Guardian Service Industries, Inc.; Analysis of Agreement Containing Consent Order To Aid Public Comment, 96980-96984 [2024-28720]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 89, Number 235 (Friday, December 6, 2024)]
[Notices]
[Pages 96980-96984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28720]


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FEDERAL TRADE COMMISSION

[File No. 241 0082]


Guardian Service Industries, Inc.; 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 Proposed Consent Order 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 January 6, 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: ``Guardian; File 
No. 241 0082'' on your comment and file your comment online at https://www.regulations.gov 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 H), 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Erik Herron (202-326-3535), 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 Order 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: 
https://www.ftc.gov/news-events/commission-actions.
    The public is invited to submit comments on this document. For the 
Commission to consider your comment, we must receive it on or before 
January 6, 2025. Write ``Guardian; File No. 241 0082'' 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 https://www.regulations.gov 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 https://www.regulations.gov 
website. If you prefer to file your comment on paper, write ``Guardian; 
File No. 241 0082'' 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, Mail Stop H-144 (Annex H), 
Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are

[[Page 96981]]

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 https://www.regulations.gov--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.
    Visit the FTC website at https://www.ftc.gov 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 January 6, 2025. For information on the Commission's privacy 
policy, including routine uses permitted by the Privacy Act, see 
https://www.ftc.gov/site-information/privacy-policy.

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 Guardian Service Industries, 
Inc. (``Guardian'' or ``Respondent''). 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 Guardian's use of restrictive covenants in some 
of its contracts with building owners and managers that limit the 
ability of those building owners and managers to solicit or hire 
Respondent's employees (``No-Hire Agreements''). The term No-Hire 
Agreement refers to a term in an agreement between two or more 
companies that restricts, imposes conditions on, or otherwise limits a 
company's ability to solicit, recruit, or hire another company's 
employees, during employment or afterwards, directly or indirectly, 
including by imposing a fee or damages in connection with such conduct, 
or that otherwise inhibits competition between companies for each 
other's employees' services.
    The Consent Agreement settles charges that Guardian has 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 No-Hire Agreements with 
customers. Guardian's No-Hire Agreements constitute unreasonable 
restraints of trade that are unlawful under section 1 of the Sherman 
Act, 15 U.S.C. 1, and are thus unfair methods of competition in 
violation of section 5 of the FTC Act. Independent of the Sherman Act, 
Guardian's use of the No-Hire Agreements constitutes an unfair method 
of competition with a tendency or likelihood to harm competition, 
consumers, and employees in the building services industry, in 
violation of section 5. 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.

II. The Respondent

    Guardian is a privately held business headquartered in New York, 
NY. Guardian provides facility maintenance services, including 
janitorial, security, engineering and operations, pest control, 
lighting and electric, window cleaning, concierge, front desk, and 
surface restoration services. Guardian employs approximately 2,800 
employees throughout the Northeast, New England, and Mid-Atlantic 
regions. The complaint focuses on Guardian's conduct in New York City 
and Northern New Jersey.

III. The Complaint

    The complaint alleges that Guardian sells building services to 
building owners and property management companies, primarily consisting 
of the labor of janitors, security guards, maintenance workers, and 
concierge desk workers who are directly employed by Guardian. These 
employees perform their work at residential and commercial buildings in 
various States, but predominantly in New York City and Northern New 
Jersey. The complaint also alleges that Guardian and its building owner 
and property manager customers are direct competitors in labor markets 
for building services workers. These include the markets for workers to 
perform concierge, security, janitorial, maintenance, and related 
services.
    As alleged in the complaint, Guardian uses standard-form agreements 
with some of its customers that include No-Hire Agreements. The No-Hire 
Agreements restrict the ability of Guardian's customers to (1) directly 
hire workers employed by Guardian and (2) indirectly hire workers 
employed by Guardian through a competing building services contractor 
after the competitor wins the customers' business away from Guardian. 
These restrictions apply during the term of Guardian's contracts and 
for six months to one year thereafter. The No-Hire Agreements apply not 
just to those Guardian employees identified by Guardian and staffed to 
provide services for a customer, but to all Guardian building services 
employees.
    The complaint alleges that Guardian's No-Hire Agreements are 
anticompetitive because they are horizontal agreements among 
competitors not to compete. Guardian and its customer building owners 
and property managers are competitors for the labor of building 
services workers like Guardian's employees. The No-Hire Agreements are 
horizontal agreements that prohibit buildings and property management

