Notice2023-05701
Anchor Glass Container Corporation; Analysis of Agreement Containing Consent Order To Aid Public Comment
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 21, 2023
Issuing agencies
Federal Trade Commission
Abstract
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis of Proposed Consent Orders to Aid Public Comment describes both the allegations in the complaint and the terms of the consent orders--embodied in the consent agreement--that would settle these allegations.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 54 (Tuesday, March 21, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 54 (Tuesday, March 21, 2023)]
[Notices]
[Pages 16977-16981]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-05701]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 211 0182]
Anchor Glass Container Corporation; Analysis of Agreement
Containing Consent Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis of Proposed Consent Orders to Aid Public Comment
describes both the allegations in the complaint and the terms of the
consent orders--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before April 20, 2023.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Anchor Glass
Non-compete Restrictions; File No. 211 0182'' on your comment and file
your comment online at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the
instructions on the web-based form. If you prefer to file your comment
on paper, please mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Suite CC-5610 (Annex Q), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Kathleen Clair (202-326-3435), Bureau
of Competition, Federal Trade Commission, 400 7th Street SW,
Washington, DC 20024.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec. 2.34, 16 CFR
2.34, notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of 30 days. The following
Analysis of Agreement Containing Consent Orders to Aid Public Comment
describes the terms of the consent agreement and the allegations in the
complaint. An electronic copy of the full text of the consent agreement
package can be obtained from the FTC website at this web address:
<a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before April 20, 2023.
Write ``Anchor Glass Non-compete Restrictions; File No. 211 0182'' on
your comment. Your comment--including your name and your state--will be
placed on the public record of this proceeding, including, to the
extent practicable, on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Because of the agency's heightened security screening, postal mail
addressed to the Commission will be delayed. We strongly encourage you
to submit your comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website. If you prefer to file your comment on paper, write ``Anchor
Glass Non-compete Restrictions; File No. 211 0182'' on your comment and
on the envelope, and mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW, Suite CC-5610 (Annex Q), Washington, DC 20580.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule Sec. 4.9(c). In
particular, the written request for confidential treatment that
accompanies the comment must include the factual and legal basis for
the request and must identify the specific portions of the comment to
be withheld from the public record. See FTC Rule Sec. 4.9(c). Your
comment will be kept confidential only if the General Counsel grants
your request in accordance with the law and the public interest. Once
your comment has been posted on <a href="https://www.regulations.gov">https://www.regulations.gov</a>--as legally
required by FTC Rule Sec. 4.9(b)--we cannot redact or remove your
comment from that website, unless you submit a confidentiality request
that meets the requirements for such treatment under FTC Rule Sec.
4.9(c), and the General Counsel grants that request.
[[Page 16978]]
Visit the FTC website at <a href="https://www.ftc.gov">https://www.ftc.gov</a> to read this document
and the news release describing this matter. The FTC Act and other laws
the Commission administers permit the collection of public comments to
consider and use in this proceeding, as appropriate. The Commission
will consider all timely and responsive public comments it receives on
or before April 20, 2023. For information on the Commission's privacy
policy, including routine uses permitted by the Privacy Act, see
<a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Analysis of Agreement Containing Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission has accepted, subject to final
approval, a consent agreement with Anchor Glass Container Corporation
(``Anchor''), Lynx Finance GP, LLC (``Lynx GP''), and Lynx Finance,
L.P. (``Lynx LP'') (collectively, ``Respondents''). Anchor manufactures
and sells in the United States glass containers used for food and
beverage packaging and employs workers at multiple facilities within
the United States for this purpose. Lynx LP is the indirect owner of
100% of the outstanding shares of Anchor, and Lynx GP is the general
partner of Lynx LP.
The consent agreement settles charges that Anchor violated Section
5 of the Federal Trade Commission Act, 15 U.S.C. 45, through its use of
post-employment covenants not to compete (``Non-Compete
Restrictions''). A Non-Compete Restriction is a term that, after a
worker has ceased working for an employer, restricts the worker's
freedom to accept employment with a competing business, to form a
competing business, or otherwise to compete with the employer.
