Business groups led by the U.S. Chamber of Commerce sued the Federal Trade Commission Wednesday seeking to block a rule finalized this week that would outlaw non-compete provisions that prohibit workers from switching jobs within an industry.
In a complaint filed in Texas federal court, the nation's largest business lobby argued that the antitrust and consumer protection agency lacks the authority to issue rules that define unfair methods of competition.
The FTC Act, which established the agency, allows it to bring cases challenging particular practices, the group said, but not to write rules. The Chamber was joined by Business Roundtable and several Texas business groups in challenging the rule.
"The Commission's categorical ban on virtually all non-competes amounts to a vast overhaul of the national economy," the Chamber said in the complaint. The rule "reflects an unlawful and unprecedented exercise of bureaucratic power."
However, the regulator argued that its legal authority is "crystal clear" in the FTC Act.
"Congress specifically 'empowered and directed' the FTC to prevent 'unfair methods of competition' and to 'make rules and regulations for the purposes of carrying out the provisions'" of the law, FTC spokesperson Douglas Farrar said.
