An Antitrust Victory for Workers?: Competition Corner
Issue #34
Howdy, competition fans and welcome to 2025.
As the sun sets on the Biden-era competition enforcement regime, its leaders are fighting to enshrine the legacy of their Neo-Brandeisian or “hipster” antitrust movement by bringing controversial new cases that the incoming administration will inherit, and by touting its successes in court as a roadmap for future enforcement. Whether these moves will animate competition regulation and enforcement under incoming Republican Federal Trade Commission (FTC) Chair Ferguson and proposed Department Of Justice (DOJ) Assistant Attorney General for Antitrust Gail Slater remains to be seen.
Consider the FTC and Neo-Brandeisian movement’s push to use antitrust as a labor protection tool rather than its longstanding role as a consumer welfare prescription. Labor welfare is already the purview of specialized agencies like the National Labor Relations Board (NLRB), and of state and federal employment laws. Under Biden-era FTC Chair Khan, the agency declared most noncompete clauses in employment agreements to be ‘unfair methods of competition.’ Multiple courts have since blocked this rule, and the agency has appealed these decisions. Similarly, the FTC’s 2024 microeconomics conference primarily featured papers centered on labor markets and harm to workers, rather than consumers. To be clear, the FTC is certainly right that antitrust does consider competition in labor markets. But courts have only found violations when the competitive process in labor markets is distorted, not when business conduct may merely reduce labor bargaining power without harming the competitive process.
Most recently, on January 14 a divided FTC issued a policy statement by a 3-2 vote, “clarifying that independent contractors, including gig workers, are shielded from antitrust liability when engaging in protected bargaining and organizing activities—such as seeking better compensation and job conditions.” This statement seeks to extend the labor antitrust exemption beyond the union context in a rather questionable manner. The dubious initiative of this last-minute exercise in antitrust adventurism was underscored in a joint dissenting statement by Commissioners Ferguson and Holyoak, stressing that “it is senseless for the Biden-Harris Commission to announce, on its way out the door, its plans for the future. It has no future.” Stay tuned for the likely swift withdrawal of this statement by a new FTC Republican majority
Kroger/Albertsons: A victory for workers?
In a recent statement, Chair Khan touted the Oregon federal district court’s ruling against the proposed merger of supermarket chains Kroger and Albertsons as a step forward for incorporating labor concerns into antitrust, and a step towards recognizing the FTC’s labor-based theories of antitrust harm. She credited the court for recognizing that “a substantial lessening of competition in labor markets can be an independent basis for [antitrust] liability.” The agency’s complaint against the merger alleged that the merged chain would harm unionized workers by using its heightened “monopsony” bargaining power to depress their wages. The court found this outcome to be “plausible.”
But this labor theory of anticompetitive harm wasn’t cited as grounds for blocking the merger. The court instead issued its preliminary injunction based on traditional antitrust principles of consumer harm. The FTC successfully argued that consumers were likely to be harmed through less downward pressure upon prices after the competing chains merged. They also presented evidence that the parties’ proposal to resolve anticompetitive concerns by selling stores in some overlapping geographic markets to a third-party would not work, since their proposed third-party buyer lacked expertise in operating supermarkets, and had an unsatisfactory track record. The court avoided any conclusion that reduced worker bargaining power constituted an anticompetitive harm rendering the proposed merger illegal.
A ruling based on such a conclusion likely would not have survived an appeal. Antitrust courts have long recognized that consumers can be harmed through depressed competition in labor markets. Depressed wages can discourage the entry of workers, leading to reduced output or quality for consumers. Importantly, this involves an analysis of both harm to labor competition and harm to competition in the ‘output’ (consumer-facing) market. A good example of this is the DOJ’s successful attempt to block the merger of publishing houses Penguin Random House and Simon & Schuster in 2022. The court found that the combined entity was likely to use its increased bargaining power over prospective authors to pay them smaller advances, thus lowering the quality or amount of creative output and harming consumers since people would be deterred from writing books.
By contrast, the FTC’s complaint against Kroger and Albertsons’ merger didn’t claim that depressed wages for grocery workers would result in reduced grocery output. Instead, it’s likely that this increased bargaining power over labor would have benefited consumers through lower prices by reducing input costs relative to output. By avoiding an endorsement of the FTC’s labor market theories, the court limited its verdict to conventional antitrust analysis rather than affirming the aspirational principles of the Neo-Brandeisian movement.
What do you think? Should antitrust enforcers continue to weave labor concerns into their enforcement decisions? Let us know.
Writing for Forbes, our senior scholar Alden Abbott analyzed the implications of a recent federal court decision to rescind the Federal Communications Commission (FCC)’s net neutrality mandate, the Supreme Court’s verdict upholding the Tiktok divestiture bill, how patent reform can drive artificial intelligence (AI) innovation, and how recent court decisions can help the Trump 2.0 administration curtail the regulatory state.
Alden also discussed the end of the Biden administration’s net neutrality rule on the Lars Larson show, assessed the intersection of AI and competition policy on the Concurrences’ antitrust code podcast, and assessed the demise of the Biden FCC’s net neutrality rule on Freedom Works (to be included in our next newsletter).
A pragmatic vision for antitrust enforcement for the Trump administration 2.0
What lessons can the incoming administration’s antitrust leadership learn from the successes and failures of the Khan FTC and the Jonathan Kanter DOJ Antitrust Division? How can they best meet their policy objectives of promoting competition, innovation, and America’s economic growth? Check out my analysis in the Hill.
That’s all for January. See you next month.
Satya Marar
Visiting Postgraduate Fellow (Innovation, Competition & Governance)
Mercatus Center at George Mason University
Project on Competition