Author: Ess Seshat

Study finds correlation between sweetener, higher heart disease risk



CLEVELAND — A study published June 6 in the European Heart Journal finds an association between consuming the sweetener xylitol and a higher risk of cardiovascular disease.

A research team led by Stanley Hazen, MD, PhD, director of Cleveland Clinic’s Center for Microbiome and Human Health, identified a higher three-year risk of cardiovascular events in an analysis of over 3,000 patients in the United States and Europe. The third of patients with the highest amount of xylitol circulating in their plasma were more likely to experience a cardiovascular event.

“This study again shows the immediate need for investigating sugar alcohols and artificial sweeteners, especially as they continue to be recommended in combating conditions like obesity or diabetes,” Hazen said. “It does not mean throw out your toothpaste if it has xylitol in it, but we should be aware that consumption of a product containing high levels could increase the risk of blood clot-related events.”

Xylitol, a polyol/sugar alcohol, is found in sugar-free candy, low-sugar baked foods and oral products like toothpaste, according to the Cleveland Clinic. The sweetness of xylitol is similar to the sweetness of sucrose, but it has 2.4 calories per gram compared to 4 calories per gram for sucrose.

The US Food and Drug Administration considers xylitol to be Generally Recognized As Safe (GRAS). The European Union allows the use of xylitol but assigns it an E-number: E967.

“The results of this study are contrary to decades of scientific evidence substantiating the safety and efficacy of low-calorie sweeteners such as xylitol by global health and regulatory ‎agencies,” said Carla Saunders, president of the Calorie Control Council, an international association representing the low- and reduced-calorie food and beverage industry. “While the authors used multiple methods, it should be noted that the findings are limited in their ability to establish association only. Further, one phase of the study included individuals who were already at increased risk for adverse cardiovascular events.‎

“These findings are a disservice to those who rely on alternative sweeteners as a tool to improve their health. Xylitol has been trusted as a great tasting, low-calorie sweetener for over 60 years.”



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Inulin Packs Nutritional Punch for Bakery, Snacks



By now it’s no secret that grocery shoppers are increasingly making food purchase decisions based upon an item’s perceived health benefits. In fact, 55 percent of U.S. consumers are seeking information on the value of foods and almost half are comparing labels to select the most nutritious options. [1]

Chief among the most sought-after nutrients is fiber. Decades of research has shown that fiber leads to numerous positive outcomes including decreased chronic disease, increased longevity and improved gut health. [2] Yet the story remains the same: most people aren’t getting nearly enough. Americans get about 15 grams daily, compared to the 25-35 grams of fiber needed for children and adults. [3] 

Bakery and snacks have long been strong categories for fiber-enhanced products. In the baking category in particular, there has been recent movement away from traditional fiber-rich ingredients and toward isolated fibers, such as inulin. [4] 

Recognized for its prebiotic benefits, inulin is well-established in the market and is among the fastest-growing prebiotic fiber ingredients. [5] And for good reason. As a functional nutritional ingredient, inulin acts as a growth factor for gut microbiota, improves digestion, improves mineral solubility and absorption, and decreases glucose uptake. [6]

Inulin is derived from agave, chicory root, beets, among other plant-based sources. It is a non-digestible, longer-chain carbohydrate that offers developers various functional properties, including fiber, sugar reduction, fat replacement (up to 50 percent), sweetener texturizer and humectant. Notably, inulin’s sweetness has anywhere from 30-50 percent of the sweetness of table sugar. This means inulin can be increased for higher fiber content without negatively impacting flavor. [7] 

 “As the market for inulin continues to grow, bakery and snack brands have a unique opportunity to educate consumers about how this bioactive, powerhouse ingredient can help them meet their daily fiber intake and other health goals,” said Tonya Lofgren, product manager for CIRANDA, the premiere North American provider of certified organic, non‐GMO and fair‐trade food ingredients.

To meet growing demand for inulin, CIRANDA offers Organic Agave Inulin, which is non-GMO and kosher. 

