Notice2025-17416
Gateway Services; 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
September 10, 2025
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 Agreement Containing Consent Orders to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order--embodied in the consent agreement--that would settle these allegations.
Full Text
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<title>Federal Register, Volume 90 Issue 173 (Wednesday, September 10, 2025)</title>
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[Federal Register Volume 90, Number 173 (Wednesday, September 10, 2025)]
[Notices]
[Pages 43606-43611]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17416]
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FEDERAL TRADE COMMISSION
[File No. 221 0170]
Gateway Services; Analysis of Agreement Containing Consent Order
To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of Federal law prohibiting unfair methods of competition.
The attached Analysis of Agreement Containing Consent Orders to Aid
Public Comment describes both the allegations in the complaint and the
terms of the consent order--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before October 10, 2025.
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: ``Gateway
Services; File No. 221 0170'' 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, Mail Stop H-144
(Annex P), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Taylor C. Hoogendoorn (phone: 202-326-
2608; email: <a href="/cdn-cgi/l/email-protection#4a3e2225252d2f242e252538240a2c3e29642d253c"><span class="__cf_email__" data-cfemail="63170b0c0c04060d070c0c110d230517004d040c15">[email protected]</span></a>), Bureau of Competition, Federal
Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop H-144,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 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>.
The public is invited to submit comments on this document. For the
Commission to consider your comment, we must receive it on or before
October 10, 2025.
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 ``Gateway
Services; File No. 221 0170'' on your comment and on the envelope, and
mail your comment by overnight service to: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144
(Annex P), Washington, DC 20580.
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 your comment will be placed on the publicly accessible
website, <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. Specifically, 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 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 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 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 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 4.9(c), and the General Counsel
grants that request.
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 October 10, 2025. For information on the Commission's privacy
policy,
[[Page 43607]]
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 (``Commission'') has accepted for
public comment, subject to final approval, an Agreement Containing
Consent Order (``Consent Agreement'') with Gateway Services, Inc. and
Gateway US Holdings, Inc. (collectively and separately, ``Gateway'' or
``Respondents''). The proposed Decision and Order (``Order''), included
in the Consent Agreement and subject to final Commission approval, is
designed to remedy the anticompetitive effects that have resulted from
Respondents' use of post-employment covenants not to compete (``Non-
Compete Agreements''). A Non-Compete Agreement refers to contract terms
that, after a worker has ceased working for an employer, restrict the
worker's freedom to accept employment with a competing business, to
form a competing business, or otherwise to compete with the employer.
The Consent Agreement settles charges that Respondents have engaged
in unfair methods of competition in violation of Section 5 of the FTC
Act, as amended, 15 U.S.C. 45, by entering into Non-Compete Agreements
with its employees. The proposed Order has been placed on the public
record for 30 days 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.
II. The Respondents
Respondent Gateway Services, Inc. (``Gateway Services'') is a
corporation organized in Canada with its principal place of business
located in Guelph, Ontario. Respondent Gateway US Holdings Inc.
(``Gateway US'') is a wholly owned subsidiary of Gateway Services, Inc.
and is a corporation organized, existing, and doing business under, and
by virtue of, the laws of the State of Delaware, with its principal
place of business located in Cranston, Rhode Island. Respondents are by
far the largest pet cremation services company in the United States.
Gateway operates over 100 locations with 2,276 employees servicing
17,000 customers across North America. Gateway has 1,992 U.S-based
employees.
III. Allegations in the Complaint
Respondents provide pet cremation services in the United States.
Respondents instituted a policy in 2019 requiring all newly hired
employees to enter Non-Compete Agreements, regardless of their position
or responsibilities. Today, all Gateway employees, except for those
working in the state of California, are subject to Non-Compete
Agreements.
Respondents' Non-Compete Agreements cover both highly-compensated
executives and hourly workers, such as those considered ``laborers''
and ``helpers,'' who perform everyday functions at cremation
facilities, such as operating incinerators, or route drivers who pick
up deceased pets from veterinary clinics and deliver them to
Respondents' crematories. These types of employees account for the vast
majority of Respondents' U.S.-based employees subject to Non-Compete
Agreements.
