii) supplemented the evidentiary record if and as appropriate;
(iii) undertook a de novo review of the substantive merits of the proposed disciplinary action, assessing whether the proposed disciplinary action comports with the policies and standards established by the state legislature; and
(iv) issued a written decision that approved, modified, or disapproved the disciplinary action proposed by the regulatory board.
In the case of a proceeding to discipline a licensee, the FTC staff suggests that that a disciplinary action taken by a regulatory board affecting a single licensee will typically have only a de minimis effect on competition. However, a pattern or program of disciplinary actions by a regulatory board affecting multiple licensees could have a substantial effect on competition.