DEI Metrics and Antitrust Risk: A Competition Law Analysis of the FTC’s Warning Letters to Law Firms

Overview

·       On 30 January 2026, the FTC sent warning letters to 42 major U.S. law firms raising potential antitrust concerns regarding their participation in the Mansfield Certification program.

·       The FTC’s concerns rest on two principal theories of harm: (i) the adoption of common DEI-related hiring metrics as a potential collusive arrangement, and (ii) structured knowledge-sharing among firms as a possible unlawful exchange of competitively sensitive information.

·       From a competition law standpoint, the key issues are whether there is evidence of a horizontal agreement/information exchange among competing firms and whether the alleged conduct produces anticompetitive effects in the relevant labour market.

·       The structure of the Mansfield program raises questions as to whether participation amounts to parallel vertical arrangements rather than a classic horizontal cartel, potentially requiring a hub-and-spoke analysis.

·       Any enforcement action would likely be assessed under an effects-based framework (rule of reason), requiring proof of actual or likely harm to labour market competition.

Introduction

On 30 January 2026, the U.S. Federal Trade Commission (FTC) announced on its official website that it sent warning letters to 42 law firms cautioning that their participation in the Mansfield Certification program could raise concerns under federal antitrust laws. The FTC’s letter focuses on whether certain diversity-related hiring and promotion practices, when implemented through a shared framework among competing firms, may give rise to unlawful coordination in labour markets. According to the announcement, the recipient firms collectively employ more than 50,000 attorneys.

From a competition law perspective, the core issue is not diversity initiatives itself, but whether competing employers may have aligned or coordinated aspects of their recruitment, promotion, or compensation practices. The FTC emphasized that agreements, either formal or informal relating to candidate selection criteria, hiring pools, pay, or benefits can distort competition for legal talent and may constitute anticompetitive collusion in labour markets. Further, participating firms also engage in structured discussions and knowledge-sharing sessions regarding implementation of the program’s criteria. In this regard, FTC’s letters suggest that such interactions could implicate Section 1 of the Sherman Act and Section 5 of the FTC Act depending on the nature and extent of coordination.

According to the explanations provided in the letter, the FTC's theory centers on two primary concerns. First, by adopting common diversity, equity, and inclusion (DEI) hiring metrics, competing law firms may be engaging in anticompetitive collusion in the labour market. Second, the monthly knowledge-sharing calls between participating firms constitute an unlawful exchange of competitively sensitive information.

In this piece, we will first provide explanations regarding the Mansfield Certification Program and then examine both of these potential theories of harm from a competition law perspective. In particular, we will assess (i) whether the adoption of common DEI-related hiring metrics by competing firms could qualify as an agreement restricting competition in the labour market, and (ii) whether structured knowledge-sharing interactions may amount to an unlawful exchange of competitively sensitive information. We will also consider the applicable analytical framework under U.S. antitrust law namely as to whether such conduct would likely be assessed under a per se standard, a “quick look” approach, or the rule of reason should the matter ultimately be brought before the courts.

The Mansfield Certification Program

As a background information, the Mansfield Certification program, developed by Diversity Lab, encourages participating organizations to consider at least 30% qualified candidates from underrepresented groups in hiring, promotion, and leadership decisions. According to Diversity Lab, the program is designed to be "additive," asking that qualified talent, regardless of background, have a fair opportunity to be considered for positions based on merit.

Notably, two district court has recently reviewed the legality of the Mansfield Rule. In Perkins Coie LLP v U.S. Department of Justice, the District Court of Columbia found that the Mansfield Rule "does not establish any hiring quotas or other illegally discriminatory practices" and does not require firms to consider attorneys from diverse backgrounds for leadership positions. The court observed that the principle underlying such programs is that negative biases against qualified underrepresented lawyers reduce their likelihood of being selected for positions for which they are qualified. In Jenner & Block LLP v. U.S. Department of Justice, the same district court has ruled in the same way and did not find any evidence that Mansfield Rule is illegal. That said, this conclusion is reached based on antidiscrimination law and there is no case discussing the legality of Mansfield Rule from competition law perspective.

Adoption of Common DEI-Related Metrics as an Anticompetitive Hub-and-spoke Scheme

In 26 February 2025, the FTC launched the Joint Labor Task Force in which, it is stated, inter alia, that collusion or unlawful coordination on DEI metrics may have the effect of diminishing labour competition by excluding certain workers from markets, or students from professional training schools, on the basis of race, sex, or sexual orientation. Therefore, the relevant warning letters are the first reflection of this statement.

