On November 13, 2023, the DOJ moved to dismiss one of its last no-poach criminal cases. The charges were against an operator of ambulatory surgery centers who had allegedly participated in two conspiracies with other health care companies to suppress competition for the services of senior-level employees. In its motion, the DOJ did not provide a rationale for the dismissal, other than a statement that dismissal is not “contrary to manifest public interest, and it will allow the conservation of this Court’s time and resources.”
This dismissal followed the DOJ’s failure to secure a single conviction in three other no-poach or wage-fixing cases brought to trial since April 2022. The most recent loss occurred in April 2023 when a federal judge in Connecticut acquitted six executives for allegedly conspiring to allocate the labor market for aerospace employees.
What does this mean?
The DOJ’s track record casts doubt on the future criminal prosecution of labor cases, as it is clear that juries and judges alike are skeptical that this type of behavior rises to the level of criminal culpability.
However, it would be premature to consider this dismissal a signal of decreased antitrust enforcement in the labor market. Notably, the draft Merger Guidelines (Draft Guidelines) released on July 19, 2023, by the DOJ and the Federal Trade Commission (collectively, the Agencies) demonstrate ongoing commitment to evaluate the impact of a merger on labor as a stand-alone basis to challenge the merger’s legality under the antitrust laws. On November 3, 2023, at the third workshop hosted by the Agencies on the Draft Guidelines, Principal Deputy Assistant Attorney General Doha Mekki’s remarks emphasized the crucial role that law enforcement plays in the labor market, particularly in protecting against mergers that lessen competition for labor and result in lower wages, fewer benefits, and less flexibility for workers.
Perhaps the Agencies are shifting their focus from criminal no-poach and wage-fixing cases to the evaluation of mergers’ impacts on labor markets, or perhaps the DOJ is simply reevaluating its strategy for prosecuting these cases. Though the exact future is uncertain, the message is clear that labor enforcement is here to stay.
How can we help?
It is critical that companies work with experienced antitrust and labor and employment counsel to navigate these evolving issues in the current antitrust enforcement climate. Please do not hesitate to contact Reed Smith’s labor and employment and antitrust and competition teams, or the Reed Smith lawyer with whom you regularly work, for further guidance.
Client Alert 2023-259