CIRANDA’S Organic Agave Inulin comes from the Agave tequilana var. weber plant — a plant that naturally contains a high concentration of inulin fructans. It is extracted from the agave pina with water, filtered to purify, and spray-dried. It is an odorless, clean tasting, mildly sweet white powder that is highly soluble in liquid. It can be used in bakery applications such as cereal and granola bars, energy balls, cookies, and baking mixes.

“Our expert technicians work with brands to effectively formulate products with inulin to meet a brand’s quality, nutrition, taste and clean-label goals,” said Lofgren. “Our agave inulin delivers on taste and texture, while also satisfying the health-conscious consumer’s desire for more fiber and reduced-sugar options.”

Agave inulin has natural water-absorption properties. It is an excellent alternative to other commercial inulin sources, such as chicory. Compared to inulin from chicory, agave inulin has more branched chains versus straight chains. These branched chains make it very soluble in cold water and enhance its functional characteristics. It acts as a fat mimetic to improve the texture and mouthfeel in reduced sugar or reduced fat applications.

“CIRANDA has decades of experience in organic agriculture, sustainable food systems and technical applications,” said Lofgren. “We look forward to helping more product developers in the bakery and snack category offer their customers the functional health benefits of inulin.” 

For more information about CIRANDA’s ingredient options, please visit www.ciranda.com.

 

[1] “Ingredient Insider: Now & Next for Fiber & Prebiotic – US,” Innova Market Insights, March 2024

[2] Alice Callahan, ” You Probably Aren’t Getting Enough Fiber,” New York Times, Aug. 14, 2023 (https://www.nytimes.com/2023/08/14/well/eat/fiber-diet.html?searchResultPosition=2)

[3] “The Nutrition Source,” Harvard T.H. Chan School of Public Health. (https://nutritionsource.hsph.harvard.edu/carbohydrates/fiber/#:~:text=Fiber%20helps%20regulate%20the%20body’s,vegetables%2C%20legumes%2C%20and%20nuts)

[4] “Ingredient Insider: Now & Next for Fiber & Prebiotic – US,” Innova Market Insights, March 2024

[5] “Ingredient Insider: Now & Next for Fiber & Prebiotic – US,” Innova Market Insights, March 2024

[6] Ankan Kheto, Yograj Bist, Anchal Awana, Samandeep Kaur, Yogesh Kumar, Rachna Sehrawat, Utilization of inulin as a functional ingredient in food: Processing, physicochemical characteristics, food applications, and future research directions, Food Chemistry Advances, Volume 3, 2023. (https://www.sciencedirect.com/science/article/pii/S2772753X23002642)

[7] Ankan Kheto, Yograj Bist, Anchal Awana, Samandeep Kaur, Yogesh Kumar, Rachna Sehrawat, Utilization of inulin as a functional ingredient in food: Processing, physicochemical characteristics, food applications, and future research directions, Food Chemistry Advances, Volume 3, 2023. (https://www.sciencedirect.com/science/article/pii/S2772753X23002642)



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Grocery shoppers still working through higher prices



LENEXA, KAN. — Although inflation is easing, consumers are still feeling the pinch of higher prices that have been rising the past few years. They have a variety of priorities in how they spend their food dollars, and they’re trying to find a balance between money, time, taste, nutrition and experience. 

“If you were to compare the prices of food and beverages today versus 2019 or 2020, you’re looking at 25% to 30% higher,” said Anne-Marie Roerink, principal at 210 Analytics, who spoke at Corbion’s 2023 Media Day on Oct. 17. “I doubt there’s a lot of us here today that are making 25% to 30% more money today than we did in 2019 or 2020, and that’s really what’s causing a lot of the pressure.”

She talked about the conflicting needs forcing consumers to figure out which items they will splurge on and other areas where they’re cutting back as well as finding a balance between healthy, nutritious foods and indulgent treats. 

“It is not a race to the bottom where it’s always cheapest,” Roerink said. 

Value and affordability are top of mind for consumers shopping in retail stores. 

“When people are buying in grocery stores, they continue to really change things up there,” she said. “We see 93% of shoppers month after month that are applying some kind of money saving measure.”

