The answer is most companies don’t have to worry about the Federal Trade Commission targeting their non-compete agreements. A few weeks ago there was some publicity around the FTC’s ruling that effectively let several cardiac physicians in Reno get out of a non-compete. The basis for the decision and companion lawsuit filed by the Nevada Attorney general focused on reduced competition and higher prices according to one article:
The action was taken because an FTC analysis found that the fact that Renown acquired a 15-cardiologist practice in 2010 and a 16-cardiologist group in 2011 reduced competition and could lead to higher prices. These acquisitions gave it control over 88% of the heart care market in the region. Further complicating matters, the acquired cardiologists were bound by noncompete clauses providing for a $750,000 penalty if they left Renown and practiced within 50 miles during the next two years.
For at least the next 30 days, the doctors can get out of the non-compete as long as they commit to stay in Reno for at least a year. The FTC’s press release alleges the employer had 88% market share.
Mergers of physician groups is on the rise and any many instances non-compete agreements can be at issue. Texas permits non-competes just as Nevada does. As discussed here previously, a non-compete for Texas doctors requires a reasonable buy out number specified in the agreement.
It’s not everyday that the FTC intervenes in a non-compete situation. The mechanics of the settlement are set forth in its order. The reality is it is highly unlikely the FTC is going to shut down a non-compete unless there is something more then the anti-competitive nature of the non-compete itself. Non-competes and Non-Solicits are by their very nature anti-competitive which is why they are subject to such scrutiny. Bottom line is employers need to make sure their agreements are enforceable. In most situations employers will not need to worry about the FTC.