Franchise No-Poach Agreements: Is Reform on The Horizon?

In 2016, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued Joint Guidance for Human Resource Professionals warning that no-poach agreements restricting employee hiring may violate the antitrust laws.[1] That guidance, along with pre-guidance litigation, has established some clear ground rules. Naked no-poach agreements are per se illegal under §1 of the Sherman Act,[2] while ancillary no-poach agreements, those related to legitimate, procompetitive joint ventures[3] and corporate acquisitions,[4] are subject to the rule of reason, which considers whether the agreement is, on balance, anticompetitive.

Yet, four years later, there remain stubborn pockets of disagreement—for example, no-poach clauses in franchise agreements. Federal courts are struggling to reach a consensus on how to analyze them under the antitrust laws. And there’s a lot at stake. Statistics show more than 8 million Americans work in the franchise sector. The stakes are high for employers too. If the rule of reason applies, private litigation may be financially impractical; the necessity of proving a relevant geographic market in applying the rule of reason makes it difficult, if not impossible, to certify sizable class actions.[5] If the per se rule applies, the Sherman Act’s treble damages and attorneys’ fees provisions can prove disastrous. Continue Reading

NCAA, COVID and Paying Players: Negotiating Payment in the Midst of a Pandemic

In May, three judges on the U.S. Court of Appeals for the Ninth Circuit ruled unanimously against the NCAA in its appeal of the lower court decision, finding that the organization’s policies that prohibit student-athletes from being compensated are, in fact, anticompetitive.

Last year we examined the decision in Alston v. NCAA, an opinion by U.S. District Judge Claudia Wilken of the Northern District of California holding that the NCAA was in violation of Section 1 of the Sherman Act, and therefore the organization could not fix or limit the amount of compensation paid to players unless the money offered to the students was “related to education.”

In May, three judges on the U.S. Court of Appeals for the Ninth Circuit ruled unanimously against the NCAA in its appeal of the lower court decision, finding that the organization’s policies that prohibit student-athletes from being compensated are, in fact, anticompetitive. Of course, there are miles to go with this litigation, as the NCAA has already planned to appeal the decision to the U.S. Supreme Court, which would hear the case in its October 2020 term if certiorari is granted. Continue Reading

Webinar: Antitrust Issues in the Food Industry During the Pandemic

Wednesday, September 23, 2020 | 2:00 p.m. – 3:00 p.m. EDT | Register Now 

You’re invited to join BakerHostetler’s Antitrust and Competition team for a discussion of antitrust issues in the food industry amid the current pandemic. This presentation for in-house counsel and executives at companies involved in all aspects of the food supply chain, from production to distribution to retail sales, will provide thoughtful guidance on how to evaluate and mitigate civil and criminal antitrust risk, before the government comes knocking and private buyer and competitor lawsuits follow. Panelists will walk participants through real-world scenarios to examine the various issues that could and have raised antitrust scrutiny, and provide pragmatic advice about how to avoid inadvertently running afoul of antitrust laws.


  • Carl Hittinger serves as BakerHostetler’s Antitrust and Competition Practice National Team Leader. He focuses his practice on complex commercial and class action litigation, with a particular emphasis on antitrust and unfair competition matters. Carl has more than 40 years of experience handling “bet the company” litigation and successfully trying lengthy jury and non-jury cases. He regularly counsels clients on all aspects of civil and criminal antitrust and unfair competition law, including clients at all levels in the food and retail industries.
  • Ann O’Brien advises companies and their senior executives facing antitrust, criminal cartel, or complex white collar investigations or litigation. Ann has recently advised food and retail clients on the patchwork of price-gouging laws in 38 states and the federal Defense Production Act provisions triggered by states of emergency declared due to the COVID-19 crisis. Prior to joining BakerHostetler, she spent nearly two decades at the Department of Justice, including holding senior leadership and management positions at the DOJ Antitrust Division. In these roles, Ann served as the leading authority on antitrust compliance programs and the application of U.S. Sentencing Guidelines to antitrust crimes, in addition to consulting on complex policy, charging, leniency and sentencing issues.
  • Jeff Martino represents companies and senior executives facing criminal antitrust, fraud, corruption and other complex white collar investigations or litigation being conducted by federal and/or state enforcers. Jeff advises key coalitions on antitrust issues regarding supply chains affected by COVID-19. Prior to joining BakerHostetler, he served as chief of the DOJ Antitrust Division in New York for five years, where he oversaw investigations and prosecutions of individuals and corporations in price fixing, bid rigging and customer allocation matters. Jeff spent 17 years at the DOJ, many of those in senior leadership positions, including chief of the Financial Crime and Public Integrity Section for the U.S. Attorney’s Office in the District of Arizona. Utilizing his experience working with regulators both internationally and domestically, competition agencies abroad, and prosecutors across the United States, Jeff is able to counsel clients operating in high-risk areas around the globe.

Register Now >>

Big Day for Big Tech: CEOs Testify in House Antitrust Hearing

On Wednesday, July 29, 2020, the House Judiciary Committee’s Subcommittee on Antitrust conducted its sixth hearing into online platforms and market power, welcoming as witnesses the chief executive officers of Amazon, Apple, Google, and Facebook. The hearing lasted more than five hours and was styled as “Examining the Dominance of Amazon, Apple, Facebook and Google.” Due to COVID-19, the CEOs testified virtually, adding an ironic digital twist with the tech titans appearing together in video tiles on a screen with no big-tobacco moment standing side-by-side to take their oath.

