Wednesday, 14 January 2015

Staff poaching and anti-competitive practices: The bizarre inconsistencies of the US legal system

From CNN, April 2014:

The lawsuit, filed in 2011, accused tech companies of agreeing not to recruit employees from one another as a way to keep wages down, a scheme allegedly hatched by deceased former Apple CEO Steve Jobs...

The lawsuit was originally filed against seven companies. Lucasfilm and Pixar, both owned now by Disney, agreed last year to pay $9 million to settle their portion of the case, while Intuit agreed to pay $11 million.

Separately, Adobe, Apple, Google, Intel, Intuit and Pixar agreed in 2010 to settle a similar Justice Department lawsuit over what regulators said were anti-competitive hiring practices.

The companies had been accused of violating antitrust law by agreeing not to poach each other's employees but did not admit wrongdoing in the settlement.

Fair enough, you might think. This boosts wages at the expense of corporate profits.

But how does that tie in with this apparently equal and opposite decision:

From City AM, January 2015:

One of business’s longest running disputes over staff poaching finally ended yesterday after British inter-dealer broker Tullett Prebon came out on top in its bitter five-year legal battle with US rival BGC Partners.

Shares in the UK broker jumped eight per cent following news that the New York-based broker will pay Tullett $100m (£66m) to settle a litigation suit in the New Jersey Superior Court.

The case concerned BGC’s alleged pinching of more than 80 brokers from Tullett’s US affiliates in 2009, which the UK firm claimed cost it $387m in market value...

The deal also includes a clause that prevents either party from hiring the other’s desk heads and senior management for a year.

This clearly boosts corporate profits at the expense of wages.


Lola said...

Corporate cronyism gone mad. Whatever happened to the 'free market'?

Bayard said...

It's the US, where they have the best justice money can buy.

Bayard said...

Also, one lawsuit was in California, the other was in New Jersey. Different states, different legal codes?

mombers said...

Hmmm, I think the difference seems to be that some confidential data was stolen by the employee who left and then tried to poach the rest of his team. I suppose trade secrets are an essential part of business, it's not like they are monopolies. The other one is more damaging as it's a collusion between a significant portion of that segment of the labour market

Mark Wadsworth said...

L, but which represents free markets? What Apple etc were doing or what Tullet was doing?

B, first comment yes.

Second comment, interesting one. What if an employer in NJ agreed with an employer in C not to poach staff? What if an employer in C poaches staff from an employer in NJ?

M, taking confidential data with when you leave a job is a clear breach of employment contract, so BCG could rightly have sued its ex-employees for damages (and Tullet would probably have had to pay those damages).