A federal judge has blocked the Federal Trade Commission’s ban on competitive agreements that make it difficult for workers to join an employer’s rivals or conduct competing businesses. The ruling blocks the FTC’s ban on competing agreements from taking effect on September 4, but the agency can still appeal the decision.
On Tuesday, U.S. District Judge Ada Brown in Dallas, Texas, ruled that the antitrust agency exceeded its statutory authority to ban practices related to unfair methods of competition, saying the prohibition on noncompete agreements “is without reasonable explanation.” Brown’s decision now blocks the FTC from enforcing a nationwide ban on non-competes after initially delaying a preliminary injunction in July. The ban.
‘We are seriously considering a potential appeal’
“We are disappointed with Judge Brown’s decision and will continue to fight to stop competition that limits the economic freedom of hard-working Americans, hinders economic growth, limits innovation and drives down wages,” FTC spokesperson Victoria Graham said in a statement. prohibit. edge. “We are seriously considering a potential appeal.”
If the FTC does move forward with the appeal, it will be heard by the Fifth Circuit Court of Appeals. Appeals of district court decisions are often a lengthy process, and the Federal Trade Commission’s appeal of Microsoft’s acquisition of Activision Blizzard is still awaiting the outcome. At the same time, the FTC will have to challenge non-competes through case-by-case enforcement actions.
The ruling upholds a lawsuit filed in April by tax firm Ryan LLC (later backed by the U.S. Chamber of Commerce and the Business Roundtable) to challenge the ban on noncompete agreements, arguing it would make it difficult for companies to retain talent. When the FTC voted 3-2 in favor of the ban, the agency said it would allow more than 8,500 new businesses to be formed each year.