And nearly four in 10 consumers said they are either eating out or ordering in less often, according to a 210 Analytics survey from August.

Consumers are spending more food dollars at retail stores than at restaurants and spending less at restaurants by cutting back on certain items like alcohol, appetizers and desserts. More people are turning to takeout rather than eating at restaurants. For instance, families may be buying a restaurant entrée to bring home then supplementing the dish with chips, drinks and other items. This creates opportunities for retailers.

“Every single department around the store has an opportunity to add onto those restaurant-based meals,” Roerink said. 

Consumers are also cooking hybrid meals at home, buying convenience items to make meal prep easier.

Retailers are finding that consumers are really watching their spending because it’s harder to get shoppers to act on promotions, she added.

“That price has to be pretty hot for them to move on it,” Roerink said. “And that’s exactly what we see out in the marketplace. Certainly we see a move toward private brands. They are outgrowing national brands in virtually every category. But we’re also seeing not quite the same reaction to promotions.”

Consumers are gravitating toward value and club stores where they save money and stock up on items.

There is a “big willingness to shift channels, more than I’ve ever seen before,” Roerink said. “Across food and beverages, look at the loss in share for traditional supermarkets. The areas that are picking up share really are the mass supercenters. In other words, Walmart is absolutely growing gangbusters and has been for several years.”

Retailers have many ways to reach out to consumers. They are willing to splurge on holidays and special occasions, which means not only promotions for large holidays but also days like National Grilled Cheese Day.

“You have of course the big primary holidays that we go after, but then if you go after those smaller ones — Mother’s Day, Father’s Day, Labor Day, St. Patrick’s Day — there is a lot of opportunities out there and what I would call the primary holidays, the secondary holidays but also those micro occasions.”

Retailers are finding ways to offer personalized ads, such as highlighting items on sale that the customer has purchased before.

“Value has everything to do with relevance,” Roerink said. “‘I can help you save time and I don’t need to sift through the whole ad when everything I see is relevant to me.’ Sixty-two percent say that is a good or great idea.”

Providing more information on packages to provide greater transparency for consumers and showcasing how products are helping the planet, people or promoting animal welfare are also suggestions Roerink said would appeal to consumers. Additionally, social media is an effective area of promotion, such as viral TikTok crazes for interesting new products.



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Posted on Author Categories Crops

Malaysia primed for growth in US pork exports



DENVER — In the past year, five US pork facilities have become eligible to export to Malaysia, with another recently being approved without the need for an on-site audit, which has supported significant growth in that market.

While Malaysia has previously maintained a cumbersome process for approving US plants, the country is emerging as a promising destination for US pork as it modifies its process, according to the US Meat Export Federation (USMEF). Malaysia is working to remove the barriers of on-site audits for export approval to only requiring a paper application.

“Malaysia had requested to come do a physical audit of five pork facilities,” explained Jim Remcheck, USMEF director of export services. “They wanted a selection of five facilities to physically audit, and then, therefore, if all five pork plants passed the audit, any future pork plants wanting to be registered for Malaysia could do so via a paper application process and not have to post a physical audit in order to become registered.”

Remcheck believes the recent approval of a pork facility without an on-site audit is a “harbinger of good things to come.”

Last year US pork exports to Malaysia reached 5,170 tonnes with a value of $16.3 million, which was over 1,500% of 2022 levels. Through May of this year, exports are approximately 50% above the 2023 pace, already topping $10 million in value.

Other contributing factors to growth in US pork exports to Malaysia included the impact of African swine fever (ASF) on domestic production and tightening supplies of European pork.

As Malaysia is a predominantly Muslim country, a large portion of the population refrains from consuming pork. However, the non-Muslim portion of the population has a strong demand for pork.

USMEF is working to get more beef facilities approved by Malaysia as well, but this process has proved challenging.

“Because there’s no halal aspect to the pork approvals, we are in a scenario in which we can do this paper process,” Remcheck said. “When it comes to approving a beef facility, not only does the Malaysia Department of Veterinary Services need to be involved in the physical audit, their halal authority does as well. So that makes things a lot more complicated for beef.”



