CALIFORNIA DENTAL ASSOCIATION v. FEDERAL TRADE COMMISSION
The California Dental Association (CDA), a nonprofit association of local dental societies, provides its members with insurance and financing arrangements, and engages in lobbying, litigation, marketing, and public relations for members' benefit. Members agree to abide by the CDA's Code of Ethics, which prohibits false or misleading advertising. The Federal Trade Commission (FTC) brought a complaint against the CDA, alleging that the CDA's guidelines restricted two types of truthful, non-deceptive advertising: price advertising and advertising relating to the quality of dental services and therefore had violated section 5 of the Federal Trade Commission Act (FTC Act). An Administrative Law Judge (ALJ) held that the FTC had jurisdiction over the CDA and found a violation of section 5 of the FTC Act. The FTC adopted most of the ALJ's factual findings and held that the price advertising, as well as the non-price, restrictions were violations of the Sherman and FTC Acts under an abbreviated rule-of-reason analysis. In affirming, the Court of Appeals sustain the FTC's jurisdiction and concluded that an abbreviated rule-of-reason analysis was proper in this case.
Does the Federal Trade Commission have jurisdiction over the California Dental Association (CDA), a nonprofit professional association? Does an abbreviated rule-of-reason analysis suffice to justify the conclusion that the CDA's advertising restrictions violated the Sherman and Federal Trade Commission Act?
Legal provision: Federal Trade Commission
Yes and no. In an opinion delivered by Justice David H. Souter, the Court held that the FTC's jurisdiction extends to associations like the CDA, which provide substantial economic benefit to their for-profit members, but that because the disputed anti-competitive efforts were not obvious, more than the abbreviated rule-of-reason analysis, performed in this case, was required. Justice Souter wrote for the Court that, "[n]onprofit entities organized on behalf of for-profit members have the same capacity... to engage in unfair methods of competition or unfair and deceptive acts." Justice Souter, however, concluded that the Court of Appeals should have used a less-abbreviated standard of review to determine whether the FTC's invalidation of the CDA's rules was justified.
IN THE SUPREME COURT OF THE UNITED STATES
CALIFORNIA DENTAL ASSOCIATION, Petitioner v. FEDERAL TRADE COMMISSION.
January 13, 1999
The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:08 a.m.
PETER M. SFIKAS, ESQ., Chicago, Illinois; on behalf of the Petitioner.
LAWRENCE G. WALLACE, ESQ., Deputy Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Respondent.
CHIEF JUSTICE REHNQUIST: We'll hear argument next in No. 97-1625, California Dental Association v. Federal Trade Commission.
ORAL ARGUMENT OF PETER M. SFIKAS ON BEHALF OF THE PETITIONER
MR. SFIKAS: Mr. Chief Justice, and may it please the Court:
There are two issues in this case. The first is the question of whether or not the FTC Act has jurisdiction over a nonprofit professional association, and the second issue is whether or not the Commission and the Ninth Circuit appropriately applied a quick look rule of reason analysis to the facts in this case.
The jurisdictional dispute in this case is over the interpretation of -- of the phrase in section 4 of the FTC Act, which reads in its relevant part -- and this may be found in the petitioner's brief at pages 1 and 2 -- a company, trust, or association without shares of capital or capital stock which is organized to carry on business for its own profit or that of its members.
There is no disagreement on the record before Your Honors that the CDA is a bona fide, not-for-profit organized under California law, with a 501(c)(6) Federal tax exemption.
There are two major cases that discuss this jurisdictional. The first is the Community Blood Bank case and the second is the AMA case.
In the Blood Bank case, both of the respondents were not-for-profit associations. After a full trial, the FTC and the hearing officer found that they had violated the antitrust laws by hindering the development of two commercial blood banks.
On the jurisdictional issue, the hearing officer who heard the case and the commission made specific findings that there were benefits to members in these cases, and that's how they rested their jurisdiction.
QUESTION: Would just remind me, counsel? Was the organization in the Blood Bank case -- was that a 501(c)(3) or (c)(6)?
MR. SFIKAS: If the Court please, I've searched the record and I come to the conclusion that the Kansas City Area Hospital Association was not a 501(c)(3).
QUESTION: Do you recognize that there might be some 501(c)(6) organizations that would fit the definition of carries on business for the profit of its members?
MR. SFIKAS: Oh, yes, Your Honor. Yes.
QUESTION: So, you're distinguishing among 501(c) -- you're not saying all nonprofits are out.
MR. SFIKAS: That is correct, Your Honor. I am not.
QUESTION: And so, now you're going to tell us why, say, the Dental Association is different from the Real Estate Board.
MR. SFIKAS: Yes. If you -- well, I don't know that I'm going to tell you that difference because I'm not sure I know that much about the Real Estate Board, Your Honor.
But in connection with the California Dental Association, its primary purpose is for the public interest. It's to promote the art and science of dentistry. I think the critical language in the statute requires, however, that there be a profit, and profit was defined in the Community Blood Bank case to be the excess of revenue over expenses, with a contemplation that it is to be paid to the members. That was not done in the California Dental Association, and that's clear in this record. So, if -- I don't know the Real Estate Board well enough to --
QUESTION: Well, how about a trade organization that's there to promote, say, eggs? It wouldn't fit the definition of profit that you just gave us, would it?
MR. SFIKAS: Well, Your Honor, in the Seventh Circuit case involving egg nutrition, they made a -- the trial court -- and it was affirmed in the Seventh Circuit -- made a specific finding that they were organized for the profit of the Egg Commission. So that -- and that's not a finding in this case, Your Honor. No such finding --
QUESTION: Well, I guess there are some benefits, though, for the dentists to belong to the Dental Association: better insurance vehicles and other benefits that the organization may provide to its members.
MR. SFIKAS: Well --
QUESTION: Do you say that the organization provides no benefits to its members?
MR. SFIKAS: Oh, no, I wouldn't -- I wouldn't say that because the -- the membership dues for the tripartite membership in dentistry is over $1,000, and I think they get their -- their membership benefits.
But, Your Honor, as far as the California Dental Association is concerned, nonmembers can get those same services by paying a little more in the way of a fee. There's nothing that the California Dental Association does for dentists in the State of California that dentists can't get elsewhere, and in fact, only 75 percent of the dentists in the State are members of the California Dental Association.
QUESTION: Wasn't there a finding someplace that the value of the membership to each dentist was worth -- I don't know -- $20,000 or something?
