Key Takeaways for Employers from DOJ/FTC on Antitrust Enforcement Amid COVID-19 Pandemic

April 20, 2020
Firm Publication

On April 13, the Antitrust Division of the Department of Justice (DOJ) and the Bureau of Competition of the Federal Trade Commission (FTC) (collectively, the Agencies) issued a Joint Antitrust Statement that the Agencies will be “on alert” for employers, staffing companies, and recruiters who take advantage of the COVID-19 pandemic by “engag[ing] in collusion or other anticompetitive conduct in labor markets, such as agreements to lower wages or to reduce salaries or hours worked.”

Last month, the Agencies issued an initial statement that recognized the necessity for some competitor collaborations to address the COVID-19 pandemic. The newest Joint Antitrust Statement, however, emphasizes that anticompetitive conduct harming workers, particularly those on the front lines of the crisis, will not be tolerated. It hearkens back to another message from 2018 in which the DOJ warned of serious consequences for companies that collude in ways that harm labor markets and employees in particular. Similar to some of the DOJ’s 2018 messaging, the current statement reaffirms the Agencies’ vigilance in protecting employees from anticompetitive conduct, particularly those “on the front lines of addressing the [COVID-19] crisis,” including “doctors, nurses, first responders, and those who work in grocery stores, pharmacies, and warehouses, among other essential service providers.”

Four Key Takeaways

There are permissible ways employers can engage in procompetitive collaboration.

For example, certain joint purchasing arrangements, sharing technical know-how, and the development of certain standards for patient management, among others, can be procompetitive in certain situations.  However, employers should follow the Agencies’ guidance in determining what actions are permissible.

Employers must avoid anticompetitive collaborations that will harm workers.

Examples of such illegal conduct include:

  • No-poach agreements, which are arrangements among employers not to hire or solicit each other’s employees.
  • Wage-fixing agreements, which include agreements to suppress or eliminate competition with respect to compensation, benefits, hours worked, or other employment terms.
  • Anticompetitive non-compete agreements.
  • The unlawful exchange of competitively sensitive employee information, including salary, wages, benefits, or compensation data.
The Agencies are focused on enforcing the antitrust laws against those hiring essential service providers, such as employers, staffing companies and recruiters.  

The Agencies warned “companies and individuals involved in the hiring, recruiting, retention, or placement of workers [to] be aware that anticompetitive conduct runs the risk of civil and/or criminal liability.” In addition to employers, staffing companies, and recruiters, the Joint Antitrust Statement specifically directs its admonitions to the healthcare field by mentioning medical travel and locum agencies.

Anticompetitive collaborations can carry hefty consequences.

In particular, the Agencies reaffirmed:

  • The DOJ “may criminally prosecute companies and individuals who enter into naked wage-fixing and no-poach agreements.”
  • The FTC may pursue civil enforcement actions against those that invite others to collude, even absent a collusive agreement.
  • Use of their civil enforcement authority to challenge unilateral anticompetitive conduct by employers that have dominant power in labor markets involving unique skill sets or underserved geographical areas.

For more information about this topic or to discuss antitrust compliance and training issues, please contact the authors of this alert.