California Dental Association v. Federal Trade Commission

After affirming our prior judgment in part and reversing in part, the United States Supreme Court remanded this case for a determination of whether the California Dental Association’s advertising restrictions are anticompetitive under rule-of-reason analysis. Having closely examined the record under the rule of reason, we conclude that the Federal Trade Commission failed to prove that the restrictions are anticompetitive. We therefore vacate and remand with instruction that the Commission dismiss its case against the Association.

*944 I.

Petitioner, the California Dental Association (“CDA”), is a trade association for California dentists that is a part of the American Dental Association (“ADA”). CDA itself is composed of 32 local “component societies.” Individual dentists in California must be a member of a component society to belong to CDA, and must have CDA membership to join the ADA. CDA membership is not a condition to obtaining a dentist’s license from the State of California, but about 19,000 of the 26,000 licensed dentists in California belong to the association. CDA is organized as a nonprofit corporation under California law and qualifies for nonprofit status under I.R.C. § 501(c)(6).

CDA provides its members a variety of services, including lobbying, marketing and public relations on behalf of member dentists, seminars on practice management, assistance in compliance with OSHA and disability requirements, continuing education, placement services, an administrative procedure for handling patient complaints, and various publications. It also has several for-profit subsidiaries from which members can obtain liability insurance, financing for equipment and other purchases, discounts on long distance calling, auto leasing, and home mortgages.

Dentists must abide by the CDA Code of Ethics as a condition of membership. The Code provides that a dentist may be disciplined for unprofessional conduct as defined in the state’s Dental Practice Act and for violating any state law relating to the practice of dentistry. The Code goes on to provide more specific ethical standards in various areas of practice. Most relevant to this case is section 10, which governs advertising. It states:

Athough any dentist may advertise, no dentist shall advertise or solicit patients in any form of communication in a manner that is false or misleading in any material respect. In order to properly serve the public, dentists should represent themselves in a manner that contributes to the esteem of the public. Dentists should not misrepresent their training and competence in any way that would be false or misleading in any material respect.

To aid in interpreting this provision, CDA’s Judicial Council, which is responsible for enforcing the Code, has released several advisory opinions. According to the Code, these opinions are not binding on member dentists but “may be considered as persuasive by the trial body and any disciplinary proceedings under the CDA Bylaws.” The following are the advisory opinions most relevant here:

2. A statement or claim is false or misleading in any material respect when it:

a. contains a misrepresentation of fact;

b. is likely to mislead or deceive because in context it makes only a partial disclosure of relevant facts;

c. is intended or is likely to create false or unjustified expectations of favorable results and/or costs;

d. relates to fees for specific types of services without fully and specifically disclosing all variables and other relevant factors;

e. contains other representations or implications that in reasonable probability will cause an ordinarily prudent person to misunderstand or be deceived.

3. Any communication or advertisement which refers to the cost of dental services shall be exact, without omissions, and shall make each service clearly identifiable, without the use of such phrases as “as low as,” “and up,” “lowest prices,” or words or phrases of similar import.

4. Any advertisement which refers to the cost of dental services and uses words of comparison or relativity — for example, “low fees” — must be based on verifiable data substantiating the comparison or statement of relativity. The burden shall be on the dentist who advertises in such terms to establish the *945 accuracy of the comparison or statement of relativity.

8. Advertising claims as to the quality of services are not susceptible to measurement or verification; accordingly, such claims are likely to be false or misleading in any material respect.

These guidelines substantially mirror parts of the California Business and Professions Code. See Cal. Bus. & Prof.Code §§ 651, 1680. CDA claims that its Code, along with the advisory opinions, is intended to ensure that dentists comply with these laws.

CDA has also issued a separate set of advertising guidelines intended to help members comply with the Code of Ethics and state law. According to the section on discount advertising, state law requires dentists offering discounts to list all of the following in the advertisement:

1. The dollar amount of the nondis-counted fee for the service;

2. Either the dollar amount of the discount fee or the percentage of the discount for the specific service;

3. The length of time that the discount will be offered;

4. Verifiable fees pursuant to the Business and Professions Code; and

5. Specific groups who qualify for the discount or any other terms and conditions or restrictions for qualifying for the discount.