As alleged in the complaint, Respondents' Non-Compete Agreements
require that, for one year following the conclusion of employment with
Gateway, the employee is prohibited from working in the pet cremation
service industry anywhere in the United States.
The complaint alleges that Respondents' Non-Compete Agreements are
anticompetitive because they deprive employees of the ability to
negotiate for better terms of employment in the pet cremation services
industry by denying them access to job opportunities and restricting
their mobility. The complaint alleges this has the tendency or likely
effect of lowering wages and salaries, reducing benefits, and causing
less favorable working conditions, and, among other things, personal
hardship to employees. The complaint further alleges that Respondents'
Non- Compete Agreements are anticompetitive because they eliminate
direct, horizontal forms of competition to attract labor in the pet
cremation services industry, inhibit current competition in the pet
cremation industry, and impede competitive entry. The complaint alleges
any legitimate objectives Respondents sought to achieve through their
Non-Compete Agreements could have been achieved through significantly
less restrictive means.
For these reasons, the complaint alleges the Non-Compete Agreements
constitute unfair methods of competition in violation of Section 5 of
the FTC Act, as amended, 15 U.S.C. 45.
IV. Proposed Order
The proposed Order seeks to remedy Respondents' unfair methods of
competition. Section II of the proposed Order prohibits Respondents
from entering into, maintaining, or enforcing Non-Compete Agreements,
or communicating to an employee or any other person that any former
employee is subject to a Non-Compete Agreement. Section II of the
proposed Order also specifies that Respondents cannot prohibit
employees in any employment agreement from soliciting any prospective,
current, or former customers of Gateway, except with respect to those
current or prospective customers with whom the employee had direct
contact or personally provided service to in the last 12 months of
their employment with Respondents.
Section III of the proposed Order requires Respondents to provide
clear and conspicuous written notice to employees and former employees
that they (i) are not subject to a Non-Compete Agreement, (ii) may
compete with Respondents, and (iii) may solicit customers with whom the
employee did not have direct contact or did not personally service
during the last 12 months of their employment with Respondents, and,
following that period, may solicit any potential customer.
Other sections contain standard provisions regarding compliance
reports, requirements for Respondents to provide notice to the FTC of
material changes to their business, and access for the FTC to documents
and personnel. The term of the proposed Order is ten years.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement and proposed Order to aid the Commission in
determining whether it should make the proposed Order final. This
analysis is not an official interpretation of the proposed Order and
does not modify its terms in any way.
By direction of the Commission, Commissioner Slaughter
dissenting.
April J. Tabor,
Secretary.
Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa
Holyoak
The Commission today acts to protect nearly 1,800 workers against
unlawful noncompete agreements. It does so by issuing an administrative
complaint and accepting for public comment a proposed consent agreement
with Gateway Services, Inc. and its wholly owned subsidiary, Gateway US
[[Page 43608]]
Holdings Inc. (collectively, ``Gateway'').\1\ I write for two reasons.
First, to highlight the Trump-Vance FTC's commitment to enforcing the
law vigorously against those who demand their employees enter into
noncompete agreements so pernicious and so onerous as to make them
anticompetitive. Second, to address in the context of this matter the
fact-specific approach and considerations that govern the Commission's
evaluation of noncompete agreements.
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\1\ Complaint, In re Gateway Pet Memorial Servs., Matter No.
2210170 (Sept. 4, 2025) (``Complaint''); Decision and Order, In re
Gateway Pet Memorial Servs., Matter No. 2210170 (Sept. 4, 2025)
(``Order'').
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I have long said that the antitrust laws serve to protect workers,
and that the Commission should devote resources to protecting
competition in labor markets.\2\ Indeed, the launch of the Commission's
Joint Labor Task Force earlier this year, at my direction, reflects
that the agency feels workers' pain.\3\ ``A healthy labor market is
critical to the country's success'' but, unfortunately,
``anticompetitive employer labor practices are widespread.'' \4\ That
reality is why the Task Force is prioritizing rooting out and
prosecuting deceptive, unfair, and anticompetitive labor-market
practices that harm American workers.\5\ These practices include
noncompete agreements,\6\ which generally are contracts in which an
employee agrees not to work for his or her employer's competitor after
his or her employment.
