Nobody Watches One Team

Section 1The question before us

A professional sports league could make more money in the short run by letting one owner buy every good player. It could probably make more money still by cutting the number of teams, consolidating fan bases into fewer and larger markets, and selling the broadcast rights at a premium. Run that logic to its conclusion and you arrive at a single team, undefeated, playing nobody.

Nobody watches one team. The competition is not a constraint on the product. The competition is the product.

And the salary cap is not imposed by a regulator. It is imposed by the owners, on themselves, because they understand what unrestrained winning does to the thing they own.

That is the argument of this paper applied to an economy. Markets reward efficiency, and efficiency pursued without limit consumes the conditions that make a market a market. A country of a few owners and many employees is more efficient in some measurable respects than a country of many owners. It is also a different country, and not the one anybody meant to build.

We examine three instruments that remove participants. A noncompete removes a worker. A settlement nondisclosure agreement removes a witness. A merger removes a competitor. Each is individually rational, legal, and often defensible. The question is what they add up to.

1.2   Our own share of the failure

The position this paper takes was American antitrust law for eighty years, and it was replaced on purpose by the people who now reject it.

Judge Learned Hand, in the Alcoa opinion, wrote that Congress "was not necessarily actuated by economic motives alone," and that "it is possible, because of its indirect social or moral effect, to prefer a system of small producers, each dependent for his success upon his own skill and character." He cited the Congressional Record for the proposition that the Sherman Act was meant "to put an end to great aggregations of capital because of the helplessness of the individual before them."5

The Supreme Court in Von's Grocery held that the Act's purpose was "to prevent economic concentration in the American economy by keeping a large number of small competitors in business."5

Dispersed ownership, the individual not helpless before aggregated capital, success dependent on a person's own skill and character — that is not a modern idea and it did not come from the left. It is Jefferson's argument and Brandeis's argument and it was the law.

Robert Bork argued that Congress had actually intended to protect consumer welfare and economic efficiency, and that the older reading was incoherent — a law "at war with itself." The Court changed course in 1974, shifting from "preserving competitors, maintaining fragmented markets and pursuing other social goals" to "a critical economics-based examination of market power." That description is the Federal Trade Commission's own.6

Bork was right that the old law was applied badly — Brown Shoe condemned a merger producing a five percent market share, which is not a defensible rule. But in fixing the application the principle went with it, and there is a live scholarly dispute over whether Bork's account of the legislative history was accurate at all.6

We should be plain about where that leaves us. On this question we are closer to the antitrust reformers than to the Chicago School, and a reader who has followed this series to Issue Papers 7 and 16 will already have noticed. We think the original reading was right and was badly executed, which is a different claim from thinking it was wrong.

Section 2The competition is the product

The sports analogy is worth taking seriously rather than treating as decoration, because it is the one context in which Americans already accept explicit anti-concentration rules without ideological objection.

Leagues cap salaries. They share revenue between large and small markets. They let the worst team pick first. Every one of those rules is a deliberate sacrifice of efficiency, and every one is adopted by profit-maximizing owners who could individually do better without them.

They do it because a league in which one team always wins has no product. The customer is not buying athletic excellence in the abstract. They are buying an outcome they cannot predict.

And the law agrees that these are genuinely separate businesses. In American Needle v. NFL the Supreme Court held unanimously that each team is "a substantial, independently owned, and independently managed business," that their objectives are not common, and that their joint conduct is therefore subject to the Sherman Act.7 The league is not one firm. The teams compete, and the rules exist to keep them competing.

One honest limit on the analogy, which we state because we object to the same thing elsewhere in this paper. A salary cap is an agreement among employers to hold down wages. It is lawful only because it is collectively bargained with a union that receives roughly half of league revenue in exchange. That is the distinction between the cap and the instruments in Section 3: bargained, with compensation, rather than imposed on an individual with neither.

Section 3Reform I: A noncompete removes a worker

Noncompete agreements should be unenforceable against employees, and should remain enforceable in connection with the sale of a business for a limited term.