Both CDA and its component societies on their own enforce the advertising rules of the Code of Ethics. As a general matter, components undertake the initial investigation into a member’s advertising and, if possible, resolve the matter at the local level. Typically, if the component’s ethics committee concludes that a member’s advertising is false or misleading in violation of CDA’s Code of Ethics, it asks the member to discontinue or modify the advertisement. If the matter cannot be resolved or the component is unsure of how to apply the relevant standard under the Code, the case is referred to CDA’s Judicial Council, which holds a hearing. If a violation is found, and no settlement is reached, CDA can impose penalties ranging from censure to expulsion.

CDA and its components also review the advertisements of applicants for membership. If the applicant does not agree to discontinue noncomplying advertising and the component considers denying the application for that reason, it can refer the case to CDA’s Membership Application Review Subcommittee (known as “MARS”). After reviewing the advertising, MARS will recommend to the component that it grant or deny membership. In some cases, applicants with noncomplying advertising can be offered a form of conditional admission under which they must change their ads within a year.

In its complaint against CDA (the component societies were not made parties to this action), the Federal Trade Commission (“FTC”) staff alleges that the CDA applied these advertising guidelines in a way that impermissibly restricted truthful, nondeceptive advertising in violation of section 5 of the FTC Act, 15 U.S.C. § 45. After a trial, Administrative Law Judge (“ALJ”) Lewis Parker determined that CDA had barred members from making representations of “low” or “reasonable” or “affordable” prices. He also found that CDA effectively prohibited across-the-board discounts by requiring dentists to post the nondiscounted price for all of the services subject to the discount. As enforced, he determined, these policies barred forms of price advertisement without regard to whether they were false or misleading. Finally, the ALJ found that CDA limited various forms of “quality” advertising regardless of truth or falsity. In particular, CDA objected to quality claims of any kind because they might be read to imply superiority over other dentists and were unverifiable. The association also deemed guarantees and attempts to allay patients’ fears, through such language as “gentle, quality care,” and “special care for cowards,” to be misleading, although the policy appears to have been *946 relaxed on “gentleness” claims. The ALJ noted that CDA’s components had engaged in similar behavior, although they were not charged in the complaint with violating the FTC Act.

The ALJ concluded that the FTC had jurisdiction over CDA’s activities and CDA had conspired with its members and component societies to restrict advertising. Applying the FTC’s decision in In re Massachusetts Board of Registration in Optometry, 110 F.T.C. 549 (1988) (“Mass.Board ”), he held that the advertising restrictions were inherently suspect and had no plausible efficiency justification. Although he also found that CDA lacked market power, he held that a showing of market power was not necessary under Mass. Board. He concluded that CDA had unreasonably restrained competition in violation of section 5 of the FTC Act.

The majority of the Commission affirmed, on somewhat different reasoning. Chairman Pitofsky’s opinion held that the restrictions on price advertising were unlawful per se. It further held that the nonprice advertising guidelines were unlawful under an abbreviated rule-of-reason analysis. In so doing, it disagreed with the ALJ and found that CDA did possess market power. The Commission found as a matter of fact that CDA has applied its Code of Ethics so as to prohibit its members from making three kinds of advertising claims: (1) characterizations of a dentist’s prices as low, reasonable, or affordable; (2) across-the-board discounts on dental services; and (3) service quality claims by dentists. Commissioner Starek concurred in the result but would have applied the Mass. Board decision rather than a per se or abbreviated rule-of-reason analysis. Commissioner Azcuenaga dissented, finding no evidence of a sufficient pattern of anticompetitive acts to hold CDA liable and no evidence of market power.