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\2\ See, e.g., Statement of Comm'r Andrew N. Ferguson Concurring
in Part and Dissenting in Part, United States v. Lyft, Inc., Matter
No. 2223028, at 14 (Oct. 25, 2024); Dissenting Statement of Comm'r
Andrew N. Ferguson, In re Guardian Serv. Indus., Matter No. 2410082,
at 1 (Dec. 4, 2024) (``Ferguson Guardian Statement''); Concurring
Statement of Comm'r Andrew N. Ferguson, Joined by Comm'r Melissa
Holyoak, In re Planned Building Servs., Matter No. 2410029, at 1 &
n.9 (Jan. 6, 2025) (``Ferguson Planned Statement'').
\3\ Press Release, FTC, FTC Launches Joint Labor Task Force to
Protect American Workers (Feb. 26, 2025), <a href="https://www.ftc.gov/news-events/news/press-releases/2025/02/ftc-launches-joint-labor-task-force-protect-american-workers">https://www.ftc.gov/news-events/news/press-releases/2025/02/ftc-launches-joint-labor-task-force-protect-american-workers</a> (``FTC Labor Task Force Press
Release'').
\4\ Memorandum from Chairman Andrew N. Ferguson, Directive
Regarding Labor Markets Task Force, FTC (Feb. 26, 2025).
\5\ See FTC Labor Task Force Press Release.
\6\ Id.
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The Commission's history with noncompete agreements is complicated.
Before 2023, the Commission had never enforced the antitrust laws
against a noncompete agreement between an employer and employee.\7\
Then, in January of 2023, the Biden Commission settled three
enforcement actions involving noncompete agreements for security guards
and glass manufacturing workers.\8\ Those settlements were basically
the beginning and the end of the Biden Commission's law-enforcement
efforts against noncompete agreements. The very next day, the
Commission launched a gargantuan seventeen-month rulemaking that
culminated in a final rule purporting to ban almost every noncompete
agreement in the country.\9\ After opening the rulemaking, the
Commission brought only one more enforcement action against noncompete
agreements.\10\
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\7\ Dissenting Statement of Comm'r Andrew N. Ferguson, Joined by
Comm'r Melissa Holyoak, In the Matter of the Non-Compete Clause
Rule, Matter No. P201200, at 5-6 (June 28, 2024) (``Ferguson
Noncompete Rule Dissent'').
\8\ See Complaint, In re Prudential Security, Inc. et al.,
Matter No. 2210026 (Jan. 4, 2023); Complaint, In re O-I Glass, Inc.,
Matter No. 2110182 (Jan. 4, 2023); Complaint, In re Ardagh Group
S.A. et al., Matter No. 2110182 (Jan. 4, 2023).
\9\ Final Rule, Non-Compete Clause Rule, 89 FR 38342 (May 7,
2024).
\10\ See Complaint, In re Anchor Glass Container Corp. et al.,
Matter No. 2110182 (Mar. 15, 2023).
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The Democrat Commissioners' choice to throw thousands of manhours
into the rule was indefensible. The rule was obviously unlawful.
Commissioner Holyoak and I explained at great length the many ways in
which the rule violated the Federal Trade Commission Act (``FTC Act''),
the Administrative Procedure Act, and the Constitution.\11\ The courts
unsurprisingly agreed, and the rule was vacated before it went into
effect.\12\ The rule therefore has not protected a single worker.
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\11\ Ferguson Noncompete Rule Dissent at 5 (``There is no
tradition of federal regulation of noncompete agreements.''); id. at
9-20 (explaining that the FTC Act did not provide authority for the
Rule); id. at 21-34 (explaining that, even if the statute provided
authority for the Rule, Congress could not have delegated its
authority to legislate through the statute); id. at 34-45
(explaining that, in any event, the Rule violated the Administrative
Procedure Act); Dissenting Statement of Comm'r Melissa Holyoak,
Joined by Comm'r Andrew N. Ferguson, In the Matter of the Non-
Compete Clause Rule, Matter No. P201200, at 3-9 (June 28, 2024)
(explaining that the text and structure of the FTC Act does not
authorize competition rulemakings); id. at 9-14 (confirming by
looking to the Commission's historical interpretation that the FTC
Act does not authorize competition rulemakings); id. at 16-18
(showing that empirical evidence fails to support the Rule).
