Using Merger Retrospectives to Examine and Address Labor Market Concentration


Economists have long been concerned with the effects of mergers on labor markets.[1]  One common concern is that worker productivity has increased dramatically in the past half-century, yet there has not been a corresponding increase in wages.[2]  Although inflation-adjusted wages have risen, they have risen at a much slower rate than the increases in worker productivity.[3]  In short, employers are extracting more from their employees without a lockstep increase in wages.[4]  While economists generally accept the existence of this issue, there is reasonable disagreement as to its causes.[5]  Wage growth is influenced by countless factors and it is very difficult to determine which factors are responsible for stagnant wage growth.[6]

For example, one factor that may influence wage growth is the level of concentration in any given labor market.[7]  Labor market concentration looks at a specific labor market, usually categorized as a specific occupation in a specific geographic area, and analyzes the number of employers and their share of that labor market.[8]  Applying this metric shows that a shocking sixty percent of U.S. labor markets are highly concentrated – defined as having four (or fewer) employers controlling that labor market with roughly equal shares.[9]  Together, the workers in those markets comprise about twenty percent of the American workforce.[10]  Geographically, this labor market concentration is most prevalent in rural areas of the country with low population density and few employers.[11]

Furthermore, there is compelling, if not yet fully accepted, empirical evidence that this increased labor market concentration constrains wage growth.[12]  A handful of studies have analyzed specific industries and found that employers in highly concentrated labor markets were able to set lower wages.[13]  Additionally, it has been shown that mergers in highly concentrated labor markets can be directly responsible for a subsequent decrease in wages.[14]  That is, newly merged entities can, and have, used their newfound significant share of that labor market to lower wages.[15]  Given these studies and the fact that so many U.S. labor markets are highly concentrated, it seems important that there be greater scrutiny of labor markets and the effects mergers may have on them.

The Traditional Merger Review and Litigation Process

When it comes to merger review and litigation by U.S. antitrust authorities, there has traditionally been limited or no attention paid to the merger’s potential effects on the labor markets.[16]  While there have been merger challenges that are premised, in part, on concerns over the effect on the labor markets,[17] there has never been a merger halted exclusively on labor market grounds.[18]  This is understandable for a few reasons.  First, it is important to lay out the premise that a merger affecting a labor market will typically also affect the consumer market for that product or service.[19]  Yet, an overwhelming percentage of merger challenges are brought alleging consumer harms, not labor market harms, so courts naturally must analyze those challenges under the consumer-harm framework.[20]  Therefore, the vast majority of case law deals with the potential consumer harms of a merger while there is very little case law dealing with labor market harms.[21]

Since so much case law focuses on consumer harms, antitrust enforcers likely find it efficient and predictable to continue using that approach to analyze and challenge potential mergers.[22]  For one, a challenge brought on grounds of consumer harm will have a more predictable outcome because that challenge and the legal theories advanced will be informed and supported by a wealth of relevant case law.[23]  It is not hard to imagine a resource-constrained team of antitrust enforcers, despite knowing that a merger raises both consumer and labor market concerns, bringing a challenge based solely on consumer effects because the outcome of their efforts is more certain.[24]

For better or worse, this has created a self-perpetuating cycle where the lack of relevant precedent disincentivizes attorneys from bringing labor market claims while incentivizing more claims premised on consumer harm, making the prospect of bringing a labor market-based claim all the more unappealing. [25]  This is further compounded by the fact that many judges, especially those who never or only infrequently hear antitrust cases, have a hard-enough time understanding agency analysis and case law relevant to an antitrust claim.[26]  As such, an attorney might not want to risk irking the judge by advancing a somewhat novel claim and asking them to rule on an unfamiliar topic.[27]

This is not to say there are never challenges brought on both consumer and labor market grounds.  In one recent highly publicized case, United States v. Anthem, Inc., the DOJ challenged a merger by claiming that the merger would harm competition in both the demand market and the labor market.[28]  Unfortunately, the decision in the District of Columbia focused primarily on the potential consumer harms and the subsequent appellate decision in the D.C. Circuit rested on such, with only Judge Kavanaugh’s dissent examining labor market concerns.[29]  Still, this litigation perhaps demonstrates that antitrust enforcers are beginning to take more seriously economists’ concerns that certain mergers may have negative effects on the relevant labor market.  At the same time, Anthem illustrates a major risk of a litigation-centric approach: the possibility that judges could create unfriendly case law.  Here, Judge Kavanaugh’s dissent from the Court of Appeals’ decision suggested that only true monopsonies (where one employer controls the entirety of a given labor market) should be deemed illegal.[30]  If his theory had instead been the majority view, its precedent would greatly set back antitrust enforcers’ efforts to combat mergers that decrease competition in labor markets.[31]

A Merger Retrospective Would Be a Valuable Information-gathering Tool

Given that labor market-based challenges to mergers are relatively novel and risky for antitrust enforcers, some other action should be taken to help inform whether enforcement priorities should include a focus on labor market concerns.  Any proposed action must accomplish two objectives.  First, it must determine whether concerns over labor market concentration are founded.  Second, if such concerns are shown, it must outline possible remedies.

