ICLE Comments to FTC Re: Employee Noncompete Agreement RFI
The International Center for Law & Economics (ICLE) appreciates the opportunity to respond to the Federal Trade Commission’s (FTC) Request for Information Regarding Employee Noncompete Agreements.[1] We believe the FTC is rightly concerned to identify anticompetitive noncompete agreements “using broadly accepted theories of antitrust harm,”[2] and that it is well within the commission’s authority under the FTC Act to pursue such anticompetitive agreements on a case-by-case basis. We also agree that:
…the Commission’s noncompete enforcement efforts have been obstructed by the Biden-Harris Administration’s Noncompete Rule, a blanket nationwide ban that exceeded the Commission’s regulatory power by purporting to prohibit nearly all noncompete agreements across all industries within the Commission’s jurisdiction without regard for their likely effects in specific contexts.[3]
For those reasons, among others, we support the FTC’s decision to withdraw its notice of appeal in Ryan, LLC v. FTC and to accede to vacate the Noncompete Rule.[4]
Our comments today are brief, although we incorporate by reference additional materials that you will find attached.[5] First, we believe the FTC’s attempted adoption of the Noncompete Rule was an overreach—as today’s commission observes—that rested not just on procedural and statutory errors, but on a slanted and at least somewhat misleading characterization of the FTC’s relevant experience and the relevant economic evidence. For that reason, we attach the comments of ICLE scholars and more than two dozen additional scholars of competition law and economics—including a former FTC general counsel and two former directors of the FTC Bureau of Economics—that we initially submitted to the FTC in response to its notice of proposed rulemaking (NPRM) for the ill-fated Noncompete Rule.[6] In those comments, we explain in some detail why we could not support the rule’s adoption, notwithstanding that “numerous NCAs may be overbroad, inefficient, or otherwise objectionable.” In brief:
First, while the NPRM amply catalogs potential problems associated with non-competes, NCAs, like other vertical restrictions in labor agreements, are not necessarily inefficient, anticompetitive, or harmful to either labor or consumer welfare; they can be efficiency-enhancing and pro-competitive. . . .
Second, and most critically, the emerging body of economic literature regarding the effects of NCAs—or the effects of what is purported to be the relative “enforceability” of NCAs—does not support the categorical ban on NCA usage contemplated by the NPRM. . . .
Third, the Commission has very little experience with NCAs, several very recent settlement agreements notwithstanding. . . .
Fourth, the Commission lacks the resources required for effective enforcement of the Proposed Rule. . . .
Fifth, it is not clear that the Commission has the authority to adopt the Proposed Rule. . . .
Finally, the economic import and the sweep of the Proposed Rule amplify each of the concerns stated above.[7]
Our point about the relevant economic literature may be especially relevant, given the commission’s desire to “better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.”[8] While the FTC’s noncompete NPRM contains a useful discussion of much of the literature, it is one with significant lacunae and one from which the Biden-era FTC drew questionable conclusions.
Our comments provide an extensive discussion of the relevant literature, including issues and sources that may be unclear in, or simply absent from, the NPRM. That includes, inter alia, research conducted by staff from the FTC’s own Bureau of Economics and other research discussed at the FTC’s 2020 workshop on noncompetes.[9] In fact, most of the literature cited by the Biden-era FTC does not directly address the effects of noncompete agreements but of certain state-law legal changes—chiefly via decisional law—regarding the agreements.
Second, the FTC’s special interest in the use and effects of noncompetes in the health-care sector may well prove fruitful. On the one hand, the economic literature regarding noncompetes in this sector is limited. On the other hand, the commission’s antitrust-enforcement experience in the health-care-provider sector is considerable and built on a solid foundation of research by both FTC and academic economists.[10] That experience and expertise can serve to inform FTC investigations of labor agreements in the sector going forward. It can also help to inform relevant systematic research on health-care-provider noncompetes that might yet be undertaken by Bureau of Economics staff.
A second attachment is a published paper discussing the extant research regarding physician noncompetes.[11] The paper provides an extensive discussion of the relevant findings, and their substantive and methodological limitations. It also sketches conditions under which viable antitrust actions regarding provider noncompetes may lie.
Third, the FTC’s attention to legitimate antitrust issues as they do and might arise in labor markets is commendable. Noncompete agreements and other vertical restrictions in labor markets may well raise competition concerns under established theories of antitrust harm, and according to established analytic methods. Toward that end, an inquiry into genuine anticompetitive exploitation of monopsony power in labor markets may bear procompetitive enforcement fruit.
At the same time, it is important that FTC investigations be mindful of important differences between monopoly and monopsony power, and that they do not give short shrift to both conceptual and empirical challenges posed by the relevant literature. Antitrust has not yet sorted how to deal with such basic questions as, e.g., how to balance directionally opposed effects at different levels of the supply chain or how to handle merger efficiencies in labor-market cases. For those reasons, we attach a relevant paper on labor monopsony and antitrust enforcement.[12]
Finally, there is the old economists’ joke: the plural form of “anecdote” is not “data.” Ad hoc and unverified reports about the terms of particular noncompete agreements and their effects may prove useful to the commission and its staff. They may help to illustrate the variety of noncompetes present in labor markets, as well as concerns that employees and others may have. And certain such reports could well merit follow-up and, potentially, enforcement investigations.
