For people who think a lot about competition, and particularly how organizations can and can’t legally circumvent it, it’s been a busy stretch.

Just last week, the Justice Department sued Live Nation, asking the court to (at a minimum) order the divestiture of Ticketmaster. This follows on the heels of the DOJ’s Google trial and just months after the National Association of Realtors’ blockbuster antitrust settlement.

This week, we’ll be discussing another recent development: the Federal Trade Commission’s new rule banning noncompetes, which the agency estimates could affect 30 million American workers.

If the rule survives the legal gauntlet (a big if, say our experts), how will workers and companies be affected?

The end of noncompetes

Many workers stand to benefit from a ban against noncompetes, particularly low-wage workers like employees of the sandwich chain Jimmy John’s, who were banned from working at a competitor selling “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within two miles of a Jimmy John’s for a period of two years.

But Thomas Hubbard, a professor of strategy at Kellogg, notes that while noncompetes can get in the way of efficient matches between people and jobs, a ban could also have the unintended effect of hindering knowledge-sharing and productivity.

Consider the example of a chef who, reluctant to share recipes with an underling, insisted on doing all the work themselves. If the chef did share their recipes, what’s to prevent the worker from taking that knowledge to a new restaurant? Noncompetes address that problem by banning the observable, detectable action of going to work at a similar firm.

“You can observe and detect whether I’m working somewhere and where I’m working, but you can’t observe what I’m doing with my knowledge,” says Hubbard.

This has made noncompetes a very desirable tool for companies where the so-called “secret sauce” involves particularly sensitive information or distinctive practices. And in the absence of noncompetes, companies may be far less willing to share knowledge with their workers. This will come at a cost to the companies, of course. But it could also come at a cost to workers, limiting their on-the-job training.

“Banning them will tend to make workers less productive,” Hubbard says, “because people aren’t going to tell them much, which would ultimately hurt their earning potential.”

Read more about the rule from Hubbard and Kellogg clinical professor Mark McCareins in Kellogg Insight.

Sharing revenue with athletes

Last week the NCAA, along with its Power 5 conferences, agreed to pay $2.8 billion to settle the antitrust lawsuits filed by student athletes. (Did I mention it’s been a busy stretch?) In addition to some backpay, the settlement creates a system for schools to share revenue with Division 1 athletes going forward.

Should the settlement be approved, there will be widespread (and still unknown) ramifications. But while some athletes could make out quite nicely, others could be in a world of trouble. That’s because, while the average Power 5 school features about 20 different men’s and women’s sports, 58 percent of total athletic-department revenue between 2006 and 2019 came from just two of them: men’s football and basketball.

These numbers come from a study published a few years ago by Kellogg’s Craig Garthwaite and his colleagues Nicole Ozminkowski, Matthew Notowidigdo, and Jordan Keener. The researchers found a large amount of the revenue generated by men’s football and basketball was used to fund investments in other sports at the same schools. (They also point out that, given player demographics, this means that revenue created by poorer, Black athletes is used to support athletes from wealthier backgrounds.)

The researchers’ model predicts that if there were less money generated by big-revenue sports, schools would cut spending for nonrevenue sports, including for coaches and facilities. You can learn more about this study in Kellogg Insight.