Antitrust Regulators Targeting Agreements Limiting Competition for Employees

Antitrust regulators have recently begun prosecuting cases based upon agreements between competitors that limit competition for employees. “Traditionally, the U.S. Department of Justice’s (DOJ’s) Antitrust Division would prosecute cases based on agreements that limit competition for customers, not employees, or that or otherwise tend to increase prices.  But recently, the DOJ charged Lucasfilm with conspiring to violate Section 1 of the Sherman Act in its agreement with Pixar that neither would cold call each other’s employees and would notify the other when making an offer to the other’s employee. The DOJ charged that the agreement reduced competition by limiting recruitment and movement of highly specialized digital animation workers and prevented employees from achieving higher compensation,” said Alan I. Greene, a partner in the Chicago office of Hinshaw & Culbertson LLP who concentrates his practice in antitrust and trade regulation law. Lucasfilm has since agreed to a consent decree that prohibits it from entering into, maintaining or enforcing any agreement that prevents it from soliciting, cold calling, recruiting or otherwise competing for employees.

An earlier consent decree imposed similar restrictions on Pixar and other high-tech companies, including Adobe, Apple, Google, Intel and Intuit. “Antitrust regulators are certain to target similar agreements between other companies. Whether they will scrutinize different types of employee or personnel-related agreements remains to be seen, but the targeting of the Lucasfilm/Pixar arrangement indicates that they may,” said Mr. Greene.  He is available to comment or author an article on antitrust regulators’ efforts to prosecute cases based upon personnel-related agreements between competitors. [02/08/2011]