‘No-Poach’ Deals Could Invite Criminal Antitrust Charges

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By Liz Crampton

The Justice Department will investigate and prosecute illegal agreements in which competing companies agree not to hire each other’s employees or set their compensation, antitrust officials said Sept. 12.

“Your client should be on notice that a business across the street from them, or that matter across the country from them, might not be a competitor in the sale of products or services — it might still be a competitor for certain types of employees,” said Acting Assistant Attorney General Andrew Finch. Finch is serving as temporary leader of the antitrust division pending Senate confirmation of Makan Delrahim, the White House’s nominee. Finch would assume the No. 2 spot in the division upon Delrahim’s confirmation.

Finch’s statement, along with those of Deputy Assistant Attorney General Barry Nigro at an antitrust symposium at Georgetown Law School, are some of the first public signals of the antitrust policy direction in President Donald Trump’s administration. The officials have until now kept a low profile waiting for Delrahim to take the helm.

Criminal Penalties

The inquiry into the anticompetitive effects of business-to-business agreements about employees began in the Obama administration. The DOJ and Federal Trade Commission last year announced that they would criminally prosecute “wage-fixing” and no-poaching agreements.

The agencies warned human resources professionals that they could be violating the law if they made deals with one or more people at another company about employees’ salaries or other terms of compensation (wage fixing) or if they agreed with one or more people at another company to refuse to solicit or hire that other company’s employees (no-poach agreements). Until that guidance was issued in October 2016, the DOJ only pursued civil charges in cases involving antitrust in the employment area.

Finch told economists and antitrust lawyers at the symposium that the DOJ is readying cases against such agreements. He said the “horizontal nature” of these deals “justifies the per se treatment,” meaning that they’re automatic criminal violations under the antitrust laws.

In a separate session, Nigro said he was “surprised” to learn about the number of active no-poaching investigations DOJ is pursuing when he joined the division last month. So far, no criminal charges have been filed in these investigations, Nigro said. But he warned that more charges may be on the horizon. “I would say it’s premature to say how those investigations will develop and ultimately how they’ll be prosecuted. But the fact that we have so many investigations in this area highlights how seriously the division takes these sorts of allegations,” he said. “They will be looked at, they will be thoroughly investigated, and in certain circumstances they will be prosecuted.”

To contact the reporter on this story: Liz Crampton in Washington at lcrampton@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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