One compelling way to accomplish these twin objectives is for the FTC to undertake a merger retrospective to examine the effects of past mergers on their relevant labor markets.  Economists have already uncovered sporadic evidence of labor market concentration affecting wages for registered nurses in specific labor markets,[32] which, at the very least, warrants increased analysis of past mergers that touch upon the labor market for nurses.  Additionally, antitrust authorities generally believe that labor markets where workers require specialized skills or an occupational license may be at greater risk for labor monopsonies,[33] and mergers in those industries should likewise be analyzed.  By focusing on industries where there is already evidence of negative effects or a high risk of negative effects, the targeted merger retrospective will be reasonable and efficient.

A merger retrospective would provide numerous benefits.  First, the merger retrospective would determine whether any mergers have resulted in negative effects on their labor markets.  If the retrospective fails to uncover credible evidence, that could indicate that the FTC’s current approach to merger enforcement adequately combats potential anticompetitive effects in the labor markets, even if this risk is not explicitly considered in traditional merger analyses.  On the other hand, if it does show negative effects on labor markets, it will provide insight as to the prevalence of such effects.  This is crucial because the results of the retrospective will help inform potential remedies to those effects.  That is, if negative effects are found to be limited and sporadic across industries, the proper remedy may simply be to pay slightly closer attention to labor market effects when analyzing mergers.  In the middle of the spectrum, if the retrospective shows that a few industries have a special propensity for negative effects, that may necessitate a more formal remedy, such as specific training for the merger shop covering that industry on how to detect and analyze labor market effects during pre-merger investigations.  Finally, on the far side of the spectrum, if the retrospective uncovers significant negative labor market effects across a variety of industries, that could inform conversations on the necessity of more drastic remedies.  Such remedies could range from revisions of agency merger guidelines, to agency rulemaking, or even changes to how merger challenges are litigated.

Additionally, the results of the retrospective could help determine if further investigation is warranted towards labor markets (whether geographic, occupation, or industry specific) that display a particular prevalence for labor market concentration.  Most importantly, a merger retrospective would ensure that any remedial action starts from an empirical foundation, allaying any concerns that the process is predominantly political or otherwise unmoored from reality.  And, if the FTC or DOJ decline to take any remedial actions after the merger retrospective, the findings of the retrospective could still be readily used by Congress or state legislatures to support their own lawmaking on the issue.  For instance, the House of Representative’s recent report on competition in online markets expressed a desire to combat concentration in certain labor markets.[34]

Merger retrospectives have a long track record of success.[35]  For instance, a 2011 retrospective of hospital mergers invigorated and altered the FTC’s approach to litigating hospital mergers going forward.[36]  Even now, the FTC is studying past acquisitions by major technology companies and it is very likely that those highly anticipated results will reframe conversations around antitrust and big tech.[37]  There is no reason to doubt that a merger retrospective focused on labor market effects would be valuable.

United States antitrust authorities are undoubtedly concerned with protecting competition in labor markets.  The FTC and DOJ have made it clear that fixing wages, at the very least, is illegal and there have been some significant conduct cases to that effect.[38]  Additionally, there have been challenges to some occupational licensing requirements that appear to negatively affect professionals in certain specialized labor markets.[39]  Finally, the FTC and DOJ recently published guidance for HR professionals warning that no-poach agreements are illegal and could result in criminal prosecutions.[40]  The work of these agencies is extremely important, and a merger retrospective will be especially helpful in building momentum and determining whether labor market effects deserve even greater attention from antitrust authorities.






[1] See generally Douglas O. Staiger et al., Is There Monopsony in the Labor Market? Evidence from a Natural Experiment, J. of Lab. Econ. 2010, at 211-13; Barry T. Hirsch et al., Classic or New Monopsony? Searching for Evidence in Nursing Labor Markets, J. Health Econ. 2005, at 1-3; Daniel Sullivan, Monopsony Power in the Market for Nurses 1-4 (Nat’l Bureau of Econ. Rsch., Working Paper No. 303, 1989).

[2] See generally Econ. Pol’y Inst., The Productivity-Pay Gap (2019),; Sandeep Vaheesan, Remarks at the FTC Hearings on Competition and Consumer Protection in the 21st Century 228-29 (Sept. 21, 2018); Jose Azar et al., Labor Market Concentration 1 (Nat’l Bureau of Econ. Rsch., Working Paper No. 24147, 2017),

[3] Econ. Pol’y Inst., supra note 2.

[4] Id.

[5] See Efraim Benmelech et al., Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages? 2 (Nat’l Bureau of Econ. Rsch., Working Paper No. 24307, 2018), (noting the variety of studies performed to understand this phenomenon’s causes).

[6] See Ioana Marinescu, Remarks at the FTC’s Hearings on Competition and Consumer Protection in the 21st Century, at 40 (Oct. 16, 2018).

