Justice Department and FTC Virtual Workshop: Agencies Discuss Whole-of-Government Approach and New Solutions to Solve Competition Problems in Labor Markets | Mintz – Antitrust Perspectives
On December 6 and 7, 2021, the Antitrust Division of the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) hosted a virtual workshop to discuss labor market competition issues and plans to carry out President Biden’s executive order to resolve competition concerns in our modern economy. The workshop, as well as the implementation measures already underway, reinforce the fact that this is a priority area for the Administration; market participants are well advised to review their policies and compliance programs accordingly.
In their opening remarks, Department of Justice Assistant Attorney General Jonathan Kanter and FTC President Lina Khan noted that the workshop came at a pivotal time, as recent models of conduct and declining levels of competition. have caused competitive prejudice to workers, which has required conversations like about how antitrust policies and laws can protect workers. In the first public remarks since his confirmation to the Senate, AAG Kanter noted that antitrust authorities must develop new applied tools to resolve competition concerns in the modern economy. President Khan echoed the need to ensure that the tools of competitive driving assessment agencies keep pace with the realities of the modern economy. Both Kanter and Khan noted that these new approaches were necessary to uphold agency responsibilities under President Biden’s executive order, which included in his call to action 72 initiatives focused on promoting and protecting healthy competition. .
One of the new approaches proposed was to review the DOJ and FTC horizontal merger guidelines to include methodologies for assessing the effects of mergers on competition in labor markets. Throughout the workshop, many panelists noted that current merger guidelines and the merger review process do not sufficiently take into account the effects of competition in labor markets. Panelists provided several examples of deals that were not blocked by agencies under traditional antitrust analysis, but still presented competitive harm in labor markets, noting, for example, mergers of hospitals that have resulted in competitive prejudice in the health professional employment services market. This point was also underscored in Tuesday afternoon’s opening speech by Tim Wu, the President’s Special Assistant for Technology and Competition Policy, who noted that the review of the merger guidelines was directly in line with the considerations of the decree of President Biden.
AAG Kanter and President Khan have also indicated that their agencies will engage in the Executive Order’s “whole-of-government” interagency approach to resolving competition concerns. DOJ Antitrust and FTC executives have promised much closer collaboration between their agencies and other sister agencies over the next several years. This approach was explored in depth during Tuesday’s panel “Building an ‘All Government’” Competition Policy, in which the leadership of the Office of Information and Regulatory Affairs (“OIRA”), the Ministry of the Treasury, the Department of Labor (“DOL”), and the Council of Economic Advisors discussed how their respective agencies identify competition concerns in labor markets and proposed methods of interagency collaboration to address these issues:
- Ben Harris, Assistant Secretary for Economic Policy at the Treasury Department, discussed the trend of wage stagnation for workers at the lower end of the work scale and highlighted the series of initiatives contained in the presidential decree that aim to ensure greater transparency of wages in some sectors, such as limiting the use of non-competition clauses and studying the impact of limited competition on the labor market. Mr Harris noted that the Treasury has been tasked with three specific white papers that are expected to be released in 2022.
- Heather Boushey, member of the Council of Economic Advisers, discussed labor competition from his perspective as an economist, noting that monopsonies and labor market concentration give employers inordinate power to set wages. She also noted that labor market frictions and information asymmetry were important factors for workers weighing the cost of changing jobs or signing a non-competition agreement. Ms Boushey identified the merger review process as a key policy lever to mitigate the labor market consequences of corporate concentration, praising the recent DOJ lawsuit to prevent a monopsony resulting from the Simon acquisition. & Schuster by Penguin Random House. Our customer alert discussing this action can be found here.
- Sharon Block, Associate Administrator at OIRA, discussed his agency’s role in developing guidance to help agencies identify types of regulatory interventions that are appropriate and serve as a clearinghouse for proposed regulations. She noted that OIRA can act as a conduit for dialogue at many levels to connect staff between agencies and help agencies develop new tools for stakeholder engagement, as mandated by the decree.