3.1   The finding that settles the trade-secret defense

The usual justification is that an employer must protect confidential information and training investment. The Federal Trade Commission's rulemaking found that over 95 percent of workers with a noncompete already have a nondisclosure agreement.1

If the secret is already protected by a separate contract, the noncompete is not protecting the secret. It is preventing the person from working. Trade secret law and NDAs are, in the Commission's words, well-established means of protecting proprietary information — and they restrict what a person may say rather than where they may go.

The Commission also found that noncompetes tend to inhibit new business formation and innovation, that there is evidence they lead to increased market concentration and higher consumer prices, and that ending them would generate over 8,500 new businesses each year.1

We want the best people always building. A country that sidelines its most capable workers for two years at a time is not protecting anything. It is idling its inventory.

3.2   The sale-of-business exception is right and is already universal

When an owner sells a business, they sell the goodwill — the customer relationships and reputation the buyer is paying for. A noncompete for a limited term is what makes that sale possible, because without it the seller could take the payment and immediately reconstitute the business across the street.

Every jurisdiction that restricts noncompetes preserves this. The vacated federal rule exempted it. California, which has banned employee noncompetes for over a century, exempts it. We would cap the term — five years is a defensible ceiling and longer terms should require justification.

3.3   And the vehicle has to be legislation

In April 2024 the FTC adopted a rule banning nearly all employee noncompetes. In August a federal court in Texas vacated it nationwide, holding that the Commission lacked substantive rulemaking authority over unfair methods of competition and that the rule was arbitrary and capricious. A Florida court blocked it separately. The FTC withdrew its appeals on September 5, 2025.1

Note what the courts objected to. Not the policy — the authority. An agency cannot ban a category of contract by rulemaking. A legislature can.

And the practice continues in both directions. On the same day the FTC abandoned its appeal it filed a complaint against a company over noncompetes affecting roughly 1,800 employees. Six states ban most employee noncompetes outright, and in 2025 alone Arkansas, Colorado, Illinois, Indiana, Montana, Oregon, Texas and Utah enacted restrictions covering physicians and other medical staff.1 The direction of travel is settled. The instrument is not.

Section 4Reform II: A settlement NDA removes a witness

Confidentiality in a settlement should be permitted as to the amount and unenforceable as to the facts of the conduct.

4.1   The mechanism, which is not obvious

Consider a business that treats counterparties badly. One of them objects. They do not want a lawsuit; they want out. A settlement is reached — a payment, a release from the contract, a release of claims. All of that is reasonable.

Then they sign a nondisclosure agreement and a non-disparagement clause, and that is reasonable too, from where they stand. They have what they wanted and the additional term costs them nothing they value.

Repeat that a dozen times and something has been constructed that nobody individually intended. A pattern exists and cannot be found. The next counterparty performing diligence cannot call the previous ones, without knowing they exist — and they could not answer if asked. Every settlement was rational for both parties. The aggregate is a machine for producing more victims.

No individual has an incentive to fight. Each one settles, signs, and moves on — and the silence they each sold is what the next one walks into.

4.2   The federal law addresses the wrong half

The Speak Out Act, signed December 2022, makes nondisclosure and non-disparagement clauses unenforceable in sexual assault and harassment disputes. It passed the Senate unanimously and the House 315 to 109.2

Its architecture is instructive and its limit is the problem. It voids pre-dispute clauses — the ones signed at hiring, before anything happened — and expressly permits post-dispute settlement confidentiality. It also preserves trade secret protection explicitly.2

Every case described in Section 4.1 is post-dispute. The one federal statute addressing nondisclosure permits precisely the practice that does the damage.

A federal Sunshine in Litigation Act was introduced in 2000 after the Firestone tyre failures, and in repeated sessions since. None has passed.

