A deal inside the Federal Trade Commission that led the agency to drop labor provisions from a new merger regulation is the latest example of the sharp divide over using competition law to police issues affecting the workforce.
The final rule, released Oct. 10, nixed proposals that would have required labor-related disclosures from companies seeking to merge—part of a “compromise” among Democrats and Republicans on the five-person commission, FTC Commissioner Rebecca Kelly Slaughter said.
Those disclosures “would’ve been helpful,” Slaughter, a Democrat, told reporters Oct. 16 during an event hosted by the Consumer Technology Association in Washington. “But we have already been investigating labor market issues in mergers, and I think we will continue to do so.”
Still, comments on the rule from the two GOP commissioners signaled hostility to that effort. In statements accompanying the rule release, they said, among other things, that the labor item was “infected” by legal and economic errors while placing an unnecessary burden on merging parties.
“It was a solution in search of a nonexistent problem,” Commissioner Melissa Holyoak, who joined the FTC in March, said.
The remarks show the strong political dispute that remains over the Biden administration’s effort to expand merger enforcement beyond consumer prices.
FTC Chair Lina Khan has argued that past enforcers neglected consolidation’s effect on worker mobility and wages, and the agency in her tenure has brought lawsuits on theories that mergers will hurt employees. That shift is just a few years underway, but critics are skeptical.
“There’s a good reason why history doesn’t supply lots of examples, and it goes beyond the DOJ and FTC didn’t care about labor markets,” Douglas Ross, an antitrust professor at the University of Washington School of Law, said. “It’s because those cases are few and far between.”
M&A Labor Spotlight
The Biden administration is largely unique in its focus on workers in the merger context, but some of the intellectual underpinnings were present in the Obama administration as it started looking at the uneven recovery from the financial crisis. Under President Donald Trump, the Justice Department also started bringing more wage-fixing and no-poach agreement cases.
The DOJ then in 2021 successfully brought its first labor-focused merger lawsuit, blocking Penguin Random House’s $2.18 billion purchase of Simon & Schuster on grounds that the combination would eliminate the competition that best-selling authors rely on when negotiating book advances.
The FTC is now trying to block a tie-up between
While the merger notification update scrapped proposed disclosure requirements on employees’ job categories and geographical info on where workers may overlap post-merger, agency staff are increasingly requesting labor information from merging parties, M&A lawyers say.
That included the US energy sector, with the FTC scrutinizing labor markets as it reviewed
‘Dreadfully Little Trying’
The focus on labor has some of its roots in economics studies spotlighting the effects of concentration on workers. The Treasury Department, for its part, concluded in 2022 that a lack of labor-market competition “contributes to high levels of income inequality.”
“It didn’t occur to people until a few years ago that labor markets were a problem,” Eric Posner, a University of Chicago law professor who served as counsel to DOJ antitrust division head Jonathan Kanter from 2022-23, said.
But critics argue a lack of results shows the focus is misplaced.
“The agencies have never brought a standalone labor challenge to an acquisition,” Holyoak argued in an Oct. 10 statement accompanying the rule’s adoption. “And it is not for lack of trying.”
Holyoak and her fellow Republican Commissioner Andrew Ferguson disputed that the Penguin Random House case, which focused on bestselling authors such as Stephen King, fits as an action targeting employees of merging firms.
The FTC’s Democratic majority contested their colleagues’ claims, saying in a written response that the history of antitrust law “finds dreadfully little trying.” Labor-related disclosures from M&A parties were designed to fill that hole, they said.
The DOJ declined to comment.
The FTC’s Kroger-Albertsons case, also centered on traditional consumer concerns like the price of groceries, is still awaiting a decision from a federal judge in Oregon, which could offer more insight on how courts are viewing the agency’s labor theories.
“At the end of the day, this will be tested not in academic papers but with facts and specific court cases,” Ross, the Washington Law professor, said.
Election Implications
The Biden administration’s push is only starting to pick up momentum. It can sometimes take years, covering multiple administrations, for a policy or legal initiative to persist inside an agency, Maureen Ohlhausen, a Wilson Sonsini partner and former FTC acting chair, said.
The disconnect inside the FTC on the issue shows that November’s election outcome could “kill off” that momentum, Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania’s Carey Law School, said.
At the same time, Makan Delrahim, a DOJ antitrust chief during the Trump administration, noted that labor competition matters should cross party lines. “They do not belong to the political left or the ideological right,” he said in a 2019 speech.
Questions also exist regarding how a Kamala Harris administration would put its imprint on antitrust, including whether Harris would retain Khan amid calls to chart another course from some Democratic donors.
Focusing on supply-side market issues such as labor “has largely been a Biden administration initiative,” Hovenkamp said. “Clinton, Obama—they really didn’t do it either.”
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