\12\ Ryan, LLC v. FTC, 746 F. Supp. 3d 369 (N.D. Tex. 2024)
(vacating the Commission's Non-Compete Clause Rule).
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That means that for all the Democrat Commissioners' rhetoric about
the dangers of noncompete agreements, the Biden Commission produced
only four settled enforcement actions and a failed rule in four years.
The immense resources expended on the rule's promulgation and defense
could have instead been expended on investigating and litigating
specific cases that could have protected thousands of workers. Instead,
the Commission spent it all on a rule that protected none.
The rule's vacatur does not prevent the Commission from doing what
it should have been doing all along--addressing noncompete agreements
through enforcement actions against companies that misuse them in
violation of the law. The Commission's enforcement actions, including
consent agreements, have a much wider effect than just on the direct
subjects of those actions. They set forth, one reasoned decision at a
time, the Commission's view of what circumstances make a particular
practice lawful or unlawful under Section 5 of the FTC Act.\13\ A
steady stream of enforcement actions against an unlawful practice
provides the markets with transparency about what the agency believes
the law requires--transparency that is very important in the
application of generally worded statutes like Section 1 of the Sherman
Act and Section 5 of the FTC Act. In response, market participants will
often shift their behavior to comply with the agency's articulated
understanding of the law.
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\13\ See Ferguson Planned Statement at 4; Remarks of Deborah L.
Feinstein, The Significance of Consent Orders in the Federal Trade
Commission's Competition Enforcement Efforts, at 4 (Sept. 17, 2013)
(``[C]onsents can provide significant guidance as to how the
Commission views the competitive issues raised by a particular
transaction or conduct.''); see also Daniel J. Solove & Woodrow
Hartzog, The FTC and the New Common Law of Privacy, 114 Colum. L.
Rev. 583, 585 (2014) (``[C]ompanies look to these [consent]
agreements to guide their decisions regarding privacy practices.'').
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All this to say that addressing noncompete agreements through
continued enforcement actions will secure real, enduring relief for
American workers. Today's Commission action rightfully does just that.
Noncompete agreements have been around, and subject to scrutiny,
for more than half a millennium. Medieval English law generally
proscribed them precisely because they interfered with an individual's
right to ply his or her trade.\14\ So pernicious was ``the mischief
which may arise . . . to the party, by the loss of his livelihood, and
the subsistence of his family,'' and ``to the publick, by depriving it
of an useful
[[Page 43609]]
member.'' \15\ The dangers of noncompete agreements are obvious: they
limit worker mobility, and as a result can impede workers' ability to
negotiate better employment terms, among other anticompetitive effects.
As a result, all fifty States regulate them extensively.\16\
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\14\ Darcy v. Allein, 77 Eng. Rep. 1260, 1263 (K.B. 1603)
(``[E]very man's trade maintains his life, and therefore he ought
not to be deprived or dispossessed of it, no more than of his
life.''); Corfield v. Coryell, 6 F. Cas. 546, 551-52 (C.C.E.D. Pa.
1823) (including the practice of one's chosen trade among the
privileges and immunities of ``citizens of all free governments'');
Golden Glow Tanning Salon, Inc. v. City of Columbus, 52 F.4th 974,
982-84 (5th Cir. 2022) (Ho, J., concurring) (expounding the history
of Anglo-American protections of the right to ``pursue one's
occupation against arbitrary government restraint'').
\15\ Mitchel v. Reynolds, 24 Eng. Rep. 347 (Q.B. 1711).
\16\ Ferguson Noncompete Rule Dissent at 3-5.
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But not all noncompete agreements are unlawful. As I have said
before, ``sometimes noncompete agreements have anticompetitive effects,
and other times they have procompetitive effects.'' \17\ For example,
noncompete agreements can promote investment in employees by mitigating
the risk that a rival will lure employees away.\18\ And noncompete
agreements can allow business owners to sell their enterprise
profitably because no one would buy a business if the seller could
immediately compete again in the same field.\19\ The common law
recognized this fact and abandoned the categorical proscription in the
early eighteenth century in favor of a case-specific reasonableness
test.\20\ Indeed, the first application of what we today call the
``rule of reason'' was in a case testing the validity of a noncompete
agreement.\21\
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\17\ Id. at 35.