MR. SFIKAS: That was -- that was not a finding, Your Honor. I think what that was, was -- was a looking at the way in which the books showed the -- the amount of money that -- that the California Dental Association gets largely from dues and how it was paid out. There was 7 percent for public service, and then there was 65 percent for membership. But that membership includes the promotion of the art and science of dentistry and high professional standards, so it's not mutually exclusive. In other words, in that 65 percent, there is the promotion of the public interest. It's not mutually exclusive.
QUESTION: But I read section 44 to say an organization which is organized to carry on business for its own profit or for the profit of its members. And -- and in some sense the Dental Association does exist for the benefit of the profit of its members.
MR. SFIKAS: Well, if the Court please, that turns on the definition of profit.
MR. SFIKAS: And the Community Blood Bank case said that that's the excess of revenue over expenses, either paid or contemplated to be paid. And clear -- clearly here there has been no dividend paid, no contemplation.
QUESTION: No, but it says, or the profit of its members. It's true that the association isn't paying out money, but it is in existence to help its dentists make money and profit and be qualified professionals and -- and succeed --
MR. SFIKAS: Well --
QUESTION: -- in the business of -- the profession of dentistry.
MR. SFIKAS: If the Court -- well, no, Your Honor, not in the -- not in the sense of the profit, the way that term is defined in the Blood Bank case and in a legion of cases that define the term profit, Your Honor.
QUESTION: Well, those are lower court cases, and I don't know that we've decided that. So, as I approached this initially, I would have thought it was designed to distinguish trade associations from charities. This is -- yours is a trade association and the Blood Bank is a charity.
MR. SFIKAS: Well, if the Court please, the other respondent in the Community Blood Bank case was not a charity. That was the Kansas City Area Hospital Association.
QUESTION: But I'm not -- I'm not speaking of a particular case. I mean, if I looked at this and said, look, it tries to distinguish trade associations from charities, why am I wrong? Am I wrong? And -- I -- granted, there are some tough distinctions somewhere along the line, but this wouldn't be one of them, I guess.
MR. SFIKAS: With all due respect, Your Honor, I would say that -- that you are wrong, that this is not a trade association, that this is different than the Egg Nutrition, for example, situation where clearly there was a finding there with reference to the organization for its profits. That was not a finding here. What the FTC argues in this case, as it did in the Blood Bank case and as it did in the AMA case, is --
QUESTION: Well, let's take a trade organization that unquestionably is a trade -- now, maybe milliners -- I don't know what it would be -- that wants to improve the image of milliners or hatters in the public view. It doesn't make profit in the sense that you are describing, but it does say, for example, if you join our organization, then you will likely have $6,000 in additional revenues, in other words, a 20 percent return on the investment that you've made in paying us dues. Suppose that was what the trade association said. And it did public things and it did things for the -- for the prestige of hatters and also was designed to help them make money. Would you say that the FTC had no authority over such a trade organization?
MR. SFIKAS: No, I would not, Your Honor, because I think even though I think the statute is clear on its face and you need not go to the legislative history, if you go to the --
QUESTION: But that wouldn't -- I gave you something that deliberately does not have the narrow definition of profit that you have been pressing.
MR. SFIKAS: Yes, but it is a commercial organization, and I think the phrase that we're talking about says, organized to conduct business and to gain a profit. I think that is doing business and --
QUESTION: It doesn't say, and. It says, business for profit.
MR. SFIKAS: Correct.
QUESTION: Business for the profit. Business for the profit.
MR. SFIKAS: Correct.
QUESTION: I don't know. Were organizations like the Cement Institute, the Sugar Institute, the Maple Flooring Association -- were they themselves making profit? I doubt it. I had always thought they were there to make profit for their members.
MR. SFIKAS: Well, Your Honor, I think if you look at the line of cases that the FTC relies on, in many of those cases, the sole purpose of the organization was to evade the antitrust laws. So, I -- I think it's very clear that in those cases they were making a profit, and in some of these other cases, I think it's clear to say --
QUESTION: Their members were.
MR. SFIKAS: No. I think the organization --
QUESTION: All right, okay. So -- so -- but if I --
MR. SFIKAS: Indiana Federation of Dentists, let's say. In that case, that was a guild. That guild was set up to avoid the antitrust laws --
QUESTION: What I'm asking --
MR. SFIKAS: -- and try to get the labor exemption. I think those cases fall in a different category, Your Honor.
QUESTION: Well, you'd also say they fall -- they fall in a different category if the dentists agreed on a recommended fee schedule that was higher than the market would otherwise provide. Then it would clearly be covered because that would be for the profit of the members.
I mean, a lot of trade associations have in the past engaged in price fixing. Raise the prices, we all make more money. And if that were alleged by your association, you would agree that it would be covered.
MR. SFIKAS: Your Honor, that would certainly be the case if that were the primary, dominant --
QUESTION: Maybe if just one of the subsidiary purposes. They mainly are interested in ethics of the industry and the reputation of the dentists, but incidentally, we also get the price level up about 10 percent higher than otherwise would be.
MR. SFIKAS: Okay. Your Honor --
QUESTION: If that were the case, I think you'd say it would be covered.
MR. SFIKAS: Well, Your Honor, you make another point that I think is -- is very valuable, and that point is that we're not asking for an exemption from the antitrust laws. Clearly we're subject to the Sherman Act and the Clayton Act.
All we're saying here is that Congress intended to have a limited statute for purposes of the FTC --
QUESTION: Well, except on that point, one of the peculiar interests of the Federal Trade Commission is advertising practices. And so, once -- insofar as you're in advertising, you seem to me to be perhaps more in the realm that is normally an FTC area of jurisdiction than just the Sherman Act.
MR. SFIKAS: Well, I'm -- I'm not sure how you come to that, and I respectfully disagree.
QUESTION: Are you going to answer Justice Stevens' question? Besides saying that -- that such an organization for that price fixing would be subject to the Sherman Act, will you answer his question of whether the Federal Trade Commission would have jurisdiction --
MR. SFIKAS: Are you saying -- I -- forgot all the facts of your hypothetical.
QUESTION: The very simple fact that the trade association, as some in our sorry history of antitrust laws have in the past done, are engaged in price fixing. They raise the level of the -- the fees that the dentists charge generally by restricting advertising, recommending fee rates, and doing a lot of things like that, which I'm not suggesting your organization does. But a hypothetical dental association doing that, would it be covered?
