Companies generally think of the antitrust laws as something that concerns their Sales Departments – no price fixing, bid rigging, market allocation, etc. They don’t generally think of them as affecting other aspects of their business. That misconception can prove costly, as the antitrust laws provide for triple damages, as well as potential criminal liability.
In fact, the antitrust laws, which prohibit a “combination or conspiracy in restraint of trade” (among other things), apply to virtually every aspect of a company’s business – Purchasing, Manufacturing/Operations, Research & Development and Finance/Accounting Departments, the Credit Committees of which it may be a member, Trade Associations in which it participates and, yes, its Human Resources activities.
Last October, technology giants Adobe, Apple, Google, and Intel, settled antitrust claims brought by a class of their employees for $415 million. The employees alleged that the companies had entered into unwritten, informal agreements or understandings that they would not recruit or hire each other’s employees (commonly referred to as “non-raiding” or “no-poaching” agreements). The employees asserted that these agreements restrained trade in human labor and artificially and unfairly depressed their wages, as they were unable to move to higher paying positions at another of the companies.
Similar suits have been filed against the Duke University Health System, alleging such an agreement with the University of North Carolina, in regard to faculty and staff of their respective hospitals, as well as Major League Baseball in regard to rules preventing teams from offering employment to the scouts of another team. The underlying concept – that an employment relationship constitutes “trade” for purposes of the antitrust laws – gives a hint as to just how expansive the definition of trade is. But, it doesn’t stop there.
A routine part of an employment contract is frequently a non-compete provision, which precludes the person for a period of time from working for a competitor within a specified geographic region. Like temporary employment agency contracts that frequently place restrictions on its client’s hiring of its employees, for the most part these arrangements do not run afoul of the antitrust laws because the restraint of a single individual does not generally affect competition; but consider the impact on a small, rural community where one of the two orthopedic surgeons within 100 miles is unable to compete with the other, his or her former employer.
Contrary to popular thought, the antitrust laws are not limited to agreements between or among competitors. In an effort to gain a better understanding of and, hopefully, control over their rapidly escalating health care costs, many employers have joined with others in their geographic area (not necessarily in the same or similar businesses) to form “health care coalitions.” These groups collect, analyze and distribute data relevant to the cost of health care for each company’s employees. The manner in which and by whom this data is collected, analyzed and distributed will frequently determine whether or not the activity violates the antitrust laws. The Federal Trade Commission has issued “Safe Harbor” guidelines for such coalitions and will, in appropriate cases, issue a “No Action” letter in regard to a specific coalition’s activity proposal.
The simple exchange of information, including non-union employee salary information, benchmarking and other similar information sharing, also has been held to constitute an antitrust violation.
A company should never permit its employees to interact with those of another company, whether or not a competitor, without being certain that the employee understands the possible antitrust implications of the interaction and that appropriate protective measures have been put into place.
When the scope of permissible conduct or the implications of contemplated interactions are less than clear, the company should consult experienced attorneys for guidance.
