FTC’s Crackdown on Non-Competes

intellectual property owners association conferenceOn September 18-20, Seyfarth partners Dawn Mertineit, Eric Barton, and Robert Milligan will be attending the Intellectual Property Owners Association’s Annual Meeting in Los Angeles. This event offers over two dozen education sessions, networking opportunities, committee meetings, and more.

During the event, Dawn will be speaking on a panel called “Hold on to Your Trade Secrets: The Winds of Change
Continue Reading Seyfarth Attorneys to Attend and Speak at IPO Annual Meeting

The Federal Trade Commission (FTC) recently set its sights squarely on non-compete agreements in merger transactions, making them ripe for further scrutiny. In a Consent Order issued June 14, 2022, the FTC ordered GPM Investments LLC and its parent company ARKO Corp. to roll back provisions it deemed “anticompetitive” in GPM’s May 2021 acquisition of 60 Express Stop retail fuel stations from Corrigan Oil Company. Under the FTC’s order, ARKO and GPM agreed to limit the non-compete agreement that it imposed on Corrigan, and return five retail fuel stations in several local Michigan markets. This decision comes on the heels of a June 10th statement by the FTC’s Chair Lina M. Khan, joined by Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya, warning businesses that contract terms in merger agreements that potentially impede fair competition would be highly scrutinized.
Continue Reading FTC Further Scrutinizes Use of Non-Competes in Merger Transactions

This July, several Seyfarth attorneys signed a letter in response to President Biden’s Executive Order on Promoting Competition in the American Economy. On December 20, 2021, following the FTC’s and DOJ’s virtual workshop on “Making Competition Work: Promoting Competition in the Labor Markets” in early December, Seyfarth partners Dawn Mertineit, Robert Milligan, Kate Perrelli, and Erik Weibust
Continue Reading Seyfarth Partners Sign on to New Letter Urging Caution on Federal Regulation of Non-Competes

Along with 54 other lawyers and two paralegals from across the country, Seyfarth partners Kate Perrelli, Robert Milligan, and Erik Weibust recently signed a letter, penned by our friend Russell Beck, in response to President Biden’s July 9, 2021 Executive Order on Promoting Competition in the American Economy, which we previously wrote about. The letter, which
Continue Reading Seyfarth Partners Join More Than 50 Lawyers Nationwide to Recommend to the White House and FTC that Regulation of Non-Competes Should Be Left to the States

On Friday, July 9, 2021, the Biden Administration released its executive order on “Promoting Competition in the American Economy.” We previously wrote about the forthcoming order and predicted that the executive order’s treatment of non-compete provisions would be a general call to rulemaking versus a more authoritative or immediate directive to the FTC.
Continue Reading President Biden Issues Executive Order Encouraging the FTC to Consider Curtailing the Use of “Unfair” Non-Competes, but Without Providing any Additional Guidance or Details

Dawn Mertineit and Robert Milligan authored an article in the Daily Journal, “‘Can’t we just be like California?’ Another solution in search of a problem.” The Seyfarth partners said while historically the issue of noncompete enforcement has been left to the states, the last year has seen the U.S. Department of Justice and the Federal Trade Commission begin to
Continue Reading Dawn Mertineit and Robert Milligan Author an Article in Daily Journal Concerning FTC’s Role in Regulating Employment Non-Competes

On April 13, 2020, the Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition released a joint statement and press release regarding “competition in labor markets” and potential agency actions in the face of the COVID-19 crisis. While the agencies’ joint statement appears to be focused on collusion between employers entering into horizontal “no-hire” or “no-poach” agreements, employers in certain industries affected by the crisis should also exercise reasonable care in enforcing vertical restrictive covenants, including non-competition and non-solicitation agreements.
Continue Reading The DOJ and FTC Issue Joint Statement on Competition in Labor Markets in Light of COVID-19: What Effect, If Any, Does This Have on Non-Competes?

Within the last five months, the two executive arms responsible for enforcing antitrust laws—the US Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”)—held public workshops to examine the effect of non-compete clauses in employment contracts on the labor market. The DOJ held its workshop on September 23, 2019, while the FTC recently held its own at the top of the year, on January 9, 2020. The purpose of the FTC workshop was “to examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts.”

Why the FTC now wants to regulate in the employment space is not readily apparent apart from attempting to capitalize on a low-hanging fruit populist issue concerning the overreporting of some companies allegedly using non-competes with low-wage workers.
Continue Reading A Solution in Search of a Problem? FTC Hosts Workshop to Consider Authority to Abolish Non-Competes

As we previously covered, a group of 18 state attorneys general in July filed comments with the Federal Trade Commission (“FTC”), asking the FTC to incorporate labor concerns when reviewing corporate mergers and to use its enforcement powers under the Sherman Act to stop the use of non-compete, non-solicit, and no-poach agreements in many situations. Many of those same attorneys general recently sent another letter to the FTC, this time urging it to use its rulemaking authority “to bring an end to the abusive use of non-compete clauses in employment contracts.”

In the most recent letter, the attorneys general endorsed the arguments presented in a March 20, 2019, petition submitted to the FTC by various labor unions, public interest groups, and legal advocates, requesting that the FTC initiate rulemaking to classify abusive worker non-compete clauses as an unfair method of competition and per se illegal under the FTC Act for low wage workers or where the clause is not explicitly negotiated. As they did in their previous letter, the attorneys general contend that non-competes “deprive workers of the right to pursue their ambitions and can lock them into hostile or unsafe working environments.” The attorneys general also argue that the arguments in support of non-compete clauses are unpersuasive and that employers can use other “less draconian” ways to recoup their investment in job training, methods of business, and other intangibles. The attorneys general further argued that non-competes burden businesses seeking to hire new employees, which in turn inhibits innovation and drives up consumer costs by suppressing competition.
Continue Reading State Attorneys General Keep Pressure on FTC to Regulate Non-Competes

A group of 18 state attorneys general (the “AGs”) recently filed comments with the Federal Trade Commission (“FTC”) in advance of a series of hearings centered on changes to antitrust and consumer protection enforcement in the 21st century. The letter identifies four major areas where recent antitrust activity involving labor issues have occurred: (1) horizontal no-poach agreements between employers; (2) vertical no-poach agreements, particularly franchise agreements; (3) non-compete agreements between employers and employees; and (4) mergers impacting labor markets. Although it may reveal the enforcement priorities of its signatories, the letter’s arguments are mostly unsupported by any case law and in some respects are contrary to the Department of Justice’s positions on the matters.
Continue Reading State Attorneys General Urge FTC to Consider Labor Issues in Antitrust Enforcement