Hair-Braiding Business Denied Permission To Operate Over Fears of Competition
Among the stupid ideas burdening health care in this country are “certificate of need” laws that require government permission to open new medical facilities or expand existing ones. Such laws are rackets that shield existing operations from competition, thereby limiting choices and raising prices. Leave it to government officials to take that bad idea and apply it to a hair-braiding business.
No Competition in This City
“A small business owner says she was told she could not open because her business is similar to neighboring businesses,” WSB-TV reported in July of a dispute in South Fulton, Georgia. “Awa Diagne says her braid shop hasn’t been able to open in the shopping plaza on Campbellton Fairburn Road for three months, because of South Fulton’s like-use zoning code.”
South Fulton, a city of more than 100,000 people that was incorporated in 2017, has a “like-use” restriction in its ordinances that bars new businesses from opening within one mile of similar businesses—at least its officials claim it does (more on that later). It’s an inherently anticompetitive rule that puts the fate of entrepreneurs and the choices available to consumers in the hands of city officials who must decide whether sometimes idiosyncratic small businesses are in direct competition and whether they should be allowed to offer goods and services to the public.
Nevertheless, Diagne, a Senegalese immigrant who became an American citizen and has been braiding hair for over three decades won initial approval for her proposed business from city staff.
“The residents that attended both online and in person shared their support for Awa Best Braid and welcomed the business to the community,” staff noted in their June 26 memorandum recommending the Planning Commission approve a special use permit for the salon. “The concern was about how the ordinance is keeping small businesses from flourishing.”
The Planning Commission unanimously approved the recommendation.
But the city council rejected the recommendation when it met, with two members arguing the proposed hair-braiding business is too much like a hair salon and a beauty supply store located nearby. Three city council members supported Diagne’s application, but four voted against it.
“We don’t want any business to suffer any losses due to an oversaturation,” one councilmember insisted.
“Never did I think, here in America of all places, that I would get denied a business permit because I might be too successful,” Diagne told 95.5 WSB radio. “I’ve been braiding hair my entire life. This is a business I know, a community I love. For the Council to deny me when I’ve done nothing wrong just isn’t right.”
Blocking Competition Without Good Reason Is Unconstitutional
Subsequently, represented by the Institute for Justice (IJ), Diagne filed suit against South Fulton.
In a complaint filed in the Fulton County Superior Court, Diagne and IJ attorneys point out, “Respondent refused to let her open, explicitly because she would pose competition for nearby businesses. Such econo
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