4.3   Florida wrote the answer in 1990

Florida's Sunshine in Litigation Act provides that no court may enter an order "which has the purpose or effect of concealing a public hazard or any information concerning a public hazard," or concealing "information which may be useful to members of the public in protecting themselves from injury" — and that any portion of an agreement or contract with that purpose or effect "is void, contrary to public policy, and may not be enforced."3

Three features deserve copying.

The definition includes people. A public hazard is "an instrumentality, including but not limited to any device, instrument, person, procedure, product, or a condition of a device, instrument, person, procedure or product, that has caused and is likely to cause injury."3 A serial bad actor is a hazard.

Trade secrets are protected only if not pertinent. Confidential business information keeps its protection unless it bears on the hazard, which is exactly the line this paper would draw. Conceal the recipe; do not conceal the poisoning.

And any "substantially affected person" may contest the clause — including non-parties, by motion or by a separate declaratory action.3 That is the part that reaches Section 4.1, because it gives standing to someone who never signed anything. Arkansas goes further and voids such agreements whether or not they were ever filed in court, which matters because most of what we are describing never reaches a docket.3

4.4   What we would add

The amount stays private. Settlement figures are legitimately confidential — publishing them invites copycat claims and distorts every subsequent negotiation. Nothing here requires anyone to disclose what they were paid.

A due diligence carve-out. Where a person is about to enter the same kind of transaction with the same party, a prior settling party should be free to answer the question. That is the specific failure in Section 4.1 and Florida's statute does not squarely address it.

And ordinary commercial confidentiality is untouched. Pricing, customer lists, unreleased products, merger discussions, formulas, source code — all of it remains protectable. The rule is not about what is secret. It is about whether the secret is evidence of wrongdoing.

Section 5Reform III: A merger removes a competitor

Merger review should be governed by a statutory standard rather than by agency guidelines that change with administrations and do not bind courts.

The inconsistency you notice is real and it has a structural cause. The Supreme Court has not issued a merits opinion in a merger case since 1975. The 2023 Merger Guidelines reflect the agencies' enforcement policies and expressly do not bind courts. Every merger fight is therefore litigated against precedent from the Nixon administration, before district judges, with no authoritative modern statement of the law.4

The 2023 guidelines lowered the structural presumption of illegality to a post-merger concentration index above 1,800 with an increase above 100 — down from 2,500 and 200. They also dropped the previous guidelines' unifying language about market power in favor of harm to "competition" generally.4

We note the doctrinal vulnerability honestly, because it bears on whether any of this survives a court. The leading Supreme Court case grounded its presumption in a thirty percent threshold and a "significant" concentration increase — which in that case was roughly 600. The guidelines now use 100, and the Congressional Research Service observes this has prompted some to question whether the approach is firmly rooted in existing doctrine.4

A rule that cannot survive review is not a rule. If the country wants structural limits on concentration, Congress has to write them.

Section 6Reform IV: Three tests that would make it coherent

We propose three specific corrections, each addressing a way current practice produces results nobody would defend if stated plainly.

6.1   A merger that creates a rival to a dominant firm is more competition, not less

Current policy runs the other way. The "leading firm proviso," revived from the 1982 guidelines, indicates challenges to mergers between a leading firm and a rival with as little as one percent of the market, where the leader holds thirty-five percent and is roughly twice the size of the second.4

That rule is aimed at the dominant firm swallowing everyone, which is right. But applied mechanically it also blocks the combination of two smaller firms into something that could actually challenge the leader.

Where the merged firm would be no larger than the existing leader, the merger should be presumed lawful. A market with two comparable competitors is more competitive than one with a giant and a scattering of firms too small to threaten it, and a review process that cannot distinguish those cases is measuring the wrong thing.

6.2   Where the market supports one firm, blocking a merger produces a bankruptcy

Some markets have economies of scale that will not support two viable firms. In those cases denying a merger does not create competition. It produces a failure and the survivor acquires the position anyway, without paying for it and without the conditions a regulator could have attached.

