Tim Cook Ordered to Give Deposition in Employee-Poaching Ban Antitrust Case

[IJ Reilly]

Originally Posted by Killerbob

Suits like this is EXACTLY why so many people laugh of the US laws and Americans in general.

Right. Corporate collusion is what made America great.

Clues: the laws prohibiting this practice are stronger just about everywhere else in the world, and more vigorously enforced. The fact that it remains such a item of debate here is what makes people laugh.

[Killerbob]

Originally Posted by IJ Reilly

Right. Corporate collusion is what made America great.

Clues: the laws prohibiting this practice are stronger just about everywhere else in the world, and more vigorously enforced. The fact that it remains such a item of debate here is what makes people laugh.

What a bunch of BS - You obviously do not know what you're talking about!

I have been conducting business in Switzerland, Liechtenstein, the UK, Greenland, and in Denmark the last 15 years, and in all the companies I have worked for has it been practice (legally) to make agreements with other companies that they do not poach each others people. We even have contracts with headhunting agencies/companies that they will never approach employees in companies in-where they do placements. And, if an employee approaches the agency for a job, it is only OK, if the particular employee was not placed by that particular agency! This is all written into contracts, in addition to the competitor clauses we are so used to!

[ufwa]

Originally Posted by Killerbob

What a bunch of BS - You obviously do not know what you're talking about!

I have been conducting business in Switzerland, Liechtenstein, the UK, Greenland, and in Denmark the last 15 years, and in all the companies I have worked for has it been practice (legally) to make agreements with other companies that they do not poach each others people. We even have contracts with headhunting agencies/companies that they will never approach employees in companies in-where they do placements. And, if an employee approaches the agency for a job, it is only OK, if the particular employee was not placed by that particular agency! This is all written into contracts, in addition to the competitor clauses we are so used to!

Are the employees made aware of such a deal when they are hired?

[IJ Reilly]

Originally Posted by Killerbob

What a bunch of BS - You obviously do not know what you're talking about!

I have been conducting business in Switzerland, Liechtenstein, the UK, Greenland, and in Denmark the last 15 years, and in all the companies I have worked for has it been practice (legally) to make agreements with other companies that they do not poach each others people. We even have contracts with headhunting agencies/companies that they will never approach employees in companies in-where they do placements. And, if an employee approaches the agency for a job, it is only OK, if the particular employee was not placed by that particular agency! This is all written into contracts, in addition to the competitor clauses we are so used to!

In the specific case you might be right (I don't know), but in the instance of antitrust laws you are certainly not right. Antitrust laws (specifically prohibiting collusion, which is at the crux of this suit), are stronger and more consistently enforced in the EU than in the U.S.

[Cartaphilus]

Non-solicitation agreements are commonplace in the United States, and as far as I know have been deemed generally enforceable as not contrary to public policy in every state, unless the restrictions are found to be specifically unreasonable as to time, geography, or extent, or unless the agreement also prohibits hiring in the absence of solicitation. (Of course, the distinction is a bit naive considering how difficult it is to prove that someone in the soliciting company initiated a suggestion that the employee make an "unsolicited" application.)

The position of the current DOJ that these agreements are a violation of the U.S. antitrust laws is relatively new, and as far as I know, no court has yet substantively upheld Justice's broadest stance. My own opinion, FWIW, is that the outcome would be highly fact-dependent, and depend on the industry, the specialty, and the relationship of the two companies. For example, if a subsidiary were to be sold by a parent company, and the buyer insisted on an agreement that for some reasonable period of time the parent could not solicit any sub employee who had been employed at the time of the sale, I can't imagine a court finding an anti-trust violation. On the other hand, if all the major tech companies in Silicon Valley entered into a mutual non-solicitation pact relating to, say, Python developers, I'd rather be representing the DOJ than the cartel.

I think the government right now is overplaying its hand, and if it isn't judicious in picking its spots, there's a good chance that a case with lousy facts for them will end up as the controlling precedent.

[cfs112]

Originally Posted by Killerbob

Oh my God you guys! What's so wrong about anti-poaching agreements?

If they weren't there you would very quickly have a monopoly - which is much much worse. If the biggest gorilla in the room could just snap up all the best employees (by poaching) and leave the "last animals out of the forest" at their competitors, you would soon have bigger problems than some individuals thinking they would have been offered big salary incentives to change firms!!!

