Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Federal agencies agree to address effects of mergers and acquisitions on labor markets, (Aug 29, 2024)

By Kenneth H. Ryesky, M.B.A., J.D.

Under new four-way mutual pact, federal antitrust agencies and federal labor agencies are now all in the loop to cooperate in promoting competition.

The FTC, Department of Justice Antitrust Division, Department of Labor (DOL), and National Labor Relations Board (NLRB) announced a new memorandum of understanding designed to enhance the agencies’ cooperation in regulating competition under the "whole-of-government" approach. Under the new agreement, the agencies will share information, expertise, and resources to address competition issues in the labor markets (DOJ, FTC, DOL, and NLRB.

On July 9, 2021, President Biden issued an Executive Order titled "Promoting Competition in the American Economy", in which he declared that "a whole-of-government approach is necessary to address overconcentration, monopolization, and unfair competition in the American economy." The Executive Order directs and encourages federal agencies to cooperate with one another in addressing competition and antitrust issues.

The Department of Justice Antitrust Division and the FTC have long worked in tandem with one another in enforcing the antitrust laws, while the DOL and NLRB have similarly shared their resources and expertise regarding the labor laws. In 2022 and 2023, the Justice Department and the FTC each entered into respective bilateral cooperation agreements with the DOL and the NLRB regarding enforcement and administration of the antitrust laws as the labor issues pertained to them. The MOU will also build upon the FTC’s enforcement policy statement related to gig work, according to the announcement.

Competition and the labor markets. Labor is an intangible service which, like tangible commodities, takes many forms in specialized markets. The labor markets are susceptible to many of the same or analogous abuses which can affect the tangible commodities markets. A merger or acquisition can impact a labor market if a large production plant or retail asset is shut down as a result. The FTC has recently taken steps to protect competition in labor markets through merger enforcement actions, including through the Commission’s challenge of Kroger Company’s acquisition of the Albertsons Companies, Inc. and Tapestry, Inc.’s acquisition of Capri Holdings Limited.

Even without a merger or acquisition, employer practices can impact competition in a labor market. Notwithstanding the recent invalidation of the FTC's ongoing broad-brush push to eliminate noncompetition agreements [Ryan, LLC v. FTC, No. 3:24-cv-00986 (N.D. Tex. Aug. 20, 2024)], the FTC has recently found that certain individual employers were imposing abusive non-compete agreements upon their employees.

Implementation of the agreement. The memorandum designates specific practices for the agencies' cooperation. The labor agencies will provide cross-training in labor law and practices to antitrust agency employees. The agencies are specifically approved to access and utilize each other's publicly-posted statistical data on their respective Internet websites; beyond this, non-public data can be shared with due regard to the relevant privacy and confidentiality concerns. The agencies' coordination will include bi-annual meetings.

All four agency heads have expressed enthusiasm over the Memorandum. FTC Chair Lina M. Khan said, "When businesses vigorously compete for workers, workers enjoy better wages and working conditions as well as greater opportunity and freedom."

“Competition in labor markets means higher wages, better working conditions, and more opportunities for workers and their families,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Our partnership with the FTC, NLRB, and DOL will help us identify and take action against mergers that threaten to harm competition for workers. The Antitrust Division did just that when we successfully challenged a merger between book publishers that would have decreased compensation for authors. Promoting workers’ right to earn a fair wage is central to the mission of each of our agencies, and we look forward to deepening our collaboration together.”

Acting DOL Secretary Julie Su declared that "it’s critical that the impact on workers and the labor market are given due consideration when analyzing mergers and acquisitions."

NLRB General Counsel Jennifer Abruzzo said that her agency is "thrilled to be partnering with the antitrust agencies to enhance their ability to obtain important information on the potential effects of mergers on workers."

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