Antitrust Experts Decry DOJ’s ‘Outrageous’ Stance in Writers Guild Case

Several experts on antitrust law have expressed concern at the stance taken by the Department of Justice in the ongoing legal feud between Hollywood writers and their agents.

Three agencies have sued the Writers Guild of America for alleged violations of antitrust law. A key hearing will be held in federal court on Friday, as a judge weighs whether to grant the union’s motion to dismiss the suit. Last week, the DOJ’s Antitrust Division filed a brief siding with the agencies, and arguing that the union may have violated the Sherman Act.

“It’s outrageous,” said Sanjukta Paul, a professor at Wayne State University Law School who studies the intersection of labor and antitrust law. “This is not a neutral reading of the law.”

The Antitrust Division, led by Makan Delrahim, has filed similar briefs in other cases around the country. In 2017, the division opposed a Seattle ordinance that would allow Uber and Lyft drivers to unionize. Earlier this year, the division sided against fast-food workers who accused restaurant chains of engaging in illegal no-poaching agreements.

Rep. David Cicilline, the Democrat who chairs the House Judiciary subcommittee on antitrust, sent a letter to Delrahim in May castigating him for siding against the rights of workers. He accused Delrahim of running the division like an “industry-funded think tank,” while neglecting the enforcement of antitrust laws.

“They’re operating on the side of capital,” said Matt Stoller, author of “Goliath: The 100-Year War Between Monopoly Power and Democracy.” “They’re saying, ‘We want capital to do whatever capital wants,’ and they’re opposed to any prohibitions on that.”

In the Writers Guild case, the agencies — CAA, UTA and WME — allege that the union has engaged in an illegal group boycott. More than 7,000 writers fired their agents in April, after the agencies refused to accept the guild’s new code of conduct. The new code forbids agencies from acting as producers or accepting packaging fees from producers, saying that poses a conflict of interest.

The WGA has countered that its actions fall under the labor exemption to the Sherman Act, which gives unions broad latitude to act in their members’ interest without facing an antitrust claim. The key Supreme Court precedent in the case, H.A. Artists & Associates v. Actors Equity Association (1981), granted entertainment guilds broad power to set the terms of agent representation. But the agencies argue that power is not unlimited, and that by taking the drastic actions it has in its campaign against packaging fees, the guild has stepped outside the protection of the labor exemption.

In its brief, the Antitrust Division concurred, arguing that the guild may have combined with “non-labor parties,” such as showrunners, which is not allowed under the labor exemption. Showrunners are members of the WGA, but the agencies argue that they often have their own production companies and can act as employers.

“This is a stretch,” Paul said. “This is coordination that the union is doing within its own membership. That’s what they’re challenging.”

The DOJ also suggested that the WGA may be “abusing its monopsony power over agents” in its efforts to enforce its conflict of interest rules.

Marshall Steinbaum, an economics professor at the University of Utah, has written about how employers can enjoy monopsony power in labor markets, giving them leverage to keep wages low. He said it was ironic to see such an argument deployed to curtail the power of a union.

“They’re cynically using this hot scholarly topic to give weight to a position that it directly at odds with it,” he said. “The application of the antitrust laws to prevent collective action by workers in a labor dispute is the exact opposite of what recent research says antitrust law should be doing to rectify disproportionate employer power in labor markets.”

Paul said the brief in the WGA case goes farther than the arguments the DOJ has made in other cases.

“I don’t think this is about the Writers Guild,” she said. “It’s not that they care fundamentally about how the talent agency ecosystem works in Hollywood. It’s a signal that labor coordination should be disfavored in favor of corporate power.”

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