Workers taking center stage is latest sign U.S. is in new antitrust era

State of play: The last week cemented the strategy. The Federal Trade Commission for the first time in 50 years enacted an "economy-wide" change — moving to ban noncompete agreements.

• One big piece of the agency's reasoning: These contracts, prohibiting employees from quitting and immediately taking jobs with a competitor company, reduce competition between companies for workers. That leads to lower wages and fewer employment opportunities, they argue.
• The FTC also filed suit last week to block the merger of two luxury fashion brands— Tapestry, which owns Coach and Kate Spade, and Capri, which owns Michael Kors and Versace.
• The agency said the deal "threatens to eliminate the incentive for the two companies to compete for employees."

The big picture: For decades, antitrust regulators evaluated mergers and other corporate actions by one metric, based on a theory promulgated by Robert Bork: consumer welfare. The key question: Would prices go up if two companies became one?

• But academics and some policymakers for years have been pushing back, noting that when companies become bigger and bigger, gaining monopolies in certain markets — there are other harms to consider, including to workers, small businesses, and entrepreneurship.
• Even citizens feel the consequences if a company grows so large as to have outsized political influence.
• Perhaps most famously, now FTC chair Lina Khan, as a law student, wrote a paper describing how Amazon ran afoul of antitrust law despite offering lower prices.

Flashback: When the DOJ sued to block the merger between Penguin Random House and Simon & Schuster in 2021, it was based on the idea that the combined company would harm authors — they are workers, too — since fewer publishing houses bidding for their work would mean they'd earn less money.

• A judge ruled in their favor, and the deal didn't happen.
• "It was the first-ever merger challenge that defined a market focused on labor, instead of a product market for consumers," says John Newman, a former official at the FTC Bureau of Competition.

Another groundbreaking moment came in February when the FTC sued to block supermarket chain Kroger's $24.6 billion acquisition of Albertsons, the agency argued the deal would hurt competition for unionized grocery workers.

• It was the first time antitrust enforcers had honed in on the traditional labor market, beyond book authors, Newman tells Axios.

Zoom out: The seeds of the antitrust worker strategy were sown even before the Biden administration. In December 2020, under President Trump, the DOJ filed a suit against a staffing agency accusing it of colluding to suppress the pay of physical therapists.

• During the Obama years, the DOJ sued Apple, Google, and other tech companies for so-called no-poach agreements where companies agreed not to hire each other's workers (they ultimately settled).

• "Things were going on" before the Biden era, says Bill Baer, who was assistant attorney general in charge of the antitrust division from 2013 to 2016 and served at the FTC in the 1970s and 1990s. "But this administration has elevated it to a new level."

The other side: Critics of the FTC's approach have accused it of going too far, particularly on the noncompete rule — the agency is facing a lawsuit from business groups who argue it doesn't have the authority to make such a sweeping change.

• Some employers, Kroger's and Albertsons, in particular, argue that mergers make them better able to compete with other big companies — and that's good for workers.
• And in some cases, workers argue that a merger is better than, say, their company going out of business. When JetBlue proposed buying Spirit Airlines, unions at the companies were split in their support for the deal.

What they're saying: "What we're seeing now is a real focus on making sure we're using antitrust tools to support worker power in labor markets," says Elizabeth Wilkins, former director of policy planning at the FTC and a Biden White House adviser.

• "This is an era-defining moment for a new wave of antitrust enforcers," says Newman.

What's next: Khan has fans on both sides of the aisle — the "Khanservatives" — but what happens to this new era in a possible Trump administration is anything but certain.