North Carolina State Board of Dental Examiners v. FTC (N.C. Dental) has worked a potential revolution in antitrust law. A revolution because it makes clear that state regulatory agencies dominated by active market participants are not entitled to immunity from federal antitrust liability unless they are actively supervised by the State. But still only a potential revolution, because much depends on what counts as “active state supervision.”
The story of N.C. Dental is, in large part, the story of how federal courts have tried to define “the State” (for purposes of state-action immunity). N.C. Dental has rejected a labeling approach, a balancing approach, and a sovereignty approach in favor of a financial disinterestedness approach. I argue that this approach isn’t obvious from an abstract political-philosophy standpoint but is actually quite sensible as a limited, antitrust-specific definition.
Whether state administrative-law judicial review counts as active state supervision has been a topic of recent litigation. I argue that judicial review that is deferential—which is usually the case—can’t count. De novo, merits- based judicial review can count, but it’s rare. Moreover, the presence of other accountability-enhancing features shouldn’t be considered relevant unless those features are directly related to whether a disinterested official has approved the agency’s action on the merits.
Finally, I conclude that, in general, the mere availability of judicial review shouldn’t be considered active state supervision: it’s merely potential, it’s costly, and it often must wait until harm is suffered—which discourages its exercise. However, if state judicial review is actually invoked and upholds state regulation on the merits, such judicial review should be considered active state supervision and should confer state-action antitrust immunity.