EC policy brief: Antitrust in Labour Markets

The European Commission has published a new policy brief on Antitrust in Labour Markets, available here.

?The brief focuses on the enforcement against restrictive labor market agreements, particularly wage-fixing and no-poach agreements, which have become a priority for many competition authorities. ?Wage-fixing agreements, which involve employers agreeing on employee wages or benefits, which limits wage competition.? No-poach agreements prevent employers from hiring or soliciting each other's employees (these can take forms such as no-hire agreements and non-solicit agreements).

?As the European Commission points out, wage-fixing and no-poach agreements typically qualify as restrictions by object under Article 101(1) TFEU and are subject to scrutiny due to their potential to harm the competitive process by artificially depressing wages and restricting labor mobility.? The Commission also stresses that such agreements harm employees by suppressing wages and benefits and reduce labor market dynamism, which can dampen productivity and innovation.? Despite potential arguments for their legality based on economic efficiencies or protection of investments (e.g., training costs), these agreements rarely meet the strict criteria required for exceptions under EU competition law, such as being indispensable and proportionate to a legitimate aim.? They are also unlikely to qualify as ancillary restraints or be exempted under Article 101(3) TFEU, as any pro-competitive effects are typically overshadowed by their restrictive nature.

?Regarding future implications for enforcement, the policy brief underscores the need for rigorous enforcement and consistent application of competition laws across EU Member States, facilitated by coordination within the European Competition Network (most of cases are likely to be dealt with by National Competition Authorities due to the geographic scope of the agreements).

?The policy brief suggests that less restrictive means (e.g., non-disclosure agreements, specific non-compete clauses, or gardening leaves) can be used to achieve legitimate business objectives without unduly harming competition.?

The best example of the increased interest in anticompetitive agreements in the realm of labour markets comes from the US.? Back in 2016, the DOJ and the FTC issued a joint antitrust guidance addressed to employers, alerting that the DOJ could bring a criminal prosecution against individuals, the company, or both in connection with no-poach and wage-fixing agreements (see here). ?Now Europe is following suit in an area that will no longer be overlooked.