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Posted on Author Categories Meat

Cal-Maine Foods announces new cage-free projects



RIDGELAND, MISS. – Cal-Maine Foods Inc. announced on March 31 that it approved new capital projects to expand its cage-free egg production capabilities. The company plans to invest an estimated $82 million in these projects with available cash on hand, investments and operating cash flow.

“We are pleased to announce these cage-free expansion projects that will further advance our growth strategy and better serve customers given growing customer and consumer demand and expanding state requirements for cage-free eggs,” said Dolph Baker, chairman and chief executive officer of Cal-Maine. “Cal-Maine Foods is well-positioned as an industry leader in meeting this demand.”

The proposed project includes the two projects at Cal-Maine Foods’ locations:

  • Delta, Utah – four new cage-free layer houses and two pullet house conversions with capacity for approximately 810,000 cage-free layer hens. The work is expected to start immediately with project completion expected by fall 2023.
  • Guthrie, Kentucky – nine cage-free layer house conversions and two pullet house conversions with capacity for approximately 953,000 cage-free layer hens. The work is expected to begin immediately with expected completion by spring 2025.

Baker added since 2008, including these projects, the company allocated approximately $625 million in facilities, equipment and related operations expanding cage-free production and distribution capabilities. Cal-Maine is expected to finish $123 million in projects in the next three years.

Cal-Maine Foods primarily is engaged in the production, grading, packing and sale of fresh shell eggs, including conventional, cage-free, organic and nutritionally enhanced eggs. The company sells the majority of its shell eggs in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.



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Posted on Author Categories Eggs

German Packaging Awards 2024: top standouts, emerging trends, and exclusive insights


Last month, we reported on the winners of the German Packaging Institute’s German Packaging Awards 2024. Now, in a unique opportunity to gain insight into the jury process, we spoke to jurors Simone Marquardt, head of Packaging Development & Packaging QA at Chocoladefabriken Lindt & Sprüngli; Norbert Menzel, head of Packaging Technology at Beiersdorf; and Christoph Waldau, CEO of B+P Creality – learning more about their experiences on the panel, the entries that impressed them this year, and the packaging trends they’ve noticed.

 

First things first, could you tell us a bit more about yourself and your professional background?

SM: Yes, for sure, I would like to. First of all, hi, my name is Simone Marquardt. I was born in the south of Germany and studied Packaging Technology at the Hochschule der Medien which is located in Stuttgart.

After finishing school – I remember well – I searched for a long time to find a study programme which combined my personal interests. So, I started Packaging Technology because of the technical content, but also because of the creative subjects. Now I know, it is much more than this.

To work with packaging is the best way to work on a technical basis, be creative, influence the market with sustainable ideas, and have different, varied tasks at work every day.

Okay, sorry. I will come back to your question. I get excited when I talk about my job.

After Stuttgart, I started as a Packaging Developer for skincare products at Win Cosmetic/Dalli Group. I was responsible for the development of sun care, skin care and natural cosmetic products.

The next step in my career was to work as a Team Leader for Packaging Development Personal Care. As a team, we developed all the packaging in cooperation with production and marketing. A few years later, I switched to the head office at the Dalli Group in Stolberg and replaced my former boss as Head of Packaging Development.

And now, a few years later, I work as the Head of Packaging Development and Packaging QA at Lindt and Sprüngli Germany.

NM: I started my career in the packaging industry in 1981. In 1989, I moved to Beiersdorf AG, where I took on various responsibilities in the area of packaging development for consumer goods.

Currently, I am heading the packaging technology team in the global packaging organization.

CW: I am the CEO of Berndt+Partner Creality, the agency of holisitic packaging for design, innovation, and sustainability.

Please could you give us an introduction to the German Packaging Award and what it’s like to be a judge?

SM: The Deutsche Verpackungsinstitut e.V. (dvi) is the organizer of the largest European packaging competitive exhibition. Almost 250 submissions from 13 countries are part of the German Packaging Award 2024.