The complaint alleges Anchor imposed Non-Compete Restrictions on
employees across a variety of positions, including workers whose labor
is an important input in the glass container manufacturing process. The
complaint alleges this conduct has a tendency or likelihood to limit
workers' mobility, to impede rivals' access to the restricted
employees' labor, and thus to harm workers, consumers, competition, and
the competitive process. As such, the complaint alleges Anchor has
engaged in an unfair method of competition in violation of Section 5 of
the FTC Act. The proposed order has been placed on the public record
for 30 days in order to receive comments from interested persons.
Comments received during this period will become part of the public
record. After 30 days, the Commission will again review the consent
agreement and the comments received and will decide whether it should
withdraw from the consent agreement and take appropriate action or make
the proposed order final.
The purpose of this analysis is to facilitate public comment on the
proposed order. It is not intended to constitute an official
interpretation of the complaint, the consent agreement, or the proposed
order, or to modify their terms in any way.
II. The Complaint
The complaint makes the following allegations. The glass containers
Anchor manufactures and sells are purchased primarily by companies that
sell food, beer, non-alcoholic beverages, and wine and spirits. The
glass container industry in the United States is highly concentrated
and is characterized by substantial barriers to entry and expansion.
Among these barriers, it is difficult to identify and employ personnel
with skills and experience in glass container manufacturing.
Anchor has imposed Non-Compete Restrictions on employees across a
variety of positions. These restrictions typically required that, for
one year following the conclusion of the worker's employment with the
Anchor, the worker may not be employed by a competing business in the
United States. At the outset of the Commission's investigation, over
300 employees of Anchor were subject to such restrictions, including
employees who work with the glass container plants' furnaces and
forming equipment and in other glass production, engineering, and
quality assurance roles.
The complaint further alleges Anchor's use of the challenged Non-
Compete Restrictions has the tendency or likely effect of harming
competition, consumers, and workers, including by: (i) impeding the
entry and expansion of rivals in the glass container industry, (ii)
reducing employee mobility, and (iii) causing lower wages and salaries,
reduced benefits, less favorable working conditions, and personal
hardship to employees.
III. Legal Analysis
Section 5 of the FTC Act prohibits ``unfair methods of
competition.'' \1\ Congress empowered the FTC to enforce Section 5's
prohibition on ``unfair methods of competition'' to ensure the
antitrust laws could adapt to changing circumstances and to address the
full range of practices that may undermine competition and the
competitive process.\2\ The Commission and federal courts have
historically interpreted Section 5 to prohibit conduct that is
inconsistent with the policies or the spirit of the antitrust laws,
even if that conduct would not violate the Sherman or Clayton Acts.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 45(a).
\2\ E.g., Atl. Refining Co. v. FTC, 381 U.S. 357, 367 (1965)
(``The Congress intentionally left development of the term `unfair'
to the Commission rather than attempting to define the many and
variable unfair practices which prevail in commerce.'') (internal
citations and quotation marks omitted); see also Fed. Trade Comm'n,
Policy Statement Regarding the Scope of Unfair Methods of
Competition Under Section 5 of the Federal Trade Commission Act,
Commission File No. P221202 (Nov. 10, 2022) [hereinafter ``FTC
Section 5 Policy Statement (2022)''], at 5 (``Congress struck an
intentional balance when it enacted the FTC Act. It allowed the
Commission to proceed against a broader range of anticompetitive
conduct than can be reached under the Clayton and Sherman Acts, but
it did not establish a private right of action under Section 5, and
it limited the preclusive effects of the FTC's enforcement actions
in private antitrust cases under the Sherman and Clayton Acts.'').