The failing-firm defense exists and is notoriously narrow. It should be widened, with conditions — a merger permitted on this ground should carry undertakings on pricing, service or access, and an obligation to divest if the scale justification proves wrong.

6.3   Break by geography, not by force into a market that cannot hold two

Where a firm is genuinely too large, the remedy should follow the largest precedent in American history.

The 1984 AT&T divestiture did not order two long-distance companies into a market that supported one. It separated a national firm into regional operating companies, each viable in its own territory, each a genuine business rather than a fragment.

That is the model. Divide along a seam that already exists — geography, business line, customer segment — rather than manufacturing competitors that cannot survive.

Section 7Reform V: When the referee is afraid to make the call

There is a scale at which a firm acquires two immunities no competitor has. It cannot be allowed to fail, and it cannot be prosecuted. Neither is earned, neither is priced, and the second is worse than the first.

7.1   An Attorney General said it under oath

On 6 March 2013, Senator Chuck Grassley — the ranking Republican on the Judiciary Committee — put the concern to the Attorney General directly. He said he was concerned about "a mentality of 'too big to jail' in the financial sector," and that he could not recall the Justice Department prosecuting any high-profile financial criminal convictions of companies or individuals.8

Eric Holder answered:

"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy."

And the sentence that completes it: "that is a function of the fact that some of these institutions have become too large. It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate."8

He attempted to withdraw the statement two months later, telling the House that no bank is above the law. The transcript of the first testimony is public.8

7.2   It is not a gaffe. It is written policy.

The doctrine has a name and a memorandum. As a Justice Department official in 1999, Holder authored guidance advising prosecutors to weigh the economic damage that might result from criminally convicting a major corporation. "Collateral consequences" became a standing factor in charging decisions.8

That is the mechanism by which size converts into immunity. It requires no corruption, no lobbying and no improper contact. A prosecutor weighing whether an indictment would damage the national economy will reach a different answer for a large firm than for a small one, and will reach it honestly.

Reporting on the HSBC matter shows it operating. After the British finance minister raised concerns with the Federal Reserve chairman and the Treasury Secretary, senior Justice Department leadership reportedly sought to better understand the collateral consequences of a conviction — including whether a guilty plea would trigger a hearing on revoking the bank's United States charter. HSBC paid $1.92 billion over anti-money-laundering failures connected to drug trafficking and terrorist financing. Nobody was prosecuted.8

7.3   Why this is the concentration that matters most

There are many laws designed to suppress competition, and most of them are lobbied for by small and medium firms rather than large ones. Occupational licensing for barbers and stylists, distributor territory protections, and a long catalogue of similar rules exist to make entry harder. They are a real cost and this paper does not address them.

The distinction is worth stating precisely, because it explains the priority. Licensing makes it harder to enter a market. This makes it harder to enforce the law.

A market where entry is expensive still has rules. A market where the rules bend according to the size of the defendant does not. Everything else in this paper concerns competition. This concerns whether the referee will make the call.

So the principle we propose is narrow and we do not specify a threshold: if a firm is too large to be allowed to fail, or too large to be prosecuted, it is too large. The relevant authorities have had the power to act on the first since 2010 and have produced institutions larger than the ones that prompted the authority. The second has an Attorney General's testimony behind it and no remedy at all.

Section 8And a breakup is not a punishment

The reason antitrust is politically difficult is that it feels like punishing success, and that framing is both wrong and unnecessary.

A company that outgrows its market has won something. It did what every firm sets out to do, and it did it better than everyone else trying. The appropriate posture toward it is not prosecution. It is the one a league takes toward a team that has won everything there is to win — recognition, and then a draft.

8.1   And historically it has made the winners richer

This is not sentiment. It is the record of the two largest breakups in American history.