[[Page 96982]]

companies from hiring building services workers, thereby undermining 
competition for labor, reducing worker bargaining power, and 
suppressing wages. For these reasons, the complaint alleges that the 
No-Hire Agreements constitute unreasonable restraints of trade that are 
unlawful under section 1 of the Sherman Act, 15 U.S.C. 1, and are thus 
unfair methods of competition in violation of section 5 of the FTC Act, 
as amended, 15 U.S.C. 45.
    Independent of the Sherman Act, the complaint alleges that 
Guardian's conduct constitutes an unfair method of competition with a 
tendency or likelihood to harm competition, consumers, and employees in 
the building services industry, in violation of section 5 of the FTC 
Act. According to the complaint, the No-Hire Agreements limit the 
ability of building owners and managers to hire Guardian's employees. 
This harms Guardian's employees because it limits their ability to 
negotiate for higher wages, better benefits, and improved working 
conditions. Employees may suffer further hardship if the building they 
work at brings services in-house because the No-Hire Agreements force 
them to leave their jobs in some circumstances. The complaint further 
alleges that the No-Hire Agreements harm building owners and managers 
because they may be foreclosed from bringing services in-house due to 
the prospect of losing long-serving workers with extensive, building-
specific experience.

IV. The Proposed Order

    The proposed Order seeks to remedy Guardian's unfair methods of 
competition. Section II of the proposed Order prohibits Guardian from 
entering or attempting to enter, maintaining or attempting to maintain, 
enforcing or attempting to enforce, or threatening to enforce a No-Hire 
Agreement, or communicating to a customer or any other person that any 
Guardian Employee is subject to a No-Hire Agreement. Paragraph III.A of 
the proposed Order requires Guardian to provide written notice to 
customers that are subject to No-Hire Agreements that (i) the 
restriction is null and void, and (ii) any customer or a subsequent 
building services contractor for a customer is no longer subject to the 
restrictions or penalties related to the No-Hire Agreements in 
Guardian's contracts. Paragraph III.B of the proposed Order requires 
Guardian to provide various written notices to employees who are 
subject to a No-Hire Agreement. Paragraph III.C requires that Guardian 
post clear and conspicuous notice that employees are not subject to No-
Hire Agreements and may seek or accept a job with the building 
directly, or any company that wins the building's business. Paragraphs 
IV.A and IV.B of the proposed Order provide a timeline according to 
which the obligations enumerated in Section III must be met. Paragraphs 
IV.C-E set forth Guardian's ongoing compliance obligations.
    Other paragraphs contain standard provisions regarding compliance 
reports, requirements for Guardian to provide notice to the FTC of 
material changes to its 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, Commissioners Holyoak and 
Ferguson dissenting.
April J. Tabor,
Secretary.

Dissenting Statement of Commissioner Melissa Holyoak

    As I have previously explained,\1\ the Commission cannot issue a 
complaint unless it has reason to believe that the law has been 
violated.\2\ The same requirement applies equally to complaints headed 
toward litigation and to complaints that accompany a consent order that 
simultaneously resolves the matter. Today's Complaint against Guardian 
Service Industries, Inc. fails to provide sufficient allegations to 
establish a violation of section 1 of the Sherman Act or a violation of 
section 5 of the FTC Act. Because the restraint at issue is between a 
building services contractor and its clients, it would qualify as a 
vertical restraint, and ``nearly every . . . vertical restraint'' 
should be analyzed under the rule of reason.\3\ Further, this is a 
novel area, and the per se rule ``is appropriate only after courts have 
had considerable experience with the type of restraint at issue, and 
only if courts can predict with confidence that it would be invalidated 
in all or almost all instances under the rule of reason.'' \4\ Under 
the rule of reason, ``the factfinder weighs all of the circumstances of 
a case in deciding whether a restrictive practice should be prohibited 
as imposing an unreasonable restraint on competition.'' \5\ To do so, 
the court conducts ``an inquiry into market power and market structure 
designed to assess the combination's actual effect.'' \6\ Today's 
Complaint, however, does not plead sufficient facts to make a violation

