Workshop topics

FTC, DOJ Workshop Highlights Antitrust Considerations in Labor Markets – Antitrust / Competition Law

The Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) hosted a two-day conference virtual workshop December 6-7, titled “Making Competition Work: Promoting Competition in Labor Markets”. The agencies had previously been tasked by President Biden “Executive Order on Promoting Competition in the United States Economy”(The“ Executive Decree ”) to combat economic competition in labor markets. Among other priorities, the executive decree called on agencies to work together to assess ways to promote worker mobility and address imbalances in labor markets as well as update previous guidelines in the area (see here for our previous blog post on the specific actions that the executive decree aims to promote in this area).

Throughout the workshop, the DOJ and the FTC sought advice from the legal community regarding initiatives set out by the Executive Order, including updates to merger guidelines and advice for human resources professionals, as well as suggestions for resolving potential issues with certain terms of the employment contract, such as non-compete agreements. Over the course of the two days, the DOJ and FTC gathered a wide range of suggestions that will likely lead to increased activity in this area in the near future.

Priorities of executors

The workshop began with opening remarks from FTC President Lina Khan and Jonathan Kanter, in her first public appearance after being confirmed as head of the DOJ’s antitrust division (see here for more information on Kanter’s appointment and here for more information on Khan’s date). Both Kanter and Khan stressed that the authorities will work closely together on their priorities, including promoting competition in labor markets. Pursuant to the executive decree instruction for agencies to strengthen their guidelines on information sharing among employers, the DOJ has started reviewing previously released documents. common orientation from 2016 for human resources professionals, which among other directions, notably announced that the DOJ would begin to prosecute certain “bare” no-poaching and wage-fixing agreements between competing employers as criminal violations of antitrust laws. Khan noted that the FTC will also review employment contracts and certain terms as unfair or deceptive practices that could harm workers. Moreover, Kanter and Khan also agreed on the applicability of the existing guidelines on horizontal mergers to labor markets, concluding that they apply equally to labor markets as to any other market and would be viewed through such a lens.

The main refrain of government officials in subsequent panels was also that of collaboration or a “whole-of-government” competition policy. While the collaboration between the DOJ and the FTC in this area is not new, speakers from different agencies pointed to specific potential avenues for intersection and joint action. For example, representatives from the Ministry of Labor and the Ministry of the Treasury joined the workshop, showing a new level of participation in the discussion. These representatives recognized that they have a role to play in resolving competition concerns in labor markets, such as wage stagnation, and seek both to work with the DOJ and the FTC as well as to acquire additional training and advice on antitrust and competition issues in these countries. areas.

Key themes addressed by the panelists

Beyond government agencies and officials, the workshop also included economists, academics and researchers, lawyers involved in employment and competition-related disputes, and various labor rights groups in the panels. The panels were moderated by representatives from the DOJ or the FTC, who encouraged general discussions on the current state of the law and the reality of competition in the labor market and solicited specific contributions to President Biden’s executive order. and the priorities for which the agencies have been tasked. The panels covered a wide range of topics relevant to workers and labor markets, including labor market disputes, information sharing between employers, collective bargaining and power imbalances between workers and workers. employers, concerns and considerations arising from the odd-job economy and contractual restrictions that may affect workers, such as non-competition and non-disclosure agreements.

Merger review

Following Kanter and Khan’s comments, various panelists, including economists and labor rights advocates, spoke of the need for the DOJ and the FTC to assess the effects of mergers on competition in labor markets and potential effects that a particular merger may have on workers. ‘wages and working conditions. For example, workers’ rights groups cited hospital mergers as an example, saying they could have had a negative impact on healthcare professionals, both in terms of loss of income and capacity. reduced to moving to a new employer. These panelists believed that such mergers could lead to market concentration and monopsony power, potentially limiting consumer choice and worker mobility (see here for our previous blog post on monopsony power). Likewise, Tim Wu, the president’s special assistant for technology and competition policy, explained in his keynote address that the merger review had not sufficiently focused on the effects on workers and pointed out that the executive order President Biden called on the DOJ and the FTC to reconsider the merger. guidelines in this regard.

Restrictive clauses

Another key topic discussed throughout the workshop was restrictive covenants in employment contracts, including non-compete covenants, confidentiality terms, training reimbursement agreements, and nondisclosure agreements. . Panelists discussed the potential effects such contractual terms can have on worker mobility as well as the protections they offer companies to secure their confidential information, trade secrets and customer relationships. President Biden’s executive order specifically encouraged the FTC to engage in rule-making on this issue, “to limit the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit mobility. workers”. Panelists from workers’ rights groups, government agencies and economic institutes generally supported limiting such agreements, especially those that are applied indiscriminately to low-wage workers. However, some panelists also noted that this has always been an area of ​​state law and should not be treated too broadly by the federal government.

Other panelists stressed that studies of the effects of such agreements are inconclusive and that enforcement officials should look to reality rather than rely on theory and doctrine. For example, when discussing disputes involving no-poaching agreements in the context of franchising, panelists noted that wages were higher before the elimination of no-poaching agreements and lower once those agreements were eliminated. were no longer in place, contrary to relevant theories. Panelists working in the private sector also pointed out that confidentiality agreements encourage companies to invest in innovation and therefore benefit consumers. Their view was that more research would be needed to understand the best balance to be struck in such agreements.

Gig economy workers

Workers’ rights groups have shared stories of workers on temporary contracts and lower wages for work also performed by full-time employees. Panelists discussed the differences in bargaining power both between workers in the odd-job economy and businesses, and between workers in the odd-job economy and full-time employees. A panel discussed the merits of extending the labor antitrust exemption to cover certain employees in the odd-job economy to provide the opportunity to organize and engage in collective action without risking legal action. under antitrust laws. Meanwhile, workers’ rights groups have also called on the FTC to exercise its prosecutorial discretion in the meantime and refuse to prosecute workers who have engaged in such activities. Other panelists rejected the ideas, noting that these were not antitrust issues at all and should instead be dealt with under labor law.

Take away food

President Biden’s executive order, along with actions already underway and the recent workshop, highlights the labor market as a priority area in antitrust enforcement. The agencies involved in the workshop stressed their intention to implement coherent approaches to implement the decree and address labor market concerns.

Businesses and the legal community can expect to see updated guidance and potential regulations in the months and years to come regarding issues such as mergers and their effects on wages and employee mobility, contracts. and the potential for reducing non-competition provisions; and the classification of temporary workers, particularly in the odd-job economy, as employees. The workshop also discussed the “” of Senator KlobucharCompetition Law Enforcement and Agreements Reform Act“, acknowledging that a potential legislative change to antitrust laws to combat monopsonies could also be considered. In the meantime, it is likely that the DOJ and the FTC will continue to aggressively enforce antitrust laws in the markets of the United States. work through judicial efforts, such as the various criminal charges brought by the DOJ over the past year. See here for more information on recent rulings in the DOJ’s first criminal wage-fixing case and here for the constitutional challenges to these criminal charges in the labor markets.

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