\18\ Id. at 41-42.
\19\ Id. at 2-3.
\20\ Id. at 35 & Section I.B.
\21\ Nat'l Soc'y of Pro. Eng'rs v. United States, 435 U.S. 679,
688-89 (1978).
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The Commission continues to apply a case-specific approach to
assessing the lawfulness of noncompete agreements. Here, evidence
obtained during the Commission's investigation gives me reason to
believe that Gateway's particular use of noncompete agreements violates
Section 5 of the FTC Act.\22\
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\22\ 15 U.S.C. 45(b); FTC v. Standard Oil of Cal., 449 U.S. 232,
241 (1980); see also AMREP Corp. v. FTC, 768 F.2d 1171, 1177 (10th
Cir. 1985); Boise Cascade Corp. v. FTC, 498 F. Supp. 772, 778-79 (D.
Del. 1980).
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Gateway is the largest pet cremation services company in the United
States. It serves veterinarian practices and pet owners directly.\23\
Gateway operates over 100 cremation facilities from which the company's
nearly 2,000 U.S.-based employees serve 17,000 veterinary clinics
across North America.\24\ In 2019, Gateway began requiring noncompete
agreements for all new employees, regardless of their
responsibilities.\25\ The Complaint alleges that these agreements are
neither reasonable in scope nor justified to protect a legitimate
business interest.
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\23\ Complaint ]] 6-7.
\24\ Id. at ] 7.
\25\ Id. at ] 8.
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The noncompete agreements prohibit Gateway's employees--with the
exception of those in California, where such agreements are banned--
from working in the pet cremation industry anywhere in the United
States for one year after their separation from Gateway.\26\ So
although limited in duration, the vast geographic scope is overbroad as
it effectively requires workers to exit the pet cremation industry
within the United States entirely for a year.\27\
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\26\ Id. at ]] 8-9.
\27\ Courts have found geographically overbroad noncompete
agreements unenforceable. See, e.g., NanoMech, Inc. v. Suresh, 777
F.3d 1020, 1024-25 (8th Cir. 2015) (finding a global noncompete
clause facially overbroad and thus unreasonable and unenforceable);
Cottman Transmission Sys., LLC v. Gano, No. 12-cv-05223, 2013 WL
842709, at *8 (E.D. Pa. Mar. 7, 2021) (holding a three-mile
restriction around every location of the employer worldwide
overbroad and unreasonable and limiting the restriction to a three-
mile radius around locations in the Greater Pittsburgh Area); GPS
Indus., LLC v. Lewis, 691 F. Supp. 2d 1327, 1336 (M.D. Fla. 2010)
(finding a global noncompete agreement overbroad).
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Gateway's noncompete agreements also apply indiscriminately to
highly compensated executives and hourly workers in relatively low-
skill positions alike.\28\ For example, Gateway's noncompete agreements
apply to drivers who pick up deceased pets, as well as crematory
workers who process ashes and prepare paw print mementos.\29\ These
workers are critical to providing cremation services, and they make up
the vast majority of Gateway's employees,\30\ but their job duties do
not require extensive training that might justify some noncompete
restrictions.\31\
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\28\ Complaint ]] 8-10.
\29\ Id. at ] 10.
\30\ Ibid.
\31\ See Ferguson Noncompete Rule Dissent at 41-42. Cf. Ferguson
Guardian Statement at n.17 (``Potential procompetitive
justifications, i.e., legitimate objectives, in these circumstances
could include [a company] seeking to recoup any costs for the
training of and investment in its workers . . .''); Giordano v. Saks
Inc., 654 F. Supp. 3d 174, 201 (E.D.N.Y. 2023) (challenged no-poach
agreement involving collaborative business arrangement not unlawful
under rule of reason where luxury brands agreed not to poach Saks
employees who were trained to sell brand products unless current
managers consented or the employee had left Saks at least six months
prior).