Therefore, it was a lot of work for us 27 independent jurors. At a two-day meeting, we reviewed, discussed, and evaluated all submissions personally and as a team.

The winners of the German Packaging Award 2024 come from Germany, Austria, Poland, the Netherlands and the UK. In addition, the dvi had innovations from Denmark, France, Israel, Canada, Sweden, Switzerland, Turkey, Hungary and the USA. The innovations cover the entire range of materials, from glass to wood, flexible plastic, rigid plastic, metal, paper, cardboard and cardboard, multi-material and new material through to corrugated cardboard and composite material.

At least one innovation won a prize in each of the ten categories of the exhibition.

It is very interesting to accompany the jury meeting and be a part of it. As interesting as it is, it is also difficult. No idea was worse than the others. Everything was highly professional and really good. And from these, selecting the submissions that are the very best is a big challenge.

It was very exciting to exchange ideas with the other jurors and find out their opinions and views. Everyone brings a different focus and completely different experiences. Through this activity, I was able to gain a lot for myself and my work and was also able to share my own experiences.

In summary, I can say that the time-consuming work as a juror was instructive and inspiring for me.

NM: The German Packaging Award is the most prestigious and largest packaging award in Germany. It is organized by the DVI, which every year invites all relevant companies along the entire packaging value chain – from packaging raw materials to the packaging industry, B2B and consumer goods industry, and consumer retail as well as logistics – to submit their most innovative new developments for the German Packaging Award.

A selected jury of experts from the entire packaging value chain evaluates the submissions in various categories and awards German packaging prizes for the most innovative solutions, which will be presented at an awards ceremony.

CW: It’s great to see the innovative strength of the industry, both from the perspective of the branded goods industry and the packaging industry. As a juror, you gain great insights, and on the other hand, you can incorporate your many years of experience into the evaluation.

What are some of the major packaging innovation trends that were represented in this year’s awards?

SM: Due to the diversity of the categories, every focus is included. This makes it possible to cover an enormous range of innovations and to offer even small companies and students a platform. Of course, it also shows in how many situations and areas packaging takes place in our life nowadays.

To talk about the trends, I have to tell you the different categories:

  • Design

  • Digitalization

  • Functionality and Convenience

  • Logistics and Material Flow

  • Sustainability

  • Overall Concept

  • Material Substitution and Reduction

  • Reusable

  • Recyclability and Use of Recycled Materials

  • Junior Employees

  • New Material

  • Packaging Machines

  • Technology and Software

  • Presentation of Goods

  • Economic Efficiency

For example, in the Sustainability and Reusable categories, a realistic option with corresponding added value for the market must be presented. In the Economic Efficiency category, it is important to look into the smallest detail of the process/product that needs to be improved in order to ultimately stand out. I just want to take two examples to show you that there is no “one trend”.

The trend is definitely that the requirements for packaging are becoming more and more complex. It is no longer enough to just handle one or two demands/standards. We had a lot of submissions that combined looks, sustainability and cost-effectiveness, current legal situations, and so on. This will continue to be the trend. So I will say it is “complex packaging demands while looking simple”.

CW: Above all, the major topic of sustainability in the area of packaging. Development is taking place at all levels: in terms of improving recyclability, reducing the use of materials in general, using more recyclates, but also in terms of new packaging systems.

In my view, seeing sustainability as an opportunity for innovation is an important step. After all, we can only achieve our sustainability goals with innovation and creativity.

NM: Sustainability and solutions that increase efficiency in packaging production, processing, and logistics are, as in previous years, the dominant trends.

Could you identify one innovation which particularly impressed you this year, and talk a bit about why you liked it?

SM: I was particularly impressed by, for example, Small Cup, Big Impact from DMK Deutsches Milchkontor GmbH and Pöppelmann GmbH & Co. KG, and ReZorce Circular Packaging from Zotefoams plc.

These participants presented new types of packaging that can be used with the same currently existing production machines. The old machines/machine parts also do not need to be replaced and can outlive their regular time of usage, which in turn continues the idea of sustainability.