- Raj Nayak, Assistant Secretary for Policy at the Ministry of Labor, noted that the DOL has previously been a leader in interagency work, highlighting several laws that the DOL enforces regarding wage and hour violations, violations of health and safety standards, and violations of the anti -discrimination, and noting that such violations may inform the importance of concentration levels when assessing the market effects of mergers. Discussing the tools available at DOL to address these issues, Mr. Nayak noted that enforcing worker protections is the agency’s greatest tool, especially when workers are unable to engage in collective actions. to challenge anti-competitive behavior; for example, DOL’s Occupational Safety and Health Administration (“OSHA”) is responsible for enforcing the Criminal Antitrust Anti-Retaliation Act, which provides protection to antitrust whistleblowers who report antitrust violations as a result of retaliation from their employer, and works closely with the DOJ to train staff to understand each other’s respective authorities.
Throughout the workshop, panelists also discussed several other competition issues and methods for agencies to address these issues in the future:
- Monopsonies of work: Panelists referred to monopsonies and the many ways they can appear in the workforce, as well as the current and future harms associated with it. Panelists cited universities as an example of an employer wielding monopsonic power even in the absence of a high degree of market concentration, noting that market concentration can sometimes be a red herring as it can mask prejudice which can appear in places where there is an accumulation of market power but not concentration. The same panel also presented a discussion of Senator Klobuchar’s “Competition and Antitrust Enforcement Act”, which proposes to explicitly add monopsony to antitrust laws and limits the need to focus on defining the monopsony. market, unless the argument is based on market share.
- Contractual constraints on worker mobility: Panelists discussed a number of clauses that can harm workers, including non-compete, non-disclosure, non-solicitation and training reimbursement agreements. The discussion included current evidence on non-compete agreements and their impact on the workforce with regard to worker mobility, wages and entrepreneurship. There was also a discussion on the pro-competitive aspects of non-competition and non-disclosure agreements, which focused on the benefit of protecting employers’ knowledge, proprietary information, inventions and innovation. Regarding the proposed solutions, panelists discussed the benefits of adopting state-by-state or federal standards to regulate a wide range of restrictive agreements. The Executive Order specifically encouraged the FTC to exercise its regulatory power under the Federal Trade Commission Act to limit unfair use of these provisions. Rules have not yet been developed on this matter, with Republican Commissioners Christine S. Wilson and Noah Phillips questioning whether the FTC’s regulatory authority extends to competition concerns and would likely oppose it. the idea of using rule-making instead of the traditional case-by-case approach. to law enforcement. However, with a third Democratic commissioner expected to be confirmed in early 2022, a rule proposal could come from the agency in the near future, and it is reasonable for the FTC to use the workshop’s public comments to develop its case. factual support for issuing a proposed rule to limit or prohibit the use of such contractual restrictions.
- Collective bargaining for workers in the odd-job economy: Panelists discussed the anti-competitive effects that result from the misclassification of workers, including denial of the right to collective bargaining. Jennifer Abruzzo, General Counsel at the National Labor Relations Board, discussed the challenges independent contractors face when it comes to organizing. Abruzzo noted that the NLRB does not have jurisdiction over independent contractors and those who engage in collective action to improve their situation face prosecution under antitrust laws. In response, many panelists echoed their support for President Khan’s proposal for Congress to extend the labor antitrust exemption to cover some employees in the odd-job economy, noting that properly classified independent contractors should benefit from the work exemption.
Discussions throughout the two-day workshop highlighted that competition issues in labor markets will be a key focus of this administration. The DOJ, FTC and other agencies have outlined their intention to execute the “whole-of-government” interagency approach as envisioned by President Biden’s executive order to identify and develop new approaches to address competition concerns in markets. work. Going forward, we can expect to see actions in response to the executive decree, including: a review of the agency merger guidelines to require a more in-depth examination of the effects of mergers on labor markets; increased cooperation and involvement of agencies that were not previously as active in antitrust law enforcement; Developing FTC rules on the use of contractual restrictions such as non-compete agreements; and legislative change to antitrust laws to combat monopsonies and collective bargaining for workers in the odd-job economy.