MR. SFIKAS: I would say there that there would be a finding that it's organized for the profit of its members and that -- that it would then probably be subject to the antitrust laws.
QUESTION: Subject to the Federal Trade Commission Act.
MR. SFIKAS: And the Federal Trade Commission, yes, Your Honor.
QUESTION: Why isn't the same thing true when one of its objects is -- is to make insurance cheaper? That increases the profit. Pay less for insurance, get more for fees. The result is the same to the members.
MR. SFIKAS: Well, I -- I think what we're quarreling about here is the definition of profit. That does not meet the definition of profit.
QUESTION: Well, the -- the -- in each case, the profit I understand is to be defined by an increase in what the dentists have at the end of the day. And in Justice Stevens' example, they get the increase by putting the fee up. In -- in the example, I think, of your client, they get it, if the association is doing its work, by paying less for overhead. What's the difference?
MR. SFIKAS: The difference is that Congress spoke a certain way in framing this legislation. This is the same Congress that also enacted the Clayton Act. The Clayton Act and the Sherman Act have very broad definitions of who persons are, who corporations are. Here clearly Congress meant something else.
What was going on at this time when this act was passed was the concern over the big trusts. Congress was not happy with the way in which the Sherman Act was being prosecuted, Your Honor, and as a result, it wanted to establish an agency, such as the Federal Trade Commission, which would have expertise with reference to industrial and commercial enterprises, not nonprofit professional --
QUESTION: But I -- I take it at the end of -- at the end of the day here, you're saying profit is -- is that increase in income which results from raising fees but not from lowering overhead, and that has -- that is of jurisdictional significance. Is that the line you draw?
MR. SFIKAS: No, I -- because -- no. The difference is, if what you're referring to is Justice Stevens' hypothetical --
QUESTION: I was referring to my hypothetical --
MR. SFIKAS: I'm sorry.
QUESTION: -- in -- in which they -- they don't get together to raise the fees. They get together to lower the overhead, in this particular case, by negotiating lower insurance rates for their members. At the -- at the -- at the -- the bottom line, as people like to say, is the dentists take home more money.
In Justice Stevens' example, they do it by charging more for the filling. In my example, they pay less for the insurance. Why in my example doesn't the -- doesn't the profit criterion get satisfied as well as in his?
MR. SFIKAS: Because of the language in the statute, Your Honor. That's not profit. That's not what is -- what was contemplated by Congress when it used the word profit. Clearly it meant the excess of revenue over expense contemplated to be paid to the members, Your Honor.
QUESTION: In Justice Stevens' example, the association isn't paying any money to the members. The association, as I understand his example, has simply agreed that all of its members will charge more money for the work that they do and, hence, will bring in more money into their own coffers. The association isn't paying them anything.
MR. SFIKAS: No. What I was saying was, as a practical matter, if that case came before a court, I think the court would make the finding that they're organized to conduct business to make a profit, Your Honor.
QUESTION: What I'm driving at with my -- I gave a number of classic cases. Imagine in each of those cases I change one fact, and I don't know if I'm changing it. But the trade association in those cases was not itself making a profit. All right, now I want to be -- that's what I'm imagining.
MR. SFIKAS: Are we talking about --
QUESTION: Now, I want to say if I imagine that --
MR. SFIKAS: That they're not making a profit --
QUESTION: They're not making a profit.
MR. SFIKAS: -- as that term is defined in Community Blood Bank, Your Honor.
QUESTION: I -- that's correct.
MR. SFIKAS: Okay.
QUESTION: Because they're only income is dues.
MR. SFIKAS: Okay.
QUESTION: And they spend all the dues.
MR. SFIKAS: Okay.
QUESTION: I'm imagining that.
MR. SFIKAS: Okay.
QUESTION: All right. Is there any other difference between your association and those?
MR. SFIKAS: Yes, Your Honor.
MR. SFIKAS: We have a public purpose. We promote the art and science of dentistry.
QUESTION: Well, I believe Maple Flooring would have promoted the art and science of maple flooring. It's beautiful, you know, aesthetically attractive, and so forth.
MR. SFIKAS: I do -- I -- I -- that --
QUESTION: Is there any other purpose -- any other difference?
MR. SFIKAS: That -- that is the major difference, Your Honor.
May I switch quickly to the -- the application of the -- the antitrust laws to this case? And may I refer you to the cert, appendix 246a, number 326.
The administrative law judge heard this case, saw the witnesses, reviewed the testimony, came to this conclusion after the trial. The activities of the CDA with respect to their enforcement of their code of ethics relative to advertising has no impact on competition in any market in the State of California, particularly with respect to price and output.
QUESTION: May I say at this point, I notice your brief quoted that several times, and you did not quote the fact that that was a quotation of what Professor Knox had concluded. You treated it as though it was a finding by the ALJ.
MR. SFIKAS: Your Honor, that is a finding of the ALJ. If you will look at the beginning of the ALJ's opinion, he indicates that those are findings, that everything in -- that everything that he's adopted are in his findings of fact, Your Honor.
QUESTION: The finding is, of course --
QUESTION: It's just a finding of fact that Professor Knox concluded that, not that the ALJ concluded it, isn't it?
MR. SFIKAS: No, Your Honor, that's not how I read it. I read that -- if you look at the analysis of the ALJ, he came to the conclusion that the complaint counsel did not prove the elements of a rule of reason case. He held that they did not define a geographic market. He held --
QUESTION: Yes, but I must say I really was a little troubled reading your brief, that you quoted it as though it were an independent finding of fact without referring to the fact that Professor Knox had so concluded. And I don't see anything in the findings that say, in so many words, I believe everything that Professor Knox said.
MR. SFIKAS: Well, Your Honor, what we went on -- and there's a footnote in our brief that actually makes reference to that where he makes reference to the following. And it's 161a of the cert petition appendix. This decision is based on the transcript of testimony, the exhibits which I received in evidence, and the proposed findings of fact and conclusions of law and answers thereto filed by the parties. I have adopted several proposed findings verbatim. Others have been adopted in substance. All other findings are rejected either because they are not supported by the record or because they are irrelevant.
QUESTION: And what in that says he believed Professor Knox?
MR. SFIKAS: I think the -- the clear reference here is that what is in his findings of fact are what he found to be the facts in this case, Your Honor.
QUESTION: Yes. What found to be the fact was that Professor Knox reached this conclusion.
MR. SFIKAS: But he came to the same conclusion in his conclusions.
QUESTION: Well, where? Where did he come to the same conclusion other than by quoting Professor Knox?
