Lessons from DOJ’s Wave Of Labor Market Prosecutions

By: William F. Cavanaugh, Jr., Amy N. Vegari & Andrew I. Haddad (Patterson Belknap/Antitrust Update)

Over the past three years, the U.S. Department of Justice (DOJ) has embarked on its inaugural pursuit of criminal antitrust cases focused on alleged agreements between companies to prevent employee poaching and manipulate wages. Out of the six cases brought forward, four ended in acquittals, and only one led to guilty pleas. In a recent development, the DOJ dismissed its sixth case without providing an explanation.

While the legal theory supporting the DOJ’s actions fared well, with courts rejecting dismissal motions and endorsing the idea that no-poach or wage-fixing deals lacking legitimate collaboration could be inherently illegal among competitors, the challenges arose during the trials.

Courts demanded the DOJ prove, at trial, that the defendants entering into no-poach agreements intended to eliminate meaningful competition in the relevant labor market – a formidable task that the DOJ seemingly struggled to fulfill. Despite deeming no-poach deals per se illegal, the courts allowed the consideration of evidence highlighting the schemes’ pro-competitive benefits as indicative of the defendants’ intent.

The foundation for these prosecutions was laid in 2016 when the DOJ and the Federal Trade Commission issued joint guidance, asserting that naked no-poach and wage-fixing deals are per se unlawful under Section 1 of the Sherman Act if not tied to a legitimate collaboration.

The DOJ’s historical policy limits criminal antitrust charges to per se offenses, traditionally applied to horizontal agreements fixing prices or allocating markets, rather than violations requiring a rule of reason analysis…

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