\3\ E.g., FTC v. Motion Picture Advert. Serv. Co., 344 U.S. 392,
394-95 (1953) (``The `Unfair methods of competition', which are
condemned by [Section] 5(a) of the [FTC] Act, are not confined to
those that were illegal at common law or that were condemned by the
Sherman Act. Congress advisedly left the concept flexible to be
defined with particularity by the myriad of cases from the field of
business.'') (internal citations omitted); Fashion Originators'
Guild of Am. v. FTC, 312 U.S. 457, 463 (1941) (Commission may
``suppress'' conduct whose ``purpose and practice . . . runs counter
to the public policy declared in the Sherman and Clayton Acts'');
FTC v. Brown Shoe, 384 U.S. 316, 321 (1966) (Commission's power
reaches ``practices which conflict with the basic policies of the
Sherman and Clayton Acts even though such practices may not actually
violate these laws''); E.I. du Pont de Nemours & Co. v. FTC (Ethyl),
729 F.2d 128, 136-37 (2d Cir. 1984) (Commission may bar ``conduct
which, although not a violation of the letter of the antitrust laws,
is close to a violation or is contrary to their spirit''); see also
FTC v. Ind. Fed'n of Dentists, 476 U.S. 447, 454 (1986); FTC v.
Sperry & Hutchinson Co., 405 U.S. 233, 244 (1972); FTC v. R.F.
Keppel & Bros., Inc., 291 U.S. 304, 309-10 (1934).
---------------------------------------------------------------------------
The Commission's recent Section 5 Policy Statement describes the
most significant general principles concerning whether conduct is an
unfair method of competition.\4\ A person violates Section 5 by (1)
engaging in a method of competition (2) that is unfair--i.e., conduct
that ``goes beyond competition on the merits.'' \5\ A method of
competition is ``conduct undertaken by an actor in the marketplace''
that implicates competition, whether directly or indirectly.\6\ Conduct
is unfair if (a) it is ``coercive, exploitative, collusive, abusive,
deceptive, predatory,'' ``involve[s] the use of economic power of a
similar nature,'' or is ``otherwise restrictive and
[[Page 16979]]
exclusionary,'' and (b) ``tend[s] to negatively affect competitive
conditions'' for ``consumers, workers, or other market participants''--
for example by impairing the opportunities of market participants,
including potential entrants; interfering with the normal mechanisms of
competition; limiting choice; reducing output; reducing innovation; or
reducing competition between rivals.\7\ The two parts of this test for
unfairness ``are weighed according to a sliding scale'': where there is
strong evidence for one part of the test, ``less may be necessary'' to
satisfy the other part.\8\ In appropriate circumstances, conduct may be
condemned under Section 5 without defining a relevant market, proving
market power, or showing harm through a rule of reason analysis.\9\
---------------------------------------------------------------------------
\4\ FTC Section 5 Policy Statement (2022), supra note 2.
\5\ Id. at 8-10.
\6\ Id. at 8.
\7\ Id. 8-10.
\8\ Id. at 9.
\9\ Id. at 10.
---------------------------------------------------------------------------
In addition, the Commission may consider any asserted
justifications for a particular practice.\10\ Any such inquiry would
focus on ``[t]he nature of the harm'' caused by the method of
competition: ``the more facially unfair and injurious the harm, the
less likely it is to be overcome by a countervailing justification of
any kind.'' \11\ Unlike ``a net efficiencies test or a numerical cost-
benefit analysis,'' this analysis examines whether ``purported benefits
of the practice'' redound to the benefit of other market participants
rather than the respondent.\12\ Established limits on defenses and
justifications under the Sherman Act ``apply in the Section 5 context
as well,'' including that the justifications must be cognizable, non-
pretextual, and narrowly tailored.\13\
---------------------------------------------------------------------------
\10\ Id. at 10-12 (``There is limited caselaw on what, if any,
justifications may be cognizable in a standalone Section 5 unfair
methods of competition case, and some courts have declined to
consider justifications altogether.'').
\11\ Id. at 11.
\12\ Id.
\13\ Id. at 11-12.
---------------------------------------------------------------------------
As described below, the factual allegations in the complaint would
support concluding that Anchor's use of the challenged Non-Compete
Restrictions is an unfair method of competition under Section 5.
First, Anchor's use of Non-Compete Restrictions is a method of
competition. The challenged Non-Compete Restrictions are not mere
``condition[s] of the marketplace, not of the respondent's making.''