[7] Azar, supra note 2, at 1.

[8] Id. at 5-8.

[9] Id. at 10; Remarks of Ioana Marinescu, supra note 6, at 38.

[10] Remarks of Ioana Marinescu, supra note 6, at 39.

[11] Id. at 38; Azar, supra note 2, at 11; Remarks of Sandeep Vaheesan, supra note 2, at 229.

[12] Remarks of Ioana Marinescu, supra note 6, at 40.

[13] There are several studies analyzing the effects of labor market concentration on wages of Registered Nurses (RNs). See James C. Robinson, Market Structure, Employment, and Skill Mix in the Hospital Industry, S. Econ. J., 1988, at 315–25; Thomas H. Bruggink et al., Direct and Indirect Effects of Unionization on the Wage Levels of Nurses: A Case Study of New Jersey Hospitals, J. Lab. Rsch., 1985, at 407–16; Charles R. Link et al., Monopsony and Union Power in the Market for Nurses, S. Econ. J., 1975, at 649-56; Richard W. Hurd, Equilibrium Vacancies in a Labor Market Dominated by Non-profit Firms: The “shortage” of Nurses, Rev. of Econ. and Stat., 1973, at 234-40.

[14] Elena Prager et al., Employer Consolidation and Wages: Evidence from Hospitals 2, 18-20 (Kellogg Sch. of Mgmt. at Nw. Univ., Working Paper, 2020).

[15] Id.

[16] Remarks of Sandeep Vaheesan, supra note 2, at 230.

[17] Complaint at 26-28, United States v. Anthem, Inc., 236 F. Supp. 3d 171 (D.D.C. 2017) (No. 16-cv-01493).

[18] Remarks of Sandeep Vaheesan, supra note 2, at 230.

[19] Mary Coleman, Remarks at the FTC’s Hearings on Competition and Consumer Protection in the 21st Century, at 233 (Sept. 21, 2018) (summarizing the interconnected nature of downstream and upstream effects).

[20] Scott Hemphill, Remarks at the FTC’s Hearings on Competition and Consumer Protection in the 21st Century, at 223-34 (Sept. 21, 2018).

[21] Id.

[22] Joseph Miller, Remarks at the FTC’s Hearings on Competition and Consumer Protection in the 21st Century, at 235-37 (Sept. 21, 2018).

[23] Id.

[24] Id.

[25] Id. at 236-37.

[26] Id. at 235-37.

[27] Id.

[28] Complaint at 26-28, United States v. Anthem, Inc., 236 F. Supp. 3d 171 (D.D.C. 2017) (No. 16-cv-01493).

[29] United States v. Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 2017) (upholding the injunction of the District Court on the grounds that the merger was presumptively anticompetitive in the relevant insurance markets without sufficiently redeeming efficiencies); United States v. Anthem, Inc., 236 F. Supp. 3d 171, 259 (D.D.C. 2017) (blocking the merger because it may “lessen competition in the market for the sale of medical health insurance”).

[30] Anthem, 855 F.3d at 378 (Kavanaugh, C.J.., dissenting).

[31] See Jonathan Sallet, Buyer Power in Recent Merger Reviews, 32 Antitrust 1, 83 (2017) (noting that true monopsonies are so rare that limiting challenges to only true monopsonies would effectively foreclosure any attempt to police the types of monopsony conduct that are more common and worrisome).

[32] See supra notes 13-15 and accompanying text.

[33] Noah Phillips, Chairman, FTC, Prepared Statement Before the U.S. House of Representatives, Judiciary Committee, Subcommittee on Antitrust, Commercial, and Administrative Law, at 3-5 (Oct. 29, 2019).

[34] H.R. Rep., Investigation of Competition in the Digital Marketplace: Majority Staff Report and Recommendations, at 303-04 (2020) (noting that Amazon controls 22 percent of the warehousing and storage labor market and uses that market power to lower wages).

[35] FTC, Retrospective Studies by the Bureau of Economics,

[36] FTC, Merger Retrospective Program,

[37] Press Release, FTC, FTC to Examine Past Acquisitions by Large Technology Companies (Feb. 11, 2020),; John D. McKinnon, FTC Expands Antitrust Investigation Into Big Tech, Wall St. J. (Feb. 11, 2020),

[38] E.g., Complaint, United States v. Arizona Hospital and Healthcare Association, No. CV07-1030-PHX (May 22, 2007),; Complaint, In the Matter of Your Therapy Source, Neeraj Jindal and Sheri Yarbray, FTC Matter No. 171-0134 (July 31, 2018),

[39] See N. Carolina State Bd. of Dental Examiners v. FTC, 135 S. Ct. 1101, 1114 (2015); see also Prepared Statement of Noah Phillips, supra note 33.

[40] U.S. DOJ & FTC, Antitrust Guidance For Human Resource Professionals 2 (2016).


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Fordham Journal of Corporate & Financial Law