The Antitrust Laws Encourage Stealing

Employees and antitrustThat’s right, the antitrust laws care so much about competition that they even prohibit agreements among competitors to not steal. In a society that morally condemns stealing, this is counter-intuitive (and a good reason to learn a little bit about antitrust).

You might wonder now whether I will engage in some philosophy gymnastics to convince you that stealing is okay. No, but I will provide a concrete example, then offer some advice. Not as fun, but perhaps more useful.

So California is abuzz with recently released documents in an antitrust class action by employees against giant Silicon Valley employers like Google, Inc., Apple Inc., Intel Corp and Adobe Systems Inc. The case is scheduled for trial soon and news reports suggest a settlement is likely.

Update: As expected, the parties have reportedly agreed to settle the antitrust case.

What happened? The class-action employees accused major Silicon Valley employers of agreeing not to steal each other’s employees. If true, that’s kind of a big deal under the antitrust laws.

It doesn’t sound so bad, right? How can anyone get any work done if everyone is trying to steal everyone’s employees? And it just seems impolite. Competitors are so tough on each other—can’t we have just a little bit of dignity and not try to hire away your competitor’s employees? The sort of war that can ensue among competing employers for a scarce resource—quality technology employees—can make a truce very tempting.

But from the employee’s perspective, it is a big problem. They sell their labor and if their prospective employers agreed among themselves not to compete for their labor, the employees lose opportunities and money. It may also make it tough to find a new job. Resources are misallocated and employers harm competition and the participants in the labor market.

I haven’t read enough of the case documents to offer my assessment of the merits, but I urge you to carefully consider what you hear in the media. Most antitrust cases are either dismissed at the pleading or summary-judgment stage or settle. Very few reach trial. When they do, the facts are not usually a slam-dunk on one side or another. Or there is some unusual factor that keeps a case from settling.

So if the recently released documents make the case sound one-sided, you should listen to those reports with skepticism. Also keep in mind that we commonly see strongly-worded business documents in antitrust litigation. Competitors are battlers (particularly the sales-people who write the most damaging documents) and people exaggerate and use big rhetoric in emails and other documents.

Sometimes the reality is not as bad as the documents make it sound, but the “smoking-gun” email sure does influence a jury.

This is a great reason why it is so important for companies to put together an antitrust policy and effectively communicate and emphasize that policy to their employees. And the antitrust training is not just for the executives: the whole company, especially that pesky and hyper-competitive sales team, needs to understand the basics of what they can and can’t do.

This is particularly true because antitrust is often counter-intuitive. You wouldn’t necessarily think that agreements not to steal could land you in jail or mire you in major class-action litigation, but it can.

An agreement not to steal each other’s employees is a per se antitrust violation that allows the government or plaintiffs to dispense with some serious elements of proof. It is a market-allocation agreement that is on par with price-fixing and bid-rigging in the antitrust list of no-no’s. And it is something that you are going to wish you told your employees about before you end up in court.

Oh, and by the way, if you want help designing an antitrust policy, we can help you with that at Bona Law PC. Or we can represent you when a plaintiff files a multi-million dollar antitrust class action against you for market-allocation, most likely following the Department of Justice investigation of the same conduct. You decide.