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From Antitrust Law Daily, September 12, 2017

Acting FTC Chairman advocates for occupational licensing reform

By Stephanie K. Mann, J.D.

Maureen K. Ohlhausen, Acting FTC Chairman, has strenuously advocated the need for reform in occupational licensing at two events this week. Speaking about the need to protect low- to middle-income workers from overburdensome restrictions, Ohlhausen addressed the efforts taken by the FTC to combat the problem.

Economic liberty. In remarks before the Fifth Joint Conference by the Concurrences Review and the George Washington University Law School yesterday, Ohlhausen addressed the topic of economic liberty. According to Ohlhausen, her first major initiative as Acting Chairman was to establish a task force to advance economic liberty, with a particular focus on occupational licensing reform. In the last 50 years, new barriers have been created for low- and middle-income Americans seeking new job opportunities due to the rise in occupational licensing. This is the result of government outreach or at the behest of incumbent market participants, said Ohlhausen.

To combat this problem, she formed the Economic Liberty Task Force to "shine a spotlight on the harms of unnecessary or overbroad occupational licensing and to partner with state leaders and other stakeholders to try to remove and reform these regulations." Ohlhausen then went on to describe the work that the task force has accomplished in the last seven months, including:

  • a roundtable session to discuss ways to facilitate license portability;
  • a roundtable session scheduled to discuss empirical evidence of the effects occupational licensing has on consumers and workers;
  • the creation of a centralized resource for licensing reform efforts;
  • drawn significant media attention to the problem and its harmful effects on middle- and low-income Americans and military families; and
  • held dozens of informational meetings with outside parties to learn about the extent of the problem and potential solutions.

Congressional hearing. At a Subcommittee on Regulatory Reform, Commercial and Antitrust Law oversight hearing today to examine potential antitrust concerns with the expansion of state occupational licensing, Ohlhausen emphasized that while occupational licensing can serve important goals by protecting consumers from harm, excessive licensing can leave consumers and workers in a worse condition by impeding competition.

While some form of occupational licensing is warranted to protect consumers from actual health and safety risk, specific regulations can have significant adverse effects on competition and consumers. These regulations must be analyzed for their impact on competition and, when it seems likely that anticompetitive effects will outweigh any consumer benefits, said Ohlhausen, the proponents of any restrictions should bear the burden of justifying why they are needed. The FTC has also urged states to be cautious when delegating authority to enforce potentially anticompetitive regulations to self-interested boards whose members represent the very occupation to be regulated.

FTC actions. To combat these issues, Ohlhausen testified that the FTC and its staff in two ways. First, as part of the FTC’s competition advocacy program, it often respond to calls for public comment and invitations from legislators and regulators, who ask FTC staff to identify and analyze specific restrictions that may harm competition without offering countervailing consumer benefits. The FTC will then urge policymakers to integrate competition concerns into their decision-making process. Specifically, asking them to consider whether:

  1. any licensing regulations are likely to have a significant adverse effect on competition;
  2. those restrictions are targeted to address actual risks of consumer harm; and
  3. the restrictions are narrowly tailored to minimize burdens on competition, or whether less restrictive alternatives are available.

Second, the FTC has used its enforcement authority to challenge anticompetitive conduct by regulatory boards whose members are active market participants. These enforcement actions have included challenges to agreements among competitors that restrain truthful and nondeceptive advertising, price competition, and contracting or other commercial practices. Ohlhausen also noted that the FTC has also challenged direct efforts to prohibit competition from new rivals where there is no legitimate justification for doing so.

Further testimony. Additional witnesses for the hearing include: Robert E. Johnson, Esq., Attorney, Institute for Justice; Rebecca H. Allensworth, Esq., Professor of Law, Vanderbilt Law School; and Sarah O. Allen, Esq., Senior Assistant Attorney General of the Commonwealth of Virginia.

Allen spoke about the need to protect consumers from fraudulent or unsafe practices by unqualified practitioners of vital consumer services, such as medical, engineering or legal services. But under a system of federalism, discussions about reducing the number of licensed occupations, the desirability of periodic sunset reviews for boards, or the ability of states to monitor professionals through less restrictive means, such as certification or registration, are best left to individual states to determine how best to structure their governments and economies in order to best protect their citizens.

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