Silicon Valley Firms Settle DOJ Hiring Practices Charges, But Are No-Solicitation Agreements Per Se Illegal?

Ending an investigation launched more than a year ago, on September 24, 2010, the Antitrust Division of the Department of Justice entered into an agreement with Google Inc., Apple Inc., Intel Corp., Adobe Systems Inc., Intuit Inc. and Pixar Animation settling charges that the companies' bilateral agreements prohibiting cold-calling of their employees violated Section 1 of the Sherman Act. In a complaint also filed on September 24th, the Division alleges that the companies compete for highly skilled technical employees and that their concerted behavior "reduced their ability to compete for employees and disrupted normal price-setting mechanisms that apply in the labor setting." U.S. v. Adobe Systems, Inc., Complaint, online. The Division contends the agreements are facially anticompetitive because "they eliminated a significant form of competition to attract high tech employees" and "substantially diminished competition to the detriment of high tech employees who were likely deprived of important information and access to better job opportunities."

In its complaint, the Division states that the no-cold call prohibitions included direct communications in the form of e-mail and other writings. Even though the companies receive a high number of applications from high tech employees, they still use cold calling to fill certain positions. The Division describes the companies as direct competitors for employees and contends the employment restraints are per se illegal under Section 1. The effect of the no-solicitation agreements, the Division alleges, was to reduce competition for high tech employees, diminish potential employment opportunities for these employees and "interfere with the proper functioning of the price-setting mechanism that would have otherwise prevailed." U.S. v. Adobe Systems, Inc., Competitive Impact Statement, online.

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