Add a new bill to the list of pending legislation introduced in Congress that seeks to regulate noncompetes. This one, named the Digital Consumer Protection Commission Act, addresses noncompetes more tangentially and only for a particular sector.
Senators Elizabeth Warren and Lindsey Graham introduced the bipartisan 158-page bill a few days ago. The bill targets so-called “Big Tech.” It would establish a new commission to regulate dominant online platforms. The commission would implement rules to promote competition, protect privacy, protect consumers, and strengthen antitrust enforcement.
How do noncompetes fit into the Digital Consumer Protection Consumer Act?
The bill would make it unlawful for an online platform covered by the law to engage in unfair methods of competition. An example of a practice deemed to presumptively violate this restriction is the use of noncompetes, except in connection with the acquisition or sale of a business.
The bill would only apply to “dominant” online platforms. The definition of “dominant platform” in the legislation suggests the bill would only apply to really large players.
For example, the law would apply to platforms with 50 million+ United States-based monthly active users or 1 billion worldwide monthly users, and a market capitalization of $550 billion or more. This means the law’s practical effect on the use of noncompetes would be relatively limited.
This legislation is yet another example of the trend toward federal and state legislative and regulatory bodies attempting to rein in the use of noncompetes. We will keep you informed on whether the Digital Consumer Protection Consumer Act or the other pending noncompete bills become law.