UK: As Treatment Of No-Poach Agreements Evolves, DOJ To Examine Antitrust In Labor Markets

Antitrust treatment of no-poach agreements continues to evolve as private cases progress, state attorneys general ramp up enforcement efforts and federal regulators further contemplate the legality of no-poach agreements.

Over the past two years, private plaintiffs have filed class action lawsuits challenging the use of no-poach commitments in franchise agreements, whereby the franchisor and/or franchisees agree not to hire each other's employees. In most cases, plaintiffs have alleged that such provisions are unreasonable restraints of trade that should be evaluated under either the strict per se rule or "quick-look" analysis because the provisions at issue are so overwhelmingly anti-competitive that an inquiry into the potential pro-competitive justifications for such provisions — as required under the more permissive rule of reason standard — is unnecessary. More specifically, quick-look analysis involves an abbreviated rule of reason inquiry that relaxes the requirement of pleading anti-competitive effects in a relevant market and generally applies to situations in which an observer with even a basic understanding of economics would conclude that the restraint causes anti-competitive effects. In some recent no-poach cases, courts have held that quick-look analysis should apply, while others have declined to decide on the mode of analysis at the motion-to-dismiss stage, concluding that discovery should be complete before the court chooses the appropriate level of scrutiny.

A recent decision takes a different approach, suggesting that courts must carefully consider the scope of the alleged restraint and determine what level of antitrust scrutiny to apply when evaluating a defendant's motion to dismiss. On July 29, 2019, Judge David M. Lawson of the U.S. District Court for the Eastern District of Michigan granted defendant pizza chain Little Caesars' motion to dismiss in Ogden v. Little Caesar Enterprises, holding that the alleged no-poach agreement did not justify the application of either the per se rule or "quick-look" mode of antitrust analysis.1

A recent decision takes a different approach, suggesting that courts must carefully consider the scope of the alleged restraint and determine what level of antitrust scrutiny to apply when evaluating a defendant's motion to dismiss.

The court declined to apply the per se rule after explaining that, in the U.S. Court of Appeals for the Sixth Circuit, the per se rule only applies to labor market restraints when there is an explicit agreement among competitors to either (1) fix wages or (2) divide the labor market into exclusive territories.

The court did not categorically reject the potential application of a quick-look analysis to no-poach agreements — a position the Department of Justice (DOJ) has advocated after multiple early no-poach decisions concluded that quick-look analysis might apply. Instead, the court concluded that the no-poach provisions in other cases where courts have held that a quick-look analysis might apply were "far more onerous and directly enforced employment restraints." In contrast, with respect to the challenged provisions in Little Caesars' agreements, the court observed: "Ogden does not allege that he tried to obtain employment at another Little Caesar franchise, let alone that he was offered a job for more pay that he had to refuse, or that another employer would hire him but for the no-poaching provision." Because neither per se nor quick-look analysis applied and the plaintiff did not plead a claim under the rule of reason, the court granted the motion to dismiss in full.

On the enforcement front, state attorneys general also continue to target no-poach agreements. On August 8, 2019, Washington state Attorney General Bob Ferguson announced legally binding agreements with four more businesses — Aaron's Inc. (a rent-to-own furniture retailer), H&R Block, Mio Sushi and The UPS Store — to end the companies' use of no-poach provisions in their franchise agreements, including provisions that prohibited an individual franchisee from hiring another franchisee's employees without prior consent.2 Among other terms, the settlement agreements require that each company: (1) no longer include no-poach language in new franchise agreements; (2) stop enforcing no-poach provisions in existing franchise agreements nationwide; and (3) remove the no-poach provision from all Washington contracts within 120 days. Since launching his no-poach investigation in January 2018, Ferguson has reached similar agreements with 66 franchise-based companies.

Ferguson and his allies have also recently focused their advocacy efforts on federal regulators. On July 15, 2019, Ferguson and 16 other state attorneys general jointly filed a public comment with the Federal Trade Commission (FTC) in response to the FTC's recent series of hearings on competition and consumer protection in the 21st century.3 In the comment, the attorneys general made two principal recommendations regarding no-poach agreements. First, they argued that the FTC should use its Section 5 enforcement authority to stop the use of no-poach agreements "in many situations," though they failed to identify any specific situations. Second, they urged the FTC to ban all intrafranchise no-poach agreements for low-wage workers, an action they noted the FTC already is considering.

The comment also directly addressed the conflict between the authors' position and the position taken by the DOJ in its recent advocacy efforts, with the DOJ arguing that intrafranchise no-poach agreements generally should be analyzed under the full rule of reason due to their potential pro-competitive benefits. In contrast, the attorneys general argued that their local enforcement activities have not uncovered evidence that the pro-competitive effects of such provisions are equal to or outweigh the broader anti-competitive effects on the labor market. Consequently, the attorneys general concluded that such agreements should continue to be evaluated by courts under per se or quick-look antitrust analysis.

The states will soon have the opportunity to make their case directly to the DOJ. Although the DOJ has recently argued that courts should analyze franchise no-poach agreements using the rule of reason, it announced that it will hold a public workshop on September 23, 2019, to discuss the role of antitrust in labor markets. Given the increasingly contrasting positions among several states, district courts and the DOJ, the workshop will surely be closely watched.


1 No. 18-12792 (E.D. Mich. July 29, 2019).

2 See Washington state Office of the Attorney General press release " AG Ferguson's Initiative Ends No-Poach Clauses at Four More Corporate Chains Nationwide" (August 8, 2019).

3 See FTC Hearings on Competition and Consumer Protection in the 21st Century, Public Comments of 18 State Attorneys General on Labor Issues in Antitrust (July 15, 2019).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions