As much of the U.S. battles COVID-19 by self-quarantining, others fight on the front lines by providing healthcare services, maintaining supply chains, and keeping America safe and fed. On April 13, the Department of Justice, Antitrust Division (DOJ) and Federal Trade Commission (FTC) issued a joint statement warning businesses and individuals that these agencies will not permit collusive or anticompetitive conduct that harms those frontline workers at this critical time. While the agencies have previously noted that procompetitive collaborations aimed at combating COVID-19 are permissible, Assistant Attorney General (AAG) Makan Delrahim announced that DOJ “will not tolerate companies and individuals who use COVID-19 to harm competition that cheats payroll and non-payroll workers.” This focus on all workers’ right to expect employers to compete fairly for their services and make independent decisions is consistent with the agencies’ emphasis in recent years on competition in labor markets generally.
Specifically, the agencies announced this week that they are on alert for employers, staffing agencies, recruiters, and others who may be engaging in anticompetitive conduct to suppress salaries and wages, curtail hours, or limit worker mobility. FTC Chairman Joe Simons said that the agencies “will not stand for any collusion among employers that would deprive workers of competitive compensation for their hard work,” a warning that businesses and individuals would be wise to heed. FTC and DOJ have track records, particularly in recent years, of challenging unlawful wage-fixing agreements, no-poach agreements, non-competes, and exchanges of competitively sensitive information among competitors. The DOJ can prosecute naked wage-fixing or no-poach agreements criminally and the FTC can bring civil enforcement actions for invitations to collude, even in cases where the parties did not reach an agreement. The announcement also notes that the agencies may use their civil enforcement authority to challenge anticompetitive conduct of dominant employers that use market power to harm competition in the labor market.
This announcement reiterates a familiar sentiment from the agencies in recent months about their intent to be on high alert for violations during this pandemic crisis situation. In March, the DOJ cautioned that it would hold accountable businesses and individuals who engage in price-fixing, bid-rigging, or other anticompetitive conduct. As AAG Delrahim recently noted, “[e]ven in times of crisis, we choose a policy of competition over collusion.” The FTC, meanwhile, is staying the course during the COVID-19 pandemic, analyzing the effects of proposed transactions and business conduct, and challenging transactions and conduct as the agency deems appropriate.
While this announcement does not change the long-standing policies of the FTC or DOJ, companies and individuals who participate in hiring, staffing, and recruiting should take note, particularly if they work with essential service providers. The antitrust agencies have the labor market under a magnifying glass at this time, and a misstep could have serious civil or criminal consequences. Accordingly, it is an important time for companies to assure that they have strong antitrust training programs in place (for HR personnel as well as the usual sales and marketing teams), look out for HR antitrust red flags, have detailed compliance programs suitable to meet government enforcer expectations should problematic conduct occur, and consider contacting experienced antitrust counsel if questions or concerns arise in this uncertain and confusing time. However chaotic or critical the circumstances, antitrust agencies have made clear that they still expect companies and employees to be aware of and act consistently with competition laws, including regarding hiring and wages.
*Morrison & Foerster associate Eric Olson assisted in the preparation of this client alert.
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