Geoff Manne on No-Poach Agreements

Law360 – ICLE President Geoffrey A. Manne was quoted by Law360 in a story about a 7th U.S. Circuit Court of Appeals case focusing on a challenge to no-poach agreements in place between McDonald’s and McDonald’s franchisees. You can read full piece here.

The International Center for Law & Economics and a group of scholars filed a brief on Tuesday criticizing the workers’ market definition and also the legal standard that the suit contends applies to the no poach provisions.

While the workers say the no poach terms should be considered automatically illegal under antitrust laws, the amicus brief argues a full rule-of-reason analysis is needed to balance potential harms against potential benefits. This is because the restrictions were vertical, or between companies at different points in the supply chain rather than between direct competitors, the brief says, and because they’re ancillary to the broader franchise agreements.

Geoffrey A. Manne, president and founder of the ICLE, told Law360 in an email Wednesday that with competition concerns in labor markets growing in significance, the case is particularly important for its application of antitrust law to franchise agreements. He said that vertical restraints like those at issue here are generally evaluated through a rule-of-reason analysis because they often foster competition between brands.

“While plaintiffs seek a departure from the rule of reason here, economic research confirms that vertical restraints — including franchisor/franchisee restraints — tend to be procompetitive,” Manne said.