The Subcommittee’s hearing culminated its year-long investigation into Big Tech, and the questioning was informed by requests for information posed to each tech company last September, which generated millions of pages of documents and hundreds of hours of interviews. Subcommittee Chair Cicilline opened the hearing by describing each of the tech companies as a “bottleneck for a key channel of distribution,” whether that be a channel of retail distribution, distribution of software applications, or distribution of information. Chair Cicilline began and ended the hearing by expressing concerns about the dominance of each firm and abuse of their purported monopoly power. Continue Reading

DOJ Takes a Stance on Section 230 Reform that Could Place Additional Burdens on Online Platforms

The Department of Justice (DOJ) recently outlined proposed reforms to Section 230 of the Communications Decency Act of 1996.[1] Section 230 has been in place since the early days of the Internet and protects online platforms from liability for certain third-party posts. It has recently become a point of contention between Big Tech and the Trump Administration.  Recently, a presidential tweet was labeled with a fact-checking message that described the content as “unsubstantiated.”[2] The President claimed the label was intended to chill his rights under the First Amendment and subsequently signed the Executive Order on Preventing Online Censorship, calling for review and clarification of the scope of Section 230. The Executive Order also calls on the Secretary of Commerce and the Attorney General to engage in rule-making with the Federal Communications Commission to clarify when a tech company could be deemed to be taking part in “not ‘taken in good faith.’”[3] Additionally, the Order encouraged the Federal Trade Commission to investigate “unfair or deceptive acts or practices” committed by online platforms. Continue Reading

Fishy Price Fixing Leads to 40-month Jail Stint

On June 16, following a monthlong trial, Christopher Lischewski, former CEO and president of Bumble Bee Foods LLC, was sentenced by Judge Edward Chen of the Northern District of California to 40 months in prison plus a $100,000 fine for orchestrating a canned tuna price-fixing conspiracy. Lischewski’s sentence demonstrates the punishment individuals should be prepared to face if involved in price fixing and that such criminal behavior cannot be shielded by any corporate protections. Assistant Attorney General Makan Delrahim, head of the Department of Justice’s Antitrust Division, remarked that “[t]he sentence imposed … will serve as a significant deterrent in the C-suite and the boardroom.”[1] Indeed, Chen himself stated that Lischewski’s sentence was intended to send a message of general deterrence, particularly where a basic food staple relied upon by many households is concerned. Continue Reading

Limits of State Action Protection for Colleges and Universities

A recently filed antitrust complaint against Duke University (Duke) provides a fresh reminder for colleges and universities that the state action immunity doctrine is unlikely to be a complete shield from antitrust liability even if a public university is involved. On May 29, a professor at the University of North Carolina (UNC) filed a complaint against Duke alleging that UNC and Duke had an agreement not to recruit each other’s faculty.[1]

The alleged conduct came to light during discovery in a similar lawsuit, Seaman v. Duke University, brought in 2015 against Duke’s and UNC’s medical schools related to a no-poach agreement regarding medical faculty.[2] Continue Reading

1-800 Contacts Settles Class Action Lawsuit With Roots in FTC Action

Back in 2016, the Federal Trade Commission (FTC) sued 1-800 Contacts, claiming the online retailer devised an anticompetitive scheme with other online lens retailers to restrict search terms.  The FTC charged that 1-800 Contacts and its competitors entered into agreements which prevented the other online contact lens retailers from bidding for search engine keywords in advertising auctions conducted by internet search engines, such as Google and Yahoo.

Last week, in a separate but related consumer class action, 1-800 Contacts settled with consumer-plaintiffs who brought suit in the Central District of Utah alleging similar facts.  The consumer complaint alleged that 1-800 Contacts forced some of its competitors to implement negative keyword lists so that when a potential consumer typed “1-800 Contacts,” no links to other retailers would appear in the search results and instead would only se links directing to 1-800 Contacts’ website. Continue Reading

The Failing Firm Defense in Times of Economic Uncertainty

As many businesses look for solutions to weather the economic impact of the COVID-19 pandemic, one potential avenue for distressed companies is to seek to be acquired by a more stable firm looking to expand. The antitrust regulators have made clear that all types of mergers – even during a global crisis – will be subject to ordinary antitrust scrutiny. As those principles are applied, merging companies may look more frequently to the “failing firm” defense to convince regulators that their deal should pass regulatory hurdles when it otherwise might not. However, the requirements for meeting the failing firm standard are high, and merging parties should not assume that financial struggles during the pandemic will provide a free pass through merger review. Continue Reading

DOJ Declines to Challenge New Bidding Platform for Commercial Advertisement Producers

On April 16, the Department of Justice (DOJ) announced that it would not challenge a proposal by the Association of Independent Commercial Producers (AICP) to operate an online platform for advertisers and advertising agencies to solicit bids from companies that produce commercials for television, the internet and other media platforms. The DOJ stated its position in a business review letter from Assistant Attorney General Makan Delrahim of the Antitrust Division to counsel for the AICP. Under the DOJ’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement on whether the division currently intends to challenge the action under the antitrust laws based on the information provided.

As outlined in the AICP’s request letter, bidding on commercial productions is primarily conducted in one of two ways: (1) Agencies solicit bids on behalf of advertisers, or (2) advertisers solicit bids directly, without engaging an agency. Production companies then directly submit responsive bids to the agencies or advertisers, as the case may be. However, the AICP noted that, increasingly, advertisers and agencies are requiring AICP members (the production and post-production companies) to use third-party bidding portals designed to aggregate the input data and provide bidding exchange services. In some cases, advertisers and agencies have formed affiliated entities that offer bidding platform services to the industry as well. Continue Reading