[Sasha Volokh] What do you get when doctors regulate doctors?

Today I filed an amicus brief I wrote in Teladoc v. Texas Medical Board, a Fifth Circuit case involving the antitrust state-action immunity doctrine. The brief is for me and 54 other antitrust and competition policy scholars (many of whom joined the antitrust scholars’ N.C. Board of Dental Examiners brief by Rebecca Haw Allensworth, Aaron Edlin, and Einer Elhauge). Our appellate lawyer was friend and onetime co-blogger, D.C.-based appellate attorney Erik Jaffe.

As I mentioned above, the basic issue in the case is the antitrust state-action immunity doctrine. In 1943, the Supreme Court held that anticompetitive action by state legislatures doesn’t violate federal antitrust law, no matter how anticompetitive it is. Since then, the Supreme Court has explained when subdivisions of the state (like municipalities or state agencies) or even private people can get that immunity. The leading case on the subject is a 1980 case called Midcal Aluminum, but last year’s N.C. Dental case is the latest word on what happens with state licensing boards that are composed of active market participants.

Longtime readers may remember this post about N.C. Dental when it came down from the Supreme Court, posts like this one when N.C. Dental was up on cert, my posts about N.C. Dental and Phoebe Putney on the Reason Foundation web site, or my article about N.C. Dental in the NYU Journal of Law and Liberty.

To introduce this case, I can’t do better than to reproduce the summary of argument from the brief, which follows below. The brief itself is here, if you want to read the whole thing.

This appeal involves an effort by a state administrative agency, the Texas Medical Board, to evade the substance of federal antitrust law. The basic purpose of antitrust law is to prevent markets from being manipulated anticompetitively—yet that is precisely what professional licensing boards dominated by market participants do. The Board argues that it is actively supervised and therefore qualifies for the narrow state-action immunity to antitrust law. But this active supervision is illusory, and this Court should not be fooled by the Board’s attempt to argue otherwise.

The background for this dispute begins with California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), where the Supreme Court held that private parties are not immune from antitrust law unless (1) they are acting pursuant to a clearly articulated anticompetitive state policy and (2) they are actively supervised by the State.

In particular, professional licensing boards dominated by market participants can have anticompetitive effects, and federal antitrust law plays a valuable role in controlling these effects. The Supreme Court recognized as much in North Carolina State Board of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015), holding that the Midcal test—in particular its second prong—applies to such boards, just as it applies to fully private parties: “[A] state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal’s active supervision requirement in order to invoke state-action antitrust immunity.” 135 S. Ct. at 1114.

The Texas Board concedes that it is dominated by active market participants and that the active-supervision requirement therefore applies. However, it argues, first, that state judicial review satisfies this requirement. Second, it argues that because Texas law has mechanisms to limit Board members’ self-dealing and promote accountability, the active-supervision requirement should be enforced less strictly than it would otherwis