MR. SFIKAS: He came to the same conclusion that they did not prove up the elements of a rule of reason case, Your Honor.
QUESTION: If that's so -- let's assume he did accept that. Are you -- are you saying that the commission could not conclude the following words? It says, in practice, California Dental prohibits all quality claims. Now, is it your point that that -- those six words I just -- eight words I just read are not supported in the record? In practice, California Dental prohibits all quality claims. Is it your point that that isn't supported?
MR. SFIKAS: I think it's -- that not only is -- is my point, Your Honor, but I believe that that's a conclusion that the commission came to, which is one that can be reviewed here. There's also authority for the fact that when there is an inconsistency in the findings of the ALJ and the commission, you may scrutinize the findings.
QUESTION: All right. So, what you want us to do is to look to see whether the commission could reasonably conclude in practice California Dental prohibits all quality claims.
MR. SFIKAS: Yes, Your Honor. We --
QUESTION: And if I conclude that there is enough evidence, then you lose.
MR. SFIKAS: Well, no, Your Honor. I think at that point in time, you look at our pro-competitive justifications, and that's why you need the traditional rule of reason to balance here if there is anything that's anti-competitive with the pro-competitive.
And let me tell you what those pro-competitives are. It is to remove the -- the untruthful aspects of someone's advertising. It is to give consumers more information so that they may be better shoppers for dental services, and it reduces search costs. If you -- if you provide --
QUESTION: Counsel, may I ask you just to back up on something that was puzzling me because you speak of a full rule of reason examination. These cases come from the FTC directly to the court. So, you're not suggesting -- well, maybe you are -- that the court of appeals is the appropriate tribunal to engage in this extensive -- you're saying that's what the commission should have done. Is that --
MR. SFIKAS: That's -- that's what the commission should have done, and because they did not do it, we believe that you should reverse the Ninth Circuit Court of Appeals, Your Honor.
QUESTION: What more would you have had the commission do?
MR. SFIKAS: I would have had the commission look to see whether there are any anti-competitive effects in this case. All they -- they concluded -- they didn't -- there's -- there's nothing in this record to indicate whether advertising of dentists has been restrained, Your Honor. If you look at the telephone books in the State of California, you'll know that that -- that conclusion could not be come to by this -- by this commission.
QUESTION: Is Painless Parker still there?
MR. SFIKAS: No, Your Honor. No. He's gone on, Your Honor. He's gone on to meet his just rewards, I think.
MR. SFIKAS: But -- but as a matter of fact, Your Honor, you have 25 percent of the -- of the dentists who don't belong to the association. If the commission were right, if -- if what has occurred here is the -- CDA has voluntarily tied its own hands, why wouldn't the other 25 percent use advertising and build up their practice and become extremely successful, and in becoming successful, why wouldn't there be droves of dentists moving into -- into California to do just that?
There are five dental schools in the State of California. They produce individuals all the time who add to the output. There has been no restraint. There has been no restriction of output and no increase in prices here as was the case in the two cases where you did apply the quick look: the NCAA and the --
QUESTION: That's a different -- that's a different matter. Whether prices have gone up or not, I take it, is not something the FTC has to prove. What they have to prove is that there's a restriction on competition and a determination that California Dental prohibits all quality claims is the restriction on competition. That is a determination that the members of the association have agreed not to compete in respect of making quality claims.
What else do you want? That is the restriction on competition? Why do you have to have some big market investigation? I mean, maybe it's justified, as you first said. That would be a different matter.
MR. SFIKAS: Well, if the Court please, first of all, as a matter of fact, all we ask for is verification in the ads. The ads are not banned. There are no banning of ads in this case. This is not a banning of ads case. This is requesting more disclosure, more information. This --
QUESTION: Yes, but counsel, you must concede that sometimes more means nothing because it -- you have to disclose so much that it becomes impossible.
MR. SFIKAS: The -- well --
QUESTION: So, but something that on its face can look like full disclosure can mean, in effect, you can't do it.
MR. SFIKAS: Your Honor, that -- I will agree that that can happen. That's not this case, however.
QUESTION: Well, I think that the commission said it was, at least with respect to the --
MR. SFIKAS: Across-the-board?
QUESTION: -- across-the-board discount.
MR. SFIKAS: Well, with the across-the-board discounts, the FTC's own witness testified that across-the-board doesn't work because it may fool customers. Pac Bell doesn't permit across-the-board in telephone books. So, if the Court please, the facts don't sustain the across-the-board.
But in any event, all we were requiring -- let's -- let's take the non-across-the-board. All we're saying is that if a dentist wants to advertise a reduction in price, for example, and you -- you have to include in that ad the old price, the reduced price, who it applies to, and the length of time that it applies. Those are very reasonable, Your Honor.
With the across-the-board, there's also evidence that all dentists -- although dentists may do 100 different treatments, they only do --
QUESTION: Do we owe any deference to the commission saying that would be such a cluttered ad, nobody would -- nobody would read it?
MR. SFIKAS: You mean the across-the-board?
MR. SFIKAS: Well, I think that's true too, Your Honor.
QUESTION: Well, then you're conceding that the additional disclosure isn't a fact of prohibition.
MR. SFIKAS: No, no, no.
QUESTION: You conceded that's the purpose of advertising.
MR. SFIKAS: Oh, oh. You're -- I see. I thought you were talking about an across-the-board -- simply an across-the-board ad. You're saying --
QUESTION: I was just saying that --
MR. SFIKAS: With the verification.
QUESTION: -- an ad that met all of these requirements because your code I think doesn't prohibit them. It just says you have to do all this.
MR. SFIKAS: Correct, Your Honor.
QUESTION: If the FCC -- FTC concludes an ad that cluttered simply wouldn't be run, nobody would do it --
MR. SFIKAS: Well, but if the Court please --
QUESTION: -- don't we owe some deference to that judgment?
MR. SFIKAS: Well, if the Court please, let's pay deference to that judgment, but that's just the beginning of the rule of reason analysis. That doesn't show that advertising has been restricted or that output has been reduced or prices have been increased, Your Honor.
QUESTION: Well, it shows that advertising has been restricted. It may not, in and of itself, show that competition has been affected, but advertising has certainly been restricted. You can't make that kind of an advertising claim. You can't say 10 percent off all fees.
That's a restriction, isn't it?
MR. SFIKAS: Well, even if we assumed that it is, Your Honor, we have pro-competitive justification.