[[Page 96983]]

under the rule of reason plausible.\7\ For this reason, I dissent.\8\
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    \1\ Dissenting Statement of Comm'r Melissa Holyoak, In the 
Matter of Chevron Corporation & Hess Corporation, Comm'n File No. 
241-0008 (Sept. 30, 2024); Joint Dissenting Statement of Comm'r 
Melissa Holyoak and Comm'r Andrew N. Ferguson, In the Matter of 
ExxonMobil Corporation, No. 241-0004 (May 2, 2024).
    \2\ 15 U.S.C. 45(b).
    \3\ Ohio v. Am. Express Co., 585 U.S. 529, 541 (2018).
    \4\ Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 
877, 886-87 (2007) (citation omitted). Chair Khan contends that 
``some no-poach or no-hire provisions may be analyzed as per se 
restraints under Section 1 of the Sherman Act.'' Statement of Chair 
Lina M. Khan, In the Matter of Guardian Service Industries, Inc., 
Matter Number 2410082 (Dec. 3, 2024). First, to be clear, the 
Complaint in today's action does not allege a per se violation. 
Second, the Seventh Circuit case upon which she relies, Deslandes v. 
McDonald's USA, LLC, 81 F.4th 699, 703 (7th Cir. 2023), cert. 
denied, 144 S. Ct. 1057 (2024), does not stand for the proposition 
that today's conduct, or no-hire and no-poach provisions more 
generally, should be condemned as per se unlawful. To begin with, 
the no-poach provisions alleged in Deslandes were purely horizontal, 
see id. at 703, lacking the vertical component at issue in today's 
complaint against Guardian. Further, Judge Easterbrook, analyzing a 
motion for judgment on the pleadings, made clear that the district 
court had ``jettisoned the per se rule too early.'' Id. He did not 
declare that such agreements were per se unlawful. In fact, he went 
on to explain a variety of questions that needed to be considered 
before such a determination could be made, including, inter alia: 
``So what was the no-poach clause doing? Was it protecting 
franchises' investments in training, or was it allowing them to 
appropriate the value of workers' own investments?'' Id. at 704. He 
explained that ``[t]hese are all potentially complex questions, 
which cannot be answered by looking at the language of the 
complaint. They require careful economic analysis. More than that: 
the classification of a restraint as ancillary is a defense, and 
complaints need not anticipate and plead around defenses.'' Id. at 
705. Such considerations are a far cry from declaring no-poach 
agreements per se unlawful.
    \5\ Leegin, 551 U.S. at 885; see also Am. Express Co., 585 U.S. 
at 541.
    \6\ Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 768 
(1984).
    \7\ The Commission's 2022 Policy Statement states that under 
section 5 of the FTC Act, ``the inquiry will not focus on the `rule 
of reason.''' See Fed. Trade Comm'n, Policy Statement Regarding the 
Scope of Unfair Methods of Competition Under Section 5 of the 
Federal Trade Commission Act, Comm'n File No. P221202, at 10 (Nov. 
10, 2022); id. at 2 (``Congress passed the FTC Act to push back 
against the judiciary's adoption and use of the open-ended rule of 
reason for analyzing Sherman Act claims.''). I disagree with this 
conclusion and the 2022 Policy Statement in general. See Dissenting 
Statement of Comm'r Christine S. Wilson, Regarding the Policy 
Statement Regarding the Scope of Unfair Methods of Competition Under 
Section 5 of the Federal Trade Commission Act, Comm'n File No. 
P221202 (Nov. 10, 2022). Among other problems with the statement, 
section 5 requires a showing of anticompetitive effects. See Boise 
Cascade Corp. v. FTC, 637 F.2d 573, 579 (9th Cir. 1980); cf. E.I. du 
Pont de Nemours & Co. v. FTC, 729 F.2d 128, 141 (2d Cir. 1984) 
(rejecting unfair method of competition claim because there was no 
``causal connection'' between the challenged practices and adverse 
competitive effects); FTC v. Raladam Co., 283 U.S. 643, 647-48 
(1931).
    \8\ Chair Khan somehow believes that just because she, as one 
agent of the American government, declares her choices as helpful to 
``American workers,'' that it makes it so. Khan, supra note 4. Good 
intentions do not, however, translate into tangible results. And 
while her rhetoric may make for good PR, the facts and the law 
matter. The Chair's decision to assert that the agreements are per 
se illegal in today's statement but not in the actual Complaint is 
just one more example where the public should rely more on the 
Chair's revealed preferences than her expressed preferences.
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Dissenting Statement of Commissioner Andrew N. Ferguson