Standard Oil. The Supreme Court ordered dissolution into 34 companies on 15 May 1911. In the year that followed, the combined share value of the successors doubled. At the end of 1911 they were worth about $600 million together; a decade later, $2.9 billion — a quadrupling the New York Times called unprecedented — having paid out some $920 million in dividends along the way.9

John D. Rockefeller held shares in all 34. His wealth roughly doubled, and by 1913 — two years after the breakup — he had become the world's first billionaire.9 The most famous antitrust action in American history made its target the richest man who has ever lived.

AT&T. The market value of its common stock just before the settlement was announced in January 1982 was $47.5 billion. Ten years later the eight successors — the remaining AT&T plus the seven regional companies — were worth $180 billion together. AT&T had traded below book value in 1982; its components traded at twice book a decade later.9

And there is a control for that comparison. Over the same decade, IBM raised its stock price above book value by 30 percent.9

Twice, the government took apart the most powerful company in America. Twice, the shareholders came out ahead. That is not a consolation prize. It is what happened.

The mechanism is not mysterious. A monopoly does not have to be efficient, and generally is not. Breaking Standard Oil unleashed innovation in a part of its portfolio it had been neglecting — gasoline — after a company chemist had invented thermal cracking in 1909.9 The pieces competed, focused, and grew.

8.2   So say it as recognition

A great athlete at the end of a career mentors the people who will replace them, including on other teams — because they want those people to have what they had, and because the sport is the thing they actually love.

That is the posture a country should take toward a company it is dividing. You built something no single market could contain. The arrangement that let you do it is worth more than any one company, including yours — and the point of taking it apart is that somebody else gets the chance you got.

We would not propose paying anyone for it, which would be a subsidy. We would propose noticing that the reward is built in, and has been twice.

Section 10What we are not claiming

We are not claiming that scale is bad. Large firms do things small ones cannot, and most of the technology in ordinary life came from one. The objection is to concentration achieved by removing participants rather than by outperforming them.

We are not proposing to abolish nondisclosure agreements. Section 4.4 preserves every ordinary commercial use and permits confidentiality over settlement amounts. The rule reaches evidence of wrongdoing and nothing else.

We are not claiming noncompetes are never appropriate. The sale of a business is the case where they are, and it is preserved everywhere including here.

And we are not claiming to know the right merger threshold. Section 5 argues Congress should set one, precisely because we do not think an agency guideline that does not bind courts is the right instrument for a question this consequential.

Section 11The argument you can carry

The paper compressed to what a person can remember and repeat.

And the one that indicts the argument's own side. Learned Hand wrote that Congress preferred "a system of small producers, each dependent for his success upon his own skill and character," and meant to end "great aggregations of capital because of the helplessness of the individual before them." That was the law for eighty years. It was replaced with a price test, on purpose, and there is a live dispute over whether the history used to justify that was accurate.

Section 12Conclusion

Three things happen quietly and each is defensible on its own terms.

A company asks a new hire to sign a noncompete, which seems prudent. A settling party signs a confidentiality clause, which seems like the price of getting out. Two firms combine to reach the scale their industry demands, which seems like arithmetic.

Nobody in any of those rooms is doing anything wrong. And the sum is a labor market where capable people sit out, a record where a pattern of misconduct cannot be found, and an industry with fewer owners in it than it had.

The owners of professional sports teams solved a version of this problem decades ago, and they did it without a regulator. They accepted limits on their own ability to win because they understood that a contest with a predetermined outcome is not a contest, and that they were selling the contest rather than the trophy.

A market is the same arrangement with higher stakes. It is the mechanism by which a person with no capital and no connections can start something, hire somebody, and answer to nobody. That is worth more than the last increment of efficiency, and it is what the country spends when it lets participants be removed one contract at a time.

And none of this should be said as an accusation. A company that outgrows its market has done the thing every company sets out to do. When the government took apart Standard Oil and AT&T, the shareholders came out ahead both times — which means the honest thing to tell a firm in that position is not that it is being punished, but that it has won, and that the arrangement which let it win is worth more than any single company inside it.

We want a nation of owners rather than barons and serfs. Every argument in this paper is that sentence with the arithmetic attached.