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Additionally, Gateway demanded noncompete agreements from workers
they terminated only weeks later, or in areas where Gateway exited
operations when it closed dozens of facilities from 2020 through
2023.\32\ Gateway also sought to secure noncompete agreements from
employees it might acquire as part of a transaction.\33\ And Gateway
knowingly wielded noncompete agreements to erect barriers in
circumstances where it faced what it perceived to be tougher
competition.\34\ All of these facts combine to curtail worker mobility
and workers' ability to negotiate better employment terms, and present
an entry barrier in the pet cremation industry.\35\
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\32\ Complaint ] 11.
\33\ Id. at ]] 11-12.
\34\ Id. at ]] 12-14.
\35\ Id. at ]] 15-16.
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The attuned reader may notice some similarity between my analysis
here and the common-law reasonableness inquiry applied by many state
courts when assessing the lawfulness of noncompete agreements, which
asks whether the restriction is no greater than necessary to protect
the employer's legitimate interests, and balances those interests
against the hardship inflicted on the employee and any potential injury
to the public.\36\ That similarity is not a coincidence. The first time
a court ever deployed the rule of reason to assess the lawfulness of an
agreement in restraint of trade was in Mitchel v. Reynolds, an English
case involving a noncompete agreement.\37\ Even today, the Supreme
Court treats the rule announced in Mitchel as ``a standard for testing
the enforceability of covenants in restraint of trade which are
ancillary to a legitimate transaction, such as an employment
contract.'' \38\ This rule of reason for noncompete agreements was well
established in the common law when Congress adopted both the Sherman
Act and the FTC Act.\39\ The Supreme Court has since interpreted the
FTC Act to incorporate the Sherman Act's prohibition on unreasonable
restraints of trade, and the Sherman Act incorporates the rule of
reason for assessing whether an agreement is an
[[Page 43610]]
unlawful restraint of trade.\40\ The Sherman Act ``invokes the common
law itself,'' \41\ and the common law forms the backdrop against which
Congress enacted the Sherman Act.\42\ Although Congress did not fix the
antitrust laws' prohibitions to match whatever the common law said in
1890,\43\ the common law is at least relevant to determining whether a
particular restraint violates the antitrust laws.\44\ It is thus
perfectly appropriate to look to the common law's traditional
application of the rule of reason to a restraint that under modern
doctrine is subject to the rule of reason. The common-law balancing
test originating in Mitchel can be considered a particular application
of the rule of reason, which is itself a balancing of anticompetitive
effects against procompetitive justifications.\45\
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\36\ See Ferguson Noncompete Rule Dissent at 3.
\37\ See id. at 2-3 (discussing Mitchel v. Reynolds, 24 Eng.
Rep. 347 (Q.B. 1711)).
\38\ Nat'l Soc'y of Pro. Eng'rs, 435 U.S. at 689.
\39\ John N. Pomeroy, Jr., A Treatise on Equitable Remedies:
Supplementary to Pomeroy's Equity Jurisprudence Sec. 294 (1905)
(``Where an employee stipulates that he will not engage in similar
business within a certain territory for a certain period after the
termination of his employment, an injunction will issue to restrain
a breach. But where the restraint is unreasonable and extends beyond
anything apparently necessary for the protection of the employer, an
injunction will be refused.''); Frederick Pollock, Principles of
Contract: A Treatise on General Principles Concerning the Validity
of Agreements in the Law of England 331-32 (3d ed. 1881) (``The
contracts in partial restraint of trade which occur in modern books
are chiefly of the following kinds . . . . Agreements by a servant
or agent not to compete with his master or employer after his time
of service or employment is over. . . . It seems, therefore, that
the only rule which can be laid down in general terms is that the
restriction must in the particular case be reasonable. Whether it be
so is a question not of fact, but of law.'').
\40\ See FTC v. Motion Picture Advert. Serv. Co., 344 U.S. 392,
394-95 (``[T]he Federal Trade Commission Act was designed to
supplement and bolster the Sherman Act and the Clayton Act--to stop
in their incipiency acts and practices which, when full blown, would
violate those Acts, as well as to condemn as `unfair method of
competition' existing violations of them.'') (internal citations
omitted); Standard Oil Co. of N.J. v. United States, 221 U.S. 1, 60
(1911) (announcing the rule of reason as the default standard under
the Sherman Act); see also Ohio v. Am. Express Co., 585 U.S. 529,
541 (2018) (``Restraints that are not unreasonable per se are judged
under the `rule of reason.' '').