On October 22, 1997, this Court affirmed the Commission. See California Dental Ass’n v. FTC, 128 F.3d 720 (9th Cir.1997). We held that the FTC properly exercised jurisdiction over CDA. While we held that the Commission erred by applying per se analysis to CDA’s restrictions, we nevertheless found CDA’s restrictions to be unreasonable under abbreviated rule-of-reason analysis. In choosing to apply abbreviated rule-of-reason analysis, we incorrectly stated that “the record provides no evidence that the [advertising restrictions have] in fact led to increased disclosure and transparency of dental pricing.” Id. at 728. 1 We also found, under abbreviated rule-of-reason analysis, that CDA exercises market power. The pivotal findings for the panel were the Commission’s conclusions that CDA prevented its members from engaging in truthful, non-misleading advertising offering across-the-board discounts or claims about service quality. Judge Real dissented from our opinion on the grounds that the FTC lacked jurisdiction over CDA and that the majority erred by applying abbreviated rule-of-reason analysis. Judge Real concluded that the panel should have applied rule-of-reason analysis, and indicated that he would have upheld the restrictions under the rule of reason.

The Supreme Court granted certiorari and, on May 24, 1999, affirmed in part and reversed in part. By a 9 to 0 vote, the Court affirmed the panel’s conclusion that the FTC properly exercised its jurisdiction over CDA. By a 5 to 4 vote, the Court held that the panel erred by applying abbreviated rule-of-reason analysis. The majority opinion held that CDA’s advertising restrictions are not such an obvious restraint on trade to render abbreviated rule-of- *947 reason analysis appropriate. Specifically, it faulted us for failing to consider a number of theories under which the restrictions might well prove procompetitive and for our “adversión to empirical evidence” in favor of burden-shifting. The Court vacated the panel opinion and remanded “for a fuller consideration of the issue.”

On remand, we will apply a more extensive rule-of-reason analysis to determine whether substantial evidence supports the Commission’s conclusion that CDA’s restrictions are anticompetitive. See California Dental Ass’n v. FTC, 526 U.S. 756, 769 n. 8, 119 S.Ct. 1604, 143 L.Ed.2d 935 (1999).

II.

The Supreme Court held that we erred by applying “quick look”/abbreviated rule-of-reason analysis, as opposed to a more empirically rigorous rule-of-reason analysis. Id. at 781, 119 S.Ct. 1604. At the same time, the Court noted that the instant case does “not ... necessarily ... call for the fullest market analysis,” and called for a “sliding scale” formula that looks “to the circumstances, details, and logic of a restraint.” Id. at 779, 781, 119 S.Ct. 1604. 2 Seeking to situate our inquiry somewhere on the rule-of-reáson continuum between abbreviated and full-blown, we employ a level of inquiry closer to the latter, bearing in mind that our ultimate task is to determine whether the challenged restraint enhances competition. See id. at 780, 119 S.Ct. 1604. 3 In particular, we must determine whether, on balance, CDA’s restrictions on advertising are procompetitive or anticompetitive. See FTC v. Indiana Fed. of Dentists, 476 U.S. 447, 458, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986); Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1413 (9th Cir.1991); CBS v. American Soc’y of Composers, Authors, & Publishers, 620 F.2d 930, 934 (2d Cir.1980). The restrictions qualify as anti-competitive only if they harm “both alloca-tive efficiency and raise[ ] the prices of goods above competitive levels or diminish[ ] their quality.” Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1433 (9th Cir.1995). Such analysis is rigorous, requiring “a detailed depiction of circumstances and the most careful weighing of alleged dangers and potential benefits.” U.S. Healthcare, Inc. v. Healthsource, Inc., 986 F.2d 589, 594 (1st Cir.1993). “The rule-of-reason analysis consists of three components: (1) the persons or entities to the agreement intend to harm or restrain competition; (2) an actual injury to competition occurs; and (3) the restraint is unreasonable as determined by balancing the restraint and any justifications or pro-competitive effects of the restraint.” American Ad Mgmt. v. GTE Corp., 92 F.3d 781, 789 (9th Cir.1996).

