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On January 5, 2023, the Federal Trade Commission (“FTC”) issued a groundbreaking proposed rule that would, if finalized:

  • prohibit most employers from entering into non-compete clauses with workers, including employees and individual independent contractors;
  • prohibit such employers from maintaining non-compete clauses with workers or representing to a worker that the worker is subject to a non-compete clause; and
  • require employers to rescind any existing non-compete clause with workers by the compliance date of the rule and notify the affected workers that their non-compete clause is no longer in effect.

The FTC’s notice of proposed rulemaking explains that the FTC considered possible limitations on the rule—such as excluding senior executives or highly paid employees from the ban—but it ultimately proposed a categorical ban on non-competes.  The only exception is for non-competes related to the sale of a business.  However, even this exception is unusually narrow: it would only apply to selling business owners who own at least 25% percent of the business being sold.  (The proposal also would not apply to most non-profits, certain financial institutions, common carriers, and others who are also outside the scope of FTC regulation.)

As discussed in Covington’s January 5 client alert, the FTC explained that it issued the proposed rule due to its belief that non-competes reduce wages, stifle innovation and business, and are exploitative and unnecessary. …

Continue Reading FTC Proposes Rule to Ban Most Non-Competes

On 22 March 2022, the European Court of Justice (“ECJ”) issued two separate preliminary rulings – Bpost and Nordzucker – which clarify how the protection against double jeopardy (“non bis in idem principle”) should be applied in instances where an identical competition law infringement is sanctioned in parallel investigations, either by different regulatory authorities of the same EU Member State or by multiple national competition authorities (“NCAs”) from different EU Member States.

The key takeaways from the two judgments are as follows:

  • the non bis in idem principle applies to competition law due to the criminal aspect embedded in the relevant administrative penalties;
  • the non bis in idem principle only applies if the facts are identical – a mere reference to a fact in a decision is not sufficient to demonstrate that an authority has ruled on that element;
  • different national authorities can impose fines for an identical infringement if the legislation on which they rely pursues complementary objectives;
  • the non bis in idem principle also applies to situations where an NCA has granted leniency to a company such that only a declaratory finding infringement (without fine) can be made.

Background

In Bpost, the ECJ  examined whether the Belgian NCA could impose a fine on Bpost for an abuse of a dominant position (through the application of a rebate system) even though Bpost had already been fined for the same rebate system by the Belgian postal regulator.…

Continue Reading European Court of Justice clarifies scope of protection against double jeopardy in successive antitrust investigations

In Enel, a judgment of 12 May 2022 (C-377/20), the Court of Justice of the European Union (“CJEU”) complemented the framework for analysing exclusionary abuses developed in earlier case-law, notably where it applies to a context of market liberalisation:

  • Abuse: The concept of “abuse” relates to conduct that departs from “competition on the merits”. Conduct that an equally efficient competitor can replicate is generally not abusive (“equally efficient competitor test”).
  • Anti-competitive effects: While it is not necessary to demonstrate actual anti-competitive effects or the company’s intention to carry out an exclusionary strategy, such factors are relevant in assessing whether the conduct is abusive or not.
  • Harm: Conduct that harms consumers indirectly as a result of its effect on the structure of the market is per se abusive; it is not required to demonstrate an actual or potential direct harm to consumers.
  • Objective justification: The prohibition set out in Article 102 TFEU does not prohibit   conduct that is objectively justified and proportionate, or where the behaviour is counterbalanced or outweighed by pro-consumer efficiency-benefits.

The judgment largely endorses the opinion of Advocate General Rantos (see our blog post), but adds some important nuance.…

Continue Reading The CJEU sets out an analytic framework on exclusionary abuses in the context of market liberalisation