All eyes are on labor this year.
Hiba Hafiz, Boston College:
2023 was a big year for labor antitrust. We saw the rise and fall of criminal no-poaching prosecutions, increasing civil challenges to anticompetitive labor agreements, a successful merger challenge based in part on labor market effects, Merger Guidelines explaining the antitrust agencies’ analysis of labor market effects, and FTC rulemaking and consent decrees banning noncompete agreements. How these enforcement and policy actions will play out in 2024 will establish crucial precedent and guidance on substantive labor antitrust law and the agencies’ authority to regulate. But 2023 saw no real developments on unlawful labor monopsony law under the Sherman Act’s Section 2.
2024 promises to be a big year for Section 2 law because the first labor monopsony case ever is scheduled for trial in April. Le v. Zuffa is a private class action brought by mixed martial arts (MMA) fighters challenging the Ultimate Fighting Championship (UFC)/Zuffa, for unlawful acquisition and maintenance of monopsony in the MMA fighter services market. The class alleges that the UFC’s acquisition of rival promoters and use of exclusionary contracts wiped out its competition and resulted in reduced fighter pay.
The trial will decide key issues about the reasonableness of contracts that restrict workers’ outside options and the sources of UFC’s monopsony, whether their own business acumen or anticompetitive exploitation of fighters. How jurors evaluate these issues will be central for labor monopsony law going forward, particularly in light of the DOJ’s challenges convincing juries in labor cases. A victory for plaintiffs will establish precedent that labor monopsony cases can traverse the treacherous terrain from filing to trial in the first jury verdict in a labor antitrust case in modern antitrust enforcement history. Fundamentally, like other labor antitrust cases, Le will be an important test of workers’ ability to use antitrust law to transform labor market dynamics, contract flexibility, and labor mobility, and in talent-based industries, to monetize and retain the value of their notoriety.
Herbert Hovenkamp, University of Pennsylvania:
Supply-side restraints are a weak sibling in antitrust policy, acknowledged in theory but less frequently applied. A revival of interest in antitrust and worker welfare is changing that. For example, the 2023 Merger Guidelines include a lengthy discussion of mergers causing buy-side harms, including to labor. The Antitrust Division is pursuing more no-poach agreements involving workers, and the Federal Trade Commission has shown new interest in employee noncompete agreements. The Supreme Court’s most recent antitrust decision, NCAA v. Alston, involved wage suppression. This could well be the most important and productive shift in recent antitrust policy.
Both the common law of trade restraints and the Sherman Act apply equally to sellers and purchasers. The Clayton Act is more selective. Section 3 condemns only exclusive contracts that are imposed by sellers, but Section 7 reaches mergers with no distinction between buy and sell-side harms. Nevertheless, the case law reflects an enormous enforcement imbalance. The economic literature does the same thing. The term “monopsony,” the buy-side version of monopoly, was not even invented until Joan Robinson incorporated it into her Economics of Imperfect Competition in 1932. Nevertheless, a small number of Sherman Act cases reached buy-side harms from the beginning.
This expansion is overdue, but litigants and even some judges must be better educated about the effects of monopsony, particularly in labor markets. While there is some difference in detail, a “naked” price restraint or anti-poaching agreement should be unlawful per se and even a criminal violation on the same terms as a seller restraint. Some troublesome decisions have rejected per se illegality or criminal liability for naked no-poach agreements, perhaps persuaded by arguments that wage suppression agreements conjure up lower consumer prices rather than higher ones. In fact, wage suppression and higher consumer prices are equally problematic and should be treated symmetrically, as the Seventh Circuit did in its DesLandes decision. That is, courts should focus on output rather than price as the relevant variable.
Eric Posner, University of Chicago:
The year 2024 will be marked by further advances in labor antitrust—the application of antitrust law to employer domination of labor markets. Deslandes v. McDonald’s will return to the district court after a rebuke from the Seventh Circuit Court of Appeals. In a notable opinion by Judge Frank Easterbrook, the court confirmed that anticompetitive harms to labor markets are governed by the antitrust laws, and that they cannot be traded off against benefits on the consumer side of the market. Deslandes is just one of a group of section 1 franchise no-poach cases that are making their way through the courts. Cung Le, et al v. Zuffa is a Section 2 case against Ultimate Fighting Championship, the mixed martial arts promoter. The plaintiffs, who allege that the UFC has illegally maintained a monopsony over elite fighters, recently obtained class certification and the case will finally go to trial in 2024, ten years after the complaint was filed. Other Section 2 challenges to sports monopsonies are advancing through the courts, while the NCAA’s model of paying nothing to athletes is collapsing. And the FTC will likely decide whether to challenge the Kroger-Albertsons merger, which, according to unions and commentators, would harm grocery workers in multiple markets if allowed to proceed.
In December 2023, the FTC and DOJ issued the final version of the 2023 draft merger guidelines, which included a new section on evaluating the labor market impacts of mergers. In 2024, they will also finalize new Hart-Scott-Rodino regulations, which require merging firms to reveal data on labor markets comparable to the data they are already required to disclose relating to product markets. The FTC will also likely finalize its proposed ban on noncompetes.
The new labor antitrust has received less attention in the media than the challenges to Big Tech, but it marks a more fundamental and long-lasting development in antitrust law.
Articles represent the opinions of their writers, not necessarily those of ProMarket, the University of Chicago, the Booth School of Business, or its faculty.