Antitrust Division Will Not Challenge Designated Supplier Program for College Apparel

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

A proposal by the Worker Rights Consortium—a nonprofit corporation aiming to improve working conditions and labor standards—to implement a "designated suppliers program" that would enable colleges and universities to ensure that apparel with their school names and insignia is made in factories providing fair labor conditions will not be challenged by the Department of Justice Antitrust Division.

The Justice Department informed the corporation in a December 16, 2011, business review letter that the proposed conduct was unlikely to lessen competition in the collegiate apparel sector.

Licensing Requirements

According to the proposal, the program would establish licensing terms that will require licensees and any factory that manufactures collegiate apparel to adhere to specified fair labor standards. The terms would include requirements that licensees pay the factories with which they contract a sufficient amount that the factories can pay their employees a living wage and that the licensees ensure that the factories guarantee workers the freedom to engage in collective bargaining.

Effect on Competition

The Justice Department noted that incorporation of the proposed licensing terms was optional, and it was unlikely to have a substantial effect on licensing competition among potentially participating schools. It also was not likely to have a substantial effect on downstream competition for apparel sales. Moreover, the letter said, the factories affected by the proposed licensing terms would probably "constitute only a tiny portion of the labor market, making significant anticompetitive effects in that market unlikely."

In issuing the letter, Sharis A. Pozen, Acting Assistant Attorney General in charge of the Antitrust Division, stated that the program, "can be viewed as precompetitive in that it may facilitate competition in a new area, by providing assurances that apparel was produced under conditions meeting the Designated Suppliers Program standard."

The letter is Worker Rights Consortium, Business Rev. Ltr. No. 11-2, December 16, 2011, CCH Trade Regulation Reporter ¶44,111. A news release on the development appears here.