QUESTION: Well, don't we have to assume that it is. If -- if the commission tells me that, as a member, I cannot run an advertisement that says 10 percent off all charges, isn't that by definition a restriction on my advertising?
MR. SFIKAS: That's the across-the-board that you're talking about.
QUESTION: That's right. That's right.
MR. SFIKAS: Well, suppose --
QUESTION: Well, isn't that a restriction?
MR. SFIKAS: Even if it is, that's the beginning of the rule of reason analysis, Your Honor.
QUESTION: Well, is it or isn't it? Is it or isn't?
MR. SFIKAS: Is a restriction if people actually do advertise that way. I'm not sure that dentists advertise that way --
QUESTION: Well, then why did you agree with me when I said that is the restriction on competition? The marketplace effects are the effects of the restriction, not the restriction. I thought you were agreeing with me on that, and certainly there are dozens of cases, Paramount, Famous Laske, First National Theaters.
So, you don't have to make a big market investigation. Just look to see if there's a restriction. Then see if it's counterbalanced. Very well. What the FTC says is, we've looked into that. We agree with you. There is something to be said for your position. We agree that this is misleading sometimes, but on balance, we think it's not worth it. Okay? On balance, we think that the restriction is worse than the justification.
Now, what are we supposed to do about that? You mean when I read through the record, I'm going -- supposed to find out that they're completely off base? Is that what you want me to do?
MR. SFIKAS: I think if you read the record, you'd find that to be the case, Your Honor.
But, no, I didn't believe that I was being inconsistent when I answered the two questions. I believe that even if you assume that there is something here which is anti-competitive, that you look at the pro-competitive justifications and you balance and you don't do this on a quick look.
A quick look is nothing more than an expansion of the per se rule. This Court has been moving away from the per se rule.
QUESTION: May I ask you on your reference to quick look, whether you think our opinion in the National Society of Professional Engineers case was a quick look case or not?
MR. SFIKAS: No, because there, there was no -- no pro-competitive justification.
QUESTION: Well, they made an effort to make a pro-competitive justification.
MR. SFIKAS: No. It was outside competition, Your Honor. As you -- as Your Honor had said, it was a frontal attack on competition.
What I'd like to do, if I can, is reserve the balance of my time for rebuttal.
QUESTION: May I ask you one question, though?
MR. SFIKAS: Yes.
QUESTION: When -- when you say they didn't go to the second prong and do the pro-competitive analysis, is -- is it your claim that they did not -- they refused to receive evidence that -- that indicated a pro-competitive effect or their -- their analytical treatment at the end of the case simply did not deal specifically with such evidence as there was?
MR. SFIKAS: The analytical treatment, Your Honor. They simply dismissed the pro-competitive aspect of this case.
QUESTION: Very well, Mr. Sfikas.
Mr. Wallace, we'll hear from you.
ORAL ARGUMENT OF LAWRENCE G. WALLACE ON BEHALF OF THE RESPONDENT
MR. WALLACE: Thank you, Mr. Chief Justice, and may it please the Court:
The provision conferring jurisdiction on the commission, section 4 of the Federal Trade Commission Act, is set forth in full in the commission's opinion which is on page 48a of the petition appendix, the light covered document. It's -- it's the latter part of this definition that is pertinent here.
Section 4 uses expansive language in conferring jurisdiction. It extends the ordinary meaning of corporation to include any organization associated -- organized to carry on business for its own profit or -- or that of its members, even if it is unincorporated and even if it lacks hallmarks of a profit-making enterprise, such as shares of capital or capital stock or certificates of interest. So long as it is carrying on its activities for the profit of its members, it comes within the definition.
And under any --
QUESTION: Really, it says carrying on business.
MR. WALLACE: Carrying on business, that is correct.
QUESTION: And you think carrying on business embraces carrying on any activities.
MR. WALLACE: Well, certainly in one sense, the activities or an organization are its business. Those are the purposes for which it is organized and what it is authorized to do under its certificate of incorporation. It is hard to see what else is involved there.
QUESTION: If you had a -- a not-for-profit corporation of doctors that does nothing but meet once a month to discuss innovations in surgery, that association would be carrying on business in your definition of the term here.
MR. WALLACE: If -- if it were an organization organized within the meaning of this act and -- and I wouldn't hesitate to say that it would come within the jurisdiction of the commission, although as you posed the hypothetical, there would be no reason to think that there's any violation of law.
But if they should add to that some deceptive misrepresentations to the public in the form of paid advertising, it's only section 5 of the Federal Trade Commission Act that protects the public against that kind of activity which is just as a small organization that broke away from the Indiana Dental Association, the Indiana Federation of Dentists, might have, in the three communities in which their membership was concentrated, engaged in deceptive practices that -- that should have been of concern to the commission.
The mere fact that they're within the jurisdiction of the agency doesn't mean that the agency is going to prevent them from carrying on lawful activities, but while petitioner says they're not exempt from the antitrust laws, they are seeking an exemption from the -- the Federal statute that protects the public against deceptive practices.
QUESTION: Well, one of the things they point to is that the Clayton Act -- the trade -- any trade association. So, they have to fit at least that. But here they say there's this formula that they don't fit under.
Can you tell us what is excluded from the FTC jurisdiction?
MR. WALLACE: Well, I -- I -- the commission's own interpretation explains that in some detail as they have formulated their interpretation, which is a reasonable interpretation of -- of the language. As long as the pecuniary benefit that they're engendering for their members is a substantial part of the organization's total activities rather than incidental to some noncommercial activity, so they're not trying to reach purely charitable organizations.
And in the commission's own holding in the College Football Association case, which we cite on page 26 of our brief, they determined that they lacked jurisdiction over a nonprofit organization engaged in commercial activity for its members' benefits because its members were themselves not-for-profit organizations. So --
QUESTION: But you say pecuniary benefit is all that's necessary. I -- I think most -- most fraternal organizations, Knights of Columbus, the Elk, and so forth, provide insurance for their members at -- at reduced rates because they negotiate good contracts. That's certainly for the pecuniary benefits of all of the members, and I think it's a substantial incentive to join if that is -- if that correlates with a substantial part of the activities of the corporation. Do you think they're covered?
MR. WALLACE: And some of -- and some of the members might use that insurance for business insurance.
QUESTION: Well, let's assume they don't use it for business insurance. I'm just assuming they use it for -- for personal -- life insurance, personal life insurance. It's certainly a pecuniary benefit to me that I get life insurance at a lower rate.