Also, the material is completely optimized – one with a significant reduction of polymer, and the other is more recyclable now. The properties of the packaging are also comparable to the previous and the product is therefore adequately protected.

And what’s more, the consumer still doesn’t have to get used to it (due to the almost identical appearance). To combine all these parameters and make it useable and economically feasible is extremely impressive.

NM: There are several innovations that have impressed me. Particularly around packaging materials, you can find some impressive solutions that can replace insufficient or non-economic recyclable materials without any loss of performance.

I particularly like solutions where the close cooperation between industry, technology providers, logistics, and retail become visible and innovative sustainable packaging concepts are developed. I am particularly impressed with a standardized reusable bottle for cooking oil that can be returned for refilling via the usual deposit machines for beverage bottles.

CW: It is difficult to single out a single winner from the large number of fantastic prize winners. The world of packaging is so diverse that each individual winner has achieved an outstanding result.

How do you expect the packaging landscape to change in between now and the next edition of the awards? What are some emerging trends that we should be looking out for?

NM: In the area of sustainability, we still face major challenges. A great need for action is needed to find innovative, efficient, and consumer-oriented solutions. So, from my perspective, it’s quite easy to predict that this will be a key driver of innovation for the German Packaging Award in the coming years.

Digitalization will also play a greater role in optimizing efficiency, and I also expect more solutions to lead to more interaction with the consumer.

CW: The trend towards paperization will certainly continue and paper will penetrate further areas previously occupied by plastics. In the area of plastics, the use of mono-materials will be further promoted and the use of recyclates will continue to expand, especially in the non-food sector. I also expect to see an increased use of flexible materials over rigid containers.

SM: Here we are definitely faced with the challenges presented by the Packaging and Packaging Waste Regulation (PPWR). What the award and its participants show is that the diverse demands placed on us by the PPWR can be solved. Many of the submissions are exactly in this vein.

Thus, the PPWR will not only determine the actions of the industry, but also encourage the industry to produce new creative ideas.

First of all, the minimum quota for the use of recycled content leads to the push for different recycling streams to scale up. For example, the submission from Saperatec GmbH and Dr. Schumacher GmbH shows us how to use packaging material out of the rejects from beverage carton recycling. With this, they make the polymer part reusable as rLDPE for flexible packaging.

All these exciting challenges will certainly play a big role until and in the next award in 2025.

Finally, I would like to mention that the award ceremony and the nomination of the Gold Award will take place on September 24th 2024 as part of FACHPACK in Nuremberg.

If you liked this story, you might also enjoy: 

How are the top brands progressing on packaging sustainability? 

Sustainable Innovation Report 2024: Current trends and future priorities 

Reuse vs. single use – which is better for the environment? 

The ultimate guide to global plastic sustainability regulation 



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Exclusive news and research on the wine, spirits and beer business


Moët Hennessy Partners With Beyoncé On New American Whiskey Brand, SirDavis

August 20, 2024

Moët Hennessy has partnered with singer and actress Beyoncé Knowles-Carter to create SirDavis, a new American whiskey brand. The whiskey is distilled from a mash of 51% rye and 49% malted barley and was developed by Dr. Bill Lumsden of Glenmorangie. SirDavis is named for Beyoncé’s grandfather, Davis Hogue, a farmer and moonshiner. The whiskey is at 44% abv, carries a suggested price of $89 a bottle, and is now available for pre-order through the brand’s website. Wider retail availability across the U.S. will kick off in September.

In a nod to Knowles-Carter’s Southern heritage, the whiskey is finished, blended, and bottled in her home state of Texas. “SirDavis is not only a revelatory and exceptional American whisky, which we are very proud of,” said Bernard Arnault, chairman and CEO of LVMH. “It is also a testament of the unwavering dedication to craftsmanship, heritage and innovation shared by LVMH and Beyoncé Knowles-Carter.”—Shane English

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Posted on Author Categories Alcohol

Food Lion completes renovations at 167 North Carolina and Virginia stores


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Dive Brief:

  • Food Lion has finished a $365 million campaign to upgrade supermarkets it operates in North Carolina and Virginia, the grocery chain announced Monday.
  • The Ahold Delhaize-owned chain plans to hold ribbon-cuttings at 167 refreshed stores in Mecklenburg County, Virginia, as well as the greater Raleigh-Durham, North Carolina, area on Wednesday.
  • The renovation project follows Food Lion’s completion last year of renovations to dozens of stores in other parts of North Carolina.

