Six Silicon Valley Tech Firms Forced To Halt Anti-Competitive Hiring Blocks

Wow, this is odd. According to a new report today from the United States Department of Justice, six very well recognized silicon valley companies are have their hands slapped by a very powerful entity. The DoJ has mandated that six companies stop entering into anti-competitive employee solicitation agreements, which they have apparently been doing for as many as 5 years.


It sounds like the six companies have agreed to comply, as the DoJ filed a lawsuit but says that the accompanying agreement should cover that. You're probably dying to know who exactly has been named here, so here goes: Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar. We're pretty sure you have heard of all six if you're here reading this site. According to investigations by the DoJ, these six companies were mixed up in agreements that forbid one company from calling another company's employee(s) in order to run any job offers by them. For example, Apple could not call Google employees and see if they'd like a different/better job at Apple, and vice-versa.


Obviously, the DoJ doesn't look kindly on those kinds of arrangements, and they said that the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities. The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel were said to have "prevented the companies from directly soliciting each other’s employees."

Anyway, it sounds like all six companies have agreed to halt these type of arrangements, but we have to wonder if any punishment will be issued. And who knows what this will do to the potential job market in Silicon Valley.

The department said in its complaint:

• Beginning no later than 2006, Apple and Google executives agreed not to cold call each other’s employees.   Apple placed Google on its internal “Do Not Call List,” which instructed employees not to directly solicit employees from the listed companies.   Similarly, Google listed Apple among the companies that had special agreements with Google and were part of the “Do Not Cold Call” list;
• Beginning no later than May 2005, senior Apple and Adobe executives agreed not to cold call each other’s employees.   Apple placed Adobe on its internal “Do Not Call List” and similarly, Adobe included Apple in its internal list of “Companies that are off limits”;
• Beginning no later than April 2007, Apple and Pixar executives agreed not to cold call each other’s employees.   Apple placed Pixar on its internal “Do Not Call List” and senior executives at Pixar instructed human resources personnel to adhere to the agreement and maintain a paper trail;
• Beginning no later than September 2007, Google and Intel executives agreed not to cold call each other’s employees.   In its hiring policies and protocol manual, Google listed Intel among the companies that have special agreements with Google and are part of the “Do Not Cold Call” list.   Similarly, Intel instructed its human resources staff about the existence of the agreement; and
• In June 2007, Google and Intuit executives agreed that Google would not cold call any Intuit employee.   In its hiring policies and protocol manual, Google also listed Intuit among the companies that have special agreements with Google and are part of the “Do Not Cold Call” list.

 

The proposed settlement, which if accepted by the court will be in effect for five years, prohibits the companies from engaging in anticompetitive no solicitation agreements.   Although the complaint alleges only that the companies agreed to ban cold calling, the proposed settlement more broadly prohibits the companies from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees.   The companies will also implement compliance measures tailored to these practices.

Today’s complaint arose out of a larger investigation by the Antitrust Division into employment practices by high tech firms.   The division continues to investigate other similar no solicitation agreements.

Adobe Systems Inc. is a Delaware corporation with its principal place of business in San Jose, Calif., and 2009 revenues of nearly $3 billion.   Apple Inc. is a California corporation with its principal place of business in Cupertino, Calif., and 2009 revenues of more than $42 billion. Google Inc. is a Delaware corporation with its principal place of business in Mountain View, Calif., and 2009 revenues of more than $23 billion. Intel Inc. is a Delaware corporation with its principal place of business in Santa Clara, Calif., and 2009 revenues of more than $35 billion.   Intuit Inc. is a Delaware corporation with its principal place of business in Mountain View, Calif., and 2009 revenues more than $3 billion.   Pixar is a California corporation with its principal place of business in Emeryville, Calif.

The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act.   Any person may submit written comments concerning the proposed settlement within 60 days of its publication to James J. Tierney, Chief, Networks & Technology Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 7100, Washington D.C. 20530.   At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.