FTC and NLRB Join Forces to Enforce Antitrust Laws in U.S. Labor Markets

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On July 19, 2022, the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) announced that they were joining forces to “support the FTC’s efforts to protect workers by promoting competitive American labor markets and by ending unfair practices that harm workers.1 A Memorandum of Understanding (MOU) between the two organizations outlines the ways in which they will work together in the future on labor issues. The new effort is just the latest example of US antitrust agencies’ aggressive program to control antitrust violations in labor markets.

The main conclusions of the memorandum of understanding are twofold:

  1. The FTC and the NLRB have agreed to several “matters of common regulatory interest,” including labor market developments related to the “gig economy,” the imposition of restrictive covenants (such as non-competition), the ability of workers to act collectively and the classification of workers.2
  2. Agencies will cooperate by a) engaging in information sharing and inter-agency consultations for law enforcement purposes, b) inter-agency training to educate each agency’s personnel on laws and regulations on the other, and c) coordinated outreach and education.3

In its announcement, the FTC said the agreement “is part of a larger initiative by the FTC to use the full authority of the agency, including enforcement actions and rulemaking of the Commission, to protect workers”.4 Indeed, the agency has previously announced that it considers “additional aspects” of competition in its merger reviews, including “how a proposed merger affects labor markets.”5 Recent second petitions have required parties to produce documents and information regarding the parties’ efforts to attract employees, and the FTC and the Department of Justice (DOJ) have jointly indicated their intention to address the issues. of the labor market in future revisions of the guidelines on horizontal mergers. .6 Outside of the merger context, the FTC has held public workshops to explore the legal and economic bases for possible regulation to restrict the use of non-competition clauses.seven

The FTC’s move is part of a broader effort by the Biden administration to prioritize antitrust enforcement in labor markets. July 2021 from President Biden Executive Decree on competition commissioned the US Treasury Department, in conjunction with the US Department of Labor, the DOJ and the FTC, to investigate “the effects of the absence of competition on labor markets”.8 The Treasury report, published in March 2022, summarized academic research concluding that the decline in wages due to labor market power was “about 20% below the level of a fully competitive market”.9 The DOJ has also taken steps to strengthen enforcement of the labor markets law. He filed a number of indictments over alleged wage-fixing and non-poaching deals, although his record at trial was disappointing. In April 2022, two DOJ criminal trials against wage-fixing and non-poaching agreements resulted in acquittals for all alleged hiring conduct (although a defendant in one of the cases has been found guilty of obstruction of justice).ten The DOJ says it is undeterred by these losses and has several other criminal cases pending that allege violations of labor market antitrust laws.11

Conclusion

The memorandum of understanding between the FTC and the NLRB is another data point that US antitrust agencies continue to put labor markets at the top of their policy and enforcement agenda. While these efforts are still ongoing, companies should be careful to avoid even the appearance of no-poaching or wage-fixing agreements with other companies and should be judicious in their use of covenants. such as non-competition clauses. In addition, companies considering mergers and acquisitions should weigh the potential effects on labor markets when assessing transaction risk.

For more information please contact Scott Sher, Jamillia Ferris, Michelle Yost Hale Marc Rosmann, Jeff VanHooreweghe, or another member of the firm antitrust and competition practice.


[1] Press Release, Federal Trade Commission, “Federal Trade Commission, National Labor Relations Board Forge New Partnership to Protect Workers from Anticompetitive, Unfair, and Deceptive Practices” (July 19, 2022), available at https://www.ftc.gov/news-events/news/press-releases/2022/07/federal-trade-commission-national-labor-relations-board-forge-new-partnership-protect-workers?utm_source= government delivery.

[2] Memorandum of Understanding Between the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) Regarding Information Sharing, Interagency Training, and Outreach in Areas of Common Regulatory Interest (July 19, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/ftcnlrb%20mou%2071922.pdf (MOU), in § 3.

[3] Memorandum of Understanding in § 4.

[4] Identifier.

[5] Press Release, Federal Trade Commission, “Making the Second Request Process Both More Streamlined and More Rigorous during this Unprecedented Merger Wave” (September 28, 2021), available at https://www.ftc.gov/enforcement/competition-matters/2021/09/making-second-request-process-both-more-streamlined-more-rigorous-during-unprecedented-merger-wave.

[6] Press release, Federal Trade Commission, “Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers” (January 18, 2022), available at https://www.ftc.gov/news-events/news/press-releases/2022/01/federal-trade-commission-justice-department-seek-strengthen-enforcement-against-illegal-mergers.

[7] Press Release, Federal Trade Commission, “Non-Competees in the Workplace: Examining Antitrust and Consumer Protection Issues” (January 9, 2020), available at Image https://www.ftc.gov/news-events/events/2020/01/non-compete-workplace-examining-antitrust-consumer-protection-issues.

[8] Executive Order on Promoting Competition in the American Economy, The White House, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.

[9] Department of the Treasury, “The State of Labor Market Competition” (March 7, 2022), available at https://home.treasury.gov/system/files/136/State-of-Labor-Market-Competition-2022.pdf.

[10] “DoJ’s First Criminal Trials in Wage-Setting and Non-Poaching End in Acquittals,” Wilson Sonsini Client Alert, https://www.wsgr.com/en/insights/first-doj-criminal-wage-fixing-and-no-poach-trials-end-in-acquittals.html.

[11] Identifier.

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