The agencies made clear that “COVID-19 does not provide a reason to tolerate anticompetitive conduct that harms workers.”
On April 13, 2020, the Bureau of Competition of the Federal Trade Commission and the U.S. Department of Justice Antitrust Division issued a joint statement warning companies that both agencies will vigorously protect competition for workers on the front lines of the COVID-19 pandemic―including doctors, nurses, first responders and those who work in grocery stores, pharmacies and warehouses, among other essential service providers. The statement acknowledged that the current health crisis may require unprecedented cooperation among government, businesses and individuals, and that there are many permissible ways that firms can engage in procompetitive collaboration. But the agencies made clear that “COVID-19 does not provide a reason to tolerate anticompetitive conduct that harms workers.”
Agencies on Alert for Collusion
This is the second joint statement that the agencies have issued in response to the pandemic. On March 24, 2020, the agencies issued a joint statement detailing an expedited antitrust review procedure and providing guidance for business collaborations during the crisis.
The more recent statement warns that the agencies will not hesitate to hold accountable those who use the COVID-19 crisis as an opportunity to “prey on American workers by subverting competition in labor markets.” The agencies state that they are on alert for collusion or other anticompetitive conduct by employers, staffing companies (including medical travel and locum agencies) and recruiters in labor markets, such as agreements to lower wages or reduce salaries or hours worked.
Civil or Criminal Liability May Result
The statement warns companies and individuals involved in the hiring, recruiting, retention or placement of workers that anticompetitive conduct runs the risk of civil and/or criminal liability. The statement pointed to the agencies’ efforts over the years to police anticompetitive noncompete agreements and unlawful exchanges of competitively sensitive employee information, including salary, wages, benefits and compensation data. In addition, as the statement points out, the agencies have challenged wage-fixing and “no-poach” agreements between companies to not solicit each other’s employees. In October 2016, in a joint guidance document to human resources professionals, the agencies announced that going forward, the DOJ would proceed criminally against naked wage-fixing or no-poach agreements, i.e., those that are not necessary to a lawful collaboration. Despite the fact that criminal charges under the new policy have yet to be filed, enforcement activity against such agreements, at the federal and state level, has increased since the joint guidance was issued.
The question of whether a business collaboration, agreement or information exchange in labor markets during the COVID-19 crisis complies with antitrust laws depends on the facts and circumstances of each case and usually requires careful analysis. Businesses should seek experienced antitrust counsel before entering into such arrangements.
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For Further Information
If you have any questions about this Alert, please contact Christopher H. Casey, Sean P. McConnell, Sean S. Zabaneh, Edward G. Biester III, any of the attorneys in our Antitrust and Competition Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.