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 companies have been investigated in the US, such as the investigation involving Adobe, Apple, Google, Intel Intuit and Pixar, and also the investigation involving Knorr-Bremse and Wabtec, and in both cases, the companies have entered into agreements with the authorities to cease the practice. More recently, in March 2019, a cross-state investigation of non-poaching agreements between franchisers and franchisees from four (4) American fast-food chains (Dunkin', Arby's, Five Guys and Little Caesars) was reported. They also entered into an agreement with the authorities to amend their respective franchise agreements, removing clauses that would prevent franchisees from hiring employees from other stores in the same franchise, which would prevent the mobility of these employees among the competing franchisees.
Another important point in the Guideline is the reference that the exchange of sensitive information among companies about HR related-issues may be seen as an antitrust violation, depending on the specificities of the case. This is because, in such cases, even if there is no explicit agreement among employers, such exchange of sensitive information could lead to negative impacts on the employment marketplace.
In Brazil, there is still no explicit determination from CADE on the subject. However, given that the Brazilian agency also takes into consideration the best practices adopted by foreign antitrust authorities, especially from the US and Europe, it is certain that this issue is already on the radar. In this sense, as a preventive and/or corrective measure, it is advisable to adopt compliance measures and internal trainings to alert and safeguard companies and HR professionals against possible practices that may constitute an anticompetitive conduct, subject to pecuniary fines (up to 20% of gross revenues) and other serious penalties.
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