From competition law perspective, the preliminary question is whether the mere adoption of a “30% consideration” benchmark is capable of constituting an anticompetitive agreement. Even assuming, for the sake of argument, that alignment around such a metric could in theory restrict competition, the structure of the Mansfield Certification program raises important analytical distinctions.

First, participating law firms do not enter into a direct agreement with one another regarding the 30% benchmark. Rather, each firm independently elects to participate in a certification program developed and administered by Diversity Lab. In that sense, the decision to adopt the relevant criteria is made vertically between each firm and the certifying body rather than horizontally among competing law firms. Therefore, in the absence of evidence demonstrating communication, commitment, or mutual assurance among the firms themselves, it would be difficult to characterize participation in the program as a classic horizontal agreement. Parallel adoption of similar standards, without more, does not by itself establish a concerted practice under Section 1 of the Sherman Act.

Accordingly, if an allegation of collusion were to be advanced, it would more likely need to rely on a hub-and-spoke theory. Under this theory, competitors (the spokes here are the law firms) are alleged to collude together via a central actor (the hub here is Diversity Lab). The FTC reasons that when organisations rely on a common benchmark (such as a collective goal of ensuring that at least 30 per cent of a given talent pool comes from underrepresented groups), that coordination may reduce independent decision-making and competition for talent.

The existence of parallel vertical contracts concluded with a common contractual partner is insufficient to establish a prohibited hub-and-spoke cartel. Therefore, the FTC must provide evidence to prove an interdependence, and it is not enough to show that there is a series of vertical agreements with Diversity Lab. The theory requires proof of a "rim," which is often evidence that competitors are acting in a manner that only makes sense because others are also participating. When competitors act independently, such as exercising business judgment based on their own incentives, there is no conspiracy and only an insufficient rimless wheel.

For the FTC to prevail in any future enforcement action, it would likely need to establish conduct going beyond the mere fact of a firm’s participation in, or certification under, the Mansfield program. The warning letters appear to rely primarily on publicly available information and do not set out concrete factual allegations of coordinated conduct. In addition, the FTC would bear the burden of demonstrating that participation in the program produced anticompetitive effect in the labour market. This could require evidence that the adoption of 30% rule reduced independent decision-making among firms or contributed to the creation or exercise of monopsony power in legal labour markets. Establishing such effects would involve a high burden of proof which has not yet been tested before the courts in this specific context.

In FTC’s announcement, it was indicated that potentially anticompetitive collusion between law firms on DEI metrics can include quotas by which they agree to compose panels of job candidates based on race, sex, or other personal characteristics other than the candidate’s merit, or by which law firms agree to make final decisions about hiring and promotions based on those personal characteristics. Accordingly, such agreements can distort competition for labour in legal professions, including along dimensions like hiring decisions, pay, and promotions.

However, the FTC’s announcement leaves several analytical gaps from a competition law standpoint.

First, it is not explained how the mere existence of diversity-related benchmarks such as considering a broader pool of candidates would translate into distortions in pay, promotions, or other competitive parameters in the labour market. For an antitrust concern to arise, there must typically be some mechanism through which firms meaningfully align or constrain their independent decision-making on wages, career progression, or hiring outcomes. The announcement does not articulate how the alleged “quotas” would produce such coordinated effects, particularly if there is no evidence that firms agreed on compensation levels, promotion timelines, or other economically sensitive terms.

Second, the criticism directed at the reporting of percentage increases in underrepresented talent appears to rest on an assumption that such metrics necessarily imply preferential treatment or fixed targets. That inference is not self-evident. An increase in representation can equally be explained by the removal of structural barriers or negative biases that previously reduced the likelihood of qualified candidates being selected. In other words, measuring outcomes does not automatically equate to imposing binding quotas or evaluating candidates on characteristics unrelated to merit. From a competition law perspective, the distinction is significant: antitrust liability generally requires an agreement that restricts competition, not the unilateral adoption of internal monitoring tools designed to broaden candidate pools.

Third, competition law traditionally intervenes where coordination reduces rivalry on economically meaningful variables such as wages, output, quality, or innovation. In labour markets, this has most clearly arisen in cases involving wage-fixing, no-poach agreements, or the exchange of competitively sensitive compensation data. By contrast, a framework that encourages firms to expand the set of candidates they consider does not, on its face, restrict output or suppress wages. If anything, increasing access to talent pools may intensify competition for qualified candidates.

