CAPITALISM, AT ITS CORE is about the freedom to compete. It permits entrepreneurs to pursue creative ends, and it empowers consumers to choose for themselves which products and services meet their needs. Our newest client, Phillip Truesdell, understands well the transformative power of this entrepreneurial freedom, and the pain of its absence.

After growing up poor and dropping out of high school, Phillip was determined to earn a living for himself and his family. Several years and businesses later, Phillip’s grown children lost their jobs at a local power plant. Phillip feared they would need to move to find new jobs. So the day he saw an ambulance for sale, he didn’t see a vehicle, he saw an opportunity to keep his family together.

Phillip’s company, Legacy Medical Transport, is a non-emergency ambulance service, meaning it takes patients to and from medical appointments and transports people between hospitals in non-emergency situations. Legacy operates in Ohio, just miles from the Kentucky border. But because Kentucky has “Certificate of Need” laws, Legacy is unable to bring patients back from their appointments in Kentucky to their homes in Ohio.

“Certificate of Need” laws allow existing businesses to choose who may enter the market, and thus they’re sometimes called the “Competitor’s Veto.” Under a Competitor’s Veto law, an aspiring entrepreneur must seek permission from the government before opening a business. Once someone applies, the relevant governmental body notifies all existing companies in that industry. Any existing businesses may then protest the application, often for any reason—even simply not wanting any new competition. A protest sends an entrepreneur to an expensive and onerous government hearing, where he or she must prove that a new business is “necessary.”

Last year, Phillip applied for a Certificate of Need. Thousands of dollars in attorney fees later, Phillip was eventually denied a certificate because he had not proven a “need” for his service. Phillip and his daughter were unprepared for the tribunal they faced. They expected questions about their qualifications. Instead, they were assailed with questions about how existing businesses would be affected.

This turns the free market on its head. In a capitalist system, entrepreneurs are free to innovate. Indeed, they must innovate and cater to consumer demands in order to stay in business. Under Competitor’s Veto laws, entrepreneurs must get permission to innovate, and consumers are stuck choosing among the privileged few.

The result of Competitor’s Veto laws is an entrenched cartel. Entrepreneur Arty Vogt’s lawsuit challenging West Virginia’s Competitor’s Veto laws for movers uncovered that no new moving company had been granted permission to operate in the state in the past 10 years.

Perhaps the best way to understand the detrimental effect of Competitor’s Veto laws is to study what happens once they’re repealed. PLF clients have built many successful businesses after being freed from these anti-competitive laws. After a federal court struck down Kentucky’s law, for example, Raleigh Bruner was able to grow and expand his moving company into carpet cleaning, home organizing, storage, furniture repair, and even a dog kennel.

Bruner also created an in-house program that helps employees open moving companies of their own, which has led to new operations across eight states. The program creates value not just for those companies, but for all their new employees and their communities.

One of this country’s founding principles is that the government may not use its regulatory power to protect favored businesses from competition. Yet unbelievably, some courts have ruled that protectionism alone is an acceptable justification for economic regulation, and that states may act simply to dole out political favors to industry players.

Because Competitor’s Veto laws are antithetical to the Constitution’s promise of economic liberty, PLF has challenged them in seven states, leading to their repeal in Missouri, Montana, Oregon, West Virginia, Pennsylvania, and Kentucky. The goal is to restore the Constitution’s promise of economic freedom and opportunity.

In a capitalist system, entrepreneurs are unleashed to compete, and the best ideas succeed. By embracing competition, we can return to the symbiotic system where entrepreneurs and consumers cooperate freely for their mutual benefit. When PLF fights against the Competitor’s Veto, it fights for that system.