Feds to weigh labor market impact of mergers
Tech companies are forever acquiring each other, but future buys will likely face more scrutiny after four US federal regulators decided to share data that they hope will help antitrust investigators them assess whether an acquisition impacts labor markets – not just the market for tech.
The four regulators are the Department of Justice’s (DOJ) Antitrust division, the Federal Trade Commission (FTC), the Department of Labor (DOL), and the National Labor Relations Board (NLRB). The quartet on Wednesday issued memorandum of understanding (MOU) [PDF] detailing their renewed collaboration, which will means that the DOL and NLRB (the labor-related agencies) will make experts available to the FTC and DOJ (the antitrust agencies) to “provide technical assistance, as well as additional information and data,” for the latter’s M&A inquiries.
The labor-related agencies will also train antitrust enforcers on labor laws and regulations.
“Workers are the backbone of our economy, and it’s critical that the impact on workers and the labor market are given due consideration when analyzing mergers and acquisitions,” said acting DOL secretary Julie Su.
A quick search through The Register’s recent coverage of M&As turns up many examples of layoffs following tech company mergers and acquisitions.
Exabeam and LogRhythm cut around 30 percent of their combined headcount in July after merging, and VMware laid off thousands after being acquired by Broadcom. Before that, Splunk slashed jobs after Cisco announced plans to acquire it, HPE got in trouble for misleading DXC shareholders about post-merger layoffs – the list goes on.
Some layoffs can’t be avoided – merged companies seldom need all the back-office staff from both entities – but the four regulators want to make sure cuts don’t go deeper than are necessary.
“Congress passed the antitrust laws to ensure that all Americans benefit from free and fair competition,” FTC chair Lina Khan said of the MOU. “By deepening partnerships with the [other agencies], the FTC will keep building on our whole-of-government efforts to ensure that all Americans can get a fair shot in our economy, free from unlawful coercion.”
Labor lawyers John Giovannone and Erin Owen have suggested the MOU means the feds will apply additional scrutiny to mergers and acquisitions.
“Businesses contemplating a merger should evaluate the potential impact the transaction could have on competition in the job market and prepare accordingly for potential review or litigation of these issues,” the pair, both partners at the California-based CDF Labor Law firm, wrote on legal news site JD Supra.
We’ve asked the four agencies to learn more about how the MOU could change the US antitrust landscape, but at the time of publishing none have replied. ®