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ARTICLE · 27 MARCH 2019

The Latest: DOJ Distinguishes ‘No-Poach' Agreements

McDermott Will & Emery
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The Department of Justice filed a Statement of Interest in three related cases in the Eastern District of Washington yesterday dealing with alleged "no-poach"

United StatesAntitrust/Competition Law
Nicole L. Castle
Nicole L. Castle
Matthew Evola
Matthew Evola
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WHAT HAPPENED:

  • The Department of Justice filed a Statement of Interest in three related cases in the Eastern District of Washington yesterday dealing with alleged "no-poach" (or non-solicitation) agreements between franchisors like Carl's Jr, Auntie Anne's and Arby's and their franchisees.
  • In the statement, the DOJ distinguished between "naked" no-poach agreements between competitors and the kinds of no-poach agreements in the franchise context that are typically vertical restraints between the parent company and the individual franchisee.
  • According to the DOJ, naked no-poach agreements should be analyzed as per se, or presumptively anticompetitive and illegal under Section 1 of the Sherman Act, while most vertical restraints should be analyzed under the rule of reason which requires some balancing of potential harms and benefits.

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