\41\ Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 732
(1988).
\42\ Standard Oil Co. of N.J., 221 U.S. at 50-51 (1911) (``There
can be no doubt that the sole subject with which the 1st section
deals is restraint of trade as therein contemplated, and that the
attempt to monopolize and monopolization is the subject with which
the 2d section is concerned. It is certain that those terms, at
least in their rudimentary meaning, took their origin in the common
law, and were also familiar in the law of this country prior to and
at the time of the adoption of the act in question.'').
\43\ Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551
U.S. 877, 899 (2007) (``Just as the common law adapts to modern
understanding and greater experience, so too does the Sherman Act's
prohibition on `restraint[s] of trade' evolve to meet the dynamics
of present economic conditions. The case-by-case adjudication
contemplated by the rule of reason has implemented this common-law
approach.'').
\44\ Standard Oil Co. of N.J., 221 U.S. at 60 (``. . . it was
intended that the standard of reason which had been applied at the
common law and in this country in dealing with the subjects of the
character embraced by the [Sherman Act] was intended to be the
measure used for the purpose of determining whether, in a given
case, a particular act had or had not brought about the wrong
against which the statute provided.''); see also Copperweld Corp. v.
Indep. Tube Corp., 467 U.S. 752, 775 n.24 (1984) (``Moreover, it is
far from clear that intracorporate conspiracies were recognized at
common law in 1890.'').
\45\ See, e.g., Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S.
36, 49 & n.15 (1977) (citing Chi. Bd. of Trade v. United States, 246
U.S. 231, 238 (1918)); Nat'l Soc'y of Pro. Eng'rs, 435 U.S. at 689;
Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 342 (1990);
Am. Express Co., 585 U.S. at 541-42.
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The proposed Order protects workers by forbidding Gateway and all
other businesses that Gateway controls now or at any point during the
ten-year term of the proposed Order from entering into, maintaining, or
enforcing noncompete agreements, with limited exceptions.\46\
Specifically, first, the proposed Order permits Gateway to enter into
noncompete agreements as part of ``the sale of a business, provided
that individuals subject to such an agreement have a pre-existing
equity interest in the business being sold.'' \47\ This exception is
consistent with the longstanding common-law rule that noncompete
agreements are a valid adjunct to the sale of a business.\48\ Second,
the proposed Order also excludes certain individual employees from its
prohibition.\49\ Gateway justified the exclusion of each of these
individuals in negotiations with Commission staff. Generally, these
individuals represent equity holders, their families, very senior
managers, those with outside business relationships with Gateway, or
those who otherwise have more unique access to competitively sensitive
information. Again, this exception is consistent with the general
common-law rule that noncompete agreements are justified when they go
no further than necessary to protect specific, identifiable, and valid
interests of the employer that could not be protected without the
noncompete agreement.\50\
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\46\ Order at Section II.A. The proposed Order also prohibits
Gateway from directly or indirectly, communicating to employees
covered by the Order or any prospective or current employer of those
covered employees that they are subject to a noncompete agreement.
Id. at Section II.B.
\47\ Id. at Section I.G (definition of ``Covered Non-Compete
Agreement'').
\48\ See Bus. Elecs. Corp., 485 U.S. at 729 n.3; 15 Corbin on
Contracts Sec. 80.7 (2024).
\49\ Order at Section I.F (``Covered Employee does not include
the individuals listed in Nonpublic Appendix A.'').
\50\ See Horner v. Graves, 131 Eng. Rep. 284, 287 (C.P. 1831)
(English courts upheld noncompete agreements if ``the restraint is
such only as to afford a fair protection to the interests of the
party in favour of whom it is given, and not so large as to
interfere with the interests of the public.''); 15 Corbin on
Contracts Sec. 80.6 (2024) (describing multifactor reasonableness
test); Restatement (2d) of Contracts Sec. 188 (1981) (same).
