Key Development in the Nonstatutory Labor Exemption to the Antitrust Law

In this piece for the Antitrust Attorney blog, author Steven Cernak (Bona Law) discusses the evolving boundaries of the labor exemptions to U.S. antitrust law and a recent court decision that may broaden the scope of employer coordination during collective bargaining. Historically, courts treated coordinated worker actions as illegal under the Sherman Antitrust Act, but Congress later created the statutory labor exemption through the Clayton Act to protect union activities. Courts subsequently developed a “nonstatutory labor exemption,” allowing certain coordinated employer conduct in collective bargaining settings without violating antitrust law.

Traditionally, courts have limited the nonstatutory exemption to agreements tied to mandatory bargaining subjects such as wages, hours, and working conditions, and primarily within formal multiemployer bargaining units. For instance, in California v. Safeway, the court rejected a profit-sharing arrangement among grocery chains during a strike because it was not sufficiently tied to collective bargaining and had potential effects in the product market where the companies competed.

Cernak highlights a more recent decision, Morgan v. The Kroger Co., involving grocery chains The Kroger Co. and Albertsons Companies. During parallel negotiations with the same union, executives discussed whether Albertsons would hire Kroger workers or solicit Kroger pharmacy customers during a potential strike. Although plaintiffs argued this constituted an anticompetitive agreement, the court dismissed the claim under the nonstatutory labor exemption, reasoning that the alleged coordination related to labor-market dynamics rather than competition in the retail grocery market.

The decision suggests courts may allow greater coordination between employers negotiating separately with the same union, even outside a formal multiemployer bargaining unit. If upheld on appeal, the ruling could provide employers more confidence that limited coordination tied to collective bargaining—particularly where it affects labor markets rather than product markets—will fall within the exemption. However, Cernak notes that employers should still exercise caution when communicating with competitors during labor disputes to avoid creating agreements that could trigger antitrust scrutiny.

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