    The Commission today issues an administrative complaint and accepts 
a proposed consent agreement with Guardian Service Industries, Inc. 
(``Guardian'').\1\ Guardian is a building services contractor operating 
throughout the Northeast, New England, and Mid-Atlantic regions.\2\ It 
employs about 2,800 workers who provide concierge, security, custodial, 
maintenance, engineering, and related services at residential and 
commercial buildings.\3\ The Complaint alleges that some of Guardian's 
contracts with building-management clients contain so called ``no-
hire'' provisions, also sometimes referred to as ``no-poach'' 
provisions.\4\ As written, these provisions forbid Guardian's clients 
from hiring Guardian's employees directly, or by hiring them from one 
of Guardian's competitors.\5\ This restriction applies both during the 
contract term and for six to twelve months beyond it.\6\
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    \1\ In re Guardian Serv. Indus., Inc., Complaint (``Complaint'') 
& Decision and Order (``Order'').
    \2\ Compl. ] 1; In re Guardian Serv. Indus., Inc., Analysis of 
Agreement Containing Consent Order to Aid Public Comment (``AAPC''), 
at 1.
    \3\ AAPC at 1.
    \4\ Compl. ] 11. No-hire provisions are not non-compete clauses. 
No-hire provisions are agreements between two or more employers not 
to recruit, solicit, or hire each other's employees. Non-compete 
clauses are agreements between an employer and its employee in which 
the employee promises not to work for the employer's competitors 
after the termination of the employment relationship. No-hire 
provisions do not fall within the scope of the Commission's failed 
Non-Compete Clause Rule. 89 FR 38,342 (May 7, 2024).
    \5\ Compl. ]] 10-11; AAPC at 2.
    \6\ Ibid.
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    The Commission is wise to focus its resources on protecting 
competition in labor markets. After all, the antitrust laws protect 
employees from unlawful restraints of the labor markets as much as they 
protect any output market.\7\ But, as I have warned before, we must 
always act within the boundaries Congress has imposed on our authority. 
For example, while I have no doubt that some noncompete agreements 
violate the Sherman Act,\8\ the now-enjoined Non-Compete Clause Rule 
\9\ wildly exceeded our authority to address noncompete agreements.\10\ 
Today, we again exceed our authority by failing to comply with 
Congress's procedural requirements for issuing an administrative 
complaint. I therefore respectfully dissent.
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    \7\ NCAA v. Alston, 594 U.S. 69, 86-87 (2021) (explaining that 
an employee challenging a labor-market restraint need show 
competitive injury only in the market for labor); Anderson v. 
Shipowners Ass'n, 272 U.S. 359, 361-65 (1926) (agreement among group 
of associations that ``own[ed], operat[ed], or control[led] 
substantially all the merchant vessels . . . [in] the ports of the 
Pacific Coast'' to control employment of seamen violated the Sherman 
Act); Todd v. Exxon Corp., 275 F.3d 191, 201 (2d Cir. 2001) 
(addressing labor market and explaining that ``[t]he Sherman Act . . 
. applies . . . to abuse of market power on the buyer side--often 
taking the form of monopsony or oligopsony. . . . Plaintiff is 
correct to point out that a horizontal conspiracy among buyers to 
stifle competition is as unlawful as one among sellers.''); Phillip 
Areeda & Herbert Hovenkamp, Antitrust Law ] 352a (rev. ed. 2024) 
(``employees may challenge antitrust violations that are premised on 
restraining the employment market.''); id. at ] 352c (``Antitrust 
law addresses employer conspiracies controlling employment terms 
precisely because they tamper with the employment market and thereby 
impair the opportunities of those who sell their services there. 
Just as antitrust law seeks to preserve the free market 
opportunities of buyers and sellers of goods, so also it seeks to do 
