Scholar argues that novelty should not prevent antitrust laws from recognizing workers’ claims.
Distinct from the use of antitrust laws against unions’ cartels during the early 20th century, the “new labor antitrust” targets employers’ liability for restricting competition in labor markets. The U.S. Department of Justice and the Federal Trade Commission (FTC) have been seeking to impose antitrust liability on employers since 2020.
The Justice Department brought criminal charges against corporate officers who agreed to “restrict the hiring and recruiting of engineers between and among companies.” The FTC sued several security companies for imposing non-compete agreements on their security guards. For merger cases, the Justice Department and the FTC jointly issued new guidelines, incorporating the impact of mergers on labor markets into their analysis.
This new approach, however, has raised skepticism among judges and scholars because, until recently, antitrust laws were seldom applied to labor markets. They have tended to view workers’ antitrust claims as incompatible with antitrust laws.
In a recent article, Eric A. Posner, the Kirkland and Ellis Distinguished Service Professor of Law at the University of Chicago Law School, argues that novelty should not hinder antitrust claims against employers. Posner outlines several reasons for the skepticism surrounding the new labor antitrust, though he finds none of them persuasive.
One reason is that the “consumer welfare standard”—the idea that antitrust laws seek to maximize the total benefits of all participants in a market—limits the victims of antitrust violations to consumers only and excludes workers, notes Posner. On this view, antitrust laws should only address the inefficiencies in product markets.
Posner contends that antitrust statutes and theories, however, have treated all kinds of markets without distinction. Workers are sellers of labor, and employers are its buyers. Labor markets are not different from product markets, argues Posner.
Robert Bork, who proposed the consumer welfare standard, only argued that the goal of antitrust laws is to maximize “consumer welfare,” posits Posner. He did not mean to limit the protection of antitrust laws to “consumers.”
Posner maintains that the courts have never held that an employer’s cartel is immune from antitrust liability if the victims are the workers, nor have they held that the consumer welfare standard prevents workers from seeking antitrust remedies.
Posner admits that, in certain cases, a harm to workers may benefit consumers by lowering prices for products. Nevertheless, he maintains that these cases are subject to the “rule of reason” under which courts weigh the harm against the benefit to competition.
Deslandes v. McDonald’s is a relevant example here, Posner points out. Although the lower court determined that a no-poach clause was legal if the output of burgers and fries increased, the U.S. Court of Appeals for the Seventh Circuit held that “benefits to consumers (increased output)” cannot justify “detriments to workers (monopsony pricing).”
A related reason behind the skepticism is that consumer welfare is often a proxy for worker welfare. Posner explains that, according to this argument, a monopsonist in a labor market is likely to be a monopoly in a product market. So, antitrust actions brought against the employers in a labor market may be redundant.
Still, Posner contends that antitrust laws require the Justice Department and the FTC to assess all relevant markets, and focusing on labor markets is often more practical than on product markets.
For example, in a case involving a merger of two of the largest five book publishers, the U.S. District Court for the District of Columbia sided with the Justice Department and held that the merger would have reduced the number of bidders in book auctions, resulting in a lower price paid for authors. Posner explains that many authors may have stopped writing books if the publishers paid them less. Less production of books would have led to higher prices and harmed consumers. Thus, worker welfare can be a proxy for assessing consumer welfare.
Skeptics also falsely assume that labor markets are always competitive and argue that the new labor antitrust is not needed, notes Posner. He explains that this assumption may derive from a dearth of studies on labor concentration and collusion before the late 2010s. Recent studies have shown that many labor markets are highly concentrated. Studies have also shown that no-poach agreements restricted workers’ ability to switch jobs and noncompete agreements removed a significant number of workers from labor markets. Together, the agreements reduced competition in labor markets, notes Posner.
On the other side of the spectrum, proponents of workers’ welfare are concerned that antitrust laws may be in tension with labor law because union activities protected by labor law may eliminate competition among workers, notes Posner. He maintains that labor laws and antitrust laws are complementary tools for workers. Workers can use unions to oppose “legal monopsonies, illegal but undetected cartels, or legal but anticompetitive coordination.” They can also use antitrust laws to challenge harmful mergers, argues Posner.
Posner concludes that although skepticism is a natural reaction to a new legal claim, courts, the Justice Department, and the FTC should avoid viewing workers’ antitrust claims with skepticism simply because of their novelty.
