The Romanian Competition Council launched its first investigation into possible anti-competitive behaviour of some companies on the market of skilled / specialised labour.
The RCC has indications of a possible coordination to share the market of skilled / specialised labour in the field of automotive engineering activities and to impose a minimum level of wages. According to the authority, the so-called “no-poach” practices, by which companies agree not to contact, recruit and/ or hire people who work or have worked for any of the companies involved, eliminate real competition between companies to attract employees, creating artificial barriers on the market, lowering labour mobility, even keeping it captive. The agreements keep the level of salaries for those specialisations at an artificial level, lower than the real one.
No-poach agreements have been lately on the agenda of other competition authorities (e.g., in Hungary, Netherlands, Portugal or Croatia). In a recent speech at the Italian Antitrust Association Annual Conference EVP M. Vestager referred to “no-poach” agreements as an indirect way to keep wages down, restricting talent from moving where it serves the economy best.
This type of arrangements has been closely monitored by the Department of Justice in US, which after pursuing civil penalties against companies that make these pacts, has recently brought criminal no-poach charges against companies that allegedly made agreements with competitors to keep wages low and refrain from soliciting each other’s employees. In 2016, the DOJ and Federal Trade Commission issued guidelines for HR professionals on how to avoid potential violations of antitrust laws related to the use of no-poach agreements. Similarly, the Portuguese competition authority published in 2021 Best practices in preventing anticompetitive agreements in labour markets.
What to do further?
The recently opened investigation might provide interesting evidence to encourage the Romanian Competition Council to pursue this subject matter further. Thus, companies should review their HR practices carefully to ensure compliance in this rapidly evolving area of antitrust enforcement, train their HR personnel, audit existing contracts/ practices. In the context of M&A transactions, buyers should ensure proper due diligence of the target in this area to avoid potential antitrust liability. Post-completion non-solicitation covenants in M&A transactions imposed on the seller are acceptable, if reasonable in terms of scope, duration, and geographic reach.
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