the same for buyers and sellers of employment services.''); see also 
Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., 549 U.S. 
312, 322 (2007) (Thomas, J.) (``The kinship between monopoly and 
monopsony suggests that similar legal standards should apply to 
claims of monopolization and to claims of monopsonization.'' (citing 
Roger Noll, ``Buyer Power'' and Economic Policy, 72 Antitrust L.J. 
589, 591 (2005) (``[A]symmetric treatment of monopoly and monopsony 
has no basis in economic analysis.''))); Mandeville Island Farms v. 
Am. Crystal Sugar Co., 334 U.S. 219, 235 (1948) (``It is clear that 
the agreement is the sort of combination condemned by the [Sherman] 
Act, even though the price-fixing was by purchasers, and the persons 
specially injured under the treble damage claim are sellers, not 
customers and consumers.'').
    \8\ See 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 18 n.142 (June 28, 2024) 
(hereinafter ``Ferguson Non-Compete Dissent''), https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-noncompete-dissent.pdf 
(``Noncompete agreements are contracts in restraint of trade, and 
therefore subject to the rule of reason under section 1 of the 
Sherman Act and section 5 of the FTC Act. But as is true of all 
agreements that do not implicate one of the few per se rules, 
whether a given noncompete agreement violates the antitrust laws 
will turn entirely on the particular circumstances and competitive 
effects of that agreement.'' (internal citations omitted)).
    \9\ 89 FR 38342 (May 7, 2024).
    \10\ Ferguson Non-Compete Dissent at 8-9; Ryan LLC v. FTC, No. 
3:24-CV-00986-E, 2024 WL 3879954 (N.D. Tex. Aug. 20, 2024) (vacating 
the Commission's Non-Compete Clause Rule); Properties of the 
Villages, Inc. v. FTC, 2024 WL 3870380 (M.D. Fla. Aug. 15, 2024) 
(issuing a preliminary injunction prohibiting enforcement of the 
Commission's Non-Compete Clause Rule as to plaintiff). With the 
Presidential transition in full swing, the Chair has some parting 
shots. She argues that my dissent is part of a ``trend in matters 
where the Commission is protecting American workers.'' Statement of 
Chair Lina M. Khan, In re Guardian Serv. Indus., Inc., Matter No. 
2410082, at 2 (Dec. 3, 2024) (hereinafter ``Chair's Statement''). 
For the second time in a couple months, she cites as an example of 
this ``trend'' my dissent from the Non-Compete Clause Rule. Id. at 2 
n.6; Statement of Chair Lina M. Khan, Joined by Comm'rs Rebecca 
Kelly Slaughter and Alvaro M. Bedoya, In re Lyft, Inc., Matter No. 
2223028, at 8-9 & n.35 (Oct. 25, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/Statement-Chair-Khan-Joined-Comm-Slaughter-Comm-Bedoya-In-the-Matter-Lyft-Inc-10-25-2025.pdf. It bears repeating 
once more that this rule is enjoined nationwide as unlawful, and the 
Biden-Harris Administration will leave office without it ever having 
taken effect. Ryan LLC, 2024 WL 3879954; Statement of Comm'r Andrew 
N. Ferguson, Concurring in Part and Dissenting in Part, United 
States v. Lyft, Matter No. 2223028, at 14 (Oct. 25, 2024) 
(hereinafter ``Ferguson Lyft Statement''), https://www.ftc.gov/system/files/ftc_gov/pdf/Ferguson-Lyft-Dissent-10-25-2024.pdf. As I 
said in Lyft, I strongly favor protecting workers to the fullest 
extent of our statutory authority. Ferguson Lyft Statement at 14. 
Promulgating failed rules and settling cases for pennies on the 
dollar does not protect workers, no matter how triumphant the 
Commission's press releases are. Ibid.
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    The Complaint charges that Guardian's no-hire clauses are 
unreasonable restraints of trade under section 1 of the Sherman 
Act,\11\ and are also therefore unfair methods of competition in 
violation of section 5 of the Federal Trade Commission Act.\12\ The 
Complaint proceeds on a rule-of-reason theory, rather than a per se 
theory. That choice makes sense. The rule of reason ``presumptively 
applies'' to every restraint,\13\ especially when, as

