US Federal Trade Commission Drills North Carolina Dental Board...

Opinion by Consumer Advocate  Tim Bolen 

Monday, June 21st, 2010

The North Carolina Dental board is in BIG TROUBLE...

On Thursday June 17th, 2010 The Federal Trade Commission (FTC) filed formal charges against the North Carolina Dental Board, saying:

"Dentists in North Carolina, acting through the instrument of the North Carolina Board of Dental Examiners (“Dental Board”), are colluding to exclude non-dentists from competing with dentists in the provision of teeth whitening services. The actions of the Dental Board prevent and deter non-dentists from providing or expanding teeth whitening services, increase prices and reduce consumer choice without any legitimate justification or defense, including the “state action” defense. The actions of the Dental Board unreasonably restrain competition and violate Section 5 of the Federal Trade Commission Act."

Section 5 of the Federal Trade Commission Act says, in part:

"Whenever the Commission shall have reason to believe that any such person, partnership, or corporation has been or is using any unfair method of competition or unfair or deceptive act or practice in or affecting commerce, and if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint.

The person, partnership, or corporation so complained of shall have the right to appear at the place and time so fixed and show cause why an order should not be entered by the Commission requiring such person, partnership, or corporation to cease and desist from the violation of the law so charged in said complaint.

Any person, partnership, or corporation may make application, and upon good cause shown may be allowed by the Commission to intervene and appear in said proceeding by counsel or in person.

The testimony in any such proceeding shall be reduced to writing and filed in the office of the Commission.

If upon such hearing the Commission shall be of the opinion that the method of competition or the act or practice in question is prohibited by this subchapter, it shall make a report in writing in which it shall state its findings as to the facts and shall issue and cause to be served on such person, partnership, or corporation an order requiring such person, partnership, or corporation to cease and desist from using such method of competition or such act or practice."

To read the entire act, click here.

The North Carolina Dental Board, and each of its Members, is in BIG TROUBLE...

Why?  Here is what the FTC sees:

"The Dental Board consists of six licensed dentists, one licensed hygienist, and one
“consumer member,” who is neither a dentist nor a hygienist. Each dentist member is
elected to this position by the licensed dentists of North Carolina, and serves a three-year
term. Collectively, the six dentist members can and do control the operation of the
Dental Board. Each dentist member is financially interested in decisions reached by the Dental Board because, while serving on the Dental Board, each dentist member continues to engage in the for-profit business of providing dental services."

More, the FTC points out:

"THE DENTAL BOARD IS ACTING TO SUPPRESS COMPETITION.

15. The North Carolina dental statute does not expressly address whether, or under what
circumstances, a non-dentist may engage in teeth whitening.
16. The Dental Board has decided that the provision of teeth whitening services by nondentists constitutes UPD. As detailed herein, the Dental Board has acted in various ways to eliminate the provision of teeth whitening services by non-dentists.
17. The Dental Board interprets the North Carolina dental statute as permitting non-dentists to engage in the retail sale of teeth whitening products for use at home. However, the Dental Board has determined that any service provided along with a teeth whitening product, including advice, guidance, providing a customer with a personal tray, whitening solution, mouth piece and/or LED light, or providing a location to use the
whitening product, constitutes the practice of dentistry.
18. The Dental Board has engaged in several types of activities aimed at preventing nondentists from providing teeth whitening services in North Carolina.
19. In particular, the Dental Board has engaged in extra-judicial activities aimed at
preventing non-dentists from providing teeth whitening services in North Carolina.
These activities are not authorized by statute and circumvent any review or oversight by
the State.
20. On 42 occasions, the Dental Board transmitted letters to non-dentist teeth whitening
providers, communicating to the recipients that they were illegally practicing dentistry
without a license and ordering the recipients to cease and desist from providing teeth
whitening services.
21. On at least six occasions, agents of the Dental Board also threatened and discouraged non-dentists who were considering opening teeth whitening businesses by
communicating to them that teeth whitening services could be provided only under the
direct supervision of a dentist.
22. Furthermore, the Dental Board issued at least 11 letters to third parties, including mall owners and property management companies, with interests in approximately 27 malls, stating that teeth whitening services offered at mall kiosks are illegal. The purpose of these letters was to block the expansion of teeth whitening kiosks in shopping malls.
23. The Dental Board’s exclusion of the provision of teeth whitening services by non-dentists does not qualify for a state action defense nor is it reasonably related to any efficiencies or other benefits sufficient to justify its harmful effect on competition."

It gets even better.  For, the FTC also says:

"ANTICOMPETITIVE EFFECTS OF THE DENTAL BOARD’S ACTIONS

24. The exclusionary course of conduct of the Dental Board as alleged in Paragraphs 18-22 of the Complaint may be expected to continue in the absence of effective relief. As a
consequence of the challenged actions and course of conduct of the Dental Board, the
availability of non-dentist teeth whitening services in North Carolina has been and will
be significantly diminished. Numerous businesses have closed down entirely or have
ceased to sell teeth whitening products and/or services. Additional teeth whitening
businesses have curtailed their advertising or are unable to provide the types of services
desired by customers. Several malls in North Carolina have declined to permit the
operation therein of non-dentist teeth whitening businesses.
25. The challenged actions and course of conduct of the Dental Board have had and will have the effect of restraining competition unreasonably and injuring consumers in the
following ways, among others:

a. preventing and deterring non-dentists from providing teeth whitening services in North Carolina;

b. depriving consumers of the benefits of price competition; and

c. reducing consumer choice in North Carolina for the provision of teeth whitening
services."
 

You are really going to love this part...

"VIOLATIONS ALLEGED

26. The combination, conspiracy, acts and practices described above, constitute
anticompetitive and unfair methods of competition in or affecting commerce in violation
of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. Such
combination, conspiracy, acts and practices, or the effects thereof, are continuing and
will continue or recur in the absence of appropriate relief."

To read the entire FTC Complaint, click here.

And, stay tuned...