Intent to Restrain Competition

Our prior opinion held that the CDA constituted an agreement among its *948 members, see 128 F.3d at 728. We did not dwell on the issue of intent, however, observing that “whatever its motivation, the point of the advertising policy was clearly to limit the types of advertising in which dentists could engage.” Id. at 729. We then observed that good “motives will not validate an otherwise anticompetitive practice,” citing NCAA v. Board of Regents, 468 U.S. 85, 101 n. 23, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984). This truncated discussion of intent reflects the well-established pattern of the Supreme Court to examine intent only in those close cases where the plaintiff falls short of proving that the defendant’s actions were anticompetitive. See, e.g., Times Picayune Publ’g Co. v. United States, 345 U.S. 594, 614, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); United States v. Griffith 334 U.S. 100, 105, 68 S.Ct. 941, 92 L.Ed. 1236 (1948). Even then, “an admitted intention to limit competition will not make illegal conduct that we know to be pro-competitive or otherwise immune from antitrust control.” 7 Phillip E. Areeda, Antitrust Law § 1506 (1986). And, while “smoking gun” evidence of an intent to restrain competition remains relevant to the court’s task of discerning the competitive consequences of a defendant’s actions, “ambiguous indications of intent do not help us ‘predict [the] consequences [of a defendant’s acts]’ ” and are therefore of no value to a court analyzing a restraint under the rule of reason, where the court’s ultimate role is to determine the net effects of those acts. Id. Under such circumstances, we apply the rule of reason without engaging in the relatively fruitless inquiry into a defendant’s intent. Cf. Bhan v. NME Hospitals, Inc., 929 F.2d 1404, 1410, 1412-13 (9th Cir.1991) (applying the rule of reason without delving into intent).

The primary piece of evidence marshaled by the FTC concerning the CDA’s intent is a statement made by a former CDA president in 1976. The statement in question reads as follows:

Why does the dental profession need CDS anyway? This is indeed the crux of the issue. We need CDS, not for itself, but to preserve our own status quo ... our own ability to exert some leadership to the insurance industry. We need to keep CDS so we do not all end up in a frenzied competition for patients on the basis of fees alone.

The last sentence in the paragraph does evince a desire on the part of CDA’s president to limit fee-based competition for patients. But as best the record indicates, CDS had nothing to do with advertising restrictions. Rather, it appears to have been a CDA-administered fee-setting arrangement between dentists and insurance companies, which presumably would have had a much more direct effect on price competition among dentists than advertising restrictions. The 1976 statement is therefore far too ambiguous to alter the rule of reason inquiry. 4

*949 We do see substantial evidence that the CDA intended to restrict certain types of advertising, but in light of the CDA’s plausibly procompetitive justifications for the restrictions, 5 such intent has no bearing on the question of whether those restrictions are in fact likely to prove anticompetitive or procompetitive. And the record reveals no unambiguous evidence that the CDA intended to restrain trade, so further analysis of CDA’s intent becomes superfluous. See generally 7 Areeda, supra, § 1506 (“Intention is often superfluous to the analysis of reasonableness, for it adds nothing to the conduct from which it is usually inferred.”). Under such circumstances, intent “drops out” of our rule-of-reason inquiry, just as it did in our prior opinion, and the case hinges on the actual economic consequences of the CDA’s restrictions.

Actual Injury to Competition

Our prior opinion held that substantial evidence supports a conclusion that the advertising restrictions at issue constituted an actual injury to competition. See 128 F.3d at 729. Although we must now apply a more rigorous rule-of-reason analysis, that earlier determination should not be disturbed. As we explain below, although we are convinced that the restrictions’ pro-competitive benefits exceed their anticom-petitive harms, we are able to identify anticompetitive harms resulting from the restrictions.

Are the Restrictions Procompetitive?

The Supreme Court’s opinion focuses on the question of whether the presumptive economic benefits resulting from CDA’s advertising restrictions outweigh their economic harms. The Court noted that “it seems to us that the CDA’s advertising restrictions might plausibly be thought to havé?a net procompetitive ef-feet, or possibly no effect at all on competition.” 526 U.S. at 771, 119 S.Ct. 1604.

The Court’s opinion instructed us to consider with much greater care the potentially procompetitive justifications for CDA’s advertising policies. Specifically, the Court pointed to several aspects of the advertising restrictions that might cause them to have a net procompetitive effect:

(1) Misleading advertising for professional services might be particularly harmful to consumers because of inherent difficulties , in obtaining accurate information about service quality (i.e., information asymmetries).