MR. WALLACE: Well, in that sense, it would be for the profit of the members. I don't know of a case in which the commission has concerned itself with such an organization.
QUESTION: Just out of its general benevolence it has decided not to move against them, although it could.
MR. WALLACE: Well, your hypothetical doesn't suggest any violation of law --
QUESTION: But you think -- you think they're subject to the jurisdiction of the -- I really find it hard to see what -- what the exemption was put in for if the Knights of Columbus and the Elk are covered.
MR. WALLACE: Well, the commission has -- has not quarreled with what we always thought to be the holding in Community Blood Bank, that purely charitable organizations are not covered, and that might include other eleemosynary organizations. And as a matter of fact, in 1977, they sought a change in the law for that purpose.
But what --
QUESTION: When you use the word profit, don't you think the word profit means not just pecuniary benefit, but pecuniary benefit that comes from some commercial enterprise, either investing or an actual business?
MR. WALLACE: Well, that -- that is certainly --
QUESTION: So that the -- so that pecuniary benefit to individuals, like the individual members of the Knights of Columbus, wouldn't count?
MR. WALLACE: That may --
QUESTION: Whereas business insurance for -- for dentists might count.
MR. WALLACE: Well, that is all we would need to cover this case, and so the Court doesn't really have to address that issue. And it's certainly --
QUESTION: Well, you had --
MR. WALLACE: -- a plausible way of looking at profit --
QUESTION: Mr. Wallace, may I seek this clarification? You are trying to get some kind of a handle on pecuniary benefits by using the word substantiality.
MR. WALLACE: Yes.
QUESTION: But you've used that to modify activities. Perhaps what it should modify is the business benefits not -- you said it shouldn't be incidental. It should be substantial. So, maybe the substantiality belongs with what is the benefit to the business of the dentists rather than the activity. Or doesn't it matter?
MR. WALLACE: Well, I -- I did not choose the 35 formulation that I used. I was quoting the commission's formulation and --
QUESTION: A problem counsel is often faced with, yes.
MR. WALLACE: And -- and -- I think the commission was concerned principally with trying to avoid charitable organizations which might incidentally engender something of pecuniary benefit to member organizations that use the blood and are charging for surgery and might, for example, be said to be deriving some pecuniary benefit.
But -- but I don't think this case is close to the borderline of those definitional questions because these are entrepreneurs engaged in profit-making business. And it's quite clear from the legislative history that the conference committee deliberately changed the statutory text because they were warned that a trade association could become the vehicle, as it was put in the legislative history, for the imposition of horizontal trade restraints among the competing members, which is exactly the problem we're faced with here. And the enforcement history of the Federal Trade Commission Act is replete with examples of the commission's exercise of jurisdiction over trade associations of various kinds, all on the assumption that the jurisdiction extends that far.
In -- in -- in a very early court of appeals decision, quoted on page 20 of our brief, the National Harness Manufacturers against FTC case, the Sixth Circuit in 1920 picked up on the very point made in the legislative history in saying that the language of the act affords no support for the thought that individuals, partnerships, and corporations can escape restraint under the act from combining together in the use of unfair methods of competition merely because they employ as a medium an unincorporated, voluntary association without capital and not itself engaged in commercial business.
And in footnote 12 of our brief, we cite three examples from volume 1 of the Federal Trade Commission Reports in 1917 and 1918 of trade associations that the Federal Trade Commission took action against --
QUESTION: Mr. Wallace, am I right that in 1917 and 1918, Congress for the people generally were not thinking about the professions as trades or businesses --
MR. WALLACE: That certainly is the case, and what I was leading up to is that then some of this Court's leading decisions also involved trade associations not involving the -- the learned professions, FTC against Cement Institute, Fashion Originators' Guild against the Federal Trade Commission.
But then more recently, there have been at least two cases on the merits in this Court that -- that did involve associations and the learned professions where it was just assumed that they too fell within the jurisdiction: FTC against Indiana Federation of Dentists, and FTC against the Superior Court Trial Lawyers Association.
QUESTION: Mr. Wallace, if I -- if I assume the jurisdictional question and say, yes, at one time we didn't think of these things as trades, now we do. But still it's also a professional organization, and this is its ethics guide.
Does the commission and the Court owe any respect to the medical association, the dental association when they say this is a matter of ethics, not business and profit?
MR. WALLACE: Well, they certainly owe respect to any litigant before the commission to take seriously a pro-competitive or other legitimate business justification that the organization puts forward for a restraint that it is imposing and to see whether that justifies a restraint that otherwise would be a violation --
QUESTION: You're speaking generally.
MR. WALLACE: -- an unfair method of competition.
QUESTION: I'm asking you specifically about professions. Are they different from people who make -- what was it -- maple floors or hats or -- does that professional -- is there that much carryover from the days when weren't considered commerce at all?
MR. WALLACE: Well, I think that this Court's decisions in Goldfarb and Bates say that, for the most part, this distinction has become an anachronism. There are many industries that affect the public where people have a high degree of training in -- in supplying foodstuffs for the consumption of the public and the like.
QUESTION: Well, is it up to us or is it up to Congress to -- to declare when things have become an anachronism? I mean, if Congress -- you think Congress clearly thought, when this statute was enacted, that dentists associations and doctors associations and lawyers associations were not covered by it.
MR. WALLACE: Well, that is precisely the argument that this Court unanimously rejected in Goldfarb --
QUESTION: I know. Well --
MR. WALLACE: -- with respect to the application of the antitrust laws themselves --
QUESTION: I understand. I understand that.
MR. WALLACE: And -- and rejected in Bates. And --
QUESTION: But you acknowledge that Congress did not think that this applied to the professions when it was enacted, but it -- but you say it does today, without Congress having changed its mind.
MR. WALLACE: Well, Congress didn't focus on that question in -- in enacting this jurisdictional provision.
QUESTION: Well, the language they adopted was language which was understood not to include the professions at the time.
MR. WALLACE: Well, I think --
QUESTION: But it covers the professions today because what? Because we say it covers the professions.
MR. WALLACE: Well, this -- this Court's decisions. Since Congress did not exclude their coverage and Congress was adopting a generally applicable principle --
QUESTION: But, Mr. Wallace --
MR. WALLACE: -- this Court's decisions say that unanticipated applications are within -- that are within the language Congress adopted --
QUESTION: But was the assumption of Congress that the statute might not apply because they were professions or because there was doubt as to whether they were insurance? You make the same argument about the insurance industry. Whether they were in commerce I mean.