\14\ Rather, these are contract provisions Anchor required its
employees to enter into, which, by their terms, restricted the
employment options available to affected workers and therefore
implicated competition for labor.
---------------------------------------------------------------------------
\14\ See id. at 8.
---------------------------------------------------------------------------
Second, Anchor's use of the challenged Non-Compete Restrictions
``goes beyond competition on the merits'' \15\ because it is coercive,
exploitative, exclusionary, and restrictive as these terms are used in
the FTC Section 5 Policy Statement. Non-Compete Restrictions typically
result from employers' outsized bargaining power compared to that of
employees. And, by reducing workers' negotiating leverage vis-[agrave]-
vis their current employers, Non-Compete Restrictions tend to impair
workers' ability to negotiate for better pay and working
conditions.\16\ The complaint here also alleges the challenged Non-
Compete Restrictions had a tendency or likely effect of impeding the
entry and expansion of rivals, as discussed below. As such, they are
exclusionary in a manner that violates the spirit and policies of the
Sherman Act.\17\ Finally, while competition on the merits ``may
include, for example . . . attracting employees and workers through the
offering of better employment terms,'' \18\ Non-Compete Restrictions,
by contrast, create a legal impediment that restricts workers from
leaving their employment even if they find more attractive employment
terms elsewhere. For this reason, Non-Compete Restrictions have long
been considered proper subjects for scrutiny under the nation's
antitrust laws.\19\
---------------------------------------------------------------------------
\15\ See id. at 8.
\16\ See, e.g., Dep't of the Treasury, Report, Non-compete
Contracts: Economic Effects and Policy Implications (Mar. 2016) at
10, <a href="https://home.treasury.gov/system/files/226/Non_Compete_Contracts_Econimic_Effects_and_Policy_Implications_MAR2016.pdf">https://home.treasury.gov/system/files/226/Non_Compete_Contracts_Econimic_Effects_and_Policy_Implications_MAR2016.pdf</a> (``When workers are legally prevented from accepting
competitors' offers, those workers have less leverage in wage
negotiations [with their current employer.]''). The strength of a
worker's negotiating position with their current employer is largely
based on the suitability of their next-best alternative employer
(i.e., the alternative employer that would offer the employee the
best combination of wages and working conditions, net of any
switching costs). Competing employers who fall within the scope of a
Non-Compete Agreement, typically employers in the same industry and
geographic area--are often the strongest competitor to a worker's
current employer for that worker's labor. Such employers typically
place the highest value on the worker's industry-specific skills,
and workers generally face lower switching costs when moving to such
employers. See, e.g., David J. Balan, Labor Non-Compete Agreements:
Tool for Economic Efficiency, or Means to Extract Value from
Workers? 15 (2021), <a href="https://equitablegrowth.org/working-papers/labor-non-compete-agreements-tool-for-economic-efficiency-or-means-to-extract-value-from-workers/">https://equitablegrowth.org/working-papers/labor-non-compete-agreements-tool-for-economic-efficiency-or-means-to-extract-value-from-workers/</a> (noting workers often ``are barred by
the non-compete from [switching to] the[ir] best available
alternative jobs'').
\17\ See generally, e.g., ZF Meritor v. Easton Corp., 696 F.3d
254, 278-79 (3d Cir. 2012); McWane, Inc. v. Fed. Trade Comm'n, 783
F.3d 814, 835 (11th Cir. 2005); Tampa Elec. Co. v. Nashville Coal
Co., 365 U.S. 320, 328 (1961); Geneva Pharms. Tech. Corp. v. Barr
Labs., 386 F.3d 485, 509 (2d Cir. 2004); see also FTC Section 5
Policy Statement (2022), supra note 2, at 8, 9, 12.
\18\ FTC Section 5 Policy Statement (2022), supra note 2, at 8-
9.
\19\ See, e.g., U.S. v. Am. Tobacco Co., 221 U.S. 106 (1911);
Newburger, Loeb & Co., Inc. v. Gross, 563 F.2d 1057, 1082 (2d Cir.
