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The Â鶹´«Ã½ Trade Commission has announced its decision not to seek further review in the Supreme Court of its case against the California Dental Association ("CDA"), and has returned the matter to adjudication and dismissed the complaint.

The Commission vote was 5-0. Chairman Robert Pitofsky and Commissioners Sheila F. Anthony and Mozelle W. Thompson issued a separate statement respecting the Commission's decision not to petition for certiorari in this matter.

In their separate statement, Chairman Pitofsky and Commissioners Anthony and Thompson stated that their participation in this action "should not be taken as an indication of any lessening of our keen interest in the activities of trade or professional associations that harm competition." They further noted that the FTC issued its administrative complaint against CDA in July 1993, alleging that it had restrained competition among dentists in California in violation of Section 5 of the Â鶹´«Ã½ Trade Commission Act by placing unreasonable restrictions on its members' truthful and nondeceptive advertising of the price, quality, and availability of their services. The FTC's charges were upheld by Administrative Law Judge Lewis F. Parker. CDA appealed, arguing that it is a nonprofit organization beyond the reach of FTC authority, and that the ALJ had erred in finding that CDA conspired with its members to restrict advertising. The Commission rejected these arguments and issued an order prohibiting CDA from imposing broad categorical bans on truthfulness and nondeceptive advertising of the price, quality or availability of dental services. CDA challenged the Commission's jurisdiction over it, as a professional association organized as a nonprofit entity, but the Ninth Circuit Court of Appeals rejected that argument, and the Supreme Court unanimously confirmed the Commission's authority over such organizations. On the merits of the antitrust issues, the Ninth Circuit initially affirmed the Commission's order, but the Supreme Court, by a 5-4 vote, held that the Ninth Circuit had not engaged in an adequately searching analysis, and remanded to that court.

The three Commissioners stated that they "have serious concerns about several aspects of the Ninth Circuit's subsequent ruling. For example, the court appears to have engaged in de novo re-weighing of the evidence in a complex trial record, contrary to the established 'substantial evidence' standard of review. The court also credited CDA's arguments that its restrictions benefitted consumers by preventing advertisements that would mislead consumers, and by inducing dentists to provide more complete pricing information - notwithstanding that court's prior conclusion, on the same record, that there was 'no evidence' that CDA's restrictions resulted in increased transparency of price information. Finally, the court took the extraordinary step of directing dismissal of the case, rather than affording the Commission the opportunity to address any gaps in the evidentiary record in further administrative proceedings."

The separate statement explains that while these issues could well form the basis for seeking further review in the Supreme Court, the Commissioners recognize practical difficulties in proceeding in this manner. The Commission's decision was made on the basis of a factual record that closed in 1995. CDA has been subject to the Commission's Order (except for limited provisions that were stayed pending appeal) since 1996 and, as far as the Commissioners are aware, has complied with that order by refraining from enforcing the advertising restrictions that were the focus of the Commission's proceedings. Consequently, any further proceedings before the Commission would have to be based on stale evidence.

The statement concludes by reaffirming the Commissioners' commitment to monitor activities of trade or professional associations that restrict competition, and to take appropriate enforcement action where it can be proven that an association is enforcing restrictions that are likely to cause anticompetitive effects. "Where, for example, an association enforces advertising restrictions in a manner that systematically deprives consumers of valuable price and quality information, and that yields no corresponding benefits to competition or consumers, we continue to believe that grave antitrust concerns are raised. We do not read either the Supreme Court majority opinion, or the Ninth Circuit's opinion on remand, as holding to the contrary." Finally, the separate statement also encourages trade and professional associations to continue to work informally with FTC staff to develop self-regulatory programs that will achieve the substantial benefits of such regulation while avoiding restrictions that may dampen the vigor of competition.

Copies of the order and the separate statement, as well as other documents related to this case, are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll-free: 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC Docket No. 9259)