You make the same point about the insurance industry. It's pretty clear from National -- Southeastern Underwriters they didn't think it was covered, but nevertheless it is now. Why is this any different?
MR. WALLACE: Of course, that was the basis for doubt that the -- the learned professions, so-called, would be covered because of doubt that the scope of the Commerce Clause extended that far.
But if anything, the situation today is even more pronounced in trying to make a meaningful distinction between the learned professions than it was at the time Goldfarb and Bates were decided. We have so much of the economy devoted to high tech industry and sophisticated service industries that involve persons with high degrees of training and skills, other professions are including paralegals, medical technicians --
MR. WALLACE: It -- it becomes quite difficult to think that there is a meaningful line to be drawn between the sorts of enterprises we're talking about here in our modern society. And -- and it -- there was no hint in this Court's opinions in the Superior Trial Court Lawyers case or in California Federation of Dentists of any concern about that. Of course, it wasn't an issue that was raised, but that's because the general assumption has been that trade associations that operate for the benefit, the pecuniary benefit, the profit, of their members are covered by the Federal Trade Commission Act.
Now, if I may turn to the merits. The court of appeals correctly applied -- and the commission here -- the rule of reason in accordance with this Court's modern jurisprudence which approves a flexible inquiry under the rule of reasons that is appropriate to the circumstances of each case. As I said in connection with jurisdiction, but it's very important to the merits, this Court recognized in the Professional Engineers case that agreements among members of a professional association that govern the way those members compete with one another are horizontal restraints of trade.
QUESTION: Isn't that consistent with the petitioner's argument that the way we can tell that an abbreviated analysis is necessary is by looking at the kind of restraint and that is very close to a per se rule? Isn't he right about that?
MR. WALLACE: Well, the restraints involved in this case are very close to the kind of horizontal restraints that have been found to be per se violations, and that is one --
QUESTION: Well, so this is sort of a quasi per se category I suppose.
MR. WALLACE: Well, I -- I -- we -- we've gotten away from proliferation of categories in modern antitrust thinking.
QUESTION: Well, then how -- how are we supposed to know then when the abbreviated rule of reason analysis is appropriate? If we don't have categories, what else do we have?
MR. WALLACE: Well, in this -- in this instance, we have findings by the commission, which addressed the pertinent considerations and which sufficed for the purpose. And the most important part of the commission's inquiry was to find that there were actual substantial anti-competitive effects of these restraints.
QUESTION: What were the exact findings? I'm just not clear on that. The -- the restriction I don't have any problem with. I -- I mean, I understand the restrictions that they found. What were the findings about the effects?
MR. WALLACE: Well, I think they're summarized quite well by the court of appeals, which reviewed the substantiality of the evidence, and summarizes them on -- if I may turn to that, on page -- pages 22a and 23a of the joint appendix, that as the commission found, petitioner was at the hub of this agreement among the competitors that involved 75 percent of the dentists in California. And vast categories of advertising were totally banned. The court of appeals recognized that there was some confusion in the way this was applied.
QUESTION: Right. That's the restriction, but what -- what do we have for effect?
MR. WALLACE: I'm sorry?
QUESTION: I mean, I have no question about the restriction, e.g., the across-the-board advertising. I will assume the commission is absolutely right. Across-the-board discount advertising is prohibited. You can't run ads saying the waiting room is comfortable and I'm progressive and so on.
What do we know about the effects of that restriction?
MR. WALLACE: Well, we know that when individual dentists engaged in advertising of this sort, it attracted a large number of new patients and then they refrained from engaging in it.
QUESTION: Do -- do we have specific commission findings to that effect? I have not been through the commission findings.
MR. WALLACE: Yes. We do --
QUESTION: Well, let me -- while you're looking for that --
MR. WALLACE: Well, I'm referred to page 78a of the petition appendix. The -- and we refer to this on page 37 of our brief in the latter part of the page.
What the commission found, in summary, was that advertising of this kind was of value to consumers who rely on advertising in helping --
QUESTION: My problem I think is just this. I -- I'm -- I'm aware of summaries, but I'm not aware of anything very specific. Do we have anything more specific than this kind of summary, conclusory --
MR. WALLACE: Well, that is the most specific point about consumer response to the particular ads. The commission did say it interfered with healthy competition for their patronage.
QUESTION: I mean, that's just conclusion. That -- that to me is -- that -- the existence of that kind of conclusion is -- is the basis for -- for the commission's determination here is what seems to me to give edge to Justice Kennedy's question. We are so close to a per se analysis, that unless I'm going to accept it as per se, there's nothing intuitively persuasive about what the commission says it is so conclusory.
MR. WALLACE: Well, the court of appeals accepted it as a valid application of the rule of reason, did not think it should reach the per se issue or approve of a per se --
QUESTION: Well, if those conclusions are -- if those conclusory statements are sound, I don't have any problem with the ultimate result.
MR. WALLACE: Well, all --
QUESTION: They're not intuitively sound. That's my problem.
MR. WALLACE: All of the findings by the commission in this case -- and they are -- are numerous -- are -- are based on a detailed record that was compiled through extensive discovery, followed by a 2-week trial.
And the central thing in the record is an analysis of petitioner's challenges to advertisements by 393 dentists from 1982 to 1993 that showed the nature of the restraints being imposed.
Then there was testimony, both --
QUESTION: What the commission significantly didn't find and what the court of appeals didn't find was that dentists are more -- are -- are willing to -- to be constrained in their advertising rather than resign from the association. All the court of appeals said is -- it puts the burden on the other side. The record does not show that dentists are willing to forego CDA membership rather than give up their advertisements.
It seems to me that if you want to establish that something is happening in the market to restrain competition, it is the opposite that has to be proved by the Government, namely that dentists would rather forego advertising than be bounced out of this association. And that's never established anywhere. The court of appeals acknowledges it.
It's sort of an intermediate per se rule where we don't say it's per se, but we're going to shift the burden to the other side to show that it isn't okay, you know.
MR. WALLACE: As a matter of fact, members of the associations and of the local associations testified, quote, no one gives up membership, unquote, in petitioner to avoid its restrictions on advertising. That is on page 84a of the appendix to the petition. There was -- and they --
QUESTION: You say there is such a finding, and -- and it's supported by the record?
MR. WALLACE: Well, there -- there is, yes.
QUESTION: The court of appeals didn't find that anyway.