Suits like this is EXACTLY why so many people laugh of the US laws and Americans in general.

It is up to each and every individual to know what he/she is worth, and ask for that, and remember everyone is free to change on their own premises. As an employer I am certainly not holding you back; there are plenty of very knowledgeable people out there - it is just not necessary to have other companies asking my people to leave. Otherwise we can have it like in professional sports...

well said, i agree!

[Killerbob]

Originally Posted by ufwa

Are the employees made aware of such a deal when they are hired?

I wouldn't say it is in the welcome package, but yes, all you have to do is ask HR. I'll give an example, I joined a company in 2010, having been head-hunted into Denmark from Switzerland. It wasn't 1 week before I had the list of companies that had agreed in that region, not to poach each others people. In this case it was specific to IT personnel, as well as the technical department of the manufacturing company.

In addition, I was told already when the head-hunter approached me, that he would not be able to represent me in two years after placing me in the particular company, and that only if I was laid off could he place me again. Also, I couldn't ask that he help me find another job (by he I mean the agency he represented as well).

On top of that I signed in my contract clauses that precluded me from working for any competitive company, world-wide, for a total of 12 months after ending my employment. Meaning competitors to the company, not other IT departments in other industries.

This is common in the countries I have worked in.

Also, I agree, Antitrust laws are very strong in Europe, but do NOT apply in this case. Antitrust usually focuses on three areas;

- Agreements that stop free trading and competition between business - i.e. cartels,
- Making illegal any activities leading to a dominant position in a market,
- Overseeing mergers and acquisitions of large corporations.

In this case I could even argue that the agreements between these 7 companies support Antitrust laws; preventing dominance by sheer buying all the employees in an area/field.

[fourthtunz]

I don't think the government should be able to interfere in this way.
We've gotten so used to government inference everyone thinks its ok.
If the employees were able to apply on their own, what's the harm?

[Killerbob]

Originally Posted by fourthtunz

if the employees were able to apply on their own, what's the harm?

exactly!

[Cartaphilus]

Originally Posted by fourthtunz

I don't think the government should be able to interfere in this way.
We've gotten so used to government inference everyone thinks its ok.
If the employees were able to apply on their own, what's the harm?

The government ALWAYS, as you characterize it, "interferes". In the U.S. the Department of Justice often determines in the first instance what activities constitute a violation of the antitrust laws, but the reason the government must always be involved is because individuals and companies must resort to government funded and staffed courts to resolve disputes. The government in the form of courts must decide which party should prevail and this can involve determining whether or not an agreement can be enforced or not, sometimes on the basis of whether that agreement is in keeping with the sort of society we want to have. For that reason, the government interferes when a bookie sues a gambler who has welshed on a bet by saying, in many states, that it will not allow its courts to be used to collect money from a wager that was illegal to have been made in the first place.

Here two companies have made a contract with each other that arguably affects the rights of an employee of one of the companies who had no involvement in the making of that contract, and who certainly did not consent to it. Assume that in the absence of that contract the other company would have attempted to recruit that employee by offering a 25% augmentation in salary. In effect, the contract has harmed the employee by arguably improperly removing the fair competition for his services that is the essence of capitalism.

So whether the Justice Department decides that the contract is a "combination in restraint of trade", or the employee decides that he has been harmed by illegal collusion to keep his compensation low, or whether one of the companies sues the other for breaching the contract by approaching the employee, the government is going to get involved.

The alternative, which existed in the distant past, and even today in some parts of the world, is that anyone who thinks he has been harmed by the acts of another gets his friends and relatives together and physically attacks whomever they think did them wrong. Long before governments were instituted among men to organize armies, coin money, or negotiate with other governments, people supported an authority to decide disputes among them. It is what separates us from barbarians.

Additionally, there are many reasons why an employee of Company A would not apply to Company B for a job, not the least of which is that if Company A learned about it, it might fire him to replace him with a more loyal employee it could count on not to defect to the competitor. Once you achieve a responsible role in an organization it is far more likely that you will be recruited to your next assignment than that you apply for it, and for that reason any limitation on recruiting deprives you of opportunity.

At the same time, though, there are situations where it is fair to prevent, for a reasonable period of time, one company from making offers of employment to the employees of another. Courts and governments generally are charged with making judgments about when particular circumstances justify enforcing or refusing to enforce a particular agreement.

