January 28, 2013

Fighting the silver state’s moving cartel

By Fighting the silver state’s moving cartel

Today, we filed this brief asking the federal court in Nevada not to throw out our lawsuit against the Nevada mover cartel. That state’s licensing law for moving companies is probably the most anti-competitive business regulation in the nation: as we explained in this blog post, the law says over and over again that if a new moving company would compete against the state’s existing movers, the government must deny the entrepreneur the right to operate his business.

That sort of economic protectionism is clearly unconstitutional, as the Ninth Circuit made clear in its decision in Merrifield v. Lockyer (another PLF case). But officials with the Nevada Transportation Authority have asked the judge to throw out our lawsuit on behalf of entrepreneur Maurice Underwood, arguing among other things that the Supreme Court’s 1976 decision, New Orleans v. Dukes, allows the state to establish a cartel if it chooses to.

The Dukes case is has rightly been criticized for its unreasonable insensitivity to the rights of business owners, but even accepting that case at face value, it certainly doesn’t justify the Nevada moving cartel laws. Dukes involved a New Orleans ordinance that prohibited food stands in the French Quarter, but grandfathered in one existing merchant that had served the area for a long time. That discrete, total ban, with an exception for an existing, non-conforming use, is hardly the same thing as Nevada’s indefinite, ongoing cartel scheme, which allows existing companies to block competition regardless of any considerations of public health and safety.

The state also claims that the law exists to prevent disreputable “fly-by-night” moving companies from starting up. But the law clearly doesn’t do that. Under Nevada’s regulations, a fly-by-night company could very well start up, if it shows that it wouldn’t compete against existing companies. Meanwhile, a reputable, experienced mover could be banned from opening even though it’s not a fly-by-night operation, simply because it would compete against the existing firms. Competition is sufficient reason by itself to bar a person from getting a license as a moving company in Nevada.

As I explain in this article, Certificate of Public Convenience and Necessity schemes like Nevada’s do not protect the public—they protect the private interests of established companies. The victims are consumers—forced to pay more for moving services—and entrepreneurs like Maurice Underwood, whose right to earn an honest living is supposed to be protected by our Constitution.

What to read next