Although merger review now acknowledges potential harms to labor markets, the analytical tools remain underdeveloped. Shishene Jing proposes identifying “labor market mavericks” as companies essential to maintaining competition among employers and preventing mergers that could reduce wages and other worker benefits.
Labor market analysis remains underdeveloped in merger review. Section 7 of the Clayton Act has historically focused on how mergers affect output and consumer prices, rather than wages and benefits for workers. In response to growth in empirical research on how market concentration is associated with lower wages, the 2023 Merger Guidelines recognize that mergers between firms that compete for the same workers can reduce wages and other worker benefits. The Department of Justice put this analysis to great effect when it successfully challenged the proposed merger between Penguin Random House and Simon & Schuster in 2022 by showing how it would suppress authors’ advances. However, regulators’ main tool for measuring how market concentration could harm competition in labor markets—the Herfindahl-Hirschman Index (HHI)—only crudely gauges changes to market structure and treats all firms the same in every way but market share.
When antitrust regulators evaluate how a horizontal merger between direct competitors can harm competition in product markets—markets for unique goods and services—they assess whether a “maverick” firm exists. The maverick firm is a competitor whose aggressive conduct disrupts the ability of the rest of the firms in the market to converge upon and maintain a stable consumer price level. The elimination of the maverick firm through a merger disproportionately facilitates this tacit coordination. Like product markets, labor markets contain analogous firms: employers whose compensation, hiring, or training practices discipline prevailing wage-setting norms to the benefit of workers. Merger analysis needs to develop an analogous framework that recognizes the existence of “labor market mavericks” through tools that ask whether a transaction would remove a firm that plays a distinctive role in sustaining wage competition.
A three-factor framework to identify labor market mavericks
Jonathan Baker’s account of mavericks—substantiated in Supreme Court precedent—lists three principles to identify a product market maverick. First, the firm must behave in a meaningfully distinct way relative to rivals. Second, that behavior must constrain coordination among competitors. Third, there must be evidence of how market dynamics would change in the firm’s absence.
The labor-market analogue asks whether a firm plays a comparable disciplining role on wage suppression and suggests a similar three-factor test.
Wage premiums: The first factor is whether the firm persistently pays wages or provides benefits above the prevailing market benchmark. This is the labor-market analogue to aggressive pricing in product markets. A sustained wage premium forces rivals to raise compensation or risk losing workers, thereby disciplining wage suppression. The relevant comparison must be specific to specific occupations or geographies. Evidence may include payroll data, compensation studies, or econometric analysis showing consistent deviation from market norms.
Expansion of outside options: The second factor is whether the firm expands credible outside options for workers. Employers who aggressively recruit from competitors, refuse to enforce noncompete clauses, or decline participation in no-poach arrangements increase labor mobility and strengthen worker bargaining power across the market. These effects extend beyond the firm itself. By increasing exit opportunities, such firms force rival employers to compete more aggressively for labor. Evidence may include hiring patterns, recruitment intensity, and contractual practices governing mobility.
Workforce investment: The third factor is whether the employer invests in training and skill development in ways that raise the competitive floor of the labor market. Firms that invest heavily in human capital and do not raise barriers to worker movement through non-compete clauses and the like benefit the broader labor market by training workers for potential competitors. Eliminating such a firm reduces both current wage competition and future skill formation. Evidence may include training expenditures, internal promotion structures, and post-separation employment patterns.
A historical retrospective
Labor market mavericks have not been identified in the past only because the conceptual framework had not been developed, not because they did not empirically exist. In the legal industry, for instance, there is huge variation between different law firms in their approach towards talent. Uncommon for “Big Law,” law firm Susman Godfrey is widely well-regarded for giving early-career employees substantive courtroom opportunities, paying above market rates, and allowing all attorneys at the firm a vote in decisions. This contrasts sharply with the norm in corporate law in both wage premium and workforce investment. Notably Susman’s internal labor practices do not merely benefit its own employees. They frequently lead to higher salaries across the market as other firms compete to match.
In the antitrust context, it is very plausible that many past acquisitions have involved companies that operated as labor market mavericks that, under the 2023 Merger Guidelines, should have warranted antitrust enforcement. The healthcare market, for example, has seen a proliferation of serial acquisitions of healthcare institutions by private equity. Studies have shown that private equity acquisitions of healthcare practices lead to higher rates of physician turnover and workforce replacement relative to independent practices not owned by private equity for dermatology, ophthalmology, and gastroenterology. Other studies have shown that after hospitals were acquired by private equity, they reduced salary expenditures by 16.6%. No agencies investigated whether any of these acquired practices had operated as labor market mavericks that would have disciplined the market for healthcare labor.
Other examples outside the private equity context abound. Tyson Foods, for instance, was profiled in Christopher Leonard’s The Meat Racket for notably poor labor market practices characterized as “contract farming,” creating a tournament system for its farmers, and offloading its own financial risk onto contract farmers. While the DOJ has required divestitures in some of Tyson’s acquisitions, Tyson has acquired direct competitors, processors, and entities across the supply chain without any agency investigation into whether the acquired entities may have acted as labor market mavericks.
Remedies and the limits of divestiture
Labor market remedies may not align with those in product markets. The structural remedy favored in product-market merger litigation—divestiture of overlapping assets to a viable buyer—translates poorly to labor market maverick cases. While competition in product markets may be maintained by selling assets, divestiture cannot effectively maintain maverick conduct in a third-party with no history of such behavior. A divested manufacturing plant or distribution center largely maintains (in theory) its productive capacity when sold to a competitor. A divested business unit does not transfer the acquired maverick’s compensation philosophy, hiring culture, or training commitments to the buyer at all, because those are organizational practices rather than transferable assets. A firm acquiring the maverick’s divested facilities while declining to match its wage premium, its no-poach abstention, or its training investment reproduces the anticompetitive labor market outcome the merger review process was meant to prevent, even while satisfying the concentration metrics a conventional structural remedy for both product and labor markets targets.
This mismatch suggests that divestiture may often be insufficient in labor-market maverick cases. Where evidence shows that the acquired firm plays a unique wage-disciplining role, outright prohibition may be the more appropriate remedy, since the relevant competitive attributes are frequently cultural and cannot be reliably transferred.
In cases that lead to condoned mergers, behavioral remedies may be warranted. Merger enforcement generally disfavors behavioral remedies due to the difficulties with monitoring firms’ compliance with them, but wage-floor commitments, restrictions on noncompete enforcement, and obligations to maintain training investment levels may better preserve competition than asset divestiture alone. The broader implication is that labor-market merger remedies should not simply import assumptions from product markets. If the harm arises from the elimination of behavioral constraints on wage-setting, then any remedies must be designed to preserve those constraints rather than merely maintain competitive market shares.
If such remedies cannot be designed without overly onerous monitoring costs, then the answer is not divestiture. It’s blocking the deal.
Conclusion
In an era of extreme wage stagnation, labor-market monopsony is now a central concern of antitrust policy, but merger doctrine still lacks a mechanism for identifying which firms matter most to wage competition. The labor market maverick framework fills this gap.
Rather than relying solely on concentration measures, merger analysis should ask whether a transaction eliminates an employer whose compensation practices, hiring behavior, or workforce investments discipline wage suppression. This approach does not require new legal authority or even drastically new analytical tools. It requires only consistent application of existing maverick logic to labor markets.
Author’s Note: The author thanks Robert Lande, Neil Averitt, and Erik Madsen for helpful comments.
Authors’ Disclosures: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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