Antitrust law — the body of legislation, regulation, and judicial doctrine governing market competition — was designed to prevent the concentration of economic power. For most of the twentieth century, its application to labor markets was marginal: antitrust doctrine focused primarily on product markets and consumer welfare, treating the employment relationship as governed by labor law rather than competition law. The consequence of this division was that enormous concentrations of employer power in labor markets grew largely unchallenged by antitrust enforcement, while the same enforcement apparatus was deployed against worker collective action — unions — as a potential restraint of trade. The recent renaissance of "antimonopoly" thinking has foregrounded labor market concentration as both an economic and a political problem, reframing antitrust enforcement as a tool for restoring competitive labor markets and improving wages and working conditions for workers.
The economic concept underlying labor market antitrust is monopsony — the condition in which a single buyer (or a small number of buyers acting in coordination) dominates a market. In labor markets, monopsony describes conditions in which employers have market power over workers, meaning they can offer wages below what a competitive market would produce without losing their entire workforce. Monopsony arises from several sources: geographic concentration of employers in specific labor markets; occupational specificity that limits workers' ability to move to different industries; information asymmetries that prevent workers from accurately assessing their outside options; non-compete agreements and no-poach agreements that contractually restrict worker mobility; and switching costs — emotional, social, and financial — associated with changing employers.
The evidence for labor market monopsony has grown substantially in the past decade. Ioana Marinescu and Herbert Schuetze, José Azar and colleagues, and other researchers have documented significant employer concentration in local labor markets across a wide range of occupations. The franchise no-poach agreements under which fast food chains prohibited franchisees from hiring each other's workers were exposed in litigation and journalist investigation as explicit collusion to suppress labor market competition. No-compete agreements — which once appeared mainly in technology and professional employment — have spread to minimum-wage workers, effectively eliminating their ability to seek better wages from competitors. Eric Posner and Glen Weyl's research estimated that the wage suppression attributable to employer market power could be as large as 20 percent of the wages workers would receive in fully competitive markets.
The Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914 contain provisions that apply to labor markets. Section 1 of the Sherman Act prohibits combinations in restraint of trade; wage-fixing agreements and no-poach agreements between competing employers are per se violations when challenged. The Clayton Act explicitly exempted labor unions from Sherman Act application — a crucial reform responding to courts that had used antitrust law to enjoin strikes. But the DOJ and FTC enforcement apparatus devoted virtually no resources to labor market antitrust enforcement for most of the postwar period, treating it as a low priority relative to horizontal price-fixing in product markets and merger review.
The Obama administration's 2016 White House report on labor market competition signaled a policy shift, and the DOJ's Criminal Division brought its first criminal wage-fixing and no-poach prosecutions in 2020 and 2021. The Biden administration's July 2021 executive order on competition directed federal agencies to prioritize labor market competition, and the FTC under Lina Khan proposed a rule banning non-compete agreements for most workers — a rule with the potential to free tens of millions of workers from contractual labor market restrictions. The Supreme Court's Loper Bright decision and subsequent litigation have complicated the FTC's rulemaking authority, but the policy direction — toward treating labor market concentration as an antitrust problem — has been established.
The merger review implications of labor market antitrust are potentially significant. Traditional merger review focused on product market concentration and consumer prices. Labor market concentration analysis, if applied in merger review, would examine whether a proposed merger would give the combined entity employer market power that would suppress wages. Research by Efraim Benmelech, Nittai Bergman, and Hyunseob Kim documents the relationship between labor market concentration and wages at the industry level; similar analysis applied to specific local labor markets could provide grounds for challenging mergers on labor market competition grounds. The Biden FTC and DOJ signaled willingness to apply this framework, though the legal foundations remain contested.
The tension between labor law and antitrust law has its own political economy. Employers have historically used antitrust doctrine against workers — challenging collective bargaining, strikes, and boycotts as restraints of trade — while their own coordination on wages and mobility restrictions escaped enforcement. The current revival of labor market antitrust represents a partial correction of this asymmetry, though the limits of antitrust as a labor policy tool are real: it addresses the competitive structure of labor markets but cannot substitute for the collective bargaining rights, minimum wage standards, and workplace safety regulation that directly set floors and standards for employment conditions.