Illegal labour market cartels: antitrust authorities focus on businesses sharing employee information

Authorities around the world including the UK Competition and Markets Authority (CMA) and European Commission are prioritising the investigation and punishment of businesses that have engaged in, what they call, illegal labour market cartels.

Businesses that have shared information about contractor or employee pay rates, terms and conditions or other benefits, or which agree not to approach or hire each other's employees ("no poaching" agreements), could be in the firing line. Those businesses may face investigation, fines and potential disqualification of directors who knew or should have known about such information sharing. 

The CMA says that its focus on labour markets reflects its commitment to tackling anti-competitive conduct that impacts public and household finances. Earlier this year, the CMA published high level advice for employers on how to avoid anti-competitive behaviour, while its guidance on horizontal agreements singled out wage-fixing between employers as an example of unlawful cartel conduct. In addition, the CMA has recently launched two investigations into suspected breaches of competition law in relation to the engagement of staff and freelancers supporting the production and broadcasting of sports and non-sports TV content. Meanwhile, the European Commission has carried out "dawn raids" against businesses in the online food delivery sector that it suspects of engaging in no-poaching agreements and exchanges of commercially sensitive information.

This is a novel area of application for competition law in the UK and Europe. Traditionally, authorities have focused on cartel activity and collusive behaviour between businesses that compete in terms of the goods and services they offer. Many businesses may therefore not have considered the antitrust risks in this area. There is scant guidance on where the line might be drawn, for example, between legitimate joint purchasing or collective bargaining, and (what the CMA and Commission consider) illegal cartels.

Steps for businesses to take

We would encourage businesses to: 

• Consider their activities as part of trade associations and other less formal gatherings of competitors, which may discuss common issues around hiring staff. 
• Refresh their internal policies around anti-competitive conduct, in light of these relatively new areas of regulatory focus. 
• Direct training at higher risk parts of the business involved in decisions and discussions over staff terms and conditions (e.g. Board and senior management, HR and recruitment). 

Activity generally comes to the attention of the authorities via whistleblowers and leniency applicants. If you would like to understand whether you are at risk in this area, please get in touch.