[[Page 96984]]

here, the restraint is ancillary to an otherwise lawful and primarily 
vertical agreement.\14\ Under the rule of reason, a restraint violates 
section 1 if the anticompetitive effects of the restraint outweigh its 
procompetitive effects.\15\ Put slightly differently, the rule of 
reason forbids restraints for which the procompetitive justifications 
for the restraint could have been achieved through ``less 
anticompetitive means'' than those imposed by the restraint.\16\
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    \11\ Compl. ] 16.
    \12\ Id. ] 17.
    \13\ Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006); see also 
Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 58-59 (1977) 
(``[D]eparture from the rule-of-reason standard must be based upon 
demonstrable economic effect rather than . . . upon formalistic line 
drawing.''); Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 
U.S. 877, 899 (2007) (``Resort to per se rules is confined to 
restraints, . . . `that would always or almost always tend to 
restrict competition and decrease output.' To justify a per se 
prohibition a restraint must have `manifestly anticompetitive' 
effects and `lack . . . any redeeming virtue.' '' (cleaned up)).
    \14\ See, e.g., Aya Healthcare Servs., Inc. v. AMN Healthcare, 
Inc., 9 F.4th 1102, 1109 (9th Cir. 2021) (citing Rothery Storage & 
Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 224 (D.C. Cir. 
1986)). The Chair invokes Deslandes v. McDonald's USA, LLC as 
``affirm[ing]'' that ``some no-poach or no-hire provisions may be 
analyzed as per se restraints under section 1 of the Sherman Act.'' 
Chair's Statement at 2 n.6. That is not quite right. Deslandes held 
only that a properly pleaded per se claim challenging no-hire 
clauses could survive a motion to dismiss because ``the 
classification of a restraint as ancillary,'' and therefore not 
subject to the per se standard, ``is a defense, and complaints need 
not anticipate and plead around defenses.'' 81 F.4th 699, 705 (7th 
Cir. 2023), cert. denied, 144 S. Ct. 1057 (2024). Whether a 
restraint is ancillary, and therefore subject to the rule of reason, 
``requires discovery, economic analysis, and potentially a trial.'' 
Ibid.
    \15\ See, e.g., GTE Sylvania Inc., 433 U.S. at 49 & n.15 (citing 
Chi. Bd. of Trade v. United States, 246 U.S. 231, 238 (1918) 
(Brandeis, J.)); Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 
328, 342 (1990); Ohio v. Am. Express Co., 585 U.S. 529, 541-42 
(2018).
    \16\ Am. Express Co., 585 U.S. at 542; Alston, 594 U.S. at 100 
(``[A]nticompetitive restraints of trade may wind up flunking the 
rule of reason to the extent the evidence shows that substantially 
less restrictive means exist to achieve any proven procompetitive 
benefits.'').
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    Here, the Complaint alleges that ``[a]ny legitimate objectives of 
Guardian's'' use of the no-hire provisions ``could have been achieved 
through significantly less restrictive means.'' \17\ This certainly may 
be true of some no-hire agreements. And no-hire clauses undoubtedly can 
have anticompetitive effects.\18\ In some circumstances, those 
anticompetitive effects will outweigh the procompetitive justifications 
for a no-hire clause.\19\ When those facts obtain, the no-hire 
provision violates the Sherman Act.
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    \17\ Compl. ] 14. Potential procompetitive justifications, i.e., 
legitimate objectives, in these circumstances could include Guardian 
seeking to recoup any costs for the training of and investment in 
its workers or for screening and background checks to employ these 
workers, or to protect any relevant trade secrets.
    \18\ Matthew Gibson, Employer Market Power in Silicon Valley, 
IZA Discussion Paper No. 14843 (Nov. 2021), https://docs.iza.org/dp14843.pdf (comparing workers' salaries at Silicon Valley firms 
subject to DOJ's no-poach investigation to worker salaries at other 
information-technology firms and concluding that the challenged no-
poach agreements reduced salaries at colluding firms by 4.8%).
    \19\ Cf. Eichorn v. AT&T Corp., 248 F.3d 131 (3d Cir. 2001) 