In this particular case it appears that Apple contracted with a number of unrelated companies to avoid a hiring war where each company was raiding the employees of the other, setting off an expensive auction for employees with rare skills. It is certainly understandable that these companies would see some advantage to themselves in avoiding such a battle, but it is incontrovertible that another consequence is that the compensation of those with valuable and rare skills would not make as much as they would otherwise. The agreement, consequently, is a violation of the law of supply and demand since the demand has been artificially suppressed. In a free capitalist society we must always be vigilant to ensure that the competition that is the heart of our economy is not circumvented by collusion among competitors, and we entrust that duty to be vigilant to our government.

[lordofthereef]

Originally Posted by jessica.

Yeah you're probably right, you're pretty familiar with my contract.

That's the thing. He doesn't have to be, Unless you are terrible at explaining things, which is possible. You described a non compete clause basically to a T, in simple terms. Is that in your contract? I don't know. You said it was...

Obviously there is more to your contract. Bit when you paraphrase, which you did, don't expect people not to dispute the analogy.

[IJ Reilly]

Originally Posted by Cartaphilus

Non-solicitation agreements are commonplace in the United States, and as far as I know have been deemed generally enforceable as not contrary to public policy in every state, unless the restrictions are found to be specifically unreasonable as to time, geography, or extent, or unless the agreement also prohibits hiring in the absence of solicitation. (Of course, the distinction is a bit naive considering how difficult it is to prove that someone in the soliciting company initiated a suggestion that the employee make an "unsolicited" application.)

The position of the current DOJ that these agreements are a violation of the U.S. antitrust laws is relatively new, and as far as I know, no court has yet substantively upheld Justice's broadest stance. My own opinion, FWIW, is that the outcome would be highly fact-dependent, and depend on the industry, the specialty, and the relationship of the two companies. For example, if a subsidiary were to be sold by a parent company, and the buyer insisted on an agreement that for some reasonable period of time the parent could not solicit any sub employee who had been employed at the time of the sale, I can't imagine a court finding an anti-trust violation. On the other hand, if all the major tech companies in Silicon Valley entered into a mutual non-solicitation pact relating to, say, Python developers, I'd rather be representing the DOJ than the cartel.

I think the government right now is overplaying its hand, and if it isn't judicious in picking its spots, there's a good chance that a case with lousy facts for them will end up as the controlling precedent.

I agree the outcome would be fact-dependent, but then so are all points of law, are they not? Assuming the facts are essentially as we know them, the question here may be less complicated than is being made out. Whether it be for pig iron or employees, whenever companies agree to not complete with one another, they have formed a type of cartel. It is difficult to imagine any circumstances beyond the very limited where such an agreement would not violate the Sherman Act.

It seems when Apple began this practice several years ago that Steve Jobs was warned that it was likely to be illegal. My feeling is that Apple and the other involved companies will do whatever is required to settle this as promptly as possible by consent and without trial, as any court finding of fact will only make the civil suits that much more powerful. They will not want to repeat the mistakes made by Microsoft.

[JAT]

You know, more people would be on the side of "protecting" these employees if we weren't talking about people making $200k and up per year, if not millions. This isn't about Apple Store Geniuses. At some dollar amount, these court cases just receive a from the general populace.

Just waiting for a Latrell Sprewell-like quote.....

[iDuel]

Originally Posted by lynfordd

The judge should through them all out of the court room. What a stupid thing to sue about.
Than apple should just fire them all.

Well, it didn't take too long into this thread for a comment like this to pop up.

[Morshu9001]

Originally Posted by KdParker

Not sure why they would even enter into such an agreement. You want the best employees, and if you have someone that you don't want to leave, then treat them right.

Might be a way of forcing their employees to stay. I normally don't accuse corporations of unethical practices, but this does not seem ethical.

----------

Originally Posted by JAT

You know, more people would be on the side of "protecting" these employees if we weren't talking about people making $200k and up per year, if not millions. This isn't about Apple Store Geniuses. At some dollar amount, these court cases just receive a from the general populace.

Just waiting for a Latrell Sprewell-like quote.....

High demand, low supply of these employees. Most people won't support those whom they envy.

[KdParker]

Originally Posted by Cavepainter

There's the rub, isn't it? Well, think like an executive for a moment. "Treating them right" costs lots of money when you're talking about top employees. These companies are for-profit businesses, not charities, and they don't like spending money. That's how they make lots of money. And these aren't the kind of employees that can be secured by a nice Christmas card and a $50 dollar gift card. If these companies all agree to not poach the valuable employees (as in the expensive employees) from one another, they all will save lots and lots of money. That's why.

