The members of BakerHostetler’s Antitrust and Competition Team are pleased to present these brief updates from the conference sessions at this week’s ABA Antitrust Spring Meeting in Washington, D.C.
Session on “Do Non-Competes Cause More Harm Than Good?”
The panel vigorously debated the merits of the FTC’s proposed rule banning non-compete agreements between employers and employees, while agreeing that the proposed rule would represent a major policy shift from the current patchwork of state-level approaches to a nationwide rule declaring such agreements, in effect, per se violations of Section 5 of the FTC Act (except in industries like banking that the FTC cannot regulate). While empirical evidence discussed in the academic literature purportedly supports the conclusions that non-competes harm employees’ compensation and may retard rather than foster innovation, a sharp divide remains between observers who find the FTC’s approach justified and those who believe the proposed rule fails to give sufficient weight to pro-competitive aspects of non-competes in at least some situations, like the sale of a business. Everyone seems to agree that, regardless of the proposed rule’s substantive merits, the agency will face serious challenges to its authority to engage in competition rulemaking at all, including under the major questions doctrine and the nondelegation doctrine, so the Supreme Court is almost certain to have the last word on the subject.
Session on “Agency Update With the U.S. Department of Justice, Antitrust Division”
The DOJ is exploring artificial intelligence (AI) companies for possible violations of Section 8 of the Clayton Act. At Wednesday morning’s enforcers panel, members of the DOJ stressed they are still seeking to use Section 8 to break up boards of directors with interlocking members. Members of the panel specifically mentioned that the DOJ is looking at AI companies sharing interlocking directors. The members of the panel also stressed they were looking into industries that attract new investment, but AI was the only industry specifically named.
Session on “The Fix Is In?”
The panelists discussed the uncertain state of merger remedies, the relationship between remedies and enforcement, and practical recommendations for advocates and advisors whose clients’ transactions are subject to agency review. FTC and DOJ representatives emphasized that, in the first instance, they are not responsible for crafting merger remedies for deals that present competitive issues; they see that as the merging parties’ obligation. They also noted that inefficiencies have arisen in recent remedy negotiations because the agencies often do not receive transacting parties’ best remedy offer until deals are near or into litigation. Diana Moss, Director of Competition Policy at the Progressive Policy Institute, observed that effective merger enforcement is difficult if the agencies’ policies on remedies are unclear. Overall, the panel highlighted persistent challenges to maintaining and implementing remedies policy and underscored that there are no easy answers.
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