Memorandum From An Unidentified Optician (Identification Removed at Request of Sender) MEMORANDUM This memorandum is a description of the history and function of the regulation of opticians in South Carolina in recent years, from the perspective of many practicing opticians. From this perspective, the results of regulation have severely restricted competition in a number of ways, and therefore have resulted in a higher level of retail prices for opthalmic goods than would otherwise obtain. These comments are not directly related to the economic effects of the proposed FTC rule, but are designed to describe the context in which the present restrictive practices in South Carolina have evolved. The regulation by the State of South Carolina of the provision of optical goods and services by persons other than physicians dates back at least to 1917, when the legislature enacted the statute that formed the basis of the regulatory system now in effect. Statutes at Large 1917 (30)1. This statute created a Board of Examiners in optometry to enforce the regulatory provisions enacted. This board has long had jurisdiction over both optometrists and opticians, but the name of the board did not reflect this until 1972, when the statute was amended to rename the board the "South Carolina Board of Examiners in Optometry and Opticianry." Statutes at Large 1972 (57) 2302. This Board has always been controlled by the organized optometrists of the state. The optometrists on the board have all been appointed by the South Carolina Optometric Association, a professional association of optometrists. Until 1972, the Board was composed of five persons, all of whom were req S.C. Optometric Association. ed by statute to be members of the 1054. In 1972, the statutory requirement of membership in the Optometric Association was relinquished, but the five optometrist members of the Board have all still been members of the Association. Prior to 1972, very few opticians were licensed each year, sometimes as few as one or two out of ten applicants. The Optometric Association still appoints these five members. The South Carolina Association of Opticians, since 1972, has been allowed to appoint two opticians to the Board, but the five optometrists still retain a clear majority and control the policies of the Board. Although optometrists provide both optical examinations (services) and optical goods (lenses and eyeglasses), the predominant part of their income has traditionally been the profit on the goods sold. Therefore, optometrists are in direct competition in the econonically most important part of their business with opticians, who only supply optical goods to the public. Opticians are primarily businessmen engaged in an enterprise that requires only limited technical training and relatively little, if any, of the responsibility and discretion associated with "professional" work. However, because they compete economically with "professionals," i.e., optometrists, the organized optom etrists have consistently sought to impose upon opticians by statute most of the business operating restraints that are imposed on optometrists by practical, professional, or legal restrictions. In 1964, the Board further restricted the business opera tions of opticians by issuing regulations as "Rules for the Procedure for Opticians in South Carolina These rules provided, for example, (1) that opticians could have no more branch offices than optometrists could have under the Board's regulations, and (2) that no optician could operate under a trade name, i.e., that opticians could operate only in their own name. In Wagner v. Ezell, 249 S.C. 421, 154 S.E.2d 731, 738 (May 10, 1967), the South Carolina Supreme Court held that the legislature had not granted the Board any authority to promulgate or enforce disciplinary rules other than those specified by statute. The optonetrists immediately returned to the legislature. In 1968, the legislature enacted a statute that limited the number of branch offices of optometrists and opticians, and that outlawed the use of trade names by optometrists or opticians. It also enacted a provision authorizing the Board to issue disciplinary rules for optometrists. When two token opticians were added to the Board, the statutory authority of the Board to enact disciplinary rules was enlarged to include opticians. 3. Major restrictive provisions. A limited number of restrictions on the operation of opticians is reasonable. No one would doubt that provisions for a licensing examination and for continuing education programs are reasonable for protecting the public from incompetence in the preparation of optical goods. Many of the present provisions of South Carolina law restricting the operation of opticians, however, have no true rational basis, and function simply to impose the same anti-competitive restrictions on opticians that are imposed on those practicing the profession of optometry. The following is a discussion of the major restrictions that are principally anti-competitive and increase costs to the public. 92-524 O - 77 - 93 (a) Restrictions on the number of offices operated by. a single optician company. There are two principal provisions restricting the number of offices which an optician can operate or in any way influence. Section 56-1075.1 of the S.C. Code of Laws (enacted in 1968), and Rule J (issued by the Board in 1973) provided that a sole practitioner optician can have only one branch office, and any group of opticians can have only two branch offices. (Although it is not clear, it appears that a "branch office" is an office in addition to the optician's principal office.) It is not clear whether a rule adopted in 1964, which required that each branch office be operated by a member of the partnership, is still considered to be in force. Informal connections between opticians through having members of an optician's family invest in additional optician offices have also recently been called into question by the Board of Examiners. In Rule K, promulgated by the Board in 1973, the Board declared that opticians "do not practice in partnership with laymen..." (emphasis added.) It is not clear either (1) that this rule actually prohibits a passive investment by a layperson in an optician's business, or (2) that this rule is authorized by the relevant statute, which authorizes the Board to "prescribe rules, regulations and bylaws for...the work of opticians." Section 56-1058, as amended 1972. However, I have been reliably informed that the Board has requested that the State Attorney General enforce this rule in a fashion to prohibit any investment by opticians' families in other optician's offices. These rules limiting the number of establishments that can be either operated or even coordinated as a single enterprise increase the cost of optical goods to the public because there are economies of scale in the supply of optical goods, such as volume wholesale purchases at discount prices and cheaper, more informative advertising, that can be increased considerably beyond the scope of a two-office enterprise. These economies are artificially stifled by the legis lation and regulations in effect in South Carolina. (b) Prohibition on use of trade names in Section 56-1075.1 and Rule K both require that an optician practice in the name of himself and his optician partners, not under any trade name. An independent retail optician has been held properly suspended for operating his business under the name "Sunland Optical Laboratory." South Carolina Board of Examiners in Optometry v. Cohen, 256 S.C. 13, 180 S.E.2d 650 (1971). There has been for many years a pattern of discriminatory enforcement of this provision, however: it has been enforced only against independent opticians. The optometrists have been unwilling to challenge the ophthalmologists, and have therefore allowed a number of opticians who share offices with ophthalmologists to use trade names. For example, retail ophthalmic goods in Charleston are provided from four ophthalmologists' offices under such trade names: "Optical Laboratories," and "Professional Ophthalmic Goods,' which are operated by licensed opticians, and "Optics, Inc.," and "Associate Opticians," which do not have licensed opticians in their employ. No disciplinary action has been taken against any of these firms although they have been operating under trade names for a number of years. This prohibition against trade names, together with a requirement that the name of a partner who is full-time in operating each branch be included in that branch's name, is designed to limit |