1977); Bradford v. N.Y. Times Co., 501 F.2d 51 (2d Cir. 1974);
Golden v. Kentile Floors, Inc., 512 F.2d 838 (5th Cir. 1975); U.S.
v. Empire Gas Corp., 537 F.2d 296 (8th Cir. 1976); Aydin Corp. v.
Loral Corp., 718 F.2d 897 (9th Cir. 1983); Consultants & Designers,
Inc. v. Bulter Serv. Grp., Inc., 720 F.2d 1553 (11th Cir. 1983).
---------------------------------------------------------------------------
Third, the factual allegations in the complaint support a finding
that Anchor's challenged conduct has the tendency or likely effect of
negatively affecting competition in the U.S. glass container industry.
Specifically, the complaint alleges that (i) Anchor required employees
across a variety of positions, including salaried employees who work
with the glass container plants' furnace and forming equipment and in
other glass production, engineering, and quality assurance roles, to
refrain from working for competing glass manufacturing companies for at
least one year after the conclusion of their employment, (ii) the
ability to identify and employ personnel with skill and experience in
glass container manufacturing is a substantial barrier to entry and
expansion, and (iii) the challenged restrictions have a tendency or
likely effect of impeding the entry and expansion of rivals.
Fourth, the factual allegations in the complaint support a finding
that Anchor's challenged conduct has the tendency or likely effect of
negatively affecting competitive conditions affecting workers in the
U.S. glass container industry. In well-functioning labor markets,
workers compete to attract employers, and employers compete to attract
workers. For example, workers may attract potential employers by
offering different skills and experience levels. Employers may attract
potential employees by offering higher wages, better hours, a more
convenient job location, more autonomy, more benefits, or a different
set of job responsibilities. Because factors beyond price (wages) are
important to both workers and employers in the job context, labor
markets are ``matching markets'' as opposed to ``commodity markets.''
\20\
---------------------------------------------------------------------------
\20\ See generally David H. Autor, Wiring the Labor Market, 15
J. of Econ. Perspectives 25-40 (2001); Enrico Moretti, Local Labor
Markets, in 4b Handbook of Labor Economics 1237-1313 (2011).
---------------------------------------------------------------------------
In general, in matching markets, higher-quality matches tend to
result when both sides--here, workers and employers--have more options
available
[[Page 16980]]
to them.\21\ Having more options on both sides could, for example,
allow for matching workers with jobs in which their specific skills are
more valued, the hours demanded better fit their availability, or their
commutes are shorter and more efficient. Matches could also be better
in that various employers' compensation packages, which differ in terms
of pay and benefits, are coupled with employees who value those
offerings more and will, for example, tend to stay at those jobs longer
as a result. Competition for labor allows for job mobility and benefits
workers by allowing them to accept new employment, create or join new
businesses, negotiate better terms in their current jobs, and generally
pursue career advancement as they see fit.\22\
---------------------------------------------------------------------------
\21\ See, e.g., Dep't of the Treasury, Report, The State of
Labor Market Competition (Mar. 7, 2022) at 5-7, <a href="https://home.treasury.gov/system/files/136/State-of-Labor-Market-Competition-2022.pdf">https://home.treasury.gov/system/files/136/State-of-Labor-Market-Competition-2022.pdf</a>; Dep't of the Treasury, Report, Non-compete
Contracts: Economic Effects and Policy Implications, supra note 16,
at 3-5, 22-23.
\22\ See, e.g., Cynthia L. Estlund, Between Rights and Contract:
Arbitration Agreements and Non-Compete Covenants As A Hybrid Form of
Employment Law, 155 U. Pa. L. Rev. 379, 407 (2006).
---------------------------------------------------------------------------
By preventing workers and employers from freely choosing their
preferred jobs and candidates, respectively, Non-Compete Restrictions
tend to impede and undermine competition in labor markets.\23\ Research
suggests Non-Compete Restrictions measurably reduce worker
mobility,\24\ lower workers' earnings,\25\ and increase racial and
gender wage gaps.\26\ At the individual level, a Non-Compete
Restriction can force a worker who wishes to leave a job into a
difficult choice: stay in the current position despite being able to
receive a better job elsewhere, take a position with a competitor at
the risk of being found out and sued, or leave the industry entirely.
