When is a business being competed against unfairly? The issue of unfair competition can be a complex and controversial topic in business law. Louisiana residents should be interested to know that the U.S. Supreme Court is getting ready to hear and adjudicate on whether the states have the right to allow professions that require regulatory boards to have said boards manned and overseen by members of those professions.

The reason this type of setup may be problematic is due to potential conflict of interest. Board members who are also actively practicing their profession have a vested interest in enacting and enforcing regulations that favor their interest to the exclusion of other businesses by unfairly limiting competition. This in turn could cause them to contravene federal antitrust laws.

A perfect example can be drawn from the case before the Supreme Court. In the 2007 case, the Board of Dental Examiners deemed that all operators of teeth-whitening kiosks that are typically found in malls and tanning salons where teeth-whitening kits are sold need a dentistry license. The reason being that teeth whitening falls under the purview of dentists, and thus selling kits requires a valid dentistry license.

The board then took it upon itself to send cease-and-desist letters to all operators that did not have the required license which forced them to close shop. Customers were left with no choice but to purchase kits from dentists who sold over the counter kits at a significantly higher price than their kiosk counter parts. The Federal Trade Commission pushed back, arguing that the board unfairly limited competition in the teeth whitening services market place. The board in retaliation sued the FTC claiming that it overstepped its bounds.

This business litigation issue has increased in prominence as the need for government-issued licenses to be able to work in a given profession has steadily increased over the years. Consider that in the 1950s, only five percent of jobs required a government-issued license. That figure has increased to about 15 percent by the 1970s and today is hovering around 30 percent according to a Princeton study.

Unfair competition issues can arise at any time and can impact a business adversely. Contacting a business law firm familiar with such issues to tackle the issue head-on may be helpful.

Source: The Salt Lake Tribune, “U.S. high court: Who best judges fair competition?” Emery Dalesio, October 13, 2014