But such reports, however genuinely offered, do not in aggregate provide an adequate sample of the population, whether random or selected. Such reports are not likely to be either comprehensive or balanced in accounting for cognizable harms and benefits associated with (much less caused by) the agreements in question. And such reports are not likely formulated through the lens of either antitrust law, other relevant provisions of the FTC Act, or industrial-organization economics. That is, the reports will provide information—perhaps very useful information—but with an as-yet-unknown signal to noise ratio.
In brief, ad hoc reports submitted to the agency in response to this RFI will not be data. We believe the commission and its expert staff know these limitations, but, equally, should remain mindful of them.
[1] Request for Information Regarding Employee Noncompete Agreements, Docket FTC-2025-0463, Fed. Trade Comm’n (Sep. 4, 2025), https://www.regulations.gov/document/FTC-2025-0463-0001; see also Press Release, Federal Trade Commission Issues Request for Information on Employee Noncompete Agreements, Fed. Trade Comm’n (Sep. 4, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-issues-request-information-employee-noncompete-agreements.
[2] Dissenting Statement of Comm’r Melissa Holyoak, In re Non-Compete Clause Rule, Matter No. P201200, Fed. Trade Comm’n (Jun. 28, 2024), at 2.
[3] Id.
[4] Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa Holyoak, Ryan, LLC v. FTC, Fed. Trade Comm’n (Sep. 5, 2025), available at https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-holyoak-statement-re-noncompete-acceding-vacatur.pdf.
[5] These include the following: Comments of Scholars of Law & Economics and the International Center for Law & Economics In the Matter of Non-Compete Clause Rulemaking, Matter No. P201200, Int’l. Ctr. for Law & Econ. (Apr. 19, 2023), available at https://laweconcenter.org/wp-content/uploads/2023/04/ICLE-Noncompete-NPRM-Comments-final.pdf [hereinafter “Comments”]; Daniel J. Gilman, A Competition Perspective on Physician Noncompete Agreements, 61 Inquiry 1 (2024), https://doi.org/10.1177/00469580241237621; Geoffrey A. Manne, Brian C. Albrecht, & Dirk Auer, Labor Monopsony and Antitrust Enforcement: A Cautionary Tale, 74 DePaul L. Rev.1119 (2025).
[6] Comments, supra note 5.
[7] Id. at 3-10.
[8] Request for Information, supra note 1, at 1.
[9] Noncompetes in the Workplace: Examining Antitrust and Consumer Protection Issues, Fed. Trade Comm’n Workshop (Jan. 9, 2020), https://www.ftc.gov/news-events/events/2020/01/non-competes-workplace-examining-antitrust-consumer-protection-issues.
[10] Relevant research by FTC staff and leadership regarding competition among health-care providers includes, inter alia, Devesh Raval et al., Using Disaster Induced Closures to Evaluate Discrete Choice Models of Hospital Demand, 53 RAND J. Econ. 561 (2022); Thomas Koch & Shawn W. Ulrick, Price Effects of a Merger: Evidence from a Physicians’ Market, 59 Econ. Inq. 790 (2021); Keith Brand & Ted Rosenbaum, A Review of the Economic Literature on Cross-Market Healthcare Mergers, 82 Antitrust L.J. 533 (2019); Thomas Koch et al., Physician Market Structure, Patient Outcomes, and Spending: An Examination
of Medicare Beneficiaries, 53 Health Serv. Res. 3549 (2018); Thomas G. Koch, Brett W. Wendling, & Nathan E. Wilson, How Vertical Integration Affects the Quantity and Cost of Care for Medicare Beneficiaries, 52 J. Health Econ. 19 (2017); Julie A. Carlson et al., Economics at the FTC: Physician Acquisitions, Standard Essential Patents, and Accuracy of Credit Reporting, 43 Rev. Indus. Org. 303 (2013); see also, e.g., Martin Gaynor & Robert J. Town, The Impact of Hospital Consolidation—Update, RWJF Synthesis Proj. (2012) (Gaynor is a former director of the FTC Bureau of Economics); Martin Gaynor & William B. Vogt, Competition Among Hospitals, 34 RAND J. Econ. 764 (2003); Maximillian J. Pany, Michael E. Chernew, & Leemore S. Dafny, Regulating Hospital Prices Based on Market Concentration Is Likely to Leave High-Price Hospitals Unaffected, 40 Health Affs. 1386 (Sept. 2021) (Dafny was deputy director for health-care antitrust in the FTC Bureau of Economics from 2012-13); Leemore S. Dafny, Hospital Industry Consolidation—Still More to Come?, 370 New Eng. J. Med. 198 (2014).
[11] Gilman, supra note 5.
[12] Manne, Albrecht, & Auer, supra note 5.