Recently, in United States v. Adobe Systems, Inc. et al.
(Adobe Systems) the antitrust division of the US
Department of Justice (DOJ) filed a lawsuit against some of the
largest technology companies in North America, namely, Adobe,
Apple, Intel, Google, Intuit and Pixar, in respect of their
agreement not to solicit or "cold call" each other's
employees. "Cold calling" refers to any solicitation for
employment, whether by phone, email, letter or otherwise, targeted
at an employee who has not previously applied for the position in
question. Employees of the defendant companies were not made aware
of the no cold-call agreements.
According to the DOJ, the agreements were anti-competitive as
they reduced the ability of the companies to compete for workers
and limited their employee's exposure to superior job
opportunities, better compensation and improved benefits. It was
also alleged that because these agreements were managed by many of
the companies' most senior executives, they had the effect of
disrupting the ordinary salary-setting mechanisms present in the
labour market for high-tech employees. As the alleged "no cold
call" agreements related to all employees in all offices
irrespective of geographical location, time period, job function or
product group, and were not limited to any specific collaboration
agreement between the defendant companies, they were said to be
unjustified and broader than reasonably necessary for any
legitimate collaboration between the companies (i.e. joint
Along with the lawsuit, the DOJ filed a proposed Final Judgment
(to which the defendants consented), which prohibits the companies
from enforcing their agreements or entering into any further
employee non-solicitation agreements for a five year period of
time, and requires them to conduct employee compliance training
seminars. Additionally, the defendants are required to allow the
DOJ to inspect company records for compliance with the terms of the
Final Judgment. While the proposed settlement does not require the
companies to pay any penalties, it does not protect them from civil
actions brought by employees who are able to demonstrate that they
suffered injury as a result of the defendants' actions.
The Adobe Systems lawsuit is noteworthy in that it relates to
the labour market for highly skilled employees rather than to a
market for typical products or services. It is also remarkable
that, in a large market for technical services, comprised of many
significant competitors and prospective employees, the DOJ
nonetheless maintained that because of the tech sector's high
demand for skilled employees and the unreasonably general nature of
the "no cold call" agreements, the agreements constituted
naked restraints1 of trade that ought to be considered per se
It is important to note that Adobe Systems does not mean that
all employee non-solicitation agreements will raise competition law
concerns. The Final Judgment specifically recognizes that
non-solicitation agreements that are "ancillary to legitimate
pro-competitive collaborations", such as agreements in
connection with legal mergers or joint-ventures, may be
permissible. Nevertheless, companies would be well advised to
consider and review their practices relating to non-solicitation
agreements ensuring that any such restrictions are reasonably
necessary and ancillary to a broader and lawful pro-competitive
agreement. Although Adobe Systems is a US proceeding, similar laws
do apply in Canada and it is not unreasonable to assume that
analogous proceedings could be advanced in Canada.
Employers working in industries with highly competitive, high
expertise labour markets such as research and development,
technology, as well as banking and investments, ought to pay
significant attention to these issues.
1 In Canada, agreements which constitute naked restraints
on competition have typically been limited to agreements to (i) fix
prices, (ii) allocate markets, or (iii) restrict/limit/fix
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