Dive Insight:

The store improvements Food Lion is showing off this week include e-commerce capabilities, upgraded lighting and refrigeration, and an expanded assortment of locally grown produce.

Food Lion noted that the upgraded produce selection available in the renovated stores will include about 25 seasonal items, such as cucumbers, melons and berries. The grocer said the investment also includes an “extensive product assortment” built around affordable meal solutions that are ready to eat, cook or heat. In addition, almost all the stores covered by the renovation effort gained self-checkout technology, Food Lion said.

The upgrades also include LED lighting as well as refrigerated cases with doors to save energy.

“Enhancements were made with our customers in mind. They’ll discover a refreshed look and feel, and more convenient grab-and-go items that make life easier,” Food Lion President Meg Ham said in the announcement.

Food Lion’s completion of the renovation project comes amid continued strong performance by the chain, which operates more than 1,100 stores across 10 states in the Southeast and Mid-Atlantic. The chain has posted comparable-store sales growth for 47 quarters in a row, Ahold Delhaize President and CEO Frans Muller said during the grocery company’s second-quarter earnings call last month.



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Judge strikes down FTC noncompete ban nationwide


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Dive Brief:

  • A Texas federal judge on Tuesday struck down the Federal Trade Commission’s ban on noncompete agreements in employment contracts, holding that the ban violates the Administrative Procedure Act and exceeds the agency’s statutory authority. The ruling applies nationwide.
  • Judge Ada Brown of the U.S. District Court for the Northern District of Texas had already ruled against FTC in Ryan LLC v. Federal Trade Commission last month. Brown preliminarily enjoined the noncompete ban but only with respect to the case’s plaintiffs and plaintiff-intervenors. Her Aug. 20 decision, however, sets the regulation aside entirely, as the APA “does not contemplate party-specific relief,” she wrote.
  • FTC’s ban had been set to take effect Sept. 4. Brown’s decision splits with that of a Pennsylvania federal judge who sided with FTC on July 23 and declined to block the ban. Last week, a Florida federal judge also issued a limited injunction of the ban, holding that FTC likely exceeded its statutory authority.

Dive Insight:

The FTC’s noncompete ban targeted contractual clauses that apply to an estimated 1 in 5 U.S. workers by the agency’s own estimates. The rule would have allowed noncompete agreements with certain senior executives prior to the rule’s effective date to remain in force while rendering all other noncompetes unenforceable.

As with other regulatory efforts from the Biden administration, however, the ban was swiftly challenged by employers and business advocates. In addition to the FTC’s ban, those parties also fought the National Labor Relations Board’s joint employer rule as well as the U.S. Department of Labor’s independent contractor and overtime eligibility rules.

In Tuesday’s decision, Brown held that the Federal Trade Commission Act gives the FTC “some authority to promulgate rules to preclude unfair methods of competition” but that the agency “lacks the authority to create substantive rules” such as the noncompete ban. She said this is supported by the fact that Congress did not prescribe sanctions for violations of certain FTC regulations, “which indicates a lack of substantive force.”

Brown also concluded that the FTC’s ban is arbitrary and capricious within the meaning of the APA “because it is unreasonably overbroad without a reasonable explanation.” She said the agency failed to offer evidence for its decision to prohibit all noncompete agreements instead of targeting specific, harmful agreements.

“This is the outcome we have predicted since the FTC first proposed the rule almost two years ago, and we expect it to be upheld on appeal, ultimately by the Supreme Court,” Erik Weibust, member of the firm at Epstein Becker Green, told HR Dive. “This is a perfect example of the judicial system holding unelected bureaucrats to account for their overreach in an area that they have neither the expertise nor Congressional authorization to regulate.”



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