CWA urges FTC, DOJ to prioritize labor market impacts as agencies prepare to overhaul corporate merger guidelines
CWA filed comments with the Federal Trade Commission (FTC) and Department of Justice (DOJ) today, urging them to include impacts on labor markets and workers as the agencies prepare to revise guidelines governing the antitrust review process. In order to preserve fairness in labor market competition, CWA recommends assessing how proposed mergers exacerbate corporate dominance over workers, including through the suppression of wages, restrictive contracts like non-competes that reduce worker mobility, and denial of workers’ ability to exercise their legal rights by imposing non-disclosure agreements, mandatory arbitration agreements, and engaging in practices like union-busting.
The comments come in response to a joint public inquiry issued by the FTC and DOJ in January, aimed at modernizing merger guidelines overall to better detect and prevent anticompetitive deals. Currently, a narrow consumer welfare standard has been the cornerstone of antitrust analysis, which prioritizes impacts on consumer prices and too often takes corporations at their word that consolidation will benefit the public.
CWA has raised similar concerns about Microsoft’s pending acquisition of Activision-Blizzard, calling for a thorough FTC review in light of union organizing underway at the game developer and the fact that Microsoft stands to gain considerable market power. The acquisition would make Microsoft the third largest game developer in the world and increase the company’s power to control content available on its console and streaming through its platforms.
“When a handful of mega-corporations dominate concentrated industries, they assert control over labor markets and wages, not just consumer prices,” said CWA President Chris Shelton. “Collective bargaining agreements give workers a voice and help protect their interests during a merger. We need sensible merger guidelines that evaluate the impact of these deals on workers. We also need stronger labor and consumer protection laws and restraints on unfair methods of competition – the whole-of-government approach envisioned by the Biden administration.”
CWA’s comments offered an updated analysis of the merger between T-Mobile and Sprint, which closed in April 2020, as an example of consolidation that allowed the combined company to degrade customer service while eliminating jobs.
T-Mobile committed to being “a job creator from day 1,” promising 3,500 new, full-time, US jobs in the first year following its merger with Sprint, and 11,000 more by 2024. Instead, T-Mobile has closed 32 percent of its corporate operated stores, 13 percent of its T-Mobile third party licensee stores, and 18 percent of its Metro by T-Mobile prepaid stores since the merger, representing an estimated total of 19,840 jobs eliminated. Meanwhile, T-Mobile’s competitors have cut their store count by less than 7 percent over the same period.
The result of the merger for wireless retail workers, who often move between wireless carriers, is fewer job options and lower wages. One study estimated that T-Mobile’s merger with Sprint would cause wage suppression of up to seven percent, costing workers in some geographic markets upwards of $3,200 a year.
Similar to wireless retail workers, game designers are at risk for wage suppression and limited job opportunities as industry consolidation has accelerated, led by gaming power players Microsoft and Sony, especially if practices like non-compete agreements continue.
“Merger review is a critical intervention point to address abusive dominance by corporations over workers and the crisis of inequality in our economy, and the merger between T-Mobile and Sprint is a prime example of why revisions to these guidelines are so critical,” said CWA Research Director Nell Geiser. “The last administration’s flawed review of that deal failed to examine evidence of potential job losses and wage suppression, or to consult with worker representatives. The result is a highly concentrated wireless sector that is squeezing consumers, workers, and small businesses. With new leadership at the FTC, we have the opportunity to protect consumers and ensure labor markets remain fair and competitive.”
CWA urged the FTC and DOJ to enjoin mergers that may substantially increase concentration in labor markets, and as a result substantially reduce wages, degrade benefits and working conditions, or reduce innovation. Where mergers are allowed to proceed with conditions, CWA recommended protections for collective bargaining rights and worker free association and other provisions, including
Prohibition on non-compete clauses and similar restrictive contracts for workers;
Provisions addressing informational asymmetries regarding wages, for example to prevent sharing of non-public information about wages among rival employers;
Protections for employees to pursue employment claims on a joint, class, or collective basis in whatever forum;
Where collective bargaining exists at some business units of the merging parties but not others, and the merger threatens to harm labor markets, agencies may consider requiring parties to engage in pattern bargaining as a condition for merger approval.
“Regulators should examine both indirect and direct evidence of market power in assessing potential merger harms,” the comments read. “Direct evidence of employer market power includes imposition of noncompete and similar job-switching restrictions, as well as nondisclosure restrictions, misclassification, and forced arbitration and class action restrictions. Where a firm seeking to merge is able to impose one or more of these restrictions on its workers, the presence of these restrictions should be recognized as direct evidence that the firm has market power in the labor market where it is imposing the restrictions.”
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