Buy it, Sell it, Just Don't Hire it: DOJ Prohibits eBay from Entering Non-solicit Agreements | Practical Law

Buy it, Sell it, Just Don't Hire it: DOJ Prohibits eBay from Entering Non-solicit Agreements | Practical Law

The DOJ settled with eBay Inc. over allegations that eBay entered anticompetitive non-solicit agreements with Intuit Inc.

Buy it, Sell it, Just Don't Hire it: DOJ Prohibits eBay from Entering Non-solicit Agreements

by Practical Law Antitrust
Published on 02 May 2014 • USA (National/Federal)
The DOJ settled with eBay Inc. over allegations that eBay entered anticompetitive non-solicit agreements with Intuit Inc.
On May 1, 2014, the DOJ announced that it reached a settlement with eBay Inc. over allegations that eBay and Intuit Inc. entered non-solicit agreements regarding the other's employees beginning as early as 2006. The settlement, among other things:
  • Prohibits eBay from entering agreements with other companies that restrain employee recruitment and hiring for a period of five years.
  • Requires eBay to institute compliance measures.
This settlement is the third of its kind in the last four years. The first DOJ investigation into non-solicitation agreements, which involved Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar, was settled in 2010. The second investigation, which involved Lucasfilm Ltd., was settled shortly thereafter. The DOJ noted that follow-on private actions were quickly filed on behalf of more than 60,000 affected employees, some of which are ongoing.
The DOJ considers the non-solicit agreements to be an overt horizontal market allocation, and therefore per se unlawful. The DOJ explained that non-solicit agreements between high-tech companies have a negative effect on competition by:
  • Diminishing competition between the companies to attract skilled technical and other employees.
  • Decreasing employees' access to other, more lucrative job opportunities.
The DOJ noted that for eBay, the illegal behavior was easily confirmed by communications between the companies, including internal e-mails between eBay and Intuit regarding the agreements.
eBay also paid nearly $4 million to settle similar antitrust allegations brought by California's Attorney General.
In addition to refraining from entering non-solicitation agreements, the practical implications of these settlements include that:
  • Bad documents continue to play a major role in antitrust enforcement, providing evidence of an agreement in the case against eBay.
  • Companies that violate antitrust laws face costs from both:
    • the governmental investigation and lawsuit; and
    • potential follow-on private actions, in which they are subject to treble damages.