Labor Practices Can Be an Antitrust Problem Even When Labor Markets Are Competitive

In this article I argue that labor practices that are detrimental to workers can be an antitrust problem even if the labor market is highly competitive. The reason is that even if a worker has many identical job offers ex ante, once the job match is formed, it is costly to dissolve. The desire to avoid these costs confers surplus that is specific to the match. This surplus will be divided via bilateral bargaining between the worker and the firm, and not in the context of the competitive labor market. Harmful labor practices may represent efforts by the firm to capture most or all of that surplus, and this can be thought of as an effort to monopolize that surplus with respect to that worker. One specific labor practice, namely imposing non-competes on workers, is particularly likely to be an antitrust problem, as it not only helps the firm capture the match-specific surplus, but also increases the surplus available to be captured by making it more difficult for the worker to re-access the competitive labor market.

By David Balan^1,2

I. INTRODUCTION

In conventional antitrust analysis, there are certain conditions that must be met for a matter to be an antitrust problem. A merger is only likely to be a problem if the merging firms are close competitors to each other and there are not very many other close competitors. Coordination is only likely to be a problem if the coordinating firms collectively represent a large fraction of the sellers of the product. And condu