## Facts

- The California Dental Association (CDA) is a nonprofit association of local dental societies whose members included about three-quarters of California’s dentists.
- CDA provided members with economic benefits, including insurance and financing arrangements, and engaged in member-support activities such as marketing and public relations.
- CDA required members to comply with a Code of Ethics prohibiting false or misleading advertising and issued advisory opinions and guidelines interpreting those rules.
- The Federal Trade Commission (FTC) alleged CDA applied its guidelines to restrict two categories of truthful, nondeceptive advertising: (1) price advertising, including “discounted fees,” and (2) advertising about the quality of dental services.
- The FTC charged that the restrictions unreasonably restrained competition in violation of § 5 of the FTC Act, applying Sherman Act § 1 standards.

## Issues

1. Whether the FTC has jurisdiction over a nonprofit professional association that provides economic benefits to for-profit members.
2. Whether CDA’s advertising restrictions could be condemned under an abbreviated (“quick look”) rule-of-reason analysis.

## Decision

- The Supreme Court held the FTC had jurisdiction over CDA.
- The Court vacated the judgment sustaining liability because the “quick look” analysis used was too abbreviated on this record.
- The Court remanded for a less abbreviated, more probing rule-of-reason inquiry into competitive effects and justifications.

## Legal Principles

- The FTC Act’s jurisdiction reaches an association organized to carry on business for the profit of its members; nonprofit status does not itself defeat jurisdiction when the entity confers economic benefits intended to enhance members’ profits.
- “Quick look” rule-of-reason review is permissible when anticompetitive effects are sufficiently apparent without detailed market analysis.
- When plausible procompetitive or competitively neutral justifications exist and the competitive effects are not obvious, a more extended rule-of-reason analysis is required, though not necessarily a full market study in every case.
- Professional advertising restraints justified as limiting deception or improving information quality may require more than a truncated analysis before they can be condemned as unlawful restraints of trade.

## Conclusion

The Court confirmed FTC jurisdiction over a nonprofit professional association whose activities economically benefit profit-seeking members, but held that CDA’s restrictions on truthful advertising were not so plainly anticompetitive as to permit condemnation on a quick-look basis, requiring remand for a more substantial rule-of-reason evaluation.


Cal. Dental Ass'n v. FTC, 526 U.S. 756 (1999)