Case Study 7

The California Dental Association (CDA) is a voluntary nonprofit association of local dental societies to which some nineteen thousand dentists belong, about three-quarters of those practicing in the state. The CDA lobbies on behalf of its members’ interests and conducts marketing and public relations campaigns for their benefit. The dentists who belong to the CDA through these associations agree to abide by a Code of Ethics (Code), which includes a regulation limiting their right to advertise. Responsibility for enforcing the Code rests in the first instance with the local dental societies. Applicants who refuse to withdraw or revise objectionable advertisements may be denied membership, and members are subject to censure, suspension, or expulsion from the CDA.
The Federal Trade Commission (FTC) brought a complaint against the CDA, alleging that it applied its Code so as to restrict truthful, nondeceptive advertising and therefore violated Section 5 of the FTC Act. The FTC alleged that the CDA unreasonably restricted price advertising—particularly discounted fees—and advertising relating to the quality of dental services.

What are the arguments that the per se standard applies to this case?
What are the arguments that a rule of reason standard applies to this case?
Which standard should apply to this case? Explain.

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3 references
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