What are the Statutory and Non-Statutory Labor Exemptions to Antitrust Liability?
March 10, 2020
A combination of court-made doctrine and federal statutes exempt certain types of activities that would normally violate federal antitrust law.
As discussed below, one type of antitrust exemption relates to labor union and certain employer-negotiating conduct.
Other types of antitrust exemptions and immunities include the state-action immunity , the filed-rate doctrine , the baseball exemption ( you can read the five-part series starting here ), the Capper-Volstead Act (Farm Cooperatives) , Noerr-Pennington Immunity , the McCarran-Ferguson Act (Insurance) , among others. Importantly, the US Supreme Court has repeatedly and consistently explained that courts shall construe these and all other antitrust exemptions narrowly. And for some of them— state-action immunity, in particular —the law is still developing.
Statutory Labor Exemption
A labor union, of course, is a collection of competitors that coordinate their negotiations with one or more employers. Typically, such coordination would violate the antitrust laws because horizontal competitors are not allowed to work together in their dealings with upstream or downstream markets.
So, to allow labor unions to function, Congress statutorily exempted labor unions from antitrust liability in certain limited circumstances:
- Section 6 of the Clayton Act, 15 U.S.C. Section 17 (formation and operation of labor unions). This section begins with a memorable line: “The labor of a human being is not a commodity or article of commerce.” Of course, this exemption notwithstanding, employment markets are generally subject to the federal antitrust laws, so this line is more rhetoric than an actual statement of antitrust law.
- Section 20 of the Clayton Act, 29 U.S.C. Section 52 (injunctive relief restrictions).
- Section 4 of the Norris-LaGuardia Act, 29 U.S.C. Section 104 (injunctive relief restrictions).
The US Supreme Court has held that these statutes create a statutory exemption for labor unions from the antitrust laws, so “long as a union acts in its self-interest and does not combine with non-labor groups.” United States v. Hutcheson , 312 U.S. 219, 232 (1941).
These two exceptions, (1) the union’s self-interest and (2) the prohibition of combining with non-labor groups, have created substantial litigation over the years. Don’t ignore or gloss over them; they matter.
The “union’s self-interest” exception, for example, incorporates activities that aren’t legitimate union labor-dispute activities, like targeting a non-union employer with frivolous lawsuits, permit oppositions, or lobbying efforts. And the non-labor group combination can, by itself, create antitrust liability for unions for resulting anticompetitive conduct.
The Non-Statutory Labor Exemption
In addition to the statutory labor exemption—from the three sections we described above—the Supreme Court has applied what the doctrine now refers to as the non-statutory labor exemption from antitrust liability.
This exemption flows naturally from the statutory labor exemption and the collective bargaining process and exempts the actual agreements between and among employers and unions from antitrust liability. Courts are still carving the exact contours of the non-statutory labor exemption, so the full scope and extent are not clear yet.
But in Brown v. Pro Football, Inc ., 518 U.S. 231, 237 (1996), the US Supreme Court extended the non-statutory labor exemption beyond just collective bargaining, but also to joint action by employers—in this case National Football League teams—that was ancillary to the collective bargaining process.
In Brown, labor talks stalled after the union rejected a proposal by the NFL teams for “development squad” players. The teams then agreed to implement the proposal, over the union’s objection, until something could be negotiated. This led to litigation over the scope of the non-statutory labor exemption from antitrust.
The Supreme Court held that this collective-employer action (by the teams) was exempt: “That conduct took place during and immediately after a collective-bargaining negotiation. It grew out of, and was directly related to, the lawful operation of the bargaining process. It involved a matter that the parties were required to negotiate collectively. And it concerned only the parties to that collective-bargaining relationship.” Brown, 518 U.S. at 250.
That was enough to fit the action into the non-statutory labor exemption.
Ultimately, the purpose of this exemption seems to be to keep courts and the antitrust laws out of the details of collective bargaining and surrounding activity. But this is a heavily litigated doctrine, with nuanced but incomplete court guidance. So you need an experienced antitrust attorney.