(2) Consumers are relatively loyal to the professionals who have treated them previously.

(3) The restrictions at issue here were much less severe than a complete ban on advertising.

(4) Some advertising methods prohibited by the restrictions might, in the long run, drive consumers away from dentists.

(5) The advertising restrictions might prevent consumers from being misled into believing that they are receiving more of a bargain than they are actually receiving.

(6) The advertising restrictions might amount to no more than a procompeti-tive ban on puffery.

See id. at 771-81, 119 S.Ct. 1604. We therefore must reevaluate in light of these considerations our earlier conclusion that the restrictions fail under abbreviated rule-of-reason analysis because they prevent truthful advertising concerning across-the-board discounts and service quality.

*950 III.

We now consider the record evidence bearing on the six factors identified above.

Information Asymmetries

The parties have briefed the question of informational asymmetries extensively and the record contains a great deal of evidence bearing on that dynamic. We conclude from the record that dentists are far better at evaluating the quality of dental services than patients are, i.e., that there is an informational asymmetry in the market. See, e.g., ER5R:14 (“With respect to the asymmetry of information, dentists are clearly in a position to know more about the product or the service than consumers .... [Consumers are not in a position to evaluate in advance the nature of the service. And even after experiencing it [they] may have difficult[y] in evaluating [quality of care].”); ER5P:3 (“[W]hen it comes to quality of care most individuals are not able to discern what is or is not quality.”).

The record also contains evidence suggesting that there is an information asymmetry with respect to cost. A dentist can determine what his fellow dentists charge for services more easily than a consumer can. ER5R:16 (“The dentist certainly is in possession of the information required for verification, and could provide that information at the lower cost.”). The FTC concedes that “individual dentists can obtain information about the prices charged by dentists in their area.” The difficult question, then, is not whether information asymmetries exist, but whether CDA’s advertising restrictions mitigate the market inefficiencies that result from these asymmetries.

The FTC argues that even in markets for professional services, where informational asymmetries abound, broad advertising restrictions have raised prices for consumers. In so doing, the FTC relies on a number of scholarly articles, See Carolyn Cox & Susan Foster, The Costs and Benefits of Occupational Regulation (1990); Lee Benham, The Effect of Advertising on the Price of Eyeglasses, 15 J.L.

& Econ. 387 (1972); James A. Langenfeld & John R. Morris, Analyzing Agreements Among Competitors: What Does the Future Hold?, 36 Antitrust Bull. 651 (1991); Phillip Nelson, Advertising as Information, 82 J. Pol. Econ. 729 (1974); John R. Schroeter et al., Advertising and Competition in Routine Legal Service Markets: An Empirical Investigation, 36 J. Indus. Econ. 49 (1987). Both parties recognize that the Cox and Foster study, which summarizes and analyzes the empirical literature, is the scholarship most relevant to our inquiry. Indeed, Cox and Foster devote a fair amount of space to discussing all of the studies cited above except for the subsequently published Langenfeld and Morris article. Cox & Foster’s characterization of the existing research is as follows:

While a few studies indicate that higher quality levels may result from such licensing restrictions, a majority of the work to date finds quality to be unaffected by licensing or business practice restrictions [such as advertising restrictions] associated with licensing. In some cases quality actually decreases.

Cox & Foster, supra, at 25 (footnotes omitted) (emphasis in original). Thus, the authors concluded that the majority of the empirical evidence indicates that restrictions that are (broadly speaking) like those at issue here do not affect quality of care.

Subsequently, Cox and Foster describe the findings of particular studies. They note that in the optometry market, “restrictions [that] prevent both advertising and limit commercial practice” result in higher prices. Id. at 32. But it is undisputed that CDA does not prevent dentists from advertising; nor do they limit dentists’ commercial practice. And, as the Benham study, which Petitioners also cite, concluded, “[e]yeglasses may of course be a special case,” and further research was needed before results from the eyeglasses market could “be generalized to other goods.” Benham, supra, at 352. Thus, the optometry market evidence is of ex *951 tremely limited value in helping us discern the economic effects of CDA’s restrictions.

