Vertical relationships, horizontal effects? The evolving debate on vertical labor-market restraintsClick here to read the full article online
“Naked” labor-market restraints that are not ancillary to collaborations or joint ventures between horizontal competitors are considered per se illegal. However, there is a growing debate over the appropriate treatment of labor-market restraints between parties with vertical relationships, such as no-poach clauses in franchise agreements and non-compete agreements between employers and employees. This article examines the nature of these vertical labor-market restraints from an economic perspective and factors impacting the legal standard for their evaluation.