(challenged no-hire agreement ``not an antitrust violation under the 
rule of reason'' where the particular provision at issue ``did not 
have a significant anti-competitive effect on the plaintiffs' 
ability to seek employment''); Aya Healthcare Servs., 9 F.4th at 
1110 (challenged non-solicitation agreement, involving employee 
outsourcing arrangement between healthcare staffing agencies 
collaborating to supply traveling nurses, not unlawful under rule of 
reason where restraint was reasonably necessary to ensure neither 
would lose personnel during collaboration); 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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    But we cannot issue a Complaint against a company based solely on a 
theory about hypothetical effects of no-hire agreements. To lawfully 
invoke our enforcement authority, we must have a ``reason to believe'' 
that Guardian's no-hire provisions violate section 5, not that no-hire 
provisions generally could violate section 5.\20\ The Commission has a 
``reason to believe'' the law has been violated only if it has evidence 
sufficient to make the ``threshold determination that further inquiry 
is warranted.'' \21\ That reason must be ``well-grounded'' in evidence 
that the Commission gleaned from its pre-filing investigation.\22\
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    \20\ 15 U.S.C. 45(b).
    \21\ FTC v. Standard Oil of Cal., 449 U.S. 232, 241 (1980); 
Boise Cascade Corp. v. FTC, 498 F. Supp. 772, 779 (D. Del. 1980).
    \22\ Standard Oil, 449 U.S. at 246 n.14; see also AMREP Corp. v. 
FTC, 768 F.2d 1171, 1177 (10th Cir. 1985).
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    Had the Complaint plausibly alleged anticompetitive effects 
outweighing procompetitive justifications, I would have voted for it. 
But the Complaint alleges nothing about the no-hire provisions' 
effects. It does not allege direct evidence of anticompetitive effects, 
or of indirect, economic evidence of anticompetitive effects, like 
market power and harm to competition. It does not even allege that 
Guardian has ever tried to enforce any of these agreements, nor does it 
allege that a single Guardian customer or worker believed Guardian 
would enforce any of these provisions.\23\ Nor have I seen any such 
evidence that goes unmentioned in the Complaint. Indeed, I am at a loss 
about how my colleagues have formed their reason to believe that 
Guardian is violating the antitrust laws.
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    \23\ The Chair presents this case as a choice between Guardian's 
no-hire provisions ``remain[ing] in place,'' ostensibly presuming 
anticompetitive effects from their very existence, or continuing the 
investigation. Chair's Statement at 2. That is not correct. I have 
seen no evidence of actual or threatened enforcement of these 
clauses. And even if Guardian did threaten or attempt to enforce 
such provisions, I have seen no evidence that such threatened or 
actual enforcement would violate the antitrust laws--the question 
before the Commission when deciding whether to issue a Complaint. 
The Chair's citation of public comments submitted in response to the 
Commission's separate, unrelated Non-Compete Clause Rule, id. at 2 
n.9, does not change the facts, or lack thereof, in this matter. 
Moreover, I have no objection to the Commission agreeing not to 
bring an enforcement action so long as Guardian agrees not to 
enforce its no-hire provisions--akin to a non-prosecution agreement. 
But if the Commission invokes its power to issue a complaint, it 
must comply with the statute giving it that power--including the 
requirement that we have ``reason to believe'' that section 5 has 
been violated.
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    The Commission ought to protect competition in the labor markets, 
but it cannot bend the law to do so. We must form a ``well-grounded 
reason to believe'' that the law has been violated before issuing an 
administrative complaint. Because we have no evidence of the effects of 
the no-hire agreements in this case, the Commission should not have 
issued this Complaint.
    I respectfully dissent.

[FR Doc. 2024-28720 Filed 12-5-24; 8:45 am]
BILLING CODE 6750-01-P