Cox and Foster then discuss a study that found that the price of legal services was higher in cities that impose time, place, and manner restrictions on legal advertising. See Cox & Foster, supra, at 33. They also note that studies have found adverse effects on consumers stemming from restrictions on advertising in the legal profession. See id. But, as one of these studies observed, “states adopted widely different attorney advertising regulations,” with some states allowing only the most minimal advertising and others prohibiting only false or misleading advertising. Schroeter et ah, supra, at 54 n. 13. Presumably, such widely divergent regulations will engender widely different market consequences. Cox and Foster do not discuss any study that has looked at the effects of only those advertising restrictions that are substantially similar to CDA’s, and the FTC does not point us to any such study.

Later in their analysis, Cox and Foster turn to the empirical evidence concerning the dental services market. Their discussion cites no empirical evidence concerning dental advertising restrictions substantially similar to those enacted by CDA. Cox and Foster do note that “retail dentists attract customers by offering their services at lower prices,” and that “restrictions that prevent discounts and expanded hours may discourage some individuals to seek care who would otherwise do so.” Cox & Foster, supra, at 35-36. But neither conclusion helps us discern the effect of the advertising restrictions at issue here. While the record clearly indicates that some dentists compete by offering discounts, the restrictions at issue here by no means prevent dentists from doing so, nor do they regulate dentists’ hours of practice. In order to conclude that advertising restrictions are at all implicated by Cox and Foster’s conclusion, one has to first conclude that CDA’s advertising restrictions raise dental prices. But if prices rise, then the harm to consumers is clear. As applied to the instant litigation, therefore, Cox and Foster’s analysis of the dental services market simply begs the question. 6

Thus, the only relevant empirical evidence the FTC musters reveals that time, place, and manner restrictions on legal advertising raise the prices of legal services. But Cox and Foster themselves caution against generalizing from one professional industry to another:

We cannot conclude, however, that the costs of licensing always exceed the benefits to consumers. Although selected business practice restrictions in dentistry and optometry discussed above were found to lack quality-enhancing benefits, other licensing restrictions, or even the same restrictions in other professions might increase quality and potentially benefit consumers. Thus, in considering ... any specific licensing business practice restriction, it is important to weigh carefully the likely costs against the prospective benefits on a case by case basis.

Id. at 41 (emphasis added). So even the FTC’s strongest evidence that CDA’s advertising restrictions raise dental prices in California is significantly weakened by the authors of that evidence. While we reject CDA’s argument that the FTC must produce empirical evidence concerning the precise dental advertising restrictions at issue in California or a neighboring state, *952 our rule-of-reason case law usually requires the antitrust plaintiff to show some relevant data from the precise market at issue in the litigation — dental services in this case. See American Ad Mgmt. v. GTE Corp., 92 F.3d 781, 789-90 (“Proving injury to competition in a rule of reason case almost uniformly requires a claimant to prove the relevant market and to show the effects of competition within that market. ... Accordingly, the district court was correct in requiring proof of the relevant geographic and product markets, as well as proof on the effects within these markets.”) (quoting Oltz v. St. Peter’s Community Hosp., 861 F.2d 1440, 1445 (9th Cir.1988)). The Supreme Court has also cautioned against reaching general conclusions about the economics of advertising with respect to all professional markets based on data from only one professional market. See Bates v. State Bar of Ariz., 433 U.S. 350, 366 n. 17, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977) (noting that “the distinctions, historical and functional, between professions, may require consideration of quite different factors” when considering advertising regulation). Thus, we conclude that the social science evidence cited by the FTC does not constitute substantial evidence of the anticompetitive nature of CDA’s advertising restrictions.