MR. WALLACE: There is -- there is evidence to that effect, and -- and the commission did rely on -- on testimony and on the fact that in many of these case studies that were followed, the applicant for membership or the member gave up the ad rather than risk his membership. This was --
QUESTION: Are you aware --
MR. WALLACE: -- a survey of 393 examples in which the commission imposed discipline on advertising -- which the -- the petitioner imposed discipline on advertising. And in no instance of all of those case studies did the dentists choose to stay with the ads and give up membership because membership has many values that the petitioner has touted and that we summarize on pages 2 and 3 of our brief, including a finding that Justice Kennedy referred to earlier by the commission that petitioner -- the petitioner -- represented the value to be anywhere from $22,000 to $65,000 a year to members, depending on the array of services that they chose to call upon.
So, we do have findings of harm to competition from the particular restraints, and the fact that they didn't result from a more detailed inquiry I think is justified by the fact that the restraints themselves are in such a sensitive area of horizontal restraint with respect to advertising discounts, they come -- at least they're akin to tampering with price competition itself. When the competitors agree not to advertise discounts, that rather takes the incentive out of giving them discounts.
QUESTION: I don't see why -- why would that -- have you come across something in writing that goes into a question I've never seen answered? I have no problem this was a rule of reason. They applied, of course, justification before deciding it was illegal. It's not a per se rule, but when you look to see whether you're going to do a thorough market effects test in trying to figure out whether something is competitive or not competitive, there can be an infinite number of situations. Sometimes you have to do it in order to see if you have any anti-competitive agreement; sometimes you don't. Sometimes you have to do it to see how serious the agreement is; sometimes you don't. You're using the rule of reason in any case.
But have you come across something that tries to categorize when you'd have to do a thorough economic analysis to see if you have an anti-competitive effect, when you'd have to do it to see how serious the anti-competitive effect that appears from the face agreement is, when you'd have to do neither? I've never seen such a thing, but maybe there is --
MR. WALLACE: Well, one -- one source of this is the Court's opinion in Indiana Federation of Dentists which approvingly quotes Professor Areeda as saying that market power is but a surrogate for actual anti-competitive effects. So, if -- if a finding is made of actual anti-competitive effects, it isn't necessary to have a detailed inquiry into whether there's market power. The fact that the anti-competitive effects were -- were effectuated is itself a showing of market power. Market power is not what the antitrust law prohibits. What the antitrust law prohibits is anti-competitive effects.
QUESTION: You might have to go into the details in order to decide whether it's serious enough in its effect to overcome a justification.
MR. WALLACE: Well, that's right. And -- and in this case, the particular kinds of restraints and the anti-competitive effects were ones at the most sensitive area of the Sherman Act, the other being an agreement to refrain from the kinds of advertising that were bringing in large numbers of new customers, such as quality claims. This is like restricting one's --
QUESTION: Excuse me. I do not understand this.
MR. WALLACE: -- own output of services.
QUESTION: Could you give me -- just take one pause between sentences.
I don't understand how there can be an anti-competitive effect when there is no market power. Do you assert that that can be the case?
MR. WALLACE: Well, the commission recognized that the market was -- that the market was for dental services and that it's a localized market. But it isn't -- the Court itself has said that it isn't necessary to define and inquire into market power when you have evidence and -- and justified findings of actual anti-competitive effects because the inquiry into market power is but a surrogate for whether there were anti-competitive effects of the restraints.
CHIEF JUSTICE REHNQUIST: Thank you, Mr. Wallace.
The case is submitted.
(Whereupon, at 12:08 p.m., the case in the above-entitled matter was submitted.)
Argument of Speaker
Mr. Speaker: The opinion of the Court in No. 97-1625, California Dental Association versus the Federal Trade Commission will be announced by Justice Souter.
Argument of Justice Souter
Mr. Souter: This case comes to us on writ of certiorari to the United State Court of Appeals for the Ninth Circuit.
The California Dental Association (CDA) is a nonprofit organization of Dentists that gives it members'advantageous access to insurance and financing and lobbies and litigates for its members' interests.
Dentist who belong to the CDA agree to follow the CDA's guidelines and rulings regulating members' advertising.
The Federal Trade Commission brought a complaint against the CDA alleging that the CDA unfairly restricts competition by applying its advertising guidelines, so as to ban some truthful nondeceptive advertising.
An Administrative Law Judge held that the Commission had jurisdiction and he found that the CDA had restricted competition in two ways.
First, by banning advertisements that state an across-the-board discount without giving exact prices, for example, 10% off for all senior citizens; and second by banning advertisements about quality of services such as highest quality, most gentle service.
The Commission agreed with the ALJ in the Ninth Circuit affirmed.
It found that the Commission had jurisdiction and then performed what is known antitrust law as a "quick look" in which it said that it could easily conclude that the CDA restrictions illegally restrained competition, because the restrictions on price-advertising or a naked restraint on price competition and the restrictions on quality advertising were a form of output limitation.
In an opinion filed with the Clerk today, we vacate and remand.
There are two issues: As to the first, we affirm that the commission had jurisdiction over a nonprofit like the CDA, which provides substantial economic benefit to its for-profit members.
The Federal Trade Commission Act gives the Commission jurisdiction over an entity that carries on business for its own profit or that of its members.
The CDA produces more than de minimis profit for its members through its insurance and financing arrangements and its litigation and lobbying.
The purpose of the Act is to prevent unfair competition and nonprofit entities organized on behalf of for-profit members can be as unfair as for-profits.
It is on the second issue that we vacate the judgment of the Ninth Circuit.
We hold that the "quick-look" that the Ninth Circuit applied to the advertising restrictions was inadequate in this case.
Both types of restrictions appear designed to avoid false and deceptive advertising in a market where the dentist knows much more than the patient does.
The price advertising restrictions might affect price competition by limiting information available to customers but they also might help competition by protecting customers from misleading and unverifiable claims of across-the-board discounts.
The quality advertisements restrictions might hurt competition by keeping useful information about the quality or care away from customers, but they might also enhance competition by avoiding false and unverifiable quality claims.
We do not hold that a full-market analysis which required only that a "quick-look" is not appropriate where such plausible, procompetitive justifications exist.
What the case calls for is a closer look.
aAccordingly, we vacate the judgment and remand the Ninth Circuit for fuller consideration.
Justice Breyer has filed an opinion concurring in part and dissenting in part in which Justices Stevens, Kennedy and Ginsburg join.