No-Poaching And Wage-Fixing Agreements Under The Radar Of Antitrust Authorities

Author:Mr Marcel Medon Santos, Marcelo Calliari, Tatiana Lins Cruz, Vivian Fraga, Guilherme Ribas and Patricia Bandouk Carvalho
Profession:TozziniFreire Advogados
 
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Antitrust

Competition authorities around the world have chosen a new target for investigations: the no-poaching agreements and the wage-fixing agreements, and the tendency is for the Administrative Council for Economic Defense (CADE) to start examining the antitrust impacts of these agreements/conducts in Brazil.

The discussion on the matter by the international community is frequently increasing, as seen in well-known events in the area, such as the Antitrust Spring Meeting of the American Bar Association and the GCR Live Annual Cartels, held in March 2019 in Washington, DC, with the participation of the members of TozziniFreire Antitrust Practice team and in the recent paper made available by the Organization for Economic Co-operation and Development (OECD) entitled “Competition Concerns in Labour Markerts - Background Note”.

In fact, agreements among employers aiming at limiting the recruitment/hiring or fixing the terms/values of wages and benefits of their employees have been increasingly high on the agenda of competition authorities. The pioneering work was done by the US authorities, which in 2016 issued an Antitrust Guidance for Human Resource Professionals (the Guideline), whose main objective is to warn about possible antitrust violations in this area.

According to the Guideline, agreements among employers for the purpose of (i) limiting and/or fixing wages or other terms encompassing remuneration, or (ii) not accepting and/or not allowing the hiring of employees from another employer, may be considered to be unlawful by object (per se), in the light of US antitrust law and, therefore, subject to criminal prosecution in that country. On the other hand, non-poaching agreements that are ancillary to corporate transactions (e.g., the creation of joint ventures) or arising from vertical relationships (e.g., franchises) may be analyzed by the so-called rule of reason, so that the potential unlawfulness of the practice will depend on the balance between the economic rationale of the practice and its actual or potential anticompetitive effects on the market.

One should note that, according to the Guideline itself, from an antitrust perspective, companies that compete to hire and retain employees are competitors in the employment marketplace, regardless of whether they offer the same products or services.

In recent years, several...

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