Predatory Hiring as Exclusionary Conduct: A New Perspective

Abstract

The showing of predatory or exclusionary conduct is a necessary element to prove an attempted monopolization claim under § 2 of the Sherman Act. Predatory hiring as a form of exclusionary conduct has not been extensively analyzed from legal or economic perspectives. Most litigated cases have followed Universal Analytics, Inc. v. MacNeal-Schwendler Corp., where the court held that unlawful predatory hiring occurs when talent is acquired not for purposes of using that talent but for purposes of denying it to a competitor.

An anticompetitive act by a single firm is an act that is not profit maximizing but for the monopoly rents the act creates or maintains, but that is profit maximizing inclusive of those monopoly rents. But a monopolist likely will use and derive profits from important labor talent once acquired, even if the effect of the hiring is anticompetitive. Thus, the current legal standard for proving predatory hiring as an element of an attempted monopolization claim may prevent plaintiffs from successfully prosecuting cases in which antitrust impact and injury exist.

Therefore, we argue that the current legal standard required to prove a predatory-hiring claim should be revised. We use a recently litigated matter in the ambulance industry, ICare-EMS v. Rural/Metro, as a case study to make our argument. This case study is particularly revealing because, unlike most litigated matters, internal company documents and deposition testimony from plaintiff and defendant firm witnesses were not designated confidential. Therefore, we are able to illuminate the bases for the firms’ internal business decisions in great detail. These decisions reveal the companies’ intentions in ways not normally observable by antitrust scholars.

Keywords: Predatory Hiring, Exclusionary Conduct

JEL Classification: K21, L41