In this way, Non-Compete Restrictions tend to leave workers with fewer
and lower-quality competing job options,\27\ thereby reducing workers'
bargaining leverage with their current employers and resulting in lower
wages, slower wage growth, and less favorable working conditions.\28\
---------------------------------------------------------------------------
\23\ See, e.g., Dep't of the Treasury, Report, The State of
Labor Market Competition, supra note 21, at 5-7.
\24\ Matthew S. Johnson, Kurt Lavetti, & Michael Lipsitz, The
Labor Market Effects of Legal Restrictions on Worker Mobility 2
(2020), <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455381">https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455381</a>;
Evan Starr, J.J. Prescott, & Norm Bishara, The Behavioral Effects of
(Unenforceable) Contracts, 36 J. L., Econ., & Org. 633, 652 (2020);
Evan Starr, Justin Frake, & Rajshree Agarwal, Mobility Constraint
Externalities, 30 Org. Sci. 961, 963-65, 977 (2019); Matt Marx,
Deborah Strumsky, & Lee Fleming, Mobility, Skills, and the Michigan
Non-Compete Experiment, 55 Mgmt. Sci. 875, 884 (2009).
\25\ Michael Lipsitz & Evan Starr, Low-Wage Workers and the
Enforceability of Noncompete Agreements, 68 Mgmt. Sci. 143, 144
(2021); Johnson, Lavetti, & Lipsitz, supra note 24.
\26\ Johnson, Lavetti, & Lipsitz, supra note 24.
\27\ See, e.g., Jessica Jeffers, The Impact of Restricting Labor
Mobility on Corporate Investment and Entrepreneurship 21-22 (Dec.
24, 2019), <a href="https://ssrn.com/abstract=3040393">https://ssrn.com/abstract=3040393</a>.
\28\ See, e.g., Johnson, Lavetti, & Lipsitz, supra note 24;
David J. Balan, Labor Practices Can be an Antitrust Problem Even
When Labor Markets are Competitive, CPI Antitrust Chronicle (May
2020) at 8.
---------------------------------------------------------------------------
Here, the complaint alleges the challenged Non-Compete Restrictions
have the tendency or likely effect of reducing employee mobility and
causing lower wages and salaries, reduced benefits, less favorable
working conditions, and personal hardship to employees.
Finally, as the complaint alleges, any legitimate objectives of
Anchor's use of the challenged Non-Compete Restrictions could be
achieved through significantly less restrictive means, including, for
example, by entering confidentiality agreements that prohibit employees
and former employees from disclosing company trade secrets and other
confidential information. Indeed, Anchor nullified the challenged Non-
Compete Restrictions after learning of the Commission's investigation,
apparently without incurring any notable impediment to their ability to
achieve any legitimate business objectives.
IV. Proposed Order
The proposed order seeks to remedy the Anchor's unfair methods of
competition. Section II of the proposed order prohibits the Respondents
from entering or attempting to enter, maintaining or attempting to
maintain, or enforcing or attempting to enforce a Non-Compete
Restriction with an Employee, or communicating to an Employee or a
prospective or current employer of that Employee that the Employee is
subject to a Non-Compete Restriction.\29\ Paragraph IV.A requires the
Respondents to take all steps necessary to void and nullify all
existing Non-Compete Restrictions with Employees within 30 days after
the date on which the proposed order is issued.\30\
---------------------------------------------------------------------------
\29\ See Decision & Order ] II.
\30\ Id. ] IV.A.
---------------------------------------------------------------------------
The proposed order also contains provisions designed to ensure
compliance. Paragraph III.A of the proposed order requires the
Respondents to provide written notice to Employees that have or
recently had a Non-Compete Restriction that (i) the restriction is null
and void, and (ii) the Employees may, after they stop working for
Anchor, seek or accept jobs with any other company or person, run their
own businesses, and compete with the Anchor.\31\ Paragraph III.B
requires Respondents to notify new Employees that they will not be
subject to Non-Compete Restrictions by including a specified notice in
the documentation provided to new Employees upon hire.\32\
---------------------------------------------------------------------------
\31\ Id. ] III.A; App'x B.