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The proposed Order additionally limits the scope of Gateway's non-
solicitation agreements. Specifically, the proposed Order restricts
non-solicitation agreements to customers with whom the employee ``had
direct contact or personally provided service'' in the previous twelve
months of their service at Gateway.\51\ These additional restrictions
are necessary to ensure Gateway cannot circumvent the prohibition on
noncompete agreements by enforcing onerous non-solicitation terms that
would effectively prohibit employees from starting a competing
business. After all, a broad non-solicitation clause that bars
employees from working directly with any current or potential Gateway
customer would severely inhibit the employee's ability to work in the
industry during the term of the non-solicitation agreement, even in the
absence of a noncompete agreement.
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\51\ Order at Section II.C.
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The proposed Order also contains a requirement that Gateway provide
current, former, and new employees with clear and conspicuous notice
that they are not subject to noncompete agreements and about the now-
narrower scope of their non-solicitation agreement.\52\ Other standard
provisions include compliance reporting on a standard schedule or
additional reporting as the Commission or staff may require, notice to
the FTC of material changes to Gateway's business, and access for the
FTC to documents and personnel.\53\
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\52\ Id. at Section III.B.
\53\ Id. at Section IV.
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The failure of the Biden Commission's rule does not mean that
employers are free to impose noncompete agreements willy-nilly. The
antitrust laws protect labor-market competition, and therefore prohibit
unreasonable noncompete agreements that limit that competition. Today's
proposed Order makes clear that the Trump-Vance Commission will act as
a cop on the beat, enforcing the antitrust laws against unlawful
noncompete agreements to protect American workers, rather than trying
to legislate them away.
Dissenting Statement of Commissioner Rebecca Kelly Slaughter
Today the Commission voted to approve a consent order for public
comment against Gateway Services, Inc. and Gateway US Holdings, Inc.
(collectively, ``Gateway Services'') that bans the pet crematorium firm
from using noncompete clauses in its employment agreements. This order
is fine as far as it goes; noncompete clauses are indeed pernicious
and, as alleged in the Commission's complaint, the investigation
revealed substantial evidence that Gateway has been employing them
aggressively to insulate itself from competition. That sort of conduct
fits squarely within the law's prohibitions and should be stopped. And
I commend the hardworking staff for their thorough investigation into
Gateway's use of noncompetes.
However, I vote no, not because of what is in the order, but
because of what is not. This settlement does nothing to
[[Page 43611]]
address the structural problems in the underlying market. Gateway is a
private equity owned network of pet crematoria,\1\ which describes
itself as the ``largest pet aftercare provider in North America.'' \2\
Its self-described ``focus is to acquire and partner with like-minded,
leading pet aftercare companies across all of North America.'' \3\ In
other words, Gateway rolls up smaller providers. And with fewer pet
aftercare competitors, Gateway is able to exert more control over the
options and prices pet owners pay for services in their time of need;
and over the employment options, pay, and working conditions available
to workers.
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\1\ See IMPERIAL CAPITAL, <a href="https://www.imperialcap.com/investments/gateway">https://www.imperialcap.com/investments/gateway</a> (last visited Sept. 4, 2025).
\2\ GATEWAY SERVICES, INC., <a href="https://www.gatewayservicesinc.com/">https://www.gatewayservicesinc.com/</a>
(last visited Sept. 4, 2025).
\3\ Id.
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That underlying market structure is part of what enables Gateway to
execute the noncompete strategy described in the Commission's
complaint. But the Commission's order does nothing to address or unwind
it. Without touching the structural issues in the market, a non-compete
remedy, however meaningful, will not successfully protect consumers or
workers in the pet aftercare market.
Finally, while I am glad to see the Commission has not entirely
abandoned the important work on noncompetes that began under Chair
Khan's leadership,\4\ I would be remiss if I did not point out, as I
have for years, that one-off enforcement is no substitute for the FTC's
meaningful, marketwide noncompete rule that will protect workers across
the country.\5\ That rule, which received thousands of public comments
in support and is currently being challenged in several separate cases,
deserves the Commission's full-throated defense in the courts.
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\4\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Announces
Rule Banning Noncompetes, <a href="https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes">https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes</a>.
\5\ See, e.g., Statement of Chair Lina M. Khan Joined by Comm'r
Rebecca Kelly Slaughter and Comm'r Alvaro M. Bedoya (Dec. 31, 2024)
at 11.
[FR Doc. 2025-17416 Filed 9-9-25; 8:45 am]
BILLING CODE 6750-01-P
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