Sunday, September 26, 2010

Six Tech Firms Settle Federal Hiring Probe

The Wall Street Journal

The Justice Department and six leading technology companies reached a settlement Friday over civil charges that the companies violated antitrust law by agreeing not to poach each other's skilled employees.

The settlement prevents Google Inc., Apple Inc., Intel Corp., Adobe Systems Inc., Intuit Inc. and Walt Disney Co. unit Pixar Animation from agreeing not to solicit, recruit or compete for each other's talent. The companies didn't admit wrongdoing or pay a fine under the settlement.

The deal allows both sides to come away with something while avoiding the risk of fighting the case in court. The Justice Department can say it halted conduct it found improper, while the companies can maintain their position that their agreements were legal and avoid the potential consequence of a court loss—a wave of lawsuits brought by employees.

The Justice Department alleged that senior executives at the companies agreed not to cold-call each other's workers. For example, the department said, Apple and Google had such an agreement since at least 2006, while Google had similar agreements with Intel and Intuit since at least 2007.

The Justice Department said the agreements amounted to a form of collusion to restrict competition. It said cold-calling is an important way for high-tech companies to recruit highly skilled employees.

"The agreements … distorted the competitive process," Justice Department antitrust lawyer Molly Boast said in a statement.

In statements, representatives of Intel, Intuit, Adobe and Google said they didn't believe their actions violated the law. They predicted settling the matter wouldn't affect their ability to do business. Apple and Pixar didn't immediately respond to requests for comment.

Amy Lambert, associate general counsel for Google, said in a blog post that the search giant agreed not to cold-call employees at partner companies "to maintain a good working relationship," but dropped the policy last year. She said there was no evidence the policy hindered hiring or affected wages.

Laura Fennell, Intuit's general counsel, said her company has "agreed to disagree with the DOJ on the issue of any wrongdoing in this matter."

Intel spokesman Chuck Mulloy said the company "is settling the matter because it believes it would not harm the company or its ability to do business."

Adobe spokeswoman Holly Campbell said "we firmly believe that our recruiting policies have been consistent with the antitrust laws and have in no way diminished competition for talent in the marketplace."

The Justice Department has been investigating hiring practices in the technology industry for more than a year. The companies argued they needed to be able to offer each other assurances that they wouldn't lure away star employees if they were to collaborate.

Until this probe, policing the labor markets hadn't been a central focus of antitrust enforcers. The department said Friday it is continuing to investigate other no-solicitation agreements.