\32\ Id. ] III.B.
---------------------------------------------------------------------------
Other paragraphs contain standard provisions regarding compliance
reports, notice of changes in Respondents, and access for the FTC to
documents and personnel.\33\ The proposed order's prohibitions apply
only to Respondents' Employees within the United States, and the term
of the proposed order is twenty years.\34\
---------------------------------------------------------------------------
\33\ Id. ]] IV-VII.
\34\ Id. ] IX.
By direction of the Commission, Commissioner Wilson dissenting.
April J. Tabor,
Secretary.
Dissenting Statement of Commissioner Christine S. Wilson
Today, the Commission announced that it has accepted, subject to
final approval, another consent agreement with a company in the glass
container industry. The consent resolves allegations that the use of
non-compete agreements in employee contracts constitutes an unfair
method of competition that violates Section 5 of the FTC Act. This case
against Anchor Glass follows law enforcement actions announced in
January 2023 involving two other industry participants, O-I Glass and
Ardagh Group.\1\ Today's case involves a similar fact pattern and
suffers from the same flaws as those earlier cases. For the same
reasons that I dissented in those cases,\2\ I dissent here.
---------------------------------------------------------------------------
\1\ See In the Matter of O-I Glass, Inc., FTC File No. 211-0182
(Jan. 4, 2023), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2110182o-iglasscomplaint.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/2110182o-iglasscomplaint.pdf</a>; In the Matter of Ardagh Group S.A.,
FTC File No. 211-0182, <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2110182ardaghcomplaint.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/2110182ardaghcomplaint.pdf</a>.
\2\ Dissenting Statement of Commissioner Christine S. Wilson, In
the Matter of O-I Glass, Inc. and In the Matter of Ardagh Group
S.A., FTC File No. 211-0182 (Jan. 4, 2023), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/wilsondissenting-statement-glass-container-cases.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/wilsondissenting-statement-glass-container-cases.pdf</a>.
---------------------------------------------------------------------------
Like the January 2023 actions, this case reflects the approach of
the new Section 5 Policy Statement.\3\ It alleges
[[Page 16981]]
that the use of non-compete agreements has a tendency to harm
competition and workers, but fails to provide facts to support the
hypothesized outcome. Similar to the Commission's complaints against O-
I Glass and Ardagh Group, the complaint against Anchor Glass suffers
from several omissions. It does not allege that the company's non-
compete provisions are unreasonable based on their temporal length,
subject matter, or geographic scope; neither does it allege that the
non-compete clauses were enforced. The complaint does not make factual
allegations regarding the inability of a competing rival in the glass
container industry to enter or expand. While the complaint alleges that
the non-compete clauses reduce employee mobility, thereby leading to
lower wages, reduced benefits, and less favorable working conditions,
the complaint does not identify a relevant market for particular types
of labor and fails to allege a market effect on wages or other terms of
employment.
---------------------------------------------------------------------------
\3\ Fed. Trade Comm'n, Policy Statement Regarding the Scope of
Unfair Methods of Competition Under Section 5 of the Federal Trade
Commission Act (Nov. 10, 2022), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/p221202sec5enforcementpolicystatement_002.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/p221202sec5enforcementpolicystatement_002.pdf</a>; Christine
S. Wilson, Dissenting Statement Regarding the ``Policy Statement
Regarding the Scope of Unfair Methods of Competition Under Section 5
of the Federal Trade Commission Act'' (Nov. 10, 2022), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/P221202Section5PolicyWilsonDissentStmt.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/P221202Section5PolicyWilsonDissentStmt.pdf</a>.
---------------------------------------------------------------------------
For the reasons outlined here and explained in detail in my January
2023 statement, I dissent.
[FR Doc. 2023-05701 Filed 3-20-23; 8:45 am]
BILLING CODE 6750-01-P
</pre></body>
</html>Indexed from Federal Register on March 21, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.