Democrats Say Noncompete Clauses Might Be Anticompetitive

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By Alexei Alexis

House Democrats’ proposals to update antitrust laws could go beyond merger reviews to examine whether certain types of conduct, such as inappropriate noncompete clauses, should be deemed automatically illegal, Rep. David Cicilline (D-R.I.) told Bloomberg Law.

Public interest groups like the Open Markets Institute are pressuring Congress to modernize antitrust laws in light of concerns that too much power is being concentrated among corporate giants.

Cicilline and other Democrats recently formed the House Antitrust Caucus to take a close look at the issue. Rep. Keith Ellison (D-Minn.) this week introduced legislation (H.R. 4538) requiring more extensive reviews of mega mergers.

“I think some of the obvious things to look at are some of the standards that apply in these [merger] reviews and whether or not there’s some conduct that ought to be ‘per se’ anticompetitive,” Cicilline said Dec. 6 after delivering formal remarks at an event in Washington hosted by the Open Markets Institute.

In his formal remarks, he described how noncompete clauses can be anticompetitive and harm workers. There is “widespread use of noncompete clauses in everyday employment contracts is a fundamental threat to workers’ economic freedom and mobility,” he said. “These clauses are widespread, even among workers who do not possess trade secrets, such as workers in the fast-food industry.”

The House Antitrust Caucus was formed in October to educate members and staff about competition policy. On Dec. 1, the group hosted an event focused on concentration in the digital economy.

Sen. Amy Klobuchar (D-Minn.) is leading a similar antitrust overhaul effort in the Senate. Legislation introduced by Klobuchar (S. 1812) would require companies to prove their mega-deals are good for competition before they can get government approval, among other changes.

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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