Seyfarth Synopsis: True to his word, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice has announced the first of a number of anticipated no-poach enforcement actions. While this was a civil proceeding, the Department of Justice has said that in some cases it may treat the conduct as criminal. Many executives and HR professionals are unaware that the antitrust laws apply to the employment marketplace. Thus, if they have not done so already, employers should consider the implementation of compliance programs to make sure that appropriate employees are aware of these developments and risks.
In January 2018, Makan Delrahim, the Assistant Attorney General for the Antitrust Division, said that the Department Of Justice ("DOJ") had been very active in reviewing potential antitrust violations resulting from agreements among employers not to compete for workers. (We previously reported on this announcement here.) He said that he was "shocked" at how many there were and that in the coming months there would be announcements of enforcement actions. He also mentioned that if the conduct occurred or continued after issuance of the October 2016 joint DOJ and Federal Trade Commission ("FTC") Antitrust Guidance for Human Resource Professionals (the "Joint Guidance"), the DOJ may treat those agreements as criminal.
On April 3, 2018, the first of these announcements was made. See "Justice Department Requires Knorr and Wabtec to Terminate Unlawful Agreements Not to Compete for Employees," available at ("News Release"). The DOJ advised that it filed a complaint in which it alleged that Knorr-Bremse AG ("Knorr"), Westinghouse Air Brake Technologies Corporation ("Wabtec") and Faiveley Transport S.A., before it was acquired by Wabtec, entered into agreements not to compete for each other's employees ("no-poach" agreements). The DOJ contends that these were naked agreements - i.e., not reasonably necessary for a separate, legitimate business transaction or collaboration - and amounted to per se violations of Section 1 of the Sherman Act. With the Complaint DOJ also filed a Competitive Impact Statement; Explanation of Consent Decree; and Stipulation and Proposed Final Judgment. (See News Release.)
As noted, Mr. Delrahim stated that there were a number of these investigations ongoing, and in the News Release said that this Complaint was "part of a broader investigation by the Antitrust Division into naked agreements...