[Soup] Will the number of wins to “prohibit competition prohibition” work?

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The Federal Trade Commission (FTC) is a US government market watchdog that corresponds to Korea's Fair Trade Commission.

A committee of five commissioners is the supreme decision-making body, one of whom serves as the chair.

Members for a seven-year term must be appointed by the president and confirmed by the Senate, and out of five members, no more than three members belong to the same political party.

It is a device put in place to maintain the political balance of the Commission.

"Amazon Sniper" Chairman Khan's 2023 launch table

Among the ministers and institutions appointed by President Biden, Lina Khan, the head of the Federal Trade Commission, is probably the one who has received the most attention.

She was born in 1989, and Khan, who was 32 at the time of taking office, was a professor at Columbia University Law School.

Since attending Yale University Law School, she has built her career working for agencies that manage market competition, including the Federal Trade Commission and the House Antitrust Subcommittee.

It is no exaggeration to say that her thesis Amazon's Antitrust Paradox, which she wrote in 2017 as a third-year law school student, is a masterpiece that made the current chairman of Khan.

This paper and how Khan's Federal Trade Commission oversees the market in the age of the platform economy were the focus of my podcast Americano.

Chairman Khan's Federal Trade Commission made a very important announcement on the 5th, from the beginning of the new year.

She said she would ban a practice called the 'noncompete clause' for short.

The Federal Trade Commission has pointed out that workers are unreasonably harmed by the provision.

Correcting unfair market practices that undermine competition is one of the responsibilities of the Federal Trade Commission from Congress.

"Amazon's Antitrust Paradox" is a logically well-documented article that explains the fact that the monopoly of big tech companies like Amazon, the giants of the platform economy and dominating the market, cannot be seen just by looking at the price mechanism.

Chairman Khan's insight is great, but his writing skill, which explains complex issues in a simple way, was particularly outstanding.

First of all, I translated the column.

▶Read New York Times column: Lena Kahn "The prohibition against moving to a competitor is a major barrier to increasing your salary and innovating."

Anti-Competition Clause

Initially, this provision only applied to occupations and positions requiring non-competition.

The provision was applied only to those who would be in trouble if they took secrets with important asset value to other companies, such as overseeing the sales of a company's products, managing patents, or scientists developing core technologies.

A representative example is the ingredients of Coca-Cola undiluted solution and the mixing ratio of ingredients.

Even among Coca-Cola employees, few people know this secret.

Coca-Cola, of course, will make it clear in their contracts that they cannot later move to Pepsi-Cola or leave the company to start their own beverage company.

It's hard to raise a question here.

However, as time goes on, there are more and more cases where the anti-compete clause deviates from its purpose.

Too many people, not just workers dealing with really important trade secrets, fall under this provision.

Employment contracts often occur in the United States, where it is relatively easy to get fired, change jobs, and re-employment.

However, it has become a practice to include this clause in contracts even for occupations that do not need to apply anti-competition clauses, such as baristas, hairdressers, and gardeners, as well as employees of security companies in Michigan, which the Federal Trade Commission cited as an example.

There is an explanation that this happened because the samples of employment contracts that companies "copy and paste" contain anti-compete clauses.

Not many workers have the time and authority to receive a contract in advance, read it carefully, and negotiate detailed terms.

When you start working, a clause that you didn't even know was in the contract suddenly catches your ankle when you leave the company or change jobs.

Companies can use this provision to block worker turnover or threaten to pay a penalty to the company if they want to quit their job.

There is also a case of a lawsuit against a worker who took the risk and changed his job.

In any case, when there are 30 million workers who have never actually dealt with trade secrets and who are subject to this clause and are restricted from changing jobs or receiving less wages, the market supervisory authorities are forced to intervene.

The Federal Trade Commission pointed out that the economic damage caused by the abuse of unnecessary anti-competition provisions amounts to 300 billion dollars, or 367 trillion won, annually.

Taking the fact that it is difficult for workers to move to another company because of the anti-competition clause as a weakness, and adding the salary that the company did not raise, the amount is this large.

However, if workers do not get the opportunity to learn skills while doing other jobs and build up their careers to raise their wages, and the opportunity cost caused by blocking the free movement of talent needed for innovation throughout the economy, the scale of damage will increase. I will.

Competitive companies are rather good opportunities

Of course, not everyone agrees with the FTC.

Right away, groups representing companies came out to criticize the Federal Trade Commission's decision.

As a representative example, the US Chamber of Commerce immediately issued a statement and nailed it as "this proposal by the Federal Trade Commission is clearly overpowering and illegal."

Even if the Federal Trade Commission has the authority to intervene in this matter, the anti-competition clause has long been a practice that has been maintained without major problems, and it is a rule that has become a cornerstone of stable business management and innovation.

Even the Federal Trade Commission has a different opinion.

Commissioner Christine S. Wilson personally disagreed with the committee's decision.

Because the Federal Trade Commission is not a legislative branch, it has no ultimate power to make laws.

However, Congress enacted the Federal Trade Commission Act of 1914, and from the time the Commission was inaugurated, it could amend or enact the statutes of its mandate, such as promoting fair competition in the market and punishing monopolists.

It does not immediately become law when the members agree, but first, the committee proposes regulations in the name of the committee, and the final draft is finalized after a period of collecting opinions from the market and the public.

In the case of the non-compete clause, the Federal Trade Commission proposed a draft on the 5th, and is currently collecting public opinion.

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