The Federal Trade Commission received some 26,000 comments from the public when it was writing its rule to impose a nationwide ban on noncompete agreements, the agency’s chair Lina Khan said this week in remarks at the Anti-Monopoly Summit in Washington.  

One person who wrote in said she was tricked into signing a noncompete agreement on her first day as a bartender, Khan told the audience of antitrust enforcement advocates. The bartender said she put up with sexual harassment for a year before violating the agreement to take a job at another restaurant.

“She was thinking there was no way a noncompete could actually be enforced for an entry level employee making close to minimum wage,” Khan said. “But her old employer followed through and hit her with a $30,000 lawsuit.”

Fear of retaliation, in this and other contexts, is pervasive throughout the economy and it’s one of the driving forces behind the FTC’s aggressive approach to antitrust law, Khan said.   

“Tolerate sexual harassment or face financial ruin is a choice nobody should have to make,” she said. “An economy where workers or business people live in terror is neither fair nor free. Yet dominant businesses and gatekeepers can use fear to coerce and control. Everyone is vulnerable to it.”

Industry control

Khan said she first came across this fear in conversations she had years ago with poultry farmers who said they were forced to accept unfavorable terms for their work because a handful of companies control the processing industry. 

“On one end you have thousands of farmers raising birds and on the other end you have millions of consumers buying meat at a grocery store,” she said. “In the middle are just a handful of poultry processing centers. If a farmer doesn’t agree with some of the details [of an agreement], too bad; there’s often nowhere else to go. And what’s more, many firms threaten to retaliate against anyone who dares to speak out and they have the power to sink a farmer’s livelihood overnight.”

This coercion is happening with companies like Google and Amazon, she said, when they use intimidation to keep small businesses from challenging them. 

“Some small businesses live in constant terror that Amazon will punish them and demote their products, slashing their sales by 80-90%,” she said. “Others are afraid their business listings will disappear from Google search results.”

The agency's noncompete rule, which was finalized in April to take effect in the fall, has been challenged in court. The U.S. Chamber of Commerce and others are seeking to have the rule stayed. Lawsuits by the FTC and Department of Justice against Amazon, Google and Apple are pending. The agencies’ antitrust efforts over the last three years have been mixed. They’ve lost merger battles with Microsoft, Meta and United Health, while blocking mergers sought by Cigna, Adobe and Sanofi, among others. 

For the friendly audience at the summit, Khan tried to frame efforts by her agency and others in the BIden administration, which has made antitrust a focus, as a continuation of the country’s highest principles. 

“Fighting against corporate consolidation is continuing a longstanding American tradition,” she said. “America was born out of a protest against monopoly.”