In sports terms, what value is free agency if all the other teams agree not to recruit you?

True, treating them right will cost money, but you aren't going to give them more than they are worth. Most likely not even close.

And the net profit loss that could come from not persuing the best fit for your company will get you fired by the Board pretty quickly.

[IJ Reilly]

Originally Posted by iDuel

Well, it didn't take too long into this thread for a comment like this to pop up.

Some of us have yet to accept the new world order, where corporations are entitled to the protections of the state but aren't legitimately subject to any laws. We are a pitiful lot, to be sure.

[techwhiz]

It's fine for a company to ban it's contract agencies from poaching if they are also placing. That is not an issue or the issue here.

What we have is a group of companies that "secretly" colluded to keep wages down by not poaching from their partners. Not detailed in the story was the fact that they also would be less likely to hire people from those other companies.

This does in fact put a cap on wages because the free market is stifled.
Pixar didn't need a secret agreement. Steve was head of both Apple *AND* Pixar at the time. Intel is/was an Apple partner.

As someone that works in the industry, I watch the IEEE Salary Survey and also participate in the survey. I keep a pretty good eye on what the market pays. What they did prevents a free market because companies won't seek out the brightest and the best at the highest pay. Waiting for you to look means you get less money than if they come look for you.

Anti-Trust laws in America are to prevent companies from making secret agreements that are counter to what is best in the public interest.

[IJ Reilly]

Originally Posted by techwhiz

What we have is a group of companies that "secretly" colluded to keep wages down by not poaching from their partners.

From their competitors in the market for labor, and this is where the rubber hits the road with the Sherman Act. That's a cartel whether the collusion is done secretly (as in this case) or entirely out in the open (see: OPEC).

The purpose of antitrust law is to protect and enhance free and open competition, which are the core values that make capitalism a productive economic system. The potential for companies to collude and form cartels has been well understood going back to Adam Smith as an inefficiency and imperfection in capitalism, so it isn't like we haven't known this for a long time. The U.S. antitrust laws are now over 120 years old, but from the discussion you'd think they were just invented.

[Cartaphilus]

Originally Posted by IJ Reilly

...It is difficult to imagine any circumstances beyond the very limited where such an agreement would not violate the Sherman Act....

Another situation in which I think a non-solicitation/non-hire agreement would likely be found permissible, even between competitors, would be in the case where, for example, Apple had been in negotiations to acquire, say, a voice-recognition software company as a means of enhancing their Siri product. If after due diligence the parties fail to reach an agreement on the acquisition, I can easily see permitting and enforcing an agreement prohibiting Apple, for some reasonable time, from hiring any technical employee of the target company of whom Apple acquired knowledge or had substantial contact during the diligence phase.

I think that generally the courts would be sympathetic to most situations where the same principle applies. For example, a software sales contract coupled with a substantial implementation project may contain a clause forbidding the customer, for some reasonable period of time, from hiring away any implementers assigned by the provider to work on the customer's project. Similarly, each corporation sponsoring the development of industry technical standards should be able to agree to refrain for some reasonable time from hiring another sponsor's employee who serves as a member of the committee.

There are many instances where companies might otherwise refuse to permit their employees to cooperate in activities which are seen as beneficial to society at large because they fear that their participating employees will be poached. To avoid discouraging the desired cooperation some exceptions should be carved out of the broad antitrust prohibition with accompanying appropriate limitations, safe harbors, and guidance.

We should also acknowledge that larger tech companies tend to comprise an often surprisingly small world, engaging regularly in what was once called "co-opetition". Accordingly, despite antitrust law and contracts, employers and employees often find it in their best respective long-term interests to accommodate one another's needs by, for example, permitting a prohibited hiring, but only once the employee has completed a current assignment where his role would be difficult to replace. Often a few discreet phone calls through back channels can result in things working out to the satisfaction of all. This cordial resolution is much more likely if all the parties know exactly where they stand legally.

It is quite true that in applying any policy the facts of the specific situation are important, but a comprehensive understanding of the relevant realties can inform the development of policies that balance the competing interests and provide for different outcomes depending on specific conditions. More situational policies can often lessen the need for enforcement actions and litigation, and allow the parties to negotiate their agreements with confidence that their legitimate goals will not be frustrated.