The FTC offers an additional theory of how consumers might be harmed by the advertising restrictions. As the FTC states in its brief, “advertising can attract patients who might otherwise forego dental services if they were not aware of relevant price or quality information.... Thus, advertising restrictions could have the effect of reducing output, depriving consumers of services they would have purchased if they had known about them.” Our prior opinion accepted this theory. See 128 F.3d at 728 (“The restrictions may also affect output more directly, as quality and comfort advertising may induce some customers to obtain nonemergency care when they might not otherwise do so.”) But the Supreme Court unambiguously rejected our conclusion for incorrectly examining factors influencing the consumer demand curve. 526 U.S. at 776-77, 119 S.Ct. 1604. The FTC’s effort to characterize the Court’s analysis as something other than a rejection of the demand-side antitrust theory proposed again here is unpersuasive. Therefore, the FTC’s argument that the restrictions at issue here exacerbate informational asymmetries in the dental market is unconvincing.

CDA, on the other hand, has made a strong case that the advertising restrictions at issue here correct for some of the informational asymmetries inherent in the market for dental services. At trial before the ALJ, CDA called Professor Robert Knox, an expert in economics and industrial organization. Knox testified that he believes CDA’s policies are procompetitive in that they prevent “buyers from getting mistaken impressions about information contained in advertisements, and therefore arms them with more accurate and verifiable information; makes them better able to search for their particular value.” ER 5R:21. In other words, the policies correct for information asymmetries by requiring that dentists fully disclose information about price or quality. For example, the restrictions would force a dentist wishing to say “cleanings discounted to $75” to disclose whether the normal price charged for cleanings is $76 or $120, thereby giving the consumer a much better idea of how much he is saving. The policies might also restrict search costs in the following manner: Say one dentist offers a twenty dollar discount on bridge work for new patients and another advertises that her new patient discounts for bridge work are fifteen percent. It appears that CDA’s policies would require both dentists to disclose the regular and discounted rates, thereby allowing a price-conscious consumer to determine from the ads which of the two dentists is actually offering a lower fee: So conceived, the restrictions create a kind of network externality by mandating a common language to be used by those CDA members who advertise discounts. As a result, a consumer’s costs of searching for the less expensive service would be re *953 duced. Lower search costs for consumers are generally understood to be procompet-itive. See, e.g., Langenfeld & Morris, supra, at 666; Note, Fixing the Price Fixing Confusion: A Rule of Reason Approach, 92 Yale. L.J. 706, 718 (1988). We are therefore persuaded that CDA’s restrictions do mitigate some of the informational asymmetries that exist in the market for dental services.

Consumer Loyalty

The market for professional care may be different from other markets in that consumers are more loyal to their professionals than they are to, say, gasoline stations. The Supreme Court conceived of this as a factor that further complicated the antitrust analysis that this Court must undertake. See 526 U.S. at 772-73, 119 S.Ct. 1604. We understand the Court’s .guidance as encouraging us to consider the view that restricting advertising in the dental market may be much less detrimental than restricting advertising in a market where consumers are much more likely to switch brands. It may be that the type of advertising that is barred by CDA (for example, unverifiable quality claims) would be ineffective at overcoming consumer inertia in selecting their dentists.

The only evidence the parties have brought to our attention that even tangentially concerns this point is the aforementioned article written by Professor Nelson. Nelson distinguished between “search goods,” for which most of a product’s qualities can be determined prior to purchase, and “experience goods,” for which most qualities usually cannot be determined pri- or to purchase. See Nelson, supra, at 780. Under Nelson’s dichotomy, dental services are almost purely experience goods, and a new dress is an example of a predominantly search good. Nelson concludes that advertising will give consumers more guidance in buying search goods than in purchasing experience goods. See id. at 747-48. By contrast, word of mouth will be more useful to consumers when making decisions about experience goods. See id. On the other hand, advertising will be more accurate where, as here, sellers depend on repeat business by customers. See id. at 730-31. Having pondered this evidence, we conclude that an analysis of the consequences of consumers’ heightened loyalty in the dental market therefore does not cut in either party’s favor.

Partial Versus Complete Advertising Ban

The Supreme Court faulted our earlier opinion for failing to recognize that “the restrictions at issue here are very far from a total ban on price or discount advertising” and for failing to consider “that the particular restrictions on professional advertising could have different effects from those ‘normally’ found in the commercial world, even to the point of promoting competition by reducing the occurrence of unverifiable and misleading across-the-board discount advertising.”