In light of the above, the FTC would likely face significant challenges if it were to pursue a formal investigation or enforcement action in relation to these activities. In particular, it would need to demonstrate not only the existence of coordination, but also concrete anticompetitive effects arising from the alleged conduct in the relevant labour market. This would require a substantiated showing that the adoption of shared metrics or participation in structured exchanges materially reduced independent decision-making, suppressed competition for talent, or otherwise distorted competitive conditions. Absent such evidence, translating the concerns expressed in the warning letters into a sustainable antitrust claim may prove difficult.

Knowledge Sharing as an Illegal Information Exchange

The second limb of the FTC’s theory relates to the monthly knowledge-sharing calls among firms participating in the Mansfield program. According to the FTC, the “sharing of competitively sensitive information about pay and other benefits between employers can be unlawful under the antitrust laws,” particularly where such exchanges harm competition for labour.

This position has its basis in the January 2025 Antitrust Guidelines for Business Activities Affecting Workers, jointly issued by the U.S. Department of Justice and the FTC. The Guidelines state that exchanging competitively sensitive information with companies that compete for workers may violate antitrust laws. This includes information relating to compensation, benefits, or other terms and conditions of employment, as well as any other exchanges that could harm competition for workers. Importantly, the agencies clarify that liability may arise even where such exchanges occur indirectly through a third party or intermediary, including algorithmic tools.

At the same time, the same Guidelines make clear that information exchanges are not automatically unlawful. Rather, exchanging competitively sensitive employment information may violate the law when the exchange has, or is likely to have, an anticompetitive effect regardless of whether such an effect was intended. This formulation confirms that rule of reason analysis applies, rather than regarding such exchanges as a per se violation.

Judicial practice also reflects this approach. In the ExxonMobil case (Todd v. ExxonCorp, 275F.3d 191, 2d Cir. 2001), which involved 14 firms operating in the integrated oil and petrochemical sector, it was examined the exchange of forward-looking wage information and salary budgets conducted through a third-party consultant via biennial surveys. The information-sharing mechanism allegedly enabled firms to align wage levels across the sector and reduce labour costs. Notably, the court acknowledged that the exchange of future-related wage information may restrict competition. However, it did not treat such exchanges as per se unlawful; instead, it emphasized the need for an effects analysis to determine whether the conduct actually restricted competition.

Against this background, the FTC’s announcement does not clearly specify the nature, scope, or granularity of the information allegedly exchanged by participating law firms. The warning letters refer broadly to knowledge-sharing, but do not identify the concrete categories of data shared. In relation Mansfield program, the central question is whether the knowledge-sharing calls facilitated the exchange of competitively sensitive information capable of coordinating wages, hiring decisions, or other core parameters of labour market competition. If the discussions were limited to general best practices for inclusive hiring without disclosure of specific compensation data, recruitment strategies, or future employment plans, the rule of reason framework may not support a finding of unlawfulness.

Conversely, if the calls involved individualized or forward-looking information concerning salaries, bonuses, benefits, or hiring intentions, competition law concerns would be more substantial. The FTC’s reference to firms being encouraged to “openly share their innovative ideas for overcoming our common challenges” does not, in itself, appear to demonstrate the exchange of competitively sensitive information. Whether such exchanges occurred and whether they were capable of restricting competition remains the critical issue from an antitrust perspective.

Final Remarks

Although the FTC’s warning letters have generated considerable public debate, this piece has confined its analysis strictly to the technical framework of U.S. antitrust law. Setting aside broader policy or political discussions surrounding diversity initiatives, the central question remains whether the conduct described could infringe antitrust rules.

Should the FTC decide to pursue a formal investigation or enforcement action, two potential theories of harm would likely be advanced: (i) that the adoption of common DEI-related metrics amounts to an unlawful coordinated scheme (possibly framed as a hub-and-spoke arrangement) and (ii) that the knowledge-sharing calls constitute an illegal exchange of competitively sensitive information. However, both theories face evidentiary and doctrinal challenges. Establishing a horizontal agreement among firms, demonstrating the existence of a “rim” in a hub-and-spoke structure, or proving that any information exchange had actual or likely anticompetitive effects in the labour market would require substantial factual evidence.

In particular, absent evidence of coordination affecting core competitive parameters such as wages, hiring conditions, or future employment strategies, it may be difficult to translate generalized concerns into a sustainable antitrust claim under a rule of reason analysis. Accordingly, while the warning letters signal an expansive view of potential labour-market collusion, converting that position into a successful enforcement action would likely involve overcoming significant legal and evidentiary challenges.